<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------
COMMUNICATIONS CENTRAL INC.
(Name of Subject Company)
PHONETEL ACQUISITION CORP.
PHONETEL TECHNOLOGIES, INC.
(Bidders)
--------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
203388 10 3
--------------
(CUSIP Number of Class of Securities)
TAMMY L. MARTIN, ESQ.
EXECUTIVE VICE PRESIDENT
CHIEF ADMINISTRATIVE OFFICER,
AND GENERAL COUNSEL
1127 EUCLID AVENUE
SUITE 650
CLEVELAND, OHIO 44115-1601
(216) 241-2555
(Name, Address and Telephone Number of Person authorized to
Receive Notices and Communications on Behalf of Bidder)
COPY TO:
STEPHEN M. BANKER, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
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CALCULATION OF FILING FEE
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
TRANSACTION VALUATION* $92,415,118.30 AMOUNT OF FILING FEE $18,483.02
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
* For purposes of calculating fee only. This amount assumes the purchase
of 6,054,556 outstanding shares of common stock of Communications
Central Inc. and 1,137,282 shares of common stock of Communications
Central Inc. which may be issued upon exercise of outstanding options
and warrants, in each case, at $12.85 in cash per share. The amount of
the filing fee calculated in accordance with Regulation 240.0-11 of
the Securities Exchange Act of 1934, as amended, equals 1/50 of one
percentum of the value of shares to be purchased.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11
(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
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- -----------------------------------------------------------------------------
<PAGE>
CUSIP NO. 203388 10 3
14D-1
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------
Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
1.
PhoneTel Acquisition Corp.
- ------------------------------------------------------------------------------
Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
2.
- ------------------------------------------------------------------------------
SEC Use Only
3.
- ------------------------------------------------------------------------------
Source of Funds
4.
AF
- ------------------------------------------------------------------------------
Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(e) or 2(f) [ ]
5.
- ------------------------------------------------------------------------------
Citizenship or Place of Organization
6.
Georgia
- ------------------------------------------------------------------------------
Aggregate Amount Beneficially Owned By Each Reporting Person*
7.
0
- ------------------------------------------------------------------------------
Check Box if the Aggregate Amount in Row (7) Excludes Certain
Shares [ ]
8.
- ------------------------------------------------------------------------------
Percent of Class Represented By Amount in Row (7)*
9.
0
- ------------------------------------------------------------------------------
Type of Reporting Person
10.
CO
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</TABLE>
2
<PAGE>
CUSIP NO. 203388 10 3
14D-1
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------
Names of Reporting Person
S.S. or I.R.S. Identification No. of Above Persons
1.
PhoneTel Technologies, Inc.
- ------------------------------------------------------------------------------
Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
2.
- ------------------------------------------------------------------------------
SEC Use Only
3.
- ------------------------------------------------------------------------------
Source of Funds
4.
BK
- ------------------------------------------------------------------------------
Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(e) or 2(f) [ ]
5.
- ------------------------------------------------------------------------------
Citizenship or Place of Organization
6.
Ohio
- -----------------------------------------------------------------------------
Aggregate Amount Beneficially Owned By Each Reporting Person*
7.
0
- ------------------------------------------------------------------------------
Check Box if the Aggregate Amount in Row (7) Excludes Certain
Shares [ ]
8.
- ------------------------------------------------------------------------------
Percent of Class Represented By Amount in Row (7)*
9.
0
- ------------------------------------------------------------------------------
Type of Reporting Person
10.
CO
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</TABLE>
3
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates
to the offer by PhoneTel Acquisition Corp., a Georgia corporation (the
"Purchaser") and a wholly owned subsidiary of PhoneTel Technologies, Inc., an
Ohio corporation ("PhoneTel"), to purchase all of the outstanding shares of
Common Stock, par value $.01 per share (the "Common Stock"), including the
associated rights to purchase shares of Common Stock (the "Rights" and,
together with the Common Stock, the "Shares"), of Communications Central
Inc., a Georgia corporation (the "Company"), at $12.85 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated March 20, 1997 (the "Offer to Purchase"), a copy of
which is attached hereto as Exhibit (a)(1), and in the related Letter of
Transmittal, a copy of which is attached hereto as Exhibit (a)(2) (which
together constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Communications Central Inc. and the
address of its principal executive offices is 1150 Northmeadow Parkway, Suite
118, Roswell, Georgia 30076.
(b) The class of securities to which this Statement relates is the Common
Stock, par value $.01 per share (including the Rights), of the Company. As of
March 14, 1997, there were 6,054,556 Shares issued and outstanding and there
were outstanding options and warrants to purchase an aggregate of 1,137,282
Shares. Purchaser is seeking to purchase all of the outstanding Shares at a
purchase price of $12.85 per Share, net to the seller in cash.
(c) The information set forth in "Section 6 -- Price Range of the Shares;
Dividends on the Shares" of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) The information set forth in the "INTRODUCTION" and "Section
9 -- Certain Information Concerning the Purchaser and PhoneTel" of the Offer
to Purchase is incorporated herein by reference. The name, business address,
present principal occupation or employment, the material occupations,
positions, offices or employments for the past five years and citizenship of
each director and executive officer of the Purchaser and PhoneTel and the
name, principal business and address of any corporation or other organization
in which such occupations, positions, offices and employments are or were
carried on are set forth in Schedule I of the Offer to Purchase and
incorporated herein by reference.
(e)-(f) During the last five years neither the Purchaser or PhoneTel nor,
to the best knowledge of the Purchaser and PhoneTel, any of the persons
listed in Schedule I of the Offer to Purchase have been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any such person was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below, neither
the Purchaser or PhoneTel, nor, to the best knowledge of the Purchaser and
PhoneTel, any of the persons listed in Schedule I of the Offer to Purchase,
has entered into any transaction with the Company, or any of the Company's
affiliates which are corporations, since the commencement of the Company's
third full fiscal year preceding the date of this Statement, the aggregate
amount of which was equal to or greater than one percent of the consolidated
revenues of the Company for (i) the fiscal year in which such transaction
occurred or (ii) the portion of the current fiscal year which has occurred if
the transaction occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below, neither
the Purchaser or PhoneTel, nor, to the best knowledge of the Purchaser and
PhoneTel, any of the persons listed in Schedule I of the Offer to Purchase,
has entered into any transaction since the commencement of the Company's
third full fiscal year preceding the date of this Statement, with the
executive officers, directors or affiliates of the
4
<PAGE>
Company which are not corporations, in which the aggregate amount involved in
such transaction or in a series of similar transactions, including all
periodic installments in the case of any lease or other agreement providing
for periodic payments or installments, exceeded $40,000.
(b) The information set forth in the "INTRODUCTION", "Section 9 -- Certain
Information Concerning the Purchaser and PhoneTel", "Section 11 -- Background
of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and
Certain Other Agreements" and "Section 12 -- Plans for the Company; Other
Matters" of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Section 10 -- Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the "INTRODUCTION", "Section 11 --
Background of the Offer; Purpose of the Offer and the Merger; the Merger
Agreement and Certain Other Agreements" and "Section 12 -- Plans for the
Company; Other Matters" of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in "Section 7 -- Effect of the Offer on
the Market for the Shares; Stock Listing; Exchange Act Registration; Margin
Regulations" of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Section 9 -- Certain Information
Concerning the Purchaser and PhoneTel" of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "INTRODUCTION", "Section 10 -- Source and
Amount of Funds", "Section 11 -- Background of the Offer; Purpose of the
Offer and the Merger; the Merger Agreement and Certain Other Agreements",
"Section 12 -- Plans for the Company; Other Matters" and "Section 16 -- Fees
and Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Section 16 -- Fees and Expenses" of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in "Section 9 -- Certain Information Concerning
the Purchaser and PhoneTel" of the Offer to Purchase is incorporated herein
by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between the Purchaser or PhoneTel, or to the best knowledge of the Purchaser
and PhoneTel, any of the persons listed in Schedule I of the Offer to
Purchase, and the Company, or any of its executive officers, directors,
controlling persons or subsidiaries.
(b)-(c) The information set forth in the "INTRODUCTION", "Section 14 --
Conditions of the Offer" and "Section 15 -- Certain Legal Matters" of the
Offer to Purchase is incorporated herein by reference.
5
<PAGE>
(d) The information set forth in "Section 7 -- Effect of the Offer on the
Market for Shares; Stock Listing; Exchange Act Registration; Margin
Regulations" and "Section 15 -- Certain Legal Matters" of the Offer to
Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
<S> <C>
(a)(1) Offer to Purchase dated March 20, 1997.
(a)(2) Letter of Transmittal with respect to the Shares.
(a)(3) Letter, dated March 20, 1997, from Southcoast Capital Corporation (Dealer Manager) to
Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(4) Letter for use by Brokers, Dealers, Banks, Trust Companies and Nominees to their Clients.
(a)(5) Notice of Guaranteed Delivery with respect to the Shares.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(7) Press Release jointly issued by PhoneTel and the Company dated March 14, 1997.
(a)(8) Form of Summary Advertisement dated March 20, 1997.
(b)(1) Highly Confident Letter dated March 14, 1997 of CIBC Wood Gundy Securities Corp.
(b)(2) Engagement Letter dated March 14, 1997 of CIBC Wood Gundy Securities Corp.
(c)(1) Agreement and Plan of Merger, dated as of March 14, 1997, by and among PhoneTel, the
Purchaser and the Company.
(c)(2) Form of Non-Competition Agreement.
(c)(3) Escrow Agreement dated as of March 14, 1997 among First Union National Bank of Georgia,
the Company and PhoneTel.
(c)(4) Confidentiality Agreement dated July 25, 1996 between PhoneTel and the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
6
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Date: March 20, 1997
PHONETEL ACQUISITION CORP.
By: /s/ Peter G. Graf
----------------------
Peter G. Graf
Chairman and Chief Executive
Officer
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Date: March 20, 1997
PHONETEL TECHNOLOGIES, INC.
By: /s/ Peter G. Graf
---------------------------
Peter G. Graf
Chairman and Chief Executive
Officer
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ----------- -------
<S> <C>
(a)(1) Offer to Purchase dated March 20, 1997
(a)(2) Letter of Transmittal with respect to the Shares
(a)(3) Letter, dated March 20, 1997, from Southcoast Capital Corporation (Dealer Manager) to
Brokers, Dealers, Banks, Trust Companies and Other Nominees
(a)(4) Letter for use by Brokers, Dealers, Banks, Trust Companies and Nominees to their
Clients
(a)(5) Notice of Guaranteed Delivery with respect to the Shares
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Press Release jointly issued by PhoneTel and the Company dated March 14, 1997
(a)(8) Form of Summary Advertisement dated March 20, 1997
(b)(1) Highly Confident Letter dated March 14, 1997 of CIBC Wood Gundy Securities Corp.
(b)(2) Engagement Letter dated March 14, 1997 of CIBC Wood Gundy Securities Corp.
(c)(1) Agreement and Plan of Merger, dated as of March 14, 1997, by and among PhoneTel, the
Purchaser and the Company
(c)(2) Form of Non-Competition Agreement
(c)(3) Escrow Agreement dated as of March 14, 1997 among First Union National Bank of
Georgia, the Company and Phone Tel
(c)(4) Confidentiality Agreement dated July 25, 1996 between PhoneTel and the Company
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
COMMUNICATIONS CENTRAL INC.
BY
PHONETEL ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
PHONETEL TECHNOLOGIES, INC.
AT
$12.85 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, APRIL 16, 1997, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER DATED
AS OF MARCH 14, 1997 AMONG PHONETEL TECHNOLOGIES, INC., PHONETEL ACQUISITION
CORP. AND COMMUNICATIONS CENTRAL INC. THE BOARD OF DIRECTORS OF
COMMUNICATIONS CENTRAL INC. HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT,
THE OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF
COMMUNICATIONS CENTRAL INC., AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER
OF SHARES WHICH REPRESENTS AT LEAST SEVENTY-FIVE PERCENT (75%) OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS, (II) THE RECEIPT BY PHONETEL
TECHNOLOGIES, INC. OF FINANCING SUFFICIENT IN AMOUNT TO ENABLE IT AND
PHONETEL ACQUISITION CORP. TO CONSUMMATE THE OFFER AND THE MERGER AND TO
REFINANCE CERTAIN INDEBTEDNESS FOR BORROWED MONEY OF COMMUNICATIONS CENTRAL
INC. AND TO PAY RELATED FEES AND EXPENSES AND (III) THE OTHER CONDITIONS SET
FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14.
--------------
IMPORTANT
Any shareholder who desires to tender all or any portion of such
shareholder's Shares (as defined herein) should either (i) complete and sign
the Letter of Transmittal (or facsimile thereof) in accordance with the
instructions in the Letter of Transmittal, mail or deliver it and any other
required documents to the Depositary and either deliver the certificates for
such Shares to the Depositary or tender such Shares pursuant to the
procedures for book-entry transfer set forth in Section 3 or (ii) request
such shareholder's broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for such shareholder. Any shareholder whose
Shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee to tender such Shares.
Any shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, may tender
such Shares by following the procedures for guaranteed delivery set forth in
Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective locations and telephone
numbers set forth on the back cover of this Offer to Purchase. Requests for
additional copies of this Offer to Purchase, the Letter of Transmittal and
the Notice of Guaranteed Delivery may be directed to the Information Agent,
the Dealer Manager, the Depositary, or to brokers, dealers, commercial banks
or trust companies. A shareholder also may contact brokers, dealers,
commercial banks or trust companies for assistance concerning the Offer.
The Dealer Manager for the Offer is:
SOUTHCOAST CAPITAL CORPORATION [LOGO]
March 20, 1997
<PAGE>
TABLE OF CONTENTS
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PAGE
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<S> <C>
INTRODUCTION....................................................................................... 1
THE OFFER.......................................................................................... 3
1. Terms of the Offer............................................................................. 3
2. Acceptance for Payment and Payment ............................................................ 5
3. Procedure for Tendering Shares ................................................................ 6
4. Withdrawal Rights.............................................................................. 8
5. Certain Federal Income Tax Consequences ....................................................... 9
6. Price Range of the Shares; Dividends on the Shares ............................................ 10
7. Effect of the Offer on the Market for the Shares; Stock Listing; Exchange Act Registration;
Margin Regulations............................................................................. 10
8. Certain Information Concerning the Company .................................................... 11
9. Certain Information Concerning the Purchaser and PhoneTel ..................................... 13
10. Source and Amount of Funds..................................................................... 15
11. Background of the Offer; Purpose of the Offer and the Merger; The Merger Agreement and Certain
Other Agreements............................................................................... 17
12. Plans for the Company; Other Matters........................................................... 26
13. Dividends and Distributions.................................................................... 29
14. Conditions of the Offer........................................................................ 29
15. Certain Legal Matters.......................................................................... 31
16. Fees and Expenses.............................................................................. 33
17. Miscellaneous.................................................................................. 33
Schedule I--Directors and Executive Officers of PhoneTel Technologies, Inc. and PhoneTel
Acquisition Corp. ..................................................................... I-1
</TABLE>
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF
COMMUNICATIONS CENTRAL INC.:
INTRODUCTION
PhoneTel Acquisition Corp., a Georgia corporation (the "Purchaser") and a
wholly owned subsidiary of PhoneTel Technologies, Inc., an Ohio corporation
("PhoneTel"), hereby offers to purchase all of the outstanding shares of
Common Stock, par value $.01 per share (the "Common Stock"), including the
associated rights to purchase shares of Common Stock (the "Rights" and,
together with the Common Stock, the "Shares") issued pursuant to the Rights
Agreement (as defined below), of Communications Central Inc., a Georgia
corporation (the "Company"), at $12.85 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
The Purchaser will pay all fees and expenses incurred in connection with the
Offer of Southcoast Capital Corporation ("Southcoast"), which is acting as
the Dealer Manager (the "Dealer Manager"), First Union National Bank of North
Carolina, which is acting as the Depositary (the "Depositary"), and MacKenzie
Partners, Inc., which is acting as the Information Agent (the "Information
Agent").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER
OF SHARES WHICH REPRESENTS AT LEAST SEVENTY-FIVE PERCENT (75%) OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). SEE SECTION
14. As used in this Offer to Purchase, "fully diluted basis" takes into
account issued and outstanding Shares and Shares subject to issuance under
outstanding options and warrants. The Company has informed the Purchaser
that, as of March 14, 1997, there were 6,054,556 Shares issued and
outstanding, and there were outstanding options and warrants to purchase an
aggregate of 1,137,282 Shares. The Merger Agreement provides, among other
things, that the Company will not, without the prior written consent of
PhoneTel, issue any additional Shares (except on the exercise of outstanding
options and warrants). Based on the foregoing and giving effect to the
exercise of all outstanding options and warrants, the Purchaser believes that
the Minimum Condition will be satisfied if 5,393,879 Shares are validly
tendered and not withdrawn prior to the expiration of the Offer.
THE OFFER ALSO IS CONDITIONED UPON, AMONG OTHER THINGS, THE RECEIPT BY
PHONETEL OF FINANCING SUFFICIENT IN AMOUNT TO ENABLE IT AND THE PURCHASER TO
CONSUMMATE THE OFFER AND THE MERGER AND TO REFINANCE CERTAIN INDEBTEDNESS FOR
BORROWED MONEY OF THE COMPANY AND TO PAY RELATED FEES AND EXPENSES (THE
"FINANCING CONDITION"). SEE SECTION 10.
Pursuant to the terms of the Merger Agreement (as defined below), PhoneTel
has deposited into escrow with First Union National Bank of Georgia, as
escrow agent (the "Escrow Agent"), $5 million in cash (the "Escrow Amount")
to be held pending consummation of the Merger or earlier termination of the
Merger Agreement. In the event that the Merger Agreement is terminated solely
due to the failure of either (i) the Minimum Condition (provided at least
50.1% of the shares outstanding on a fully diluted basis have been validly
tendered and not withdrawn) or (ii) the Financing Condition (provided the
Company has fulfilled its obligations with respect to rendering assistance in
securing financing necessary to satisfy the Financing Condition), then the
Company shall be entitled to receive the entire Escrow Amount. In addition,
the Merger Agreement provides that PhoneTel will pay to the Company an amount
equal to the Company's reasonable legal fees and expenses if, among other
events, the Offer is not completed as a result of PhoneTel's failure to
satisfy the Financing Condition (provided the Company has fulfilled its
obligations with respect to rendering assistance in securing financing
necessary to satisfy the Financing Condition).
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 14, 1997 (the "Merger Agreement"), by and among PhoneTel, the
Purchaser and the Company pursuant to which, as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions to the Merger (as defined below), (i) in the event that PhoneTel,
the Purchaser and any other
<PAGE>
subsidiaries of PhoneTel acquire in the aggregate at least 90% of the Shares,
pursuant to the Offer or otherwise, then, at the election of PhoneTel, the
Company will be merged with and into the Purchaser and the separate corporate
existence of the Company will thereupon cease, or (ii) in the event that
PhoneTel does not so elect or does not acquire at least 90% of the Shares,
then the Purchaser will be merged with and into the Company and the separate
corporate existence of the Purchaser will cease. The merger, as effected
pursuant to clause (i) or (ii) of the immediately preceding sentence, is
referred to herein as the "Merger," and such of the Purchaser or the Company
as is the surviving corporation of the Merger is herein referred to as the
"Surviving Corporation." At the effective time of the Merger (the "Effective
Time"), each Share then outstanding (other than Shares held by PhoneTel, the
Purchaser or any other wholly owned subsidiary of PhoneTel and Shares held by
shareholders who perfect their dissenters' rights under Georgia law) will be
converted into the right to receive $12.85 in cash or any higher price per
Share paid in the Offer. The Merger Agreement is more fully described in
Section 11.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES.
J.C. Bradford & Co. LLC, the Company's financial advisor ("Bradford"), has
delivered to the Company's Board of Directors its written opinion to the
effect that the consideration to be received by the public shareholders of
the Company in the Offer and the Merger is fair to such shareholders from a
financial point of view as of the date of delivery of that opinion. Such
opinion is set forth in full as an exhibit to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") that is being mailed to shareholders of the Company.
The Merger Agreement provides that, except as otherwise provided therein,
following satisfaction or waiver, if permissible, of the conditions to the
Offer and subject to the terms and conditions thereof, the Purchaser will
accept for payment, in accordance with the terms of the Offer, all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as it is
permitted to do so pursuant to applicable law. The Offer will not remain open
following the time Shares are accepted for payment.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of shareholders of the Company of
the Merger Agreement, if required by applicable law in order to consummate
the Merger. See Section 12. Under the Georgia Business Corporation Code
("GBCC"), except as otherwise provided below, the affirmative vote of a
majority of the outstanding shares of Common Stock is required to approve the
Merger Agreement and the Merger.
Under Section 14-2-1104 of the GBCC, if a corporation owns at least 90% of
the outstanding shares of each class of another corporation, the corporation
holding such stock may merge such other corporation into itself without any
action or vote on the part of the board of directors or the shareholders of
such other corporation (a "short-form merger"). In the event that PhoneTel,
the Purchaser and any other subsidiaries of PhoneTel acquire in the aggregate
at least 90% of the Shares, pursuant to the Offer or otherwise, then, at the
election of PhoneTel, a short-form merger could be effected without any
approval of the Board of Directors or the shareholders of the Company,
subject to compliance with the provisions of Section 14-2-1104 of the GBCC.
Even if PhoneTel, the Purchaser and the other subsidiaries of PhoneTel do not
own 90% of the outstanding Shares following consummation of the Offer,
PhoneTel and the Purchaser could seek to purchase additional shares in the
open market or otherwise in order to reach the 90% threshold and employ a
short-form merger. The per share consideration paid for any Shares so
acquired may be greater or less than that paid in the Offer. PhoneTel does
not presently intend to effect a short-form merger, whether or not it
acquires 90% or more of the Shares.
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The Company has distributed one Right for each outstanding share of Common
Stock pursuant to a Shareholder Rights Agreement, dated as of July 25, 1995,
as amended as of March 13, 1997, between the Company and First Union National
Bank of North Carolina, as Rights Agent (as amended, the "Rights Agreement").
The Company has represented in the Merger Agreement that it has taken all
action which may be necessary under the Rights Agreement so that the
execution of the Merger Agreement and any amendments thereto and the
consummation of the transactions contemplated thereby will not cause (i)
PhoneTel and/or the Purchaser to become an Acquiring Person (as defined in
the Rights Agreement), (ii) a Distribution Date, a Stock Acquisition Date or
a Triggering Event (as such terms are defined in the Rights Agreement) to
occur, irrespective of the number of Shares acquired pursuant to the Offer,
and (iii) the Rights Agreement to be applicable to the Merger Agreement and
the transactions contemplated thereby, including the Offer and the Merger.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE OFFER.
THE OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer, the Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4 of this Offer to Purchase. The term "Expiration
Date" shall mean 12:00 Midnight, New York City time, on Wednesday, April 16,
1997, unless and until the Purchaser, in accordance with the terms of the
Merger Agreement, shall have extended the period of time for which the Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition, the satisfaction of the Financing Condition and the
expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder (the "HSR Act"). See Section 14. If such conditions
are not satisfied prior to the Expiration Date, the Purchaser reserves the
right (but shall not be obligated) to (i) decline to purchase any of the
Shares tendered and terminate the Offer, subject to the terms of the Merger
Agreement, (ii) waive any of the conditions to the Offer, to the extent
permitted by applicable law and the provisions of the Merger Agreement, and,
subject to complying with applicable rules and regulations of the Securities
and Exchange Commission (the "Commission"), purchase all Shares validly
tendered or (iii) subject to the terms of the Merger Agreement, extend the
Offer and, subject to the right of shareholders to withdraw Shares until the
Expiration Date, retain the Shares which will have been tendered during the
period or periods for which the Offer is extended.
Pursuant to the terms of the Merger Agreement, PhoneTel has deposited into
escrow with the Escrow Agent the Escrow Amount of $5 million in cash to be
held pending consummation of the Merger or earlier termination of the Merger
Agreement. In the event that the Merger Agreement is terminated solely due to
the failure of either (i) the Minimum Condition (provided at least 50.1% of
the shares outstanding on a fully diluted basis have been validly tendered
and not withdrawn) or (ii) the Financing Condition (provided the Company has
fulfilled its obligations with respect to rendering assistance in securing
financing necessary to satisfy the Financing Condition), then the Company
shall be entitled to receive the entire Escrow Amount. In addition, the
Merger Agreement provides that PhoneTel will pay to the Company an amount
equal to the Company's reasonable legal fees and expenses if, among other
events, the Offer is not completed as a result of PhoneTel's failure to
satisfy the Financing Condition (provided the Company has fulfilled its
obligations with respect to rendering assistance in securing financing
necessary to satisfy the Financing Condition).
Subject to the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving
oral or written notice of such extension to the Depositary and (ii) to amend
the Offer in any respect (including, without limitation, by decreasing or
increasing the consideration offered in the Offer (the "Offer Price") to
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holders of Shares and/or by decreasing the number of Shares being sought in
the Offer), by giving oral or written notice of such amendment to the
Depositary. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's rights to terminate the Offer as described in
Section 14. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement thereof, the announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date
in accordance with the public announcement requirements of Rule 14d-4(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Without limiting the obligation of the Purchaser under such Rule or the
manner in which the Purchaser may choose to make any public announcement, the
Purchaser currently intends to make announcements by issuing a release to the
Dow Jones News Service. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE SHARES, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Merger Agreement provides that the Purchaser will not amend or waive
the Minimum Condition and will not decrease the Offer Price or decrease the
number of Shares sought, or amend any other condition of the Offer in any
manner adverse to the holders of the Shares without the written consent of
the Company; provided, however, that if on the initial scheduled Expiration
Date of the Offer, which is twenty business days after the date the Offer is
commenced, all conditions to the Offer shall not have been satisfied or
waived, the Purchaser may, from time to time, in its sole discretion, extend
the Expiration Date for one or more periods totalling not more than thirty
days. Notwithstanding the foregoing, the Merger Agreement provides that (i)
the Purchaser may waive, in writing, the Minimum Condition without the
written consent of the Company in the event that at least 50.1% of the
outstanding Shares on a fully diluted basis are validly tendered and not
withdrawn on or prior to the Expiration Date and (ii) the Purchaser may
extend the Offer as it reasonably deems necessary to comply with any legal or
regulatory requirements, including the HSR Act. Furthermore, under the terms
of the Merger Agreement, if, immediately prior to the Expiration Date, the
Shares tendered and not withdrawn equal more than 75% but less than 90% of
the outstanding Shares, the Purchaser may extend the Offer for a period not
to exceed twenty business days, notwithstanding that all conditions to the
Offer may have been satisfied. The Merger Agreement further provides,
however, that in no event may the Offer be extended beyond the date of
termination of the Merger Agreement, and either party has the right to
terminate the Merger Agreement if the Offer is not completed by May 19, 1997.
Pursuant to the "highly confident" letter dated March 14, 1997 delivered to
PhoneTel by CIBC Wood Gundy Securities Corp. ("CIBC Wood Gundy"), CIBC Wood
Gundy's ability to consummate the sale or placement of the financing
described therein is likely to require an extension of the initial Expiration
Date. See Section 10.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the
Offer, the Depositary may retain tendered Shares on behalf of the Purchaser,
and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to withdrawal rights as described in Section 4.
However, the ability of the Purchaser to delay the payment for Shares which
the Purchaser has accepted for payment is limited by Rule 14e-l(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under
the Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information
concerning the Offer, other than a change in price or a change in percentage
of securities sought, will depend upon the facts and circumstances then
existing, including the relative materiality of the changed terms or
information. In a public release, the Commission has stated that in its view
an offer must remain open for a minimum period of time following a material
change in the terms of the Offer and that waiver of a material condition,
such as the Minimum Condition, is a material change in the terms of the
Offer. The release states than an offer should remain open for a
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minimum of five business days from the date a material change is first
published, sent or given to security holders and that, if material changes
are made with respect to information not materially less significant than the
offer price and the number of shares being sought, a minimum of ten business
days may be required to allow adequate dissemination and investor response.
The requirement to extend the Offer will not apply to the extent that the
number of business days remaining between the occurrence of the change and
the then-scheduled Expiration Date equals or exceeds the minimum extension
period that would be required because of such amendment. As used in this
Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act.
The Company has provided the Purchaser with the Company's shareholder
lists and security position listings for the purpose of disseminating the
Offer to holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed by the Purchaser to record holders of Shares and
will be furnished by the Purchaser to brokers, dealers, banks and similar
persons whose names, or the names of whose nominees, appear on the
shareholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the Purchaser will
accept for payment and will pay, promptly after the Expiration Date, for all
Shares validly tendered prior to the Expiration Date and not properly
withdrawn in accordance with Section 4. All determinations concerning the
satisfaction of such terms and conditions will be within the Purchaser's
discretion, which determinations will be final and binding. See Sections 1
and 14. The Purchaser expressly reserves the right, in its sole discretion,
to delay acceptance for payment of or payment for Shares in order to comply
in whole or in part with any applicable law, including, without limitation,
the HSR Act. Any such delays will be effected in compliance with Rule
14e-l(c) under the Exchange Act (relating to a bidder's obligation to pay the
consideration offered or return the securities deposited by or on behalf of
holders of securities promptly after the termination or withdrawal of such
bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or a timely Book-Entry Confirmation (as defined
below) with respect thereto), (ii) a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below), and (iii) any other documents required by the Letter of
Transmittal. The per Share consideration paid to any shareholder pursuant to
the Offer will be the highest per Share consideration paid to any other
shareholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice
to the Depositary of the Purchaser's acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from
the Purchaser and transmitting payment to tendering shareholders. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE
PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
If the Purchaser is delayed in its acceptance for payment of, or payment
for, Shares or is unable to accept for payment or pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer (including such rights as are set forth in Sections 1 and 14)
(but subject to compliance with Rule 14e-1(c) under the Exchange Act), the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to exercise, and duly exercise, withdrawal rights
as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering shareholder (or, in the case of Shares
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delivered by book-entry transfer of such Shares into the Depositary's account
at the Book-Entry Transfer Facility (as defined below) pursuant to the
procedures set forth in Section 3, such Shares will be credited to an account
maintained at the Book-Entry Transfer Facility), as promptly as practicable
after the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or in
part, to PhoneTel or to one or more direct or indirect wholly owned
subsidiaries of PhoneTel, the right to purchase Shares tendered pursuant to
the Offer, but any such transfer or assignment will not relieve the Purchaser
of its obligations under the Offer and will in no way prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in
the case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration
Date and either certificates for tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered pursuant
to the procedures for book-entry transfer set forth below (and a Book-Entry
Confirmation received by the Depositary), in each case, prior to the
Expiration Date or (ii) the tendering shareholder must comply with the
guaranteed delivery procedures set forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase.
Any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedure for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message, and any other required documents must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration
Date, or the tendering shareholder must comply with the guaranteed delivery
procedures described below. The confirmation of a book-entry transfer of
Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation."
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
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Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in the Book Entry Transfer Facility's systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) if such Shares are
tendered for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is
a participant in the Security Transfer Agent's Medallion Program, the New
York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution" and,
collectively, "Eligible Institutions"). In all other cases, all signatures on
Letters of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made, or certificates for
Shares not tendered or not accepted for payment are to be returned, to a
person other than the registered holder of the certificates surrendered, then
the tendered certificates for such Shares must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name or names
of the registered holders or owners appear on the certificates, with the
signatures on the certificates or stock powers guaranteed as aforesaid. See
Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect to)
such Shares, together with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents are received by the Depositary within
three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the National
Association of Securities Dealers Automated Quotation National Market (the
"NASDAQ National Market") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the
form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted
for payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder
and the Purchaser upon the terms and subject to the conditions of the Offer.
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Appointment. By executing the Letter of Transmittal as set forth above,
the tendering shareholder will irrevocably appoint designees of the
Purchaser, and each of them, as such shareholder's attorneys-in-fact and
proxies in the manner set forth in the Letter of Transmittal, each with full
power of substitution, to the full extent of such shareholder's rights with
respect to the Shares tendered by such shareholder and accepted for payment
by the Purchaser and with respect to any and all other Shares or other
securities or rights issued or issuable in respect of such Shares. All such
proxies will be considered coupled with an interest in the tendered Shares.
Such appointment will be effective when, and only to the extent that, the
Purchaser accepts for payment Shares tendered by such shareholder as provided
herein. Upon such appointment, all prior powers of attorney, proxies and
consents given by such shareholder with respect to such Shares or other
securities or rights will, without further action, be revoked and no
subsequent powers of attorney, proxies, consents or revocations may be given
by such shareholder (and, if given, will not be deemed effective). The
designees of the Purchaser will thereby be empowered to exercise all voting
and other rights with respect to such Shares and other securities or rights,
including, without limitation, in respect of any annual, special or adjourned
meeting of the Company's shareholders, actions by written consent in lieu of
any such meeting or otherwise, as they in their sole discretion deem proper.
The Purchaser reserves the right to require that, in order for Shares to be
deemed validly tendered, immediately upon the Purchaser's acceptance for
payment of such Shares, the Purchaser must be able to exercise full voting,
consent and other rights with respect to such Shares and other related
securities or rights, including voting at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of
Shares will be determined by the Purchaser, in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders of any Shares determined by it not to be
in proper form or the acceptance for payment of, or payment for which may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right, in its sole discretion, subject to the
provisions of the Merger Agreement, to waive any of the conditions of the
Offer or any defect or irregularity in the tender of any Shares of any
particular shareholder, whether or not similar defects or irregularities are
waived in the case of other shareholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating
thereto have been cured or waived. None of the Purchaser, PhoneTel, the
Depositary, the Information Agent, the Dealer Manager or any other person
will be under any duty to give notification of any defects or irregularities
in tenders or incur any liability for failure to give any such notification.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Withholding. In order to avoid "backup withholding" of U.S. federal
income tax on payments of cash pursuant to the Offer, a shareholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such shareholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such shareholder is not subject to backup
withholding. If a shareholder does not provide such shareholder's correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service may impose a penalty on such shareholder and payment of cash to such
shareholder pursuant to the Offer may be subject to backup withholding of
31%. All shareholders surrendering Shares pursuant to the Offer should
complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and
the Depositary). Certain shareholders (including, among others, all
corporations and certain foreign individuals and entities) are not subject to
backup withholding. Foreign shareholders, if exempt, should complete and sign
the main signature form and a Form W-8, Certificate of Foreign Status, a copy
of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 9 to the Letter of Transmittal.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn pursuant to the procedures set forth below at any time prior to
the Expiration Date and, unless theretofore accepted for payment and paid for
by the Purchaser pursuant to the Offer, may also be withdrawn at any time
after May 18, 1997.
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For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
and must specify the name of the person having tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name
of the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of
the account at the appropriate Book-Entry Transfer Facility to be credited
with the withdrawn Shares and otherwise comply with such Book-Entry Transfer
Facility's procedures. Withdrawals of tenders of Shares may not be rescinded,
and any Shares properly withdrawn will thereafter be deemed not validly
tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 3
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. None of the
Purchaser, PhoneTel, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of
any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer or the Merger will be a taxable transaction for U.S.
federal income tax purposes and also may be a taxable transaction under
state, local or foreign tax laws. In general, a shareholder who tenders
Shares in the Offer or receives cash in exchange for Shares in the Merger
will recognize gain or loss for federal income tax purposes equal to the
difference, if any, between the amount of cash received and the shareholder's
tax basis in the Shares sold. Gain or loss will be determined separately for
each block of Shares (i.e., Shares acquired at the same time and price)
exchanged pursuant to the Offer or the Merger. Such gain or loss generally
will be capital gain or loss if the Shares disposed of were held as capital
assets by the shareholder, and will be long-term capital gain or loss if the
Shares disposed of were held for more than one year at the date of sale.
A shareholder of Shares who perfects such shareholder's dissenter's
rights, if any, under the GBCC probably will recognize gain or loss at the
Effective Time in an amount equal to the difference between the "amount
realized" and such shareholder's adjusted tax basis of such Shares. For this
purpose, although there is no authority to this effect directly on point, the
amount realized generally should equal the trading value per share of the
Shares at the Effective Time. Ordinary interest income and/or capital gain
(or capital loss, assuming that the Shares were held as capital assets)
should be recognized by such shareholder at the time of actual receipt of
payment, to the extent that such payment exceeds (or is less than) the amount
realized at the Effective Time.
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the Offer and the Merger without regard to
the particular facts and circumstances of each shareholder of the Company and
is based on the provisions of the Internal Revenue Code of 1986, as amended,
Treasury Department Regulations issued pursuant thereto and published rulings
and court decisions in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect. Special tax consequences not
described herein may be applicable to certain shareholders subject to special
tax treatment (including, but not limited to, insurance companies, tax-exempt
organizations, financial institutions or broker dealers, foreign shareholders
and shareholders who have acquired their Shares pursuant to the exercise of
employee stock options or otherwise as compensation). ALL SHAREHOLDERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO SPECIFIC TAX EFFECTS APPLICABLE TO
THEM OF THE OFFER AND THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF
THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL AND FOREIGN TAX LAWS.
9
<PAGE>
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES. The Shares are
traded on the NASDAQ National Market under the symbol "CCIX". The following
table sets forth, for each of the calendar years indicated, the high and low
reported sales price per Share on the NASDAQ National Market based on
published financial sources.
<TABLE>
<CAPTION>
SALES PRICE
-----------------
HIGH LOW
-------- -------
<S> <C> <C>
1995
First Quarter ............................. 18 3/4 14 1/4
Second Quarter ............................ 18 7
Third Quarter ............................. 9 1/2 6 1/2
Fourth Quarter ............................ 7 4 1/4
1996
First Quarter ............................. 7 1/2 4 1/2
Second Quarter ............................ 8 1/2 6 5/8
Third Quarter ............................. 8 5
Fourth Quarter ............................ 8 3/8 6
1997
First Quarter (through March 19, 1997) .... 12 7 1/2
</TABLE>
On March 13, 1997, the last full trading day prior to the first public
announcement of the Purchaser's intention to commence the Offer, the last
reported sales price of the Shares on the NASDAQ National Market was $8 7/8
per Share. On March 19, 1997, the last full trading day prior to the
commencement of the Offer, the last reported sales price of the Shares on the
NASDAQ National Market was $10 3/4 per Share. SHAREHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company has advised the Purchaser that the Company has never declared
or paid any cash dividends on its capital stock.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and, depending upon the number of Shares so
purchased, could adversely effect the liquidity and market value of the
remaining Shares held by the public.
Stock Listing. Depending upon the number of Shares purchased pursuant to
the Offer, and the aggregate market value and per share price of any Shares
not purchased pursuant to the Offer, the Shares may no longer meet the
standards of the National Association of Securities Dealers, Inc. (the
"NASD") for continued inclusion in the NASDAQ National Market, which require
that an issuer have at least 200,000 publicly held shares with a market value
of at least $1 million, and have net tangible assets of at least $1 million,
$2 million or $4 million depending on profitability levels during the
issuer's four most recent fiscal years. If these standards are not met, the
Shares might nevertheless continue to be included in the NASD's NASDAQ Stock
Market with quotations published in the NASDAQ "additional list" or in one of
the "local lists." However, if the number of holders of Shares falls below
300, or if the number of publicly held Shares falls below 100,000, or if
there are not at least two market makers for the Shares, NASD rules provide
that the securities would no longer be "qualified" for NASDAQ Stock Market
reporting, and the NASDAQ Stock Market would cease to provide any quotations
as to the Shares. Shares held directly or indirectly by an officer or
director of the Company, or by any beneficial owner of more than 10% of the
Shares, ordinarily will not be considered as being publicly held for this
purpose. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the NASD requirements for continued
inclusion in the NASDAQ National Market or the NASDAQ Stock Market, and the
Shares are no longer included in any tier of the NASDAQ Stock Market, the
market for Shares could be adversely affected.
10
<PAGE>
In the event the Shares no longer meet the requirements of the NASD for
inclusion in the NASDAQ Stock Market, it is possible that the Shares would
continue to trade in the over-the-counter market and that price quotations
might still be available from other sources. The extent of the public market
for the Shares and availability of such quotations would, however, depend
upon the number of holders of Shares remaining at such time, the interest in
maintaining a market in the Shares on the part of securities firms, the
possible termination of registration under the Exchange Act, as described
below, and other factors.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996 (the "Company 1996 10-K"), as of September 19, 1996,
there were approximately 87 holders of record of Shares, not including
approximately 4,200,000 Shares held by 78 shareholders in "street name."
According to information provided by the Company, as of March 14, 1997, there
were 6,054,556 Shares outstanding. If, as a result of the purchase of Shares
pursuant to the Offer or otherwise, the Company does not meet the
requirements for continued inclusion in the NASDAQ National Market or the
NASDAQ Stock Market and the Shares are no longer included in the NASDAQ
National Market or the NASDAQ Stock Market, as the case may be, the market
for Shares could be adversely affected.
Exchange Act Registration. The Shares currently are registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares
are neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its shareholders and to the Commission and would
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement pursuant to Section 14(a) in connection with shareholders' meetings
and the related requirement of furnishing an annual report to shareholders
and the requirements of Rule 13e-3 under the Exchange Act with respect to
"going private" transactions, no longer applicable to the Company.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant
to Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be "margin securities" or be eligible for continued listing
on any stock exchange. The Purchaser may seek to cause the Company to apply
for termination of registration of the Shares under the Exchange Act as soon
after the completion of the Offer as the requirements for such termination
are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from the NASDAQ National Market and the
registration of the Shares under the Exchange Act will be terminated
following the consummation of the Merger.
Margin Regulations. The Shares presently are "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Shares would
no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be
used as collateral for loans made by brokers.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected
Financial Information," has been furnished by the Company or has been taken
from or based upon publicly available documents and records on file with the
Commission and other public sources. Neither PhoneTel nor the Purchaser
assumes responsibility for the
11
<PAGE>
accuracy or completeness of the information concerning the Company contained
in such documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of
any such information but which are unknown to PhoneTel or the Purchaser.
The Company owns and operates a network of over 26,000 coin-operated
payphones and inmate phones located in 41 states and the District of
Columbia. The Company's payphones are located where there is significant
demand for payphone services, such as convenience stores, service stations,
grocery stores, hospitals, shopping centers and truck stops. The payphones
generate significant revenue from both coin calls and "non-coin" calls, such
as collect calls, third-party calls and credit card or calling card calls.
The Company's inmate phones are installed in approximately 560 correctional
institutions, most of which are operated at the county and local government
level. All inmate phone revenue is generated from non-coin calls.
Substantially all of the Company's payphones and inmate phones are
electronically linked to the Company's centralized, proprietary management
information systems that permit the Company to monitor phone usage patterns
and address potential service and maintenance needs before they cause
significant downtime or come to the attention of the site operator or
correctional institution. The Company is a Georgia corporation with its
principal executive offices at 1150 Northmeadow Parkway, Roswell, Georgia
30076. The telephone number of the Company at such offices is (770) 442-7300.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company, excerpted or
derived from the Company's 1996 Annual Report to Shareholders and its
Quarterly Report on Form 10-Q for the quarter ended December 31, 1996, both
filed with the Commission pursuant to the Exchange Act.
More comprehensive financial information is included in such reports and
in other documents filed by the Company with the Commission. The following
summary is qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any related notes)
contained therein. Such reports and other documents may be inspected and
copies may be obtained from the Commission in the manner set forth below.
COMMUNICATIONS CENTRAL INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEARS ENDED
------------------------------ ----------------------------------
DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995 1994
-------------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales ........................... $ 53,159 $ 53,387 $105,340 $ 81,422 $46,124
Operating income (loss) ............. 2,943 4,778 (11,525) 7,828 5,519
Net income (loss) ................... (363) 1,276 (17,946) 3,172 2,779
Net income (loss) per share ......... (0.06) 0.21 (2.96) 0.52 0.57
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital ..................... $(11,490) 6,821 $ 1,464 $ 3,783
Total assets ........................ 111,327 125,500 109,728 122,967
Total liabilities ................... 83,775 79,753 83,191 78,692
Shareholders' equity ................ 27,552 45,747 26,537 44,275
</TABLE>
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated
to file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with
the Company is required to be disclosed in proxy statements distributed to
the Company's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Seven
12
<PAGE>
World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
website at http://www.sec.gov that contains reports, proxy statements and
other information. Such material should also be available for inspection at
the offices of the NASDAQ National Market, located at 1735 K Street, N.W.,
Washington, D.C. 20006-1506.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PHONETEL.
General. The Purchaser, a Georgia corporation and a wholly owned
subsidiary of PhoneTel, was organized for the purpose of acquiring the
Company and has conducted no activities unrelated to such purpose since its
organization. All of the issued and outstanding shares of capital stock of
the Purchaser are owned by PhoneTel. The principal executive offices of the
Purchaser are located at the principal executive offices of PhoneTel. The
telephone number of the Purchaser at such offices is (216) 241-2555.
PhoneTel believes it is the largest independent public pay telephone
operator in the United States. As of March 14, 1997, PhoneTel owned and
operated more than 41,000 installed public pay telephones, of which
approximately 95% are located in 20 states and approximately 57% are located
in Texas, Florida, California, Missouri and New Mexico. PhoneTel is an Ohio
corporation with its principal executive offices at 1127 Euclid Avenue,
Cleveland, Ohio 44115. Its telephone number at such address is (216)
241-2555.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to PhoneTel for the fiscal
years ended December 31, 1996, 1995 and 1994. Such financial information has
been taken from the periodic reports and other documents filed by PhoneTel
with the Commission. More comprehensive information concerning PhoneTel is
included in such reports and other documents and the financial information
that follows is qualified in its entirety by reference to such reports and
other documents and all of the financial information and notes contained
therein. Such reports and other documents may be inspected and copies may be
obtained from the Commission in the manner set forth below.
PHONETEL TECHNOLOGIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
----------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Revenues............................. $ 44,804 $18,718 $15,866
Operating income (loss).............. (6,129) (5,289) (1,314)
Net (loss) income.................... (26,649) (6,110) (1,695)
Income (loss) per common share ...... $ (5.29) $ (3.29) $ (1.35)
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital (deficit)............ $ 39,491 $(4,844)
Total assets......................... 159,770 28,917
Total liabilities.................... 136,357 19,206
Shareholders' equity (including
mandatorily redeemable preferred
stock).............................. 23,413 9,711
</TABLE>
The selected consolidated financial information set forth above is not
necessarily indicative of the current balance sheet data of PhoneTel or the
results of its operations going forward, due to, among other things, the
effect of financing, new Federal Communications Commission ("FCC") rules and
recent acquisitions, as follows:
13
<PAGE>
The financial information includes data for each of the following
acquisitions only from the date of such acquisition:
<TABLE>
<CAPTION>
NUMBER OF PAY
COMPANY ACQUISITION DATE TELEPHONES
- --------------------------------------- ------------------ ---------------
<S> <C> <C>
Alpha Pay Phone IV L.P.................. March 25, 1994 2,155
World Communications, Inc............... September 22, 1995 3,237
Public Telephone Corporation............ October 16, 1995 1,200
Paramount Communications Systems, Inc. March 15, 1996 2,528
International Pay Phones, Inc. ......... March 15, 1996 2,101
Payphones of America, Inc. ............. August 1, 1996 3,115
Amtel Communications Services .......... September 13, 1996 6,872
</TABLE>
In addition, such financial information does not reflect the following
acquisitions completed in 1997:
<TABLE>
<CAPTION>
NUMBER OF PAY
COMPANY ACQUISITION DATE TELEPHONES
- ------------------------------ ---------------- ---------------
<S> <C> <C>
Cherokee Communications, Inc. January 1, 1997 13,949
Texas Coinphone ............... January 14, 1997 1,250
Other acquisitions ............ January 1997 300
Other acquisitions ............ February 1997 391
</TABLE>
On December 18, 1996, PhoneTel completed the following two underwritten
public offerings: (i) the sale of 6,750,000 shares of common stock at a
price to the public of $3.00 per share, for estimated net proceeds to
PhoneTel of $17,982,500 (with an underwriters' allotment exercised for
1,012,500 shares, for additional net proceeds to the Company of
$2,825,000) and (ii) the sale of $125,000,000 aggregate principal amount
of its Senior Notes due 2006 ("Senior Notes") for net proceeds to PhoneTel
therefrom of $118,475,000. The net proceeds of such sales were used to
fund certain acquisitions completed in 1997, to repay certain indebtedness
of PhoneTel and to fund working capital and other general corporate
purposes. The historical Summary of Earnings Data set forth above with
respect to PhoneTel does not reflect the impact of these offerings.
Effective November 6, 1996, pursuant to recently promulgated FCC rules,
PhoneTel began to derive additional revenues from access it provides
callers to any carrier other than the presubscribed carrier (commonly
referred to as "dial-around" access). As of November 6, 1996, PhoneTel
began accruing gross dial-around revenues at the mandated rate of $45.85
per telephone per month, as compared with the rate of $6.00 per telephone
per month in place prior to November 6, 1996. Commencing October 7, 1997
and ending October 6, 1998, the $45.85 per telephone per month rate will
change to a rate of $0.35 per call. Thereafter, the dial-around rate will
be at a per-call rate equal to the local coin call rate. Additionally, the
states are required to deregulate the price of local phone calls, which
PhoneTel believes may result in an increase in the local coin call rate,
thereby generating additional revenues. However, there can be no assurance
as to the ultimate effect that the rules and policies adopted by the FCC
on its own or after any judicial review will have on PhoneTel's business,
results of operations or financial condition.
Certain Information. The name, citizenship, business address, present
principal occupation or employment and five-year employment history of each
of the directors and executive officers of the Purchaser and PhoneTel are set
forth in Schedule I hereto.
Except as set forth in this Offer to Purchase, neither the Purchaser or
PhoneTel, nor, to the best of their knowledge, any of the persons listed on
Schedule I, nor any associate or majority-owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire any Shares, and
neither the Purchaser nor PhoneTel nor, to the best of their knowledge, any
of the persons or entities referred to above, nor any of the respective
executive officers, directors or subsidiaries of any of the foregoing, has
effected any transaction in Shares during the past 60 days.
14
<PAGE>
Except as set forth in this Offer to Purchase, neither the Purchaser or
PhoneTel, nor, to the best of their knowledge, any of the persons listed on
Schedule I, has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including,
but not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss, or the giving or withholding of proxies. Except as
set forth in this Offer to Purchase, none of the Purchaser, PhoneTel, or any
of their respective affiliates, nor, to the best of their knowledge, any of
the persons listed on Schedule I, has had, since July 1, 1993, any business
relationships or transactions with the Company or any of its executive
officers, directors or affiliates that would require reporting under the
rules of the Commission. Except as set forth in this Offer to Purchase, since
July 1, 1993, there have been no contacts, negotiations or transactions
between the Purchaser, PhoneTel, any of their respective affiliates or, to
the best of their knowledge, any of the persons listed on Schedule I, and the
Company or its affiliates concerning a merger, consolidation or acquisition,
tender offer or other acquisition of securities, election of directors or a
sale or other transfer of a material amount of assets.
Available Information. PhoneTel is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated
to file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning PhoneTel's directors and officers, their
remuneration, options granted to them, the principal holders of PhoneTel's
securities and any material interests of such persons in transactions with
PhoneTel is required to be disclosed in proxy statements distributed to
PhoneTel's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection from the
offices of the Commission in the same manner as set forth with respect to
information concerning the Company in Section 8. Such material should also be
available for inspection at the offices of the American Stock Exchange, Inc.,
located at 86 Trinity Place, New York, NY 10006-1881.
10. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Purchaser to purchase all of the
Shares pursuant to the Offer and the Merger, to refinance certain
indebtedness for borrowed money of the Company, and to pay related fees and
expenses is expected to be approximately $175 million. THE OFFER IS
CONDITIONED UPON, AMONG OTHER THINGS, THE RECEIPT BY PHONETEL OF FINANCING
SUFFICIENT IN AMOUNT TO ENABLE IT AND THE PURCHASER TO CONSUMMATE THE OFFER
AND THE MERGER AND TO REFINANCE CERTAIN INDEBTEDNESS FOR BORROWED MONEY OF
THE COMPANY AND TO PAY RELATED FEES AND EXPENSES.
PhoneTel and the Purchaser anticipate that the funds required in
connection with the transactions contemplated by the Merger Agreement would
be obtained through the private placement of senior and/or subordinated debt
or equity securities of PhoneTel and through borrowings from commercial banks
or other lenders.
Pursuant to an Engagement Letter dated March 14, 1997 between CIBC Wood
Gundy and PhoneTel (the "Engagement Letter"), CIBC Wood Gundy has been
engaged to act as PhoneTel's lead underwriter, placement agent or initial
purchaser, as the case may be, in connection with, but not limited to, (i)
the proposed issuance to institutional investors of up to $175 million
aggregate principal amount of high yield debt securities of PhoneTel,
preferred stock or private common equity (the "Securities"), (ii) the
obtaining of a new senior credit facility of up to $100 million (the "Senior
Financing") and (iii) the issuance of up to $125 million of additional high
yield debt or equity securities to finance other potential acquisitions (the
"Future Financing" and, together with the Securities and the Senior
Financing, the "Financing"). The net proceeds to PhoneTel from the Securities
and the Senior Financing principally will be used to finance the Offer and
the Merger, to repay existing indebtedness of the Company, for general
corporate purposes, including other acquisitions, and to pay related fees and
expenses. This Offer to Purchase does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities to be placed by CIBC
Wood Gundy.
In addition, CIBC Wood Gundy has delivered to PhoneTel a letter dated
March 14, 1997 stating that, based on current market conditions, CIBC Wood
Gundy is "highly confident" of its ability, as lead
15
<PAGE>
underwriter, placement agent or initial purchaser, to sell or place up to
$175 million of senior and/or subordinated debt or equity securities of
PhoneTel to finance the acquisition of the Company, subject to the terms and
conditions set forth in such letter. Pursuant to such letter, CIBC Wood
Gundy's ability to consummate such sale or placement of such financing is
subject to: (i) the terms and conditions of such financing and all related
documentation, as well as the terms and structure of the transaction, all
being reasonably satisfactory in form and substance to CIBC Wood Gundy and
its counsel, (ii) CIBC Wood Gundy's satisfaction with, and completion of
financial, business and legal due diligence regarding PhoneTel and the
Company, including access to certain non-public information, (iii) there not
having become known or, since December 31, 1996, occurred any material
adverse change in the business, condition (financial or otherwise), results
of operations, assets, liabilities or prospects of PhoneTel or the Company,
(iv) the receipt of all necessary governmental, regulatory, and third-party
approvals and consents, including from other lenders to PhoneTel in
connection with such financing and the transaction, on terms satisfactory to
CIBC Wood Gundy, (v) CIBC Wood Gundy having a reasonable and customary time
and terms to market such financing, as contemplated by the Engagement Letter,
which is likely to require an extension of the initial Expiration Date and
(vi) at the time such financing is consummated, there being no legal,
regulatory, financial or other restrictions on PhoneTel's ability to promptly
consummate the transaction. The foregoing description of the CIBC Wood Gundy
"highly confident" letter is qualified in its entirety by reference to such
letter, a copy of which has been filed with the Commission as an exhibit to
the Schedule 14D-1.
Pursuant to the Engagement Letter, in consideration for the services
rendered by CIBC Wood Gundy in connection with the Financing, PhoneTel has
agreed to pay to CIBC Wood Gundy as follows: (i) a cash placement fee of 3.5%
of the purchase price of high yield debt securities issued in the Financing,
(ii) a cash placement fee of 4.0% of the liquidation value of any preferred
equity issued in the Financing, subject to certain exceptions, (iii) a cash
placement fee of 6.0% of the gross proceeds from the sale or placement of
private common equity issued in the Financing, subject to certain exceptions,
(iv) a cash placement fee of 2.5% of the committed amount of the Senior
Financing, subject to certain exceptions and (v) a cash advisory fee of
$625,000 for financial advisory services provided in connection with the
solicitation of the Noteholder Consents (as defined below). Moreover, under
the terms of the Engagement Letter, if PhoneTel completes the Offer and the
Merger, PhoneTel will pay CIBC Wood Gundy a minimum cash fee of $1 million,
which shall be credited against any fees due pursuant to clauses (i), (ii)
(iii) or (iv) above. PhoneTel also has agreed to reimburse CIBC Wood Gundy
for certain fees and expenses and to indemnify it against certain claims
arising out of the services provided thereunder.
The obligations of CIBC Wood Gundy under the Engagement Letter are to use
its best efforts to place the Financing. There is no obligation on the part
of CIBC Wood Gundy to purchase any of the instruments comprising the
Financing under either the Engagement Letter or the "highly confident"
letter. The placement obligations of CIBC Wood Gundy are subject to
satisfactory completion of a due diligence investigation by CIBC Wood Gundy
and its counsel, market conditions and the form and terms of the instruments
comprising the Financing, the offering materials and all related documents
being mutually acceptable to PhoneTel and CIBC Wood Gundy.
The foregoing discussion of the Engagement Letter is qualified in its
entirety by reference to the Engagement Letter, a copy of which has been
filed with the Commission as an exhibit to the Schedule 14D-1.
As currently contemplated, completion of the Financing would require
PhoneTel to obtain the consent of the holders of at least a majority of the
outstanding aggregate principal amount of the Senior Notes to amend the
Indenture dated as of December 18, 1996 with respect to the Senior Notes to
modify the limitation contained therein on the incurrence by PhoneTel of
additional indebtedness (the "Noteholder Consents").
It is anticipated that borrowings incurred by PhoneTel in connection with
the Financing will be repaid from internally generated funds of PhoneTel
including, after the Merger, funds obtained from the Company, and/or
refinanced in the private or public markets.
16
<PAGE>
THE OFFER IS SUBJECT, AMONG OTHER THINGS, TO THE FINANCING CONDITION.
THERE CAN BE NO ASSURANCE THAT (I) THE NOTEHOLDER CONSENTS WILL BE OBTAINED
OR (II) PHONETEL OR THE PURCHASER WILL SUCCEED IN COMPLETING THE FINANCING,
WHETHER THROUGH CIBC WOOD GUNDY OR OTHERWISE.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS
The following description was prepared by PhoneTel and the Company.
Information about the Company was provided by the Company and neither the
Purchaser nor PhoneTel takes any responsibility for the accuracy or
completeness of any information regarding meetings or discussions in which
PhoneTel or its representatives did not participate.
Background of the Offer. PhoneTel believes that there is a significant
opportunity to consolidate the highly fragmented independent segment of the
public pay telephone industry. Selective acquisitions enable PhoneTel to
expand its geographic presence and further its strategy of clustering its
public pay telephones more rapidly than with new installations. Accordingly,
PhoneTel maintains an active acquisition program to acquire public pay
telephones that are in, or contiguous to, its existing markets or that can
form the basis of a new cluster. Members of PhoneTel's senior management
routinely engage in investigating opportunities to meet PhoneTel's objective
to grow, in part, through additional acquisitions, thereby achieving
economies of scale while implementing cost savings. See Section 9.
In July 1996, Peter G. Graf, PhoneTel's Chairman and Chief Executive
Officer, and Tammy L. Martin, Executive Vice President, Chief Administrative
Officer and General Counsel of PhoneTel, met Rodger L. Johnson, President and
Chief Executive Officer of the Company, at the Company's headquarters in
Roswell, Georgia. Messrs. Graf and Johnson met again the following week. At
such meetings, the parties discussed the public pay telephone industry
generally, PhoneTel's acquisition strategy and, in general terms, the
potential benefits of a strategic relationship between PhoneTel and the
Company, including the possibility of combining the companies. Following
these discussions, PhoneTel and the Company entered into the Confidentiality
Agreement dated July 25, 1996, a copy of which is filed as an exhibit to the
Schedule 14D-1, pursuant to which, among other things, the parties agreed
that any non-public information made available to the other would be held in
strict confidence. In addition, under the Confidentiality Agreement, each
party agreed not to purchase or sell securities of each other based on such
information until such information is made, or becomes, publicly available.
No confidential information was exchanged as the result of such meetings.
There were no further substantive discussions between PhoneTel and the
Company until February 1997.
In January 1997, PhoneTel's senior management and its advisors reviewed
the status of their internal discussions regarding the Company and considered
preliminary value ranges for the Shares in light of a possible combination.
PhoneTel's senior management concluded that, given the Company's prospects
and the outlook for its financial performance, and the potential benefits of
consolidation, PhoneTel should pursue further discussions with the Company
regarding a possible combination. On February 4, 1997, at a meeting of the
Board of Directors of PhoneTel, senior management of PhoneTel presented and
discussed the potential benefits of a strategic relationship between PhoneTel
and the Company.
On February 19, 1997, Mr. Graf and Nickey B. Maxey, Vice Chairman of
PhoneTel, accompanied by legal counsel for PhoneTel and representatives of
CIBC Wood Gundy and Southcoast, met with Mr. Johnson, C. Douglas McKeever,
Chief Financial Officer of the Company, and counsel for the Company to
discuss a potential transaction between the Company and PhoneTel as well as,
in general terms, the Financing. At that time, the management participants
from PhoneTel indicated that it would be prepared to enter into a merger
agreement, commence a tender offer and complete a transaction in the range of
$11.50 per Share. PhoneTel also indicated the importance to PhoneTel of
securing non-competition agreements from key employees of the Company,
particularly Mr. Johnson, and the willingness of PhoneTel to pay up to $1.5
million for such agreements.
On February 26, 1997, at a regularly scheduled meeting, the Company's
Board of Directors first considered PhoneTel's proposal in light of an array
of other strategic alternatives, and directed the Company's management to
seek an increase in the price to be paid.
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On February 28, 1997, counsel for PhoneTel, on behalf of PhoneTel, sent a
draft agreement and plan of merger to senior management of the Company and
its counsel. During the period from February 19, 1997 through and including
March 7, 1997, representatives of PhoneTel and the Company, including legal
counsel, met by telephone conference on several occasions to discuss the
price at which a merger might be approved by PhoneTel and the Company and to
negotiate the terms of the draft agreement and plan of merger.
On March 7, 1997, PhoneTel entered into an engagement letter with CIBC
Wood Gundy, and on March 9, 1997, CIBC Wood Gundy delivered to PhoneTel a
"highly confident" letter. Such engagement letter and "highly confident"
letter have been superseded by the Engagement Letter and the "highly
confident" letter of CIBC Wood Gundy dated March 14, 1997, each of which has
been filed as an exhibit to the Schedule 14D-1. See Section 10.
On March 10, 1997, Messrs. Graf, Johnson and McKeever, together with
counsel for PhoneTel and the Company, met in Atlanta, Georgia. At that
meeting, Mr. Graf indicated that an acquisition by PhoneTel would be subject
to a financing condition. After further discussion, Mr. Graf indicated that
PhoneTel would be willing to pay $12.85 per Share to acquire the Company, to
place $3 million in escrow to be paid to the Company in the event that such
financing condition was not satisfied and to pay $2 million for the
non-competition agreements.
On March 9 and 11, 1997, the Company's Board of Directors held telephonic
meetings to further consider the proposed merger agreement and terms of the
offer and the merger, and the related transactions. In response to the
Board's concern regarding the uncertainty created by the financing condition
and PhoneTel's desire to have a minimum condition greater than a majority of
the outstanding shares on a fully-diluted basis, the Board instructed Mr.
Johnson to seek an increase in the escrow deposit and to negotiate for the
earliest possible date by which the tender offer could be completed. After
further discussions between representatives of PhoneTel and the Company,
PhoneTel agreed to increase the amount to be placed in escrow to $5 million,
and to complete the tender offer by May 19, 1997.
On March 12, 1997, the Board of Directors of PhoneTel held a telephonic
meeting to consider the proposed terms of the Merger Agreement, including the
Offer and the Merger, and the related transactions, including the Financing.
At such meeting, after a full discussion, the Board of Directors of PhoneTel
approved the Merger Agreement, the Offer and the Merger and the transactions
contemplated thereby, including the Financing.
At meetings of the Board of Directors of the Company held on March 13 and
14, 1997, the Board of Directors unanimously approved the Merger Agreement,
the Offer and the Merger and determined that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company's shareholders,
and unanimously recommended that shareholders of the Company accept the Offer
and tender their Shares. On March 14, Bradford delivered to the Company's
Board of Directors its written opinion to the effect that the consideration
to be received by the public shareholders of the Company in the Offer and the
Merger is fair to such shareholders from a financial point of view as of the
date of such meeting. The opinion of Bradford is set forth in full as an
exhibit to the Company's Schedule 14D-9 which is being mailed to shareholders
of the Company. Shareholders of the Company are urged to read that opinion in
its entirety.
Following the approval of the respective Boards of Directors, on March 14,
1997, PhoneTel, the Purchaser and the Company executed and delivered the
Merger Agreement.
On March 20, 1997, the Purchaser and PhoneTel commenced the Offer.
Purpose of the Offer and the Merger. The purpose of the Offer, the Merger
and the Merger Agreement is to enable PhoneTel to acquire control of, and the
entire equity interest in, the Company. The Offer is being made pursuant to
the Merger Agreement and is intended to increase the likelihood that the
Merger will be effected. The purpose of the Merger is to acquire all
outstanding Shares not purchased pursuant to the Offer. The transaction is
structured as a merger in order to ensure the acquisition by PhoneTel and its
affiliates, including the Purchaser, of all the outstanding Shares. Upon
consummation of the Merger, the Company will become (or will be merged into)
a wholly owned subsidiary of PhoneTel.
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If the Merger is consummated, PhoneTel's common equity interest in the
Company would increase to 100% and PhoneTel would be entitled to all benefits
resulting from that interest. These benefits include complete management with
regard to the future conduct of the Company's business and any increase in
its value. Similarly, PhoneTel will also bear the risk of any losses incurred
in the operation of the Company and any decrease in the value of the Company.
Shareholders of the Company who sell their Shares in the Offer will cease
to have any equity interest in the Company and to participate in its earnings
and any future growth. If the Merger is consummated, the shareholders will no
longer have an equity interest in the Company and instead will have only the
right to receive cash consideration pursuant to the Merger Agreement or to
exercise statutory dissenters' rights under Georgia law. See Section 12.
Similarly, the shareholders of the Company will not bear the risk of any
decrease in the value of the Company after selling their Shares in the Offer
or the subsequent Merger.
The primary benefits of the Offer and the Merger to the shareholders of
the Company are that such shareholders are being afforded an opportunity to
sell all of their Shares for cash at a price which represents a premium of
approximately 44.7% over the closing market price of the Shares on the last
full trading day prior to the initial public announcement of the Offer, and a
more substantial premium over recent historical trading prices.
Merger Agreement
The following is a summary of certain provisions of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement
which is incorporated herein by reference and a copy of which has been filed
with the Commission as an exhibit to the Schedule 14D-1. The Merger Agreement
may be examined and copies may be obtained at the places and in the manner
set forth in Section 9 of this Offer to Purchase.
THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement provides that,
without the written consent of the Company, the Purchaser will not decrease
the Offer Price, decrease the number of Shares sought in the Offer, amend or
waive the Minimum Condition, or amend any condition of the Offer in a manner
adverse to the holders of Shares, except that (i) PhoneTel or the Purchaser
can waive the Minimum Condition without the written consent of the Company in
the event that at least 50.1% of the Shares outstanding on a fully diluted
basis are validly tendered and not withdrawn on or prior to the expiration of
the Offer and (ii) if on the initial scheduled expiration date of the Offer
all conditions to the Offer shall not have been satisfied or waived, the
Purchaser may, from time to time, in its sole discretion, extend the
expiration date for one or more periods totalling not more than thirty days
or as may reasonably be necessary to comply with any legal or regulatory
requirements. The Merger Agreement provides that if, immediately prior to the
expiration date of the Offer, as it may be extended, the Shares tendered and
not withdrawn pursuant to the Offer equal more than 75% of the outstanding
Shares but less than 90%, the Purchaser may extend the Offer for a period not
to exceed 20 business days. Notwithstanding the foregoing, the Merger
Agreement provides that the Offer may not be extended beyond the date of
termination of the Merger Agreement pursuant to the terms thereof.
THE MERGER. Following the consummation of the Offer, the Merger Agreement
provides that, subject to the terms and conditions thereof, at the election
of PhoneTel and in accordance with Georgia law, in the event that PhoneTel
shall acquire, directly or indirectly, at least 90% of the outstanding Shares
of the Company, at the Effective Time the Company shall be merged with and
into the Purchaser and, as a result of the Merger, the separate corporate
existence of the Company shall cease and the Purchaser shall continue as the
surviving corporation (sometimes referred to as the "Purchaser Surviving
Corporation" or the "Surviving Corporation"). In the event that PhoneTel does
not so elect or does not acquire at least 90% of the Shares, then at the
Effective Time the Purchaser will be merged with and into the Company and, as
a result of the Merger, the separate corporate existence of the Purchaser
will cease and the Company will continue as the surviving corporation
(sometimes referred to as the "Company Surviving Corporation" or the
"Surviving Corporation").
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The respective obligations of PhoneTel and the Purchaser, on the one hand,
and the Company, on the other hand, to effect the Merger are subject to the
satisfaction on or prior to the Closing Date (as defined in the Merger
Agreement) of each of the following conditions, any and all of which may be
waived, in whole or in part, jointly by PhoneTel and the Company to the
extent permitted by applicable law: (i) the Merger Agreement shall have been
approved and adopted by the requisite vote of the holders of Shares, if
required by applicable law, in order to consummate the Merger; (ii) no
statute, rule or regulation shall have been enacted or promulgated by any
governmental authority which prohibits the consummation of the Merger, and
there shall be no order or injunction of a court of competent jurisdiction in
effect precluding the consummation of the Merger; (iii) PhoneTel, the
Purchaser or their affiliates shall have purchased Shares pursuant to the
Offer, unless such failure to purchase is a result of a breach of PhoneTel's
and the Purchaser's obligations under the Merger Agreement; and (iv) the
applicable waiting period under the HSR Act shall have expired or been
terminated.
In addition, the obligations of PhoneTel and the Purchaser to consummate
the Merger are further subject to the fulfillment of the condition (which may
be waived by PhoneTel and the Purchaser) that the Company comply with its
obligations regarding the Company's or any of its Subsidiaries' outstanding
options and warrants, stock option plans and any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any of its Subsidiaries, as
more fully described below.
At the Effective Time of the Merger (i) each issued and outstanding Share
(other than Shares that are owned by the Company as treasury stock, any
Shares owned by PhoneTel, the Purchaser or any other wholly owned Subsidiary
of PhoneTel, or any Shares which are held by shareholders exercising
dissenters' rights under Georgia law) will be converted into the right to
receive the price per share paid pursuant to the Offer and (ii) each issued
and outstanding share of the common stock, par value $.01 per share, of the
Purchaser will be converted into one share of common stock of the Company
Surviving Corporation or shall remain outstanding and constitute shares of
the Purchaser Surviving Corporation, as the case may be, and shall constitute
the only outstanding shares of capital stock of the Surviving Corporation.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that
promptly after the purchase by the Purchaser of at least a majority of the
outstanding Shares, PhoneTel shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Company's Board of
Directors as is equal to the product of the total number of directors on the
Company's Board of Directors (giving effect to the directors designated by
PhoneTel) multiplied by the percentage that the number of Shares so accepted
for payment bears to the total number of Shares then outstanding. The Company
will, upon request of the Purchaser, promptly use its best reasonable
efforts, including amending its By-laws if necessary, either to increase the
size of the Company's Board of Directors or secure the resignations of such
number of its incumbent directors, or both, as is necessary to enable
PhoneTel's designees to be elected to the Company's Board of Directors. In
the event that PhoneTel's designees are elected to the Company's Board of
Directors, until the Effective Time, the Company's Board of Directors will
have at least three directors who were directors on the date of the Merger
Agreement and who would constitute Continuing Directors for purposes of
Article VII of the Company's Articles of Incorporation. The Company's
obligation to appoint PhoneTel's designees to the Company's Board of
Directors is subject to compliance with Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder.
SHAREHOLDERS' MEETING. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call,
give notice of, convene and hold a special meeting of its shareholders as
promptly as practicable following the acceptance for payment and purchase of
Shares by the Purchaser pursuant to the Offer for the purpose of considering
and taking action upon the approval of the Merger and the adoption of the
Merger Agreement. The Merger Agreement provides that the Company will, if
required by applicable law in order to consummate the Merger, prepare and
file with the Commission a preliminary proxy or information statement (the
"Proxy Statement") relating to the Merger and the Merger Agreement and use
its best efforts (i) to obtain and furnish the information required to be
included by the Commission in the Proxy Statement and, after consultation
with PhoneTel, to respond promptly to any comments made by the Commission
with respect to the preliminary Proxy Statement and cause a definitive Proxy
Statement to be mailed to its shareholders, provided that no
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amendment or supplement to the Proxy Statement will be made by the Company
without consultation with PhoneTel and its counsel and (ii) to obtain the
necessary approvals of the Merger and the Merger Agreement by its
shareholders. If the Purchaser acquires at least a majority of the
outstanding Shares, the Purchaser will have sufficient voting power to
approve the Merger, even if no other shareholder votes in favor of the
Merger. The Company has agreed to include in the Proxy Statement the
recommendation of the Company's Board of Directors that shareholders of the
Company vote in favor of the approval of the Merger and the adoption of the
Merger Agreement. PhoneTel has agreed that it will vote, or cause to be
voted, all of the Shares then owned by it, the Purchaser or any of its other
Subsidiaries and affiliates in favor of the approval of the Merger and the
adoption of the Merger Agreement.
The Merger Agreement provides that in the event that PhoneTel, the
Purchaser or any other Subsidiary of PhoneTel acquires at least 90% of the
outstanding Shares, pursuant to the Offer or otherwise, PhoneTel, the
Purchaser and the Company will, at the request of PhoneTel and subject to the
terms of the Merger Agreement, take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of shareholders of the Company, in accordance
with Georgia law.
OPTIONS AND WARRANTS. Pursuant to the Merger Agreement, at the Effective
Time, each holder of then outstanding options (collectively, the "Options")
or warrants (collectively, the "Warrants") to purchase Shares granted by the
Company, whether or not then exercisable, will be entitled to receive, and
will receive, in settlement of each Option or Warrant an amount in cash equal
to the difference between the Offer Price and the per Share exercise price of
such Option or Warrant. Prior to the Effective Time, the Company shall use
its best efforts to obtain all necessary consents or releases from holders of
outstanding Options or Warrants, to the extent required by the terms of the
plans or agreements governing such Options or Warrants, as the case may be,
or pursuant to the terms of any Option or Warrant granted thereunder. Except
as may be otherwise agreed to by PhoneTel or the Purchaser and the Company,
the Company shall take all action necessary to ensure that: (i) the Company's
1991 Stock Option Plan, 1993 Stock Option Plan, as amended and restated as of
October 11, 1995, and the Stock Option Plan for Directors (collectively, the
"Stock Option Plans") shall have been terminated as of the Effective Time and
the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of
the Company or any of its Subsidiaries shall be cancelled as of the Effective
Time, and (ii) following the Effective Time, (a) no participant in any Stock
Option Plan or other plans, programs or arrangements shall have any right
thereunder to acquire equity securities of the Company, the Surviving
Corporation or any Subsidiary thereof and all such plans shall have been
terminated, and (b) the Company will not be bound by any convertible
security, option, warrant, right or agreement which would entitle any person
to own any capital stock of the Company, the Surviving Corporation or any
Subsidiary thereof.
INTERIM OPERATIONS; COVENANTS. Pursuant to the Merger Agreement, the
Company has agreed that, except as expressly contemplated or provided by the
Merger Agreement or agreed to in writing by PhoneTel, prior to the time the
designees of the Purchaser constitute a majority of the Company's Board of
Directors (the "Appointment Date"), the business of the Company and its
Subsidiaries will be conducted only in the ordinary and usual course and to
the extent consistent therewith, each of the Company and its Subsidiaries
will use its best efforts to preserve its business organization intact and
maintain its existing relations with customers, suppliers, employees,
creditors and business partners, and (a) the Company will not, directly or
indirectly, (i) issue, sell, transfer or pledge or agree to sell, transfer or
pledge any treasury stock of the Company or any capital stock of any of its
Subsidiaries beneficially owned by it, except upon the exercise of Warrants
or Options or other rights to purchase shares of Common Stock outstanding on
the date of the Merger Agreement; (ii) amend its Articles of Incorporation or
By-laws or similar organizational documents; or (iii) split, combine or
reclassify the outstanding Shares or any outstanding capital stock of any of
the Subsidiaries of the Company; and (b) neither the Company nor any of its
Subsidiaries shall (i) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock; (ii) issue, sell, pledge, dispose of or encumber any additional shares
of, or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any
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class of the Company or its Subsidiaries, other than Shares reserved for
issuance on the date of the Merger Agreement pursuant to the exercise of
Warrants or Options outstanding on the date of the Merger Agreement; (iii)
transfer, lease, license, sell, or dispose of any assets, or incur any
indebtedness or other liability other than in the ordinary course of
business, or mortgage, pledge or encumber any assets or modify any
indebtedness; (iv) redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock; (v) grant any increase in the
compensation payable or to become payable by the Company or any of its
Subsidiaries to any of its executive officers or adopt any new or amend or
otherwise increase or accelerate the payment or vesting of the amounts
payable or to become payable under any existing bonus, incentive
compensation, deferred compensation, severance, profit sharing, stock option,
stock purchase, insurance, pension, retirement or other employee benefit
plan, agreement or arrangement; (vi) enter into any employment or severance
agreement with or, except in accordance with the existing written policies of
the Company, grant any severance or termination pay to any officer, director
or employee of the Company or any of its Subsidiaries; (vii) permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to PhoneTel; (viii) enter into any
contract or transaction relating to the purchase of assets other than in the
ordinary course of business; (ix) change any of the accounting methods used
by it unless required by generally accepted accounting principles ("GAAP"),
make any material tax election, change any material tax election already
made, adopt any material tax accounting method, change any material tax
accounting method unless required by GAAP, enter into any closing agreement,
settle any tax claim or assessment or consent to any tax claim or assessment
or any waiver of the statute of limitations for any such claim or assessment;
or (x) enter into any agreement with respect to the foregoing or take any
action with the intent of causing any of the conditions to the Offer set
forth in Section 14 not to be satisfied.
Pursuant to the Merger Agreement, the Company has agreed to provide such
assistance as PhoneTel may reasonably request in connection with the securing
of funds sufficient for PhoneTel and Purchaser to consummate the transactions
contemplated by the Merger Agreement including, without limitation, using its
reasonable best efforts to (i) make available on a timely basis such
financial information of the Company and its Subsidiaries as may reasonably
be required in connection with any such financing, (ii) obtain customary
"cold comfort" letters and updates thereof from the Company's independent
certified public accountants and customary opinion letters from the Company's
attorneys, and (ii) make available representatives of the Company and its
accountants and attorneys in connection with any such financing, including
for purposes of due diligence and marketing efforts related thereto.
NO SOLICITATION. Pursuant to the Merger Agreement, the Company has agreed
that neither the Company nor any of its Subsidiaries will (and the Company
and its Subsidiaries will cause their respective officers, directors,
employees, representatives and agents, including, but not limited to,
investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation,
partnership, person or other entity or group (other than PhoneTel, any of its
affiliates or representatives) concerning any proposal or offer to acquire
all or a substantial part of the business and properties of the Company or
any of its Subsidiaries or any capital stock of the Company or any of its
Subsidiaries, whether by merger, tender offer, exchange offer, sale of assets
or similar transactions involving the Company or any Subsidiary, division or
operating or principal business unit of the Company (an "Acquisition
Proposal"), except that the Merger Agreement does not prohibit the Company
and the Company's Board of Directors from (i) taking and disclosing to the
Company's shareholders a position with respect to a tender or exchange offer
by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, or (ii) making such disclosure to the Company's shareholders
as, in the good faith judgment of the Board, after receiving advice from
outside counsel, is required under applicable law, provided that, except as
permitted under the terms of the Merger Agreement, neither the Company's
Board of Directors nor any committee thereof shall approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, or enter into any
agreement with respect to any Acquisition Proposal or withdraw or modify, or
propose to withdraw or modify, in a manner adverse to PhoneTel or the
Purchaser, the approval or recommendation of the Company's Board of
Directors, or any such committee thereof, of the Offer, the Merger Agreement
or the Merger. The Company also agreed to immediately cease any existing
activities, discussions or negotiations with any parties conducted prior to
the date of the Merger Agreement with respect to any of the foregoing.
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The Merger Agreement provides that, notwithstanding the foregoing, the
Company, prior to the acceptance of Shares pursuant to the Offer, may furnish
information concerning its business, properties or assets to any corporation,
partnership, person or other entity or group pursuant to appropriate
confidentiality agreements, and may negotiate and participate in discussions
and negotiations with such entity or group concerning an Acquisition Proposal
if (i) such entity or group has, on an unsolicited basis, submitted a bona
fide written proposal to the Company relating to any such transaction which
the Company's Board of Directors determines in good faith, after receiving
advice from a nationally recognized investment banking firm, represents a
superior transaction to the Offer and the Merger and which the Company's
Board of Directors determines in good faith can be fully financed and (ii) in
the opinion of the Company's Board of Directors, only after receipt of advice
from outside legal counsel, the failure to provide such information or access
or to engage in such discussions or negotiations could reasonably be expected
to cause the Company's Board of Directors to violate its fiduciary duties to
the Company's shareholders under applicable law (an Acquisition Proposal
which satisfies clauses (i) and (ii) above is referred to in the Merger
Agreement as a "Superior Proposal"). The Company will, within one business
day following receipt of a Superior Proposal, notify PhoneTel of the receipt
of the same. The Company will promptly provide to PhoneTel any material
non-public information regarding the Company provided to any other party
which was not previously provided to PhoneTel. At any time after two business
days following notification to PhoneTel of its intent to do so (which
notification shall include the identity of the bidder and the material terms
and conditions of the proposal) and if permitted to do so pursuant to the
terms of the Merger Agreement, the Company's Board of Directors may withdraw
or modify its approval or recommendation of the Offer.
In the event of a Superior Proposal which (i) is to be paid entirely in
cash and (ii) is not subject to any financing condition or contingency, the
Company may enter into an agreement with respect to such Superior Proposal no
sooner than four days after giving PhoneTel written notice of its intention
to enter into such agreement; provided that the Purchaser or PhoneTel has
not, prior to the expiration of such four-day period, advised the Company of
its intention to raise the Offer Price to match such Superior Proposal and
has waived the Financing Condition, unless the sole reason for the Financing
Condition not to be waived is the failure of the Company to satisfy its
obligations under the Merger Agreement to render assistance in securing
financing. Upon expiration of such four-day period without such action by the
Purchaser or PhoneTel, the Company may enter into an agreement with respect
to such Superior Proposal (with the bidder and on terms no less favorable
than those specified in such notification), provided it shall concurrently
with entering into such agreement pay or cause to be paid to PhoneTel an
amount equal to the greater of $2,000,000 or an amount equal to the actual,
reasonable and reasonably documented out-of-pocket fees and expenses incurred
by PhoneTel and the Purchaser in connection with the Offer, the Merger, the
Merger Agreement, the consummation of the transactions contemplated under the
Merger Agreement and the financing therefor, provided that in no event shall
the Company be obligated to pay any such fees and expenses in excess of
$2,500,000.
INDEMNIFICATION AND INSURANCE. Pursuant to the Merger Agreement, for six
years after the Effective Time, the Surviving Corporation (or any successor
to the Surviving Corporation) shall indemnify, defend and hold harmless the
present and former officers and directors of the Company and its
Subsidiaries, and persons who become any of the foregoing prior to the
Effective Time, with respect to matters occurring at or prior to the
Effective Time to the full extent permissible under applicable Georgia law,
the terms of the Company's Articles of Incorporation or the By-laws, as in
effect as of the date of the Merger Agreement. The Merger Agreement also
provides that PhoneTel or the Surviving Corporation will maintain the
Company's existing officers' and directors' liability insurance ("D&O
Insurance") for a period of not less than six years after the Effective Time,
provided, that PhoneTel may substitute therefor policies of substantially
equivalent coverage and amounts containing terms no less favorable to such
former directors or officers. PhoneTel has also agreed that if the existing
D&O Insurance expires, is terminated or cancelled during such period,
PhoneTel or the Surviving Corporation will use all reasonable efforts to
obtain substantially similar D&O Insurance, but in no event will it be
required to pay aggregate annual premiums for such insurance in excess of
$103,250. If PhoneTel or the Surviving Corporation is unable to obtain the
amount of D&O Insurance required for such aggregate premium, PhoneTel or the
Surviving Corporation has agreed to obtain as much insurance as can be
obtained for $103,250.
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REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to PhoneTel and the
Purchaser with respect to, among other things, its organization,
capitalization, financial statements, public filings, conduct of business,
employee benefit plans, intellectual property, employment matters, compliance
with laws, tax matters, litigation, environmental matters, vote required to
approve the Merger Agreement, undisclosed liabilities, its rights plan,
information in the Proxy Statement and the absence of any material adverse
effect on the Company since December 31, 1996.
In addition, the Company has represented that, subject to certain
exceptions, the Company has good and marketable title, free of all liens,
charges, claims or encumbrances, to at least 20,000 pay telephones and at
least 5,800 prison phones in operation, subject to enforceable site location
agreements and generating income for the Company. The Company also
represented that the average term of such site location agreements for each
telephone (excluding prison phones) is at least 40 months and the average
term of such site location agreements for each prison phone is at least 28
months.
The Company further represented that, as of the date of the Merger
Agreement and as of the closing of the Merger, the average net revenue per
pay telephone (excluding prison phones) in operation as of the date of the
Merger Agreement shall be at least $90 and the average net revenue per prison
phone in operation as of the date of the Merger Agreement shall be at least
$145. For purposes of the Merger Agreement, average net revenue for such pay
telephones shall mean the average of the monthly gross revenues minus
telephone bills and commissions (assuming dial-around compensation is based
on the state of the law existing prior to September 20, 1996) for the 18
months prior to the date of the Merger Agreement. In addition, average net
revenue from operator service providers shall only include revenues received
by the Company from such providers.
TERMINATION; FEES. The Merger Agreement may be terminated and the
transactions contemplated therein abandoned at any time prior to the
Effective Time, whether before or after approval of the shareholders of the
Company, (a) by mutual written consent of PhoneTel and the Company, (b) by
either the Company or PhoneTel (i) if (x) the Offer shall have expired
without any Shares being purchased therein or (y) the Purchaser shall not
have accepted for payment all Shares tendered pursuant to the Offer by May
19, 1997, provided, that such right to terminate will not be available to any
party whose failure to fulfill any obligation under the Merger Agreement was
the cause of, or resulted in, the failure of PhoneTel or the Purchaser to
purchase the Shares on or before such date; or (ii) if any governmental
entity shall have issued an order, decree or ruling or taken any other action
(which order, decree, ruling or other action the parties will use their
reasonable efforts to lift), in each case permanently restraining, enjoining
or otherwise prohibiting the acceptance for payment of, or payment for,
Shares pursuant to the Offer or the Merger and such order, decree, ruling or
other action shall have become final and non-appealable, (c) by the Company
(i) if PhoneTel, the Purchaser or any of their affiliates shall have failed
to commence the Offer on or prior to five business days following the date of
the initial public announcement of the Offer; provided, that the Company may
not terminate the Merger Agreement pursuant to this clause (c)(i) if the
Company is at such time in breach of its obligations under the Merger
Agreement such as to cause a material adverse effect on the Company and its
Subsidiaries, taken as a whole; (ii) if PhoneTel or the Purchaser shall have
breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in the Merger Agreement,
which breach cannot be or has not been cured, in all material respects,
within 30 days after the giving of written notice to PhoneTel or the
Purchaser, as applicable; (iii) in connection with entering into a definitive
agreement in accordance with the Merger Agreement, provided it has complied
with all provisions thereof, including the notice provisions therein, and
that it makes simultaneous payment of an amount equal to the greater of
$2,000,000 or an amount equal to the actual, reasonable and reasonably
documented out-of-pocket fees and expenses incurred by PhoneTel and the
Purchaser in connection with the Offer, the Merger, the Merger Agreement, the
consummation of the transactions contemplated under the Merger Agreement and
the financing therefor, provided that in no event shall the Company be
obligated to pay any such fees and expenses in excess of $2,500,000, or (d)
by PhoneTel (i) if, due to an occurrence, not involving a breach by PhoneTel
or the Purchaser of their obligations under the Merger Agreement, which makes
it impossible to satisfy any of the conditions to the Offer set forth in
Section 14,
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PhoneTel, the Purchaser, or any of their affiliates shall have failed to
commence the Offer on or prior to five business days following the date of
the initial public announcement of the Offer; (ii) if prior to the purchase
of Shares pursuant to the Offer, the Company has breached any representation,
warranty, covenant or other agreement contained in the Merger Agreement which
(x) would give rise to the failure of a condition described in clauses (f)
and (g) of Section 14 and (y) cannot be or has not been cured, in all
material respects, within 30 days after the giving of written notice to the
Company; or (iii) upon the occurrence of any event set forth in clause (e) of
Section 14.
In accordance with the Merger Agreement, if (x) PhoneTel terminates the
Merger Agreement pursuant to clause (d)(iii) of the immediately preceding
paragraph, (y) the Company terminates the Merger Agreement pursuant to clause
(c)(iii) of the immediately preceding paragraph, or (z) either the Company or
PhoneTel terminates the Merger Agreement pursuant to clause (b)(i) of the
immediately preceding paragraph and prior thereto there shall have been
publicly announced another Acquisition Proposal or an event set forth in
clause (h) of Section 14 shall have occurred, the Company has agreed to pay
to PhoneTel an amount equal to the greater of $2.0 million or an amount equal
to PhoneTel's actual, reasonable and reasonably documented out-of-pocket fees
and expenses incurred by PhoneTel and the Purchaser in connection with the
Offer, the Merger, the Merger Agreement, the consummation of the Transactions
and the financing therefor, provided that in no event shall the Company be
obligated to pay such fees and expenses in excess of $2,500,000. The Merger
Agreement also provides that if the Company terminates the Merger Agreement
(i) pursuant to clause (b)(i) of the immediately preceding paragraph and the
sole reason for PhoneTel's failure to purchase Shares in the Offer is
PhoneTel's failure to satisfy the Financing Condition (except if the sole
reason for PhoneTel's failure to satisfy the Financing Condition is the
failure of the Company to satisfy its obligations under the Merger Agreement
to render assistance in securing financing) or (ii) pursuant to clause (c)(i)
of the immediately preceding paragraph, then PhoneTel shall pay to the
Company an amount equal to the Company's reasonable legal fees and expenses
incurred as of the date of such termination with respect to the Merger
Agreement and the transactions contemplated therein.
NON-COMPETITION AGREEMENTS. In connection with the Offer and the Merger,
PhoneTel has entered into Non-Competition Agreements, in the form filed as an
exhibit to the Schedule 14D-1, with each of Rodger L. Johnson, the Company's
President and Chief Executive Officer, Anthony J. Palermo, the Company's Vice
President, Sales and Marketing, C. Douglas McKeever, the Company's Vice
President, Finance, and two other employees of the Company, and expects to
enter into a Non-Competition Agreement with Barry E. Selvidge, the Company's
General Counsel and Vice President, Regulatory. The Merger Agreement also
requires the Company to deliver a covenant not to compete in a form
reasonably satisfactory to PhoneTel for Robert Bowling, Vice President,
Operations, within five business days after the date of the Merger Agreement.
The Non-Competition Agreements generally prohibit the above-named
employees of the Company, (i) for a period of five years from the
consummation of the Merger, from (a) purchasing any assets of PhoneTel or any
Subsidiary thereof or (b) soliciting the current or future customers and
suppliers of PhoneTel or any Subsidiary thereof to divert their pay telephone
or inmate phone business to another entity or individual, (ii) for a period
of three years from the consummation of the Merger, from (a) competing with
the pay telephone and inmate phone business operated by PhoneTel or any
Subsidiary thereof or (b) soliciting any employee or client of PhoneTel or
any Subsidiary thereof to terminate his or her contractual relationship with
PhoneTel or its affiliates or to become employed by or to enter into
contractual relations with a competitor of PhoneTel or its affiliates, and
(ii) for a period of one year from the consummation of the Merger, from
employing or causing to be employed any employee or consultant of PhoneTel or
its affiliates (including employees of the Company).
The Non-Competition Agreements also contain covenants of the above-named
employees not to disclose any confidential information about PhoneTel or its
affiliates without the prior written consent of PhoneTel. As consideration
for the execution of such Non-Competition Agreements, Mr. Johnson will
receive $1,450,000, Messrs. Palermo and McKeever will each receive $200,000
and each of Messrs. Bowling and Selvidge will receive $100,000. Such
consideration will be paid, without interest, in two equal installments,
one-half upon the consummation of the Merger and one-half six months
thereafter if the former employee has not violated the terms of such
employee's Non-Competition Agreement.
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ESCROW AGREEMENT. In connection with the execution and delivery of the
Merger Agreement, PhoneTel, the Company and the Escrow Agent entered into the
Escrow Agreement, a copy of which is filed as an exhibit to the Schedule
14D-1. In accordance with the Escrow Agreement, PhoneTel has deposited the
Escrow Amount of $5,000,000 with the Escrow Agent to be held and disposed of
by the Escrow Agent pursuant to the terms of Escrow Agreement. In the event
that the Merger Agreement is terminated solely due to the failure of either
(i) the Minimum Condition (provided at least 50.1% of the Shares outstanding
on a fully diluted basis have been validly tendered and not withdrawn), or
(ii) the Financing Condition (unless the failure of such Financing Condition
is due solely to the failure of the Company to satisfy its obligations under
the Merger Agreement to render assistance in securing financing necessary to
satisfy the Financing Condition), then the Company will be entitled to
receive the entire Escrow Amount, as liquidated damages, and neither the
Company nor PhoneTel nor the Purchaser will have any other rights or remedies
in respect of the Merger Agreement. Delivery of funds by the Escrow Agent to
the applicable parties shall be made pursuant to the terms of the Escrow
Agreement.
12. PLANS FOR THE COMPANY; OTHER MATTERS
Plans for the Company. PhoneTel is conducting a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and will consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances which exist upon completion of the
Offer. Such changes could include changes in the Company's business,
corporate structure, articles of incorporation, by-laws, capitalization,
Board of Directors, management or dividend policy, although, except as
disclosed in this Offer to Purchase, PhoneTel has no current plans with
respect to any of such matters. The Merger Agreement provides that, promptly
after the purchase by the Purchaser of at least a majority of the outstanding
Shares, PhoneTel has the right to designate such number of directors, rounded
up to the next whole number, on the Company's Board of Directors as is equal
to the product of the total number of directors on the Company's Board of
Directors (giving effect to the directors designated by PhoneTel) multiplied
by the percentage that the number of Shares so accepted for payment bears to
the total number of Shares then outstanding. See Section 11. The Merger
Agreement provides that the directors and officers of the Purchaser at the
Effective Time of the Merger will, from and after the Effective Time, be the
directors and officers, respectively, of the Surviving Corporation.
Except as disclosed in this Offer to Purchase, neither PhoneTel nor the
Purchaser has any present plans or proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of assets,
involving the Company or any of its subsidiaries, or any material changes in
the Company's corporate structure, business or composition of its management
or personnel.
Other Matters
SHAREHOLDER APPROVAL. Under Article VII of the Company's Articles of
Incorporation, the Merger could require the affirmative vote of holders of at
least 75% of the outstanding Shares, unless the Merger was approved by
two-thirds of the continuing directors (as such term is defined in the
Company's Articles of Incorporation). The Company has represented in the
Merger Agreement that its Board of Directors has unanimously approved this
Agreement and the transactions contemplated hereby, including the Offer and
the Merger, and such approval constitutes approval of the Offer, the Merger
Agreement and the transactions contemplated thereby, including the Merger,
for purposes of Article VII of the Company's Articles of Incorporation, such
that the provisions of Article VII of the Company's Articles of Incorporation
will not apply to the Offer and such transactions. As a result, under the
GBCC, the approval of the Board of Directors of the Company and the
affirmative vote of the holders of a majority of the outstanding Shares are
required to adopt and approve the Merger Agreement and the transactions
contemplated thereby. The Company has represented in the Merger Agreement
that the Board of Directors of the Company has unanimously approved the
Merger Agreement, the Offer and the Merger and the transactions contemplated
thereby in satisfaction of the requirement under the GBCC. Therefore, unless
the Merger is consummated pursuant to the short-form merger provisions under
the GBCC described below (in which case no further corporate action by the
shareholders of the Company will be
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required to complete the Merger), the only remaining required corporate
action of the Company will be the approval of the Merger Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of a
majority of the Shares. The Merger Agreement provides that PhoneTel will
vote, or cause to be voted, all of the Shares then owned by PhoneTel, the
Purchaser or any of PhoneTel's other subsidiaries, among others, in favor of
the approval of the Merger and the approval and adoption of the Merger
Agreement. In the event that PhoneTel, the Purchaser and PhoneTel's other
subsidiaries acquire in the aggregate at least a majority of the Shares, the
vote of no other shareholder of the Company will be required to approve the
Merger and the Merger Agreement.
SHORT-FORM MERGER. Section 14-2-1104 of the GBCC provides that, if a
corporation owns at least 90% of the outstanding shares of each class of
another corporation, the corporation holding such stock may merge such other
corporation into itself without any action or vote on the part of the board
of directors or the shareholders of such other corporation (a "short-form
merger"). In the event that PhoneTel, the Purchaser and any other
subsidiaries of PhoneTel acquire in the aggregate at least 90% of the Shares,
pursuant to the Offer or otherwise, then, at the election of PhoneTel, a
short-form merger could be effected without any approval of the Board of
Directors or the shareholders of the Company, subject to compliance with the
provisions of Section 14-2-1104 of the GBCC. Even if PhoneTel, the Purchaser
and the other subsidiaries of PhoneTel do not own 90% of the outstanding
Shares following consummation of the Offer, PhoneTel and the Purchaser could
seek to purchase additional shares in the open market or otherwise in order
to reach the 90% threshold and employ a short-form merger. The per share
consideration paid for any Shares so acquired may be greater or less than
that paid in the Offer. PhoneTel does not presently intend to effect a
short-form merger, whether or not it acquires 90% or more of the Shares.
GEORGIA BUSINESS COMBINATION STATUTE. In general, Section 14-2-1132 of the
GBCC (the "Georgia Business Combination Statute") prohibits any person who is
an "interested shareholder," including a beneficial owner of 10% or more of
the voting power of the outstanding voting shares of a corporation, from
engaging in certain "business combinations" (including the Merger) with
certain Georgia corporations for a period of five years following the time at
which such person became an interested shareholder, unless (i) either the
transaction by which such person became an interested shareholder or the
business combination is approved by the board of directors of the corporation
prior to the time at which such person became an interested shareholder, (ii)
upon consummation of the transaction which resulted in such person becoming
an interested shareholder, such person owned at least 90% of the voting stock
outstanding at the time the transaction commenced, other than shares owned by
(a) persons who are officers and directors of the corporation and their
affiliates or associates, (b) subsidiaries of the corporation and (c) any
employee stock plan under which employee participants do not have the right
to determine confidentially the extent to which shares held subject to the
plan will be tendered in a tender or exchange offer (collectively, "Excluded
Shares"), or (iii) subsequent to becoming an interested shareholder, the
interested shareholder becomes the owner of 90% of the eligible voting stock
outstanding of the corporation (other than Excluded Shares) and the business
combination is authorized by the affirmative vote, at an annual or special
meeting of shareholders, of at least a majority of the outstanding shares of
voting stock other than Excluded Shares and those beneficially owned by the
interested shareholder. The requirements of the Georgia Business Combination
Statute do not apply unless the corporation adopts a by-law expressly
electing to be governed thereby. According to publicly available information,
the Company's Amended and Restated By-Laws have included such a provision at
least since July 25, 1995. Accordingly, the requirements of the Georgia
Business Combination Statute apply to the Company.
The Company has represented in the Merger Agreement that its Board of
Directors has unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and such approval
constitutes approval of the Offer, the Merger Agreement and the transactions
contemplated thereby, including the Merger, for purposes of Section 14-2-1132
of the GBCC, such that the provisions of Section 14-2-1132 of the GBCC will
not apply to the Offer and such transactions.
GEORGIA FAIR PRICE STATUTE. In general, unless certain conditions are met,
including with respect to the consideration paid to shareholders, Section
14-2-1111 of the GBCC (the "Georgia Fair Price Statute")
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requires that, in addition to any vote otherwise required by law or the
articles of incorporation of a corporation, certain business combinations
(including a business combination such as the Merger) between an interested
shareholder or an affiliate thereof, including a beneficial owner of 10% or
more of the voting power of the outstanding voting shares of a corporation,
and a Georgia corporation be either (i) unanimously approved by the board of
directors, provided that the continuing directors (as defined in the GBCC)
constitute at least three members of the board of directors at the time of
such approval, or (ii) recommended by at least two-thirds of the continuing
directors and approved by a majority of the votes entitled to be cast by
holders of voting shares, other than voting shares beneficially owned by the
interested shareholder who is, or whose affiliate is, a party to the business
combination. The requirements of the Georgia Fair Price Statute do not apply
unless the corporation adopts a by-law expressly electing to be governed
thereby. According to publicly available information, the Company's Amended
and Restated By-Laws have included such a provision at least since July 25,
1995. Accordingly, the requirements of the Georgia Fair Price Statute apply
to the Company.
The Company has represented in the Merger Agreement that its Board of
Directors has unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and such approval
constitutes approval of the Offer, the Merger Agreement and the transactions
contemplated thereby, including the Merger, for purposes of Section 14-2-1111
of the GBCC, such that the provisions of Section 14-2-1111 of the GBCC will
not apply to the Offer and such transactions.
DISSENTERS' RIGHTS. Shareholders do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, shareholders of
the Company who did not vote in favor of the Merger have certain rights under
Georgia law to dissent and demand payment of the fair value of their Shares.
If a dissenting shareholder complies with the applicable statutory
procedures, such rights could lead to a judicial determination of the fair
value required to be paid to such dissenting holder for such holder's Shares.
The Purchaser cannot make any representation as to the outcome of an
appraisal of fair value of the Shares as determined by the Georgia courts,
and shareholders should recognize that such an appraisal could result in a
determination of a value higher or lower than, or equivalent to, the
consideration per Share provided in the Offer or consideration per Share to
be paid in the Merger. In an appraisal proceeding, however, the Purchaser
could argue that, for purposes of such proceeding, the fair value of the
Shares is less than the consideration per Share provided in the Offer.
Under the GBCC, dissenting shareholders who comply with the applicable
statutory procedures will be entitled to fair value for their Shares (i.e.,
the value of the Shares immediately before the consummation of the Merger,
excluding any appreciation or depreciation in anticipation of the Merger) and
to receive payment of such fair value in cash. If a shareholder demand to the
Company for payment of such fair value remains unsettled, the Company is
required within 60 days of receiving the demand to commence a proceeding for
judicial determination of the fair value of the Shares and interest accrued
since the consummation of the Merger. If the Company does not commence the
proceeding within the 60-day period, it must pay each such dissenting
shareholder the amount demanded. In Grace Bros., Ltd. v. Farley Industries,
Inc., the Georgia Supreme Court stated that any facts which shed light on the
value of dissenting shareholders' interests are to be considered in arriving
at "fair value" under the statutory appraisal remedy. Shareholders should
recognize that the value so determined could be higher or lower than the
price per Share paid pursuant to the Offer or the consideration per Share to
be paid in the Merger. Pursuant to Section 14-2-1302(b) of the GBCC, (i)
statutory appraisal rights are the exclusive remedy for dissenting
shareholders and (ii) a shareholder entitled to dissent and obtain payment
for such holder's Shares under the GBCC may not challenge the Merger except
for failure to comply with the procedural requirements of the GBCC or the
articles of incorporation or by-laws or in cases of fraud or deception.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING SHAREHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
SHAREHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO
THE APPLICABLE PROVISIONS OF THE GBCC.
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The foregoing description of the GBCC, including the descriptions of the
Georgia Business Combination Statute and the Georgia Fair Price Statute, is
not necessarily complete and is qualified in its entirety by reference to the
GBCC.
RULE 13E-3. The Merger would have to comply with any applicable Federal
law operative at the time. Rule 13e-3 under the Exchange Act is applicable to
certain "going private" transactions; however, the Purchaser believes that
Rule 13e-3 will not be applicable to the Merger. If Rule 13e-3 were
applicable to the Merger, it would require, among other things, that certain
financial information concerning the Company, and certain information
relating to the fairness of the proposed transaction and the consideration
offered to minority shareholders in such a transaction, be filed with the
Commission and disclosed to minority shareholders prior to consummation of
the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that, prior to the time
the designees of PhoneTel have been elected to, and constitute a majority of,
the Board of Directors of the Company, without the prior written consent of
PhoneTel, (i) the Company will not, directly or indirectly, (A) except upon
exercise of warrants or options or other rights to purchase shares of Common
Stock outstanding on the date of the Merger Agreement, issue, sell, transfer
or pledge or agree to sell, transfer or pledge any treasury stock of the
Company or any capital stock of any of its subsidiaries beneficially owned by
it; (B) amend its Amended and Restated Articles of Incorporation or by-laws
or similar organizational documents; or (C) split, combine or reclassify the
outstanding Shares or any outstanding capital stock of any of the
subsidiaries of the Company; and (ii) neither the Company nor any of its
subsidiaries will (A) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock; (B) issue, sell, pledge, dispose of or encumber any additional shares
of, or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class of the Company or its subsidiaries, other than Shares
reserved for issuance on the date of the Merger Agreement pursuant to the
exercise of warrants or options outstanding on such date; (C) transfer,
lease, license, sell or dispose of any assets, or incur any indebtedness or
other liability other than in the ordinary course of business, or mortgage,
pledge or encumber any assets or modify any indebtedness; or (D) redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital
stock.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-l(c) under the Exchange Act (relating to the Purchaser's obligation
to pay for or return tendered Shares promptly after termination or withdrawal
of the Offer), pay for, and may delay the acceptance for payment of or,
subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer as to any Shares not then paid
for, if (i) any applicable waiting period under the HSR Act has not expired
or terminated, (ii) the Minimum Condition has not been satisfied, (iii) the
Financing Condition has not been satisfied or (iv) at any time on or after
the date of the Merger Agreement and before the time of acceptance for
payment for any such Shares, any of the following events shall occur or shall
be determined by the Purchaser, in its judgment reasonably exercised, to have
occurred:
(a) there shall be threatened or pending any suit, action or proceeding
by any court, arbitral tribunal, administrative agency or commission or
other governmental or other regulatory authority or agency (a
"Governmental Entity") against the Purchaser, PhoneTel, the Company or any
subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on PhoneTel's or the Purchaser's ownership or operation (or
that of any of their respective subsidiaries or affiliates) of all or a
material portion of their or the Company's businesses or assets, or to
compel PhoneTel or the Purchaser or their respective subsidiaries and
affiliates to dispose of or hold separate any material portion of the
business or assets of the Company or PhoneTel and their respective
subsidiaries, in
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each case taken as a whole, (ii) challenging the acquisition by PhoneTel
or the Purchaser of any Shares under the Offer, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by the Merger
Agreement, or seeking to obtain from the Company, PhoneTel or the
Purchaser any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (iii) seeking to impose material
limitations on the ability of the Purchaser, or render the Purchaser
unable, to accept for payment, pay for or purchase some or all of the
Shares pursuant to the Offer and the Merger, (iv) seeking to impose
material limitations on the ability of Purchaser or PhoneTel effectively
to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's shareholders, or (v) which otherwise
is reasonably likely to be materially adverse to the Company and its
subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a
Government Entity, to the Offer or the Merger, or any other action shall
be taken by any Governmental Entity, other than the application to the
Offer or the Merger of applicable waiting periods under HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a)
above;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange or
the American Stock Exchange or the NASDAQ Stock Market for a period in
excess of 24 hours (excluding suspensions or limitations resulting solely
from physical damage or interference with such exchanges not related to
market conditions), (ii) any decline in either the Dow Jones Industrial
Average or the Standard & Poor's Index of 400 Industrial Companies or in
the New York Stock Exchange Composite Index in excess of 15% measured from
the close of business on the trading day next preceding the date of the
Merger Agreement, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether
or not mandatory), (iv) a commencement of a war, armed hostilities or
other international or national calamity directly or indirectly involving
the United States, (v) any limitation (whether or not mandatory) by any
United States governmental authority on the extension of credit generally
by banks or other financial institutions, (vi) a change in general
financial, bank or capital market conditions which materially and
adversely affects the ability of financial institutions in the United
States to extend credit or syndicate loans or (vii) in the case of any of
the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof;
(d) there shall have occurred any events after the date of the Merger
Agreement which, either individually or in the aggregate, would be
materially adverse to the Company and its subsidiaries, taken as a whole;
(e) the Board of Directors of the Company or any committee thereof shall
have withdrawn or modified in a manner adverse to PhoneTel or the
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any Acquisition Proposal (as
defined in the Merger Agreement);
(f) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct, in each case (i) as of the
date referred to in any representation or warranty which addresses matters
as of a particular date, or (ii) as to all other representations and
warranties, as of the date of the Merger Agreement and as of the scheduled
expiration of the Offer, unless the inaccuracies (without giving effect to
any materiality or material adverse effect qualifications or materiality
exceptions contained therein) under such representations and warranties,
taking all the inaccuracies under all the representations and warranties
together in their entirety, would not, individually or in the aggregate,
be materially adverse to the Company and its Subsidiaries, taken as a
whole;
(g) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant to be performed or complied with by it
under the Merger Agreement other than any failure which would not, either
individually or in the aggregate, be materially adverse to the Company and
its Subsidiaries, taken as a whole;
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(h) any person acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act), of at least 20% of the outstanding
Common Stock of the Company; or
(i) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of PhoneTel and the
Purchaser, may be asserted by PhoneTel or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction
by PhoneTel or the Purchaser not in violation of the Merger Agreement) and
may be waived by PhoneTel or the Purchaser in whole or in part at any time
and from time to time in the sole discretion of PhoneTel or the Purchaser,
subject in each case to the terms of the Merger Agreement. The failure by
PhoneTel or the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time.
15. CERTAIN LEGAL MATTERS.
Except as described in this Section 15, based on information provided by
the Company, none of the Company, Purchaser or PhoneTel is aware of any
license or regulatory permit that appears to be material to the business of
the Company and its subsidiaries, taken as a whole, that might be adversely
affected by the Purchaser's acquisition of Shares (and the indirect
acquisition of the stock of the Company's subsidiaries) as contemplated
herein or of any approval or other action by a domestic or foreign
governmental, administrative or regulatory agency or authority that would be
required for the acquisition and ownership of the Shares (and the indirect
acquisition of the stock of the Company's subsidiaries) by the Purchaser as
contemplated herein. Should any such approval or other action be required,
the Purchaser and PhoneTel presently contemplate that such approval or other
action will be sought, except as described below under "State Takeover Laws."
While, except as otherwise described in this Offer to Purchase, the Purchaser
does not presently intend to delay the acceptance for payment of or payment
for Shares tendered pursuant to the Offer pending the outcome of any such
matter, there can be no assurance that any such approval or other action, if
needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result
in consequences adverse to the Company's business or that certain parts of
the Company's business might not have to be disposed of or other substantial
conditions complied with in the event that such approvals were not obtained
or such other actions were not taken or in order to obtain any such approval
or other action. If certain types of adverse action are taken with respect to
the matters discussed below, the Purchaser could decline to accept for
payment or pay for any Shares tendered. See Section 14 for certain conditions
to the Offer, including conditions with respect to governmental actions.
State Takeover Laws. The Company is incorporated under the laws of the
State of Georgia. In general, Section 14-2-1132 of the GBCC prohibits any
person who is an "interested shareholder" (e.g., a person who beneficially
owns 10% or more of a corporation's outstanding voting stock) from engaging
in a "business combination" (defined to include mergers and certain other
transactions) with certain Georgia corporations for a period of five years
following the time such person became an interested shareholder unless, among
other things, the transaction by which such person became an interested
shareholder or the business combination is approved by the board of directors
of the corporation prior to the time at which such person became an
interested shareholder. Moreover, unless certain conditions are met, Section
14-2-1111 of the GBCC requires that, in addition to any vote otherwise
required, certain business combinations (including a business combination
such as the Merger) between an interested shareholder or an affiliate
thereof, including a beneficial owner of 10% or more of the voting power of
the outstanding voting shares of a corporation, and a Georgia corporation be,
among other things, unanimously approved by the board of directors, provided
that the continuing directors (as defined in the GBCC) constitute at least
three members of the board of directors at the time of such approval. See
Section 12. The Company has represented in the Merger Agreement that its
Board of Directors has unanimously approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, and
such approval constitutes approval of the Offer, the Merger Agreement and the
transactions contemplated thereby, including the Merger, for purposes of
Section 14-2-1111 and Section 14-2-1132 of the GBCC, such that the provisions
of Section 14-2-1111 and the restrictions contained in Section 14-2-1132 of
the GBCC
31
<PAGE>
will not apply to the Offer and such transactions. A number of other states
have adopted laws and regulations applicable to attempts to acquire
securities of corporations which are incorporated, or have substantial
assets, shareholders, principal executive offices or principal places of
business, or whose business operations otherwise have substantial economic
effects in such states. In Edgar v. MITE Corp., the Supreme Court of the
United States invalidated on constitutional grounds the Illinois Business
Takeover statute, which, as a matter of state securities law, made takeovers
of corporations meeting certain requirements more difficult. However in 1987,
in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the
State of Indiana may, as a matter of corporate law and, in particular, with
respect to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs
of a target corporation without the prior approval of the remaining
shareholders. The state law before the Supreme Court was by its terms
applicable only to corporations that had a substantial number of shareholders
in the state and were incorporated there.
The Company and certain of its subsidiaries conduct business in a number
of other states throughout the United States, some of which have enacted
takeover laws and regulations. Neither PhoneTel nor the Purchaser knows
whether any or all of these takeover laws and regulations will by their terms
apply to the Offer, and, except as set forth above with respect to Sections
14-2-1111 and 14-2-1132 of the GBCC, neither PhoneTel nor the Purchaser has
currently complied with any other state takeover statute or regulation. The
Purchaser reserves the right to challenge the applicability or validity of
any state law purportedly applicable to the Offer and nothing in this Offer
to Purchase or any action taken in connection with the Offer is intended as a
waiver of such right. If it is asserted that any state takeover statute is
applicable to the Offer and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or to receive approvals from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer, or may be delayed
in consummating the Offer. In such case, the Purchaser may not be obligated
to accept for payment or pay for any Shares tendered pursuant to the Offer.
See Section 14.
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission (the "FTC") and certain waiting period requirements have been
satisfied.
PhoneTel and the Company expect to file soon their Notification and Report
Forms with respect to the Offer under the HSR Act. The waiting period under
the HSR Act with respect to the Offer will expire at 11:59 p.m., New York
City time, on the fifteenth day after the date PhoneTel's form is filed
unless early termination of the waiting period is granted. However, the
Antitrust Division or the FTC may extend the waiting period by requesting
additional information or documentary material from PhoneTel or the Company.
If such a request is made, such waiting period will expire at 11:59 p.m., New
York City time, on the tenth day after substantial compliance by PhoneTel
with such request. Only one extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent
of PhoneTel. In practice, complying with a request for additional information
or material can take a significant amount of time. In addition, if the
Antitrust Division or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue. The Purchaser will not accept for payment Shares
tendered pursuant to the Offer unless and until the waiting period
requirements imposed by the HSR Act with respect to the Offer have been
satisfied. See Section 14.
As discussed below, the HSR Act requirements with respect to the Merger
will not apply if certain conditions are met. In particular, the Merger may
not be consummated until thirty days after receipt by the Antitrust Division
and the FTC of the Notification and Report Forms of both PhoneTel and the
Company unless the Purchaser acquires 50% or more of the outstanding Shares
pursuant to the Offer (which would be the case if the Minimum Condition were
satisfied) or the thirty-day period is earlier terminated by the Antitrust
Division and the FTC. Within such thirty-day period, the Antitrust Division
32
<PAGE>
or the FTC may request additional information or documentary materials from
PhoneTel and/or the Company. The Merger may not be consummated until twenty
days after such requests are substantially complied with by both PhoneTel and
the Company. Thereafter, the waiting periods may be extended only by court
order or with the consent of PhoneTel and the Company.
The FTC and the Antitrust Division frequently scrutinize the legality
under the antitrust laws of transactions such as the Purchaser's acquisition
of Shares pursuant to the Offer and the Merger. At any time before or after
the Purchaser's acquisition of Shares, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition
of Shares pursuant to the Offer or otherwise or seeking divestiture of Shares
acquired by the Purchaser or divestiture of substantial assets of PhoneTel or
its subsidiaries. Private parties, as well as state governments, may also
bring legal action under the antitrust laws under certain circumstances.
Based upon an examination of publicly available information relating to the
businesses in which PhoneTel and the Company are engaged, PhoneTel and the
Purchaser believe that the acquisition of Shares by the Purchaser will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer or other acquisition of Shares by the Purchaser on
antitrust grounds will not be made or, if such a challenge is made, of the
result. See Section 14 for certain conditions to the Offer, including
conditions with respect to litigation and certain governmental actions.
Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or
maintenance of credit for the purpose of buying or carrying margin stock,
including the Shares, if the credit is secured directly or indirectly by
margin stock. Such secured credit may not be extended or maintained in an
amount that exceeds the maximum loan value of all the direct and indirect
collateral securing the credit, including margin stock and other collateral.
All financing for the Offer will be structured so as to be in full compliance
with the Margin Regulations.
16. FEES AND EXPENSES.
PhoneTel has engaged Southcoast to act as financial advisor to PhoneTel in
connection with the proposed acquisition of the Company and as Dealer Manager
in connection with the Offer. PhoneTel has agreed to pay Southcoast an
advisory fee equal to 1% of the aggregate consideration paid in the Offer and
the Merger in connection with the transactions contemplated by the Merger
Agreement and a fee of $25,000 in connection with its services as Dealer
Manager. PhoneTel has also agreed to reimburse Southcoast for all reasonable
out-of-pocket expenses incurred in connection with its role as financial
advisor, and as Dealer Manager, for the Offer and the Merger, including
reasonable attorneys' fees and disbursements, and to indemnify Southcoast and
certain related persons against certain liabilities in connection with the
Offer, including certain liabilities under federal securities laws.
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent and First Union National Bank of North Carolina to act as
the Depositary in connection with the Offer. Such firms each will receive
reasonable and customary compensation for their services. The Purchaser has
also agreed to reimburse each such firm for certain reasonable out-of-pocket
expenses and to indemnify each such firm against certain liabilities in
connection with their services, including certain liabilities under federal
securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager and the Information Agent) for
making solicitations or recommendations in connection with the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
17. MISCELLANEOUS.
The Offer is being made to all holders of Shares other than the Company.
The Purchaser is not aware of any jurisdiction in which the making of the
Offer or the tender of Shares in connection therewith would not be in
compliance with the laws of such jurisdiction. If the Purchaser becomes aware
of any jurisdiction
33
<PAGE>
in which the making of the Offer would not be in compliance with applicable
law, the Purchaser will make a good faith effort to comply with any such law.
If, after such good faith effort, the Purchaser cannot comply with any such
law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer
to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of PhoneTel or the Purchaser not contained herein or
in the Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
The Purchaser and PhoneTel have filed with the Commission the Schedule
14D-1 pursuant to Rule 14d-3 under the Exchange Act furnishing certain
additional information with respect to the Offer. The Schedule 14D-1 and any
amendments thereto, including exhibits, may be examined and copies may be
obtained from the offices of the Commission and the American Stock Exchange,
Inc. in the manner set forth in Section 9 of this Offer to Purchase (except
that they will not be available at the regional offices of the Commission).
PHONETEL ACQUISITION CORP.
March 20, 1997
34
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PHONETEL AND THE PURCHASER
The following table sets forth the name, business address and present
principal occupation or employment, and material occupations, positions,
offices or employments for the past five years, of each director and
executive officer of PhoneTel. Each such person is a citizen of the United
States of America and, unless otherwise indicated, the business address of
each such person is c/o PhoneTel, 1127 Euclid Avenue, Suite 650, Cleveland,
Ohio 44115. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to employment with PhoneTel. Unless otherwise
indicated, each such person has held his or her present occupation as set
forth below, or has been an executive officer at PhoneTel, or the
organization indicated, for the past five years. Directors are identified by
an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ----------------------------------- ---------------------------------------------------------------------
<S> <C>
Peter G. Graf* Mr. Graf has been Chairman and a Director of PhoneTel since July 1, 1995
and was elected Chief Executive Officer of PhoneTel in September 1995 and
spends a substantial portion of his time fulfilling such duties. Mr. Graf
has been Chairman and a Director and Chief Executive Officer of the Purchaser
since March 1997. Mr. Graf is licensed as an attorney and as a certified
public accountant and serves as an officer and/or director of various
privately-held companies and the managing partner of an accounting firm.
From 1991 to September 1995, Mr. Graf served as Vice Chairman of USA Mobile
Communications Holdings, Inc.
Nickey B. Maxey* Mr. Maxey has served as Vice Chairman of PhoneTel since February 1997 and
c/o Resort Hospitality Services as a Director since April 1996. From April 1996 through February 1997,
19B Bow Circle Mr. Maxey served as Chief Operating Officer of PhoneTel. Mr. Maxey was
Hilton Head, SC 29928 the founder and for more than five years prior to the acquisition of IPP
by PhoneTel in March 1996, served as President of each of International
Pay Phones, Inc., a Tennessee corporation, and International Pay Phones,
Inc., a South Carolina corporation. Since 1990, Mr. Maxey has owned and
operated Resort Hospitality Services of South Carolina, Resort Hospitality
Services of Tennessee and Resort Hospitality Services International, a
group of affiliated companies which are resellers of long-distance services.
Joseph Abrams* Mr. Abrams has been a Director of PhoneTel since September 1995. Mr. Abrams
c/o Joseph Graf & Co. is also a director of Merisel Inc., a public company that distributes
6 East 43rd Street microcomputer hardware and software, and Spectrum Signal Processing, Inc.,
New York, NY 10017 a public company that specializes in digital signal solutions. Mr. Abrams
was a co-founder of and served as the President of AGS Computers from 1967
to 1991. From 1991 to 1996, Mr. Abrams has been a private investor.
George H. Henry* Mr. Henry has been a Director of PhoneTel since April 1990. Mr. Henry is
the Chairman and Chief Executive Officer of Access Television Network.
Mr. Henry has been the President of G. Howard Associates, Inc., a private
investment firm, since 1986. Mr. Henry is also on the Board of Directors
of Biovail International Corporation and a trustee of Mitchell College.
I-1
<PAGE>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ----------------------------------- ---------------------------------------------------------------------
Stuart Hollander* Mr. Hollander has been a Director of PhoneTel since September 1995. Mr.
World Communications, Inc. Hollander is the founder and President of Med InterLink, L.L.C. Mr. Hollander
11656 Lilburn Park Road was founder, principal owner and Chairman of the Board of World Communications,
St. Louis, MO 63146 Inc. ("World") from 1986 until it was merged into PhoneTel 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 a member of the Board of Pioneer Bank and Trust Company.
Aron Katzman* Mr. Katzman has been a Director of PhoneTel since September 1995. Mr. Katzman
c/o The Source Co. has been a Director of The Source Co. since January 1995. Previously, Mr.
11656 Lilam Park Drive Katzman was founder and a former Director of Medicine Shoppe, Inc., a franchisor
St. Louis, MO 63146 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. Mr. Katzman was formerly a Director and officer of
World, which was merged into PhoneTel in September 1995.
Steven Richman* Mr. Richman has been a Director of PhoneTel since September 1995. Mr. Richman
9 Park Place is the principal owner of, and has served as the Chief Executive Officer
Great Neck, NY 11021 of, Fabric Resources International for more than the past five years. Mr.
Richman was the co-founder and an officer of Cable Systems USA, an officer
at Cellular Systems USA and a director of USA Mobile Communications Holdings,
Inc. Mr. Richman has been a director of Cable Systems USA II since 1989.
Tammy L. Martin Ms. Martin was elected Executive Vice President and Chief Administrative
Officer of PhoneTel in April 1996 and has been General Counsel and Secretary
of PhoneTel since September 1995. Ms. Martin has been a Director and Vice
President, Treasurer and Secretary of the Purchaser since March 1997. Prior
to that, Ms. Martin served as associate legal counsel for PhoneTel during
1993 and 1994. Prior to joining PhoneTel, Ms. Martin was in private legal
practice from 1992 to 1993 and was self-employed as an accountant from
1990 to 1992.
Richard P. Kebert Mr. Kebert has served as Chief Financial Officer of PhoneTel since September
1996. Prior to joining PhoneTel, Mr. Kebert was an independent consultant.
From 1994 to 1996, he was Vice President--Finance and Administration of
Acordia of Cleveland, Inc. For 12 years prior thereto, Mr. Kebert held
several senior management positions with Mr. Coffee, Inc., including Vice
President--Administration and Secretary. Mr. Kebert is a certified public
accountant.
</TABLE>
I-2
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
shareholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at one of the addresses set forth
below:
The Depositary for the Offer is:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By Mail: By Hand/Overnight Delivery:
230 South Tryon Street 230 South Tryon Street
11th Floor 11th Floor
Charlotte, North Carolina 28288 Charlotte, North Carolina 28288
or or
IBJ Schroeder Bank & Trust Company IBJ Schroeder Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing Window
Attn: Reorganization Subcellar One (SC-1)
Operations Dept.
By Facsimile Transmission:
(For Eligible Institutions Only)
(704) 383-8353
or
(212) 858-2611
Confirm Receipt of Facsimile by Telephone:
(704) 374-2775
or
(212) 858-2103
Questions and requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the Guidelines for Certification of Taxpayer Identification on Substitute
Form W-9 may be directed to the Information Agent or the Dealer Manager at
their respective locations and telephone numbers set forth below.
Shareholders may also contact their broker, dealer, commercial bank or trust
company for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC. [LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
SOUTHCOAST CAPITAL CORPORATION [LOGO]
277 Park Avenue
37th Floor
New York, New York 10172
CALL TOLL FREE: (888) 696-7222
(212) 940-9330 (Call Collect)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
COMMUNICATIONS CENTRAL INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 20, 1997
BY
PHONETEL ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
PHONETEL TECHNOLOGIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, APRIL 16, 1997, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By Mail: By Hand/Overnight Delivery:
230 South Tryon Street 230 South Tryon Street
11th Floor 11th Floor
Charlotte, North Carolina 28288 Charlotte, North Carolina 28288
or or
IBJ Schroeder Bank & Trust Company IBJ Schroeder Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing Window
Attn: Reorganization Subcellar One (SC-1)
Operations Dept.
By Facsimile Transmission:
(For Eligible Institutions Only)
(704) 383-8353
or
(212) 858-2611
Confirm Receipt of Facsimile by Telephone:
(704) 374-2775
or
(212) 858-2103
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
THIS LETTER OF TRANSMITTAL IS TO BE USED EITHER IF CERTIFICATES ARE TO BE
FORWARDED HEREWITH OR IF DELIVERY OF SHARES (AS DEFINED BELOW) IS TO BE MADE
BY BOOK-ENTRY TRANSFER TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE
DEPOSITORY TRUST COMPANY (HEREINAFTER REFERRED TO AS THE "BOOK-ENTRY TRANSFER
FACILITY") PURSUANT TO THE PROCEDURES SET FORTH IN SECTION 3 OF THE OFFER TO
PURCHASE (AS DEFINED BELOW). SHAREHOLDERS WHO DELIVER SHARES BY BOOK-ENTRY
TRANSFER ARE REFERRED TO HEREIN AS "BOOK-ENTRY SHAREHOLDERS" AND OTHER
SHAREHOLDERS ARE REFERRED TO HEREIN AS "CERTIFICATE SHAREHOLDERS."
<PAGE>
Shareholders whose certificates are not immediately available or who
cannot deliver their Shares and all other documents required hereby to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date (as defined in the Offer to Purchase) must tender their
Shares according to the guaranteed delivery procedure set forth in Section 3
of the Offer to Purchase. See Instruction 2. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Depositary.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
------------------------------------------------------------------------
Account Number:
------------------------------------------------------------------------
Transaction Code Number:
------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Owner(s)
------------------------------------------------------------------------
Window Ticket Number (if any)
------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
------------------------------------------------------------------------
Name of Institution which Guaranteed Delivery
------------------------------------------------------------------------
Account Number:
------------------------------------------------------------------------
Transaction Code Number:
------------------------------------------------------------------------
BOXES ABOVE FOR USE BY ELIGIBLE INSTITUTIONS ONLY
2
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATE(S) TENDERED
APPEAR(S) ON THE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ---------------------------------------------- ---------------------------------------------------------
TOTAL NUMBER OF NUMBER OF
CERTIFICATE SHARES REPRESENTED SHARES
NUMBER(S)* BY CERTIFICATE(S) TENDERED**
- ---------------------------------------------- ----------------- ---------------------- --------------
<S> <C> <C> <C>
----------------- ---------------------- --------------
----------------- ---------------------- --------------
----------------- ---------------------- --------------
----------------- ---------------------- --------------
----------------- ---------------------- --------------
----------------- ---------------------- --------------
Total Shares
- ---------------------------------------------- ----------------- ---------------------- --------------
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by any certificates
delivered to the Depositary are being tendered. See Instruction 4.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF YOU CANNOT LOCATE YOUR CERTIFICATE(S) AND REQUIRE
ASSISTANCE IN REPLACING THEM. UPON RECEIPT OF NOTIFICATION BY THIS
LETTER OF TRANSMITTAL, THE COMPANY'S STOCK TRANSFER AGENT WILL CONTACT
YOU DIRECTLY WITH REPLACEMENT INSTRUCTIONS.
3
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to PhoneTel Acquisition Corp., a Georgia
corporation (the "Purchaser") and a wholly owned subsidiary of PhoneTel
Technologies, Inc., an Ohio corporation ("PhoneTel"), the above-described
shares of Common Stock, par value $.01 per share (the "Common Stock"),
including the associated rights to purchase shares of Common Stock (the
"Rights" and, together with the Common Stock, the "Shares") issued pursuant
to the Rights Agreement (as defined below), of Communications Central Inc., a
Georgia corporation (the "Company"), pursuant to the Purchaser's offer to
purchase all outstanding Shares at a price of $12.85 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated March 20, 1997 (the "Offer to Purchase"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which,
together with the Offer to Purchase and any amendments or supplements hereto
or thereto, constitute the "Offer"). The undersigned understands that the
Purchaser reserves the right to transfer or assign, in whole or in part from
time to time, to one or more direct or indirect wholly owned subsidiaries of
PhoneTel the right to purchase Shares tendered pursuant to the Offer.
The Company has distributed one Right for each outstanding Share of Common
Stock pursuant to a Shareholder Rights Agreement, dated as of July 25, 1995,
as amended as of March 13, 1997, between the Company and First Union National
Bank of North Carolina, as Rights Agent (as amended, the "Rights Agreement").
The Company has represented in the Merger Agreement (as defined in the Offer
to Purchase) that it has taken all action which may be necessary under the
Rights Agreement so that the execution of the Merger Agreement and any
amendments thereto and the consummation of the transactions contemplated
thereby will not cause (i) PhoneTel and/or the Purchaser to become an
Acquiring Person (as defined in the Rights Agreement), (ii) a Distribution
Date, a Stock Acquisition Date or a Triggering Event (as such terms are
defined in the Rights Agreement) to occur, irrespective of the number of
Shares acquired pursuant to the Offer, and (iii) the Rights Agreement to be
applicable to the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger (as defined in the Offer to Purchase).
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), effective upon acceptance for payment of and payment
for the Shares tendered herewith, the undersigned hereby sells, assigns, and
transfers to, or upon the order of the Purchaser, all right, title and
interest in and to all the Shares that are being tendered hereby (and any and
all other Shares or other securities issued or issuable in respect thereof
(collectively, "Distributions")) and irrevocably constitutes and appoints the
Depositary the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares and all Distributions, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) deliver certificates for such Shares and
all Distributions, or transfer ownership of such Shares and all Distributions
on the account books maintained by the Book-Entry Transfer Facility,
together, in any such case, with all accompanying evidences of transfer and
authenticity, to or upon the order of the Purchaser, upon receipt by the
Depositary, as the undersigned's agent, of the purchase price (adjusted, if
appropriate, as provided in the Offer to Purchase), (b) present such Shares
and all Distributions for cancellation and transfer on the Company's books
and (c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares and all Distributions, all in accordance with the
terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares and all Distributions and that, when the same are accepted for payment
by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions,
claims, charges and encumbrances, and the same will not be subject to any
adverse claims. The undersigned will, upon request, execute any signature
guarantees or additional documents deemed by the Depositary or the Purchaser
to be necessary or desirable to complete the sale, assignment and transfer of
the tendered Shares and all Distributions. In addition, the undersigned shall
promptly remit and transfer to the Depositary for the account of the
Purchaser any such Distributions issued to the undersigned, in respect of the
tendered Shares, accompanied by documentation of transfer, and pending such
remittance or appropriate assurance thereof, the Purchaser shall be entitled
to all rights and privileges as owner of any such Distributions and, subject
to the terms of the Merger Agreement, may withhold the entire purchase price
or deduct from the purchase price the amount or value thereof, as determined
by the Purchaser, in its sole discretion.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
4
<PAGE>
The undersigned hereby irrevocably appoints Peter G. Graf or Tammy L.
Martin, and each of them, and any other designees of the Purchaser, the
attorneys and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's shareholders or otherwise act (including pursuant to written
consent) in such manner as each such attorney and proxy or his or her
substitute shall in his or her sole discretion deem proper, to execute any
written consent concerning any matter as each such attorney and proxy or his
or her substitute shall in his or her sole discretion deem proper with
respect to, and to otherwise act with respect to, all the Shares tendered
hereby which have been accepted for payment by the Purchaser prior to the
time any such vote or action is taken (and any and all Distributions issued
or issuable in respect thereof) and with respect to which the undersigned is
entitled to vote. This appointment is effective when, and only to the extent
that, the Purchaser accepts for payment such Shares as provided in the Offer
to Purchase. This power of attorney and proxy is coupled with an interest in
the tendered Shares, is irrevocable and is granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the
Offer. Such acceptance for payment shall revoke all prior powers of attorney
and proxies given by the undersigned at any time with respect to such Shares
and no subsequent powers of attorney or proxies may be given by the
undersigned (and, if given, will not be deemed effective). The Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser must be able to exercise full voting and other rights
with respect to such Shares, including voting at any shareholders meeting
then scheduled.
The undersigned understands that the valid tender of Shares pursuant to
any one of the procedures described in Section 3 of the Offer to Purchaser
and in the instructions hereto will constitute a binding agreement between
the undersigned and the Purchaser upon the terms and subject to the
conditions of the Offer. The undersigned recognizes that under certain
circumstances set forth in the Offer to Purchase, the Purchaser may not be
required to accept for payment any of the tendered Shares. The Purchaser's
acceptance for payment of Shares pursuant to the Offer will constitute a
binding agreement between the undersigned and the Purchaser upon the terms
and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price of any Shares purchased, and/or
return any certificates for Shares not tendered or accepted for payment, in
the name(s) of the registered holder(s) appearing under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of any
Shares purchased, and/or any certificates for Shares not tendered or accepted
for payment (and accompanying documents, as appropriate) to the address(es)
of the registered holder(s) appearing under "Description of Shares Tendered."
In the event that both the Special Delivery Instructions and the Special
Payment Instructions are completed, please issue the check for the purchase
price of any Shares purchased, and/or return any certificates for Shares not
tendered or accepted for payment in the name(s) of, and mail said check
and/or any certificates to, the person or persons so indicated. In the case
of a book-entry delivery of Shares, please credit the account maintained at
the Book-Entry Transfer Facility indicated above with any Shares not accepted
for payment. The undersigned recognizes that the Purchaser has no obligation
pursuant to the Special Payment Instructions to transfer any Shares from the
name of the registered holder(s) thereof if the Purchaser does not accept for
payment any of the Shares so tendered.
5
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not purchased
and/or the check for the purchase price of Shares purchased are to be issued
in the name of someone other than the undersigned.
Issue: [ ] Check [ ] Certificate(s) to:
Name:
- -----------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- -----------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- -----------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
- -----------------------------------------------------------------------------
ACCOUNT NUMBER
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not purchased
and/or the check for the purchase price of Shares purchased are to be
delivered to someone other than the undersigned or to the undersigned at an
address other than that appearing under "Description of Shares Tendered."
Deliver: [ ] Check [ ] Certificate(s) to:
Name:
- -----------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- -----------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- -----------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
6
<PAGE>
SHAREHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(SIGNATURE(S) OF OWNER(S))
Dated: , 1997
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or any other
person acting in a fiduciary or representative capacity, please set forth
full title below. See Instruction 5.)
Name(s):
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- -----------------------------------------------------------------------------
Address:
- -----------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone Number:
- -----------------------------------------------------------------------------
Tax Identification or Social Security Number:
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9 BELOW)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
- -----------------------------------------------------------------------------
Name:
- -----------------------------------------------------------------------------
(PLEASE PRINT)
Title:
- -----------------------------------------------------------------------------
Name of Firm:
- -----------------------------------------------------------------------------
Address:
- -----------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- -----------------------------------------------------------------------------
Dated: , 1997
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations
and brokerage houses) that is a participant in the Security Transfer Agent's
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each an "Eligible
Institution," and collectively, "Eligible Institutions"). No signature
guarantee is required on this Letter of Transmittal (i) if this Letter of
Transmittal is signed by the registered holder(s) (which term, for purposes
of this document, shall include any participant in a Book-Entry Transfer
Facility whose name appears on a security position listing as the owner of
Shares) of Shares tendered herewith, unless such holder(s) has completed
either the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" in this Letter of Transmittal or (ii) if such
Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by shareholders
either if certificates for Shares are to be forwarded herewith or if a tender
of Shares is to be made pursuant to the procedures for delivery by book-entry
transfer set forth in Section 3 of the Offer to Purchase. For Shares to be
validly tendered pursuant to the Offer, either (i) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees, or in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase), and any other required
documents, must be received by the Depositary at one of the Depositary's
addresses set forth herein prior to the Expiration Date (as defined in the
Offer to Purchase) and either certificates for tendered Shares must be
received by the Depositary at one of such addresses or such Shares must be
delivered pursuant to the procedures for book-entry transfer (and a Book
Entry Confirmation received by the Depositary), in each case, prior to the
Expiration Date, or (ii) the tendering shareholder must comply with the
guaranteed delivery procedure set forth below.
Stockholders whose certificates for Shares are not immediately available
or who cannot complete the procedures for book-entry transfer on a timely
basis or time will not permit all required documents to reach the Depositary
prior to the Expiration Date, may tender their Shares pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. Pursuant to such procedures, (i) such tender must be made by or
through an Eligible Institution, (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the
Purchaser (or facsimile thereof), must be received by the Depositary prior to
the Expiration Date and (iii) the certificates for (or a Book-Entry
Confirmation with respect to) such Shares, together with this properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other required documents are received
by the Depositary within three trading days after the date of execution of
such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer
to Purchase. A "trading day" is any day on which the National Association of
Securities Dealers Automated Quotation National Market is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
The method of delivery of Shares, this Letter of Transmittal and all other
required documents, including delivery through the Book-Entry Transfer
Facility, is at the election and risk of the tendering shareholder. Shares
will be deemed delivered only when actually received by the Depositary
(including, in the case of a book-entry transfer, by Book-Entry
Confirmation). If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a
separate schedule attached hereto.
4. Partial Tenders (Applicable To Certificate Shareholders Only). If fewer
than all the Shares evidenced by any certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such case, new certificate(s) for
the remainder of the Shares that were evidenced by the old
8
<PAGE>
certificate(s) will be sent to the registered holder(s), unless otherwise
provided in the appropriate box on this Letter of Transmittal, as soon as
practicable after the expiration or termination of the Offer. All Shares
represented by certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of
the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment or certificates for Shares
not tendered or accepted for payment are to be issued to a person other than
the registered owner(s). Signatures on such certificates or stock powers must
be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the shares tendered hereby, the certificates
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name(s) of
the registered owner(s) appear(s) on the certificates for such Shares.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution. See Instruction 1.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6, the
Purchaser will pay, or cause to be paid, any stock transfer taxes with
respect to the transfer and sale of Shares to it or its assignee pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any persons other than the registered holder(s),
or if tendered certificates are registered in the name of any person other
than the person(s) signing this Letter of Transmittal, the amount of any
stock transfer taxes (whether imposed on the registered holder or such
person) payable on the account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment
of such taxes or exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter
of Transmittal.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of and/or certificates for Shares not accepted for payment are to
be returned to a person other than the signer of this Letter of Transmittal
or if a check is to be sent and/or such certificates are to be returned to a
person other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Any shareholder tendering Shares by
book-entry transfer will have any Shares not accepted for payment returned by
crediting the account maintained by such shareholder at the Book-Entry
Transfer Facility from which such transfer was made.
8. Waiver of Conditions. Except as otherwise provided in the Offer to
Purchase, the Purchaser reserves the absolute right, in its sole discretion,
to waive any of the conditions of the Offer or any defect or irregularity in
the tender of any Shares of any particular shareholder, whether or not
similar defects or irregularities are waived in the case of other
shareholders.
9. Substitute Form W-9. The tendering shareholder (or other payee) is
required, unless an exemption applies, to provide the Depositary with a
correct Taxpayer Identification Number ("TIN"), generally the shareholder's
social security or federal employer identification number, and with certain
other information, on Substitute Form W-9, which is provided under "Important
Tax Information" below, and to certify under penalties of perjury, that such
number is correct and that the shareholder (or other payee) is not subject to
backup withholding. If a tendering shareholder is subject to backup
withholding, he or she must cross out item (2) of the Certification Box on
Substitute Form W-9 before signing such Form. Failure to furnish the correct
TIN on the Substitute Form W-9 may subject the tendering shareholder (or
other payee) to a $50 penalty imposed by the Internal Revenue Service and
payments of cash to the tendering shareholder (or other payee)
9
<PAGE>
pursuant to the Offer may be subject to backup withholding of 31%. If the
tendering shareholder has not been issued a TIN and has applied for a number
or intends to apply for a number in the near future, he or she should write
"Applied For" in the space provided for the TIN in Part I, sign and date the
Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN by the time of payment, the Depositary
will withhold 31% of all such payments for surrendered Shares thereafter
until a TIN is provided to the Depositary.
10. Lost or Destroyed Certificates. If any certificate(s) representing
Shares has been lost or destroyed, the shareholder should check the
appropriate box on the front of the Letter of Transmittal. The Company's
stock transfer agent will then instruct such shareholder as to the procedure
to be followed in order to replace the certificate(s). The shareholder will
have to post a surety bond of approximately 2% of the current market value of
the stock. This Letter of Transmittal and related documents cannot be
processed until procedures for replacing lost or destroyed certificates have
been followed.
11. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
locations and telephone numbers set forth below.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF),
TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND CERTIFICATES, OR A BOOK-ENTRY
CONFIRMATION, FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY
THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY (OR A FACSIMILE COPY
THEREOF) MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION
DATE.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a shareholder surrendering Shares must,
unless an exemption applies, provide the Depositary (as payor) with his
correct TIN on Substitute Form W-9 included in this Letter of Transmittal. If
the shareholder is an individual, his TIN is his social security number. If
the correct TIN is not provided, the shareholder may be subject to a $50
penalty imposed by the Internal Revenue Service and payments of cash to the
tendering shareholder (or other payee) pursuant to the Offer may be subject
to backup withholding of 31%.
Certain shareholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup
withholding. In order for an exempt foreign shareholder to avoid backup
withholding, that person should complete, sign and submit a Form W-8,
Certificate of Foreign Status, signed under penalties of perjury, attesting
to his exempt status. A Form W-8 can be obtained from the Depositary. Exempt
shareholders, other than foreign shareholders, should furnish their TIN,
write "Exempt" on the face of the Substitute Form W-9 and sign, date and
return the Substitute Form W-9 to the Depositary. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payment made to payee. Backup withholding is not an additional tax.
Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If backup
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of his correct TIN (or the TIN of any other
payee) by completing the Substitute Form W-9 included in this Letter of
Transmittal certifying (1) that the TIN provided on the Substitute Form W-9
is correct (or that such shareholder is awaiting a TIN), and that (2) the
shareholder is not subject to backup withholding because (i) the shareholder
has not been notified by the Internal Revenue Service that the shareholder is
subject to backup withholding as a result of a failure to report all interest
and dividends or (ii) the Internal Revenue Service has notified the
shareholder that the shareholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the TIN, generally the
social security number or employer identification number, of the record owner
of the Shares. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance
on which number to report. If the tendering shareholder has not been issued a
TIN and has applied for a number or intends to apply for a number in the near
future, he or she should write "Applied For" in the space provided for the
TIN in Part I, sign and date the Substitute Form W-9 and sign and date the
Certificate of Awaiting Taxpayer Identification Number, which appears in a
separate box below the Substitute Form W-9. If "Applied For" is written in
Part I and the Depositary is not provided with a TIN by the time of payment,
the Depositary will withhold 31% of all payments of the purchase price until
a TIN is provided to the Depositary.
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
PAYER'S NAME: FIRST UNION NATIONAL BANK OF NORTH CAROLINA
-----------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN IN THE BOX AT --------------------------------
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. Social Security Number
Department of the Treasury OR
Internal Revenue Service --------------------------------
Employer Identification No.
(If awaiting TIN write
"Applied For")
- ------------------------------ -------------------------------------------------- -------------------------------
PAYER'S REQUEST FOR PART II-- For payees NOT subject to backup withholding, see the enclosed Guidelines
TAXPAYER IDENTIFICATION for Certification of Taxpayer Identification Number on Substitute Form W-9 and
NUMBER ("TIN") complete as instructed therein.
CERTIFICATION-- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because either (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION
OF THIS DOCUMENT OTHER THAN THE CERTIFICATES REQUIRED TO AVOID BACKUP
WITHHOLDING.
- ------------------------------ -----------------------------------------------------------------------------------
SIGNATURE: DATE:
- --------------------------------------------- --------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND IN BACKUP WITHHOLDING OF
31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
WROTE "APPLIED FOR" IN PART I OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER THE PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION
NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED
AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR
(B) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I
UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER BY THE
TIME OF PAYMENT, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE
WITHHELD UNTIL I PROVIDE A NUMBER.
SIGNATURES DATE
- -------------------------------------- ------------------------
12
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
locations and telephone numbers set forth below:
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC. [LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
SOUTHCOAST CAPITAL CORPORATION [LOGO]
277 Park Avenue
37th Floor
New York, New York 10172
CALL TOLL FREE: (888) 696-7222
(212) 940-9330 (Call Collect)
13
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
COMMUNICATIONS CENTRAL INC.
BY
PHONETEL ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
PHONETEL TECHNOLOGIES, INC.
AT
$12.85 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, APRIL 16, 1997, UNLESS THE OFFER IS EXTENDED.
March 20, 1997
To Brokers, Dealers, Banks, Trust
Companies and Other Nominees:
We have been engaged by PhoneTel Acquisition Corp., a Georgia corporation
(the "Purchaser") and a wholly owned subsidiary of PhoneTel Technologies,
Inc., an Ohio corporation ("PhoneTel"), to act as Dealer Manager in
connection with the Purchaser's offer to purchase all of the outstanding
shares of Common Stock, par value $.01 per share (the "Common Stock"),
including the associated rights to purchase shares of Common Stock (the
"Rights" and, together with the Common Stock, the "Shares"), of
Communications Central Inc., a Georgia corporation (the "Company"), at $12.85
per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Purchaser's Offer to
Purchase dated March 20, 1997 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"). Please furnish copies of the
enclosed materials to those of your clients for whom you hold Shares
registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated March 20, 1997;
2. Letter of Transmittal to be used by shareholders of the Company in
accepting the Offer;
3. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
4. Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer, that number
of shares which represents at least seventy-five percent (75%) of the Shares
outstanding on a fully diluted basis, (ii) the receipt by PhoneTel of
financing sufficient in amount to enable it and the Purchaser to consummate
the Offer and the Merger (as defined in the Offer to Purchase) and to
refinance certain indebtedness for borrowed money of the Company and to pay
related fees and expenses and (iii) the other conditions set forth in the
Offer to Purchase. As used herein, "fully diluted basis" takes into account
issued and outstanding Shares and Shares subject to issuance under
outstanding stock options and warrants.
<PAGE>
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will accept for payment and will pay
promptly after the Expiration Date (as defined in the Offer to Purchase) for
all Shares validly tendered prior to the Expiration Date and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares. Payment for Shares
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for such Shares (or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect
thereto), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase), and (iii) any other documents required by the Letter of
Transmittal.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates on or prior to the Expiration Date or
to comply with the book-entry transfer procedures on a timely basis, a tender
may be effected by following the guaranteed delivery procedures specified in
Section 3 of the Offer to Purchase.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS
PROMPTLY. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, APRIL 16, 1997, UNLESS
EXTENDED.
Neither the Purchaser nor PhoneTel will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and
Information Agent as described in the Offer to Purchase) in connection with
the solicitation of tenders of Shares pursuant to the Offer. The Purchaser
will, however, upon request, reimburse brokers, dealers, commercial banks and
trust companies for reasonable and necessary costs and expenses incurred by
them in forwarding materials to their customers. The Purchaser will pay all
stock transfer taxes applicable to its purchase of Shares pursuant to the
Offer, subject to Instruction 6 of the Letter of Transmittal.
Additional copies of the enclosed materials may be obtained by contacting
the Dealer Manager or the Information Agent at their respective locations and
telephone numbers set forth on the back cover of the enclosed Offer to
Purchase.
Very truly yours,
Southcoast Capital Corporation
as Dealer Manager
277 Park Avenue
37th Floor
New York, NY 10172
Call Toll Free: (888) 696-7222
(212) 940-9330
(Call Collect)
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PHONETEL, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR ANY OTHER PERSON
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM
WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE
LETTER OF TRANSMITTAL.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
COMMUNICATIONS CENTRAL INC.
BY
PHONETEL ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
PHONETEL TECHNOLOGIES, INC.
AT
$12.85 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, APRIL 16, 1997, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated March 20,
1997 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") relating to the Offer by PhoneTel Acquisition Corp., a Georgia
corporation (the "Purchaser"), which is a wholly owned subsidiary of PhoneTel
Technologies, Inc., an Ohio corporation ("PhoneTel"), to purchase for cash
all of the outstanding shares of Common Stock, par value $.01 per share (the
"Common Stock"), including the associated rights to purchase shares of Common
Stock (the "Rights" and, together with the Common Stock, the "Shares"), of
Communications Central Inc., a Georgia corporation (the "Company"). We are
the holder of record of Shares held by us for your account. A TENDER OF SUCH
SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request your instructions as to whether you wish to tender
any of or all of the Shares held by us for your account upon the terms and
subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The offer price is $12.85 per Share, net to the seller in cash,
without interest thereon.
2. The Offer is being made for all outstanding Shares.
3. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER AND DETERMINED THAT THE TERMS OF THE OFFER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY'S SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Wednesday, April 16, 1997, unless the Offer is
extended.
5. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer,
that number of shares which represents at least seventy-five percent (75%)
of the Shares outstanding on a fully diluted basis, (ii) the receipt by
PhoneTel of financing sufficient in amount to enable it and the Purchaser
to consummate the Offer and the Merger (as defined in the Offer to
Purchase) and to refinance certain indebtedness for
<PAGE>
borrowed money of the Company and to pay related fees and expenses and
(iii) the other conditions set forth in the Offer to Purchase. As used
herein, "fully diluted basis" takes into account issued and outstanding
Shares and Shares subject to issuance under outstanding stock options and
warrants.
6. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser pursuant to the Offer will be borne by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to
submit a tender on your behalf prior to the expiration of the Offer. If you
wish to have us tender any or all of the Shares held by us for your account,
please so instruct us by completing, executing and returning to us the
instruction form set forth on the reverse side of this letter. An envelope to
return your instructions to us is enclosed. If you authorize the tender of
your Shares, all such Shares will be tendered unless otherwise specified on
the reverse side of this letter. Your instructions should be forwarded to us
in ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, the holders of Shares residing in any jurisdiction in which the
making or acceptance of the Offer would not be in compliance with the laws of
such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
COMMUNICATIONS CENTRAL INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase dated March 20, 1997 and the related Letter of Transmittal, in
connection with the offer by PhoneTel Acquisition Corp., a Georgia
corporation and a wholly owned subsidiary of PhoneTel Technologies, Inc., an
Ohio corporation, to purchase all of the outstanding shares of common stock,
par value $.01 per share (the "Common Stock"), including the associated
rights to purchase shares of Common Stock (the "Rights" and, together with
the Common Stock, the "Shares"), of Communications Central Inc., a Georgia
corporation.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in such Offer to Purchase and related Letter of
Transmittal.
Dated: , 1997
NUMBER OF SHARES TO BE TENDERED*
SHARES
-----------------
I (we) understand that if I (we) sign this instruction form without
indicating a lesser number of Shares in the space above, all Shares held by
you for my (our) account will be tendered.
-----------------------------
Signature(s)
-----------------------------
Print Name(s)
-----------------------------
Print Address(es)
-----------------------------
Area Code and Telephone Number
-----------------------------
Tax ID or Social Security Number
- ------------
* Unless otherwise indicated, it will be assumed that all Shares held by your
firm for my (our) account are to be tendered.
3
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
COMMUNICATIONS CENTRAL INC.
As set forth in Section 3 of the Offer to Purchase (as defined below),
this form or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if certificates for shares of Common Stock, par
value $.01 per share (the "Common Stock"), including the associated rights to
purchase shares of Common Stock (the "Rights" and, together with the Common
Stock, the "Shares"), of Communications Central Inc., a Georgia corporation
(the "Company"), are not immediately available, or if the procedure for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary at the address set
forth below prior to the Expiration Date (as defined in the Offer to
Purchase). This form may be delivered by hand to the Depositary or
transmitted by telegram, facsimile transmission or mail to the Depositary and
must include a guarantee by an Eligible Institution (as defined in the Offer
to Purchase). See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By Mail: By Hand/Overnight Delivery:
230 South Tryon Street 230 South Tryon Street
11th Floor 11th Floor
Charlotte, North Carolina 28288 Charlotte, North Carolina 28288
or or
IBJ Schroeder Bank & Trust Company IBJ Schroeder Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing Window
Attn: Reorganization Subcellar One (SC-1)
Operations Dept.
By Facsimile Transmission:
(For Eligible Institutions Only)
(704) 383-8353
or
(212) 858-2611
Confirm Receipt of Facsimile by Telephone:
(704) 374-2775
or
(212) 858-2103
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to PhoneTel Acquisition Corp., a Georgia
corporation (the "Purchaser") and a wholly owned subsidiary of PhoneTel
Technologies, Inc., an Ohio corporation, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated March 20,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal,
receipt of which is hereby acknowledged, the number of Shares (as such term
is defined in the Offer to Purchase) set forth below, all pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase.
Number of Shares:
---------------------------------------------------------------------------
Certificate Nos. (if available):
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(Check box if Shares will be
tendered by book-entry transfer)
[ ] The Depository Trust Company
Account Number:
---------------------------------------------------------------------------
Dated: , 1997
---------------------------
Name(s) of Record Holder(s):
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Please Print
Address(es):
---------------------------------------------------------------------------
Zip Code
Area Code and Tel. No.:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Signature(s)
Dated: , 1997
---------------------------
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program
or the Stock Exchange Medallion Program, hereby guarantees to deliver to
the Depositary either the certificates representing the Shares tendered
hereby, in proper form for transfer, or a Book-Entry Confirmation with
respect to such Shares, in any such case together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or an Agent's Message, and any other
required documents within three trading days (as defined in the Offer to
Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver such Letter of Transmittal and
such certificates for Shares, or such Book-Entry Confirmation, to the
Depositary within the time period shown herein. Failure to do so could
result in a financial loss to such Eligible Institution. All capitalized
terms used herein have the meanings set forth in the Offer to Purchase.
Name of Firm:
----------------------------------
Address:
----------------------------------
----------------------------------
Zip Code
Area Code and
Tel. No.:
----------------------------------
----------------------------------
Authorized Signature
Name:
----------------------------------
Please Print
Title:
----------------------------------
Dated: , 1997
----------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE.
CERTIFICATES FOR SHARES SHOULD BE SENT WITH
YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
GIVE THE
SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY
NUMBER OF--
- --------------------------------------- ----------------------------
<S> <C>
1.An individual's account The individual
2.Two or more individuals The actual owner of
(joint account) the account or, if
combined funds,
the first individual on
the account(1)
3.Husband and wife The actual owner of
(joint account) the account or, if joint
funds, either person(1)
4.Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5.Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor(1)
6.Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent person(3)
minor, or incompetent
7.a.The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b.So-called trust account that is not The actual owner(1)
a legal or valid trust under state
law
- --------------------------------------- ----------------------------
</TABLE>
<TABLE>
<CAPTION>
GIVE THE
EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- -------------------------------------- ----------------------------------
<S> <C>
8.Sole proprietorship account The owner(4)
9.A valid trust, estate or pension The legal entity (Do not furnish
the identifying number of the
personal representative or trustee
unless the legal entity itself is
not designated in the account
title.)(5)
10.Corporate account The corporation
11.Religious, charitable, or The organization
educational organization account
12.Partnership account held in the The partnership
name of the business
13.Association, club, or other The organization
tax-exempt organization
14.A broker or registered nominee The broker or nominee
15.Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or
prison) that receives agricultural
program payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's Social Security number.
(4) Show your individual name. You may also enter your business or "doing
business as" name. You may use either your Social Security number or
your Employer Identification Number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), at the local office of the Social
Security Administration or the Internal Revenue Service (the "IRS") and apply
for a number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for
which no information reporting is required. For interest and dividends, all
listed payees are exempt except those identified in item (9). For broker
transactions, payees listed in items (1) through (13) and a person registered
under the Investment Advisers Act of 1940 who regularly acts as a broker are
exempt. Payments subject to reporting under sections 6041 and 6041A of the
Internal Revenue Code (the "Code") are generally exempt from backup
withholding only if made to payees described in items (1) through (7), except
a corporation that provides medical and health care services or bills and
collects payments for such services is not exempt from backup withholding or
information reporting. Only payees described in items (2) through (6) are
exempt from backup withholding for barter exchange transactions, patronage
dividends, and payments by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a) of the Code, or an
IRA, or a custodial account under section 403(b)(7) of the Code.
(3) The United States or any agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States,
or any of their political subdivisions or instrumentalities thereof.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalies.
(6) An international organization or any agencies or instrumentalities.
(7) a foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the
United States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a) of the
Code.
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Securities, Inc., Nominee List.
(15) A trust exempt from tax under section 664 of the Code or described in
section 4947 of the Code.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under Section 1441
of the Code.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
o Payments of patronage dividends not paid in money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and
you have not provided your correct taxpayer identification number to the
payer.
o Payments of tax-exempt interest (including exempt-interest dividends
under Section 852 of the Code).
o Payments described in Section 6049(b)(5) of the Code to nonresident
aliens.
o Payments on tax-free covenant bonds under Section 1451 of the Code.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN
AND DATE THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN
OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A
COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A and
6050N of the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE--Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers
to payers who must report the payments to the IRS. The IRS uses the numbers
for identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE>
FOR IMMEDIATE RELEASE
Contact: ______________________
PHONETEL TECHNOLOGIES, INC. AND
COMMUNICATIONS CENTRAL INC.
ANNOUNCE MERGER AGREEMENT
New York, New York, March 14, 1997 -- PhoneTel Technologies, Inc. (AMEX:
PHN) and Communications Central Inc. (NASDAQ: CCIX) jointly announced today
that they have signed a definitive merger agreement pursuant to which PhoneTel
will acquire all outstanding shares of Communications Central for $12.85 per
share in cash. Pursuant to the agreement, a wholly owned subsidiary of
PhoneTel will commence an all-cash tender offer for all outstanding common
shares (and associated rights) of Communications Central for $12.85 per share,
net to the Seller, followed by a merger of the PhoneTel subsidiary and
Communications Central. The transaction, including debt to be assumed or
refinanced, is valued at approximately $165 million. The Board of Directors of
each company has approved the transaction.
The tender offer is conditioned upon, among other things, 75% of the
outstanding Communications Central shares, on a fully diluted basis, having
been tendered and the receipt by PhoneTel of financing sufficient to enable it
to consummate the transaction.
Peter G. Graf, Chairman and Chief Executive Officer of PhoneTel said,
"The acquisition of Communications Central is a great step forward in
developing an efficient consolidation vehicle for pay telephones. We are
thrilled to have the opportunity to combine the substantial skills and
resources of Communications Central with our own."
Rodger L. Johnson, President and Chief Executive Officer of
Communications Central said, "The independent pay telephone industry presents
a significant opportunity for consolidation and this transaction will allow
two industry leaders to join forces in bringing the consolidation trend
forward. We are delighted to merge our resources with those of PhoneTel to
work toward further developing an efficient vehicle to drive the industry
consolidation."
<PAGE>
PhoneTel, based in Cleveland, Ohio, believes it is the largest
independent public pay telephone operator in the United States, owning
approximately 41,300 installed public pay telephones.
Communications Central, based in Roswell, Georgia, is an independent
public pay telephone and inmate phone operator with a network of approximately
26,000 pay telephones and inmate phones located in 41 states and the District
of Columbia.
Southcoast Capital Corporation is acting as financial advisor to PhoneTel
in connection with the transaction.
2
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase (as defined below) dated March 20, 1997 and
the related Letter of Transmittal and is being made to all holders of Shares.
The Offer is not being made to (nor will tenders be accepted from or on behalf
of) holders of Shares in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the laws of such
jurisdiction or any administrative or judicial action pursuant thereto. In any
jurisdiction where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of PhoneTel Acquisition Corp. by Southcoast Capital Corporation or one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
COMMUNICATIONS CENTRAL INC.
AT
$12.85 NET PER SHARE
BY
PHONETEL ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
PHONETEL TECHNOLOGIES, INC.
PhoneTel Acquisition Corp., a Georgia corporation (the "Purchaser") and a
wholly owned subsidiary of PhoneTel Technologies, Inc., an Ohio corporation
("PhoneTel"), is offering to purchase all of the outstanding shares of Common
Stock, par value $.01 per share (the "Common Stock"), including the associated
rights to purchase shares of Common Stock (the "Rights" and, together with the
Common Stock, the "Shares") issued pursuant to the Rights Agreement (as
defined below), of Communications Central Inc., a Georgia corporation (the
"Company"), at a price of $12.85 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated March 20, 1997 (the "Offer to Purchase") and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, APRIL 16, 1997, UNLESS THE OFFER IS
EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of March 14, 1997 (the "Merger Agreement"), by and among PhoneTel,
the Purchaser and the Company. The Merger Agreement provides that, as soon as
practicable after the completion of the Offer and satisfaction and waiver, if
permissible, of all conditions to the Merger (as defined below), (i) in the
event that PhoneTel, the Purchaser and any other subsidiaries of PhoneTel
acquire in the aggregate at least 90% of the Shares, pursuant to the Offer or
otherwise, then, at the election of PhoneTel, the Company will be merged with
and into the Purchaser and the separate corporate existence of the Company
will thereupon cease, or (ii) in the event that PhoneTel does not so elect or
does not acquire at least 90% of the Shares, then the Purchaser will be merged
with and into the Company and the separate corporate existence of the
Purchaser will cease. The merger, as effected pursuant to clause (i) or (ii)
of the immediately preceding sentence, is referred to herein as the "Merger,"
and such of the Purchaser or the Company as is the surviving corporation of
the Merger is herein referred to as the "Surviving Corporation." At the
effective time of the Merger, each Share then outstanding (other than Shares
held by PhoneTel, the Purchaser or any other wholly owned subsidiary of
PhoneTel and Shares held by shareholders who perfect dissenters' rights under
Georgia law) will be converted into the right to receive $12.85 in cash,
without interest thereon, or any higher price paid in the Offer. The Company
has represented in the Merger Agreement that it has taken all action which may
be necessary under a Shareholder Rights Agreement dated as of July 25, 1995 as
amended as of March 13, 1997, between the Company and First Union National
Bank of North Carolina, as Rights Agent (as amended, the "Rights Agreement")
so that the execution of the Merger Agreement and any amendments thereto and
the consummation of the transactions contemplated thereby, will not cause (i)
PhoneTel and/or the Purchaser to become an Acquiring Person (as defined in the
Rights Agreement), (ii) a Distribution Date, a Stock Acquisition Date or a
Triggering Event (as such terms are defined in the Rights Agreement) to occur,
irrespective of the number of Shares acquired pursuant to the Offer, and (iii)
the Rights Agreement to be applicable to the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT, THE OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER
OF SHARES WHICH REPRESENTS AT LEAST SEVENTY-FIVE PERCENT (75%) OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ("MINIMUM CONDITION"), (ii) THE RECEIPT
BY PHONETEL OF FINANCING SUFFICIENT IN AMOUNT TO ENABLE IT AND THE PURCHASER
TO CONSUMMATE THE OFFER AND THE MERGER AND TO REFINANCE CERTAIN INDEBTEDNESS
FOR BORROWED MONEY OF THE COMPANY AND TO PAY RELATED FEES AND EXPENSES
("FINANCING CONDITION") AND (iii) THE OTHER CONDITIONS SET FORTH IN THE OFFER
TO PURCHASE. AS USED IN THE HEREIN, "FULLY DILUTED BASIS" TAKES INTO ACCOUNT
ISSUED AND OUTSTANDING SHARES AND SHARES SUBJECT TO ISSUANCE UNDER OUTSTANDING
STOCK OPTIONS AND WARRANTS.
Pursuant to the terms of the Merger Agreement, PhoneTel has deposited
into escrow with First Union National Bank of Georgia, as Escrow Agent, $5
million in cash (the "Escrow Amount") to be held pending consummation of the
Merger or earlier termination of the Merger Agreement. In the event that the
Merger Agreement is terminated solely due to the failure of either (i) the
Minimum Condition (provided at least 50.1% of the Shares outstanding on a fully
diluted basis have been validly tendered and not withdrawn) or (ii) the
Financing Condition (provided the Company has fulfilled its obligations with
respect to rendering assistance in securing the financing necessary to satisfy
the Financing Condition), then the Company shall be entitled to receive the
entire Escrow Amount. In addition, the Merger Agreement provides that PhoneTel
will pay to the Company an amount equal to the Company's reasonable legal fees
and expenses incurred, as of the date of the termination of the Merger
Agreement with respect to the Merger Agreement and the transactions
contemplated thereby in certain circumstances, including, subject to certain
exceptions, if (i) the Offer shall have expired without any Shares being
purchased therein or (ii) the Purchaser shall not have accepted for payment all
Shares tendered pursuant to the Offer by May 19, 1997, and the sole reason for
the Purchaser's failure to purchase Shares in the Offer is PhoneTel's failure
to satisfy the Financing Condition (provided the Company has fulfilled its
obligations with respect to rendering assistance in securing the financing
necessary to satisfy the Financing Condition).
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares properly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or
written notice to First Union National Bank of North Carolina (the
"Depositary") of the Purchaser's acceptance for payment of such Shares. Upon
the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering shareholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates for such Shares (or a
timely Book-Entry Confirmation (as defined in the Offer to Purchase) with
respect thereto), (ii) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined in
the Offer to Purchase), and (iii) any other documents required by the Letter
of Transmittal. The per Share consideration paid to any shareholder pursuant
to the Offer will be the highest per Share consideration paid to any other
shareholder pursuant to the Offer. Under no circumstances will interest be
paid on the purchase price to be paid by the Purchaser for such Shares,
regardless of any extension of the Offer or any delay in making such payment.
Except as otherwise provided below, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date (as defined in the Offer to Purchase) and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after May 18, 1997. For a
withdrawal to be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth in the Offer to Purchase and must specify the name of the
person having tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of the Shares to be withdrawn,
if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
serial numbers shown on such certificates must be submitted to the Depositary
and, unless such Shares have been tendered by an Eligible Institution (as
defined in Section 3 of the Offer to Purchase), the signatures on the notice
of withdrawal must be guaranteed by an Eligible Institution. If Shares have
been delivered pursuant to the procedures for book-entry transfer set forth in
Section 3 of the Offer to Purchase, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility (as
defined in the Offer to Purchase) to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 3 of the Offer to Purchase at any time
prior to the Expiration Date. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Purchaser, in its sole discretion, which determination will be final and
binding.
Subject to the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time,
to extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 under the Securities Exchange Act of 1934, as amended, is contained
in the Offer to Purchase and is incorporated herein by reference.
The Company has provided the Purchaser with the Company's shareholder
lists and security position listings for the purpose of disseminating the
Offer to holders of Shares. The Offer to Purchase, the related Letter of
Transmittal and other relevant documents will be mailed by the Purchaser to
record holders of Shares, and will be furnished by the Purchaser to brokers,
dealers, banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the shareholder lists, or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or additional copies of the Offer
to Purchase, Letter of Transmittal and other tender offer documents may be
directed to the Information Agent or the Dealer Manager, at their respective
locations and telephone numbers set forth below, and copies will be furnished
at the Purchaser's expense. The Purchaser will not pay any fees or commissions
to any broker or dealer or other person (other than the Dealer Manager and the
Information Agent) for soliciting tenders of Shares in connection with the
Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll Free: (800) 322-2885
The Dealer Manager for the Offer is:
SOUTHCOAST CAPITAL CORPORATION
277 Park Avenue
37th Floor
New York, New York 10172
Call Toll Free: (888) 696-7222
(212) 940-9330 (Call Collect)
March 20, 1997
<PAGE>
[CIBC WOOD GUNDY LETTERHEAD]
March 14, 1997
Mr. Peter. G. Graf
Chairman and Chief Executive Officer
PhoneTel Technologies, Inc.
650 Statler Office Tower
1127 Euclid Avenue
Cleveland, OH 44115
Dear Mr. Graf:
CIBC Wood Gundy Securities Corp. ("CIBC Wood Gundy") is pleased to confirm
that, based on current market conditions and the other terms and conditions
referred to herein, we are highly confident of our ability, as lead book
running underwriter, placement agent or initial purchaser, to sell or place
up to $175 million of senior and/or subordinated debt or equity (the
"Financing") for PhoneTel Technologies, Inc. ("PhoneTel" or the "Company")
to finance the acquisition (the "Transaction") of Communications Central Inc.
("CCI") pursuant to a binding merger agreement (the "Acquisition Agreement")
through which the Company will obtain the entire equity interest of CCI subject
to the terms and conditions therein and of this letter. The structure,
covenants and economic and other terms of the Financing will be based on
market conditions at the time of the sale or placement of the Financing and
on the ultimate structure of the Transaction. This letter is intended to
further clarify and supersede our letter of March 9, 1997.
Our ability to consummate the sale or placement of the Financing is subject to:
(i) the terms and conditions of the Financing and all related
documentation (which will be customary for transactions of this
nature), as well as the terms and structure of the Transaction
(including the Acquisition Agreement and related documents)
and the execution and delivery of documentation with respect to
the Financing and the Transaction, all being reasonably
satisfactory in form and substance to CIBC Wood Gundy and its
counsel;
(ii) our satisfaction with, and completion of financial, business and
legal due diligence regarding the Company and CCI including
access to certain non-public information;
(iii) there not having become known or, since December 31, 1996 occurred
any material adverse change in the business, condition (financial
or otherwise), results of operations, assets, liabilities or
prospects of the Company or CCI;
(iv) the receipt of all necessary governmental, regulatory and third-
party approvals and consents, including from other lenders to
the Company in connection with the Financing and the Transaction,
on terms satisfactory to us;
<PAGE>
Mr. Peter G. Graf
March 14, 1997
Page Two
(v) our having reasonable and customary time and terms to market the
Financing, as contemplated by our engagement letter, which is
likely to require an extension of the initial tender offer
period; and
(vi) at the time the Financing is consummated there being no legal,
regulatory, financial or other restrictions on the Company's
ability to promptly consummate the Transaction.
This highly confident letter is being delivered to you based upon the
understanding that no disclosure of, or reference to, this highly confident
letter shall be made to any person or entity other than PhoneTel and its
directors, officers, financial advisors, counsel and accountants who are
directly involved in the Transaction and/or CCI and its directors, officers,
financial advisors, counsel and accountants who are directly involved in the
Transaction, without prior written consent from CIBC Wood Gundy. Please note
that this letter is not a commitment to purchase or place the Financing or
any other securities of the Company.
We look forward to working with you on this transaction.
Very truly yours,
CIBC Wood Gundy Securities Corp.
By: /s/ James J. Moglia
-------------------------------
James J. Moglia
Managing Director
2
<PAGE>
[CIBC WOOD GUNDY LETTERHEAD]
March 14, 1997
Mr. Peter G. Graf
Chairman and Chief Executive Officer
PhoneTel Technologies, Inc.
650 Statler Office Tower
1127 Euclid Avenue
Cleveland, OH 44115
Gentlemen:
This agreement (the "Agreement") will confirm that PhoneTel Technologies,
Inc. and its subsidiaries (collectively, the "Company") have retained CIBC Wood
Gundy Securities Corp. ("CIBC Wood Gundy") as the Company's lead book running
underwriter, placement agent or initial purchaser, as the case may be, on the
terms and conditions set forth herein, in connection with, but not limited to:
(i) the proposed issuance to institutional investors of up to $175 million
aggregate principal amount of high yield debt securities of the Company,
preferred stock, or private common equity (the "Securities"), (ii) the
obtaining of a new senior credit facility of up to S100 million (the "Senior
Financing") and (iii) the issuance of up to $125 million of additional high
yield debt or equity securities to finance other potential acquisitions (the
"Future Financing" and together with the "Securities" and the "Senior
Financing", the "Financing"). The net proceeds to the Company from the
Securities and the Senior Financing principally will be used to finance the
acquisition (the "Acquisition") of Communications Central Inc. ("CCI") and to
refinance CCI's existing indebtedness pursuant to a merger agreement dated as
of March 14, 1997 (the "Acquisition Agreement"), fund working capital and for
general corporate purposes, including potential acquisitions (the
"Transaction"). This letter shall supersede the engagement letter dated
March 7, 1997 between the Company and CIBC Wood Gundy.
1. Retention. (a) Subject to the provisions set forth below in this
Agreement, the Company hereby retains CIBC Wood Gundy as its lead book running
underwriter, placement agent or initial purchaser, as the case may be, in
connection with the Financing. The Company agrees that during the term of this
Agreement, it will not directly, or indirectly, offer the instruments
comprising the Financing (whether in the form of a loan, debt securities or
preferred stock) to, or solicit any offer to purchase any of the same from, or
otherwise contact, approach or negotiate in respect thereof with, any person or
persons, other than through CIBC Wood Gundy, except that the Company may work
with ING, GE Capital, or Cerberus Partners or their affiliates
<PAGE>
(collectively, the "Permitted Parties") regarding Senior Financing and with
current equity owners and parties previously contacted by or on behalf of the
Company (the "Equity Parties") regarding the purchase of preferred stock and
common equity. The Company further represents that (i) it is not currently in
discussions or under any agreement with any other placement agent, underwriter
or financial institution with respect to a private or public offering of the
instruments comprising the Financing, or any other debt or preferred stock
instrument, whether in the form of a loan or securities other than with the
Permitted Parties regarding Senior Financing, with the Equity Parties regarding
preferred stock and common equity and with respect to public common equity and
(ii) it will not enter into any such discussions or agreement with any other
initial purchaser, placement agent, underwriter or financial institution during
the term of this Agreement with respect to a private or public offering of the
instruments comprising the Financing, whether in the form of a loan, debt or
preferred stock securities, other than with the Permitted Parties regarding
Senior Financing, with the Equity Parties regarding preferred stock and private
common equity and with respect to sales of public common equity. The Company
agrees that CIBC Wood Gundy will have the exclusive right to act as sole
underwriter/placement agent or initial purchaser in connection with any
issuance of high yield debt Securities unless the Company shall have received,
prior to the date on which Offering Materials are provided to prospective
purchasers of such high yield debt Securities, a commitment to provide Senior
Financing of at least $100 million by a Permitted Party on terms not in
conflict with an offering of Securities as determined by CIBC Wood Gundy at its
reasonable discretion.
(b) In addition, if the Company determines to sell the inmate phone lines
currently owned by CCI, the Company agrees that it will retain CIBC Wood Gundy
as financial advisor or sale agent in connection with such sale.
2. Compensation. (a) In consideration for services rendered hereunder as
financial advisor or lead book running underwriter, placement agent, or initial
purchaser, as the case may be, the Company agrees to pay to CIBC Wood Gundy, on
the date the Transaction is consummated (the "Closing Date"):
(i) A cash placement fee equal to 3.5% of the purchase price of high yield
debt securities issued under a new indenture;
(ii) A cash placement fee equal to 4.0% of the liquidation value of preferred
equity securities issued. For the purposes of calculating fees in this
paragraph (ii), the proceeds of sales of preferred equity to the Equity
Parties shall be excluded;
(iii) A cash placement fee equal to 6.0% of the gross proceeds from the sale or
placement of private common equity. For the purposes of calculating fees
in this paragraph (iii), the proceeds of sales of private equity to the
Equity Parties shall be excluded;
(iv) A cash placement fee of 2.5% of the committed amount of Senior Financing
other than that obtained from the Permitted Parties. For purposes of the
previous sentence, "committed amounts" shall refer to, among other
things, both drawn and undrawn amounts under any Senior Financing;
2
<PAGE>
(v) A cash advisory fee equal to $625,000 for financial advisory services
provided in connection with the solicitation of consents and/or waivers
from holders of the Company's outstanding 12% Senior Notes due 2006; and
(vi) In the event that CIBC Wood Gundy is retained as financial advisor or
sale agent for a transaction involving the sale of the inmate phone lines
currently owned by CCI, the Company agrees to pay CIBC Wood Gundy a cash
fee equal to 1.0% of the consideration received by the Company from such
sale. For purposes of this Agreement, the term "consideration" means an
amount equal to the sum of (i) the maximum aggregate cash consideration
paid, and payable, plus the fair market value of any securities issued or
property distributed or distributable, directly or indirectly, to the
seller or its security holders in connection with a sale and (ii) the
aggregate amount of any interest bearing indebtedness assumed or
refinanced by the buyer, whether or not recourse or non-recourse, and not
included in clause (i) of this sentence.
If the Company consummates the Acquisition, the Company shall pay CIBC Wood
Gundy a minimum cash fee of $1,000,000, which shall be credited against any
amounts due under Sections 2 (a)(i), (ii), (iii), (iv) or 2(c), but not against
any fees due under Sections 2(a)(v) or (vi).
All such placement or underwriting fees shall be paid directly out of the
proceeds of the Financing by wire transfer or by delivery to CIBC Wood Gundy of
a certified or official bank check or checks payable to its order in
immediately available funds.
As financial advisor or lead book running underwriter, placement agent or
initial purchaser, as the case may be, with respect to the above-mentioned
Financing, CIBC Wood Gundy shall receive:
1. Notwithstanding the last sentence of Section 1(a), no less than 80% of the
fees as outlined in Section 2(a)(i) on the sale of high yield debt
securities;
2. No less than 85% of the fees as outlined in Section 2(a)(ii) on the sale of
preferred equity securities;
3. No less than 100% of the fees as outlined in Section 2(a)(iii) on the sale
of private common equity securities;
4. No less than 100% of the fees as outlined in Section 2(a)(iv) with respect
to the placement of the Senior Financing;
5. No less than 100% of the fees as outlined in Section 2(a)(v) with respect
to financial advisory services provided in connection with the solicitation
of consents and/or waivers from holders of the Company's 12% Senior Notes
due 2006; and
6. No less than 100% of the fees as outlined in Section 2(a)(vi) with respect
to services provided as financial advisor or sale agent in connection with
the sale of the inmate phones currently owned by CCI.
3
<PAGE>
(b) In addition to the fees payable pursuant to Section 2(a) above and
whether or not the Financing is consummated, the Company hereby agrees to
reimburse CIBC Wood Gundy promptly upon request (not less frequently than
monthly) and upon presentation of appropriate documentation thereof in
reasonable detail for all out-of-pocket expenses (including but not limited to,
word processing charges, messenger and duplicating services, facsimile
expenses, research document expenses, travel expenses, roadshow and rating
agency expenses and other customary expenditures) incurred by it in connection
with the proposed Financing, (i) excluding the fees and expenses of legal
counsel to CIBC Wood Gundy with respect to the Financing, if the Financing is
in the form of the Securities and (ii) including the reasonable fees and
expenses of legal counsel to CIBC Wood Gundy with respect to the Financing, if
the Financing is in the form of Senior Financing. Amounts payable pursuant to
this Section 2(b) and Section 2(a) may be withheld by CIBC Wood Gundy from the
payment to the Company of the proceeds of the sale or placement of the
instruments comprising the Financing.
(c) CIBC Wood Gundy's engagement relating to the Financing under this
Agreement may be terminated by either the Company or CIBC Wood Gundy upon five
days written notice in writing delivered to the other party. If the Company
consummates the Financing (or any of the individual components thereof) prior
to the Expiration Date (as defined herein) of this Agreement, with any
institution other than CIBC Wood Gundy, then CIBC Wood Gundy shall be entitled
to receive all of the amounts payable under Sections 2(a) and 2(b). In
addition, unless CIBC Wood Gundy terminates this Agreement, if the Company
consummates the Financing (or any of the individual components thereof) within
twelve months after the Expiration Date, CIBC Wood Gundy shall be entitled to
receive all of the amounts payable under Sections 2(a) and 2(b). In the event
that this Agreement expires, or is terminated for any reason, the Company shall
promptly pay CIBC Wood Gundy all amounts due under Section 2(b).
(d) Except as set forth herein, no fee paid or payable to CIBC Wood Gundy
or any of its affiliates shall be credited against any other fee paid or
payable to CIBC Wood Gundy or any of its affiliates. Nothing contained in this
Agreement shall require CIBC Wood Gundy to purchase any securities or make any
investment in the Company for its own account, directly or indirectly or result
in CIBC Wood Gundy being held liable by the Company or any of its affiliates or
stockholders as a result of the forfeiture of the deposits that may be made by
the Company in connection with the Acquisition or any other damages to which
the Company may be subject under the Acquisition Agreement as a result of the
failure to consummate the Financing.
3. Offering Materials. (a) The Company represents and warrants to CIBC
Wood Gundy that this Agreement has been duly authorized, executed and delivered
by the Company and, assuming the due execution by CIBC Wood Gundy, constitutes
a legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except insofar as enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and by equitable principles affecting the
availability of remedies in the nature of specific performance and except as
rights to indemnification may be limited by federal or state laws.
4
<PAGE>
(b) The Company will furnish CIBC Wood Gundy, as appropriate, with a
private placement memorandum, offering memorandum, prospectus, and/or bank book
in form satisfactory to CIBC Wood Gundy with respect to the Financing and the
Transaction (the "Offering Materials"). CIBC Wood Gundy shall assist the
Company in the preparation of the Offering Materials, provided that the Company
shall be solely responsible for the form and content thereof.
(c) CIBC Wood Gundy will perform due diligence; however the Company
recognizes and confirms that CIBC Wood Gundy (A) will use and rely primarily on
the Offering Materials and on information available from generally recognized
public sources in performing the services contemplated by this Agreement
without having independently verified the same; (B) is authorized as the
Company's lead book running underwriter, placement agent or initial purchaser,
as the case may be, with respect to the Financing to transmit to any
prospective purchaser of the Securities or lender under the Senior Financing, a
copy or copies of the Offering Materials, forms of purchase agreements, credit
and loan agreements and any other legal documentation supplied to CIBC Wood
Gundy expressly for transmission to any prospective purchaser or lender by or
on behalf of the Company or by any of the Company's officers, representatives
or agents, in connection with the performance of CIBC Wood Gundy's services
hereunder or any transaction contemplated hereby; (C) does not assume
responsibility for the accuracy or completeness of the Offering Materials and
such other information; (D) will not make an appraisal of any assets of the
Company; and (E) reserves the right to continue to perform due diligence during
the course of the engagement until the Financing or its individual components,
as the case may be, is consummated or until the Expiration Date. CIBC Wood
Gundy agrees to keep the Offering Materials confidential so long as such
materials remain non-public, unless disclosure is required by law or requested
by any government or regulatory agency or body (and then only after giving the
Company notice and an opportunity to contest such disclosure to the extent
practicable), and CIBC Wood Gundy will not make use thereof, except in
connection with its services hereunder for the Company.
(d) The Company agrees that any reference to CIBC Wood Gundy or any
release, communication, or material distributed to prospective purchasers of
the Securities or prospective lenders under the Senior Financing is subject to
CIBC Wood Gundy's prior written approval (which approval shall not be
unreasonably withheld), except to the extent required by law (in which case the
appropriate party shall so advise the other in writing prior to such use and,
to the extent practicable, shall consult with the other with respect to the
form and timing of disclosure). If CIBC Wood Gundy resigns prior to the
dissemination of any such release, communication or material, no reference
shall be made therein to CIBC Wood Gundy.
5
<PAGE>
(e) Without CIBC Wood Gundy's prior written consent, no advice rendered
by CIBC Wood Gundy in connection with the services performed by CIBC Wood Gundy
pursuant to this Agreement will be quoted by the Company, its affiliates or
representatives nor will any such advice be referred to in any report,
document, release or other communication, whether written or oral, prepared,
issued or transmitted by such person, except to the extent required by law (in
which case the appropriate party shall so advise the other in writing prior to
such use and, to the extent practicable, shall consult with the other with
respect to the form and timing of disclosure).
(f) The Company represents that the Offering Materials do not and will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they are made, not
misleading, except that the Company makes no representation with respect to (i)
any of the projections contained therein or (ii) any information supplied by
CIBC Wood Gundy in writing for inclusion in the Underwriting or Plan of
Distribution sections in the Offering Materials. The Company agrees to advise
CIBC Wood Gundy immediately of the occurrence of any event or any other change
known to it which results in the Offering Materials containing any untrue
statement of a material fact or omitting to state any material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
4. Indemnity. In consideration of CIBC Wood Gundy's agreement to act on
behalf of the Company and notwithstanding any limitations set forth herein, the
Company agrees to indemnify and hold harmless CIBC Wood Gundy, its agents,
employees, officers and directors, and any person who controls CIBC Wood Gundy
within the meaning of Section 15 of the Securities Act, as amended (the "Act")
or Section 20 of the Securities Exchange Act of 1934, as amended (each, an
"Indemnified Party" and collectively, the "Indemnified Parties"), from and
against any and all losses, claims, damages, liabilities and expenses
(including, but not limited to, all reasonable legal expenses, any and all
other expenses incurred in investigating, preparing or defending against any
action or proceeding to which, jointly or severally such Indemnified Parties,
become subject, which arise out of or are based upon (i) any transaction,
financing or otherwise, contemplated by this Agreement, the retention of CIBC
Wood Gundy under this Agreement, the performance of services by CIBC Wood Gundy
hereunder or any involvement or alleged involvement of CIBC Wood Gundy in the
Financing (or any of the components thereof), or (ii) any untrue statement or
alleged untrue statement of fact contained in any information (oral or written)
or document furnished or made available by the Company (including, without
limitation, the Offering Materials, as from time to time amended and
supplemented), directly or through CIBC Wood Gundy or otherwise, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, no Indemnified Party shall be entitled to
indemnification under this Section 4 with respect to any action, suit or
proceeding in which a final judgment (after all appeals or the expiration of
time to appeal) is entered against such Indemnified Party based primarily upon
his gross negligence, willful malfeasance, bad faith, or material breach of
this Agreement ("Disabling Conduct") and any payment or reimbursement made to
such Indemnified Party by
6
<PAGE>
the Company in connection with any such action or proceeding will be repaid by
such Indemnified Party to the Company.
If any action or proceeding (including any governmental proceeding) is
brought or asserted against an Indemnified Party in respect of which indemnity
may be sought against the Company, such Indemnified Party shall promptly notify
the Company in writing of the institution of such action or proceeding. Each
Indemnified Party shall give the Company prompt notice upon becoming aware of
any claim for which indemnity or contribution may be sought hereunder; failure
to provide such notice will not, however, relieve the Company from any
obligation or liability it has hereunder or otherwise. The Company, at its
option, may assume the defense of any such claim with counsel reasonably
satisfactory to CIBC Wood Gundy, except if such Indemnified Party has been
advised by counsel that, due to a conflict of interests or because there may be
legal defenses available to such Indemnified Party that are different from or
additional to defenses available to the Company, separate counsel for the
Company and such Indemnified Party is advisable in which case, the reasonable
fees and expenses of CIBC Wood Gundy's counsel shall be at the expense of the
Company; provided, that, upon invoking such option to assume the defense on
behalf of CIBC Wood Gundy or any Indemnified Party, the Company shall
unconditionally and irrevocably commit in writing to bear all risk with respect
to such claim and to keep such Indemnified Party informed of the progress of
any such claim.
The Company agrees that, without the prior written consent of each of the
relevant Indemnified Parties, it will not settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
in respect of which indemnification could be sought hereunder (i) that involves
any equitable relief that binds or purports to bind such Indemnified Parties
(whether or not such Indemnified Parties are actual or potential parties to
such pending claim, action or proceeding) and (ii) unless such settlement,
compromise or consent includes an unconditional release for such Indemnified
Parties from all liability arising out of such pending claim, action or
proceeding. CIBC Wood Gundy and each such Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of CIBC Wood Gundy or such Indemnified Party unless (a) the Company has
agreed to pay such fees and expenses, or (b) the Company shall have failed to
assume the defense of such action or proceeding. Unless the Company fails to
either (i) assume the defense of an action or proceeding or (ii) confirm in
writing its obligations with respect to such action or proceeding, the Company
shall not be liable for any settlement of any such action or proceeding
effected without its written consent (which shall not be unreasonably withheld
or delayed), but if the Company has failed to either (i) assume such defense or
(ii) confirm in writing its obligations with respect to such action or
proceeding, if such claim is settled with the Company's written consent, or if
there be a final judgment for the plaintiff in any such action or proceeding,
the Company agrees to indemnify and hold harmless CIBC Wood Gundy and any such
Indemnified Party from and against any loss, liability damage or expense by
reason of such settlement or judgment as provided in this Section 4, except
with respect to Disabling Conduct on the part of any such Indemnified Party.
7
<PAGE>
If the indemnification provided for in this Section 4 is unavailable to
an Indemnified Party in respect of any losses, claims, damages, liabilities and
expenses referred to herein or insufficient to hold an Indemnified Party
harmless (other than by reason of such Person's Disabling Conduct), then the
Company agrees that in lieu of indemnifying such Indemnified Party, it shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities and expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by them
on the one hand and the Indemnified Party on the other from the proceeds of the
Financing or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Indemnified Party on
the other in connection with the untrue statements or omissions or other
actions (or alleged untrue statements, omissions or other actions) which
resulted in such losses, claims, damages, liabilities and expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Indemnified Party on the other shall be
deemed to be in the same proportion as the total proceeds from the Financing,
less the value of the compensation actually received by such Indemnified Party
pursuant to the first sentence of Section 2(a) hereof with respect to the
Financing (or the individual components thereof), bears to such compensation.
The relative fault of the Company on the one hand and of the Indemnified Party
on the other shall be determined by reference to, among other things, whether
such untrue statements or omissions or other actions (or alleged untrue
statements, omissions or other actions) relate to information supplied or
action taken by the Company on the one hand or by the Indemnified Party on the
other and the relevant persons' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statements,
omissions or actions. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
The Company and CIBC Wood Gundy agree that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above.
The aforesaid indemnity and contribution agreements shall apply to any
related activities engaged in by any Indemnified Party prior to this date and
to any modification of CIBC Wood Gundy's engagement hereunder, and shall remain
in full force and effect regardless of any investigation made by or on behalf
of CIBC Wood Gundy or any of its agents, employees, officers, directors or
controlling persons and shall survive the closing of the Financing (or the
individual components thereof). The Company agrees promptly to notify CIBC Wood
Gundy of the commencement of any litigation or proceeding against it or any of
its directors, officers, agents or employees in connection with the
transactions contemplated hereby. The agreements contained in this Section 4
shall remain in full force and effect following the completion or termination
of CIBC Wood Gundy's engagement hereunder and shall be in addition to any
liability that the Company may otherwise have to CIBC Wood Gundy and its
agents, employees, officers, directors or controlling persons.
8
<PAGE>
The Company also agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company, its owners, creditors or securityholders for or in connection with
advice or services rendered or to be rendered by CIBC Wood Gundy pursuant to
this Agreement, the transactions contemplated hereby or any Indemnified Party's
actions or inaction in connection with any such advice, services or
transactions except for liabilities (and related expenses) of the Company that
are determined by a final judgment of a court of competent jurisdiction to have
resulted primarily from such Indemnified Party's Disabling Conduct.
5. Survival of Certain Provisions. The representations, warranties,
covenants and confidentiality provisions contained in Section 3, the provisions
contained in Section 4 of this Agreement and the Company's obligation to pay
CIBC Wood Gundy any compensation earned pursuant hereto shall remain operative
and in full force and effect regardless of (a) any completion or termination of
the Transaction, (b) any termination of this Agreement, or (c) any
investigation made by or on behalf of CIBC Wood Gundy or any affiliate of CIBC
Wood Gundy, and shall be binding upon, and shall inure to the benefit of, any
successors, assigns, heirs and personal representatives of the Company, CIBC
Wood Gundy, the indemnified parties and any such person.
6. Conditions of Engagement. It is understood that the obligations of
CIBC Wood Gundy are to use its best efforts to place the Financing and there is
no obligation on the part of CIBC Wood Gundy to purchase any of the instruments
comprising the Financing. The obligations of CIBC Wood Gundy are subject to
satisfactory completion of a due diligence investigation by CIBC Wood Gundy and
its counsel, market conditions and the form and terms of the instruments
comprising the Financing (or any individual components thereof), the Offering
Materials and all related documents being mutually acceptable to the Company
and CIBC Wood Gundy.
7. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered (a) if to the
Company, at its offices at Joseph Graf & Company, 6 East 43rd Street, New York,
NY 10017 Attention: Mr. Peter G. Graf; and (b) if to CIBC Wood Gundy, at its
offices at 425 Lexington Avenue, 3rd Floor, New York, New York 10017,
Attention: Mr. James J. Moglia.
The parties hereto, by written notice to the other parties, may designate
additional or different addresses for subsequent notices or communications.
8. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
9
<PAGE>
9. Third Party Beneficiaries. This Agreement has been and is made solely
for the benefit of the parties hereto, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement.
10. Choice of Law, Jurisdiction, Recovery of Attorney's Fees. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York (without regard to its conflict of laws provisions). The
Company hereby irrevocably submits to the exclusive jurisdiction of the Federal
and New York State courts located in the City of New York in connection with
any suit, action or proceeding related to this agreement or any of the matters
contemplated hereby, irrevocably waives any defense of lack of personal
jurisdiction and irrevocably agrees that all claims in respect of any suit,
action or proceeding may be heard and determined in any such court. The Company
irrevocably waives, to the fullest extent it may effectively do so under
applicable law, any objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding brought in any such court and
any claims that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. The Company further agrees to pay or
reimburse CIBC Wood Gundy for all reasonable costs and expenses incurred by
CIBC Wood Gundy in connection with the enforcement of any of its rights under
this Agreement, including without limitation, all reasonable attorneys fees and
expenses of its counsel.
11. Headings. The section headings in this Agreement have been inserted
as a matter of convenience of reference and are not a part of this Agreement.
12. Press Announcements. At any time after the consummation or other
public announcement of the sale of the instruments comprising the Financing,
and with prior approval of the Company (which approval shall not be
unreasonably withheld or delayed), CIBC Wood Gundy may place an announcement
(at its expense) in such newspapers and publications as it may choose with
respect to its role in the Transactions.
13. Term. Except as provided herein, the Agreement shall run from the
date of this letter to March 14, 1998 or such earlier date as CIBC Wood Gundy's
engagement hereunder is terminated pursuant to Section 2(c) hereof (the
"Expiration Date") unless extended by mutual consent of the parties.
10
<PAGE>
14. Amendment. This Agreement may not be modified or amended except in
writing duly sworn by the parties hereto.
15. Enforceability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
Please sign and return the original and one copy of this letter to
indicate your acceptance of the terms set forth herein whereupon this letter
and your acceptance shall constitute a binding agreement between the Company
and CIBC Wood Gundy.
Very truly yours,
CIBC WOOD GUNDY SECURITIES CORP.
By: /s/ James J. Moglia
---------------------------
Mr. James J. Moglia
Managing Director
Accepted and agreed to
as of March 14, 1997
PHONETEL TECHNOLOGIES, INC.
By: /s/ Peter G. Graf
-------------------------------
Mr. Peter G. Graf
Chairman of the Board and Chief Executive Officer
11
<PAGE>
AGREEMENT AND PLAN OF MERGER
by and among
PHONETEL TECHNOLOGIES, INC.,
PHONETEL ACQUISITION CORP.
and
COMMUNICATIONS CENTRAL INC.
dated as of
March 14, 1997
<PAGE>
Index of Defined Terms
Defined Term Section No.
- ------------ -----------
Agreement.............................................................Recitals
Acquisition Proposal....................................................5.4(a)
Appointment Date...........................................................5.1
Articles of Incorporation...............................................1.2(a)
Average Net Revenue.......................................................3.20
Balance Sheet..........................................................3.10(a)
By-laws.................................................................1.4(b)
Certificates............................................................2.2(b)
Closing....................................................................1.6
Closing Date...............................................................1.6
Code....................................................................3.9(a)
Common Stock............................................................1.1(a)
Company...............................................................Recitals
Company Agreements.........................................................3.4
Company Disclosure Schedule................................................III
Company Material Adverse Effect.........................................3.1(a)
Company SEC Documents......................................................3.5
Company Surviving Corporation...........................................1.4(b)
Confidentiality Agreement...............................................5.2(a)
Copyrights.............................................................3.11(c)
Dissenting Shareholders.................................................2.1(c)
D&O Insurance...........................................................5.8(b)
Effective Time.............................................................1.5
Employment Agreement......................................................5.10
Encumbrances............................................................3.2(b)
Environmental Claim....................................................3.15(g)
Environmental Laws.....................................................3.15(g)
ERISA...................................................................3.9(a)
ERISA Affiliate.........................................................3.9(a)
Escrow Agent..............................................................1.10
Escrow Amount.............................................................1.10
Exchange Act............................................................1.1(a)
Executive.................................................................5.10
Financial Statements.......................................................3.5
Financing Condition.....................................................1.1(a)
fully diluted basis.....................................................1.1(a)
GAAP.......................................................................3.5
GBCC....................................................................1.2(a)
Governmental Entity........................................................3.4
Hazardous Materials....................................................3.15(g)
HSR Act.................................................................1.1(a)
Indemnified Party.......................................................5.8(a)
<PAGE>
Independent Directors...................................................1.3(c)
Intellectual Property..................................................3.11(c)
Licenses...............................................................3.11(c)
Merger.....................................................................1.4
Merger Consideration....................................................2.1(c)
Minimum Condition.......................................................1.1(a)
Offer...................................................................1.1(a)
Offer Documents.........................................................1.1(b)
Offer Price.............................................................1.1(a)
Offer to Purchase.......................................................1.1(a)
Options....................................................................2.4
Parent................................................................Recitals
Patents................................................................3.11(c)
Paying Agent............................................................2.2(a)
PBGC....................................................................3.9(b)
PCBs...................................................................3.15(e)
Plans...................................................................3.9(a)
Preferred Stock.........................................................3.2(a)
Proxy Statement.........................................................1.8(a)
Purchaser.............................................................Recitals
Purchaser Common Stock.....................................................2.1
Purchaser Surviving Corporation.........................................1.4(a)
Rights ...................................................................3.18
Rights Agreement..........................................................3.18
Schedule 14D-1..........................................................1.1(b)
Schedule 14D-9..........................................................1.2(b)
SEC.....................................................................1.1(b)
Secretary of State.........................................................1.5
Securities Act.............................................................3.5
Shares..................................................................1.1(a)
Special Meeting.........................................................1.8(a)
Stock Option Plans.........................................................2.4
Subsidiary..............................................................3.1(a)
Superior Proposal.......................................................5.4(b)
Surviving Corporation...................................................1.4(a)
Tax....................................................................3.10(k)
Taxes..................................................................3.10(k)
Tax Return.............................................................3.10(k)
Termination Fee.........................................................8.1(b)
Title IV Plan...........................................................3.9(a)
Trademarks.............................................................3.11(c)
Transactions............................................................1.2(a)
Voting Debt.............................................................3.2(a)
Warrants...................................................................2.4
<PAGE>
Table of Contents
Page
ARTICLE I ----
THE OFFER AND MERGER
Section 1.1 The Offer................................................... 1
Section 1.2 Company Actions............................................. 4
Section 1.3 Directors................................................... 6
Section 1.4 The Merger.................................................. 8
Section 1.5 Effective Time.............................................. 10
Section 1.6 Closing..................................................... 10
Section 1.7 Directors and Officers of the
Surviving Corporation.................................. 10
Section 1.8 Shareholders' Meeting....................................... 10
Section 1.9 Merger Without Meeting of Shareholders...................... 11
Section 1.10 Escrow...................................................... 12
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock................................. 12
Section 2.2 Exchange of Certificates.................................... 13
Section 2.3 Dissenters' Rights.......................................... 15
Section 2.4 Options and Warrants........................................ 15
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Section 3.1 Organization................................................ 17
Section 3.2 Capitalization.............................................. 17
Section 3.3 Authorization; Validity of Agreement;
Company Action......................................... 19
Section 3.4 Consents and Approvals; No Violations....................... 19
Section 3.5 SEC Reports and Financial Statements........................ 20
Section 3.6 Absence of Certain Changes.................................. 21
Section 3.7 No Undisclosed Liabilities.................................. 21
Section 3.8 Litigation.................................................. 21
Section 3.9 Employee Benefit Plans...................................... 22
Section 3.10 Tax Matters; Government Benefits............................ 24
Section 3.11 Intellectual Property....................................... 27
i
<PAGE>
Section 3.12 Employment Matters.......................................... 28
Section 3.13 Compliance with Laws........................................ 28
Section 3.14 Vote Required............................................... 29
Section 3.15 Environmental Laws.......................................... 29
Section 3.16 Information in Proxy Statement.............................. 31
Section 3.17 Opinion of Financial Advisor................................ 32
Section 3.18 Rights Agreement............................................ 32
Section 3.19 Phones...................................................... 32
Section 3.20 Average Net Revenue......................................... 32
Section 3.21 Brokers or Finders.......................................... 33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Section 4.1 Organization................................................ 33
Section 4.2 Authorization; Validity of Agreement;
Necessary Action....................................... 33
Section 4.3 Consents and Approvals; No Violations....................... 34
Section 4.4 Information in Proxy Statement.............................. 34
Section 4.5 Financing................................................... 35
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company........................... 35
Section 5.2 Access; Confidentiality..................................... 37
Section 5.3 Consents and Approvals...................................... 38
Section 5.4 No Solicitation............................................. 39
Section 5.5 Additional Agreements....................................... 41
Section 5.6 Publicity................................................... 41
Section 5.7 Notification of Certain Matters............................. 41
Section 5.8 Directors' and Officers' Insurance and
Indemnification........................................ 42
Section 5.9 Purchaser Compliance........................................ 43
Section 5.10 Severance Arrangements...................................... 43
Section 5.11 Financing................................................... 43
Section 5.12 Additional Employee Covenants............................... 43
Section 5.13 Senior Credit Refinancing................................... 44
ii
<PAGE>
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation
to Effect the Merger................................... 44
Section 6.2 Condition to Parent's and the
Purchaser's Obligations to Effect
the Merger............................................. 45
ARTICLE VII
TERMINATION
Section 7.1 Termination................................................. 45
Section 7.2 Effect of Termination....................................... 47
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses........................................... 47
Section 8.2 Amendment and Modification.................................. 48
Section 8.3 Non-survival of Representations and
Warranties............................................. 48
Section 8.4 Notices..................................................... 49
Section 8.5 Interpretation.............................................. 50
Section 8.6 Counterparts................................................ 50
Section 8.7 Entire Agreement; No Third Party Bene-
ficiaries.............................................. 50
Section 8.8 Severability................................................ 50
Section 8.9 Governing Law............................................... 51
Section 8.10 Assignment.................................................. 51
ANNEX A Conditions of the Offer.......................................... A-1
EXHIBIT A Escrow Agreement
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of March 14, 1997, by and among PhoneTel Technologies,
Inc., an Ohio corporation ("Parent"), PhoneTel Acquisition Corp., a Georgia
corporation and a wholly owned subsidiary of Parent (the "Purchaser"), and
Communications Central Inc., a Georgia corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the Purchaser and
the Company has approved, and deems it advisable and in the best interests of
its respective shareholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) As promptly as practicable (but in no event later than five
business days after the public announcement of the execution hereof), the
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (the
"Offer") for all of the outstanding shares (the "Shares") of common stock, $.01
par value per share (the "Common Stock"), of the Company (including the related
Rights (as defined in Section 3.18 of this Agreement)) at a price of $12.85 per
Share, net to the seller in cash (such price, or any such higher price per
Share as may be paid in the Offer, being referred to herein as the "Offer
Price"), subject to (i) there being validly tendered and not withdrawn prior to
the expiration of the Offer, that number of Shares which represents at least
seventy-five percent (75%) of the Shares outstanding on a fully diluted basis
(the "Minimum
<PAGE>
Condition"), (ii) the receipt by Parent of financing sufficient in amount to
enable it and the Purchaser to consummate the Offer and the Merger (as
hereinafter defined) and to refinance certain indebtedness for borrowed money
of the Company and to pay related fees and expenses (the "Financing Condition")
and (iii) the other conditions set forth in Annex A hereto, and shall
consummate the Offer in accordance with its terms. As used herein, "fully
diluted basis" takes into account issued and outstanding Shares and Shares
subject to issuance under outstanding stock options and warrants. The
obligations of the Purchaser to accept for payment and to pay for any Shares
validly tendered on or prior to the expiration of the Offer and not withdrawn
shall be subject only to the Minimum Condition, the Financing Condition and the
other conditions set forth in Annex A hereto. The Offer shall be made by means
of an offer to purchase (the "Offer to Purchase") containing the terms set
forth in this Agreement, the Minimum Condition, the Financing Condition and the
other conditions set forth in Annex A hereto. The Purchaser shall not amend or
waive the Minimum Condition and shall not decrease the Offer Price or decrease
the number of Shares sought, or amend any other condition of the Offer in any
manner adverse to the holders of the Shares without the written consent of the
Company; provided, however, that if on the initial scheduled expiration date of
the Offer, which shall be twenty business days after the date the Offer is
commenced, all conditions to the Offer shall not have been satisfied or waived,
the Purchaser may, from time to time, in its sole discretion, extend the
expiration date for one or more periods totalling not more than thirty days.
Notwithstanding the foregoing, (i) Parent or the Purchaser can waive, in
writing, the Minimum Condition without the written consent of the Company in
the event that at least 50.1% of the Shares outstanding on a fully diluted
basis are validly tendered and not withdrawn on or prior to the expiration of
the Offer and (ii) the Purchaser may extend the initial expiration date or any
extension thereof, as the Purchaser reasonably deems necessary to comply with
any legal or regulatory requirements, including but not limited to, the
termination or expiration of any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). The Purchaser shall, on the terms and subject to the prior satisfaction
or waiver of the conditions of the Offer, accept for payment and pay for Shares
tendered as
2
<PAGE>
soon as it is legally permitted to do so under applicable law; provided,
however, that if, immediately prior to the initial expiration date of the Offer
(as it may be extended), the Shares tendered and not withdrawn pursuant to the
Offer equal more than seventy-five percent (75%) of the outstanding Shares, but
less than 90% of the outstanding Shares, the Purchaser may extend the Offer for
a period not to exceed twenty business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer.
Notwithstanding the foregoing, the Offer may not be extended beyond the date of
termination of this Agreement pursuant to Article VII hereof.
(b) As soon as practicable on the date the Offer is commenced, Parent
and the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will
include, as exhibits, the Offer to Purchase and a form of letter of transmittal
and summary advertisement (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). Parent represents and warrants to
the Company that the Offer Documents will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent or
the Purchaser with respect to information furnished by the Company to Parent or
the Purchaser, in writing, expressly for inclusion in the Offer Documents. The
Company represents and warrants to Parent and the Purchaser that the
information supplied by the Company to Parent or the Purchaser, in writing,
expressly for inclusion in the Offer Documents and Parent represents and
warrants to the Company that the information supplied by Parent or the
Purchaser to the Company, in writing, expressly for inclusion in the Schedule
14D-9 (as hereinafter defined) will not contain any untrue statement of a
material fact or omit to state any material fact required
3
<PAGE>
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) Each of Parent and the Purchaser will take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Each of Parent and the Purchaser, on the one hand, and
the Company, on the other hand, will promptly correct any information provided
by it for use in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect and Parent will take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of the Shares, in each case as and to
the extent required by applicable federal securities laws. The Company and its
counsel shall be given the opportunity to review the Schedule 14D-1 before it
is filed with the SEC. In addition, Parent and the Purchaser will provide the
Company and its counsel, in writing, with any comments, whether written or
oral, Parent, the Purchaser or their counsel may receive from time to time from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that its Board of Directors, at a meeting duly called
and held, has (i) unanimously determined that each of this Agreement, the Offer
and the Merger (as defined in Section 1.4 hereof) are fair to and in the best
interests of the shareholders of the Company, (ii) approved this Agreement and
the transactions contemplated hereby, including the Offer and the Merger
(collectively, the "Transactions"), and such approval constitutes approval of
the Offer, this Agreement and the Transactions, including the Merger, for
purposes of Section 14-2-1111 and Section 14-2-1132 of the Georgia Business
Corporation Code (the "GBCC") and Article VII of the Company's Amended and
Restated Articles of Incorporation (the "Articles of Incorporation"), such that
the provisions of Section 14-2-1111 and the restrictions contained in Section
14-2-1132 of the GBCC and Article VII of the Company's Articles of Incorpo-
4
<PAGE>
ration will not apply to the Transactions, and (iii) resolved to recommend that
the shareholders of the Company accept the Offer, tender their Shares
thereunder to the Purchaser and approve and adopt this Agreement and the
Merger; provided, that such recommendation may be withdrawn, modified or
amended if, in the opinion of the Board of Directors, only after receipt of
advice from outside legal counsel, failure to withdraw, modify or amend such
recommendation would result in the Board of Directors violating its fiduciary
duties to the Company's shareholders under applicable law. The Company
represents and warrants that the actions set forth in this Section 1.2(a) and
all other actions it has taken in connection therewith are sufficient to render
the relevant provisions of such Section 14-2-1111 and the restrictions
contained in Section 14-2-1132 of the GBCC and Article VII of the Company's
Articles of Incorporation inapplicable to the Offer and the Merger.
(b) As soon as practicable on the date the Offer is commenced, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9") which shall, subject to
the provisions of Section 5.4(b) hereof, contain the recommendation referred to
in clause (iii) of Section 1.2(a) hereof. The Company represents and warrants
to Parent and the Purchaser that the Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information furnished by
Parent or the Purchaser, in writing, expressly for inclusion in the Schedule
14D-9. The Company further agrees to take all steps necessary to cause the
Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9
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if and to the extent that it shall have become false and misleading in any
material respect and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Parent and its counsel shall be
given the opportunity to review the Schedule 14D-9 before it is filed with the
SEC. In addition, the Company agrees to provide Parent, the Purchaser and their
counsel, in writing, with any comments, whether written or oral, that the
Company or its counsel may receive from time to time from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments
or other communications.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing, or computer file containing the names and
addresses of all record holders of the Shares as of a recent date, and shall
furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of the Shares and their addresses, mailing
labels and lists of security positions) and assistance as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and the Purchaser shall hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request of the Company deliver or cause to be delivered
to the Company all copies of such information then in its possession or the
possession of its agents or representatives.
Section 1.3 Directors.
(a) Promptly upon the purchase of and payment for Shares by the
Purchaser which represent at least a majority of the outstanding Shares, Parent
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Board of Directors of the Company as is equal to the
product of the total number of
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directors on such Board (giving effect to the directors designated by Parent
pursuant to this sentence) multiplied by the percentage that the number of
Shares so accepted for payment bears to the total number of Shares then
outstanding. In furtherance thereof, the Company shall, upon the request of
Parent, use its best reasonable efforts promptly either to increase the size of
its Board of Directors, including amending the By-Laws of the Company if
necessary to so increase the size of the Company's Board of Directors, or
secure the resignations of such number of its incumbent directors, or both, as
is necessary to enable Parent's designees to be so elected to the Company's
Board of Directors, and shall take all actions available to the Company to
cause Parent's designees to be so elected. At such time, the Company shall, if
requested by Parent, also cause persons designated by Parent to constitute at
least the same percentage (rounded up to the next whole number) as is on the
Company's Board of Directors of (i) each committee of the Company's Board of
Directors, (ii) each board of directors (or similar body) of each Subsidiary
(as defined in Section 3.1 hereof) of the Company and (iii) each committee (or
similar body) of each such board.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder in
order to fulfill its obligations under Section 1.3(a) hereof, including mailing
to shareholders the information required by such Section 14(f) and Rule 14f-1
as is necessary to enable Parent's designees to be elected to the Company's
Board of Directors. Parent or the Purchaser shall supply the Company and be
solely responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1. The provisions of this Section 1.3(b) are in addition to and shall
not limit any rights which the Purchaser, Parent or any of their affiliates may
have as a holder or beneficial owner of Shares as a matter of law with respect
to the election of directors or otherwise.
(c) In the event that Parent's designees are elected to the Company's
Board of Directors, until the Effective Time (as defined in Section 1.5
hereof), the Company's Board of Directors shall have at least three directors
who are directors on the date hereof and who
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would constitute Continuing Directors for purposes of Article VII of the
Company's Articles of Incorporation (the "Independent Directors"), provided
that, in such event, if the number of Independent Directors shall be reduced
below three for any reason whatsoever, any remaining Independent Directors (or
Independent Director, if there is only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate three persons to fill such
vacancies who shall not be shareholders, affiliates or associates of Parent or
the Purchaser and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees are elected to the Company's
Board of Directors, after the acceptance for payment of Shares pursuant to the
Offer and prior to the Effective Time (as hereinafter defined), the affirmative
vote of a majority of the Independent Directors shall be required to (a) amend
or terminate this Agreement by the Company, (b) exercise or waive any of the
Company's rights, benefits or remedies hereunder, or (c) take any other action
by the Company's Board of Directors under or in connection with this Agreement.
Section 1.4 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time, the Company and the Purchaser shall
consummate a merger (the "Merger") as set forth below.
(a) In the event that Parent, the Purchaser and any other Subsidiaries
of Parent shall acquire in the aggregate at least 90% of the Shares of the
Company, pursuant to the Offer or otherwise, then, at the election of Parent,
pursuant to the Merger (i) the Company shall be merged with and into the
Purchaser and the separate corporate existence of the Company shall thereupon
cease, (ii) the Purchaser shall be the successor or surviving corporation in
the Merger (sometimes hereinafter referred to as the "Purchaser Surviving
Corporation" or the "Surviving Corporation") and shall continue to be governed
by the laws of the State of Georgia, and (iii) all the rights, privileges,
immunities, powers and franchises of the Company shall vest in the Purchaser
Surviving Corporation and, except as otherwise provided for in this
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Agreement, all obligations, duties, debts and liabilities of the Company shall
be the obligations, duties, debts and liabilities of the Purchaser Surviving
Corporation.
(b) Except in the event Section 1.4(a) above applies, then, pursuant
to the Merger (i) the Purchaser shall be merged with and into the Company and
the separate corporate existence of the Purchaser shall cease, (ii) the Company
shall be the successor or surviving corporation in the Merger (sometimes
hereinafter referred to as the "Company Surviving Corporation" or the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Georgia, and (iii) the separate corporate existence of the Company
with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger, except as set forth in this Section 1.4(b).
Pursuant to the Merger, (x) the Articles of Incorporation shall be amended in
its entirety to read as the Articles of Incorporation of the Purchaser, in
effect immediately prior to the Effective Time, except that Article FIRST
thereof shall read as follows: "FIRST: The name of the corporation is
Communications Central Inc." and, as so amended, shall be the Articles of
Incorporation of the Company Surviving Corporation until thereafter amended as
provided by law and such Articles of Incorporation, except that if the
Purchaser shall acquire less than seventy-five percent of the outstanding
Shares pursuant to the Offer or otherwise, the Articles of Incorporation of the
Company, as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Company Surviving Corporation until thereafter
amended as provided by law and such Articles of Incorporation, and (y) the
By-Laws of the Purchaser (the "By-laws"), as in effect immediately prior to the
Effective Time, shall be the By-laws of the Company Surviving Corporation until
thereafter amended as provided by law, by the Articles of Incorporation of the
Company Surviving Corporation or by such By-laws, except that if the Purchaser
shall acquire less than seventy-five percent of the outstanding Shares pursuant
to the Offer, the By-laws of the Company, as in effect immediately prior to the
Effective Time shall be the Bylaws of the Company Surviving Corporation until
thereafter amended as provided by law, by the Articles of Incorporation of the
Company Surviving Corporation or by such By-laws. The Merger shall have the
effects specified in the GBCC.
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Section 1.5 Effective Time. Parent, the Purchaser and the Company will
cause a Certificate of Merger to be executed and filed on the Closing Date (as
defined in Section 1.6 hereof) (or on such other date as Parent and the Company
may agree) with the Secretary of State of Georgia (the "Secretary of State") as
provided in the GBCC. The Merger shall become effective on the date on which
the Certificate of Merger is duly filed with the Secretary of State or such
time as is agreed upon by the parties and specified in the Certificate of
Merger, and such time is hereinafter referred to as the "Effective Time."
Section 1.6 Closing. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m. on the second business day after satisfaction or
waiver of all of the conditions set forth in Article VI hereof, or such other
date as may be agreed to by the parties in writing (the "Closing Date"), at the
office of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York,
New York, unless another place is agreed to in writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving Corporation. The
directors and officers of the Purchaser at the Effective Time shall, from and
after the Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in
accordance with the Articles of Incorporation and the By-laws of the Surviving
Corporation.
Section 1.8 Shareholders' Meeting.
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law and subject to the fiduciary duties of the Board of Directors:
(i) duly call, give notice of, convene and hold a special meeting of
its shareholders (the "Special Meeting") as promptly as practicable
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon
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the approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and use its best
efforts (x) to obtain and furnish the information required to be included
by the SEC in the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any comments made by the
SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any amendment
or supplement thereto (the "Proxy Statement") to be mailed to its
shareholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent and
its counsel and (y) to obtain the necessary approvals of the Merger and
this Agreement by its shareholders; and
(iii) include in the Proxy Statement the recommendation of the Board
of Directors that shareholders of the Company vote in favor of the approval
of the Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, the Purchaser or any of its other Subsidiaries and affiliates in
favor of the approval of the Merger and the approval and adoption of this
Agreement.
Section 1.9 Merger Without Meeting of Shareholders. Notwithstanding
Section 1.8 hereof, in the event that Parent, the Purchaser and any other
Subsidiaries of Parent shall acquire in the aggregate at least 90% of the
outstanding Shares of the Company, pursuant to the Offer or otherwise, the
parties hereto shall, at the request of Parent and subject to Article VI
hereof, take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
shareholders of the Company, in accordance with Section 14-2-1104 of the GBCC.
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Section 1.10 Escrow. Simultaneously herewith, Parent, the Company and
First Union National Bank of Georgia, a national banking association, as escrow
agent (the "Escrow Agent"), are entering into an Escrow Agreement in the form
attached hereto as Exhibit A, and Parent is depositing $5,000,000 (the "Escrow
Amount") with the Escrow Agent, to be held and disposed of by the Escrow Agent
pursuant to the Escrow Agreement. In the event that the Merger Agreement is
terminated solely due to the failure of either (i) the Minimum Condition
(provided at least 50.1% of the Shares outstanding on a fully diluted basis
have been validly tendered and not withdrawn) and neither Parent nor the
Purchaser has waived the Minimum Condition, or (ii) the Financing Condition
(unless the failure of such Financing Condition is due solely to the failure of
the Company to satisfy its obligations under Sections 5.11 and 5.13 hereof),
then the Company shall be entitled to receive the entire Escrow Amount, as
liquidated damages, and neither the Company nor Parent nor the Purchaser shall
have any other rights or remedies in respect of this Agreement. Delivery of
funds by the Escrow Agent to the applicable parties shall be made pursuant to
the terms of the Escrow Agreement.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or holders of common stock, par value $.01 per share, of the Purchaser
(the "Purchaser Common Stock"):
(a) The Purchaser Common Stock. Each issued and outstanding share of
the Purchaser Common Stock shall be converted into and become one fully paid
and nonassessable share of common stock of the Company Surviving Corporation or
shall remain outstanding and constitute one fully paid and non-assessable share
of the Purchaser Surviving Corporation, as the case may be, and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
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(b) Cancellation of Treasury Stock and Parent-Owned Stock. All Shares
that are owned by the Company as treasury stock and any Shares owned by Parent,
the Purchaser or any other wholly owned Subsidiary of Parent shall be cancelled
and retired and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) Exchange of Shares. Each issued and outstanding Share (other than
Shares to be cancelled in accordance with Section 2.1(b) above and any Shares
which are held by shareholders exercising appraisal rights pursuant to Article
13 of the GBCC ("Dissenting Shareholders")) shall be converted into the right
to receive the Offer Price, payable to the holder thereof, without interest
(the "Merger Consideration"), upon surrender of the certificate formerly
representing such Share in the manner provided in Section 2.2 hereof. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance
with Section 2.2 hereof, without interest, or the right, if any, to receive
payment from the Surviving Corporation of the "fair value" of such Shares as
determined in accordance with Article 13 of the GBCC.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as agent for the holders of the
Shares in connection with the Merger (the "Paying Agent") to receive in trust
the funds to which holders of the Shares shall become entitled pursuant to
Section 2.1(c) above. Such funds shall be invested by the Paying Agent as
directed by Parent or the Surviving Corporation.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose Shares were
converted pursuant to
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Section 2.1 hereof into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Paying Agent and shall be in such form and have such
other provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration for each Share formerly represented by such
Certificate and the Certificate so surrendered shall forthwith be cancelled. If
payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required
by reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been
paid or is not applicable. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration in cash as
contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such
Shares, except as otherwise provided for herein or by applicable law. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Article
II.
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(d) Termination of Fund; No Liability. At any time following six
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying
Agent and which had not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corpo-
ration (subject to abandoned property, escheat or other similar laws) only as
general creditors thereof with respect to the Merger Consideration payable upon
due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
Section 2.3 Dissenters' Rights. If any Dissenting Shareholder shall
demand to be paid the fair value of such holder's Shares, as provided in
Article 13 of the GBCC, the Company shall give Parent notice thereof and Parent
shall have the right to participate in all negotiations and proceedings with
respect to any such demands. Neither the Company nor the Surviving Corporation
shall, except with the prior written consent of Parent, voluntarily make any
payment with respect to, or settle or offer to settle, any such demand for
payment. If any Dissenting Shareholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares held by such
Dissenting Shareholder shall thereupon be treated as though such Shares had
been converted into the Merger Consideration pursuant to Section 2.1 hereof.
Section 2.4 Options and Warrants. At the Effective Time, each holder
of a then outstanding option (collectively, the "Options") or warrant
(collectively, the "Warrants") to purchase Shares granted by the Company,
whether or not then exercisable, shall in settlement thereof, receive for each
Share subject to such Option or Warrant an amount (subject to any applicable
withholding tax) in cash equal to the difference between the Offer Price and
the per Share exercise price of such Option or Warrant to the extent such
difference is a positive number. Prior to the Effective Time, the Company shall
use its best efforts to obtain all necessary consents or
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releases from holders of Options or Warrants, to the extent required by the
terms of the plans or agreements governing such Options or Warrants, as the
case may be, or pursuant to the terms of any Option or Warrant granted
thereunder, and take all such other lawful action as may be necessary to give
effect to the transactions contemplated by this Section 2.4 (except for such
action that may require the approval of the Company's shareholders). Except as
otherwise agreed to by Parent or the Purchaser and the Company, the Company
shall take all action necessary to ensure that (i) the Company's 1991 Stock
Option Plan, 1993 Stock Option Plan, as amended and restated as of October 11,
1995, and the Stock Option Plan for Directors (collectively, the "Stock Option
Plans") shall have been terminated as of the Effective Time and the provisions
in any other plan, program or arrangement providing for the issuance or grant
of any other interest in respect of the capital stock of the Company or any
Subsidiary thereof, shall be cancelled as of the Effective Time, and (ii)
following the Effective Time, (a) no participant in any Stock Option Plan or
other plans, programs or arrangements shall have any right thereunder to
acquire equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof and all such plans shall have been terminated, and (b) the
Company will not be bound by any convertible security, option, warrant, right
or agreement which would entitle any person to own any capital stock of the
Company, the Surviving Corporation or any Subsidiary thereof.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as disclosed in the schedule attached to this Agreement setting
forth exceptions to the Company's representations and warranties set forth
herein (the "Company Disclosure Schedule"), the Company represents and warrants
to Parent and the Purchaser as set forth below. The Company Disclosure Schedule
will be arranged in sections corresponding to sections of this Agreement to be
modified thereby.
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Section 3.1 Organization. (a) Each of the Company and its Subsidiaries
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority, and governmental
approvals would not, individually or in the aggregate, have a Company Material
Adverse Effect (as defined below). As used in this Agreement, the term
"Subsidiary" shall mean all corporations or other entities in which the Company
or the Parent, as the case may be, owns a majority of the issued and
outstanding capital stock or similar interests. As used in this Agreement,
"Company Material Adverse Effect" with reference to any events, changes or
effects, shall mean that such events, changes or effects are materially adverse
to the Company and its Subsidiaries, taken as a whole.
(b) The Company and each of its Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
individually or in the aggregate have a Company Material Adverse Effect. Except
as disclosed in Section 3.1 of the Company Disclosure Schedule, the Company
does not own any equity interest in any corporation or other entity.
Section 3.2 Capitalization. (a) The authorized capital stock of the
Company consists of 50,000,000 shares of Common Stock and 2,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"). As of the
date hereof, (i) 6,054,556 Shares are issued and outstanding, (ii) none of the
Shares are issued and held in the treasury of the Company, (iii) none of the
Preferred Stock is issued and outstanding, and (iv) 1,137,282 Shares are
reserved for issuance upon the exercise of outstanding Warrants or Options.
Section 3.2(a) of the Company Disclosure Schedule discloses the number of
shares subject to each outstanding Option and Warrant and the exercise price
thereof. All the out-
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standing shares of the Company's capital stock are, and all Shares which may be
issued pursuant to the exercise of outstanding Options or Warrants will be,
when issued in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and non-assessable. There are no bonds,
debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Voting Debt") of the Company
or any of its Subsidiaries issued and outstanding. Except as set forth above
and except for the transactions contemplated by this Agreement, as of the date
hereof, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding, (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest
in, the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment and (iii) except as disclosed in Section 3.2(a) of the Company
Disclosure Schedule, there are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any Shares, or the capital stock of the Company or of any Subsidiary or
affiliate of the Company or to provide funds to make any investment (in the
form of a loan, capital contribution or otherwise) in any Subsidiary or any
other entity.
(b) Except as disclosed in Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding shares of capital stock of each of its
Subsidiaries are owned beneficially and of record by the Company or one of its
Subsidiaries, directly or indirectly, and all such shares have been validly
issued and are fully paid and nonassessable and are owned by either the Company
or one of its Subsidiaries free and clear of all liens, charges, claims or
encumbrances ("Encumbrances").
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(c) There are no voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries.
Section 3.3 Authorization; Validity of Agreement; Company Action. The
Company has full corporate power and authority to execute and deliver this
Agreement and to consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
Transactions, have been unanimously approved and duly authorized by its Board
of Directors and no other corporate action on the part of the Company is
necessary to authorize the execution and delivery by the Company of this
Agreement and the consummation by it of the Transactions, except that
consummation of the Merger may require approval of the Company's shareholders
as contemplated by Section 1.8 hereof. This Agreement has been duly executed
and delivered by the Company and, assuming due and valid authorization,
execution and delivery hereof by Parent and the Purchaser, is a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization, or other laws affecting
creditors' rights generally or by the availability of equitable remedies
generally.
Section 3.4 Consents and Approvals; No Violations. Except for the
filings disclosed in Section 3.4 of the Company Disclosure Schedule and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act and the HSR Act,
none of the execution, delivery or performance of this Agreement by the
Company, the consummation of the Transactions or compliance by the Company with
any of the provisions hereof will (i) conflict with or result in any breach of
any provision of the Articles of Incorporation, the By-laws or similar
organizational documents of the Company or any of its Subsidiaries, (ii)
require any filing with, or permit, authorization, consent or approval of, any
court, arbitral tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (a "Governmental Entity"), (iii)
result in a violation or
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breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
(the "Company Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, excluding from the foregoing clauses
(ii), (iii) and (iv) such violations, breaches or defaults which would not,
individually or in the aggregate, have a Company Material Adverse Effect or
have a material adverse effect on the ability of the Company to consummate the
Transactions. Section 3.4 of the Company Disclosure Schedule sets forth a list
of all third party consents and approvals required to be obtained in connection
with this Agreement under the Company Agreements prior to the consummation of
the Transactions.
Section 3.5 SEC Reports and Financial Statements. The Company has
filed with the SEC, and has heretofore made available to Parent, true and
complete copies of all forms, reports, schedules, statements and other
documents required to be filed by it since January 1, 1995 under the Exchange
Act or the Securities Act of 1933, as amended (the "Securities Act") (as such
documents have been amended since the time of their filing, collectively, the
"Company SEC Documents"). As of their respective dates, the Company SEC
Documents, including, without limitation, any financial statements or schedules
included therein (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be, and the applicable rules and regulations of the SEC thereunder.
None of the Company's Subsidiaries is required to file any forms, reports or
other documents with the SEC. The financial statements of the Company included
in the Company SEC Documents (the "Financial Statements") have been prepared
from, and are in
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accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position and the consolidated results
of operations and cash flows (and changes in financial position, if any) of the
Company and its consolidated Subsidiaries as of the times and for the periods
referred to therein.
Section 3.6 Absence of Certain Changes. Except as disclosed in Section
3.6 of the Company Disclosure Schedule or in the Company SEC Documents filed
prior to the date hereof, since December 31, 1996, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary
and usual course and (i) there have not occurred any events or changes
(including the incurrence of any liabilities of any nature, whether or not
accrued, contingent or otherwise) having, individually or in the aggregate, a
Company Material Adverse Effect and (ii) the Company has not taken any action
which would have been prohibited under Section 5.1 hereof.
Section 3.7 No Undisclosed Liabilities. Except (a) as disclosed in the
Financial Statements and (b) for liabilities and obligations (i) incurred in
the ordinary course of business and consistent with past practice since
December 31, 1996, (ii) pursuant to the terms of this Agreement, (iii) as
disclosed in Section 3.7 of the Company Disclosure Schedule, or (iv) as
disclosed in Section 3.8 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise.
Section 3.8 Litigation. Except as disclosed in Section 3.8 of the
Company Disclosure Schedule, as of the date hereof, there are no suits, claims,
actions, proceedings, including, without limitation, arbitration proceedings or
alternative dispute resolution proceedings, or investigations pending or, to
the knowledge of the Company, threatened against the Company or any of its
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Subsidiaries before any Governmental Entity that, either individually or in the
aggregate, would be reasonably likely to have a Company Material Adverse
Effect.
Section 3.9 Employee Benefit Plans.
(a) Section 3.9(a) of the Company Disclosure Schedule contains a true
and complete list of each deferred compensation and each incentive
compensation, stock purchase, stock option and other equity compensation plan,
program, agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus
or other "pension" plan, fund or program (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed
to by the Company or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party, whether written or oral, for the
benefit of any employee or former employee of the Company or any Subsidiary
(the "Plans"). Each of the Plans that is subject to section 302 or Title IV of
ERISA or section 412 of the Internal Revenue Code of 1986, as amended (the
"Code") is hereinafter referred to in this Section 3.9 as a "Title IV Plan."
Neither the Company, any Subsidiary nor any ERISA Affiliate has any commitment
or formal plan, whether legally binding or not, to create any additional
employee benefit plan or modify or change any existing Plan that would affect
any employee or former employee of the Company or any Subsidiary.
(b) No liability under Title IV or section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation ("PBGC") (which premiums
have been paid when due).
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(c) [Reserved.]
(d) With respect to each Title IV Plan, the present value of accrued
benefits under such Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Plan's actuary
with respect to such Plan did not exceed, as of its latest valuation date, the
then current value of the assets of such Plan allocable to such accrued
benefits.
(e) No Title IV Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any Title IV Plan a plan described in section
4063(a) of ERISA. Neither the Company nor any ERISA Affiliate has made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in sections 4203 and 4205 of ERISA (or any liability
resulting therefrom has been satisfied in full).
(f) Each Plan has been operated and administered in accordance with
its terms and applicable law, including but not limited to ERISA and the Code.
(g) Each Plan intended to be "qualified" within the meaning of section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service with respect to the qualified status of such Plan
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, and nothing has occurred since the
issuance of such letter which could reasonably be expected to cause the loss of
the tax-qualified status of such Plan and the related trust maintained
thereunder. Each Plan intended to satisfy the requirements of Section 501(c)(9)
has satisfied such requirements.
(h) No Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
the Company or any Subsidiary for periods extending beyond their retirement or
other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," or (iii) benefits the full
cost of which is borne by the current or former employee (or his or her
beneficiary).
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(i) Except as disclosed in Section 3.9(i) of the Company Disclosure
Schedule or as set forth in Section 5.10 of this Agreement, the consummation of
the transactions contemplated by this Agreement will not, either alone or in
combination with another event, except as expressly provided in Section 2.4 of
this Agreement, (a) entitle any current or former employee or officer of the
Company or any ERISA Affiliate to severance pay, unemployment compensation or
any other payment, or (b) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee or officer.
(j) There are no pending, threatened or anticipated claims by or on
behalf of any Plan, by any employee or beneficiary covered under any such Plan,
or otherwise involving any such Plan (other than routine claims for benefits)
which could have a material adverse effect upon the Plans or have a Company
Material Adverse Effect.
(k) Notwithstanding anything in this Section 3.9 to the contrary, the
representations and warranties set forth in Sections 3.9(c), (f), and (j)
hereof shall not be deemed to be breached unless such breaches, either
individually or in the aggregate, would have a Company Material Adverse Effect.
Section 3.10 Tax Matters; Government Benefits.
(a) Except as disclosed in Section 3.10(a) of the Company Disclosure
Schedule, the Company and each of its Subsidiaries have duly filed (or there
has been filed on its behalf) all Tax Returns (as hereinafter defined) that are
required to be filed and have duly paid or caused to be duly paid in full or
made provision in accordance with GAAP (or there has been paid or provision has
been made on their behalf) for the payment of all Taxes (as hereinafter
defined) shown due on such Tax Returns. All such Tax Returns are correct and
complete in all material respects and accurately reflect all liability for
Taxes for the periods covered thereby. All Taxes owed and due by the Company
and each of its Subsidiaries for results of operations through June 30, 1996
(whether or not shown on any Tax Return) have been paid or have been adequately
reflected on the Company's balance sheet as of June 30, 1996 included in the
Financial Statements (the "Balance Sheet"). Since June 30, 1996,
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the Company has not incurred liability for any Taxes other than in the ordinary
course of business. Neither the Company nor any of its Subsidiaries has
received written notice of any claim made by an authority in a jurisdiction
where neither the Company nor any of its Subsidiaries file Tax Returns, that
the Company is or may be subject to taxation by that jurisdiction.
(b) Except as disclosed in Section 3.10(b) of the Company Disclosure
Schedule, there are no liens for Taxes upon any property or assets of the
Company or any of its Subsidiaries except for liens for Taxes not yet due.
(c) The federal income Tax Returns of the Company and its Subsidiaries
have been examined by the Internal Revenue Service (or the applicable statutes
of limitation for the assessment of federal income Taxes for such periods have
expired) for all periods through and including June 30, 1992, and, except as
disclosed in Section 3.10(c) of the Company Disclosure Schedule, no
deficiencies were asserted as a result of such examinations that have not been
resolved or fully paid. Neither the Company nor any of its Subsidiaries has
waived any statute of limitations in any jurisdiction in respect of Taxes or
Tax Returns or agreed to any extension of time with respect to a Tax assessment
or deficiency.
(d) The deductibility of compensation paid by the Company or any of
its Subsidiaries will not be limited by Section 162(m) of the Code.
(e) Except as disclosed in Section 3.10(e) of the Company Disclosure
Schedule, no federal, state, local or foreign audits, examinations or other
administrative proceedings have been commenced or, to the Company's knowledge,
are threatened with regard to any Taxes or Tax Returns of the Company or of any
of its Subsidiaries. No written notification has been received by the Company
or by any of its Subsidiaries that such an audit, examination or other
proceeding is pending or threatened with respect to any Taxes due from or with
respect to or attributable to the Company or any of its Subsidiaries or any Tax
Return filed by or with respect to the Company or any of its Subsidiaries. To
the Company's knowledge, there is no dispute or claim concerning any Tax
liability
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of the Company, or any of its Subsidiaries either claimed or raised by any
taxing authority in writing.
(f) Except as disclosed in Section 3.10(f) of the Company Disclosure
Schedule, no power of attorney granted by either the Company or any of its
Subsidiaries is currently in force.
(g) Except as disclosed in Section 3.10(g) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any
agreement, plan, contract or arrangement that could result, separately or in
the aggregate, in a payment of any "excess parachute payments" within the
meaning of section 280G of the Code.
(h) Except as disclosed in Section 3.10(h) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has filed a consent
pursuant to section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries.
(i) Except as disclosed in Section 3.10(i) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any tax
sharing, tax indemnity or other agreement or arrangement with any entity not
included in the Company's consolidated financial statements most recently filed
by the Company with the SEC.
(j) Except as disclosed in Section 3.10(j) of the Company Disclosure
Schedule, none of the Company or any of its Subsidiaries has been a member of
any affiliated group within the meaning of section 1504(a) of the Code, or any
similar affiliated or consolidated group for tax purposes under state, local or
foreign law (other than a group the common parent of which is the Company), or
has any liability for Taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise.
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(k) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
levies, penalties or other assessments imposed by any federal, state, local
or foreign governmental authority, including, but not limited to, income,
gross receipts, excise, property, sales, gain, use, license, custom duty,
unemployment, capital stock, transfer, franchise, payroll, withholding,
social security, minimum estimated, and other taxes, and shall include
interest, penalties or additions attributable thereto; and
(ii) "Tax Return" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
Section 3.11 Intellectual Property.
(a) Except as disclosed in Section 3.11(a) of the Company Disclosure
Schedule, the Company and its Subsidiaries own or have adequate rights to use
all items of Intellectual Property (as defined below) necessary to conduct the
business of the Company and its Subsidiaries as presently conducted or as
currently proposed to be conducted, free and clear of all Encumbrances (other
than Encumbrances which, individually or in the aggregate, would not have a
Company Material Adverse Effect).
(b) To the knowledge of the Company, the conduct of the Company's and
its Subsidiaries' business and the Intellectual Property owned or used by the
Company and its Subsidiaries, do not infringe any Intellectual Property rights
or any other proprietary right of any person other than infringements which,
individually or in the aggregate, would not have a Company Material Adverse
Effect. The Company and its Subsidiaries have received no notice of any
allegations or threats that the Company's and its Subsidiaries' use of any of
the Intellectual Property infringes upon or is in conflict with any
Intellectual Property or proprietary rights of any third party other than
infringements or conflicts which individually or in the aggregate would not
have a Company Material Adverse Effect.
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(c) As used in this Agreement, "Intellectual Property" means all of
the following: (i) U.S. and foreign registered and unregistered trademarks,
trade dress, service marks, logos, trade names, corporate names and all
registrations and applications to register the same (the "Trademarks"); (ii)
issued U.S. and foreign patents and pending patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, reexaminations, and extension thereof, any counterparts claiming
priority therefrom, utility models, patents of importation/confirmation,
certificates of invention and like statutory rights (the "Patents"); (iii) U.S.
and foreign registered and unregistered copyrights (including, but not limited
to, those in computer software and databases), rights of publicity and all
registrations and applications to register the same (the "Copyrights"); (iv)
all categories of trade secrets as defined in the Uniform Trade Secrets Act
including, but not limited to, business information; and (v) all licenses and
agreements pursuant to which the Company has acquired rights in or to any
Trademarks, Patents, or Copyrights, or licenses and agreements pursuant to
which the Company has licensed or transferred the right to use any of the
foregoing ("Licenses").
Section 3.12 Employment Matters. To the knowledge of the Company, no
key employee disclosed in Section 3.12 of the Company Disclosure Schedule has
any plans to terminate such employee's employment with the Company or any of
its Subsidiaries as a result of the Transactions or otherwise. Neither the
Company nor any of its Subsidiaries has experienced any strikes, collective
labor grievances, other collective bargaining disputes or claims of unfair
labor practices in the last five years. To the Company's knowledge, there is no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company and its Subsidiaries.
Section 3.13 Compliance with Laws. The Company and its Subsidiaries
are in compliance with, and have not violated any applicable law, rule or
regulation of any United States federal, state, local, or foreign government or
agency thereof which affects the business, properties or assets of the Company
and its Subsidiaries, and no notice, charge, claim, action or assertion has
been received by the Company or any of its Subsidiaries
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<PAGE>
or has been filed, commenced or, to the Company's knowledge, threatened against
the Company or any of its Subsidiaries alleging any such violation, except for
any matter otherwise covered by this sentence which would not have,
individually or in the aggregate, a Company Material Adverse Effect. All
licenses, permits and approvals required under such laws, rules and regulations
are in full force and effect except where the failure to be in full force and
effect would not have a Company Material Adverse Effect.
Section 3.14 Vote Required. The affirmative vote of the holders of a
majority of the outstanding Shares in favor of the Merger is the only vote of
the holders of any class or series of the Company's capital stock which may be
necessary to approve this Agreement and the Transactions.
Section 3.15 Environmental Laws.
(a) Except as disclosed in Section 3.15(a) of the Company Disclosure
Schedule, to the knowledge of the Company, the Company and its Subsidiaries are
in compliance with all applicable Environmental Laws (as defined below) (which
compliance includes, without limitation, the possession by the Company and its
Subsidiaries of all permits and other governmental authorizations required
under applicable Environmental Laws, and compliance with the terms and
conditions thereof), except where failure to be in compliance, either
individually or in the aggregate, would not have a Company Material Adverse
Effect.
(b) Except as disclosed in Section 3.15(b) of the Company Disclosure
Schedule, to the knowledge of the Company, there is no Environmental Claim (as
defined below) pending or, to the Company's knowledge, threatened against the
Company or any of the Subsidiaries or, to the Company's knowledge, against any
person or entity whose liability for any Environmental Claim the Company or any
of its Subsidiaries has or may have retained or assumed either contractually or
by operation of law which Environmental Claim would have, either individually
or in the aggregate, a Company Material Adverse Effect.
(c) Except as disclosed in Section 3.15(c) of the Company Disclosure
Schedule, to the knowledge of the Company, there are no past or present
actions, activi-
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ties, circumstances, conditions, events or incidents, including, without
limitation, the release or presence of any Hazardous Material (as defined
below), which could form the basis of any Environmental Claim against the
Company or any of its Subsidiaries, or to the Company's knowledge, against any
person or entity whose liability for any Environmental Claim the Company or any
of its Subsidiaries has or may have retained or assumed either contractually or
by operation of law, which Environmental Claim would have, either individually
or in the aggregate, a Company Material Adverse Effect.
(d) Except as disclosed in Section 3.15(d) of the Company Disclosure
Schedule, to the knowledge of the Company, the Company and its Subsidiaries
have not, and to the Company's knowledge, no other person has, placed, stored,
deposited, discharged, buried, dumped or disposed of Hazardous Materials or any
other wastes produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on, beneath or adjacent to any
property currently or formerly owned, operated or leased by the Company or any
of its Subsidiaries, except (x) for inventories of such substances to be used,
and wastes generated therefrom, in the ordinary course of business of the
Company and its Subsidiaries, or (y) which would not, either individually or in
the aggregate, have a Company Material Adverse Effect.
(e) Without in any way limiting the generality of the foregoing,
except as disclosed in Section 3.15(e) of the Company Disclosure Schedule, to
the knowledge of the Company, none of the properties owned, operated or leased
by the Company or any of its Subsidiaries contain any: underground storage
tanks; asbestos; polychlorinated biphenyls ("PCBs"); underground injection
wells; radioactive materials; or septic tanks or waste disposal pits in which
process wastewater or any Hazardous Materials have been discharged or disposed
the existence of which, individually or in the aggregate, could reasonably be
expected to have a Company Material Adverse Effect.
(f) The Company has made available to Parent for review copies of all
environmental reports or studies in its possession.
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(g) For purposes of this Agreement, (i) "Environmental Laws" means all
federal, state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment, including, without limitation,
laws relating to releases or threatened releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, release, disposal, transport or handling of Hazardous
Materials and all laws and regulations with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials; (ii) "Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, Cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or Release, of any
Hazardous Materials at any location, whether or not owned, leased or operated
by the Company or any of its Subsidiaries, or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law; (iii)
"Hazardous Materials" means all substances defined as Hazardous Substances,
Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined as such by, or
regulated as such under, any Environmental Law.
Section 3.16 Information in Proxy Statement. The Proxy Statement, if
any (or any amendment thereof or supplement thereto), will not, at the date
mailed to Company shareholders and at the time of the meeting of Company
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied in writing by Parent or the Purchaser for
inclusion in the Proxy Statement. The Proxy Statement will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
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Section 3.17 Opinion of Financial Advisor. The Company has received
the opinion of J.C. Bradford & Co., dated the date hereof, to the effect that,
as of such date, the consideration to be received in the Offer and the Merger
by the Company's shareholders is fair to the Company's shareholders from a
financial point of view, a copy of which opinion has been delivered to Parent
and the Purchaser.
Section 3.18 Rights Agreement. The Company has taken all action which
may be necessary under the Shareholder Rights Agreement dated as of July 25,
1995 between the Company and First Union National Bank of North Carolina, as
Rights Agent (the "Rights Agreement"), so that the execution of this Agreement
and any amendments hereto by the parties hereto and the consummation of the
transactions contemplated hereby shall not cause (i) Parent and/or the
Purchaser to become an Acquiring Person (as defined in the Rights Agreement),
(ii) a Distribution Date, a Stock Acquisition Date or a Triggering Event (as
such terms are defined in the Rights Agreement) to occur, irrespective of the
number of Shares acquired pursuant to the Offer and (iii) the Rights Agreement
is otherwise inapplicable to this Agreement and the transactions contemplated
hereby, including the Offer and the Merger. The Company has furnished to Parent
a true and complete copy of Amendment No. 1 to the Rights Agreement, which is
in full force and effect.
Section 3.19 Phones. Except as disclosed in Section 3.19 of the
Company Disclosure Schedule, the Company has good and marketable title, free of
all Encumbrances, to at least 20,000 pay telephones and at least 5,800 prison
phones in operation, subject to enforceable site location agreements and
generating income for the Company. The average term of such site location
agreements for each telephone (excluding prison phones) is at least 40 months
and the average term of such site location agreements for each prison phone is
at least 28 months.
Section 3.20 Average Net Revenue. As of the date hereof and as of the
Closing, the Average Net Revenue shall be at least $90 per pay telephone
(excluding prison phones) and $145 per prison phone in operation as of the date
of this Agreement. For purposes of this Agreement, "Average Net Revenue" for
such pay telephones
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shall mean the average of the monthly gross revenues minus telephone bills and
commissions (assuming dial-around compensation is based on the state of the
law existing prior to September 20, 1996) for the 18 months prior to the date
of this Agreement. Average Net Revenue from operator service providers shall
only include revenues received by the Company from such providers.
Section 3.21 Brokers or Finders. The Company represents, as to itself
and its Subsidiaries and affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee from the
Company or any of its Subsidiaries in connection with any of the transactions
contemplated by this Agreement except for J.C. Bradford & Co., whose fees are
set forth in the engagement letter attached as Section 3.21 of the Company
Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as set
forth below.
Section 4.1 Organization. Parent is a corporation duly organized,
validly existing and in good standing under the laws of Ohio and the Purchaser
is a corporation duly organized, validly existing and in good standing under
the laws of Georgia.
Section 4.2 Authorization; Validity of Agreement; Necessary Action.
Each of Parent and the Purchaser has full corporate power and authority to
execute and deliver this Agreement and to consummate the Transactions. The
execution, delivery and performance by Parent and the Purchaser of this
Agreement and the consummation of the Transactions have been duly authorized by
the Boards of Directors of Parent and the Purchaser and by Parent as the sole
shareholder of the Purchaser and no other corporate action on the part of
Parent and the Purchaser is necessary to authorize the execution and delivery
by Parent and the Purchaser of this Agreement and the consummation of the
Transactions. This Agreement
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has been duly executed and delivered by Parent and the Purchaser and, assuming
due and valid authorization, execution and delivery hereof by the Company, is a
valid and binding obligation of each of Parent and the Purchaser enforceable
against each of them in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, or other laws affecting creditors' rights generally or by the
availability of equitable remedies generally.
Section 4.3 Consents and Approvals; No Violations. Except for the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act and the HSR Act,
none of the execution, delivery or performance of this Agreement by Parent or
the Purchaser, the consummation by Parent or the Purchaser of the Transactions
or compliance by Parent or the Purchaser with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the Articles of
Incorporation or Code of Regulations of Parent or the Articles of Incorporation
or By-Laws of the Purchaser, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent, or any of its Subsidiaries or the
Purchaser is a party or by which any of them or any of their respective
properties or assets may be bound, or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (ii), (iii) and (iv) such violations, breaches or defaults which would
not, individually or in the aggregate, have a material adverse effect on the
ability of Parent and the Purchaser to consummate the Transactions.
Section 4.4 Information in Proxy Statement. None of the information
supplied by Parent or the Purchaser in writing specifically for inclusion or
incorporation by reference in the Proxy Statement, if any, will,
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at the date mailed to shareholders and at the time of the meeting of
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading.
Section 4.5 Financing. Parent has received a highly confident letter
for the funds sufficient to finance the transactions contemplated herein and
has made available to the Company a true and correct copy of such letter.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants
and agrees that, except (i) as expressly contemplated by this Agreement or (ii)
as agreed in writing by Parent, after the date hereof, and prior to the time
the designees of Parent have been elected to, and shall constitute a majority
of, the Board of Directors of the Company pursuant to Section 1.3 hereof (the
"Appointment Date"):
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its Subsidiaries shall use its best efforts
to preserve its business organization intact and maintain its existing
relations with customers, suppliers, employees, creditors and business
partners;
(b) the Company will not, directly or indirectly, (i) except upon
exercise of Warrants or Options or other rights to purchase shares of Common
Stock outstanding on the date hereof, issue, sell, transfer or pledge or agree
to sell, transfer or pledge any treasury stock of the Company or any capital
stock of any of its Subsidiaries beneficially owned by it, (ii) amend its
Articles of Incorporation or By-laws or similar organizational documents; or
(iii) split, combine or reclassify the outstanding Shares or any outstanding
capital stock of any of the Subsidiaries of the Company;
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(c) neither the Company nor any of its Subsidiaries shall: (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock; (ii) issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible into
or exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than Shares reserved for issuance on the date hereof
pursuant to the exercise of Warrants or Options outstanding on the date hereof;
(iii) transfer, lease, license, sell or dispose of any assets, or incur any
indebtedness or other liability other than in the ordinary course of business,
or mortgage, pledge or encumber any assets or modify any indebtedness; or (iv)
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(d) neither the Company nor any of its Subsidiaries shall: (i) grant
any increase in the compensation payable or to become payable by the Company or
any of its Subsidiaries to any of its executive officers or (ii)(A) adopt any
new, or (B) amend or otherwise increase, or accelerate the payment or vesting
of the amounts payable or to become payable under any existing bonus, incentive
compensation, deferred compensation, severance, profit sharing, stock option,
stock purchase, insurance, pension, retirement or other employee benefit plan,
agreement or arrangement; or (iii) enter into any employment or severance
agreement with or, except in accordance with the existing written policies of
the Company, grant any severance or termination pay to any officer, director or
employee of the Company or any of its Subsidiaries;
(e) neither the Company nor any of its Subsidiaries shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent;
(f) neither the Company nor any of its Subsidiaries shall enter into
any contract or transaction relating to the purchase of assets other than in
the ordinary course of business;
(g) neither the Company nor any of its Subsidiaries shall change any
of the accounting methods used by it unless required by GAAP, neither the
Company nor any
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of its Subsidiaries shall make any material Tax election, change any material
Tax election already made, adopt any material Tax accounting method, change any
material Tax accounting method unless required by GAAP, enter into any closing
agreement, settle any Tax claim or assessment or consent to any Tax claim or
assessment or any waiver of the statute of limitations for any such claim or
assessment; and
(h) neither the Company nor any of its Subsidiaries will enter into
any agreement with respect to the foregoing or take any action with the intent
of causing any of the conditions to the Offer set forth in Annex A not to be
satisfied.
Section 5.2 Access; Confidentiality. (a) Upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to the Appointment Date, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to Parent (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request, including without
limitation, true and complete copies of each Plan of the Company or of any of
its Subsidiaries and any amendments thereto (or if any Plan is not a written
Plan, a description thereof), any related trust or other funding vehicle, any
summary plan description under ERISA or the Code and the most recent
determination letter received from the Internal Revenue Service with respect to
each such Plan intended to qualify under Section 401 of the Code. Access shall
include the right to conduct such environmental studies and tests as Parent, in
its reasonable discretion, shall deem appropriate; provided, however, that such
studies and tests must be performed prior to April 15, 1997 and must be
performed in such a way as not to disrupt materially the Company's business.
After the Appointment Date, the Company shall provide Parent and such persons
as Parent shall designate with all such information, at such time as Parent
shall request.
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Unless otherwise required by law and until the Appointment Date, Parent and the
Purchaser will hold any such information which is non-public in confidence in
accordance with, and will otherwise abide by, the provisions of the
Confidentiality Agreement between the Company and Parent dated July 25, 1996
(the "Confidentiality Agreement").
(b) Following the execution of this Agreement, Parent and the Company
shall cooperate with each other and make all reasonable efforts to minimize any
disruption to the business which may result from the announcement of the
Transactions.
Section 5.3 Consents and Approvals. (a) Each of the Company, Parent
and the Purchaser shall take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on it with respect
to this Agreement and the Transactions (which actions shall include, without
limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with this Agreement and the Transactions. Each of
the Company, Parent and the Purchaser shall, and shall cause its Subsidiaries
to, take all reasonable actions necessary to obtain (and will cooperate with
each other in obtaining) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity or other public or private third
party required to be obtained or made by Parent, the Purchaser, the Company or
any of their Subsidiaries in connection with the Transactions or the taking of
any action contemplated thereby or by this Agreement.
(b) The Company and Parent shall take all reasonable actions necessary
to file as soon as practicable notifications under the HSR Act and to respond
as promptly as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
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Section 5.4 No Solicitation. (a) Neither the Company nor any of its
Subsidiaries shall (and the Company and its Subsidiaries shall cause their
respective officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent or
any of its affiliates or representatives) concerning any proposal or offer to
acquire all or a substantial part of the business and properties of the Company
or any of its Subsidiaries or any capital stock of the Company or any of its
Subsidiaries, whether by merger, tender offer, exchange offer, sale of assets
or similar transactions involving the Company or any Subsidiary, division or
operating or principal business unit of the Company (an "Acquisition
Proposal"), except that nothing contained in this Section 5.4 or any other
provision hereof shall prohibit the Company or the Company's Board of Directors
from (i) taking and disclosing to the Company's shareholders a position with
respect to a tender or exchange offer by a third party pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act, or (ii) making such disclosure to
the Company's shareholders as, in the good faith judgment of the Board of
Directors, after receiving advice from outside counsel, is required under
applicable law; provided that, except as permitted by this Section 5.4, neither
the Board of Directors of the Company nor any committee thereof shall (x)
approve or recommend or propose to approve or recommend any Acquisition
Proposal, (y) enter into any agreement with respect to any Acquisition
Proposal, or (z) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or the Purchaser, the approval or recommendation by
such Board of Directors or any such committee of the Offer, this Agreement or
the Merger. The Company will immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any corporation, partnership, person or other
entity or group pursuant to appropriate
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confidentiality agreements, and may negotiate and participate in discussions
and negotiations with such entity or group concerning an Acquisition Proposal
if (x) such entity or group has on an unsolicited basis submitted a bona fide
written proposal to the Company relating to any such transaction which the
Board of Directors determines in good faith, after receiving advice from a
nationally recognized investment banking firm, represents a superior
transaction to the Offer and the Merger and which the Board of Directors
determines in good faith can be fully financed and (y) in the opinion of the
Board of Directors of the Company, only after receipt of advice from outside
legal counsel to the Company, the failure to provide such information or access
or to engage in such discussions or negotiations could reasonably be expected
to cause the Board of Directors to violate its fiduciary duties to the
Company's shareholders under applicable law (an Acquisition Proposal which
satisfies clauses (x) and (y) being referred to herein as a "Superior
Proposal"). The Company shall within one business day following receipt of a
Superior Proposal notify Parent of the receipt of the same. The Company shall
promptly provide to Parent any material non-public information regarding the
Company provided to any other party which was not previously provided to
Parent. At any time after two business days following notification to Parent of
the Company's intent to do so (which notification shall include the identity of
the bidder and the material terms and conditions of the proposal) and if the
Company has otherwise complied with the terms of this Section 5.4(b), the Board
of Directors may withdraw or modify its approval or recommendation of the
Offer.
(c) In the event of a Superior Proposal which (i) is to be paid
entirely in cash and (ii) is not subject to any financing condition or
contingency, the Company may enter into an agreement with respect to such
Superior Proposal no sooner than four days after giving Parent written notice
of its intention to enter into such agreement; provided that the Purchaser or
Parent has not, prior to the expiration of such four-day period, advised the
Company of its intention to raise the Offer Price to match such Superior
Proposal and has waived the Financing Condition (unless the sole reason for the
Financing Condition not to be waived is the failure of the Company to satisfy
its obligations under Sections 5.11 and 5.13 hereof). Upon expiration of such
four-day period without such
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action by the Purchaser or Parent, the Company may enter into an agreement with
respect to such Superior Proposal (with the bidder and on terms no less
favorable than those specified in such notification), provided it shall
concurrently with entering into such agreement pay or cause to be paid to
Parent the amount specified in Section 8.1(b) hereof.
Section 5.5 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, legal or otherwise,
to achieve the satisfaction of the Minimum Condition, the Financing Condition
and all conditions set forth in Annex A attached hereto and Article VI hereof,
and to consummate and make effective the Merger and the other transactions
contemplated by this Agreement. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the officers and directors of the Company, Parent and the Purchaser
shall use all reasonable efforts to take, or cause to be taken, all such
necessary actions.
Section 5.6 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and the Company. Thereafter, so long as this Agreement is in effect, neither
the Company, Parent nor any of their respective affiliates shall issue or cause
the publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without the prior consultation
of the other party, except as such party believes, after receiving the advice
of outside counsel, may be required by law or by any listing agreement with a
national securities exchange or trading market.
Section 5.7 Notification of Certain Matters. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or
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inaccurate in any material respect at or prior to the Effective Time and (ii)
any material failure of the Company, Parent or the Purchaser, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.7 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 5.8 Directors' and Officers' Insurance and Indemnification.
(a) For six years after the Effective Time, the Surviving Corporation (or any
successor to the Surviving Corporation) shall indemnify, defend and hold
harmless the present and former officers and directors of the Company and its
Subsidiaries, and persons who become any of the foregoing prior to the
Effective Time (each an "Indemnified Party") against all losses, claims,
damages, liabilities, costs, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the written consent of the Parent or the Surviving Corporation which consent
shall not unreasonably be withheld)) arising out of actions or omissions
occurring at or prior to the Effective Time to the full extent permissible
under applicable Georgia law, the terms of the Company's Articles of
Incorporation or the By-laws, as in effect at the date hereof; provided that,
in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until disposition of any and all such claims.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance ("D&O Insurance") for a
period of not less than six years after the Effective Time; provided, that the
Parent may substitute therefor policies of substantially equivalent coverage
and amounts containing terms no less favorable to such former directors or
officers; provided, further, if the existing D&O Insurance expires, is
terminated or cancelled during such period, Parent or the Surviving Corporation
will use all reasonable efforts to obtain substantially similar D&O Insurance;
provided, further, however, that in no event shall Parent be required to pay
aggregate premiums for insur-
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ance under this Section 5.8(b) in excess of $103,250; and provided, further,
that if the Parent or the Surviving Corporation is unable to obtain the amount
of insurance required by this Section 5.8(b) for such aggregate premium, Parent
or the Surviving Corporation shall obtain as much insurance as can be obtained
for an annual premium not in excess of $103,250.
Section 5.9 Purchaser Compliance. Parent shall cause the Purchaser to
comply with all of its obligations under or related to this Agreement.
Section 5.10 Severance Arrangements. Parent shall cause the Surviving
Corporation to honor the severance arrangements set forth in the Employment
Agreement dated as of November 6, 1995 (the "Employment Agreement") by and
between Communications Central of Georgia, Inc., a Georgia corporation and
wholly owned Subsidiary of the Company and Rodger L. Johnson (the "Executive"),
except to the extent modified or superseded by any separate agreement which may
be entered into by the Executive and Parent or the Purchaser or any of their
respective Subsidiaries.
Section 5.11 Financing. Parent shall endeavor in good faith to secure
funds sufficient for Parent and the Purchaser to consummate the transactions
contemplated hereby. The Company shall provide such assistance as Parent may
reasonably request in connection with securing such funds, including, without
limitation, using its reasonable best efforts to (a) make available on a timely
basis such financial information of the Company and its Subsidiaries as may
reasonably be required in connection with any such financing, (b) obtain "cold
comfort" letters and updates thereof from the Company's independent certified
public accountants and opinion letters from the Company's attorneys, with such
letters to be in customary form and to cover matters of the type customarily
covered by accountants and attorneys in such transactions, and (c) make
available representatives of the Company and its accountants and attorneys in
connection with any such financing, including for purposes of due diligence and
marketing efforts related thereto.
Section 5.12 Additional Employee Covenants. The Company shall, within
five business days of the date hereof, deliver to Parent covenants not to
compete in a
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form reasonably satisfactory to Parent for each of Mark Noyd, Ann Galloway and
Robert Bowling.
Section 5.13 Senior Credit Refinancing. At the request of Parent, the
Company shall take all action reasonably necessary to assist Parent and the
Purchaser in refinancing the Company's senior secured credit facility upon
the purchase of and payment for Shares by the Purchaser pursuant to the Offer,
including without limitation (i) borrowing such replacement indebtedness ob-
tained by Parent or the Purchaser from Parent or the Purchaser, (ii) providing
subsidiary guarantees of such indebtedness to Parent or the Purchaser; (iii)
pledging the Company's assets as security for such indebtedness; and (iv)
arranging for releases of liens which secure prior indebtedness against the
Company's assets.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part
jointly by the Company and Parent to the extent permitted by applicable law:
(a) Shareholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the holders of the Shares, if required by
applicable law in order to consummate the Merger;
(b) Statutes; Court Orders. No statute, rule or regulation shall have
been enacted or promulgated by any governmental authority which prohibits the
consummation of the Merger; and there shall be no order or injunction of a
court of competent jurisdiction in effect precluding consummation of the
Merger;
(c) Purchase of Shares in Offer. Parent, the Purchaser or their
affiliates shall have purchased Shares pursuant to the Offer, except that this
condition shall not apply if Parent, the Purchaser or their affiliates shall
have failed to purchase Shares pursuant to the
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Offer in breach of their obligations under this Agreement; and
(d) HSR Approval. The applicable waiting period under the HSR Act
shall have expired or been terminated.
Section 6.2 Condition to Parent's and the Purchaser's Obligations to
Effect the Merger. The obligations of Parent and the Purchaser to consummate
the Merger are further subject to the fulfillment of the condition that all
actions contemplated by Section 2.4 hereof shall have been taken, which may be
waived in whole or in part by Parent and the Purchaser.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the
Transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after shareholder approval thereof:
(a) By the mutual written consent of Parent and the Company; or
(b) By either of the Company or Parent:
(i) if (x) the Offer shall have expired without any Shares being
purchased therein or (y) the Purchaser shall not have accepted for payment
all Shares tendered pursuant to the Offer by May 19, 1997; provided,
however, that the right to terminate this Agreement under this Section
7.1(b)(i) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of Parent or the Purchaser, as the case may be, to purchase the
Shares pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their reasonable ef-
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forts to lift), which permanently restrains, enjoins or otherwise prohibits
the acceptance for payment of, or payment for, Shares pursuant to the Offer
or the Merger and such order, decree, ruling or other action shall have
become final and non-appealable; or
(c) By the Company:
(i) if Parent, the Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided, that
the Company may not terminate this Agreement pursuant to this Section
7.1(c)(i) if the Company is at such time in breach of its obligations under
this Agreement such as to cause a Company Material Adverse Effect; or
(ii) if Parent or the Purchaser shall have breached in any material
respect any of their respective representations, warranties, covenants or
other agreements contained in this Agreement, which breach cannot be or has
not been cured, in all material respects, within 30 days after the giving
of written notice to Parent or the Purchaser, as applicable; or
(iii) in connection with entering into a definitive agreement in
accordance with Section 5.4(c) hereof, provided it has complied with all
provisions thereof, including the notice provisions therein, and that it
makes simultaneous payment of the amount specified in Section 8.1(b)
hereof; or
(d) By Parent:
(i) if, due to an occurrence, not involving a breach by Parent or the
Purchaser of their obligations hereunder, which makes it impossible to
satisfy any of the conditions set forth in Annex A hereto, Parent, the
Purchaser, or any of their affiliates shall have failed to commence the
Offer on or prior to five business days following the date of the initial
public announcement of the Offer;
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(ii) if prior to the purchase of Shares pursuant to the Offer, the
Company shall have breached any representation, warranty, covenant or other
agreement contained in this Agreement which (A) would give rise to the
failure of a condition set forth in paragraph (f) or (g) of Annex A hereto
and (B) cannot be or has not been cured, in all material respects, within
30 days after the giving of written notice to the Company; or
(iii) upon the occurrence of any event set forth in paragraph (e) of
Annex A hereto.
Section 7.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to its terms, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void, and there shall be no liability on the part of the Purchaser, Parent
or the Company except (A) for fraud or for breach of this Agreement prior to
such termination and (B) as set forth in the last sentence of Section 5.2(a)
and Sections 7.2 and 8.1 hereof.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as contemplated by this
Agreement, including Sections 8.1(b) and (c) hereof, all costs and expenses
incurred in connection with this Agreement and the consummation of the
Transactions shall be paid by the party incurring such expenses.
(b) If (i) Parent terminates this Agreement pursuant to Section
7.1(d)(iii) hereof, (ii) the Company terminates this Agreement pursuant to
Section 7.1(c)(iii) hereof, or (iii) either the Company or Parent terminates
this Agreement pursuant to Section 7.1(b)(i) and prior thereto there shall have
been publicly announced another Acquisition Proposal or an event set forth in
paragraph (h) of Annex A shall have occurred, the Company shall pay to Parent,
an amount equal to the greater of $2,000,000 (the "Termination Fee"), or an
amount equal to Parent's
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actual, reasonable and reasonably documented out-of-pocket fees and expenses
incurred by Parent and the Purchaser in connection with the Offer, the Merger,
this Agreement, the consummation of the Transactions and the financing
therefor, which shall be payable in same day funds, provided that in no event
shall the Company be obligated to pay any such fees and expenses in excess of
$2,500,000. The Termination Fee or Parent's good faith estimate of its
expenses, as the case may be, shall be paid concurrently with any such
termination, together with delivery of a written acknowledgement by the Company
of its obligation to reimburse Parent for its actual expenses in excess of such
estimated expenses payment.
(c) If the Company terminates this Agreement pursuant to (i) Section
7.1(b) and the sole reason for the Purchaser's failure to purchase Shares in
the Offer is the Parent's failure to satisfy the Financing Condition (except if
the sole reason for Parent's failure to satisfy the Financing Condition is the
failure of the Company to satisfy its obligations under Sections 5.11 and 5.13
hereof), or (ii) Section 7.1(c) hereof, then Parent shall pay to the Company an
amount equal to the Company's reasonable legal fees and expenses incurred, as
of the date of such termination, with respect to this Agreement and the
Transactions.
Section 8.2 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action
taken by their respective Boards of Directors (which in the case of the Company
shall include approvals as contemplated in Section 1.2(a)), at any time prior
to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the
shareholders of the Company, no such amendment, modification or supplement
shall reduce the amount or change the form of the Merger Consideration.
Section 8.3 Non-survival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
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Section 8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such
as Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
PhoneTel Technologies, Inc.
650 Statler Office Building
1127 Euclid Avenue
Suite 650
Cleveland, Ohio 44115-1601
Attention: Chairman
Telephone No.: (216) 241-2555
Telecopy No.: (216) 241-2574
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Stephen M Banker, Esq.
Telephone No.: (212) 735-2760
Telecopy No.: (212) 735-2000
(b) and, if to the Company, to:
Communications Central Inc.
1150 Northmeadow Parkway
Suite 118
Roswell, Georgia 30076
Attention: President
Telephone No.: (770) 442-7300
Telecopy No.: (770) 751-9082
with a copy to:
Hunton & Williams
600 Peachtree Street, N.E.
Suite 4100
Atlanta, Georgia 30308
Attention: J. Stephen Hufford, Esq.
Telephone No.: (404) 888-4048
Telecopy No.: (404) 888-4190
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Section 8.5 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation." As used in this Agreement, the term "affiliates" shall
have the meaning set forth in Rule 12b-2 of the Exchange Act.
Section 8.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement, the Escrow Agreement and the Confidentiality Agreement (including
the documents and the instruments referred to herein and therein) constitute
the entire agreement and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof and thereof. This Agreement and the Escrow Agreement are not intended to
confer upon any person other than the parties hereto or thereto any rights or
remedies hereunder or thereunder.
Section 8.8 Severability. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
asking such determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest
to express-
50
<PAGE>
ing the intention of the invalid or unenforceable term or provision.
Section 8.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia without giving
effect to the principles of conflicts of law thereof.
Section 8.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
content of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns.
51
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
PHONETEL TECHNOLOGIES, INC.
By /s/ Peter G. Graf
-----------------------------------
Name: Peter G. Graf
Title: Chairman
PHONETEL ACQUISITION CORP.
By /s/ Peter G. Graf
-----------------------------------
Name: Peter G. Graf
Title: Chairman
COMMUNICATIONS CENTRAL INC.
By /s/ Rodger L. Johnson
-----------------------------------
Name: Rodger L. Johnson
Title: President and Chief Executive
Officer
52
<PAGE>
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other provisions
of the Offer, and in addition to (and not in limitation of) the Purchaser's
rights to extend and amend the Offer at any time in its sole discretion
(subject to the provisions of the Merger Agreement), the Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate or amend the Offer as
to any Shares not then paid for, if (i) any applicable waiting period under the
HSR Act has not expired or terminated, (ii) the Minimum Condition has not been
satisfied, or (iii) at any time on or after the date of the Merger Agreement
and before the time of acceptance for payment for any such Shares, any of the
following events shall occur or shall be determined by the Purchaser, in its
judgment reasonably exercised, to have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent, the
Company or any Subsidiary of the Company (i) seeking to prohibit or impose any
material limitations on Parent's or the Purchaser's ownership or operation (or
that of any of their respective Subsidiaries or affiliates) of all or a
material portion of their or the Company's businesses or assets, or to compel
Parent or the Purchaser or their respective Subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or assets of
the Company or Parent and their respective Subsidiaries, in each case taken as
a whole, (ii) challenging the acquisition by Parent or the Purchaser of any
Shares under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other
transactions contemplated by the Merger Agreement, or seeking to obtain from
the Company, Parent or the Purchaser any damages that are material in relation
to the Company and its Subsidiaries taken as a whole, (iii) seeking to impose
material limi-
A-1
<PAGE>
tations on the ability of the Purchaser, or render the Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares pursuant to
the Offer and the Merger, (iv) seeking to impose material limitations on the
ability of the Purchaser or Parent effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote the
Shares purchased by it on all matters properly presented to the Company's
shareholders, or (v) which otherwise is reasonably likely to have a Company
Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger of
applicable waiting periods under HSR Act, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ Stock Market for a period in excess of 24
hours (excluding suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market conditions),
(ii) any decline in either the Dow Jones Industrial Average or the Standard &
Poor's Index of 400 Industrial Companies or in the New York Stock Exchange
Composite Index in excess of 15% measured from the close of business on the
trading day next preceding the date of the Merger Agreement, (iii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States (whether or not mandatory), (iv) a commencement of a
war, armed hostilities or other international or national calamity directly or
indirectly involving the United States, (v) any limitation (whether or not
mandatory) by any United States governmental authority on the extension of
credit generally by banks or other financial institutions, (vi) a change in
general financial, bank or capital market conditions which materially and
adversely affects the ability of financial institu-
A-2
<PAGE>
tions in the United States to extend credit or syndicate loans or (vii) in the
case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof;
(d) there shall have occurred any events after the date of the Merger
Agreement which, either individually or in the aggregate, would have a Company
Material Adverse Effect;
(e) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the Purchaser
its approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Acquisition Proposal;
(f) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct, in each case (i) as of the date
referred to in any representation or warranty which addresses matters as of a
particular date, or (ii) as to all other representations and warranties, as of
the date of the Merger Agreement and as of the scheduled expiration of the
Offer, unless the inaccuracies (without giving effect to any materiality or
material adverse effect qualifications or materiality exceptions contained
therein) under such representations and warranties, taking all the inaccuracies
under all such representations and warranties together in their entirety, would
not, individually or in the aggregate, result in a Company Material Adverse
Effect;
(g) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant to be performed or complied with by it
under the Merger Agreement other than any failure which would not have, either
individually or in the aggregate, a Company Material Adverse Effect;
(h) any person acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act), of at least 20% of the outstanding Common
Stock of the Company;
(i) the Merger Agreement shall have been terminated in accordance with
its terms; or
A-3
<PAGE>
(j) Parent shall not have satisfied the Financing Condition.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction
by Parent or the Purchaser not in violation of the Merger Agreement) and may be
waived by Parent or the Purchaser in whole or in part at any time and from time
to time in the sole discretion of Parent or the Purchaser, subject in each case
to the terms of the Merger Agreement. The failure by Parent or the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.
A-4
<PAGE>
Exhibit A
Escrow Agreement
A-5
<PAGE>
Filed as Exhibit c(3) to the Schedule 14D-1
A-6
<PAGE>
Exhibit c(2)
FORM OF NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT (this "Agreement"), dated as of March 14,
1997, by and between PhoneTel Technologies, Inc., an Ohio corporation
("Parent"), and _____________ ("Executive").
WHEREAS, Executive has heretofore served as ____________ of
Communications Central Inc., a Georgia corporation ("the Company");
WHEREAS, Parent and the Company have entered into an Agreement and
Plan of Merger (the "Merger Agreement"), dated as of March 14, 1997, pursuant
to which, as of the "Closing Date" (as such term is defined in the Merger
Agreement), PhoneTel Acquisition Corp., a Georgia corporation and wholly owned
subsidiary of Parent ("Sub"), will merge with and into the Company or the
Company will merge with and into Sub (the "Merger").
WHEREAS, the Company and Parent are in the business of owning,
leasing, operating and maintaining pay telephones;
WHEREAS, Parent recognizes that Executive possesses trade secrets and
confidential business information relating to the Company as well as knowledge
and experience relating to the pay telephone industry and desires to prevent
Executive from (1) competing with the pay telephone and inmate phone business
operated by Parent (or any subsidiary thereof), (2) soliciting the former,
current or future customers or employees of Parent (or any subsidiary thereof)
or (3) soliciting Parent to sell its assets (or the assets of any subsidiary
thereof);
WHEREAS, Parent has required Executive to enter into this Agreement as
a condition to entering into the Merger Agreement; and
WHEREAS, Executive is agreeable to restrictions on his ability to
compete against and solicit from Parent in accordance with the terms of this
Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the execution, delivery and
performance of the Merger Agreement, and mutual premises and covenants herein
and therein contained and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Parent and Executive hereby
agree as follows:
Section 1. Term. The term of this agreement shall commence on the date
hereof and continue for a period of five (5) years commencing upon the
consummation of the Merger (the "Term").
Section 2. Non-Competition. (a) Subject to and expressly conditioned
upon Parent's timely payment of all amounts due to Executive hereunder, for a
period of three (3) years commencing upon the consummation of the Merger,
neither Executive nor any member of his family shall, without the prior written
consent of Parent, directly or indirectly, own, operate, manage, be employed
by, be an agent of, act as a consultant for, financially support, lease
property to or from or have a proprietary interest in, any enterprise or
business which sells, leases, maintains, owns or operates pay telephones or
inmate phones in any part of the states in which Parent or the Company conducts
its business on the date hereof. Executive acknowledges that the business of
Parent and its affiliates will be conducted throughout such states and agrees
that such geographic scope is reasonable.
(b) Notwithstanding any provision to the contrary contained herein,
Executive shall not be prohibited from owning less than 2% of the outstanding
equity securities of any publicly-held corporation.
Section 3. Non-Solicitation. Executive agrees that, (a) during the
Term of this Agreement, he will not, directly or indirectly, (i) purchase or
otherwise acquire, or attempt to purchase or otherwise acquire, any of the
assets of Parent (or any subsidiary thereof) or (ii) persuade or attempt to
persuade customers, potential customers, suppliers or potential suppliers of
Parent and its affiliates to divert their pay telephone or inmate phone
business to any other entity or individual; (b) for a period of three years
commencing upon consummation of the Merger, he will not, directly or
indirectly, solicit, entice or persuade, or attempt to solicit, entice or
persuade, any employee of Parent or its affiliates (including employees of the
Company), or any client then
2
<PAGE>
under contract with Parent or any of its affiliates, to terminate his or her
employment by or contractual relationship with Parent or its affiliates or to
become employed by or to enter into contractual relations with a competitor of
Parent or its affiliates; and (c) for a period of one year commencing upon
consummation of the Merger, he will not, directly or indirectly, employ or
cause to be employed, any employee or consultant of Parent or its affiliates
(including employees of the Company).
Section 4. Confidentiality. Executive acknowledges that Parent would
be irreparably damaged if confidential information about Parent or its
affiliates were disclosed to or utilized on behalf of any person, firm,
corporation or other business organization which is in competition in any
respect with Parent or its affiliates. Executive covenants and agrees that he
will not at any time, and will cause his agents, affiliates and associates not
to at any time, without the prior written consent of Parent, disclose any such
confidential information, except to employees and authorized representatives of
Parent.
Section 5. Compensation; Taxes. In consideration for the agreements of
Executive contained herein, Parent agrees to pay or cause the Company to pay
Executive a total of $[ ], without interest, to be paid 50% upon consummation
of the Merger and 50% six months thereafter; provided, however, that if
Executive violates the terms of this Agreement, such second installment will be
withheld. The second installment shall be placed in escrow by Parent for the
benefit of Executive upon consummation of the Merger. Executive hereby
acknowledges that by virtue of this Agreement he is not and will not become an
employee of Parent. Executive further acknowledges his separate responsibility
for all federal and state withholding taxes, Federal Insurance Contribution Act
taxes and workers' compensation and unemployment compensation taxes, if
applicable, and agrees to indemnify and hold Parent harmless from any claim or
liability therefor.
Section 6. Necessity. Executive acknowledges that due to the
uniqueness of his skills and abilities and the uniqueness of the trade secrets,
confidential business lists, customer requirements and preferences, records and
information he possesses, the covenants set
3
<PAGE>
forth herein are reasonable and necessary for the protection of Parent.
Executive further acknowledges that enforcement of the covenants herein will
not deprive him of his ability to earn a livelihood.
Section 7. Specific Performance. Executive acknowledges that the
rights and privileges granted to Parent herein are of a special and unique
character, which gives them a peculiar value, the loss of which may not be
reasonably or adequately compensated for by damages in an action at law, and
that a breach by Executive of this Agreement will cause Parent irreparable
injury and damage. Accordingly, Executive hereby agrees that Parent shall be
entitled to remedies of injunction, specific performance or other equitable
relief, to prevent or cure a breach of this Agreement. This provision shall not
be construed as a waiver of any other rights or remedies Parent may have for
damages or otherwise.
Section 8. Partial Invalidity. The parties have entered into this
Agreement in good faith and for the reasons set forth in the recitals hereto
and assume and intend that this Agreement is legally binding. If, for any
reason, this Agreement is not binding because of its geographical scope or
because of its term, then the parties agree that this Agreement shall be deemed
effective for the widest geographical area and/or the longest period of time as
may be legally enforceable, it being understood that the compensation payable
hereunder is for the full Term and geographic area stated herein, and for all
the covenants of Executive. Any provision which is determined to be prohibited
or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. The
provisions of this Section 8 shall not be construed as a waiver of any other
rights or remedies Parent may have for damages or otherwise.
Section 9. Binding Effect; Modifications. This Agreement shall be
binding upon and shall inure to the benefit of the personal representatives,
executors, administrators, successors and assigns of the parties to this
Agreement. This Agreement contains the entire agreement of the parties and
supersedes any and all prior written agreements between the parties, and all
prior and contemporaneous oral statements with respect to the transactions
contemplated hereby. This Agreement may not be changed or terminated orally,
but may only be changed
4
<PAGE>
by an agreement in writing signed by each of the parties hereto.
Section 10. Section Captions; Counterparts. Section and other captions
contained in this Agreement are for reference purposes only and are in no way
intended to describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof. This Agreement may be executed in
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and the
same instrument.
Section 11. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of New York, applied without giving
effect to any conflict of laws principles.
Section 12. No Rule of Construction. The parties acknowledge and agree
that no rule of construction shall apply to this Agreement which construes any
language, whether ambiguous, unclear or otherwise, in favor of or against any
party by reason of that party's role in drafting this Agreement.
Section 13. Notices. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to Parent:
PhoneTel Technologies, Inc.
650 Statler Office Building
1127 Euclid Avenue
Cleveland, Ohio 44115
Tel: (216) 241-2555
Fax: (216) 241-2574
Attention: Chairman
If to Executive:
5
<PAGE>
or to such other address as each 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.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have hereunto set their
hands as of the day and year first above written.
PHONETEL TECHNOLOGIES, INC.
By:
--------------------------------
Name: Peter G. Graf
Title: Chairman and Chief
Executive Officer
-----------------------------------
7
<PAGE>
Exhibit c(3)
ESCROW AGREEMENT
This ESCROW AGREEMENT is made and entered into as of March 14, 1997
("Escrow Agreement") by and among First Union National Bank of Georgia, a
national banking association (the "Escrow Agent"), Communications Central Inc.,
a Georgia corporation (the "Company") and PhoneTel Technologies, Inc., an Ohio
corporation ("Parent").
WHEREAS, Parent and the Company are parties to an Agreement and Plan
of Merger of even date herewith (the "Merger Agreement") pursuant to which, as
of the "Closing Date" (as such term is defined in the Merger Agreement), the
Company will merge with and into PhoneTel Acquisition Corp., a Georgia
corporation and wholly owned subsidiary of Parent ("Sub"), or Sub will merge
with and into the Company;
WHEREAS, Section 1.10 of the Merger Agreement provides for Parent to
deposit into escrow the amount of $5,000,000 (the "Escrow Amount"), being
delivered by Parent upon the signing of this Escrow Agreement;
WHEREAS, the Company and Parent wish to enter into this Escrow
Agreement providing for the terms and conditions upon which the Escrow Amount
will be held and released by the Escrow Agent, and the Escrow Agent wishes to
act as Escrow Agent pursuant to the terms and conditions of this Escrow
Agreement; and
WHEREAS, all capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties hereto agree as follows:
Section 1. Deposit into Escrow Account. On the date of this Agreement,
Parent is depositing the Escrow Amount with the Escrow Agent into an interest
bearing escrow account established with the Escrow Agent entitled PhoneTel
Technologies, Inc. Escrow Account (the "Escrow Account").
<PAGE>
Section 2. Investments and Earnings. (a) The Escrow Agent is hereby
authorized and directed to invest the Escrow Amount in (i) any security issued
or guaranteed by the United States government or a governmental authority of
the United States, (ii) certificates of deposit issued by a bank in the United
States having a combined surplus of at least $500 million (a "Bank"), (iii)
commercial paper with a rating of at least "Prime-1" by Moody's Investors
Services, Inc. ("Moody's"), (iv) corporate bonds with a rating of Aa or Aaa by
Moody's, or (v) publicly-traded money market funds investing in only the
foregoing, in each case as specified by Parent to the Escrow Agent in
writing. In any event, Parent shall not select any investment with a maturity
which does not allow for sufficient liquidity to satisfy the obligations
hereunder.
(b) The Escrow Agent shall remit to Parent, on the last day of each
month prior to the final distribution of the Escrow Amount pursuant to this
Escrow Agreement, all earnings and interest (adjusted for any increase or
decrease in the principal value of any investment or any capital gain or loss,
as the case may be) upon the Escrow Amount.
Section 3. Escrow Amount and Delivery. The Escrow Agent shall hold the
Escrow Amount until the earlier of the Closing or the termination of the Merger
Agreement, and distribute the Escrow Amount as follows:
3.1 Closing. At the Closing the Escrow Agent shall remit to
Parent the Escrow Amount and all earnings and interest (adjusted for any
increase or decrease in the principal value of any investment or any capital
gain or loss, as the case may be) upon the Escrow Amount.
3.2 Termination of Merger Agreement - General. In the event
that the Merger Agreement is terminated prior to the Closing, (i) Parent may
notify the Escrow Agent of such termination and thereby request delivery of the
Escrow Amount, (ii) the Escrow Agent must thereupon promptly notify the Company
of Parent's request, (iii) the Company then shall have ten (10) days within
which the Company can respond to the Escrow Agent and object to Parent's
request on the basis that such termination was not in accordance with the terms
of the
2
<PAGE>
Merger Agreement or that the Company is entitled to the Escrow Amount pursuant
to Section 1.10 of the Merger Agreement, (iv) failure to respond within ten
(10) days of the Escrow Agent's notification will be deemed as consent on the
part of the Company to the Escrow Agent's delivering the Escrow Amount to
Parent and (v) actual or deemed consent by the Company will result in the
Escrow Agent's delivery of the entire Escrow Amount to Parent.
3.3 Termination of Merger Agreement - Lack of Financing. In
the event that the Merger Agreement is terminated solely due to the failure of
either (x) the Minimum Condition (provided at least 50.1% of the Shares
outstanding on a fully diluted basis have been validly tendered and not
withdrawn) and neither Parent nor the Purchaser has waived the Minimum
Condition, or (y) the Financing Condition (unless the failure of such Financing
Condition is due solely to the failure of the Company to satisfy its
obligations under Section 5.13 of the Merger Agreement), then (i) the Company
may notify the Escrow Agent of such termination and thereby request delivery of
the Escrow Amount pursuant to Section 1.10 of the Merger Agreement, (ii) the
Escrow Agent must thereupon promptly notify Parent of the Company's request,
(iii) Parent then shall have ten (10) days within which it can respond to the
Escrow Agent and object to the Company's request, (iv) failure to respond
within ten (10) days of the Escrow Agent's notification will be deemed as
consent on the part of Parent to the Escrow Agent's delivering the Escrow
Amount to the Company and (v) actual or deemed consent by Parent will result in
the Escrow Agent's delivery of the entire Escrow Amount to the Company.
3.4 Disputes. It is understood and agreed that should any
dispute arise with respect to the payment and/or ownership or right of
possession of the Escrow Amount, the Escrow Agent is authorized and directed to
retain in its possession the amount in controversy until either (i) Parent and
the Company direct the application or payment thereof by delivering a joint
writing to the Escrow Agent or (ii) the Escrow Agent shall receive a certified
copy of a final judgment of a court of competent jurisdiction with respect to a
claim on the Escrow Amount. Upon receipt of such written direction from Parent
and the Company or not sooner than five (5) days after receipt of such
certified copy of a judgment, the Escrow Agent shall take action with respect
3
<PAGE>
to the amount in controversy as required by such direction or such judgment,
as the case may be.
Section 4. Interpleader Provision. Nothing contained in this Escrow
Agreement shall preclude the right of the Escrow Agent to seek an adjudication
in a court of competent jurisdiction as to the rights of the parties under this
Escrow Agreement, and the Escrow Agent shall not be liable for any delay
occasioned because of such resort to court. The Escrow Agent will be reimbursed
for expenses, including reasonable counsel fees, in connection with performance
of the Escrow Agent's duties under this Agreement, to be paid 50% by Parent and
50% by the Company.
Section 5. Termination. This Escrow Agreement shall terminate upon the
final distribution of the funds held by the Escrow Agent pursuant to this
Agreement.
Section 6. Compensation of Escrow Agent. The Escrow Agent shall be
entitled to a fee for its escrow services in an amount calculated at a rate of
$1,000 per annum, to be deducted from the Escrow Account.
Section 7. Escrow Agent. (a) The Escrow Agent may resign and be
discharged from its duties hereunder at any time by giving notice of such
resignation to the Company and Parent, which shall specify a date (not less
than thirty (30) days following the date of such notice) when such resignation
shall take effect. Upon such notice, a successor escrow agent shall be selected
by the Company and Parent, such successor escrow agent to become the Escrow
Agent hereunder upon the resignation date specified in such notice. If the
Company and Parent are unable to agree upon a successor escrow agent within
fifteen (15) days after the date of such notice, the Escrow Agent shall be
entitled to appoint its successor, which shall be a Bank. The Escrow Agent
shall continue to serve hereunder until its successor accepts the escrow and
acknowledges receipt of the Escrow Amount.
(b) The Company and Parent agree to release and hold the Escrow Agent
harmless and indemnify it from any loss or claim whatsoever in conjunction with
the performance of the duties of the Escrow Agent (including attorney's fees)
as long as the Escrow Agent has complied with the provisions of this Escrow
Agreement. Said
4
<PAGE>
indemnification shall be borne fifty percent (50%) by Parent and fifty percent
(50%) by the Company (unless otherwise determined by a court of competent
jurisdiction) and shall survive the termination of this Agreement.
Section 8. Notices. Any notices or other communications required or
permitted hereunder shall be given in writing and shall be delivered by hand,
air courier or by confirmed facsimile or by reputable overnight delivery
service, addressed as follows:
If to Parent, to:
PhoneTel Technologies, Inc.
650 Statler Office Building
1127 Euclid Avenue
Suite 650
Cleveland, OH 44115-1601
Telephone Number: 216-241-2555
Facsimile Number: 216-241-2574
Attn: Chairman
with a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, NY 10022
Telephone Number: 212-735-2760
Facsimile Number: 212-735-2000
Attn: Stephen M Banker, Esq.
or:
If to the Escrow Agent, to:
First Union National Bank of Georgia
999 Peachtree Street, N.E.
Corporate Trust Department
Suite 1100
Atlanta, GA 30309
Telephone Number: 404-827-7326
Facsimile Number: 404-827-7305
Attn: Ms. Nicole Stefanini
or:
5
<PAGE>
If to the Company, to:
Communications Central Inc.
1150 Northmeadow Parkway
Suite 118
Roswell, GA 30076
Telephone Number: 770-442-7300
Facsimile Number: 770-751-9082
Attn: President
with a copy to:
Hunton & Williams
600 Peachtree Street, N.E.
Suite 4100
Atlanta, GA 30308
Telephone Number: 404-888-4045
Facsimile Number: 404-888-4190
Attn: J. Stephen Hufford, Esq.
or to such other address as shall be furnished in writing by such party, and
any such notice or communication shall be effective and be deemed to have been
given as of the date delivered if by hand, the day after delivery to the air
courier service if sent by overnight mail, and five days following the date of
mailing if mailed.
Section 9. Entire Agreement. This Escrow Agreement is the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.
Section 10. Amendments; Waiver. This Escrow Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived only by written instrument signed by the
parties hereto or, in the case of a waiver, the party waiving compliance.
Section 11. Assignment. No assignment of any rights or delegations of
any obligations provided for herein may be made by any party without the
express written consent of all the other parties hereto.
Section 12. Counterparts. This Escrow Agreement may be executed in
two more counterparts, each of
6
<PAGE>
which shall be deemed an original but all of which together shall constitute
one and the same instrument.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF GEORGIA
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
Section 14. Benefit. This Escrow Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors and assigns of
each of them.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have affixed their signatures
to this Escrow Agreement upon the date first set forth above.
FIRST UNION NATIONAL BANK
OF GEORGIA
By: /s/ R. Douglas Milner, VP
--------------------------------
COMMUNICATIONS CENTRAL INC.
By: /s/ Rodger L. Johnson
--------------------------------
Name: Rodger L. Johnson
Title: President and Chief Execu-
tive Officer
PHONETEL TECHNOLOGIES, INC.
By: /s/ Peter G. Graf
--------------------------------
Name: Peter G. Graf
Title: Chairman
<PAGE>
EXHIBIT (c)(4)
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement, made and entered into this day of July,
1996, by and between PHONETEL TECHNOLOGIES, INC., 1127 Euclid Avenue,
650 Statler Office Tower, Cleveland, Ohio 44115, and COMMUNICATIONS CENTRAL
INC., 1250 Northmeadow Parkway, Suite 113, Rosewell, Georgia 30076,
collectively referred to hereafter as the "parties", singularly as a "party."
RECITALS
The parties intend to commence discussions and exchange certain documents and
information in connection with a potential business relationship. The
information given one to the other will, for the most part, be confidential
trade secrets and contain items not publicly available.
The parties desire to protect the confidentiality of certain information that
may be disclosed.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter contained and other good and valuable consideration acknowledged to
have been received, it is agreed:
1. Definitions. For purposes of this Agreement, the following definitions
shall apply:
(a) The parties hereto shall include all their parent companies,
divisions, subsidiaries and affiliates.
(b) "Confidential Information" shall mean any information of a
confidential and/or proprietary nature, including but not limited to,
information relating to the current or proposed business plans of the
parties hereto and financial information related thereto, except for
that information specified in Section 7 below entitled "Exceptions."
Confidential Information, when disclosed in writing, machine-readable,
or other tangible form by one party to the other party, shall be
clearly marked as such. Such information, when disclosed orally by
one part to the other, shall be considered Confidential Information,
provided that within ten (10) working days of such disclosure the
disclosing party provides the other party a written summary of those
matters designated as Confidential Information.
<PAGE>
2. Use of Confidential Information. During the course of the discussions
between the parties, they may disclose certain Confidential Information,
either by verbal or written communications. These disclosures will be made
upon the basis of the confidential relationship between the companies and
upon their agreement that, unless specifically authorized in writing by
the other, they will:
(a) use such Confidential Information solely for the purpose of
evaluating the proposed business relationship between themselves; and
(b) promptly return to each other, upon request, any and all tangible
material concerning such Confidential Information including all
copies and notes, whether such material was made, compiled by or
furnished by either party.
3. Nondisclosure. Each party agrees to receive and hold the Confidential
Information of the other party in strict confidence. Each party agrees
that it will treat such Confidential Information in the same manner as
it treats like information of its own that it does not wish to disclose
to the public, but, in all events, it shall use a reasonable degree of
care. To that end, neither party will make a copy of any Confidential
Information of the other party that is in documented form except for
use by employees with a need to know.
Each party further agrees not to distribute, disclose or discriminate the
Confidential Information in any way to anyone, except its employees who have
such need to know, nor use the Confidential Information for its own benefit
or the benefit of others, except as authorized in writing by the other party,
in any form whatever. Each party agrees that its disclosure of Confidential
Information to its employees who have such a need to know shall be limited
to only so much of such Confidential Information as is necessary for that
employee to perform his/her function.
No Confidential Information may be disclosed by the receiving party to any
third party unless the disclosing party is notified in writing, and the
disclosing party executes a Non-Disclosure Agreement with the third party
and the disclosing party provides written approval to the receiving party
that such Confidential Information may be disclosed to the third party.
4. Covenant Not to Trade. Each party acknowledges that certain securities of
each party are registered with the Securities and Exchange Commission and
are publicly traded, and that purchase or sale of such securities, based
upon material non-public information, including the Confidential
Information, may be deemed to violate the Federal securities laws, among
other things. Both parties covenant and agree, therefore, not to purchase
or sell securities of each other based on the Confidential Information,
until the Confidential Information is made publicly available by either
party or otherwise becomes publicly available.
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<PAGE>
5. No License. Nothing contained in this Agreement shall be construed as
granting or conferring any rights by license or otherwise in any
Confidential Information disclosed to the receiving party.
6. No Obligations. The furnishing of Confidential Information hereunder
shall not obligate either party to enter into any further agreement
or negotiation with the other or to refrain from entering into an
agreement or negotiation with any other entity.
7. Exceptions. The obligations imposed upon either party herein shall not
apply to Confidential Information:
(a) which is already in the public domain at the time the disclosing party
communicates it to the receiving party or which becomes available to
the public through no wrongful act of the receiving party; or
(b) which may be published prior to the date hereof, or
(c) which is already in the possession of the receiving party and not
subject to an existing agreement of confidence prior to receipt from
the disclosing party; or
(d) which is received from a third party without restriction and without
breach of this Agreement; or
(e) which is disclosed pursuant to a requirement or request of a
government agency or a court of competent jurisdiction, provided
however, that the receiving party shall notify the disclosing party
of such legal requirement prior to making the required disclosure and
that the receiving party shall use its reasonable efforts to obtain
protective arrangements for the requested Confidential Information; or
(f) which is developed by the receiving party, independently of and without
reference to any Confidential Information of the disclosing party or
any other information that the disclosing party has disclosed in
confidence to any third party; or
(g) which is disclosed by the receiving party to a third party with the
express prior written permission of the disclosing party.
Notwithstanding the above, all materials, including without limitation,
documents, writings, designs, drawings and specifications, furnished and that
are designated as proprietary information shall remain the sole property of the
disclosing party and shall be returned promptly to the disclosing party at its
request with all copies made thereof.
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<PAGE>
8. Termination of Obligation. The obligation to protect the Confidential
Information received hereafter shall continue for eighteen (18) months
following provision of the information, unless a specific request is
mutually agreed upon in writing to maintain the information on a
confidential basis for a different period of time.
9. Entire Agreement. This Agreement constitutes the entire Agreement between
the parties and supersedes any prior or contemporaneous oral or written
representations with regard to the subject matter hereof. This Agreement
may not be modified except by a writing signed by both parties.
10. Damages for Breach. The parties acknowledge that, in the event of a
threatened or actual breach of this Agreement, monetary damages may be
difficult to ascertain or inappropriate. Accordingly, a party shall be
entitled to injunctive relief in the event of a threatened or actual
breach of this Agreement.
11. Governing Law. This Agreement shall be construed and governed in
accordance with the laws of the State of Georgia.
12. Binding Authority. The parties acknowledge and verify that the persons
signing below are duly authorized to execute this Agreement and act on
behalf of the parties and to bind them to the specific terms noted above.
PHONETEL TECHNOLOGIES, INC.
Date: July 25, 1996 By: /s/ Tammy L. Martin
----------------------------------
Tammy L. Martin
Chief Administrative Officer
Executive Vice President
COMMUNICATIONS CENTRAL INC.
Date: July 25, 1996 By: /s/ C. D. McKeever
----------------------------------
C. Douglas McKeever
Vice President, Finance
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