<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant (x)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the Commission
Only (as permitted
by Rule 14a-6(e)(2))
(x) Definitive Proxy Statement
(x) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COMMUNICATIONS CENTRAL INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
( ) No fee required
(x) Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies: Common
Stock, Employee Stock Options, Warrants to Purchase Common Stock
2) Aggregate number of securities to which transaction applies: 6,285,987
shares, 797,684 Stock Options, 234,500 Warrants to purchase Common
Stock
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): $10.50 per
share (being the amount payable to the Registrant's shareholders in
the proposed merger); option price and warrant price variable based on
exercise price
4) Proposed maximum aggregate value of transaction: $69,916,840
5) Total fee paid: $13,983
(x) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
COMMUNICATIONS CENTRAL INC.
1150 NORTHMEADOW PARKWAY, SUITE 118
ROSWELL, GEORGIA 30076
SPECIAL MEETING OF SHAREHOLDERS
December 29, 1997
To the Shareholders:
We invite you to attend a special meeting of shareholders of Communications
Central Inc. (the "Corporation") to be held on January 30, 1998 at 9:00 a.m.,
Eastern Standard Time (the "Special Meeting"), at Cameron City Club, 1000
Northfield Court, Suite 200, Roswell, Georgia. A formal notice of the Special
Meeting, together with the Proxy Statement and proxy, is enclosed with this
letter.
At the Special Meeting, you will be asked to consider and vote on a proposal
to approve an Agreement and Plan of Merger, dated as of November 24, 1997 (the
"Merger Agreement"), by and among the Corporation, Davel Communications Group,
Inc. ("Davel") and Panther Acquisition Corp., a wholly-owned subsidiary of Davel
("Merger Subsidiary"). A copy of the Merger Agreement is included as Annex I to
the attached Proxy Statement. On the terms and subject to the conditions of the
Merger Agreement, Merger Subsidiary will be merged with and into the Corporation
(the "Merger") and the Corporation will become a subsidiary of Davel. Upon
consummation of the Merger, each outstanding share of the Corporation's common
stock, other than shares held by Davel or its subsidiaries and shares held by
shareholders who properly exercise and perfect their dissenters' rights, will be
converted into the right to receive $10.50 in cash.
Approval of the Merger Agreement requires the affirmative vote of a majority
of the outstanding shares of common stock of the Corporation. Detailed
information concerning the Merger is set forth in the Proxy Statement, which we
urge you to read carefully.
YOUR BOARD OF DIRECTORS, AFTER CAREFUL CONSIDERATION, HAS UNANIMOUSLY APPROVED
THE MERGER AGREEMENT AND DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE CORPORATION AND ITS SHAREHOLDERS. THE BOARD UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
Whether or not you plan to attend the Special Meeting in person and regardless
of the number of shares of common stock you own, please complete, sign, date and
return the enclosed proxy promptly in the accompanying prepaid envelope.
Sincerely yours,
Rodger L. Johnson
President and Chief Executive Officer
<PAGE>
COMMUNICATIONS CENTRAL INC.
1150 NORTHMEADOW PARKWAY, SUITE 118
ROSWELL, GEORGIA 30076
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
-----------------------------------------
Notice is Hereby Given that a Special Meeting of the holders of shares of
Common Stock, $.01 par value per share, of Communications Central Inc. (the
"Common Stock") will be held at Cameron City Club, 1000 Northfield Court, Suite
200, Roswell, Georgia, on January 30, 1998 at 9:00 a.m., Eastern Standard Time,
for the following purposes:
1. To approve the Agreement and Plan of Merger, dated as of November 24,
1997, by and among Communications Central Inc., Davel Communications
Group, Inc. and Panther Acquisition Corp.; and
2. To transact such other business as may properly come before the meeting.
Holders of shares of Common Stock of record at the close of business on
December 22, 1997 are entitled to notice of and to vote at the meeting or any
adjournment thereof.
Any shareholder who does not vote in favor of the Merger and fully complies
with all of the applicable provisions of Article 13 of the Georgia Business
Corporation Code ("Article 13") will be entitled to assert dissenters' rights
and demand and receive, in lieu of receiving the merger consideration to be paid
in the Merger, payment of an amount equal to the "fair value" of such holder's
shares of Common Stock, provided the Merger is consummated. A copy of Article
13 is included as Annex III hereto.
Please complete, sign, date and return the enclosed proxy promptly, whether or
not you expect to attend the meeting. A self-addressed, stamped envelope is
enclosed for your convenience.
If you are present at the meeting, you may vote in person even if you already
have returned your proxy.
By Order of the Board of Directors,
Barry E. Selvidge
Secretary
December 29, 1997
SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.
<PAGE>
COMMUNICATIONS CENTRAL INC.
1150 Northmeadow Parkway, Suite 118
ROSWELL, GEORGIA 30076
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
JANUARY 30, 1998
Approximate date of mailing - December 29, 1997
Proxies in the form enclosed are solicited by the Board of Directors of
Communications Central Inc. (the "Corporation") for a Special Meeting of
Shareholders (the "Special Meeting") to be held on January 30, 1998, and any
adjournments thereof. At the Special Meeting, holders of shares of common
stock, $.01 par value per share, of the Corporation (the "Common Stock") will be
asked to consider and vote upon the approval of the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of November 24, 1997, by and among the
Corporation, Davel Communications Group, Inc., an Illinois corporation
("Davel"), and Panther Acquisition Corp., a Georgia corporation and wholly-owned
subsidiary of Davel ("Merger Subsidiary"), which provides for the merger of
Merger Subsidiary with and into the Corporation (the "Merger"), on the terms and
subject to the conditions set forth in the Merger Agreement. Upon the
consummation of the Merger, each outstanding share of Common Stock (other than
shares held by Davel and its subsidiaries and shares held by shareholders who
properly exercise and perfect their dissenters' rights) will be converted into
the right to receive $10.50 in cash (the "Merger Consideration"). As a result
of the Merger, the Corporation will become a wholly-owned subsidiary of Davel.
(With respect to the period following the consummation of the Merger, the
Corporation may be referred to in this Proxy Statement as the "Surviving
Corporation.")
A copy of the Merger Agreement is attached hereto as Annex I. The
summaries of the portions of the Merger Agreement set forth in this Proxy
Statement do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, the text of the Merger Agreement.
THE CORPORATION'S BOARD OF DIRECTORS, AFTER CAREFUL CONSIDERATION, HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND DETERMINED THAT THE MERGER IS FAIR
TO, AND IN THE BEST INTERESTS OF, THE CORPORATION AND ITS SHAREHOLDERS. THE
BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT. In reaching its determination, the Board of Directors considered,
among other things, the opinion, dated as of November 24, 1997, of J.C. Bradford
& Co., L.L.C. ("Bradford"), the Corporation's financial advisor, as to the
fairness to the holders of Common Stock of the Merger Consideration from a
financial point of view. The opinion of Bradford is included as Annex II hereto
and is incorporated herein by reference. Shareholders are urged to read the
opinion carefully in its entirety for further information respecting the
assumptions made, matters considered and limitations on the review undertaken in
connection with such opinion. See "The Merger -- Reasons for Merger;
Recommendation of the Board of Directors;" and "-- Opinion of Financial
Advisor."
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN CONNECTION
WITH THE SOLICITATION OF PROXIES MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OTHER PERSON.
__________________________________
The date of this Proxy Statement is December 29, 1997.
<PAGE>
TABLE OF CONTENTS
PAGE
----
SUMMARY................................................................. 1
The Special Meeting................................................ 1
The Merger......................................................... 2
Dissenters' Rights................................................. 5
Stock Purchase Rights.............................................. 5
Government and Regulatory Approvals and Filings.................... 5
Market Prices and Dividend Information............................. 5
SUMMARY FINANCIAL INFORMATION CONCERNING THE CORPORATION................ 6
SPECIAL MEETING......................................................... 7
Place, Date and Time............................................... 7
Record Date; Solicitation of Proxies............................... 7
Vote Required...................................................... 7
THE MERGER.............................................................. 9
General............................................................ 9
Background of Merger............................................... 9
Reasons for Merger; Recommendation of the Board of Directors.......11
Opinion of Financial Advisor.......................................12
Certain Tax Consequences of the Merger.............................14
Dissenters' Rights.................................................14
Anticipated Accounting Treatment...................................16
Stock Purchase Rights..............................................16
Interests of Certain Persons in the Merger.........................16
Effective Time of the Merger.......................................17
Payment for Shares of Common Stock.................................17
No Solicitation; Fiduciary Duties..................................18
Government and Regulatory Approvals and Filings....................18
Terms of the Merger................................................18
General.......................................................18
Amendment, Extension, Waiver..................................19
Conditions to the Merger......................................19
Conduct of Business Pending the Merger........................19
Termination...................................................20
MARKET PRICES AND DIVIDEND INFORMATION..................................20
SELECTED FINANCIAL INFORMATION CONCERNING THE CORPORATION...............21
SECURITY OWNERSHIP......................................................22
Security Ownership of Certain Beneficial Owners....................22
Security Ownership of Certain Management of the Corporation........22
Independent Accountants............................................24
Incorporation of Certain Documents by Reference....................24
ANNUAL MEETING..........................................................25
OTHER MATTERS...........................................................25
(ii)
<PAGE>
ANNEXES
Agreement and Plan of Merger................................. Annex I
Opinion of J.C. Bradford & Co. LLC...........................Annex II
Article 13 of the Georgia Business Corporation Code.........Annex III
(iii)
<PAGE>
SUMMARY
The following is a brief summary of certain information found elsewhere in
this Proxy Statement. Certain capitalized terms used in this Summary are
defined elsewhere in this Proxy Statement. All statements in the following
Summary are qualified by and are made subject to the more detailed information
contained elsewhere in this Proxy Statement and the Annexes attached hereto,
which you are urged to read in their entirety.
THE SPECIAL MEETING
PLACE, DATE AND TIME
The Special Meeting of Shareholders of the Corporation will be held at
Cameron City Club, 1000 Northfield Court, Suite 200, Roswell, Georgia on January
30, 1998 at 9:00 a.m., Eastern Standard Time.
RECORD DATE; SHARES OF COMMON STOCK ENTITLED TO VOTE
The Board of Directors has fixed the close of business on December 22, 1997
as the record date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Special Meeting. See "Special
Meeting -- Record Date; Solicitation of Proxies."
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, holders of Common Stock will be asked to approve
the Merger Agreement, which provides for the merger of Merger Subsidiary, a
wholly-owned subsidiary of Davel, with and into the Corporation, whereby the
Surviving Corporation will become a wholly-owned subsidiary of Davel.
VOTE REQUIRED; PROXIES
A majority of the outstanding shares of Common Stock entitled to vote,
represented in person or by proxy, is required for a quorum at the Special
Meeting. Approval of the Merger Agreement requires the affirmative vote of the
holders of a majority of the shares of Common Stock outstanding as of the Record
Date. At the Record Date, 6,289,584 shares of Common Stock were issued and
outstanding and entitled to vote at the Special Meeting. See "Special Meeting -
- Record Date; Solicitation of Proxies."
Shares of Common Stock that are represented by properly executed proxies,
unless such proxies shall have previously been properly revoked, will be voted
in accordance with the instructions indicated in such proxies. If no contrary
instructions are indicated, such shares will be voted FOR approval of the Merger
Agreement, and in the discretion of the persons named in the proxy as proxy
appointees, as to any other matter that may properly come before the Special
Meeting and of which the Corporation is not presently aware. Under the rules of
the National Association of Securities Dealers, Inc. (the "NASD"), although
brokers who hold shares in street name have the authority to vote on certain
items when they have not received instructions from beneficial owners, brokers
will not be entitled to vote on the Merger Agreement absent specific
instructions. A broker non-vote will have the effect of a negative vote on the
approval of the Merger Agreement. Similarly, a failure to return a properly
executed proxy or an abstention will have the effect of a negative vote on the
approval of the Merger Agreement.
It is not expected that any matters other than those referred to in this
Proxy Statement will be brought before the Special Meeting. If other matters
are properly presented, however, the persons named as proxy appointees will vote
in accordance with their best judgment on such matters. The grant of a proxy
also will confer discretionary authority on the persons named in the proxy to
vote in accordance with their best judgment on matters incident to the conduct
of the Special Meeting.
Any shareholder may revoke a proxy (other than an irrevocable proxy coupled
with an interest) at any time before it is voted by filing with the Corporate
Secretary of the Corporation an instrument revoking the proxy
<PAGE>
or by returning a duly executed proxy bearing a later date, or by attending the
Special Meeting and voting in person.
In addition to the solicitation of proxies by use of the mails, proxies
also may be solicited by the Corporation and its directors, officers and
employees (who will receive no additional compensation therefor) by telephone,
telegram, facsimile transmission and other electronic communication methods or
personal interview. Corporate Investor Communications, Inc. ("CIC") has been
engaged to assist in the solicitation of proxies from brokers, nominees,
fiduciaries and other custodians. The Corporation will pay CIC approximately
$4,000 for its services, plus reimbursement of out-of-pocket expenses. The
Corporation will reimburse banks, brokerage houses, custodians and other
fiduciaries who hold shares of Common Stock in their name or custody, or in the
name of nominees for others, for their out-of-pocket expenses incurred in
forwarding copies of the proxy materials to those persons for whom they hold
such shares. The Corporation will bear all other costs of the Special Meeting
and of soliciting proxies therefor, including the cost of printing and mailing
this Proxy Statement and related materials.
THE MERGER
PARTIES TO THE MERGER AGREEMENT
The following entities are parties to the Merger Agreement:
The Corporation. The Corporation owns and operates a network of pay
telephones. The address and telephone number of the Corporation's executive
offices are 1150 Northmeadow Parkway, Suite 118, Roswell, Georgia, 30076, and
(770) 442-7300.
Davel. Davel owns and operates a network of pay telephones and provides
long distance operator services to its pay telephones through its digitally-
switched long distance network. The address and telephone number of Davel's
principal executive offices are 1429 Massaro Boulevard, Tampa, Florida 33619,
and (813) 623-3545.
Merger Subsidiary. Merger Subsidiary is a newly-formed Georgia corporation
created solely for the purpose of engaging in the transactions contemplated by
the Merger Agreement. Merger Subsidiary is a wholly-owned subsidiary of Davel.
The address and telephone number of Merger Subsidiary's principal executive
offices are 1429 Massaro Boulevard, Tampa, Florida 33619, and (813) 623-3545.
TERMS OF THE MERGER
If the Merger Agreement is approved by the requisite vote, and all other
conditions to the obligations of the parties are satisfied or waived, Merger
Subsidiary will merge with and into the Corporation. In the Merger, each share
of Common Stock, other than shares owned by Davel and its subsidiaries (which
will be automatically canceled and extinguished) and shares held by shareholders
who properly exercise and perfect their dissenters' rights, will be canceled and
converted automatically into the right to receive the Merger Consideration.
Each outstanding share of common stock of Merger Subsidiary will be converted
automatically into one share of common stock of the Surviving Corporation. The
Merger Agreement also contains certain agreements among the parties with respect
to outstanding stock options and warrants, employment matters, continuing
indemnification of the Corporation's directors and officers, and the effect of
termination of the Merger Agreement. See "The Merger -- General" and "-- Terms
of the Merger."
RECOMMENDATION OF THE BOARD OF DIRECTORS AND REASONS FOR THE MERGER
The Board of Directors of the Corporation, at a special meeting commenced
on November 23 and continued through November 24, 1997, unanimously approved the
Merger Agreement and directed that it be submitted to the shareholders of the
Corporation for their approval. The Board of Directors has determined that the
Merger is fair to, and in the best interests of, the Corporation and its
shareholders and unanimously recommends that the shareholders vote FOR approval
of the Merger Agreement. In reaching its decision to approve the Merger
Agreement, the Board of Directors considered a number of factors. For a
discussion of the
2
<PAGE>
factors considered by the Board in reaching its determination, see "The
Merger --Reasons for Merger; Recommendation of the Board of Directors;" and
"--Opinion of Financial Advisor."
OPINION OF FINANCIAL ADVISOR
Bradford, the Corporation's financial advisor, has delivered its written
opinion to the Board of Directors of the Corporation that, as of November 24,
1997, the Merger Consideration to be received by the shareholders of the
Corporation in the Merger is fair to such shareholders from a financial point of
view.
The full text of the written opinion of Bradford, which sets forth
assumptions made, matters considered and limitations on the review undertaken in
connection with the opinion, is attached hereto as Annex II and is incorporated
herein by reference. Shareholders are urged to read such opinion in its
entirety. See "The Merger -- Reasons for Merger; Recommendation of the Board of
Directors;" and " -- Opinion of Financial Advisor."
NO SOLICITATION; FIDUCIARY DUTIES
Pursuant to the Merger Agreement, the Corporation may not, nor may it
authorize or permit any of its subsidiaries or any of its subsidiaries'
officers, directors, employees, agents or representatives to, solicit, initiate
or encourage, including by way of furnishing or disclosing non-public
information, any inquiries or any proposal relating to any merger, consolidation
or other business combination involving the Corporation or the acquisition of
all or substantially all of the assets or capital stock of the Corporation (a
"Competing Transaction"), or negotiate, explore or engage in substantive
discussions relating to any Competing Transaction, or enter into any agreement,
arrangement or understanding causing it to fail to complete the Merger, unless
the Corporation's Board of Directors determines in good faith, after receiving
the advice of its counsel and financial advisors, that the failure to take such
action would constitute a breach of the fiduciary obligations of the directors
under applicable law. See "The Merger -- No Solicitation; Fiduciary Duties."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Except as summarized below and as described in more detail in "The Merger
-- Interests of Certain Persons in the Merger," none of the Company's directors
or executive officers has any material interest in or related to the Merger.
As described in more detail under the caption "Security Ownership," certain
directors and executive officers of the Corporation hold shares of Common Stock
and/or options to acquire shares of Common Stock. Pursuant to the Merger
Agreement, such persons will receive the same consideration for such securities
as other holders of shares, options and warrants to purchase Common Stock who
are not directors or executive officers of the Corporation. Under the Merger
Agreement, all unvested options to purchase Common Stock (including those held
by officers of the Corporation) will accelerate and become fully vested
immediately prior to consummation of the Merger. See "The Merger -- General."
Pursuant to the Merger Agreement, Rodger L. Johnson, the Corporation's
President and Chief Executive Officer, and five other key employees of the
Corporation recently entered into Employment and Non-Competition Agreements with
the Corporation, which will become effective only if the Merger is consummated.
In the case of Mr. Johnson, this agreement will supercede his existing
Employment Agreement if the Merger is consummated. None of the other five key
employees have existing employee agreements with the Corporation. Under the
Employment and Non-Competition Agreements, Mr. Johnson and such other employees
will be entitled to receive certain payments for serving as employees of the
Corporation and agreeing not to compete with it for certain periods after the
Merger is consummated.
In addition, pursuant to the Merger Agreement, Davel has agreed to cause
the Surviving Corporation to indemnify, for a period of at least six years after
the Merger, to the full extent permitted under Georgia law, the present and
former directors and officers of the Corporation and its subsidiaries in respect
of actions taken in connection with their duties as directors or officers of the
Corporation.
3
<PAGE>
With respect to all of the foregoing, see "The Merger -- Interests of
Certain Persons in the Merger."
ANTICIPATED ACCOUNTING TREATMENT
The Merger will be accounted for by Davel as a "purchase" for accounting
and financial reporting purposes. See "The Merger -- Anticipated Accounting
Treatment."
CERTAIN TAX CONSEQUENCES OF THE MERGER
The disposition of shares of Common Stock and receipt of the Merger
Consideration in the Merger will be a taxable transaction for federal income tax
purposes and may also be a taxable transaction under applicable state, local,
foreign or other tax laws. Shareholders are urged to consult their own tax
advisors as to the particular tax consequences of the Merger, including the
applicability and effect of state, local, foreign and other taxes. See "The
Merger -- Certain Tax Consequences of the Merger."
EFFECTIVE TIME OF THE MERGER; PAYMENT FOR COMMON STOCK
As soon as practicable after satisfaction or, to the extent permitted,
waiver of all conditions to the Merger as set forth in the Merger Agreement, the
Corporation and Merger Subsidiary will file a Certificate of Merger (the
"Certificate of Merger") with the Secretary of State of the State of Georgia
(the "Georgia Secretary of State") and make all other filings or recordings
required by the Georgia Business Corporation Code (the "GBCC") in connection
with the Merger. The Merger shall become effective upon the filing of the
Certificate of Merger with the Georgia Secretary of State and satisfaction of
any additional requirements of the GBCC, or such later time as is specified in
the Certificate of Merger (the "Effective Time"). See "The Merger -- Terms of
the Merger Conditions to the Merger;" and "-- Effective Time of the Merger."
Detailed instructions with regard to the surrender of certificates, to be
accompanied by a letter of transmittal, will be forwarded to holders of
certificates formerly evidencing shares of Common Stock promptly following the
Effective Time by First Union National Bank of North Carolina (the "Exchange
Agent"). Payment will be made to such former holders of shares of Common Stock
promptly following receipt by the Exchange Agent of the certificates evidencing
their shares of Common Stock, a signed letter of transmittal and other required
documents. No interest will be paid or accrued on the cash payable upon the
surrender of certificates. See "The Merger -- Payment for Shares of Common
Stock."
STOCK CERTIFICATES SHOULD NOT BE SENT WITH THE ENCLOSED PROXY
CARD. IF THE MERGER IS CONSUMMATED, SHAREHOLDERS WILL BE
FURNISHED INSTRUCTIONS FOR EXCHANGING THEIR SHARES OF COMMON STOCK
FOR THE MERGER CONSIDERATION.
CONDITIONS TO THE MERGER
The obligations of the Corporation, Davel and Merger Subsidiary to
consummate the Merger are subject to satisfaction or waiver of certain
conditions, including obtaining requisite shareholder and regulatory approvals.
See "The Merger -- Terms of the Merger Conditions to the Merger;" and "--
Government and Regulatory Approvals and Filings."
TERMINATION; FEES AND EXPENSES
The Merger Agreement may be terminated at any time prior to the Effective
Time by mutual written consent of the Corporation, Davel and Merger Subsidiary,
by either the Corporation or Davel if the Merger is not
4
<PAGE>
completed by February 27, 1998, or by the Corporation, Davel or Merger
Subsidiary upon the occurrence of certain other specified events.
If the Merger Agreement is terminated by Davel or Merger Subsidiary upon
the occurrence of certain specified events, or if the Corporation terminates the
Merger Agreement to enable the Corporation to enter into a Competing Transaction
that the Corporation's Board of Directors has determined is more favorable to
the Corporation and its shareholders than the Merger, then the Corporation will
pay Davel a termination fee of $3 million, plus out-of-pocket expenses not to
exceed $500,000 incurred by Davel in connection with the Merger. See "The
Merger -- Terms of the Merger - Termination."
DISSENTERS' RIGHTS
Under Article 13 of the GBCC ("Article 13"), the shareholders of the
Corporation have dissenters' rights with respect to the Merger. Any shareholder
of the Corporation who does not vote in favor of the Merger and who complies
with the applicable provisions of Article 13 may have the right, in lieu of
receiving the Merger Consideration, to an appraisal of and payment for such
shareholder's shares of Common Stock. A copy of Article 13 is attached hereto
as Annex III. See "The Merger -- Dissenters' Rights."
STOCK PURCHASE RIGHTS
The Corporation has taken all necessary action such that neither the Merger
Agreement nor the Merger will trigger any rights, actions or events under the
Shareholder Rights Agreement, dated as of July 25, 1995 and amended as of March
13, 1997, between the Corporation and First Union National Bank of North
Carolina (the "Rights Agreement"), such that the Rights Agreement will not be
applicable to the Merger Agreement or the Merger. See "The Merger -- Stock
Purchase Rights."
GOVERNMENT AND REGULATORY APPROVALS AND FILINGS
The Corporation must obtain such approvals and consents of state public
service commissions as are required under applicable laws. See "The Merger --
Government and Regulatory Approvals and Filings."
MARKET PRICES AND DIVIDEND INFORMATION
The Common Stock is listed and traded on the Nasdaq Stock Market. As of
November 24, 1997, the last date on which the Common Stock was traded prior to
the public announcement of the signing of the Merger Agreement, the high and low
sales prices of the Common Stock on the Nasdaq Stock Market were $8 per share
and $8 1/4 per share, respectively. On December 19, 1997, the latest
practicable trading day before the printing of this Proxy Statement, the high
and low sales prices of the Common Stock on the Nasdaq Stock Market were
$10 1/64 per share and $9 3/4 per share, respectively.
5
<PAGE>
SUMMARY FINANCIAL INFORMATION CONCERNING THE CORPORATION
The selected summary consolidated financial data presented below for each
of the last five fiscal years ended June 30, 1997, and the three months ended
September 30, 1997 and 1996, have been derived from the Corporation's historical
financial statements. This data should be read in conjunction with the
consolidated financial statements and notes thereto of the Corporation included
in the Annual Report on Form 10-K, as amended by Form 10-K/A filed October 28,
1997 and Form 10-K/A filed December 15, 1997, for the fiscal year ended June 30,
1997, and the Quarterly Report on Form 10-Q for the quarter ended September 30,
1997, which is incorporated by reference into this Proxy Statement. See
"Additional Information -- Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
IN THOUSANDS EXCEPT PER SHARE AMOUNTS
THREE MONTHS ENDED
SEPTEMBER 30, (UNAUDITED) FISCAL YEARS ENDED JUNE 30,
------------------------- ----------------------------------------
1997 1996 1997 1996 1995 1994 1993
------------ ----------- ----------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Total Revenue $ 24,150 $ 26,792 $103,848 $105,340 $ 81,422 $46,124 $29,878
Operating Income (Loss) (1,138) 1,653 (5,593) (11,525) 7,828 5,519 2,486
Net Income (Loss) (2,830) 3 (8,406) (17,946) 3,172 2,779 1,084
PER SHARE (DOLLARS)
Net Income (Loss) (0.45) (0.00) (1.38) (2.96) 0.52 0.28 (1.41)
BALANCE SHEET DATA)
Total Assets 100,234 110,430 104,333 109,728 122,967 63,643 30,157
Current Portion of Notes
Payable and Long-Term Debt 68,697 16,549 71,697 3,088 1,271 671 2,608
Notes Payable and Long-Term Debt,
Less Current Portion -- 56,697 -- 70,197 70,197 18,557 13,500
Total Shareholders' Equity
(Deficit) 16,730 27,918 19,550 26,537 44,275 40,037 (3,017)
CASH DIVIDENDS DECLARED AND PAID
PER SHARE OF COMMON STOCK
-- -- -- -- -- -- --
</TABLE>
6
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SPECIAL MEETING
PLACE, DATE AND TIME
The Special Meeting of Shareholders of the Corporation will be held at
Cameron City Club, 1000 Northfield Court, Suite 200, Roswell, Georgia, on
January 30, 1998 at 9:00 a.m. Eastern Standard Time.
RECORD DATE; SOLICITATION OF PROXIES
The Board of Directors of the Corporation has fixed the close of business
on December 22, 1997 as the Record Date for the determination of shareholders
entitled to notice of and to vote at the Special Meeting. At the Record Date,
there were 6,289,584 shares of Common Stock issued and outstanding and entitled
to vote at the Special Meeting held by approximately 41 holders of record.
Holders of Common Stock are entitled to one vote at the Special Meeting for each
share of Common Stock held of record at the Record Date.
In addition to the solicitation of proxies by use of the mails, proxies
also may be solicited by the Corporation and its directors, officers and
employees (who will receive no additional compensation therefor) by telephone,
telegram, facsimile transmission and other electronic communication methods or
personal interview. The Corporation will reimburse banks, brokerage houses,
custodians and other fiduciaries who hold shares of Common Stock in their name
or custody, or in the name of nominees for others, for their out-of-pocket
expenses incurred in forwarding copies of the proxy materials to those persons
for whom they hold such shares. The Corporation will bear the costs of the
Special Meeting and of soliciting proxies therefor, including the cost of
printing and mailing this Proxy Statement and related materials. The
Corporation has retained Corporate Investor Communications, Inc. ("CIC") to
assist in the solicitation of proxies. In accordance with the Corporation's
agreement with CIC, CIC will assist in the solicitation of proxies from brokers,
nominees, fiduciaries and other custodians in connection with the Special
Meeting at a cost of approximately $4,000, plus reimbursement of out-of-pocket
expenses. Any questions or requests for assistance regarding the Corporation's
proxies and related materials may be directed in writing to Barry E. Selvidge,
General Counsel and Secretary, Communications Central Inc., 1150 Northmeadow
Parkway, Suite 118, Roswell, Georgia 30076.
VOTE REQUIRED
A majority of the outstanding shares of Common Stock entitled to vote as of
the Record Date, represented in person or by proxy, is required for a quorum at
the Special Meeting. The affirmative vote of a majority of the outstanding
shares of Common Stock as of the Record Date is required for approval of the
Merger Agreement. Abstentions may be specified with respect to the approval of
the Merger Agreement and will be counted as present for the purpose of
determining the existence of a quorum but will have the effect of a negative
vote.
Shares of Common Stock that are represented by properly executed proxies,
unless such proxies shall have previously been properly revoked, will be voted
in accordance with the instructions indicated in such proxies. If no contrary
instructions are indicated, such shares will be voted FOR approval of the Merger
Agreement, and in the discretion of the persons named in the proxy as proxy
appointees, as to any other matter that may properly come before the Special
Meeting and of which the Corporation is not presently aware.
Under the rules of the NASD, although brokers who hold shares in street
name have the authority to vote on certain items when they have not received
instructions from beneficial owners, brokers will not be entitled to vote on the
approval of the Merger Agreement absent specific instructions. Brokers who do
not receive instructions but who are present, in person or by proxy, at the
Special Meeting will be counted as present for quorum purposes. A broker non-
vote will have the effect of a negative vote on the approval of the Merger
Agreement. Similarly, a failure to return a properly executed proxy or an
abstention will have the effect of a negative vote on the approval of the Merger
Agreement.
It is not expected that any matters other than those referred to in this
Proxy Statement will be brought before the Special Meeting. If other matters
are properly presented, however, the persons named as proxy
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appointees will vote in accordance with their best judgment on such matters. The
grant of a proxy also will confer discretionary authority on the persons named
as proxy appointees to vote in accordance with their best judgment on matters
incident to the conduct of the Special Meeting.
Any shareholder may revoke his, her or its proxy (other than an irrevocable
proxy coupled with an interest) at any time before it is voted by filing with
the Corporate Secretary of the Corporation an instrument revoking the proxy or
by returning a duly executed proxy bearing a later date, or by attending the
Special Meeting and voting in person. Attendance at the Special Meeting will
not by itself constitute revocation of a proxy.
Except as summarized below and as described in more detail in "The Merger
-- Interests of Certain Persons in the Merger," none of the Company's directors
or executive officers has any material interest in or related to the Merger.
As of December 4, 1997, the current directors and executive officers of the
Corporation beneficially owned 781,246 shares (approximately 11.1%) of the
outstanding shares of Common Stock, including (i) 768,164 shares that such
directors and executive officers have the right to acquire through the exercise
of Stock Options (as defined below) that are presently exercisable or will be
exercisable upon consummation of the Merger and (ii) 13,082 shares of Common
Stock currently owned by such directors and executive officers. See "Security
Ownership -- Security Ownership of Certain Beneficial Owners;" and "-- Security
Ownership of Certain Management of the Corporation." Such directors and
executive officers of the Corporation have indicated that they intend to vote
the 13,082 shares that they currently own FOR the approval of the Merger
Agreement. Under the Merger Agreement, all unvested Stock Options (including
those held by officers of the Corporation) will accelerate and become fully
vested immediately prior to consummation of the Merger. All theretofore
unexercised Stock Options will be exchanged for cash upon consummation of the
Merger. See "The Merger -- General."
Pursuant to the Merger Agreement, Rodger L. Johnson, the Corporation's
President and Chief Executive Officer, and five other key employees of the
Corporation recently entered into Employment and Non-Competition Agreements with
the Corporation, which will become effective only upon consummation of the
Merger. In the case of Mr. Johnson, this agreement will supercede his existing
Employment Agreement if the Merger is consummated. None of the other five key
employees have existing employment agreements with the Corporation. Under the
Employment and Non-Competition Agreements, Mr. Johnson and such other employees
will be entitled to receive certain payments for serving as employees of the
Corporation and agreeing not to compete with it for certain periods after the
Merger is consummated. See "The Merger -- Interests of Certain Persons in the
Merger."
In addition, pursuant to the Merger Agreement, Davel has agreed to cause
the Surviving Corporation to indemnify, for a period of at least six years after
the Merger, to the full extent permitted under Georgia law, the present and
former directors and officers of the Corporation and its subsidiaries in respect
of actions taken in connection with their duties as directors or officers of the
Corporation. See "The Merger -- Interests of Certain Persons in the Merger."
SHAREHOLDERS ARE URGED TO READ AND CAREFULLY CONSIDER THE INFORMATION
PRESENTED IN THIS PROXY STATEMENT, AND SHAREHOLDERS ARE URGED TO COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING PREPAID
ENVELOPE.
STOCK CERTIFICATES SHOULD NOT BE SENT WITH THE ENCLOSED PROXY. IF THE
MERGER IS CONSUMMATED, SHAREHOLDERS WILL BE FURNISHED INSTRUCTIONS FOR
EXCHANGING THEIR SHARES OF COMMON STOCK FOR THE MERGER CONSIDERATION.
8
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THE MERGER
GENERAL
The following information with respect to the Merger is qualified in its
entirety by reference to the complete text of the Merger Agreement, a copy of
which is included in this Proxy Statement as Annex I. The Merger Agreement sets
forth the terms and conditions upon which the Merger is to be effected. If the
Merger Agreement is approved by the holders of a majority of the outstanding
shares of Common Stock at the Special Meeting, and all other conditions to the
obligations of the parties thereto are satisfied or waived, the Merger will be
consummated and Merger Subsidiary will merge with and into the Corporation at
the Effective Time. The Corporation will be the Surviving Corporation in the
Merger and will become a wholly-owned subsidiary of Davel.
In the Merger, each share of Common Stock issued and outstanding at the
Effective Time, other than shares owned by Davel and its subsidiaries (which
will be automatically canceled and extinguished) and shares held by shareholders
who properly exercise and perfect their dissenters' rights, will be canceled and
converted automatically into the right to receive the Merger Consideration.
Each outstanding share of common stock of Merger Subsidiary will be converted
automatically into one share of common stock of the Surviving Corporation. As a
result of the Merger, shareholders of the Corporation will cease to have an
equity interest in, or possess any rights as shareholders of, the Surviving
Corporation.
Pursuant to the Merger Agreement, each exercisable Stock Option (as defined
below) and Warrant (as defined below), and any rights thereunder, outstanding
and unexercised immediately prior to the Effective Time shall be canceled at the
Effective Time in exchange for the right to receive an amount in cash equal to
the product of (i) the number of shares of Common Stock underlying any
unexercised portion of such Stock Option or such Warrant immediately prior to
the Effective Time and (ii) the excess, if any, of (A) the Merger Consideration
over (B) the per share exercise price of such Stock Option or such Warrant,
subject to applicable withholding taxes. A "Stock Option" refers to an option
or right of any kind (other than Warrants) to purchase shares of Common Stock.
A "Warrant" refers to each of the currently outstanding warrants to purchase
shares of Common Stock. Under the Merger Agreement, all unvested Stock Options
(including those held by officers of the Corporation) will accelerate and become
fully vested immediately prior to consummation of the Merger. See "Security
Ownership -- Security Ownership of Certain Management of the Corporation."
At the closing date of the Merger (the "Closing Date"), Stock Options
having a per share exercise price under $10.50 will be outstanding and
exercisable for an aggregate of 797,684 shares of Common Stock, entitling the
holders to an aggregate amount of cash equal to approximately $3,503,601,
assuming no such Stock Options are exercised or lapse in accordance with their
terms prior to the Effective Time. All of such Stock Options will be
exercisable in full. At the Closing Date, Warrants having a per share exercise
price under $10.50 will be outstanding and exercisable for an aggregate of
234,500 shares of Common Stock, entitling the holders to an aggregate amount of
cash equal to $410,375 assuming no such Warrants are exercised or lapse in
accordance with their terms prior to the Effective Time.
BACKGROUND OF MERGER
The terms and conditions of the Merger were determined through arms-length
negotiations between the representatives of the Corporation and Davel. The
following is a brief discussion of the history of the transaction.
On March 14, 1997, the Corporation entered into an Agreement and Plan of
Merger (the "PhoneTel Agreement") with PhoneTel Technologies, Inc. ("PhoneTel")
and a wholly-owned subsidiary of PhoneTel. After an extended period during
which PhoneTel had outstanding a tender offer to acquire all of the outstanding
shares of Common Stock of the Corporation pursuant to the terms of the PhoneTel
Agreement, the proposed transaction could not be effectuated and the PhoneTel
Agreement was terminated. On August 21, 1997, at the time the termination of
the PhoneTel Agreement was announced, the Corporation also announced that it had
entered into an Asset Purchase Agreement with Talton Holdings, Inc. ("Talton")
to sell substantially all of the assets of the Corporation's InVision Telecom,
Inc. subsidiary ("InVision") to Talton for consideration of approximately $40
9
<PAGE>
million in cash and the assumption by Talton of approximately $2 million of
liabilities. The Corporation and Talton also agreed that one-half of InVision's
accounts receivable collected will be paid to Talton until Talton has received
an aggregate amount equal to $1.2 million, and all amounts collected in excess
of such payment will be retained by InVision. Effective October 1, 1997, the
Asset Purchase Agreement with Talton was consummated. Substantially all of the
proceeds of that transaction were used by the Corporation to reduce its
outstanding indebtedness to its principal lender.
Upon termination of the PhoneTel Agreement and consummation of the Asset
Purchase Agreement with Talton, at the direction of the Board of Directors, the
Corporation's management focused on managing the Corporation's core payphone
business. At the same time, however, the Board of Directors advised management
that the Corporation should continue to remain open to strategic alternatives
that might potentially involve a business combination or other sale of the
Corporation or its assets. Pursuant to that direction, Rodger L. Johnson, the
Corporation's President and Chief Executive Officer, engaged in informal
discussions concerning a possible business combination transaction with various
potential strategic and financial acquirors of payphone businesses.
During the week of September 1, 1997, Mr. Johnson received a call from
Robert Hill, the President of Davel. At that time, Mr. Hill expressed an
interest in having Davel and the Corporation consider engaging in some form of
business combination. This discussion was followed by a meeting on September
10, 1997 among Mr. Johnson and C. Douglas McKeever, the Corporation's Vice
President - Finance, on behalf of the Corporation, and Mr. Hill, Michael E.
Hayes, the Chief Financial Officer of Davel, and a representative of ABN AMRO
Chicago Corporation, Inc. ("Chicago Corporation"), on behalf of Davel. At that
meeting, Mr. Johnson confirmed the Corporation's willingness to explore a
possible business combination with Davel. Davel conducted preliminary due
diligence at the offices of the Corporation in late September and early October
1997.
On October 28, 1997, Mr. Johnson and a representative of Hunton & Williams,
the Corporation's corporate and securities counsel, met at Davel's offices in
Tampa to discuss the structure of a possible transaction with Messrs. Hill and
Hayes. At that time, Davel's representatives delivered to the Corporation's
representatives a first draft of a proposed Merger Agreement.
On October 30, 1997, Theodore C. Rammelkamp, Jr., Davel's Senior Vice
President and General Counsel, and representatives of Chicago Corporation and
Kirkland & Ellis, Davel's investment banking and outside legal counsel,
respectively, met with Mr. Johnson and representatives of Hunton & Williams to
discuss and negotiate the terms of the proposed Merger Agreement. A special
meeting of the Board of Directors of the Corporation was held on November 2,
1997, by telephonic conference call, to update the Board on the status of
discussions with Davel regarding a possible transaction with Davel.
The parties' discussions were tabled during the weeks of November 3, 1997
and November 10, 1997, as investment banking and other representatives of Davel
and the Corporation analyzed the proposed transaction in light of industry-
related regulatory developments. However, the discussions were continued in
earnest during the week of November 17, 1997. On November 20, 1997, at a
regularly scheduled meeting of the Board of Directors of the Corporation, the
Board was advised that discussions with Davel were progressing, and, in light of
a possible proposal from Davel, discussed at length various other strategic
alternatives potentially available to the Corporation, including the prospects
for obtaining and/or receiving a more favorable business combination proposal
from some other financial or strategic consolidator of payphone businesses. In
that regard, Mr. Johnson reported to the Board that he had continued to have
informal discussions with a number of potential consolidators of the industry.
He further reported that, based on those informal discussions, he did not
believe that any of these consolidators was likely to be willing or able to
finance a transaction as favorable as what he believed Davel might propose.
During the weekend of November 22 and November 23, 1997, representatives of
the Corporation and Davel completed negotiations over the proposed form of
agreement. On November 23, 1997, a special meeting of the Board of Directors of
the Corporation was commenced to analyze the proposed transaction. On November
24, 1997, representatives of Davel delivered a formal offer of $10.50 in cash
for each share of Common Stock of the Corporation, and delivered a final
proposed form of the Merger Agreement. The Board of Directors of the
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Corporation met on the evening of November 24, 1997, to consider the offer and
to receive the financial analysis and fairness opinion of Bradford with respect
to the proposed transaction. At that meeting, Bradford delivered to the
Corporation's Board of Directors its written opinion to the effect that the
consideration to be received by the shareholders of the Corporation in the
Merger is fair to such shareholders from a financial point of view. At the same
meeting, the Board of Directors of the Corporation determined that the terms of
the Merger Agreement are fair to, and in the best interests of, the Corporation
and its shareholders, and unanimously approved the Merger Agreement and
unanimously recommended that the shareholders approve the Merger Agreement. In
connection with such determination and the Board of Director's approval of the
Merger Agreement, the Board of Directors voted unanimously to (i) exclude the
Merger from the scope of the Rights Agreement, (ii) approve the Merger under
Part Two and Part Three of Article 11 of the GBCC and (iii) approve the Merger
and thereby exclude such transaction from the supermajority voting provisions of
the Corporation's Articles of Incorporation.
REASONS FOR MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS
At its meeting commenced on November 23 and continued through November 24,
1997, the Corporation's Board of Directors determined that the Merger is fair
to, and in the best interests of, the Corporation and its shareholders.
Accordingly, at such meeting, the Board of Directors approved the Merger
Agreement unanimously and directed that the Merger Agreement be submitted to the
Corporation's shareholders for approval.
THE BOARD OF DIRECTORS
OF THE CORPORATION RECOMMENDS THAT THE
CORPORATION'S SHAREHOLDERS VOTE
FOR APPROVAL OF THE MERGER AGREEMENT.
The determination of the Corporation's Board of Directors to approve the
Merger Agreement was based upon its consideration of a number of factors. The
following list includes material factors considered by the Board of Directors in
its evaluation of the Merger: (i) the Board's familiarity with the business,
operations, competitive position and prospects of the Corporation and the nature
of the industry in which the Corporation participates, both on a historical and
a prospective basis; (ii) the Board's consideration of, among other things,
information with respect to the financial condition, results of operations and
business of the Corporation, on both a historical and a prospective basis, and
the influence of current industry, economic, market and regulatory conditions;
(iii) the Board's consideration over the last several months of a variety of
strategic alternatives, including a proposed business combination transaction
between the Corporation and PhoneTel Technologies, Inc., which could not be
consummated and was terminated effective August 21, 1997, and the Board's belief
that none of the various potential strategic alternatives believed by the Board
to be available to the Corporation at the time the Merger Agreement was executed
appeared to the Board to be as favorable to the Corporation and its shareholders
as the Merger; (iv) the fact that the Corporation had held discussions with a
number of potential interested parties in the context of a prolonged and
comprehensive process and implemented procedures to maximize value; (v) the
Board's review of the historical and prospective market prices of the Common
Stock compared to the Merger Consideration; (vi) the Board's review of
presentations by, and discussion of the terms and conditions of the Merger with,
senior executive officers of the Corporation, representatives of its legal
counsel and representatives of Bradford; (vii) the Board's receipt of the
financial analysis presented by Bradford, as well as the opinion of Bradford,
presented on November 24, 1997, to the effect that, based upon and subject to
certain matters as set forth in such opinion, as of November 24, 1997, the
Merger Consideration was fair to the shareholders of the Corporation from a
financial point of view (see the Opinion of Bradford attached as Annex II
hereto); (viii) the Board's consideration of the terms of the Merger Agreement,
including the Corporation's right to terminate the Merger Agreement under
certain specified circumstances in the event that the Board determines in good
faith, after receiving the advice of its financial advisors and legal counsel,
that a Competing Transaction is more favorable to the shareholders of the
Corporation than the Merger; (ix) the Board's evaluation of the high probability
that Davel would be able to consummate the Merger Agreement and the absence of a
financing condition as a condition to Davel's obligations to consummate the
Merger; and (x) the fact that Davel's offer was the highest offer believed by
the Board of Directors to be available to the Corporation at the time the Merger
Agreement was executed.
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In view of the wide variety of material factors considered in connection
with its evaluation of the Merger, the Board of Directors did not find it
practicable to, and did not attempt to, quantify or otherwise attempt to assign
relative weights to the specific factors described above in reaching its
determination.
OPINION OF FINANCIAL ADVISOR
On November 24, 1997, Bradford delivered its written opinion to the Board
of Directors of the Corporation that as of November 24, 1997, the Merger
Consideration to be received by the shareholders of the Corporation pursuant to
the Merger Agreement is fair to such shareholders from a financial point of
view.
THE FULL TEXT OF THE WRITTEN OPINION OF BRADFORD DATED NOVEMBER 24, 1997,
WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED AS ANNEX II TO
THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF COMMON
STOCK ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY. THE OPINION
OF BRADFORD IS DIRECTED ONLY TO THE FAIRNESS OF THE MERGER CONSIDERATION FROM A
FINANCIAL POINT OF VIEW, DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER OR ANY
RELATED TRANSACTION AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER
AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING. THE SUMMARY OF
SUCH OPINION INCLUDED IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In conducting its analysis and arriving at its opinion, Bradford considered
such financial and other information as it deemed appropriate, including, among
other things, (i) the Merger Agreement; (ii) the historical and current
financial position and results of operations of the Corporation and Davel as set
forth in their respective periodic reports and proxy materials filed with the
Securities and Exchange Commission (the "Commission"); (iii) certain internal
operating data and financial analyses and forecasts of the Corporation for the
fiscal years beginning July 1, 1997 and ending June 30, 2001, prepared for the
Corporation by its senior management; (iv) certain financial and securities
trading data of certain other companies, the securities of which are publicly
traded, that Bradford believed to be comparable to the Corporation or relevant
to the Merger; (v) the financial terms of certain other transactions that
Bradford believed to be relevant; (vi) the reported price and trading activity
for the Common Stock; and (vii) such other financial studies, analyses and
investigations as Bradford deemed appropriate for purposes of its opinion.
Bradford also held discussions with members of the senior management of the
Corporation regarding the past and current business operations, financial
condition and future prospects of the Corporation.
Bradford relied upon the accuracy and completeness of all of the financial
and other information reviewed by it for purposes of its opinion, and Bradford
did not assume any responsibility for, nor undertake an independent verification
of such information for purposes of rendering its opinion. With respect to the
internal operating data and financial analyses and forecasts supplied to
Bradford, it assumed that such data, analyses and forecasts were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the Corporation's senior management as to the recent and likely
future performance of the Corporation. In addition, Bradford did not make an
independent evaluation or appraisal of the assets and liabilities of the
Corporation or any of its subsidiaries, and Bradford was not furnished with any
such evaluation or appraisal.
The following are financial and comparative analyses that were performed by
Bradford, and which Bradford considers to be material, in arriving at its
opinion dated November 24, 1997 as to the fairness of the Merger Consideration
to be received by the shareholders of the Corporation.
(a) Discounted Cash Flow Analysis. Using discounted cash flow analysis, based
on publicly available information and information obtained from management
of the Corporation, Bradford discounted to present value the projected
future cash flows that the Corporation is projected to produce through
fiscal year 2001, assuming the Corporation performed in accordance with the
earnings forecast of management. Bradford calculated terminal values for
the Corporation (i.e., the values at the 2001 year end) by applying
multiples to earnings before interest, taxes, depreciation and amortization
("EBITDA"), net income and the number of phones projected to be in
operation in the year 2001. The cash flow streams and terminal values were
then discounted to present values using a range of
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<PAGE>
discount rates chosen to reflect the Corporation's cost of capital. Based
on this analysis, the implied value per share of the Corporation ranged
from $8.36 to $11.50, as compared to the Merger Consideration of $10.50.
(b) Comparable Company Analysis. Using publicly available information,
Bradford reviewed selected financial and operating data, including
revenues, historical and projected earnings, EBITDA and number of phones in
operation for several publicly traded companies engaged in the business of
operating public pay phones (the "Comparable Company Group"). Bradford
calculated the current market price of each company as a multiple of
estimated 1998 earnings (which ranged from 12.6x to 20.2x with an average
multiple of 16.2x); total firm value (defined as equity market value plus
net debt) as a multiple of last twelve months ("LTM") revenues (which
ranged from 1.2x to 2.6x, with an adjusted average multiple of 1.6x) and
annualized revenues for the most recent quarter (which ranged from 1.2x to
2.3x, with an adjusted average multiple of 1.6x); total firm value as a
multiple of LTM EBITDA (which ranged from 6.1x to 10.1x, with an adjusted
average multiple of 6.4x) and annualized EBITDA for the most recent quarter
(which ranged from 5.8x to 8.7x, with an adjusted average multiple of
6.3x); and total firm value as a multiple of the number of phones in
operation (which ranged from $3,579 per phone to $6,302 per phone, with an
adjusted average price per phone of $4,141). Bradford then compared these
Comparable Company Group multiples to the corresponding multiples in the
Merger (assuming Merger Consideration of $10.50 per share), which were,
respectively, 1.8x LTM revenues, 9.7x LTM EBITDA, 26.3x estimated 1998
earnings and $4,944 per phone. Bradford also noted that the Corporation had
a net loss for the LTM and projected a net loss for 1997.
(c) Comparable Transaction Analysis. Using publicly available information,
Bradford reviewed selected transactions in which companies engaged in
businesses similar to Davel and the Corporation (the "Comparable
Transaction Group") combined their businesses. Bradford calculated the
consideration paid for each acquired company in the Comparable Transaction
Group as a multiple of the number of phones in operation at the time of the
transaction. The price per phone paid for the target company in each
transaction ranged from $534 to $8,400, with an average of $3,026.
Separately, Bradford also compared the price per phone paid in the
acquisition of Cherokee Communications, Inc. by PhoneTel Technologies, Inc.
(the "Cherokee Acquisition"), the most comparable recent transaction in the
industry. The price per phone paid in the Cherokee Acquisition was
approximately $4,068 per phone. Bradford then compared the average price
per phone for the Comparable Transaction Group and for the Cherokee
Acquisition to the corresponding price per phone in the Merger of $4,944
(assuming Merger Consideration of $10.50).
Bradford, as part of its investment banking business, engages in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes. The Corporation selected Bradford as its financial advisor
because it is a nationally recognized investment banking firm that has
substantial experience in transactions similar to the Merger, and because of its
familiarity with the Corporation and its business.
Pursuant to an engagement letter dated March 14, 1997, as revised by an
amendment thereto dated November 24, 1997, Bradford has earned fees totaling
$300,000 for its services as financial advisor to the Corporation's Board of
Directors in connection with the Merger, including delivery of Bradford's
opinion, and in connection with the terminated PhoneTel transaction and the
Talton transaction. Bradford will receive an additional $100,000 upon the
closing of the Merger. The Corporation has agreed to indemnify Bradford against
certain liabilities arising out of or in connection with the services rendered
by Bradford in connection with the engagement.
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CERTAIN TAX CONSEQUENCES OF THE MERGER
The disposition of shares of Common Stock in the Merger will be a taxable
transaction to the holders of Common Stock for federal income tax purposes and
may also be a taxable transaction under applicable state, local, foreign or
other tax laws. Generally, a shareholder will recognize gain or loss for such
purposes equal to the difference between the tax basis for the shareholder's
shares of Common Stock and the amount of Merger Consideration payable for such
shares. For federal income tax purposes, such gain or loss generally will be a
capital gain or loss if the shares of Common Stock are a capital asset in the
hands of the shareholder, and such capital gain or loss will be subject to tax
at various rates depending generally on the shareholder's holding period for the
shares of Common Stock. There are limitations on the deductibility of capital
losses.
The summary of tax consequences set forth above is for general information
only. The tax treatment of each shareholder will depend in part upon his or her
particular situation. Special tax consequences not described herein may be
applicable to particular classes of taxpayers, such as financial institutions,
broker-dealers, persons who are not citizens or residents of the United States,
shareholders who acquired the shares of Common Stock through the exercise of
Stock Options or otherwise as compensation and persons who received payments in
respect of Stock Options. ALL SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
AS TO THE PARTICULAR TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
DISSENTERS' RIGHTS
Pursuant to the provisions of Article 13, if the Merger is consummated, any
holder of Common Stock on the Record Date who (i) gives to the Corporation,
prior to the vote at the Special Meeting with respect to the approval of the
Merger Agreement, written notice of such holder's intent to demand payment for
such holder's shares, and (ii) does not vote in favor thereof, shall be entitled
to receive, upon compliance with all applicable statutory requirements, the fair
value of such holder's shares as determined immediately prior to the Effective
Time, excluding any appreciation or depreciation in anticipation of the Merger.
Set forth below is a summary of the material rights of a dissenting shareholder
of the Corporation, which summary is qualified in its entirety by reference to
Article 13, which is included as Annex III to this Proxy Statement. Any
shareholder of the Corporation who intends to dissent from approval of the
Merger Agreement should carefully review the text of such provisions and should
also consult with such holder's attorney. No further notice of the events giving
rise to dissenters' rights or any steps associated therewith will be furnished
to the Corporation's shareholders, except as indicated below or otherwise
required by law.
A shareholder of record may assert dissenters' rights as to fewer than all
the shares registered in such holder's name only if such holder dissents with
respect to all shares beneficially owned by any one beneficial shareholder and
such holder notifies the Corporation in writing of the name and address of each
person on whose behalf such holder asserts dissenters' rights. The rights of
such a partial dissenter are determined as if the shares as to which such holder
dissents and such holder's other shares were registered in the names of
different shareholders.
The written objection requirement referred to above will not be satisfied
under the GBCC by merely voting against approval of the Merger Agreement by
proxy or in person at the Special Meeting. Any holder of Common Stock who
returns a signed proxy but fails to provide instructions as to the manner in
which such shares are to be voted will be deemed to have voted in favor of the
transaction and will not be entitled to assert dissenters' rights. In addition
to not voting in favor of the Merger Agreement, a shareholder wishing to
preserve the right to dissent and seek appraisal must give a separate written
notice of such holder's intent to demand payment for such holder's shares if the
Merger is effected, as herein provided.
Any written objection to the Merger Agreement satisfying the requirements
discussed above must be addressed as follows: Communications Central Inc., 1150
Northmeadow Parkway, Suite 118, Roswell, Georgia 30076, Attention: Barry E.
Selvidge, Corporate Secretary.
14
<PAGE>
If the Merger is authorized at the Special Meeting, the Corporation will
deliver a written dissenters' notice (the "Dissenters' Notice") to all
shareholders who satisfied the foregoing requirements no later than ten days
after the Effective Time, which Dissenters' Notice will (i) state where the
demand for payment must be sent and where and when certificates for certificated
shares must be deposited, (ii) inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the payment demand is
received, (iii) set a date by which the Corporation must receive the payment
demand (which date may not be fewer than 30 nor more than 60 days after the
Dissenters' Notice is delivered), and (iv) be accompanied by a copy of Article
13.
A shareholder of record who receives the Dissenters' Notice must demand
payment and deposit such holder's certificates in accordance with the
Dissenters' Notice. Such shareholder will retain all other rights of a
shareholder until the consummation of the Merger. A record shareholder who does
not demand payment or deposit such holder's share certificates where required,
each by the date set forth in the Dissenters' Notice, is not entitled to payment
for such holder's shares under Article 13.
Except as described below, the Corporation must, within ten days of the
later of the Effective Time or receipt of a payment demand, offer to pay to each
dissenting shareholder who complied with the payment demand and deposit
requirements described above the amount the Corporation estimates to be the fair
value of such holder's shares, plus accrued interest from the Effective Time.
Such offer of payment must be accompanied by (i) certain recent financial
statements of the Corporation, (ii) the Corporation's estimate of the fair value
of the shares, (iii) an explanation of how the interest was calculated, (iv) a
statement of the dissenter's right to demand payment under Section 14-2-1327 of
the GBCC, and (v) a copy of Article 13. If the shareholder accepts the
Corporation's offer, or is deemed to have accepted the offer by failing to
respond within 30 days, payment must be made within 60 days after the later of
the making of the offer or the Effective Time.
If the Merger is not effected within 60 days after the date set for
demanding payment and depositing share certificates, the Corporation must return
the deposited certificates and release the transfer restrictions imposed on
uncertificated shares. If, after such return and release, the Merger is
effected, the Corporation must send a new Dissenters' Notice and repeat the
payment demand procedure described above.
Section 14-2-1327 of the GBCC provides that a dissenting shareholder may
notify the Corporation in writing of such holder's own estimate of the fair
value of such holder's shares and the amount of interest due, and may demand
payment of such estimate, if (i) such holder believes that the amount offered by
the Corporation is less than the fair value of such holder's shares or that the
interest due has been calculated incorrectly, or (ii) the Corporation, having
failed to effect the Merger, does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares within 60
days after the date set for demanding payment. A dissenting shareholder waives
such holder's right to demand payment under Section 14-2-1327 and is deemed to
have accepted the Corporation's offer unless such holder notifies the
Corporation of such holder's demand in writing within 30 days after the
Corporation makes or offers payment for such holder's shares. If the Corporation
does not offer payment within ten days of the later of the Effective Time or
receipt of a payment demand, then (i) the shareholder may demand the financial
statements and other information required to accompany the Corporation's payment
offer, and the Corporation must provide such information within ten days after
receipt of the written demand, and (ii) the shareholder may notify the
Corporation of such holder's own estimate of the fair value of such holder's
shares and the amount of interest due, and may demand payment of such estimate.
If a demand for payment under Section 14-2-1327 remains unsettled, the
Corporation must commence a nonjury equity valuation proceeding in the Superior
Court of Fulton County, Georgia within 60 days after receiving the payment
demand and must petition the court to determine the fair value of the shares and
the accrued interest. If the Corporation does not commence the proceeding within
such 60 day period, it is required to pay each dissenting shareholder whose
demand remains unsettled the amount demanded. The Corporation is required to
make all dissenting shareholders whose demands remain unsettled parties to the
proceeding and to serve a copy of the petition upon each dissenting shareholder.
The court may appoint appraisers to receive evidence and to recommend a decision
on fair value. Each dissenting shareholder made a party to the proceeding is
entitled to judgment for the amount that the court finds to be the fair value of
such holder's shares, plus interest to the date of judgment.
15
<PAGE>
The court in an appraisal proceeding must determine the costs of the
proceeding, excluding fees and expenses of attorneys and experts for the
respective parties, and must assess those costs against the Corporation, except
that the court may assess the costs against all or some of the dissenting
shareholders to the extent the court finds they acted arbitrarily, vexatiously,
or not in good faith in demanding payment under Section 14-2-1327. The court
also may assess the fees and expenses of attorneys and experts for the
respective parties against the Corporation if the court finds the Corporation
did not substantially comply with the requirements of Article 13, or against
either the Corporation or dissenting shareholder if the court finds that such
party acted arbitrarily, vexatiously, or not in good faith with respect to the
rights provided by Article 13.
If the court finds that the services of attorneys for any dissenting
shareholder were of substantial benefit to other dissenting shareholders
similarly situated, and that the fees for those services should not be assessed
against the Corporation, the court may award those attorneys reasonable fees out
of the amounts awarded the dissenting shareholders who were benefited. No action
by any dissenting shareholder to enforce dissenters' rights may be brought more
than three years after the Effective Time, regardless of whether notice of the
Merger and of the right to dissent was given by the Corporation in compliance
with the shareholder meeting notice and Dissenters' Notice requirements.
ANTICIPATED ACCOUNTING TREATMENT
The Merger will be accounted for by Davel as a "purchase" for accounting
and financial reporting purposes. Under this method of accounting, the purchase
price will be allocated to assets acquired and liabilities assumed based on
their estimated fair values at the Effective Time.
STOCK PURCHASE RIGHTS
The Corporation has taken all necessary action such that neither Davel nor
Merger Subsidiary will become an "Acquiring Person," such that no "Triggering
Event," "Stock Acquisition Date," or "Distribution Date" (as such terms are
defined in the Rights Agreement) will occur, and such that the Rights Agreement
will not be applicable to the Merger Agreement or the consummation of the Merger
and other transactions contemplated by the Merger Agreement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General. Except as set forth below, none of the Company's directors or
executive officers has any material interest in or related to the Merger. As
described in more detail under the caption "Security Ownership," certain
directors and executive officers of the Corporation hold shares of Common Stock
and/or Stock Options. Pursuant to the Merger Agreement, such persons will
receive the same consideration for such securities as other holders of shares,
options and warrants to purchase Common Stock who are not directors or executive
officers of the Corporation. Under the Merger Agreement, all unvested Stock
Options (including those held by officers of the Corporation) will accelerate
and become fully vested immediately prior to consummation of the Merger. All
theretofore unexercised Stock Options will be exchanged for cash upon
consummation of the Merger. See " -- General."
Employment and Non-Competition Agreements. On November 6, 1995, the
Corporation entered into an Employment Agreement with Rodger L. Johnson (the
"Original Agreement") under which Mr. Johnson currently serves as the
Corporation's President and Chief Executive Officer. Pursuant to the Original
Agreement, for fiscal 1997, Mr. Johnson was paid a base salary of $228,000 and,
based on the Corporation's performance during such year, was granted a bonus
equal to one-half of his base salary, or $114,000. The Original Agreement also
provides that if Mr. Johnson's employment with the Corporation is terminated as
a result of a "Change of Control" (as defined therein), subject to certain
limitations, the Corporation will pay Mr. Johnson an amount equal to his base
salary less $28,000, plus the average of any bonus payments for the
Corporation's most recent two fiscal years preceding termination. In connection
with the execution of the Original Agreement, the Corporation granted Mr.
Johnson an option to purchase up to 500,000 shares of Common Stock at an
exercise price of $6.50 per share. As of December 4, 1997, options with respect
to 256,249 of such shares were vested under the terms of the relevant
16
<PAGE>
option agreement. The remainder of such options will vest automatically, per the
terms of the relevant option agreements, upon consummation of the Merger.
Pursuant to the Merger Agreement, Mr. Johnson and five other key
employees of the Corporation have entered into Employment and Non-Competition
Agreements with the Corporation, which will become effective only upon
consummation of the Merger and will provide for such employees to continue to be
employed by the Corporation for a period of six months following the Merger (the
"Employment Period"). In the case of Mr. Johnson, if the Merger is consummated,
this agreement will supercede the Original Agreement. None of the other five
key employees has an existing employment agreement with the Corporation. Under
the Employment and Non-Competition Agreements, Mr. Johnson and such other
employees will be entitled to receive payments for agreeing not to compete with
the Corporation during the Employment Period and for certain periods thereafter.
The Employment and Non-Competition Agreements provide for the following payments
to the following employees as consideration for agreeing not to compete with the
Corporation during the Employment Period and for the following periods
thereafter: (i) Mr. Johnson, $505,000 for three years; (ii) Anthony J. Palermo,
the Company's Executive Vice President of Sales, and C. Douglas McKeever, the
Company's Vice President-Finance, $150,000 each for 18 months; and (iii) Mark
Noyd and Ann Galloway, $50,000 each for 18 months. The Employment and Non-
Competition Agreement of Barry E. Selvidge, the Company's Vice President -
Regulatory Affairs, General Counsel and Secretary, provides for him to receive
$75,000 for agreeing not to compete with the Corporation during the Employment
Period. In addition, under Mr. Johnson's Employment and Non-Competition
Agreement, Mr. Johnson will also receive a severance payment analogous to the
severance payment of approximately $200,000 that he would have been entitled to
receive (but will forego) under the Original Agreement.
Indemnification. Under the Merger Agreement, Davel has agreed to cause the
Surviving Corporation to indemnify, for a period of at least six years after the
Effective Time, to the full extent permitted by Georgia law, the present and
former directors and officers of the Corporation and its subsidiaries in respect
of actions taken prior to and including the Effective Time in connection with
their duties as officers or directors of the Corporation (including transactions
related to the Merger).
EFFECTIVE TIME OF THE MERGER
As soon as practicable after satisfaction or, to the extent permitted,
waiver of all conditions to the Merger set forth in the Merger Agreement, the
parties to the Merger Agreement will cause a Certificate of Merger to be
executed, delivered and filed with the Georgia Secretary of State. The
Effective Time for the Merger will be such time as the Certificate of Merger is
duly filed with the Georgia Secretary of State and any additional requirements
of the GBCC are complied with, or such later time as is specified in the
Certificate of Merger. See "-- Terms of the Merger Conditions to the Merger."
PAYMENT FOR SHARES OF COMMON STOCK
As a result of the Merger, holders of certificates formerly representing
shares of Common Stock (the "Certificates") will cease to have any equity
interest in the Surviving Corporation. After consummation of the Merger, all
Certificates will be required to be surrendered to the Exchange Agent in order
to receive the Merger Consideration to which holders thereof will be entitled as
a result of the Merger. No interest will be paid or accrued on the cash payable
upon the surrender of Certificates.
Detailed instructions with regard to the surrender of Certificates,
together with a letter of transmittal, will be forwarded by the Exchange Agent
to holders of Certificates promptly following the Effective Time. HOLDERS OF
SHARES OF COMMON STOCK SHOULD NOT SUBMIT THEIR CERTIFICATES TO THE EXCHANGE
AGENT UNTIL THEY HAVE RECEIVED SUCH MATERIALS. Upon surrender of the
Certificates and other required documents to the Exchange Agent, the Exchange
Agent, promptly following its receipt of the Certificates, will distribute the
Merger Consideration (subject to applicable withholding taxes) for each share
represented by such Certificates to the holder thereof.
17
<PAGE>
If any portion of the Merger Consideration to be received upon exchange of
an outstanding Certificate or Certificates is to be paid to a person other than
the person in whose name the Certificate surrendered and exchanged therefor is
registered, it shall be a condition of such payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such exchange shall pay in advance any transfer
or other taxes required by reason of the issuance of a check representing cash
to such other person, or establish to the satisfaction of the Exchange Agent
that such tax has been paid or that no such tax is payable.
NO SOLICITATION; FIDUCIARY DUTIES
The Merger Agreement provides that the Corporation shall not, and shall not
authorize or permit any of its subsidiaries or any of its or its subsidiaries'
officers, directors, employees, agents or representatives to: (i) solicit,
initiate or encourage, directly or indirectly, including by way of furnishing or
disclosing non-public information, any inquiries or proposals relating to any
merger, consolidation or other business combination involving the Corporation or
the acquisition of all or substantially all of the assets or capital stock of
the Corporation (a "Competing Transaction"); (ii) negotiate, explore or
otherwise engage in substantive discussions with any other entity relating to
any Competing Transaction; or (iii) enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Merger; provided that if the Corporation's Board of Directors determines in good
-------------
faith, after consultation with its financial advisors and legal counsel, that
failure to take the following actions would constitute a breach of its fiduciary
duties, (A) the Corporation may, in response to a bona fide unsolicited written
proposal with respect to a Competing Transaction from a credible third party
that is not subject to any material financing uncertainties and is more
favorable to the Corporation's shareholders than the Merger, furnish or disclose
non-public information to, and negotiate, explore or otherwise discuss with, or
enter into an agreement with, such third party, and (B) upon receipt of an
unsolicited written proposal with respect to a Competing Transaction that
appears, on its face, to meet the requirements of clause (A) above, the
Corporation may explore such proposal for the purpose of determining if it
satisfies such requirements. See "Terms of the Merger -- Termination."
GOVERNMENT AND REGULATORY APPROVALS AND FILINGS
The Corporation must obtain such approvals and consents of state public
service commissions as are required under applicable laws.
TERMS OF THE MERGER
The terms of the Merger are set forth in the Merger Agreement that appears
as Annex I to this Proxy Statement, and the description of the Merger Agreement
contained herein is qualified in its entirety by reference to the Merger
Agreement. Shareholders are urged to review the Merger Agreement carefully.
GENERAL
The Merger Agreement sets forth the terms and conditions upon which the
Merger is to be effected. The Merger is contingent upon the approval of the
Merger Agreement by the holders of a majority of the outstanding shares of
Common Stock at the Special Meeting and the satisfaction or waiver of the other
conditions to the obligations of the parties.
At the Effective Time, Merger Subsidiary will merge with and into the
Corporation. The Corporation will be the Surviving Corporation in the Merger.
Pursuant to the Merger, each share of Common Stock issued and outstanding at the
Effective Time will be canceled and converted automatically into the right to
receive the Merger Consideration, other than shares owned by Davel and its
subsidiaries (which will be automatically canceled and extinguished) and shares
held by shareholders who properly exercise and perfect their dissenters' rights.
Each outstanding share of common stock of Merger Subsidiary will be
automatically converted into one share of common stock of the Surviving
Corporation. As a result of the Merger, shareholders of the Corporation (other
18
<PAGE>
than Davel and its affiliates) will cease to have an equity interest in, or
possess rights as shareholders of, the Surviving Corporation.
AMENDMENT, EXTENSION, WAIVER
Subject to the applicable provisions of the GBCC, at any time prior to the
Effective Time, the parties may amend or waive any provision of the Merger
Agreement if such amendment or waiver is in writing and signed, in the case of
an amendment, by all parties to the Merger Agreement, and, in the case of a
waiver, by the party against whom the waiver is to be effective. After
approval, however, of the Merger Agreement by the shareholders of the
Corporation at the Special Meeting, no such amendment or waiver may, without
further approval of such shareholders, change the amount or kind of the Merger
Consideration, change the articles of incorporation of the Surviving
Corporation, or change any terms of the Merger Agreement if such change would
adversely affect such shareholders. The Merger Agreement may not be amended
unilaterally by any party.
At any time prior to the Effective Time, the parties may (i) extend the
time for the performance of any of the obligations or acts of the other parties
under the Merger Agreement; (ii) waive any inaccuracies in the representations
and warranties of the other parties contained in the Merger Agreement or in any
document delivered pursuant to the Merger Agreement; or (iii) waive compliance
with any of the agreements or conditions of the other parties contained in the
Merger Agreement, other than approval of the Corporation's shareholders and any
required approvals relating to the HSR Act.
CONDITIONS TO THE MERGER
The respective obligations of each party to consummate the Merger are
subject to the satisfaction or, where permissible, waiver of the following
conditions: (i) approval of the Merger Agreement by the requisite vote of the
Corporation's shareholders; (ii) expiration or early termination of all
applicable waiting periods under the HSR Act; and (iii) the absence of any
applicable law or regulation or any injunction, order, judgment or decree that
would prohibit consummation of the Merger.
The obligations of Davel and Merger Subsidiary to consummate the Merger are
also subject to the satisfaction or waiver of the following conditions: (i)
cancellation at the Effective Time of all outstanding Stock Options in exchange
for the consideration described under "- General"; (ii) the absence of any
breach of certain specified representations and warranties of the Corporation
contained in the Merger Agreement, when made and immediately prior to the
Effective Time, and the Corporation's performance or compliance, in all material
respects, of or with each of its covenants and agreements in the Merger
Agreement; (iii) the execution and delivery to Davel of all Employment and Non-
Competition Agreements as described under "-- Interests of Certain Persons in
the Merger"; and (iv) the accuracy as of the date of the Merger Agreement and as
of the Effective Time of the representations and warranties of the Corporation
contained in the Merger Agreement, except where the failure of such
representations and warranties to be accurate would not, in the aggregate, have
a Material Adverse Effect (as defined in the Merger Agreement).
The obligations of the Corporation to consummate the Merger are also
subject to the satisfaction or waiver of the condition that the representations
and warranties of Davel and Merger Subsidiary contained in the Merger Agreement
be true and correct as of the date of the Merger Agreement and as of the
Effective Time, except where the failure of such representations and warranties
to be true and correct would not, in the aggregate, have a material adverse
effect on Davel and Merger Subsidiary.
CONDUCT OF BUSINESS PENDING THE MERGER
The Corporation has agreed, pending the Effective Time, to conduct and to
cause each of its subsidiaries to conduct, their respective operations in the
ordinary and usual course of business and consistent with past practice, and to
use its reasonable best efforts: (i) to preserve intact its business
organization and goodwill; (ii) to keep available the services of its officers
and employees; and (iii) to maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it. The
Corporation has agreed
19
<PAGE>
that, except as contemplated in the Merger Agreement or consented to in writing
by Davel and Merger Subsidiary, prior to the Effective Time, (i) it will not
amend its Articles of Incorporation or Bylaws; (ii) it will not split, combine
or reclassify the outstanding shares of Common Stock or declare, set aside or
pay any dividend payable in cash, stock or property with respect to such shares;
(iii) neither it nor any subsidiary will issue or agree to issue any additional
shares or rights to acquire shares of capital stock, other than shares issuable
upon exercise of outstanding Stock Options or Warrants; (iv) neither it nor any
subsidiary will enter into or agree to enter into any new or amended contract
with any unions representing employees of the Corporation or any subsidiary; (v)
except as described under "-- No Solicitation; Fiduciary Duties," it will not
authorize, recommend, propose or announce an intention to authorize, recommend
or propose, or enter into an agreement with respect to any merger, consolidation
or business combination (other than the Merger), any acquisition or disposition
of a material amount of assets or securities or any material change in its
capitalization, or enter, other than in the ordinary course of business
consistent with past practices, into a material contract or any release of any
material contract rights; (vi) neither the Corporation nor any subsidiary will
enter into or amend any employment, severance or change-in-control agreement, or
any benefit plan except as required by law or regulations, or make any
contribution to any such plan except as required pursuant to the terms thereof;
(vii) it will not incur or assume any long-term debt (including capital leases)
or, except in the ordinary course of business under existing lines of credit or
except to fund costs incurred in connection with the Merger, incur, assume or
permit to exist any short-term debt in an aggregate amount exceeding $1,400,000;
(viii) it will not assume or guarantee the obligations of any other person
except wholly-owned subsidiaries of the Corporation in the ordinary course of
business and consistent with past practices; (ix) it will not make any loans to
or investments in any person, other than a wholly-owned subsidiary; or (x) it
will neither amend the Rights Agreement nor redeem any of the related rights.
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time: (i) by mutual written consent of the Corporation, Davel and Merger
Subsidiary; (ii) by either the Corporation or Davel if (A) the Merger has not
been completed by February 27, 1998, or (B) any law or regulation prohibits the
Merger or any final and nonappealable judgment, injunction, order or decree
enjoins the Corporation or Davel from completing the Merger; (iii) by either
Davel or Merger Subsidiary if (A) the Corporation's Board of Directors
withdraws, modifies or changes its recommendation or approval with respect to
the Merger in a manner adverse to Davel, (B) the Corporation's Board of
Directors recommends any proposal relating to a Competing Transaction, (C) any
other person or group becomes the beneficial owner of more than 20% of the
outstanding shares of Common Stock, or (D) any decline in either the Dow Jones
Industrial Average or the Standard & Poor's Index of 400 Industrial Companies or
the New York Stock Exchange Composite Index exceeds 15% measured from November
21, 1997; or (iv) by the Corporation's Board of Directors to allow the
Corporation to enter into a Competing Transaction that the Board has determined
is more favorable to the Corporation and its shareholders than the Merger.
If the Merger Agreement is terminated by either Davel or Merger Subsidiary
pursuant to clause (iii)(A), (iii)(B) or (iii)(C) above, or by the Corporation
pursuant to clause (iv) above, then the Corporation will pay Davel a termination
fee of $3 million, plus out-of-pocket expenses not to exceed $500,000 incurred
by Davel in connection with the proposed Merger.
MARKET PRICES AND DIVIDEND INFORMATION
The Common Stock is listed and traded on the Nasdaq Stock Market. As of
November 24, 1997, the last date on which the Common Stock was traded prior to
the public announcement of the signing of the Merger Agreement, the high and low
sales prices of the Common Stock on the Nasdaq Stock Market were $8 per share
and $8 1/4 per share, respectively. On December 19, 1997, the latest
practicable trading day before the printing of this Proxy Statement, the high
and low sales prices of the Common Stock on the Nasdaq Stock Market were
$10 1/64 per share and $9 3/4 per share, respectively.
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<PAGE>
SELECTED FINANCIAL INFORMATION CONCERNING THE CORPORATION
The selected summary consolidated financial data presented below for each
of the last five fiscal years ended June 30, 1997, and the three months ended
September 30, 1997 and 1996, have been derived from the Corporation's historical
financial statements. This data should be read in conjunction with the
consolidated financial statements and notes thereto of the Corporation included
in the Annual Report on Form 10-K, as amended by Form 10-K/A filed October 28,
1997 and Form 10-K/A filed December 15, 1997, for the fiscal year ended June 30,
1997, and the Quarterly Report on Form 10-Q for the quarter ended September 30,
1997, which is incorporated by reference into this Proxy Statement. See
"Additional Information -- Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
IN THOUSANDS EXCEPT PER SHARE AMOUNTS
THREE MONTHS ENDED
SEPTEMBER 30, (UNAUDITED) FISCAL YEARS ENDED JUNE 30,
------------------------- ----------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
---------- --------- --------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Total Revenue $ 24,150 $ 26,792 $103,848 $105,340 $ 81,422 $46,124 $29,878
Operating Income (Loss) (1,138) 1,653 (5,593) (11,525) 7,828 5,519 2,486
Income (Loss) Before
Income Tax Expense and
Extraordinary Item (2,830) 3 (8,406) (17,868) 4,300 4,506 1,124
Net Income (Loss) (2,830) 3 (8,406) (17,946) 3,172 2,779 1,084
PER SHARE (DOLLARS)
Net Income (Loss) (0.45) (0.00) (1.38) (2.96) 0.52 0.28 (1.41)
BALANCE SHEET DATA
(at end of period)
Total Assets 100,234 110,430 104,333 109,728 122,967 63,643 30,157
Current Portion of Notes Payable
and Long-Term Debt 68,697 16,549 71,697 3,088 1,271 671 2,608
Notes Payable and Long-Term Debt,
Less Current Portion -- 56,697 -- 70,197 70,197 18,557 13,500
Total Shareholders' Equity
(Deficit) 16,730 27,918 19,550 26,537 44,275 40,037 (3,017)
CASH DIVIDENDS DECLARED AND PAID
PER SHARE OF COMMON STOCK -- -- -- -- -- -- --
</TABLE>
21
<PAGE>
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of Common Stock by
all persons who, to the knowledge of the Corporation, beneficially owned more
than five percent of the outstanding shares of Common Stock as of December 4,
1997, or, in certain instances as described in the footnotes below, as of a date
of the filing by such person of a Schedule 13G with the Commission. According
to rules adopted by the Commission, a person is the "beneficial owner" of
securities if he or she has or shares the power to vote them or to direct their
investment or has the right to acquire beneficial ownership of such securities
within 60 days through the exercise of an option, warrant or right, the
conversion of a security or otherwise. Unless otherwise indicated, all persons
have sole voting and investment power over all shares beneficially owned. An
asterisk in the percent of class column indicates beneficial ownership of less
than one percent of the outstanding Common Stock.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE PERCENT OF CLASS
Beneficial Owner OF BENEFICIAL OWNERSHIP BENEFICIALLY OWNED
-------------------------------------------------- ----------------------- -------------------
<S> <C> <C>
RIT Capital Partners Plc/1/......................... 981,880 15.6%
Entities affiliated with Goldman, Sachs & Co./2/.... 655,000 10.4
Heartland Advisors, Inc./3/......................... 573,400 9.1
Entities affiliated with Brinson Partners, Inc./4/.. 476,448 7.6
Entities affiliated with MVP Ventures Group/5/...... 432,661 6.9
-----------------------------
</TABLE>
/1/The business address of RIT Capital Partners Plc is 27 St. James's Place,
London, England SWIA INR.
/2/The business address of Goldman, Sachs & Co. and related entities is 85
Broad Street, New York, New York 10004. Entities whose shares are included with
Goldman, Sachs & Co.'s shares above include the parent holding company, The
Goldman Sachs Group, L.P. The numbers reported were derived from a Schedule 13G
executed by Goldman, Sachs & Co. on February 10, 1997, and filed with the
Commission on February 10, 1997.
/3/The business address of Heartland Advisors, Inc. is 790 North Milwaukee
Street, Milwaukee, Wisconsin 53202. The numbers reported were derived from a
Schedule 13G executed by Heartland Advisors, Inc. on February 12, 1997, and
filed with the Commission on February 14, 1997.
/4/The business address of Brinson Partners, Inc. and related entities is
209 South LaSalle, Chicago, Illinois 60604-1295. Entities whose shares are
included with Brinson Partners, Inc.'s shares above include: (i) Brinson Trust
Company; (ii) Brinson Holdings, Inc.; (iii) SEC Holding (USA), Inc.; and (iv)
Swiss Bank Corporation. The numbers reported were derived from a Schedule 13G
executed by Brinson Partners, Inc. on February 12, 1997, and filed with the
Commission on February 13, 1997.
/5/The business address of MVP Ventures Group ("MVP") and related entities
is 45 Milk Street, Boston, Massachusetts 02109. Entities whose shares are
included with MVP's shares above include: (i) Chestnut III Ltd. Partnership
(54,997 shares held of record); (ii) Chestnut Capital International III (73,177
shares held of record); (iii) Late Stage Fund 1990 Limited Partnership (218,856
shares held of record); (iv) Late Stage Fund 1991 Limited Partnership (84,787
shares held of record); and (v) MVP Investors Limited Partnership (844 shares
held of record).
The Corporation knows of no other person who is the beneficial owner of
more than five percent of the Common Stock.
SECURITY OWNERSHIP OF CERTAIN MANAGEMENT OF THE CORPORATION
The following table sets forth information, as of December 4, 1997,
concerning Common Stock owned by (i) each director; (ii) the Chief Executive
Officer and the other executive officers of the Corporation who earned more than
22
<PAGE>
$100,000 during fiscal 1997 and were serving as executive officers at the end of
fiscal 1997; and (iii) all directors and officers of the Corporation as a group.
According to rules adopted by the Commission, a person is the "beneficial owner"
of securities if he or she has or shares the power to vote them or to direct
their investment or has the right to acquire beneficial ownership of such
securities within 60 days through the exercise of an option, warrant or right,
the conversion of a security or otherwise. Accordingly, the beneficial ownership
information set forth below includes shares that are subject to unvested Stock
Options that, under the Merger Agreement, will accelerate and become fully
vested immediately prior to consummation of the Merger. Unless otherwise
indicated, all persons have sole voting and investment power over all shares
beneficially owned. An asterisk in the percent of class column indicates
beneficial ownership of less than one percent of the outstanding Common Stock.
<TABLE>
<CAPTION>
PERCENT OF CLASS
NAME OF AMOUNT AND NATURE BENEFICIALLY
Beneficial Owner OF BENEFICIAL OWNERSHIP OWNED
------------------------------- ----------------------- -----------------
<S> <C> <C>
Robert C. Fisher, Jr./1/....... 9,748 *
Richard W. Oliver/2/........... 24,862 *
Peter A. Schober/3/............ 10,900 *
Ronald C. Warrington/4/........ 24,398 *
Rodger L. Johnson/5/........... 500,000 7.4%
C. Douglas McKeever/6/......... 60,000 1.0
Anthony J. Palermo/7/.......... 93,000 1.5
Robert E. Bowling/8/........... 30,838 *
All current directors and
executive officers as a group
(9 persons)/9/................ 781,246 11.1%
-----------------------------
</TABLE>
/1/All of the shares listed for Mr. Fisher represent shares subject to
currently exercisable options having a weighted average exercise price of $5.92
per share. Upon consummation of the Merger, under the terms of the Merger
Agreement, Mr. Fisher will be paid in cash the difference between the Merger
Consideration of $10.50 and such weighted average exercise price, times 9,748
shares.
/2/Shares beneficially owned by Mr. Oliver include 2,000 shares owned by him
directly and 22,862 shares subject to currently exercisable options. Of the
shares subject to currently exercisable options, 15,000 shares are subject to
options having an exercise price in excess of $10.50 per share, such that none
of such options will be exchanged for cash upon consummation of the Merger. The
remaining 7,862 shares are subject to currently exercisable options having a
weighted average exercise price of $6.07 per share. Upon consummation of the
Merger, under the terms of the Merger Agreement, Mr. Oliver will be paid in cash
the difference between the Merger Consideration of $10.50 and such weighted
average exercise price, times 7,862 shares.
/3/Shares beneficially owned by Mr. Schober include 400 shares held of
record by William Schober, Mr. Schober's son, and 844 shares beneficially owned
by MVP. While Mr. Schober may be deemed to be an "affiliate" of MVP, he
disclaims beneficial ownership of such shares. Shares beneficially owned by Mr.
Schober also include 9,656 shares subject to currently exercisable options
having a weighted average exercise price of $5.85 per share. Upon consummation
of the Merger, under the terms of the Merger Agreement, Mr. Schober will be paid
in cash the difference between the Merger Consideration of $10.50 and such
weighted average exercise price, times 9,656 shares.
/4/All of the shares listed for Mr. Warrington represent shares subject to
currently exercisable options. Of the shares subject to currently exercisable
options, 15,000 shares are subject to options having an exercise price in excess
of $10.50 per share, such that none of such options will be exchanged for cash
upon consummation of the Merger. The remaining 9,398 shares are subject to
currently exercisable options having a weighted average exercise price of $5.66
per share. Upon consummation of the Merger, under the terms of the Merger
Agreement, Mr. Warrington will be paid in cash the difference between the Merger
Consideration of $10.50 and such weighted average exercise price, times 9,398
shares.
23
<PAGE>
/5/Such amount is comprised of 256,249 shares subject to currently
exercisable options and 243,751 shares subject to options not vested as of
December 4, 1997. Under the terms of the relevant option agreement, unvested
options will accelerate and be vested in full as of the date the Merger is
consummated. Accordingly, under the terms of the Merger Agreement, upon
consummation of the Merger, Mr. Johnson will be paid in cash the difference
between the Merger Consideration of $10.50 and the $6.50 per share exercise
price of his options, times 500,000 shares.
/6/Such amount is comprised of 29,250 shares subject to currently
exercisable options and 30,750 shares subject to options not vested as of
December 4, 1997. Under the terms of the relevant option agreement, unvested
options will accelerate and be vested in full as of the date the Merger is
consummated. Accordingly, under the terms of the Merger Agreement, upon
consummation of the Merger, Mr. McKeever will be paid in cash the difference
between the Merger Consideration of $10.50 and the $5.25 per share exercise
price of his options, times 60,000 shares.
/7/Such amount is comprised of 3,000 shares owned directly by Mr. Palermo,
43,875 shares subject to currently exercisable options and 46,125 shares subject
to options not vested as of December 4, 1997. Under the terms of the relevant
option agreement, unvested options will accelerate and be vested in full as of
the date the Merger is consummated. Accordingly, under the terms of the Merger
Agreement, upon consummation of the Merger, Mr. Palermo will be paid in cash the
difference between the Merger Consideration of $10.50 and the $4.50 per share
exercise price of his options, times 90,000 shares.
/8/Such amount is comprised of 4,338 shares owned directly by Mr. Bowling
and 26,500 shares subject to currently exercisable options having a weighted
average exercise price of $5.75 per share. Upon consummation of the Merger,
under the terms of the Merger Agreement, Mr. Bowling will be paid in cash the
difference between the Merger Consideration of $10.50 and such weighted average
exercise price, times 26,500 shares. Mr. Bowling's employment with the
Corporation terminated effective November 1, 1997.
/9/Such amount includes 768,164 shares subject to options that, pursuant to
the accelerated vesting provisions thereof, will either expire or be exchanged
for cash upon consummation of the Merger.
ADDITIONAL INFORMATION
INDEPENDENT ACCOUNTANTS
Upon appointment by the Corporation's Board of Directors, Ernst & Young,
independent public accountants, audited and reported on the consolidated
financial statements of the Corporation and its subsidiaries for the fiscal year
ended June 30, 1997. Such financial statements have been incorporated by
reference in this Proxy Statement. Representatives of Ernst & Young are
expected to be present at the Special Meeting with the opportunity to make a
statement if they desire to do so and to respond to appropriate questions.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Corporation with the Securities and
Exchange Commission, are incorporated herein by reference:
(i) the Corporation's Annual Report on Form 10-K filed October 6, 1997, as
amended by Form 10-K/A filed October 28, 1997 and Form 10-K/A filed December 15,
1997, for the fiscal year ended June 30, 1997;
(ii) the Corporation's Quarterly Report on Form 10-Q filed November 14,
1997, for the quarterly period ended September 30, 1997; and
(iii) the Corporation's Current Reports on Form 8-K filed October 10, 1997
(as amended by Form 8-K/A filed December 8, 1997), October 21, 1997, and
December 2, 1997, respectively.
24
<PAGE>
All reports and definitive proxy or information statements filed by the
Corporation pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Proxy Statement and prior to the date of the
Special Meeting shall be deemed to be incorporated by reference into this Proxy
Statement from the dates of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated in this Proxy Statement
shall be deemed to be modified or superseded for purposes of this Proxy
Statement to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference modifies or supersedes such statement.
A copy of the documents incorporated herein by reference (excluding
exhibits unless such exhibits are specifically incorporated by reference into
the information incorporated herein) that are not presented herein or delivered
herewith will be provided without charge to each person, including any
beneficial owner, to whom a Proxy Statement is delivered, upon oral or written
request of any such person and by first-class mail or other equally prompt
means. Requests should be directed to the Corporate Secretary at the address
set forth below in "Other Matters."
ANNUAL MEETING
If the Merger is consummated, no public annual meetings of shareholders of
the Corporation will be held in the future. If the Merger is not consummated,
the 1997 annual meeting of shareholders of the Corporation will be held as soon
as practicable in the first calendar quarter of 1998.
OTHER MATTERS
The Board of Directors of the Corporation, as of December 29, 1997 is not
aware of any matters to be presented for action at the Special Meeting other
than the approval of the Merger Agreement and does not intend to bring any other
matters before the Special Meeting. If any other matters properly come before
the meeting, however, or any adjournment thereof, the person or persons voting
the proxies will vote in accordance with their judgment.
A copy of the Corporation's 1997 Annual Report on Form 10-K as required to
be filed with the Commission will be provided on written request without charge
to any shareholder whose proxy is being solicited by the Board of Directors.
The written request should be directed to the Secretary of the Corporation, 1150
Northmeadow Parkway, Suite 118, Roswell, Georgia 30076.
By Order of the Board of Directors,
Barry E. Selvidge
Secretary
25
<PAGE>
ANNEX I
AGREEMENT AND PLAN OF MERGER
DATED AS OF
NOVEMBER 24, 1997
BY AND AMONG
DAVEL COMMUNICATIONS GROUP, INC.,
PANTHER ACQUISITION CORP.
AND
COMMUNICATIONS CENTRAL INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
[RESERVED]
ARTICLE II
THE MERGER
SECTION 2.01 The Merger.................................. 1
SECTION 2.02 Conversion of Shares........................ 2
SECTION 2.03 Exchange of Shares.......................... 2
SECTION 2.04 Dissenting Shares........................... 4
SECTION 2.05 Stock Options and Warrants.................. 4
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.01 Certificate of Incorporation................ 5
SECTION 3.02 Bylaws...................................... 5
SECTION 3.03 Directors and Officers...................... 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Corporate Organization...................... 5
SECTION 4.02 Authorization............................... 6
SECTION 4.03 Capital Stock............................... 6
SECTION 4.04 Subsidiaries................................ 7
SECTION 4.05 Consents and Approvals; No Violation........ 7
SECTION 4.06 SEC Reports and Financial Statements........ 8
SECTION 4.07 Absence of Undisclosed Liabilities.......... 8
SECTION 4.08 Changes..................................... 8
SECTION 4.09 Investigations; Litigation.................. 9
SECTION 4.10 Environmental and Safety Matters............ 10
SECTION 4.11 Taxes....................................... 12
SECTION 4.12 Employment Agreements....................... 13
SECTION 4.13 Change of Control Provisions................ 13
SECTION 4.14 Employee Benefit Plans...................... 13
SECTION 4.15 Licenses.................................... 14
SECTION 4.16 Trademarks, Trade Names, Patents, etc....... 15
SECTION 4.17 Compliance with Other Instruments and Laws.. 15
SECTION 4.18 Employees................................... 15
SECTION 4.19 Disclosure.................................. 15
SECTION 4.20 Rights Agreement............................ 16
SECTION 4.21 Certain Fees................................ 16
SECTION 4.22 Opinion of Financial Advisor................ 16
-i-
<PAGE>
SECTION 4.23 Phones...................................... 16
SECTION 4.24 Average Net Revenue......................... 16
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 5.01 Corporate Organization...................... 17
SECTION 5.02 Authorization............................... 17
SECTION 5.03 Proxy Statement; Other Information.......... 17
SECTION 5.04 Consents and Approvals; No Violations....... 17
SECTION 5.05 Financing................................... 18
SECTION 5.06 Certain Fees................................ 18
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.01 Conduct of Business by the Company Pending
the Merger.................................. 18
SECTION 6.02 Shareholders' Meeting; Proxy Material....... 20
SECTION 6.03 Access to Information....................... 20
SECTION 6.04 No Solicitation............................. 21
SECTION 6.05 Representations; Schedules.................. 21
SECTION 6.06 Corporate Organization...................... 22
ARTICLE VII
COVENANTS OF BUYER
SECTION 7.01 Confidentiality............................. 22
SECTION 7.02 Obligations of Newco........................ 22
SECTION 7.03 Indemnification............................. 22
ARTICLE VIII
COVENANTS OF BUYER AND THE COMPANY
SECTION 8.01 Best Efforts................................ 23
SECTION 8.02 Certain Filings............................. 23
SECTION 8.03 Public Announcements........................ 23
SECTION 8.04 Further Assurances.......................... 24
SECTION 8.05 Notices of Certain Events................... 24
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 Conditions to the Obligations of Each Party. 24
ARTICLE X
TERMINATION
SECTION 10.01 Termination................................. 26
SECTION 10.02 Waiver...................................... 27
-ii-
<PAGE>
SECTION 10.03 Closing..................................... 27
SECTION 10.04 Effect of Termination; Termination Fee...... 27
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Notices..................................... 28
SECTION 11.02 Survival of Representations and Warranties.. 29
SECTION 11.03 Amendments; No Waivers...................... 29
SECTION 11.04 Expenses.................................... 29
SECTION 11.05 Successors and Assigns...................... 30
SECTION 11.06 Governing Law............................... 30
SECTION 11.07 Counterparts; Effectiveness................. 30
SECTION 11.08 Headings.................................... 30
SECTION 11.09 No Third Party Beneficiaries................ 30
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT dated as of November 24, 1997 by and among Davel
Communications Group, Inc., an Illinois corporation ("Buyer"), Panther
Acquisition Corp., a Georgia corporation and a wholly-owned subsidiary of Buyer
("Newco"), and Communications Central Inc., a Georgia corporation (the
"Company").
RECITALS
--------
The Boards of Directors of Buyer, Newco and the Company deem it
advisable and in the best interests of the shareholders of such corporations to
effect the merger of Newco and the Company pursuant to this Agreement.
The respective Boards of Directors of Buyer, Newco and the Company
have approved the acquisition of the Company by Buyer, and the Board of
Directors of the Company has unanimously resolved to recommend that it be
approved by the shareholders of the Company.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I
[RESERVED]
ARTICLE II
THE MERGER
SECTION 2.01 The Merger.
----------
(a) At the Effective Time (as defined in Section 2.01(b)), Newco shall
be merged (the "Merger") with and into the Company in accordance with the
Georgia Business Corporation Code (the "Georgia Law"), whereupon the
separate existence of Newco shall cease, and the Company shall be the
surviving corporation (the "Surviving Corporation"). The Merger is
sometimes hereinafter referred to as the "Transaction."
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company
and Newco will file a certificate of merger with the Secretary of State of
the State of Georgia (the "Georgia Certificate of Merger") and make all
other filings or recordings required by the Georgia Law in connection with
the Merger. The Merger shall become effective at such time as the Georgia
Certificate
<PAGE>
of Merger is duly filed with the Secretary of State of the State of Georgia
and any additional requirements of the Georgia Law are complied with or at
such later time as is specified in the Georgia Certificate of Merger (the
"Effective Time").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the assets, rights, privileges, powers and franchises and be
subject to all of the liabilities, restrictions, disabilities and duties of
the Company and Newco, all as provided under the Georgia Law.
SECTION 2.02 Conversion of Shares.
--------------------
(a) At the Effective Time and by virtue of the Merger and without any
action on the part of the holders thereof:
(i) each share of capital stock of the Company held by the
Company as treasury stock or owned by Buyer, Newco or any subsidiary
of either of them immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto;
(ii) each share of capital stock of Newco outstanding immediately
prior to the Effective Time shall be converted into and become one
share of capital stock of the Surviving Corporation with the same
rights and privileges as the shares so converted and shall constitute
the only outstanding shares of capital stock of the Surviving
Corporation; and
(iii) each share of common stock of the Company, $.01 par value
per share, and the associated share purchase right of the Company (a
"Share") outstanding immediately prior to the Effective Time shall,
except as otherwise provided in clause (i) or clause (ii) of this
subsection or as provided in Section 2.04 with respect to Shares as to
which appraisal rights have been exercised, be converted into the
right to receive $10.50 in cash without interest;
(b) The consideration into which each Share is to be converted
pursuant to clause (iii) of subsection (a) above is referred to herein as
the "Merger Consideration."
SECTION 2.03 Exchange of Shares.
------------------
(a) Prior to the Effective Time, Buyer shall appoint an agent (the
"Exchange Agent") for the purpose of exchanging certificates representing
Shares for the Merger Consideration. Buyer will make available to the
Exchange Agent, as needed, the Merger Consideration to be paid in respect
of the Shares. For purposes of determining the Merger Consideration to be
made available, Buyer shall assume that no shareholder of the Company will
perfect his right to appraisal of his Shares. Promptly after the Effective
Time, Buyer will
-2-
<PAGE>
send, or will cause the Exchange Agent to send, to each holder of Shares at
the Effective Time a letter of transmittal for use in such exchange.
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Shares, together with a
properly completed letter of transmittal covering such Shares, will be
entitled to receive the Merger Consideration payable in respect of such
Shares. Until so surrendered, each such certificate shall, after the
Effective Time, represent for all purposes only the right to receive such
Merger Consideration.
(c) If any portion of the Merger Consideration payable in respect of
any Share is to be paid to a person other than the registered holder of the
Shares represented by the certificate or certificates surrendered, it shall
be a condition to such payment that the certificate or certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result of such
payment to a person other than the registered holder of such Shares or
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(d) After the Effective Time, there shall be no further registration
of transfers of shares of capital stock of the Company which were
outstanding immediately prior to the Effective Time.
(e) Until the Merger Consideration is paid in respect of the Shares,
the Exchange Agent may invest portions thereof as Buyer directs, provided
that all such investments shall be in obligations of or guaranteed by the
United States of America, in commercial paper obligations receiving the
highest rating from either Moody's Investors Service, Inc. or Standard &
Poor's Corporation, or in certificates of deposit, bank repurchase
agreements or bankers' acceptances of commercial banks with capital
exceeding $250,000,000 (collectively, "Permitted Investments") or in money
market funds which are invested solely in Permitted Investments. Any net
profit resulting from, or interest or income produced by, such investments
shall be payable to the Surviving Corporation or Buyer. Any portion of the
Merger Consideration made available to the Exchange Agent pursuant to
subsection (a) of this Section that remains unclaimed by the holders of
Shares entitled thereto six months after the Effective Time shall be
returned to Buyer, upon demand. Buyer shall not be liable to any
shareholder of the Company for any amount paid to a public official
pursuant to applicable abandoned property laws. Any amounts remaining
unclaimed by holders of Shares who would otherwise be entitled thereto six
months after the Effective Time (or such earlier date immediately prior to
such time as such amounts would otherwise escheat to or become property of
any governmental entity) shall, to the extent permitted by applicable law,
become the property of Buyer free and clear of any claims or interest of
any person previously entitled thereto.
-3-
<PAGE>
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to paragraph (a) of this Section 2.03 to pay for
Shares for which appraisal rights shall have been perfected shall be
returned to Buyer, upon demand.
SECTION 2.04 Dissenting Shares. Notwithstanding Section 2.02,
-----------------
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has demanded appraisal for such Shares in accordance with the Georgia Law shall
not be converted into a right to receive the Merger Consideration, unless such
holder fails to perfect or withdraws or otherwise loses his right to appraisal.
If after the Effective Time such holder fails to perfect or waives, rescinds,
withdraws or otherwise loses his right to appraisal, such Shares shall be
treated as if they had been converted as of the Effective Time into a right to
receive the Merger Consideration payable in respect of such Shares pursuant to
Section 2.02. The Company shall give Buyer prompt notice of any demands
received by the Company for appraisal of Shares, and Buyer shall have the right
to participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Buyer, make any
payment with respect to, or settle or offer to settle, any such demands.
SECTION 2.05 Stock Options and Warrants.
--------------------------
(a) At or immediately prior to the Effective Time, the Company shall
use its best efforts to cause (i) all outstanding employee stock options to
purchase Shares granted under any employee stock option or compensation
plan or arrangement of the Company and (ii) all outstanding warrants to
purchase Shares of the Company, 200,000 of which have been issued to First
Union National Bank and 34,500 of which have been issued to former
employees of Perot Systems Corporation (the "Warrants"), to be canceled,
and each holder of any such exercisable option or Warrant shall be paid by
the Company immediately prior to the Effective Time for each such option or
Warrant an amount (funded by Buyer) determined by multiplying (i) the
excess, if any, of the Merger Consideration over the applicable exercise
price then in effect of such option or Warrant by (ii) the number of Shares
such holder could have purchased had such holder exercised such option or
Warrant in full immediately prior to the Effective Time (whether or not
such option or Warrant is actually vested or exercisable at such time)
without giving effect to any antidilutive changes in the number of such
Shares arising from the Merger.
(b) Prior to the Effective Time, the Company shall use its best
efforts to obtain any consents from holders of options to purchase Shares
granted under the Company's stock option or compensation plans or
arrangements and from holders of Warrants that are necessary to give
effect to the transactions contemplated by paragraph (a) of this Section.
Except as otherwise agreed to by Buyer 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 provision 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
-4-
<PAGE>
thereof, shall be canceled 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 Buyer, 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 Buyer, the Company, the Surviving Corporation or any Subsidiary
thereof.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.01 Certificate of Incorporation. The certificate of
----------------------------
incorporation of Newco in effect at the Effective Time shall be the certificate
of incorporation of the Surviving Corporation until amended in accordance with
applicable law, except that the name of the Surviving Corporation shall be
"Communications Central Inc."
SECTION 3.02 Bylaws. The bylaws of Newco in effect at the Effective
------
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.03 Directors and Officers. From and after the Effective
----------------------
Time, until successors are duly elected or appointed in accordance with
applicable law, (a) the directors of Newco at the Effective Time shall
constitute the directors of the Surviving Corporation, and (b) the officers of
the Company at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer and Newco that:
SECTION 4.01 Corporate Organization. The Company is a corporation
----------------------
duly organized, validly existing and in good standing under the laws of the
State of Georgia, and has all requisite corporate power and authority to own,
operate and lease its properties and assets and to carry on its business as it
is now being conducted. Except as set forth on Schedule 4.01 hereto, the
Company is duly qualified to do business and is in good standing in each
jurisdiction in which the character of its properties owned or held under lease
or the nature of its activities makes such qualification necessary except where
the failure to be so qualified or to be in good standing will not, individually
or in the aggregate, have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company and
the Subsidiaries (as hereinafter defined) taken as a whole (a "Material Adverse
Effect").
-5-
<PAGE>
SECTION 4.02 Authorization. The Company has the necessary corporate
-------------
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Company's Board of Directors, have been
approved by the Board of Directors prior to either Buyer or Newco becoming an
"interested shareholder" as defined in Section 14-2-1112 of the Georgia Law and
have been approved as otherwise required by the Company's articles of
incorporation, as amended. Except for the approval, if required, of this
Agreement and the Merger by the Company's shareholders, no other corporate
proceeding on the part of the Company is necessary for the execution and
delivery of this Agreement by the Company, the performance of the Company's
obligations hereunder or the consummation by the Company of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and is a legal, 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.
Without limiting the generality of the foregoing, the Company's Board
of Directors, at a meeting duly called and held, (i) unanimously determined that
this Agreement and the transactions contemplated hereby, including, without
limitation, the Merger, are fair to and in the best interests of the Company's
shareholders, (ii) unanimously approved this Agreement and the transactions
contemplated hereby, including, without limitation, the Merger, and resolved to
recommend the adoption and approval of this Agreement and the Merger by the
Company's shareholders and (iii) has taken any and all additional actions as may
be necessary to cause the provisions of Section 14-2-1111 of the Georgia Law and
the restrictions contained in Section 14-2-1132 of the Georgia Law and Article
VII of the Company's articles of incorporation to be inapplicable to the Merger.
The actions taken by the Company and its Board of Directors in connection with
the Merger are sufficient to render the relevant provisions of such Section 14-
2-1111 and the restrictions contained in Section 14-2-1132 of the Georgia Law
and Article VII of the Company's articles of incorporation inapplicable to the
Merger.
SECTION 4.03 Capital Stock. The authorized capital stock of the
-------------
Company consists of: (a) 50,000,000 Shares, of which, as of November 24, 1997,
there were 6,285,987 Shares issued and outstanding (and no Shares held in the
Company's treasury) and (b) 2,000,000 shares of preferred stock, $.01 par value,
of which no shares are issued or outstanding. All of the outstanding Shares and
all of the outstanding shares of capital stock of the Company's Subsidiaries (as
defined in Section 4.04 hereof) have been validly issued and are fully paid,
nonassessable and free of preemptive rights with no personal liability attaching
to the ownership thereof. Except for options to acquire not more than 900,000
Shares pursuant to the Stock Option Plans and the Warrants exercisable for not
more than 234,500 Shares, there are no outstanding subscriptions, options,
warrants, rights, contracts or other arrangements or commitments obligating the
Company to issue any shares of its capital stock or any securities convertible
into or exchangeable for shares of its capital stock.
-6-
<PAGE>
SECTION 4.04 Subsidiaries. Schedule 4.04 hereto lists all direct and
------------
indirect subsidiaries of the Company (each, a "Subsidiary" and collectively, the
"Subsidiaries"). Except as listed in Schedule 4.04 hereto, the Company does not
directly or indirectly own any interest in any other corporation, partnership,
joint venture or other business association or entity. Each Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own, operate and lease its properties and assets and to carry
on its business as it is now being conducted. Except as set forth on Schedule
4.04 hereto, each Subsidiary is duly qualified to do business and is in good
standing in each jurisdiction in which the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or to be in good standing
will not, individually or in the aggregate, have a Material Adverse Effect.
Except as set forth on Schedule 4.04 hereto, all outstanding shares of capital
stock of each Subsidiary are validly issued, fully paid and nonassessable and
are owned by the Company or another Subsidiary free and clear of any liens,
claims or encumbrances.
SECTION 4.05 Consents and Approvals; No Violation. Except as set
------------------------------------
forth on Schedule 4.05 hereto and except for (a) applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), (b) expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (c) the filing and recordation of the Georgia Certificate of Merger as
required by Georgia Law, (d) such filings and consents as may be required under
any environmental law pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by this
Agreement, (e) filing with, and approval of, the Nasdaq Stock Market and the SEC
with respect to the delisting and deregistration of the Shares, and (f) such
consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings as may be required under the corporation, takeover or
blue sky laws of various states, no filing with or prior notice to, and no
permit, authorization, consent or approval of, any federal, state, local,
foreign or other governmental department, commission, board, bureau, agency or
instrumentality is necessary for the consummation by the Company of the
transactions contemplated by this Agreement. Neither the execution and delivery
of this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby nor compliance by the Company with any of the
provisions hereof will (i) conflict with or result in any violation of any
provision of the articles of incorporation, as amended, or bylaws of the Company
or any Subsidiary, (ii) except as set forth on Schedule 4.05, 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, license, agreement or other instrument or obligation
to which the Company or any Subsidiary is a party or by which any of them or any
of their properties or assets may be bound, or, (iii) violate any federal,
state, local or foreign order, writ, injunction, decree, statute, rule or
regulation applicable to the Company, any Subsidiary or any of their properties
or assets, excluding from the foregoing clauses (ii) and (iii) violations,
breaches or defaults which, either individually or in the aggregate, would not
have a Material Adverse Effect.
-7-
<PAGE>
SECTION 4.06 SEC Reports and Financial Statements.
------------------------------------
(a) Since June 30, 1995, the Company has filed all required forms,
reports and documents with the United States Securities and Exchange
Commission (the "SEC") required to be filed by it pursuant to the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(the "Securities Act") and the Exchange Act (hereinafter collectively
referred to as the "Company Reports"), all of which have complied in all
material respects with all applicable requirements of the Securities Act
and the Exchange Act. The Company has previously furnished to Buyer copies
of all such Company Reports.
(b) None of such forms, reports or documents, including, without
limitation, any financial statements or schedules included therein, at the
time filed, contained any untrue statement of a material fact or omitted 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.
(c) The consolidated balance sheets and the related consolidated
statements of operations, shareholders' equity and changes in financial
position (including, without limitation, the related notes thereto) of the
Company and the Subsidiaries included in the financial statements contained
in the Company's Annual Report on Form 10-K for the year ended June 30,
1997 (the "Company 10-K") and in the Company's Quarterly Report on Form 10-
Q for the quarter ended September 30, 1997 (the "Company 10-Q"), present
fairly the consolidated financial position of the Company and the
Subsidiaries as of their respective dates, and the results of consolidated
operations and changes in consolidated financial position for the periods
then ended, all in conformity with generally accepted accounting principles
applied on a consistent basis, except as otherwise noted therein, and
subject in the case of unaudited interim financial statements to normal
year-end audit adjustments.
SECTION 4.07 Absence of Undisclosed Liabilities. Neither the Company
----------------------------------
nor any Subsidiary has any liabilities (whether absolute, accrued or
contingent), except: (a) liabilities, obligations or contingencies that are
accrued and reserved against in the consolidated balance sheet of the Company
and the Subsidiaries as of June 30, 1997 or reflected in the notes thereto, (b)
liabilities incurred since June 30, 1997 in the ordinary course of business, (c)
liabilities disclosed in Schedule 4.07 hereto or (d) liabilities which,
individually or in the aggregate, would not have a Material Adverse Effect.
SECTION 4.08 Changes. Since the date of the Company 10-K, and except
-------
as set forth in the Company 10-K, the Company 10-Q and the Company's Current
Reports on Form 8-K dated August 13, 1997, August 29, 1997, September 22, 1997,
October 10, 1997 and October 21, 1997 and except as otherwise disclosed in
Schedule 4.08 hereto:
(a) there has been no material adverse change in the business, assets,
condition (financial or otherwise) or results of operations of the Company
and its Subsidiaries, taken as a whole;
-8-
<PAGE>
(b) except as permitted by this Agreement, there has been no direct or
indirect redemption, purchase or other acquisition of any shares of the
Company's capital stock, or any declaration, setting aside or payment of
any dividend or other distribution by the Company in respect of the
Company's capital stock, or any issuance of any shares of capital stock of
the Company, or any granting to any person of any option to purchase or
other right to acquire shares of capital stock of the Company or any stock
split or other change in the Company's capitalization;
(c) neither the Company nor any Subsidiary has entered into or agreed
to enter into any new or amended contract with any unions representing
employees of the Company or any subsidiary;
(d) neither the Company nor any Subsidiary has entered into or agreed
to enter into any new or amended contract with any of the officers thereof
or otherwise increased the compensation payable to the officers or
directors of any such entity; and
(e) neither the Company nor any Subsidiary has (i) entered into or
amended any bonus, incentive compensation, deferred compensation, profit
sharing, retirement, pension, group insurance or other benefit plan except
as required by law or regulations or (ii) made any contribution to any such
plan except for contributions specifically required pursuant to the terms
thereof.
SECTION 4.09 Investigations; Litigation.
--------------------------
(a) Except as described in Schedule 4.09(a), and other than reviews
pursuant to the HSR Act, there are, to the knowledge of the Company, no
pending investigations, reviews or inquiries by any federal, state,
municipal, foreign or other governmental department, commission, board,
bureau, agency or instrumentality with respect to the Company or any
Subsidiary or with respect to the activities of any officer, director or
employee of the Company (an "Investigation"), nor to the knowledge of the
Company is an Investigation threatened, nor has any such governmental
entity indicated to the Company or any executive officer of the Company an
intention to conduct an Investigation, other than Investigations which, if
the resolution thereof were adverse, would not, individually or in the
aggregate, have a Material Adverse Effect. For the purpose of this
Agreement, "knowledge of the Company" shall be deemed to mean the actual
knowledge, after due inquiry, of any executive officer of the Company.
(b) Except as described in Schedule 4.09(b) hereto, (i) there are no
actions or proceedings pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary before any court or before
any administrative agency or administrative officer or executive, whether
federal, state, local or foreign, which seek to enjoin the Merger or which
if adversely determined would, individually or in the aggregate, have a
Material Adverse Effect, (ii) there are no outstanding domestic or foreign
judgments, decrees or orders against the Company or any Subsidiary
enjoining any of them in respect of, or the effect of
-9-
<PAGE>
which is to prohibit, any business practice or the acquisition of any
property or the conduct of business in any area that, individually or in
the aggregate, have a Material Adverse Effect, (iii) neither the Company
nor any Subsidiary is in violation of, and none of them has received any
claim or notice that it is in violation of, any federal, state, local or
foreign laws, statutes, rules, regulations or orders promulgated or
judgments entered by any federal, state, local or foreign court or
governmental authority or instrumentality, which violations, individually
or in the aggregate, have a Material Adverse Effect; (iv) there are no
actions pending, or to the knowledge of the Company, threatened against the
directors or any director of the Company alleging a breach of such
directors' or director's fiduciary duties, except for such actions or
threatened actions as outside legal counsel of the Company, acting in good
faith, advises the Company are not likely to prevail in any material
respect; and (v) to the knowledge of the Company, there are no claims,
actions or proceedings pending or threatened against the Company arising
out of the transactions consummated pursuant to the Agreement dated August
21, 1997 among the Company, Invision Telecom, Inc. and Talton Holdings,
Inc.
SECTION 4.10 Environmental and Safety Matters.
--------------------------------
(a) The Company and its Subsidiaries have complied in all material
respects and are in compliance in all material respects with all applicable
Environmental and Safety Requirements. "Environmental and Safety
Requirements" means all federal, state, local and foreign statutes,
regulations, ordinances and other provisions having the force or effect of
law, all judicial and administrative orders and determinations and all
common law in each case concerning public health and safety, worker health
and safety, and pollution or protection of the environment (including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, Release, threatened
Release, control, or cleanup of any hazardous materials, substances or
wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation). "Release" has the meaning
set forth in CERCLA (as defined below).
(b) Without limiting the generality of the foregoing, the Company and
its Subsidiaries have obtained and complied with, and are in compliance
with, all permits, licenses and other authorizations that are required
pursuant to Environmental and Safety Requirements for the occupation of
their facilities and the operation of their business, except where the
failure to obtain or comply with such permits, licenses and other
authorizations will not have a Material Adverse Effect.
(c) The Company and its Subsidiaries have not received any written or
oral notice, report or other information regarding any material liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) or
material investigatory, removal, remedial or corrective obligations,
relating to the Company or its Subsidiaries, or any of their respective
current or former properties and facilities, and arising under
Environmental and Safety Requirements.
-10-
<PAGE>
(d) Except as set forth on Schedule 4.10(d) hereto, none of the
following exists at any property or facility currently owned or operated by
the Company or its Subsidiaries:
1) Underground storage tanks;
2) Asbestos-containing material in any form or condition;
3) Materials or equipment containing polychlorinated biphenyls; or
4) Landfills, surface impoundments, waste piles or other waste
management, treatment, storage or disposal areas.
(e) The Company and its Subsidiaries have not treated, stored,
disposed of, arranged for or permitted the disposal of, transported,
handled, or Released any substance, including without limitation any
hazardous substance, or owned or operated any facility or property, so as
to give rise to liabilities of the Company or its Subsidiaries for response
costs, natural resource damages or attorneys fees pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), as amended, or similar state Environmental and Safety
Requirements.
(f) To the knowledge of the Company, neither this Agreement nor the
consummation of the transaction that is the subject of this Agreement will
result in any obligations for site investigation or cleanup, or
notification to or consent of government agencies or third parties,
pursuant to any so-called "transaction-triggered" or "responsible property
transfer" Environmental and Safety Requirements.
(g) Neither the Company nor its Subsidiaries have, either expressly or
by operation of law, assumed or undertaken any liability, including without
limitation any obligation for removal, corrective or remedial action, of
any other Person relating to any Environmental and Safety Requirements.
(h) To the knowledge of the Company, no Environmental Lien has
attached to any property currently owned, leased or operated by the Company
or any Subsidiary. "Environmental Lien" means a lien, either recorded or
unrecorded, in favor of any governmental entity, relating to any liability
arising under Environmental and Safety Requirements.
(i) Without limiting the foregoing, no facts, events or conditions
relating to the past or present facilities, properties or operations of the
Company or its Subsidiaries, or, to the Company's knowledge, any
predecessor or affiliate thereof, will prevent, hinder or limit continued
compliance in all material respects by the Company with applicable
Environmental and Safety Requirements, give rise to any material
investigatory, removal, remedial or corrective obligations pursuant to
Environmental and Safety Requirements, or give rise to any other material
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental and Safety Requirements, including
without limitation any relating to onsite or offsite Releases or threatened
-11-
<PAGE>
Releases of hazardous materials, substances or wastes, personal injury,
property damage or natural resource damage.
SECTION 4.11 Taxes. Except as set forth on Schedule 4.11 hereto,
-----
each of the Company and each of the Subsidiaries has timely filed (or has or
will have had filed on its behalf) all federal, state, local and foreign income
and other tax returns, reports and declarations which are or were required by
applicable law to have been filed at or before the Effective Time, except where
the failure to so timely file does not, individually or in the aggregate, have a
Material Adverse Effect. Each of the Company and the Subsidiaries has paid or
will pay (or has or will have paid on its behalf), or where payment is not
required to be made, has made or will make adequate provision in reserves
established on its financial statements and accounts for the payment of, all
taxes (including, without limitation, all taxes required to be withheld, or any
interest and penalties on any taxes), in respect of the periods covered by said
returns, reports and declarations or any other taxable period ending on or
before the Effective Time. The foreign and federal income tax returns of the
Company and the Subsidiaries have been audited and settled through, or the
statute of limitations has expired with respect to, the taxable year ended June
30, 1994. Except as set forth on Schedule 4.11 hereto, neither the Company nor
any Subsidiary has waived or extended, or requested any waiver or extension of,
any limitation period for audit or assessment of any tax liability. All
material returns, reports and declarations required to be made, including,
without limitation, any amendments to date, have been prepared in good faith and
are complete and accurate in all material respects. To the knowledge of the
Company, neither the Company nor any of the Subsidiaries will have any material
liability with respect to any such taxes, including, without limitation,
interest and/or penalties thereon, in excess of the amount so paid or the
reserves so established on the books of the Company or such Subsidiary. Except
as set forth on Schedule 4.11 hereto, neither the Company nor any of the
Subsidiaries is delinquent in the payment of any material tax, assessment or
governmental charge required to be paid by it. No deficiencies for any tax,
assessment or governmental charge have been asserted or assessed against the
Company or any of the Subsidiaries which have not been paid, settled or
adequately provided for through reserves established in the financial statements
and accounts and, to the knowledge of the Company, there is no basis for any
such deficiency, assessment or charge which would be material to the Company and
the Subsidiaries taken as a whole. No election under Section 341(f) of the
Internal Revenue Code of 1986, as amended (the "Code"), has been or shall
hereafter be made to treat the Company or any of the Subsidiaries as a
consenting corporation (as defined in Section 341(f) of the Code). Neither the
Company nor any of its Subsidiaries is a U.S. real property holding corporation
within the meaning of Code Section 897(c)(2).
SECTION 4.12 Employment Agreements. Except as disclosed in Schedule
---------------------
4.12 hereto, there are no employment, consulting, severance or indemnification
arrangements, agreements or understandings between the Company or any
Subsidiary, on the one hand, and any directors, officers or other employees of
the Company or any Subsidiary, on the other hand.
SECTION 4.13 Change of Control Provisions. Except as disclosed in
----------------------------
Schedule 4.l3 hereto, none of the arrangements, agreements or understandings set
forth in Section 4.12 hereto and none of the Company's or any Subsidiary's
employee benefit plans, programs or arrangements contains any provision that
would become operative as the result of a change of control of the
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<PAGE>
Company or that will become operative as a result of the Merger or any other
transactions contemplated by this Agreement.
SECTION 4.14 Employee Benefit Plans.
----------------------
(a) Except as set forth in Schedule 4.14(a) hereto, all of the (i)
Plans (as defined in clause (b) of this Section 4.14), and (ii) other
bonus, insurance, pension, profit sharing, retirement, health, and other
benefit plans, stock option plans and stock purchase or ownership plans
currently maintained by the Company or any of the Subsidiaries or to which
the Company or any of the Subsidiaries is a party may be terminated by the
Surviving Corporation following the Effective Time without financial
penalty or premium and there will be no obligation of the Surviving
Corporation or Buyer following the Effective Time to issue any shares of
their respective capital stock pursuant to any of the foregoing or
otherwise following the Effective Time. Except as set forth in Schedule
4.14(a) hereto, no payment by the Company or any of the Subsidiaries to any
person (whether payable or distributable pursuant to the foregoing
agreements and plans, this Agreement or otherwise) will be nondeductible by
the Company or any of the Subsidiaries for federal income tax purposes
because of Section 280G of the Code.
(b) All employee benefit plans within the meaning of Section 3(3) of
the Employment Retirement Income Security Act of 1974, as amended
("ERISA"), maintained by the Company or any of the Subsidiaries since June
30, 1995 (collectively, the "Plans") are in compliance in all material
respects with, and have been administered and operated in all material
respects in accordance with, the terms of such Plans and applicable law,
and the Internal Revenue Service has determined that each such Plan which
is intended to be "qualified" within the meaning of Section 401(a) of the
Code is so qualified and that each related trust is exempt from tax under
Section 501(a) of the Code. No event which constitutes a "reportable
event" as defined in Section 4043 of ERISA has occurred and is continuing
with respect to any Plan subject to Title III of ERISA. No material
liability under any statutes, orders, governmental rules or regulations
applicable to any Plan, including, without limitation, ERISA and the Code,
has been or may reasonably be expected to be incurred with respect to any
Plan (other than liabilities for the payment of contributions and benefits
in the ordinary course). No Plan has been terminated pursuant to Title IV
of ERISA. To the best knowledge of the Company, no event has occurred and
no condition exists with respect to any Plan which presents a material risk
of termination or partial termination of any Plan, which could reasonably
be anticipated to result in a material liability on the part of the Company
or any of the Subsidiaries. Full payment has been made, or provision has
been made therefor, of all amounts which the Company or any of the
Subsidiaries were required under the terms of the Plans to have paid as
contributions to such Plans on or prior to the date hereof and no Plan
which is subject to Part 3 of Subtitle B of Title I of ERISA has incurred
any "accumulated funding deficiency" (within the meaning of Section 302 of
ERISA or Section 412 of the Code), whether or not waived. Neither the
Company nor any of the Subsidiaries nor, to the knowledge of the Company,
any other "disqualified person" or "party in interest" (as defined in
Section 4975 of the Code and Section 3(14) of ERISA,
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<PAGE>
respectively) has engaged in any nonexempt prohibited transactions in
connection with any Plan (or its related trust) with respect to which the
Company, any of the Subsidiaries, or any officer, director, employee of the
Company or any of the Subsidiaries or, to the knowledge of the Company, any
trustee, administrator or other fiduciary of any Plan, would be subject to
either a penalty pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code nor, to the knowledge of the Company, will the
consummation of the transactions contemplated by this Agreement constitute
such a transaction. Except as disclosed on Schedule 4.14(b), no material
claim, action or litigation, has been made, commenced or, to the knowledge
of the Company, threatened with respect to any Plan. No Plan or related
trust owns any securities in violation of Section 407 of ERISA. No
withdrawal by the Company or any of the Subsidiaries, partial or complete,
within the meaning of Title IV of ERISA, has occurred or may be reasonably
expected to occur with respect to any Plan which is a multiemployer plan
which would create a material liability not adequately reserved against by
the Company. With respect to each employee pension benefit plan (as defined
in Section 3(2) of ERISA) which is a defined benefit plan and is not a
multiemployer plan, the assets of such Plan available to meet the accrued
liabilities of such Plan would exceed such liabilities, based on the
actuarial assumptions used for plan termination. The Company has paid, or
has set up an adequate reserve for the payment of, all material liabilities
under each Plan.
SECTION 4.15 Licenses. The Company or a Subsidiary, as the case may
--------
be, has obtained all permits, concessions, grants, franchises, licenses and
other federal, state, local or foreign governmental authorizations and approvals
material, individually or in the aggregate, to the conduct of all or any
material part of the business of the Company and the Subsidiaries (collectively,
"Licenses"), except where the failure to obtain such Licenses will not have a
Material Adverse Effect. All of the Licenses are in full force and effect and,
to the best of the Company's knowledge after due inquiry, will not be impaired
or adversely affected by the transactions contemplated by this Agreement in a
manner or to a degree that would have a Material Adverse Effect. There is not
pending or, to the knowledge of the Company, threatened any domestic or foreign
suit or proceeding with respect to the suspension, revocation, cancellation,
modification or non-renewal of any of such Licenses, and, except as set forth on
Schedule 4.15, no event has occurred that (whether with notice or lapse of time,
or both) will or may result in a suspension or revocation of or failure to renew
any of the Licenses, the loss of which would have a Material Adverse Effect.
SECTION 4.16 Trademarks, Trade Names, Patents, etc. The Company or a
-------------------------------------
Subsidiary, as the case may be, has the right to use all U.S. and foreign
patents, trademarks, trade names, copyrights, inventions, formulae, trade
secrets, manufacturing processes, know-how and other intellectual property
rights material for the manufacturing and marketing of the products presently
manufactured or marketed by it, including, without limitation, any product
licensed from others. To the knowledge of the Company, the transactions
contemplated by this Agreement will not impair any such patent, trademark, trade
name, copyright or other similar property rights. Neither the Company nor any
Subsidiary has any knowledge of any notice or claim or other indication that any
such patent, trademark, trade name, copyright or other similar property right is
not valid or enforceable by the Company or such Subsidiary, as the case may be,
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<PAGE>
or of any infringement upon or conflict with any such patent, trademark, trade
name, copyright or other similar property right of any third party by the
Company or such Subsidiary, as the case may be, or any claim of a third party
alleging such infringement or conflict.
SECTION 4.17 Compliance with Other Instruments and Laws. Except as
------------------------------------------
set forth on Schedule 4.17, neither the Company nor any Subsidiary is in
violation of any term of its articles of incorporation, as amended, or bylaws,
or in violation of any mortgage, indenture, instrument or agreement relating to
indebtedness for borrowed money or of any judgment, decree or order which names
the Company or any Subsidiary or in violation of any term of any other
instrument, contract or agreement to which it is a party or by which it or any
of its properties or assets is bound, which violation would have a Material
Adverse Effect. Except as set forth on Schedule 4.17, the Company's and each
Subsidiary's businesses are in compliance in all material respects with all
federal, state, local or foreign statutes, laws, ordinances, rules, governmental
regulations, permits, concessions, grants, franchises, licenses or other
governmental authorizations or approvals applicable to the operation of such
business, except where such violation will not have a Material Adverse Effect.
SECTION 4.18 Employees. To the Company's knowledge, as of the date
---------
of this Agreement, no key employee, or group of employees of the Company has any
plans to terminate employment with the Company. Without limiting the generality
of Section 4.17, the Company has complied in all material respects with all laws
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity and collective bargaining, and it does not have
any material labor relations problems (including without limitation threatened
or actual strikes or work stoppages or material grievances).
SECTION 4.19 Disclosure. At the time the Company Proxy Statement (as
----------
defined in Section 6.02 hereof) or any amendment or supplement thereto is first
mailed to shareholders of the Company, at the time such shareholders vote on
adoption of this Agreement and at the Effective Time, the Company Proxy
Statement as supplemented or amended, if applicable, will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any disclosure document filed after the date hereof pursuant to the
Securities Act, the Exchange Act or any state securities law (each a "Company
Disclosure Document") other than the Company Proxy Statement, at the time of any
distribution thereof and throughout the remaining pendency of the Merger each
such Company Disclosure Document (as supplemented or amended) will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this subsection (b) will not apply to statements or
omissions in the Company Proxy Statement or the Company Disclosure Documents
based upon information furnished to the Company by Buyer or Newco specifically
for use therein.
SECTION 4.20 Rights Agreement. The Company's Board of Directors has
----------------
taken all necessary action to provide that neither Buyer nor Newco will become
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<PAGE>
an "Acquiring Person," that no "Triggering Event," "Stock Acquisition Date" or
"Distribution Date" (as such terms are defined in the Shareholder Rights
Agreement, dated as of July 25, 1995, between the Company and First Union
National Bank of North Carolina, as Rights Agent, and amended by Amendment No. 1
to Shareholders Rights Agreement, dated as of March 13, 1997 (the "Rights
Agreement")) will occur, and that the Rights Agreement will not be applicable to
the execution or delivery of this Agreement or any amendment hereto or the
consummation of the Merger and other transactions contemplated hereby. The
Company has provided to Buyer and Newco written evidence, reasonably
satisfactory to Buyer and Newco, of the foregoing.
SECTION 4.21 Certain Fees. Except in connection with the engagement
------------
of J.C. Bradford & Co., neither the Company nor any Subsidiary has employed any
broker or finder or incurred any liability for any financial advisory, brokerage
or finders' fees or commissions in connection with the transactions contemplated
hereby.
SECTION 4.22 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 Merger Consideration to be received in 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 Buyer and Newco.
SECTION 4.23 Phones. Except as disclosed on Schedule 4.23 hereto,
------
the Company has good and marketable title, free of all liens, claims and
encumbrances, to at least 19,500 pay telephones in operation, subject to
enforceable site location agreements or generating income for the Company. The
average term of such site location agreements for each telephone is at least 40
months.
SECTION 4.24 Average Net Revenue. The Average Net Revenue shall be
-------------------
at least $90.00 per pay telephone in operation as of the date hereof. For
purposes of this Agreement, "Average Net Revenue" for such pay telephones shall
mean the average of the monthly gross revenues minus telephone bills and
commissions (excluding dial-around compensation) for the 18 months prior to
September 30, 1997.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND NEWCO
Buyer and Newco represent and warrant to the Company as follows:
SECTION 5.01 Corporate Organization. Each of Buyer and Newco is a
----------------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, with all requisite corporate power and
authority to own, operate and lease its properties and assets and to carry on
its businesses as now being conducted.
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SECTION 5.02 Authorization. Each of Buyer and Newco has the
-------------
necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by Buyer and Newco, the performance by Buyer and Newco of their
respective obligations hereunder and the consummation by Buyer and Newco of the
transactions contemplated hereby have been duly and validly authorized by the
respective Boards of Directors of Buyer and Newco, and by Buyer as the sole
shareholder of Newco, and no other corporate proceeding on the part of Buyer or
Newco is necessary for the execution and delivery of this Agreement by each of
Buyer and Newco, the performance of their respective obligations hereunder and
the consummation by Buyer and Newco of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of Buyer
and Newco and is a legal, valid and binding obligation of each of Buyer and
Newco, 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 5.03 Proxy Statement; Other Information. None of the
----------------------------------
information supplied by Buyer or Newco for inclusion or included in the Company
Proxy Statement or any other Company Disclosure Document, or in any amendments
or supplements thereto, required to be filed with the SEC in connection
therewith, will, at the respective times such documents, amendments or
supplements are filed with the SEC and mailed to shareholders, 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.
SECTION 5.04 Consents and Approvals; No Violations. Except for (a)
-------------------------------------
applicable requirements of the Exchange Act, (b) expiration of the waiting
period under the HSR Act, (c) the filing and recordation of the Georgia
Certificate of Merger as required by Georgia Law (d) such filings and consents
as may be required under any environmental law pertaining to any notification,
disclosure or required approval triggered by the Merger or the transactions
contemplated by this Agreement, (e) filing with, and approval of, the Nasdaq
Stock Market and the SEC with respect to the delisting and deregistration of the
Shares, and (f) such consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings as may be required under the
corporation, takeover or blue sky laws of various states or non-U.S. change-in-
control laws or regulations, no filing or registration with, no notice to and no
permit, authorization, consent or approval of any public or governmental body or
authority is necessary for the consummation by Buyer and Newco of the
transactions contemplated by this Agreement. Neither the execution and delivery
of this Agreement by Buyer and Newco nor the consummation by Buyer and Newco of
the transactions contemplated hereby nor compliance by Buyer and Newco with any
of the provisions hereof will (i) conflict with or result in any breach of any
provision of the articles or certificate of incorporation or bylaws of Buyer or
Newco, (ii) at the Effective Time, 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 or otherwise
change the existing rights or obligations of any party thereto) under, any of
the terms, conditions or provisions of any note, bond, mortgage indenture,
license, agreement or other instrument or obligation to which Buyer or Newco is
-17-
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a party or by which Buyer or Newco, or any of their respective properties or
assets may be bound, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer or Newco or any of their
respective properties or assets, excluding from the foregoing clauses (ii) and
(iii) violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of Buyer.
SECTION 5.05 Financing. Buyer and/or Newco has sufficient funds
---------
available, or written commitments providing therefor, to purchase all Shares
currently outstanding for the Merger Consideration.
SECTION 5.06 Certain Fees. Except for ABN AMRO Chicago Corporation,
------------
Inc., whose fees will be paid by Buyer, there is no investment banker, broker,
finder or other intermediary who might be entitled to any fee or commission upon
consummation of the transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.01 Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
The Company covenants and agrees that prior to the Effective Time or the date,
if any, on which this Agreement is earlier terminated pursuant to Section 10.01
hereof, unless Buyer and Newco shall otherwise consent in writing or except as
otherwise contemplated by this Agreement:
(a) the businesses of the Company and the Subsidiaries will be
conducted only in the ordinary and usual course; the Company will use its
best efforts to preserve intact its business organization and goodwill,
keep available the services of its officers and employees and maintain
satisfactory relationships with suppliers, distributors, customers and
others having business relationships with it and the Subsidiaries; and the
Company will promptly notify Buyer and Newco of any event or occurrence or
emergency not in the ordinary and usual course of the business of the
Company or any Subsidiary or material to the business of the Company and
the Subsidiaries, taken as a whole;
(b) the Company will not (i) amend its articles of incorporation or
bylaws or (ii) split, combine or reclassify the outstanding Shares or
declare, set aside or pay any dividend payable in cash, stock or property
with respect to the Shares;
(c) neither the Company nor any Subsidiary will issue or agree to
issue any additional shares of, or rights of any kind to acquire shares of,
its capital stock of any class other than the issuance of shares of capital
stock of a Subsidiary to the Company or, with respect to the Company,
Shares issuable upon exercise of outstanding options pursuant to the Stock
Option Plans or upon exercise of the Warrants;
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(d) neither the Company nor any Subsidiary will enter into or agree to
enter into any new or amended contract or agreement with any unions
representing employees of the Company or any Subsidiary;
(e) except as contemplated by Section 6.04 hereto, the Company will
not authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into an agreement in principle or an
agreement with respect to any merger, consolidation or business combination
(other than the Merger), any acquisition or disposition of a material
amount of assets or securities (including, without limitation, the assets
or securities of any Subsidiary) or any material change in its
capitalization, or enter, other than in the ordinary course of business
consistent with past practice, into a material contract or any release or
relinquishment of any material contract rights;
(f) the Company will not, and will not permit any Subsidiary to, (i)
enter into or amend any employment, severance or change-in-control
agreement, or any bonus, incentive compensation, deferred compensation,
profit sharing, retirement, pension, group insurance or other benefit plan
except as required by law or regulations, or as expressly provided by this
Agreement; or (ii) make any contribution to any such plan except for
contributions specifically required pursuant to the terms thereof;
(g) the Company will not (i) except as set forth on Schedule 6.01(g)
hereto, create, incur or assume any long-term debt (including, without
limitation, obligations in respect of capital leases) or, except in the
ordinary course of business under existing lines of credit or except to
fund out-of-pocket costs incurred in connection with the transactions
contemplated hereby, create, incur, assume, maintain or permit to exist any
short-term debt in an aggregate amount for the Company and the Subsidiaries
as a whole exceeding $1,400,000; (ii) except as set forth on Schedule
6.01(g), assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person except wholly-owned Subsidiaries of the
Company in the ordinary course of business and consistent with past
practices; or (iii) make any loans, advances or capital contributions to,
or investments in, any other person other than a wholly-owned Subsidiary
(other than customary advances to employees and short-term investments
pursuant to customary cash management systems of the Company in the
ordinary course and consistent with past practice);
(h) the Company will neither amend the Rights Agreement nor redeem any
of the Rights without the written consent of Buyer; and
(i) neither the Company nor any Subsidiary shall agree in writing or
otherwise to take (i) any action that it is prohibited from taking by this
Section 6.01, (ii) any action that would be prohibited by Section 6.01(e)
in the absence of the exception therein for matters contemplated by Section
6.04 hereto or (iii) any action that would constitute or is likely to cause
or result in a breach of any covenant, agreement, or representation or
warranty set forth herein.
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SECTION 6.02 Shareholders' Meeting; Proxy Material. If required
-------------------------------------
under the Georgia Law, the Company shall cause a meeting of its shareholders
(the "Company Shareholder Meeting") to be duly called and held as soon as
reasonably practicable for the purpose of voting on the approval and adoption of
this Agreement and the Merger. The Board of Directors of the Company, subject
to their fiduciary duties as advised by counsel, will (a) recommend approval and
adoption of this Agreement by the Company's shareholders in accordance with
Section 1.02 hereof and (b) use its best efforts to obtain the necessary
approval by the Company's shareholders of this Agreement and the transactions
contemplated hereby. In connection with such meeting, the Company will promptly
prepare and file with the SEC, will use its best efforts to have cleared by the
SEC and will thereafter mail to its shareholders a proxy statement and all other
proxy materials for such meeting (the "Company Proxy Statement") and will
otherwise comply with all legal requirements applicable to such meeting.
SECTION 6.03 Access to Information. Subject to the terms of Section
---------------------
7.01, the Company will give Buyer, its counsel, financial advisors, auditors and
other authorized representatives full access throughout the period prior to the
Effective Time to all of the offices, properties, business and marketing plans,
books, files and records of the Company and the Subsidiaries, will furnish to
Buyer, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Buyer in its investigation of
the business of the Company and its Subsidiaries. The Company will furnish
promptly to Buyer and Newco (a) a copy of each report, schedule and other
document filed or received by it pursuant to the requirements of Federal or
state securities laws, and (b) all such other information concerning its
business, properties and personnel as Buyer or Newco may reasonably request;
provided that no investigation pursuant to this Section 6.03 shall affect any
--------
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
SECTION 6.04 No Solicitation. (a) The Company agrees that, prior
---------------
to the Effective Time, it shall not, and shall not authorize or permit any of
its Subsidiaries or any of its or its Subsidiaries' directors, officers,
employees, agents or representatives, directly or indirectly, to solicit,
initiate or encourage (including by way of furnishing or disclosing non-public
information) any inquiries or the making of any proposal with respect to any
merger, consolidation or other business combination involving the Company or the
acquisition of all or substantially all of the assets or capital stock of the
Company (an "Acquisition Transaction") or negotiate, explore or otherwise engage
in substantive discussions with any person (other than Buyer, Newco or their
respective directors, officers, employees, agents and representatives) with
respect to any Acquisition Transaction or enter into any agreement, arrangement
or understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by this Agreement; provided that
(i) the Company may, in response to a bona fide unsolicited written proposal
with respect to an Acquisition Transaction from a credible third party that is
not subject to any material financing uncertainties and is more favorable to the
shareholders of the Company than the Merger, furnish or disclose non-public
information to, and negotiate, explore or otherwise engage in substantive
discussions with, or enter into such an agreement with, such third party
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(provided that it shall concurrently with entering into such agreement pay or
cause to be paid to Buyer the amount specified in Section 10.04(b) hereof) and
(ii) upon receipt of an unsolicited written proposal with respect to an
Acquisition Transaction that appears, on its face, to meet the requirements set
forth in clause (i) above, the Company may explore such proposal with such other
person for the purpose of determining whether it meets such requirements, in
each case only if the Board determines in good faith by a majority vote, after
consultation with its financial advisors and outside legal counsel of the
Company, that failing to take such action would constitute a breach of the
fiduciary duties of the Board.
(b) Upon executing this Agreement, the Company shall immediately
advise Buyer in writing regarding the identity of any other persons or entities
with whom the Company has had direct or indirect contact since September 30,
1997 regarding a possible Acquisition Transaction. Hereafter, the Company shall
immediately advise Buyer in writing of the receipt, directly or indirectly, of
any inquiries or proposals relating to an Acquisition Transaction and any
actions taken pursuant to Section 6.04(a) and furnish to Buyer either a copy of
such proposal or a written summary of such proposal.
SECTION 6.05 Representations; Schedules. Each of the Company, on
--------------------------
the one hand, and Buyer and Newco, on the other, (a) will use their reasonable
best efforts to take all action necessary to render true and correct as of the
Closing its representations and warranties contained in this Agreement, (b) will
refrain from taking any action that would render any such representation or
warranty untrue or incorrect as of such time, and (c) will perform or cause to
be satisfied each agreement, covenant or condition to be performed or satisfied
by it.
SECTION 6.06 Corporate Organization. Notwithstanding anything to
----------------------
the contrary contained in this Agreement or in the Schedules hereto, the Company
and each Subsidiary shall take all actions necessary in order to be duly
qualified and in good standing on the Effective Date with the Secretary of State
and the state regulatory authority governing pay telephone services in each
jurisdiction in which the character of its properties owned or held under lease
or the nature of its activities makes such qualification necessary.
ARTICLE VII
COVENANTS OF BUYER
Buyer agrees that:
SECTION 7.01 Confidentiality. Buyer will hold, and will use its
---------------
reasonable best efforts to cause its officers, directors, employees,
consultants, advisors and agents to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law,
all trade secrets and confidential information concerning the Company and the
Subsidiaries furnished to Buyer in connection with the transactions contemplated
by this Agreement, except to the extent that such information can be shown to
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have been (a) previously known on a nonconfidential basis by Buyer, (b) in the
public domain through no fault of Buyer or (c) lawfully available to Buyer from
sources other than the Company; provided, however, that Buyer may disclose such
-------- -------
information to its officers, directors, employees, consultants, advisors,
agents, banks and other sources of financing in connection with the transactions
contemplated by this Agreement so long as such persons are informed by Buyer of
the confidential nature of such information and are directed by Buyer to treat
such information confidentially and provided that Buyer shall be responsible for
any disclosures of such information by any such persons. If this Agreement is
terminated, such confidence shall be maintained and Buyer will, and will use its
best efforts to cause its officers, directors, employees, consultants, advisors
and agents to, destroy or deliver to the Company, upon request, all documents
and other materials, and all copies thereof, obtained by Buyer or on its behalf
from the Company in connection with this Agreement that are subject to such
confidence.
SECTION 7.02 Obligations of Newco. Buyer will take all action
--------------------
necessary to cause Newco to perform its obligations under this Agreement and to
consummate the Merger on the terms and conditions set forth in this Agreement.
SECTION 7.03 Indemnification. Buyer shall cause the Surviving
---------------
Corporation to indemnify, to the full extent permitted under the Georgia Law,
the present and former directors or officers of the Company and the Subsidiaries
(the "Indemnified Parties") in respect of actions taken prior to and including
the Effective Time in connection with their duties as directors or officers of
the Company (including the transactions contemplated hereby) for a period of not
less than six years from the Effective Time; 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
final disposition of any and all such claims. Without limitation of the
foregoing, in the event any Indemnified Party becomes involved in such capacity
in any action, proceeding or investigation in connection with any matter,
including the transactions contemplated hereby, occurring prior to and including
the Effective Time, the Surviving Corporation, to the extent permitted and on
such conditions as may be required by applicable law, will periodically
reimburse such Indemnified Party for his legal and other out-of-pocket expenses
(including the cost of any investigation and preparation) incurred in connection
therewith.
ARTICLE VIII
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
SECTION 8.01 Best Efforts. Subject to the terms and conditions of
------------
this Agreement, each party will use its best 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 to consummate the
transactions contemplated by this Agreement. The Company, Buyer and Newco shall
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each furnish to one another and to one another's counsel all such information as
may be required in order to accomplish the foregoing actions.
SECTION 8.02 Certain Filings. The Company and Buyer shall cooperate
---------------
with one another (a) in connection with the preparation of the Company Proxy
Statement and the Company Disclosure Documents, (b) in determining whether any
other action by or in respect of, or filing with, any governmental body, agency
or official, or authority or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts in connection
with the consummation of the transactions contemplated by this Agreement and (c)
in seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Proxy Statement and the Company Disclosure Documents and seeking timely
to obtain any such actions, consents, approvals or waivers.
SECTION 8.03 Public Announcements. Buyer and the Company will
--------------------
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law or any listing agreement
with any national securities exchange, will not issue any such press release or
make any such public statement prior to such consultation.
SECTION 8.04 Further Assurances. At and after the Effective Time,
------------------
the officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Newco, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf the Company or Newco, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
SECTION 8.05 Notices of Certain Events. The Company and Buyer shall
-------------------------
promptly notify the other of:
(a) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to
or involving or otherwise affecting the Company or any Subsidiary, on the
one hand, or Buyer or Newco, on the other hand, which relate to the
consummation of the transactions contemplated by this Agreement; and
(d) any action, event or occurrence that would constitute a breach of
any representation, warranty, covenant or agreement of it set forth in this
Agreement.
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ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 Conditions to the Obligations of Each Party. The
-------------------------------------------
obligations of the Company, Buyer and Newco to consummate the Merger are subject
to the satisfaction of the following conditions:
(a) if required by the Georgia Law, this Agreement shall have been
approved and adopted by the shareholders of the Company in accordance with
such Law;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(d) with respect to the obligations of Buyer and Newco, all
outstanding employee stock options shall be canceled upon delivery at the
Effective Time of the consideration described in Section 2.05;
(e) with respect to the obligations of Buyer and Newco, there shall
not have been a breach of any representation or warranty of the Company set
forth in Sections 4.06(b), 4.06(c), 4.11, 4.19 and 4.24 of this Agreement
when made or as of immediately prior to the Effective Time, except in each
case that with respect to any such representation and warranty that speaks
as of a specific date or time, there shall not have been a breach thereof
as of such date or time and the Company shall have performed or complied in
all material respects with each covenant or agreement of it set forth in
this Agreement;
(f) with respect to the obligations of Buyer and Newco, the
individuals who are party to the Consulting and Non-Competition Agreements,
the forms of which are attached hereto as Exhibits A, B, C, D, E and F,
shall have executed and delivered to Buyer counterparts to such agreements;
(g) this Agreement shall not have been terminated in accordance with
its terms; and
(h) with respect to the obligations of Buyer and Newco, on the one
hand, the representations and warranties of the Company contained herein
shall be true and correct as of the date hereof and as of the Effective
Date as if made on and as of such date, except where the failure of such
representations and warranties to be true and correct (after giving effect
to the disclosures made by the Company in any disclosure schedules
delivered hereto, but disregarding any materiality qualifications contained
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within the body of such representations and warranties, including, without
limitation, Section 4.07(d)) would not, in the aggregate, have a Material
Adverse Effect and, with respect to the obligations of the Company, on the
other hand, the representations and warranties of Buyer or Newco contained
herein shall be true and correct as of the date hereof and as of the
Effective Date as if made on and as of such date, except where the failure
of such representations and warranties to be true and correct (disregarding
any materiality qualifications contained within the body of such
representations and warranties) would not, in the aggregate, have a
material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of Buyer and Newco.
ARTICLE X
TERMINATION
SECTION 10.01 Termination. This Agreement may be terminated and the
-----------
Transaction may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the shareholders of the
Company):
(a) by mutual written consent of the Company, Buyer and Newco;
(b) by either the Company or Buyer, if the Merger has not been
consummated by February 27, 1998; provided that no party may terminate this
--------
Agreement pursuant to this clause if such party's failure to fulfill any of
its obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date;
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Transaction illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining Buyer
or the Company from consummating the Transaction is entered and such
judgment, injunction, order or decree shall become final and nonappealable;
(d) by either of Buyer or Newco, if the Company's Board of Directors
shall withdraw, modify or change its recommendation or approval in respect
of this Agreement or the Merger in a manner adverse to Buyer;
(e) by either of Buyer or Newco, if the Company's Board of Directors
shall have recommended any proposal other than by Buyer or Newco in respect
of an Acquisition Transaction;
(f) by either of Buyer or Newco, if any corporation, partnership,
person, other entity or group (as defined in Section 13(d)(3) of the
Exchange Act) other than Buyer or Newco or any of their respective
subsidiaries or affiliates shall have become the beneficial owner of more
than 20% of the outstanding Shares (either on a primary or a fully diluted
basis);
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(g) by the Board of Directors of the Company, to allow the Company to
enter into an agreement in respect of an Acquisition Transaction which the
Board has determined is more favorable to the Company and its shareholders
than the transactions contemplated hereby (provided that the termination
described in this clause (g) shall not be effective unless and until the
Company shall have paid to Buyer the fee described in Section 10.04(b)
hereof); or
(h) by either of Buyer or Newco, if there shall have occurred 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 this Agreement.
Such right of termination shall be exercised by written notice of termination
given by the terminating party to the other parties hereto in the manner
hereinafter provided. Any such right of termination shall not be an exclusive
remedy hereunder but shall be in addition to any other legal or equitable
remedies that may be available to any non-defaulting party hereto arising out of
any default hereunder by any other party hereto.
SECTION 10.02 Waiver. At any time prior to the Effective Time, the
------
parties hereto, by action taken by or pursuant to resolutions of their
respective Boards of Directors, may (a) extend the time for the performance of
any of the obligations or other acts of the parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) except for approval of the holders
of Shares and, in connection with all HSR Act filings, of the Federal Trade
Commission and the Department of Justice, waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party.
SECTION 10.03 Closing. Subject to the satisfaction of the conditions
-------
contained in Section 9.01 hereof, the closing of the Merger contemplated by this
Agreement (the "Closing") shall take place at the offices of Kirkland & Ellis in
Chicago, Illinois as soon as practicable after the satisfaction or waiver of all
of the conditions to the Merger contained in Section 9.01(a) and (b) hereof or
at such other time and place as Buyer, Newco and the Company shall agree.
SECTION 10.04 Effect of Termination; Termination Fee. (a) If this
--------------------------------------
Agreement is terminated pursuant to Section 10.01, this Agreement shall become
void and of no effect with no liability on the part of any party hereto, except
that the agreements contained in Sections 7.01, and 11.04 shall survive the
termination hereof, and except that no such termination shall relieve any party
from liability for breach of this Agreement or failure by it to perform its
obligations hereunder.
(b) If (i) Buyer or Newco shall have terminated this Agreement
pursuant to any of clauses (d), (e) or (f) of Section 10.01 hereof or (ii) the
Company shall have terminated this Agreement pursuant to clause (g) of Section
10.01 hereof, then in either such case the Company shall promptly, but in no
event later than two business days after the date of such termination or event,
pay Buyer a termination fee of $3,000,000 plus an amount, not to exceed
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$500,000, equal to Buyer's actual and reasonably documented out-of-pocket
expenses directly attributable to the proposed acquisition of the Company,
including negotiation and execution of this Agreement and the attempted
financing and completion of the Merger, which fee and amount shall be payable in
same day funds. In no event shall the Company be required to pay more than one
termination fee and reimbursement of expenses pursuant to this Section 10.04(b).
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Notices. All notices, requests and other
-------
communications to any party hereunder shall be in writing (including facsimile,
telex or similar writing) and shall be given,
If to Buyer or Newco, to:
Davel Communications Group, Inc.
601 West Morgan
Jacksonville, IL 62650
Attention: General Counsel
Facsimile: (217) 243-6016
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk
Facsimile: (312) 861-2200
if to the Company, to:
Communications Central Inc.
1150 Northmeadow Parkway
Suite 118
Roswell, GA 30076
Attention: President
Facsimile: (770) 751-9082
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<PAGE>
with a copy to:
Hunton & Williams
600 Peachtree Street, N.E.
Suite 4100
Atlanta, GA 30308
Attention: J. Stephen Hufford
Facsimile: (404) 888-4190
or such other address, telecopy or telex number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such
notice, request or other communication shall be effective (a) if given by
facsimile or telex, upon confirmation of receipt, or (b) if given by any other
means, when delivered at the address specified in this Section.
SECTION 11.02 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties contained herein shall not survive the Effective
Time. The covenants and agreements contained herein shall not survive the
Effective Time or the termination of this Agreement except for the covenants and
agreements set forth in Sections 7.01 (only in the event of termination pursuant
to Section 10.01), 7.03, 10.04 and 11.04.
SECTION 11.03 Amendments; No Waivers.
----------------------
(a) Any provision of this Agreement may be amended or waived prior to
the Effective Time if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Company, Buyer and Newco or in the
case of a waiver, by the party against whom the waiver is to be effective;
provided that after the adoption of this Agreement by the shareholders of the
--------
Company, no such amendment or waiver shall, without the further approval of such
shareholders, alter or change (i) the amount or kind of consideration to be
received in exchange for any shares of capital stock of the Company, (ii) any
term of the articles of incorporation of the Surviving Corporation or (iii) any
of the terms or conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.04 Expenses. Except as provided in Section 10.04, each
--------
party shall pay its own costs and expenses relating to this Agreement and the
transactions contemplated hereby.
SECTION 11.05 Successors and Assigns. The provisions of this
----------------------
Agreement shall be binding upon and inure to the benefit of the Parties hereto
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<PAGE>
and their respective successors and assigns; provided that no party may assign,
--------
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Newco may
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase Shares in the Merger, but any such transfer or
assignment will not relieve Newco of its obligations hereunder or prejudice the
rights of shareholders to receive the Merger Consideration pursuant to the
Merger.
SECTION 11.06 Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the law of the State of Georgia, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Georgia or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Georgia.
SECTION 11.07 Counterparts; Effectiveness. This Agreement may be
---------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 11.08 Headings. Section headings used in this Agreement are
--------
for convenience only and shall be ignored in the construction and interpretation
hereof.
SECTION 11.09 No Third Party Beneficiaries. Except for Section 7.03,
----------------------------
no provision of this Agreement is intended to, or shall, confer any third party
beneficiary or other rights or remedies upon any person other than the parties
hereto.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
DAVEL COMMUNICATIONS GROUP, INC.
By /s/ David Hill
---------------------------------
Title: Chairman of the Board
PANTHER ACQUISITION CORP.
By /s/ David Hill
---------------------------------
Title: President
COMMUNICATIONS CENTRAL INC.
By /s/ Rodger L. Johnson
---------------------------------
Title: President & Chief Executive Officer
<PAGE>
ANNEX II
J.C. Bradford & Co.
Corporate Finance
November 24, 1997
Board of Directors
Communications Central Inc.
1150 Northmeadow Parkway
Suite 118
Roswell, Georgia 30076
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders (the "Stockholders") of the outstanding common stock,
par value $.01 per share (the "Common Stock"), of Communications Central Inc.
(the "Company") of the consideration to be received by the Stockholders pursuant
to the proposed Agreement and Plan of Merger, dated as of November 24, 1997 (the
"Merger Agreement"), by and between the Company, Davel Communications Group,
Inc. ("Davel") and Panther Acquisition Corp., a wholly-owned subsidiary of Davel
("Panther"). For purposes of this opinion, we have assumed that the draft Merger
Agreement in the form previously provided to us will not vary in any material
respect from the Merger Agreement to be signed by the parties thereto.
The Merger Agreement provides for, among other things, the merger of
Panther with and into the Company (the "Merger") and the consideration to be
paid to the Stockholders in the Merger of the right to receive $10.50 in cash,
without interest, for each outstanding share of Common Stock. The terms and
conditions of the Merger are more fully set forth in the Merger Agreement.
Capitalized terms used but not defined herein have the meanings ascribed to such
terms in the Merger Agreement.
J.C. Bradford & Co., L.L.C, as part of its investment banking business,
engages in the valuation of businesses and securities in connection with mergers
and acquisitions, negotiated underwritings, secondary distributions of listed
and unlisted securities, private placements and valuations for estate, corporate
and other purposes. We have been engaged by the Board of Directors of the
Company to render this opinion in connection with the Merger and will receive a
fee from the Company for our services.
In conducting our analysis and arriving at our opinion, we have considered
such financial and other information as we deemed appropriate including, among
other things, the following: (i) the proposed Merger Agreement; (ii) the
historical and current financial position and results of operations of the
Company and Davel as set forth in their respective periodic reports and proxy
materials filed with the Securities and Exchange Commission; (iii) certain
internal operating data and financial analyses and forecasts of the Company for
the fiscal years beginning July 1, 1997 and ending June 30, 2001, prepared for
the Company by its senior management; (iv) certain financial and securities
trading data of certain other companies, the securities of which are publicly
traded, that we believed to be comparable to the Company or relevant to the
transaction; (v) the financial terms of certain other transactions that we
believed to be relevant; (vi) reported price and trading activity for the Common
Stock; and (vii) such other financial studies, analyses and
<PAGE>
investigations as we deemed appropriate for purposes of our opinion. We also
have held discussions with members of the senior management of the Company
regarding the past and current business operations, financial condition and
future prospects of the Company.
We have taken into account our assessment of general economic, market and
financial and other conditions and our experience in other transactions, as well
as our experience in securities valuation and our knowledge of the industries in
which the Company and Davel operate generally. Our opinion is necessarily based
upon the information made available to us and conditions as they exist and can
be evaluated as of the date hereof.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us for purposes of our opinion and have not
assumed any responsibility for, nor undertaken an independent verification of,
such information. With respect to the internal operating data and financial
analyses and forecasts supplied to us, we have assumed that such data, analyses
and forecasts were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the Company's senior management as to the
recent and likely future performance of the Company. Accordingly, we express no
opinion with respect to such analyses or forecasts or the assumptions on which
they are based.
We note that Davel represents and warrants in the Merger Agreement that
Davel or Panther has sufficient funds available (or written commitments
therefor) to purchase all of the Common Stock. We have not independently
verified that Davel or Panther, in fact, has such funds or commitments, and we
express no opinion with respect thereto. We were not asked to consider and our
opinion does not address the relative merits of the Merger as compared to any
alternative business strategies that might exist for the Company or the effect
of any other transactions in which the Company might engage. Furthermore, we
have not made an independent evaluation or appraisal of the assets and
liabilities of the Company or any of its subsidiaries or affiliates and have not
been furnished with any such evaluation or appraisal.
The Company is entitled to reproduce this opinion, in whole but not in
part, in the Proxy Statement as required by applicable law or as appropriate;
provided, that any excerpt from or reference to this opinion (including any
summary thereof) in such document must be approved by us in advance in writing.
Notwithstanding the foregoing, this opinion does not constitute a recommendation
to any Stockholder to vote in favor of the Merger.
Based upon and subject to the foregoing, and based upon such other matters
as we consider relevant, it is our opinion that, as of the date hereof and based
on conditions as they currently exist, the Merger is fair to the Stockholders
from a financial point of view.
Very truly yours,
J.C. BRADFORD & CO., L.L.C.
BY: /S/ N.B. FORREST SHOAF
----------------------------
N. B. Forrest Shoaf
Senior Vice President
<PAGE>
ANNEX III
ARTICLE 13 OF THE GEORGIA BUSINESS CORPORATION CODE
---------------------------------------------------
RELATING TO DISSENTING SHAREHOLDERS
-----------------------------------
TITLE 14, CHAPTER 2, ARTICLE 13
-------------------------------
DISSENTERS' RIGHTS
------------------
PART 1
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
14-2-1301. DEFINITIONS.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporate action" means the transaction or other action by the
corporation that creates dissenters' rights under Code Section 14-2-1302.
(3) "Corporation" means the issuer of shares held by a dissenter before the
corporate action, or the surviving or acquiring corporation by merger or share
exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under Code Section 14-2-1302 and who exercises that right when and in the
manner required by Code Sections 14-2-1320 through 14-2-1327.
(5) "Fair value," with respect to a dissenter's shares, means the value of the
shares immediately before the effectuation of the corporate action to which the
dissenter objects, excluding any appreciation or depreciation in anticipation of
the corporate action.
(6) "Interest" means interest from the effective date of the corporate action
until the date of payment, at a rate that is fair and equitable under all the
circumstances.
(7) "Record shareholder" means the person in whose name shares are registered
in the records of a corporation or the beneficial owner of shares to the extent
of the rights granted by a nominee certificate on file with a corporation.
(8) "Shareholder" means the record shareholder or the beneficial shareholder.
<PAGE>
14-2-1302. RIGHT TO DISSENT.
(a) A record shareholder of the corporation is entitled to dissent from, and
obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a party:
(A) If approval of the shareholders of the corporation is required for the
merger by Code Section 14-2-1103 or the articles of incorporation and the
shareholder is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is merged with its parent under
Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all of the
property of the corporation if a shareholder vote is required on the sale or
exchange pursuant to Code Section 14-2-1202, but not including a sale pursuant
to court order or a sale for cash pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be distributed to the
shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters or abolishes a right in respect of redemption, including
a provision respecting a sinking fund for the redemption or repurchase, of the
shares;
(C) Alters or abolishes a preemptive right of the holder of the shares to
acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any matter, or to
cumulate votes, other than a limitation by dilution through issuance of shares
or other securities with similar voting rights;
(E) Reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under Code
Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of the shares of the class;
or
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<PAGE>
(5) Any corporate action taken pursuant to a shareholder vote to the extent
that Article 9 of this chapter, the articles of incorporation, bylaws, or a
resolution of the board of directors provides that voting or nonvoting
shareholders are entitled to dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares under
this article may not challenge the corporate action creating his entitlement
unless the corporate action fails to comply with procedural requirements of this
chapter or the articles of incorporation or bylaws of the corporation or the
vote required to obtain approval of the corporate action was obtained by
fraudulent and deceptive means, regardless of whether the shareholder has
exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there shall be no
right of dissent in favor of the holder of shares of any class or series which,
at the record date fixed to determine the shareholders entitled to receive
notice of and to vote at a meeting at which a plan of merger or share exchange
or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the holders of shares
of the class or series are required under the plan of merger or share exchange
to accept for their shares anything except shares of the surviving corporation
or another publicly held corporation which at the effective date of the merger
or share exchange are either listed on a national securities exchange or held of
record by more than 2,000 shareholders, except for scrip or cash payments in
lieu of fractional shares; or
(2) The articles of incorporation or a resolution of the board of directors
approving the transaction provides otherwise.
14-2-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose behalf he
asserts dissenters' rights. The rights of a partial dissenter under this Code
section are determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders.
3
<PAGE>
PART 2
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
14-2-1320. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Code Section 14-2-
1302 is taken without a vote of shareholders, the corporation shall notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in Code Section 14-2-
1322 no later than ten days after the corporate action was taken.
14-2-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a record
shareholder who wishes to assert dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written notice of
his intent to demand payment for his shares if the proposed action is
effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A record shareholder who does not satisfy the requirements of subsection
(a) of this Code section is not entitled to payment for his shares under this
article.
14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after the
corporate action was taken and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
4
<PAGE>
(3) Set a date by which the corporation must receive the payment demand, which
date may not be fewer than 30 nor more than 60 days after the date the notice
required in subsection (a) of this Code section is delivered; and
(4) Be accompanied by a copy of this article.
14-2-1323. DUTY TO DEMAND PAYMENT.
(a) A record shareholder sent a dissenters' notice described in Code Section
14-2-1322 must demand payment and deposit his certificates in accordance with
the terms of the notice.
(b) A record shareholder who demands payment and deposits his shares under
subsection (a) of this Code section retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the proposed
corporate action.
(c) A record shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
14-2-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are canceled
or modified by the taking of the proposed corporate action.
14-2-1325. OFFER OF PAYMENT.
(a) Except as provided in Code Section 14-2-1327, within ten days of the later
of the date the proposed corporate action is taken or receipt of a payment
demand, the corporation shall by notice to each dissenter who complied with Code
Section 14-2-1323 offer to pay to such dissenter the amount the corporation
estimates to be the fair value of his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year ending not
more than 16 months before the date of payment, an income statement for that
year, a statement of changes in shareholders' equity for that year, and the
latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the shares;
5
<PAGE>
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Code Section
14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written notice to
the corporation within 30 days after the corporation's offer or is deemed to
have accepted such offer by failure to respond within such 30 days, payment for
his or her shares shall be made within 60 days after the making of the offer or
the taking of the proposed corporate action, whichever is later.
14-2-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60 days after
the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure.
14-2-1327. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under Code Section 14-2-
1325 is less than the fair value of his shares or that the interest due is
incorrectly calculated; or
(2) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within 60 days after the date set for demanding
payment.
(b) A dissenter waives his or her right to demand payment under this Code
section and is deemed to have accepted the corporation's offer unless he or she
notifies the corporation of his or her demand in writing under subsection (a) of
this Code section within 30 days after the corporation offered payment for his
or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set forth in
subsection (a) of Code Section 14-2-1325:
6
<PAGE>
(1) The shareholder may demand the information required under subsection (b)
of Code Section 14-2-1325, and the corporation shall provide the information to
the shareholder within ten days after receipt of a written demand for the
information; and
(2) The shareholder may at any time, subject to the limitations period of Code
Section 14-2-1332, notify the corporation of his own estimate of the fair value
of his shares and the amount of interest due and demand payment of his estimate
of the fair value of his shares and interest due.
PART 3
JUDICIAL APPRAISAL OF SHARES
14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the 60 day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(b) The corporation shall commence the proceeding, which shall be a nonjury
equitable valuation proceeding, in the superior court of the county where a
corporation's registered office is located. If the surviving corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in the proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided by
law for the service of a summons and complaint, and upon each nonresident
dissenting shareholder either by registered or certified mail or by publication,
or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) of this Code section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them or in any amendment to it. Except as otherwise
provided in this chapter, Chapter 11 of Title 9, known as the "Georgia Civil
Practice Act," applies to any proceeding with respect to dissenters' rights
under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to judgment for
the amount which the court finds to be the fair value of his shares, plus
interest to the date of judgment.
7
<PAGE>
14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code Section 14-2-
1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, but not
including fees and expenses of attorneys and experts for the respective parties.
The court shall assess the costs against the corporation, except that the court
may assess the costs against all or some of the dissenters, in amounts the court
finds equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Code Section 14-2-
1327.
(b) The court may also assess the fees and expenses of attorneys and experts
for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if the court
finds the corporation did not substantially comply with the requirements of Code
Sections 14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this article.
(c) If the court finds that the services of attorneys for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these attorneys reasonable fees to be paid out of the amounts awarded
the dissenters who were benefited.
14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights shall be brought more
than three years after the corporate action was taken, regardless of whether
notice of the corporate action and of the right to dissent was given by the
corporation in compliance with the provisions of Code Section 14-2-1320 and Code
Section 14-2-1322.
8
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF COMMUNICATIONS CENTRAL INC.
The undersigned shareholder(s) of Communications Central Inc., a Georgia
corporation (the "Corporation"), hereby acknowledges receipt of the Notice of
Special Meeting of Shareholders dated December 29, 1997, and hereby appoints
Rodger L. Johnson and C. Douglas McKeever, or either of them, proxies and
attorneys-in-fact, with full power of substitution, on behalf and in the name
of the undersigned, to represent the undersigned at the Special Meeting of the
shareholder(s) of the Corporation to be held at 9:00 a.m. on January 30, 1998
at Cameron City Club, 1000 Northfield Court, Suite 200, Roswell, Georgia, and
at any adjournment(s) thereof (the "Special Meeting"), and to vote all shares
of Common Stock which the undersigned would be entitled to vote if then and
there personally present, on the matters set forth below:
(1) To approve the Agreement and Plan of Merger, dated as of November 24, 1997,
by and among Communications Central Inc., Davel Communications Group, Inc.
and Panther Acquisition Corp.
[_] FOR [_] AGAINST [_] ABSTAIN
(2) In their discretion, upon such other matter or matters which may properly
come before the Special Meeting or any adjournment(s) thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. This Proxy, when
properly executed, will be voted in accordance with the directions given by the
undersigned shareholder(s). IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR
PROPOSAL (1) AND AS THE PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY
COME BEFORE THE SPECIAL MEETING.
<PAGE>
LOGO
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to its holdings, and hereby ratifies and confirms all
that the proxy appointed herein may lawfully do by virtue hereof.
Dated: _____________________, 1998
----------------------------------
Signature
----------------------------------
Signature (if held jointly)
Title or authority (if
applicable)
Number of shares held ____________
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS ON YOUR STOCK CERTIFICATE(S). IF
SHARES ARE REGISTERED IN MORE THAN ONE NAME, THE SIGNATURE OF ALL SUCH PERSONS
IS REQUIRED. A CORPORATION SHOULD SIGN IN ITS FULL CORPORATE NAME BY A DULY AU-
THORIZED OFFICER, STATING HIS OR HER TITLE. TRUSTEES, GUARDIANS, EXECUTORS AND
ADMINISTRATORS SHOULD SIGN IN THEIR OFFICIAL CAPACITY, GIVING THEIR FULL TITLE
AS SUCH. IF A PARTNERSHIP, PLEASE SIGN IN THE PARTNERSHIP NAME BY AN AUTHORIZED
PERSON.
