EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PHONETEL TECHNOLOGIES, INC.,
PHONETEL II, INC.
AND
PUBLIC TELEPHONE CORPORATION
DATED OCTOBER 16, 1995
TABLE OF CONTENTS
PAGE
ARTICLE I
TERMS OF MERGER; THE CLOSING
1.1 Merger . . . . . . . . . . . . . . . . . . 4
1.2 Consideration . . . . . . . . . . . . . . . 4
1.3 Certificates . . . . . . . . . . . . . . . 6
1.4 Closing . . . . . . . . . . . . . . . . . . 6
1.5 Deliveries by PTC and Shareholders . . . . 7
1.6 Deliveries by Buyer and PhoneTel . . . . . 7
1.7 Related Matters . . . . . . . . . . . . . . 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
2.1 Organization and Standing; Subsidiaries . . 9
2.2 Organizational Documents and Corporate
Records . . . . . . . . . . . . . . . . . . 10
2.3 Authorization . . . . . . . . . . . . . . . 11
2.4 Seller Capitalization . . . . . . . . . . . 11
2.5 Consents and Approvals; No Violation . . . 12
2.6 Absence of Undisclosed Liabilities . . . . 13
2.7 Absence of Certain Changes or Events . . . 14
2.8 Compliance with Laws and Permits . . . . . 14
2.9 Litigation and Arbitration . . . . . . . . 15
2.10 Brokers . . . . . . . . . . . . . . . . . . 16
2.11 Seller Phones . . . . . . . . . . . . . . . 17
2.12 Telco Charges and Location Commission . . . 17
2.13 Disclosure . . . . . . . . . . . . . . . . 17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND PHONETEL
3.1 Organization and Standing; Subsidiaries . . 18
3.2 Authorization . . . . . . . . . . . . . . . 19
3.3 Capitalization . . . . . . . . . . . . . . 19
3.4 Consents and Approvals; No Violation . . . 21
3.5 Absence of Undisclosed Liabilities . . . . 22
3.6 Absence of Certain Changes of Events . . . 23
3.7 Compliance with Laws and Permits . . . . . 23
3.8 Litigation and Arbitration . . . . . . . . 24
3.9 Telco Charges and Location Commissions . . 25
ARTICLE IV
FURTHER ASSURANCES; COOPERATION
4.1 Further Assurances; Cooperation . . . . . . 26
4.2 Expenses . . . . . . . . . . . . . . . . . 26
ARTICLE V
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
5.1 Survival of Representations and
Warranties . . . . . . . . . . . . . . . . 27
5.2 Indemnification of Buyer . . . . . . . . . 27
5.3 Indemnification of Seller Shareholders . . 28
5.4 Assertion of Claims . . . . . . . . . . . . 28
ARTICLE VI
MISCELLANEOUS
6.1 Parties in Interest; No Third Party
Beneficiaries . . . . . . . . . . . . . . . 29
6.2 Exhibits and Disclosure Schedule . . . . . 30
6.3 Entire Agreement . . . . . . . . . . . . . 30
6.4 Waiver of Compliance . . . . . . . . . . . 30
6.5 Enforceability . . . . . . . . . . . . . . 31
6.6 Counterparts . . . . . . . . . . . . . . . 32
6.7 Headings . . . . . . . . . . . . . . . . . 32
6.8 Governing Law . . . . . . . . . . . . . . . 32
6.9 Notices . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
DEFINITIONS
7.1 Definitions . . . . . . . . . . . . . . . . 34
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this
"Agreement") is entered into on this 16th day of October,
1995, by and among PhoneTel Technologies, Inc.
("PhoneTel"), an Ohio corporation, PhoneTel II, Inc.
("Sub" or "Buyer"), an Ohio corporation and wholly-owned
subsidiary of PhoneTel, and Public Telephone Corporation
("PTC" or "Seller"), an Indiana corporation.
WHEREAS, the parties hereto desire that Sub be
merged with and into PTC in accordance with the terms and
conditions herein contained; and
WHEREAS, it is intended that the Merger shall
qualify as a tax-free reorganization pursuant to Section
368 (a) of the Code (as defined herein), and this
Agreement is intended to be and hereby is adopted as a
plan of reorganization within the meaning of Section 368
of the Code.
NOW, THEREFORE, in consideration of the
premises and the representations, warranties, covenants
and agreements herein contained, the parties hereto agree
as follows:
ARTICLE I
TERMS OF MERGER; THE CLOSING
1.1 Merger. On the date hereof, Sub shall be
merged into and with PTC (the "Merger"). PTC shall be
the surviving corporation of the Merger and shall
continue to exist and to be governed by the laws of the
State of Indiana. The Merger shall be consummated
pursuant to the terms of this Agreement and the Articles
of merger (substantially in the form attached hereto as
Exhibit A) (the "Articles of Merger"), all of which shall
have been approved and adopted by the Board of Directors
and shareholders of PTC, and the Board of Directors of
PhoneTel and Buyer. The Merger shall become effective
upon filing the Articles of Merger with the Secretary of
State of the State of Indiana (the "Secretary of State")
in accordance with the Indiana Business Corporation Law
(the "Effective Time"). At the Effective Time, the
separate corporate existence of Sub shall cease and PTC
shall continue as the surviving corporation of the merger
and a direct wholly-owned subsidiary of PhoneTel (which
shall continue to operate under the name Public Telephone
Corporation).
1.2 Consideration. Shareholders of PTC (the
"Shareholders"), listed on Exhibit B attached hereto,
shall be entitled to receive, in the aggregate, 1,349,290
shares ("Shares"), of PhoneTel common stock, $.01 par
value (the "Consideration"), in exchange for all of the
shares of common stock, no par value, of PTC (the "Seller
Shares"). Provided, however, that the Consideration will
be reduced by the aggregate amount of any liabilities of
the Seller (including, but not limited to, payables and
costs of termination and non-competition agreements)
which are in excess of $2,212,230 and which are not
offset by cash or cash equivalents (including, but not
limited to, receivables) and provided also that the
escrowed shares will be remitted to Phonetel in
applicable amounts to effect any such purchase price
reduction; such adjustment shall not take effect until
the aggregate amount of excess liabilities is at least
$50,000 greater than the value of any unrecorded amounts
which become due and payable to PTC subsequent to the
closing as proceeds pursuant to settlements and/or
judgments resulting from actions settled or pending as of
the date hereof against the City of Chicago, Illinois and
Ameritech, and orders issued by the Illinois Commerce
Commission, the FCC and the Michigan Taxing Authority
concerning retroactive tax credits.
1.3 Certificates. Certificates representing
(i) the number of Shares constituting the Consideration
(ii) less 175,000 Shares shall be delivered to a
representative designated by the shareholders (the
"Shareholder Representative"), to be distributed on a pro
rata basis to each Shareholder, as soon as practicable
after Closing, in accordance with the percentages set
forth opposite each Shareholder's name on Exhibit B.
Certificates representing 175,000 Shares (the "Escrow
Shares") will be delivered to Shambaugh, Kast, Xxxx &
Xxxxxxxx, as Escrow Agent, (the "Escrow Agent") pursuant
to an escrow agreement being entered into simultaneously
herewith in substantially the form attached hereto as
Exhibit E.
1.4 Closing. The consummation of the
transactions contemplated hereby (the "Closing") is
taking place at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 on
October 16, 1995 (the "Closing Date"), simultaneously
with the execution of this Agreement, the Certificate of
Merger and the other agreements, documents, instruments
and writings executed and delivered pursuant hereto or in
connection herewith (collectively the "Other Documents").
1.5 Deliveries by PTC and Shareholders. PTC
and the Shareholders are delivering the following to
Buyer and PhoneTel:
(a) Stock certificates representing all of
the Seller Shares, accompanied by stock powers (duly
endorsed in blank) or other duly executed instruments of
transfer;
(b) A Stockholder Representations and
Warranties Certificate from each Shareholder, in
substantially the form attached hereto as Exhibit C;
(c) A certificate, duly executed by an
officer of PTC, representing to Buyer and PhoneTel that
Exhibit B is an accurate and complete list of all
Shareholders and that there are no other Seller Shares
issued and outstanding; and
(d) Certified resolutions of the Board of
Directors and the Shareholders of PTC approving this
Agreement, the other Documents and the transactions
contemplated hereby and thereby.
1.6 Deliveries by Buyer and PhoneTel. Buyer
and PhoneTel are delivering or will deliver the following
to Seller:
(a) 1,174,290 Shares, for distribution to
Seller Shareholders;
(b) 175,000 Shares for delivery to the
Escrow Agent;
(c) Certified resolutions of the Board of
Directors and Shareholders of Buyer, approving this
Agreement and the Other Documents and transactions
contemplated hereby and thereby;
(d) Certified resolutions of the Board of
Directors of PhoneTel approving this Agreement, the Other
Documents and the transactions contemplated hereby and
thereby; and
(e) The Certificate of Merger, to be filed
with the Secretary of State.
1.7 Related Matters.
(a) Non-Competition Agreements. At the
closing, Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx are
entering into the agreements to not compete with PhoneTel
which are attached hereto as Exhibits F and G,
respectively, (the "Non-Competition Agreements").
(b) Registration Rights Agreement. At the
Closing, PhoneTel and Buyer are entering into the
registration rights agreement which is attached hereto as
Exhibit E (the "Registration Rights Agreement")
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer and
PhoneTel as follows:
2.1 Organization and Standing; Subsidiaries.
(a) Seller is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Indiana. Seller has all
requisite corporate power and authority to own, lease and
operate the properties and assets it now owns, operates
and leases and to carry on its business and operations as
currently and heretofore conducted. Schedule 2.1 is a
complete listing of all jurisdictions in which Seller is
presently doing business. Seller is duly qualified or
licensed to do business and is in good standing in all
such jurisdictions.
(b) Seller has no subsidiaries. As used
in this Agreement, a subsidiary of an entity shall mean
(i) any corporation for which such entity (or any
subsidiary of such entity) is entitled to elect a
majority of the directors, by virtue of its ownership of
more than 50% of the outstanding securities having
ordinary voting power, or otherwise, or (ii) any
partnership, joint venture or other entity which such
entity (or any subsidiary of such entity) controls, by
virtue of its ownership of more than 50% of the entity,
or otherwise.
(c) Seller has taken all actions necessary
to enable Buyer to assume, without any adverse effect,
all of Seller's rights and interests in all joint
ventures.
2.2 Organizational Documents and Corporate
Records.
(a) Seller has heretofore delivered to
Buyer complete and correct copies of the Articles of
Incorporation and Bylaws of Seller, as currently in
effect and including all amendments thereto. The minute
books of Seller have been made available to Buyer for its
inspection and contain complete and correct records of
all meetings, and consents in lieu of a meeting, of
Seller's Board of Directors (and any committees thereof)
and of Seller's shareholders held or executed since
Seller's incorporation, and such records accurately
reflect all transactions referred to therein. The stock
books and ledgers of Seller have been made available to
Buyer for its inspection, and such books and ledgers are
complete and correct in all material respects.
(b) Seller has made available to Buyer all
accounting, corporate and financial books and records
(the "Accounting Books and Records") which relate to the
business of Seller.
2.3 Authorization. Seller has the requisite
corporate power and authority to execute, deliver and
perform its obligations under this Agreement and the
Other Documents and to consummate the transactions
contemplated hereby and thereby. All corporate
proceedings on the part of Seller which are necessary to
execute, deliver and perform this Agreement and the other
Documents and to consummate the transactions contemplated
hereby and thereby have been duly authorized and taken.
Upon execution, this Agreement and all Other Documents to
which Seller is a party will constitute valid and binding
obligations of Seller and shall be enforceable against
Seller in accordance with their terms.
2.4 Seller Capitalization. As of the date
hereof, the authorized capital stock of Seller consists
of 15,000,000 shares of Class A common stock, no par
value ("Seller Shares"), 100,000 shares of Class B common
stock, no par value, and 10,000,000 shares of preferred
stock, no par value. 966 Seller Shares are issued and
outstanding as of the date hereof, all of which are owned
by the Shareholders. Seller has no other class of
capital stock authorized or outstanding. None of
Seller's shares of capital stock have been reserved for
any purpose. All outstanding Seller Shares are duly
authorized, validly issued, fully paid and nonassessable
and were not issued in violation of any preemptive
rights. There are no (i) options, warrants, calls,
commitments, or rights of any character to purchase or
otherwise acquire from Seller shares of capital stock of
any class, (ii) outstanding securities of Seller that are
convertible into or exchangeable or exercisable for
shares of any class of capital stock of Seller, (iii)
options, warrants or other rights to purchase from Seller
any such convertible or exchangeable securities, (iv)
contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance of any
capital stock of Seller, nor (v) options, warrants or
rights, pursuant to which, in any of the foregoing cases,
Seller is or would be subject or bound.
2.5 Consents and Approvals; No Violation.
Neither the execution and delivery of this Agreement and
the Other Documents, nor the consummation of the
transactions contemplated hereby or thereby, nor
compliance with any of the provisions hereof, will (a)
conflict with any provision of the Articles of
Incorporation or Bylaws (or other similar organizational
documents) of Seller, (b) require any consent, waiver,
approval, authorization or Permit of, or filing with or
notification to, or any other action by, any Governmental
Authority by Seller, (c) violate any Law or any
restriction imposed by any Governmental Authority which
might be applicable to Seller, or by which any of
Seller's business, properties or assets may be bound or
affected nor (d) violate, breach, or conflict with, 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 of any
obligation to pay or result in the imposition of any
Encumbrance upon any of the property) under any of the
terms, conditions or provisions of any note, bond,
mortgage, indenture, Encumbrance, contract, Permit, order
or other instrument or obligation to which Seller is a
party or by which any of Seller's business, properties or
assets may be bound or affected
2.6 Absence of Undisclosed Liabilities.
Schedule 2.6 of the Disclosure Schedule
sets forth a true, complete and accurate list of all
liabilities of Seller at the Closing, including all
Encumbrances attaching to any of Seller's Assets. Except
as set forth on Schedule 2.6 of the Disclosure Schedule,
Seller had no liabilities arising from or relating to its
business and operations of any nature (whether absolute,
accrued, fixed, contingent, liquidated, unliquidated or
otherwise and whether due or to become due) and any and
all liabilities or obligations incurred since June 30,
1995 were incurred in the ordinary course of business and
consistent with past practice.
2.7 Absence of Certain Changes or Events.
Except as set forth on Schedule 2.7 of the Disclosure
Schedule, since June 30, 1995:
(i) Seller has operated its business in
the ordinary course consistent with past practice;
(ii) there has not been any material
adverse change in the business, results of
operations, assets, liabilities, financial condition
or (except for matters which apply to United States
businesses generally) any material adverse change in
the prospects of Seller; and
(iii) Seller has not incurred any material
damage, destruction or loss (whether or not covered
by insurance) to its owned or leased property or
assets.
2.8 Compliance with Laws and Permits.
(a) The business and operation of Seller
have been conducted and are now being conducted in all
material respects in compliance with all Laws and Orders
of all Governmental Authorities having jurisdiction over
Seller and all Permits relating to any of its properties
or applicable to its business.
(b) Seller possesses all Permits necessary
to own and operate its property and assets and to conduct
its business as it is currently conducted. Such Permits
are valid, subsisting in full force and effect, and
Seller has fulfilled its material obligations under each
of the Permits, and no event has occurred or condition or
state of facts exists which constitutes or, after notice
or lapse of time or both, would constitute a default or
violation under any of the Permits or would permit
revocation or termination of any of the Permits. No
proceeding which might involve the revocation or
termination of any such Permits is pending or, to the
knowledge of Seller, threatened.
(c) Seller has made all filings and
received all approvals relating to the Permits which are
necessary in order for Buyer to legally and validly own
and operate the property and assets of Seller and to
conduct Seller's business as it is currently and has
heretofore been conducted.
2.9 Litigation and Arbitration.
(a) No claim, action, cause of action,
suit, proceeding, inquiry, investigation or Order by or
before any Governmental Authority, administrative body or
arbitration or mediation panel is pending or, to the best
of Seller's knowledge, threatened, against Seller or
which is otherwise pending or threatened and might affect
the business, operations, or assets of Seller, except as
set forth on Schedule 2.9 of the Disclosure Schedule. No
order of any Governmental Authority, arbitrator or
mediator is outstanding against Seller, its business,
operations or assets. Seller has no knowledge of any
fact or circumstance which would reasonably be expected
to result in any other claim, action, cause of action,
suit, proceeding, inquiry, investigation or Order being
filed which would be against Seller or which might affect
its business, operations or assets.
(b) To the best of Seller's knowledge, no
claim, action, suit, proceeding, inquiry or investigation
has been instituted which threatens to restrain or
prohibit or to otherwise challenge the legality or
validity of the transactions contemplated by this
Agreement or the Other Documents.
2.10 Brokers. Seller has no obligation to pay
any brokers, finders, investment bankers, financial
advisors or similar fee in connection with this Agreement
or the other Documents or the transactions contemplated
hereby or thereby, by reason of any action taken by or on
behalf of Seller.
2.11 Seller Phones. There were at least 1200
Seller Phones in operation as of the close of business on
September 30, 1995. A complete and accurate list of all
Seller Phones is attached hereto as Schedule 2.11 of the
Disclosure Schedule. The aggregate monthly gross revenue
as of the date of closing divided by the number of Seller
Phones is greater than $150.00, provided, however, that
Buyer shall have no action against Seller unless the
aggregate monthly gross revenue divided by the number of
Seller Phones is less than $145.00 as of the date of
closing.
2.12 Telco Charges and Location Commission.
Seller has paid all telephone line charges to the local
exchange companies and commissions to site location
owners which are due and payable as of the Closing,
except as set forth on Schedule 2.12 of the Disclosure
Schedule, or, if not so paid, such unpaid charges and
commissions are immaterial and not likely to have a
material adverse effect upon the operations of the
business of PTC.
2.13 Disclosure. Seller has disclosed to
PhoneTel and Buyer any and all facts which are material
to Seller's business, results of operations, assets,
Liabilities, and financial condition. No representation
or warranty by Seller in this Agreement (including the
Disclosure Schedule) and no statement by Seller in any of
the Other Documents or previously disclosed to PhoneTel
or Buyer, contains any untrue statement of a material
fact or omits to state any material fact necessary in
order to make the statements made herein or therein, in
light of the circumstances under which they were made,
not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND PHONETEL
PhoneTel and Buyer represent and warrant to
Seller as follows:
3.1 Organization and Standing; Subsidiaries.
Buyer is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Ohio. Buyer has all requisite corporate
power and authority to own, lease and operate the
properties and assets it now owns, operates and leases
and to carry on its business and operations as currently
and heretofore conducted. Schedule 3.1 is a complete
listing of all jurisdictions in which Buyer is presently
doing business, and Buyer is duly qualified or licensed
to do business and is in good standing in all such
jurisdictions.
3.2 Authorization. Buyer has the requisite
corporate power and authority to execute, deliver and
perform their obligations under this Agreement and the
Other Documents and to consummate the transactions
contemplated hereby and thereby. All corporate
proceedings on the part of Buyer which are necessary to
execute, deliver and perform this Agreement and the Other
Documents and to consummate the transactions contemplated
hereby and thereby have been duly authorized and taken.
Upon execution, this Agreement and the Other Documents
will constitute valid and binding obligations of Buyer
and shall be enforceable against Buyer in accordance with
their terms.
3.3 Capitalization.
(a) As of the date hereof, the authorized
capital stock of Buyer consists of (i) 22,500,000 Shares,
14,497,107 of which are issued and outstanding, and (ii)
2,500,000 shares of Preferred Stock, $.01 par value, of
which (A) 2,125 shares have been designated Preferred
Stock, $100 par value, of which no shares are
outstanding; (B) 6,500 shares have been designated
Convertible Preferred Stock, without par value, $100
stated value, cumulative and redeemable, of which no
shares are outstanding; (C) 3,880 shares have been
designated Preferred Stock, without par value, $1,000
stated value, cumulative and redeemable, of which 1,496
shares are outstanding; (D) 16,000 shares have been
designated as Preferred Stock, without par value, $100
stated value, cumulative and redeemable, of which 12,200
shares are outstanding; (E) 2,500 shares have been
designated 7% Convertible Preferred Stock, without par
value, $100 stated value, cumulative and redeemable, all
of which shares are outstanding; (F) 550,000 shares have
been designated as 10% Non-Voting Preferred Stock,
without par value, of which 530,534 shares are
outstanding; and (G) 1,918,995 shares are not yet
designated nor issued. PhoneTel has no other class of
capital stock authorized or issued and outstanding. All
of the PhoneTel shares of capital stock issued are duly
authorized and validly issued, fully paid, nonassessable
and not issued in violation of any preemptive rights.
(b) Except as set forth in Schedule
3.3(b), there are no (i) options, warrants, calls,
commitments or right of any character to purchase or
otherwise acquire from PhoneTel any shares of its capital
stock, (ii) outstanding securities of PhoneTel that are
convertible into or exchangeable or exercisable for
shares of any class of stock of PhoneTel, (iii) options,
warrants or other rights to purchase from PhoneTel any
such convertible or exchangeable securities, (iv)
contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance of any
capital stock of PhoneTel nor (v) any options, warrants
or rights, pursuant to which, in any of the foregoing
cases, PhoneTel is or would be subject or bound; no other
shares of PhoneTel's capital stock have been reserved for
any purpose.
3.4 Consents and Approvals; No Violation.
Except as set forth on Schedule 3.4 of the Disclosure
Schedule, neither the execution and delivery of this
Agreement and the other Documents, nor the consummation
of the transactions contemplated hereby or thereby, nor
compliance with any of the provisions hereof, will
conflict with any provision of the Articles of
Incorporation or Code of Regulations (or other similar
organizational documents) of Buyer, (b) require any
consent, waiver, approval, authorization or Permit of, or
filing with or notification to, or any other action by,
any Governmental Authority by Buyer, (c) violate any Law
of any Governmental Authority which is applicable to
Buyer, or by which any of Buyer's business, properties or
assets may be bound or affected nor (d) violate, breach,
or conflict with, 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
of any obligation to pay or result in the imposition of
any Encumbrance upon any of the property) under any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture, Encumbrance, contract, Permit, Order
or other instrument or obligation to which Buyer is a
party or by which any of the business, properties or
assets of Buyer may be bound or affected.
3.5 Absence of Undisclosed Liabilities.
(a) Except as set forth on Schedule 3.5
(a) of the Disclosure Schedule, (i) Buyer had no
liabilities arising from or relating to its business and
operations of any nature (whether absolute, accrued,
fixed, contingent, liquidated, unliquidated or otherwise
and whether due or to become due) which were not
reflected in the financial statements (the "PhoneTel
Financial Statements") from Form 10QSB for the quarter
ended June 30, 1995, and (ii) any liability or obligation
incurred since June 30, 1995, was incurred in the
ordinary course of its business and consistent with past
practice.
(b) Schedule 3.5 (b) of the Disclosure
Schedule sets forth a true, complete and accurate list of
all liabilities of Buyer as of September 22, 1995.
3.6 Absence of Certain Changes of Events.
Except as set forth on Schedule 3.6 of the Disclosure
Schedule, since June 30, 1995:
(i) Buyer has operated its business in the
ordinary course consistent with past practice;
(ii) there has not been any material
adverse change in the business, results of
operations, assets, liabilities, financial condition
or (except for matters which apply to United States
businesses generally) any material adverse change in
the prospects of PhoneTel; and
(iii) Buyer has not incurred any material
damage, destruction or loss (whether or not covered
by insurance) to its owned or leased property or
assets.
3.7 Compliance with Laws and Permits.
(a) Except as set forth on Schedule 3.7
(a) of the Disclosure Schedule, the business and
operation of Buyer have been conducted and are now being
conducted in all material respects in compliance with all
Laws and Orders of all Governmental Authorities having
jurisdiction over Buyer and all Permits relating to any
of its properties or applicable to its business.
(b) Except as set forth on Schedule 3.7(b)
of the Disclosure Schedule, Buyer possesses all Permits
necessary to own and operate its property and assets and
to conduct its business as it is currently conducted.
Such Permits are valid, subsisting in full force and
effect, and Buyer has fulfilled its material obligations
under each of the Permits, and no event has occurred or
condition or state of facts exists which constitutes or,
after notice or lapse of time or both, would constitute a
default or violation under any of the Permits or world
permit revocation or termination of any of the Permits.
No proceeding which might involve the revocation or
termination of any such Permits is pending or, to the
knowledge of Buyer, threatened.
(c) Except as set forth on schedule 3.7(c)
of the Disclosure Schedule, Buyer has made all filings
and received all approvals in connection with the Permits
which are necessary for Buyer to own and operate the
property and assets of Buyer and to conduct Buyer's
business as it is currently and has heretofore been
conducted.
3.8 Litigation and Arbitration.
(a) No claim, action, cause of action,
suit, proceeding, inquiry, investigation or Order by or
before any Governmental Authority, administrative body or
arbitration or mediation panel is pending or, to the best
of Buyer's knowledge, threatened, against Buyer, except
as set forth on Schedule 4.8 of the Disclosure Schedule.
No Order of any Governmental Authority, arbitrator or
mediator is outstanding against Buyer, its business,
operations or assets. Buyer has no knowledge of any fact
or circumstance which could reasonably be expected to
result in any other claim, action, cause of action, suit,
proceeding, inquiry, investigation or Order, against
Buyer or affect its business, Operations or assets.
(b) To the best of Buyer's knowledge, no
claim, action, suit, proceeding, inquiry or investigation
has been instituted which threatens to restrain or
prohibit or to otherwise challenge the legality or
validity of the transactions contemplated by this
Agreement or the Other Documents.
3.9 Telco Charges and Location Commissions.
PhoneTel has paid all telephone line charges to the local
exchange companies and commissions to site location
owners which are due and payable as of the Closing,
except as set forth on Schedule 3.9 of the Disclosure
Schedule, or if not so paid, such unpaid charges and
commissions are immaterial and not likely to have a
material adverse effect upon the operations of the
business of PhoneTel.
ARTICLE IV
FURTHER ASSURANCES; COOPERATION
4.1 Further Assurances; Cooperation.
(a) The parties shall from time to time
after the Closing, upon the request of any other party
and without further consideration, execute, acknowledge
and deliver in proper form any further instruments or
documents, and take such further actions as such other
party may reasonably require, to carry out effectively
the intent of this Agreement and the other Documents.
4.2 Expenses. Any expenses incurred by the
parties in connection with or execution of this Agreement
and the Other Documents and the consummation of the
transactions contemplated hereby and thereby, including
expenses of accountants, counsel, brokers, finders,
financial advisors and other representatives shall be
paid by the parties incurring such expenses.
ARTICLE V
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
5.1 Survival of Representations and
Warranties. All representations and warranties of
Seller, Buyer contained herein or made pursuant hereto
shall survive the Closing and any investigation at any
time made by or on behalf of any party hereto until the
earlier of (i) six months from the date hereof or (ii)
with respect to representations of Seller which affect
the tax liabilities of Buyer, two years from the date
hereof. Notwithstanding the foregoing, if a claim with
respect to a breach of a representation and warranty is
made within the applicable period in accordance with the
provisions hereinafter set forth, such claim and any
related claim may continue to be asserted after such
period.
5.2 Indemnification of Buyer. The
Shareholders of Seller agree to indemnify Buyer from any
Losses incurred by reason of any breach of representation
and warranty or covenant of Seller contained herein;
provided, however, that Buyer shall have a claim only for
the value of the loss or losses which, in the aggregate,
exceed $100,000. The escrowed shares will be available
to buyer for the settlement of any claims pursuant to
Section 5.4, in addition to any other remedies to which
the buyer may be entitled.
5.3 Indemnification of Seller Shareholders.
Buyer agrees to indemnify Seller's shareholders from any
Losses incurred by reason of any breach of a
representation and warranty or covenant of Buyer
contained herein; provided, however, that a party shall
have a claim only for the value of the loss or losses
which, in the aggregate, exceed $100,000.
5.4 Assertion of Claims.
(a) The parties shall be free to bring
all differences of interpretation and disputes arising in
connection with this Agreement to the attention of the
other at any time without prejudicing their harmonious
relationship and operations hereunder, and the good
offices and facilities of either party shall be available
at all times for the prompt and effective adjustment of
any and all such differences, either by mail, telephone
or personal meeting under friendly and courteous
circumstances.
(b) If a party claims ("Claiming Party")
that it is entitled to indemnification under this
Article, notice of such claim (the "Claim") shall be
given to the party from whom the Claiming Party seeks
indemnification. The parties shall negotiate in good
faith to determine the validity and the value of the
Claim. If the parties cannot reach an agreement as to
the value of the Claim, then the Claim shall be submitted
to a mutually acceptable party for arbitration in
accordance with the Commercial Rules of the American
Arbitration Association, and the decision of such
arbitrator shall be final and binding upon the parties
for all arbitration rulings awarding less than $100,000
in damages. The prevailing party in any action brought
before an arbitrator or any court shall be entitled to
recover such costs, including fees and expenses of
counsel.
ARTICLE VI
MISCELLANEOUS
6.1 Parties in Interest; No Third Party
Beneficiaries.
(a) This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the
parties hereto and their respective successors and
permitted assigns. This Agreement and the rights and
obligations of Seller, Buyer hereunder may not be
assigned by any of the parties hereto without the prior
written consent of the other parties, except that the
Buyer may assign its rights and obligations hereunder to
a designated wholly-owned subsidiary at any time.
(b) This Agreement is not intended, nor
shall it be construed, to confer any rights or remedies
under or by reason of this Agreement upon any Person
except (i) the parties hereto, (ii) the shareholders of
Seller and Buyer and (iii) their heirs, successors and
permitted assigns.
6.2 Exhibits and Disclosure Schedule. All
Exhibits attached hereto and the Disclosure Schedule
referred to herein are hereby incorporated in and made a
part of this Agreement as if set forth in full herein.
6.3 Entire Agreement. This Agreement and the
Other Documents, including all Exhibits, documents,
schedules, certificates and instruments referred to
herein or therein, embody the entire agreement and
understanding of the parties hereto in respect of the
transactions contemplated by this Agreement. This
Agreement supersedes all prior agreements, arrangements
and understandings of the parties with respect to such
transaction.
6.4 Waiver of Compliance. No amendment,
modification, alteration, supplement or waiver of
compliance with any obligation, covenant, agreement,
provision or condition hereof or consent pursuant to this
Agreement shall be effective unless evidenced by an
instrument in writing executed by all of the parties
hereto, or, in the case of a waiver the party against
whom enforcement of any waiver is sought. Any waiver or
failure to insist upon strict compliance with such
obligations, covenant, agreement, provision or condition
shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
6.5 Enforceability. If any term, provision,
covenant or restriction of this Agreement or the
application thereof to any person or circumstance should
be held by an administrative agency or court of competent
jurisdiction to be invalid, void, or unenforceable, then
the remainder of this Agreement and the application of
such term, provision, covenant, or restriction to other
persons or circumstances shall not be affected thereby,
but rather shall be enforced to the greatest extent
permitted by law. Further, it is the intent of the
parties that if any term, provision, covenant, or
restriction of the Agreement should be held to be
invalid, void, or unenforceable as applied to any person
or circumstance, then such term, provision, covenant, or
restriction shall be modified to the minimum extent
necessary in order to render the same enforceable,
consistent with the expressed objectives of the parties
hereto for entering into this Agreement.
6.6 Counterparts. This Agreement may be
executed in any number of counterparts, each of which
shall be deemed an original but all of which together
shall constitute one and the same instrument.
6.7 Headings. The table of contents, article
and section headings contained in this Agreement are for
convenience only and shall not control or affect in any
way the meaning or interpretation of the provisions of
this Agreement.
6.8 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the state of New York without giving effect to the
conflicts of law principles thereof.
6.9 Notices. All notices, requests, claims,
demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given (i)
at the time of delivery if personally delivered or
telecopied (with confirmation of receipt), (ii) the next
day, if delivered by nationally-recognized overnight
express service, or (iii) in five (5) days, if sent by
registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following
addresses:
(a) If to PhoneTel to:
PhoneTel Technologies, Inc.
000 Xxxxxxx Xxxxxx Xxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
Attn: Xxxxxx Xxxx
with copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
Attn: N. J. Terris, Esq.
(b) if to PTC:
Public Telephone Corporation
Fort Xxxxx, Indiana
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
Attn: President
with copy to:
Shareholder Representative/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
with copy to:
Shambaugh, Kast, Xxxx & Xxxxxxxx
600 Standard Federal Plaza
P. O. Xxx 00000
Xxxx Xxxxx, Xxxxxxx 00000-0000
(000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
or to such other address as the person to whom notice is
to be given may have previously furnished to the other in
writing in the manner set forth above, provided that
notice of a change of address shall be, deemed given only
upon receipt.
ARTICLE VII
DEFINITIONS
7.1 Definitions. For purposes of this
Agreement, the following terms shall have the meanings
set forth below (such meanings to be equally applicable
to both the singular and plural forms of the terms
defined):
"Buyer" shall mean PhoneTel II, Inc., an Ohio
corporation and a wholly-owned subsidiary of PhoneTel.
"Certificate of Merger" shall have the meaning
set forth in Section 1.1 hereof.
"Closing" shall have the meaning set forth in
Section 1.4 hereof.
"Closing Date" shall have the meaning set forth
in Section 1.4 hereof.
"Code" shall mean the Internal Revenue Code of
1986, as amended.
"Disclosure Schedule" shall mean the disclosure
schedule delivered in connection herewith.
"Encumbrance" shall mean any lien, encumbrance,
proxy, voting trust arrangement, pledge, security
interest, collateral security agreement, financing
statement (and similar notices) filed with any
Governmental Authority, claim (including any claim as
defined in the Code), charge, equities, mortgage, pledge,
objection, title defect, option, restrictive covenant or
restriction on transfer of any nature whatsoever, and the
interest of the lessor in any property subject to a
capital lease.
"GAAP" shall mean generally accepted accounting
principles as in effect on the date hereof.
"Governmental Authority" shall mean any
government or political subdivision thereof, whether
federal, state, local or foreign, or any agency,
department, commission, board, bureau, court, tribunal,
body, administrative or regulatory authority or
instrumentality of any such government or Political
subdivision.
"Law" shall mean any law (including common
law), rule, regulation, restriction (including zoning),
code, statute, ordinance, order, writ, injunction,
judgment, decree or other requirement of a Governmental
Authority.
"Losses" shall mean and include all demands,
claims, actions, causes of action, assessments, damages,
losses, liabilities, judgments, settlements, fines,
penalties, sanctions, costs and expenses (including,
without limitation, interest, penalties, reasonable
attorneys' fees and expenses as incurred, and all other
reasonable costs of investigating and defending third
party claims as incurred).
"Merger" shall have the meaning set forth in
Section 1.1 hereof.
"Order" shall mean any order, judgment,
injunction, award, decree, writ, rule or similar action
of any Governmental Authority.
"Other Documents" shall have the meaning set
forth in Section 1.3 hereof.
"Permits" shall mean any franchise, license,
certificate, approval, identification number,
registration, permit, authorization, order or approval
of, and any required registration with, any Governmental
Authority.
"Person" shall mean any individual,
partnership, firm, trust, association, corporation, joint
venture, joint stock company, unincorporated
organization, Governmental Authority or other entity.
"PhoneTel" shall mean PhoneTel Technologies,
Inc., an Ohio corporation.
"PhoneTel Financial Statements" shall have the
meaning set forth in Section 4.5 hereof.
"PTC" shall mean Public Telephone Corporation,
an Indiana corporation.
"Securities Act" shall mean the Securities Act
of 1933, as amended, and the rules and regulations
promulgated thereunder.
"Seller" shall mean PTC.
"Seller Phones" shall mean the microprocessor-
based pay telephones owned and operated by Seller which
are active and generating income.
"Seller Shares" shall mean the common shares,
no par value, of Public Telephone Corporation which are
issued and outstanding as of the closing.
"Shares" shall mean the shares of Buyer's
common stock, $.0l par value.
"Shareholders" shall have the meaning set forth
in Section 1.2.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement, as of the day and year first
above written.
Public Telephone Corporation
By:
Xxxxxx X. Xxxxxx, President
PhoneTel:
PHONETEL TECHNOLOGIES, INC.
By:
Name:
Title:
BUYER:
PHONETEL II, INC.
By:
Name:
Title:
