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EXHIBIT 10.2
AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "AMENDMENT"), dated as
of December 31, 1996, among PhoneTel Technologies, Inc., an Ohio corporation
(the "Buyer"); PhoneTel CCI, Inc., a Texas corporation and wholly owned
subsidiary of the Buyer ("Merger Sub"); Cherokee Communications, Inc., a Texas
corporation ("CCI"); Xxxx X. Xxxxxx, Xx., Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx,
C. Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxx & Company Investments, Inc., Capital Southwest
Corporation, Capital Southwest Venture Corporation, Banc One Capital Partners,
L.P. (together with CCI, collectively the "Sellers"); and Xxxx X. Xxxxxx, Xx.
and X. Xxxxx Duty, as Seller Representatives.
W I T N E S S E T H:
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WHEREAS, the Buyer, Merger Sub and the Sellers entered into that
certain Agreement and Plan of Merger, dated as of November 21, 1996 (the
"AGREEMENT"), whereby they agreed to cause Merger Sub to merge with and into
CCI; and
WHEREAS, pursuant to the terms of the Agreement, the Closing Date is to
occur between January 2, 1997 and January 31, 1997; and
WHEREAS, the Buyer, the Sellers, Merger Sub and Seller Representatives
have agreed to close the transactions contemplated by the Agreement on January
3, 1997, but desire the Merger to be effective for financial accounting purposes
as of January 1, 1997, on the terms and conditions provided in this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
I.
GENERAL TERMS
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A.TERMS DEFINED IN AGREEMENT. As used in this Amendment, except as may
otherwise be provided in Sections 1.2 and 1.3 hereof, all capitalized terms
shall have the meanings ascribed to them in the Agreement.
B.AMENDED DEFINITIONS. The following terms which are defined in Article
IX of the Agreement are amended in their entirety to read as follows:
"Contract Phones" shall mean the telephones to be installed by
CCI pursuant to location contracts entered into by CCI, provided the
locations for installation of such telephones have been selected and
approved consistent with standards employed by CCI immediately prior to
October 16, 1996.
"First Rate Cap Year" shall mean the twelve-month period from
the Effective Time through the first anniversary of the Effective Time.
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"Post-Closing Period" shall mean any taxable year beginning on
or after January 1, 1997.
"Pre-Closing Period" shall mean any taxable year which ends on
or before December 31, 1996.
"Second Rate Cap Year" shall mean the twelve-month period from
the end of the First Rate Cap Year through the second anniversary of
the Effective Time.
"Straddle Period" shall mean any taxable year that begins
before and ends after the Effective Time.
X.XXX DEFINITIONS. The following terms are hereby added as defined
terms in Article IX of the Agreement to read in their entirety and be located as
follows:
1.The following shall be added after the defined term
"Straddle Period" and before the defined term "Surviving Corporation":
"Subsidiaries" shall mean Cherokee Communications, Inc., a South Dakota
corporation, and Cherokee Communications, Inc., a Nevada corporation.
2.The following shall be added after the defined term "Merger"
and before the defined term "Merger Sub": "Merger Effective Time" shall mean the
close of business on the date on which the Articles of Merger have been duly
filed with the Texas Secretary of State or such other time as is agreed upon by
the parties and specified in the Articles of Merger.
II.
REVISIONS TO AGREEMENT
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A.MERGER EFFECTIVE TIME; EFFECTIVE TIME. Sections 1.1, 1.2, 1.11 and
1.12 of the Agreement are hereby amended by replacing the defined term
"Effective Time" with the defined term "Merger Effective Time". Section 1.4(c)
of the Agreement is hereby amended by replacing the defined term "Closing Date"
with the defined term "Effective Time".
B.CONSIDERATION ADJUSTMENTS--FIRST QUARTER. Section 1.4(b) of the
Agreement is hereby amended to read in its entirety as follows:
"(b) FIRST QUARTER EBITDA. Intentionally Omitted."
C.CONSIDERATION ADJUSTMENTS--INSTALLED PHONES. Section 1.4(d) of the
Agreement is hereby amended to read in its entirety as follows:
"(d) INSTALLED PHONES. If the number of Installed Phones as of
the Effective Time is less than 14,000, the Consideration (as
adjusted pursuant to Sections 1.4(a), (b), and (c)) shall be
decreased by $3,950 multiplied by the difference between
14,000 and the number of Installed
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Phones as of the Effective Time. For purposes of this Section
1.4(d), the number of Installed Phones shall include up to 900
Contract Phones."
D.CONSIDERATION ADJUSTMENTS--CONTRACT PHONES. The Agreement is hereby
amended by adding the following as Section 1.4(f) to read in its entirety as
follows:
"(f) CONTRACT PHONES. If the number of Installed Phones as of
the Effective Time is less than 14,000, the Consideration (as
adjusted pursuant to Sections 1.4(a), (b), (c), (d) and (e))
shall be decreased: (i) by $150 per Contract Phone for which
equipment to complete installation is held in inventory as of
the Effective Time, and (ii) by $1,000 per Contract Phone for
which equipment to complete installation is not in inventory
as of the Effective Time. For purposes of this Section 1.4(f),
the number of Contract Phones with respect to which the
Consideration will be adjusted shall equal the difference
between 14,000 and the number of Installed Phones as of the
Effective Time, not to exceed 900. For purposes of this
Section 1.4(f), the Consideration shall be adjusted first with
respect to Contract Phones for which equipment to complete
installation is held in inventory as of the Effective Time and
then, to the extent necessary, with respect to Contract Phones
for which equipment to complete installation is not in
inventory as of the Effective Time."
E.THE CLOSING. Section 1.8 of the Agreement is hereby amended to read
in its entirety as follows:
"1.8 THE CLOSING. Upon the terms and subject to the conditions
contained in this Agreement, the Closing of the transactions
contemplated hereby (the "Closing") will take place at the
offices of Gardere & Xxxxx, L.L.P., 0000 Xxxxxxxxxxxx Xxxxx,
Xxxxxx, Xxxxx 00000 (or such other place as the Buyer and
Seller Representatives may agree) on January 3, 1997 (the
"Closing Date"), simultaneously with the execution of the
other agreements, documents, instruments and writings to be
executed and delivered pursuant hereto or in connection
herewith (collectively, the "Other Documents"). At the
Closing, the actions described in Sections 1.6(b), 1.8, 1.9
and 1.10 hereof shall be taken. All such actions shall be
deemed to have occurred simultaneously. On the Closing Date,
the Buyer and CCI will cause appropriate Articles of Merger
(the "Articles of Merger") to be filed with the Secretary of
State of Texas in such form and executed as provided in
Article 5.04 of the Texas Business Corporation Act.
Notwithstanding that for state law purposes the Merger will be
effective at the Merger Effective Time, the parties agree
that, except as otherwise provided herein, for purposes of
allocating the rights and responsibilities of the parties
under this Agreement, the Merger shall be deemed effective as
of 12:01 a.m., January 1, 1997, and such time is hereafter
referred to as the "Effective Time"."
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F.REPRESENTATIONS AND WARRANTIES. The second sentence of the
introductory paragraph of Article III of the Agreement is hereby amended to read
in its entirety as follows:
"All references to CCI in this Article III shall refer to CCI,
the Subsidiaries, and CCI's investments in CID, but not the
Excluded Assets, except for Sections 3.1(a) and (c), 3.4, and
3.6."
G.SUBSIDIARIES. Section 3.1 of the Agreement is hereby amended to read
in its entirety as follows:
"3.1 ORGANIZATION AND STANDING; SUBSIDIARIES. (a) CCI
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas. Cherokee
Communications, Inc., a South Dakota corporation, is a
corporation duly organized, validly existing and in good
standing under the laws of the State of South Dakota. Cherokee
Communications, Inc., a Nevada corporation, is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Nevada. CID Communications, S.A. de
C.V. ("CID") is a corporation duly organized, validly existing
and in good standing under the laws of Mexico.
(b) CCI has all requisite corporate power and
authority to own, lease and operate the properties and assets
it now owns, leases and operates and to carry on its business
and operations as now being conducted. CCI is duly qualified
or licensed to do business and is in good standing in each of
the jurisdictions in which (i) the character or location of
the properties and assets it owns, leases or operates, (ii)
the conduct of its business and operations as currently and
heretofore conducted or (iii) any other circumstance makes
such qualification necessary, except where the failure to be
so qualified or licensed would not have a material adverse
effect on CCI.
(c) CCI has no investment in any corporation,
partnership or other entity except CID and the Subsidiaries.
CCI has good and valid title to such number of shares of
common stock of CID which constitutes 50% of the outstanding
shares of the only equity security of CID, free and clear of
any Encumbrances. CCI has good and valid title to all
outstanding shares of common stock of the Subsidiaries, free
and clear of any Encumbrances."
H.RECENT EBITDA. The Agreement is hereby amended by adding the
following as Section 3.26 to read in its entirety as follows:
"3.26 EBITDA. EBITDA for October 1996 plus November 1996
is at least $1,172,349."
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X.XXX RETURNS. The fourth sentence of Section 5.1(b) of the Agreement
is hereby amended to read in its entirety as follows:
"To the extent permissible under applicable law, all such Tax
Returns shall be prepared and filed in a timely manner consistently
with CCI's past practices."
J.EXCLUDED ASSETS. The first sentence of Section 5.9 of the Agreement
is hereby amended to read in its entirety as follows:
"Prior to the Effective Time, the Sellers shall cause the
assets relating to CCI's hospitality division listed on
Exhibit H hereto (the "Excluded Assets") (and any related
liabilities) to be transferred out of CCI and to be acquired
and assumed by the Sellers or one or more other parties (other
than CCI or the Buyer)."
K.CONDITIONS TO CLOSING. Section 6.1(f) of the Agreement is hereby
amended to read in its entirety as follows:
"(f) EBITDA. The EBITDA for October 1996 plus November 1996
shall be at least $1,172,349."
X.XXX INDEMNIFICATION. Section 7.7 of the Agreement is hereby amended
as follows:
1.Section 7.7(a)(ii) of the Agreement is hereby amended to
read in its entirety as follows:
"(ii) any Straddle Period, but only with respect to the
portion of such Straddle Period ending on December 31, 1996
and in the manner provided in paragraph 7.7(d) hereof and"
2.Section 7.7(b) of the Agreement is hereby amended by
replacing the phrase "Without limiting the generality of Section 7.7(a) above"
in the first sentence thereof with the phrase "Notwithstanding anything to the
contrary contained herein":
3.Section 7.7(c)(ii) of the Agreement is hereby amended to
read in its entirety as follows:
"(ii) any Straddle Period, but only with respect to the
portion of such Straddle Period beginning on January 1, 1997
and in the manner provided in paragraph 7.7(d) hereof."
4.Section 7.7(d) of the Agreement is hereby amended by
replacing the words "the Closing Date" with the words "December 31, 1996".
5.Section 7.7(e) of the Agreement is hereby amended by adding
the following to the end thereof:
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", provided, however, that CCI shall, to the extent permitted
under applicable law, elect to carry back any loss
attributable to any compensation deduction generated by the
exercise of stock options on January 1, 1997 by Management
Sellers, or the use of capital contribution of cash by Xx.
Xxxx X. Xxxxxx, Xx. on January 1, 1997 related thereto."
6.Section 7.7(f) of the Agreement is hereby amended by adding
the following sentence after the end of the third sentence thereof:
"Notwithstanding anything to the contrary contained herein,
the Buyer shall pay to the Sellers all Tax refunds resulting
from the carry back of any loss attributable to any
compensation deduction generated by the exercise of stock
options on January 1, 1997 by Management Sellers on, or the
use of capital contribution of cash by Xx. Xxxx X. Xxxxxx, Xx.
January 1, 1997 related thereto."
7.Section 7.7(h) of the Agreement is hereby amended by
replacing the words "the day after the Closing Date" with the words "January 1,
1997".
M.AMENDED SCHEDULE. Schedule 2.2 of the Agreement is hereby deleted in
its entirety and replaced by Schedule 2.2 attached to this Amendment.
III.
MISCELLANEOUS
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A.EXTENT OF AMENDMENTS. Except as otherwise expressly provided herein,
the Agreement, and the other instruments and agreements referred to therein are
not amended, modified or affected by this Amendment. Except as expressly set
forth herein, all of the terms, conditions, covenants, representations,
warranties and all other provisions of the Agreement are herein ratified and
confirmed and shall remain in full force and effect.
B.REFERENCES. On and after the date on which this Amendment becomes
effective, the terms, "Agreement," "this Agreement," "hereof," "herein,"
"hereunder" and terms of like import, when used herein or in the Agreement
shall, except where the context otherwise requires, refer to the Agreement, as
amended by this Amendment, and as may be further amended from time to time.
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[Agreement continued on following page]
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C.COUNTERPARTS. This Amendment 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.
IN WITNESS WHEREOF, the parties hereto executed this Amendment as of
the day and year first above written.
PHONETEL TECHNOLOGIES, INC.
By:
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Xxxxx X. Xxxx
Chairman and Chief Executive Officer
PHONETEL CCI, INC.
By:
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Xxxxx X. Xxxx
Chairman and Chief Executive Officer
CHEROKEE COMMUNICATIONS, INC.
By:
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Xxxx X. Xxxxxx, Xx.
Chairman and Chief Executive Officer
SELLERS:
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XXXX X. XXXXXX, XX., individually
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XXXXXX X. XXXXXXXX, individually
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XXXXX X. XXXXXX, individually
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C. XXXXXX XXXXXXX, individually
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XXXXXXX XXXXXX & COMPANY
INVESTMENTS, INC.
By:
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Xxxxx X. Xxxxx
President
CAPITAL SOUTHWEST CORPORATION
By:
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X. Xxxxx Duty
Senior Vice President
CAPITAL SOUTHWEST VENTURE
CORPORATION
By:
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X. Xxxxx Duty
Senior Vice President
BANC ONE CAPITAL PARTNERS, L.P.
By BOCP Corporation
General Partner
By:
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Xxxxxxx X. Xxxxxxxxx
Authorized Signer
SELLER REPRESENTATIVES:
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XXXX X. XXXXXX, XX.
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X. XXXXX DUTY
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SCHEDULE 2.2
Restrictions on Transferability
1. Amended and Restated Shareholders Agreement dated May 21,
1993, among CCI, Xxxx X. Xxxxxx, Xx., Capital Southwest
Corporation, a Texas corporation; Capital Southwest Venture
Corporation, a Nevada corporation; Banc One Capital Partners
Corporation, a Texas corporation; and Xxxxxxx Xxxxxx &
Company, Inc., an Iowa corporation. This agreement supersedes
the Shareholders Agreement dated December 31, 1992.
2. Amendment No. 1 to the Amended and Restated Shareholders
Agreement (dated as of May 21, 1993) dated November 2, 1995,
made and entered into by and among Xxxx X. Xxxxxx, Xx.;
Capital Southwest Corporation, a Texas corporation; Capital
Southwest Venture Corporation, a Nevada corporation; Banc One
Capital Partners Corporation, a Texas corporation; Xxxxxxx
Xxxxxx & Co., Inc., an Iowa corporation; CCI; and Network
Operator Services, Inc., a Texas corporation.
3. Agreement dated May 21, 1993 between CCI, Xxxxxxx Xxxxxx &
Company, Inc. and Xxxxxxx Xxxxxx & Company Financial Services,
Inc. This Agreement consolidated the terms of four letter
agreements dated June 5, 1992, October 6, 1992, December 3,
1992 and April 12, 1993 between these parties.
4. See Items 2-7 of Schedule 3.5(a) only to the extent the lessor
may terminate lease upon the Merger.
5. Loan and Warrant Purchase Agreement (the "Agreement") dated
May 21, 1993, between Banc One Capital Partners Corporation
and CCI pursuant to which Banc One Capital Partners
Corporation granted CCI a term loan in the amount of
$5,000,000 (to be paid contemporaneously with the Closing).
6. 1992 Incentive Stock Option Plan, as may be amended
contemporaneously with the Closing (the "Plan"), and the
options issued pursuant to the Plan.
7. Option Agreement dated November 2, 1995 between Xxxx X.
Xxxxxx, Xx. and Network Operator Services, Inc. (to be
terminated contemporaneously with the Closing).
8. 1,143,000 Shares owned by Xxxxxx are pledged to Network
Operator Services, Inc. (to be released contemporaneously with
the Closing).
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