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EXHIBIT 10.3
FIRST AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
by and among
PHONETEL TECHNOLOGIES, INC.,
PHONETEL ACQUISITION CORP.
and
COMMUNICATIONS CENTRAL INC.
dated as of
May 15, 1997
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FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (hereinafter
referred to as this "First Amendment"), dated as of May 15, 1997, by and among
PhoneTel Technologies, Inc., an Ohio corporation ("Parent"), PhoneTel
Acquisition Corp., a Georgia corporation and a wholly owned subsidiary of Parent
(the "Purchaser"), and Communications Central Inc., a Georgia corporation (the
"Company").
WHEREAS, Parent, the Purchaser and the Company entered into an
Agreement and Plan of Merger dated as of March 14, 1997 (the "Agreement"); and
WHEREAS, Parent, the Purchaser and the Company desire to amend
the Agreement upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used and not
otherwise defined herein shall have the respective meanings assigned to them in
the Agreement.
ARTICLE II
AMENDMENTS TO ARTICLE I OF THE AGREEMENT
Section 2.1 AMENDMENT TO SECTION 1.1 OF THE AGREEMENT. The
first clause (i) of subsection (a) of Section 1.1 of the Agreement is hereby
amended and restated in its entirety to read as follows:
"(i) there being validly tendered and not withdrawn prior
to the expiration of the Offer, that number of Shares which
represents at least
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seventy-five percent (75%) of the Shares outstanding (but in no event
less than 50.1% of the Shares outstanding on a fully diluted basis)
(the "Minimum Condition"), "
Section 2.2 AMENDMENT TO SECTION 1.4 OF THE AGREEMENT. Section
1.4 of the Agreement is hereby amended and restated in its entirety to read as
follows:
"Section 1.4 THE MERGER. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time, (i) the Purchaser
shall be merged with and into the Company (the "Merger") and the
separate corporate existence of the Purchaser shall cease, (ii) the
Company shall be the successor or surviving corporation in the Merger
(sometimes hereinafter referred to as the "Company Surviving
Corporation" or the "Surviving Corporation") and shall continue to be
governed by the laws of the State of Georgia, and (iii) the separate
corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the
Merger, except as set forth in this Section 1.4. Pursuant to the
Merger, (x) the Articles of Incorporation shall be amended in its
entirety to read as the Articles of Incorporation of the Purchaser, in
effect immediately prior to the Effective Time, except that Article
FIRST thereof shall read as follows: "FIRST: The name of the
corporation is Communications Central Inc." and, as so amended, shall
be the Articles of Incorporation of the Company Surviving Corporation
until thereafter amended as provided by law and such Articles of
Incorporation, except that if the Purchaser shall acquire less than
seventy-five percent of the outstanding Shares pursuant to the Offer or
otherwise, the Articles of Incorporation, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of
the Company Surviving Corporation until thereafter amended as provided
by law and such Articles of Incorporation, and (y) the ByLaws of the
Purchaser (the "By-laws"), as in effect immediately prior to the
Effective Time, shall be the By-laws of the Company Surviving
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Corporation until thereafter amended as provided by law, by the
Articles of Incorporation of the Company Surviving Corporation or by
such By-laws, except that if the Purchaser shall acquire less than
seventy-five percent of the outstanding Shares pursuant to the Offer,
the By-laws of the Company, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Company Surviving
Corporation until thereafter amended as provided by law, by the
Articles of Incorporation of the Company Surviving Corporation or by
such By-laws. The Merger shall have the effects specified in the GBCC."
Section 2.3 AMENDMENT TO SECTION 1.9 OF THE AGREEMENT. Section
1.9 of the Agreement is hereby deleted in its entirety.
Section 2.4 AMENDMENT TO SECTION 1.10 OF THE AGREEMENT.
Section 1.10 of the Agreement is hereby amended by deleting the last two
sentences thereof.
ARTICLE III
AMENDMENT TO ARTICLE II OF THE AGREEMENT
Section 3.1 AMENDMENT TO SECTION 2.1 OF THE AGREEMENT.
Subsection (a) of Section 2.1 of the Agreement is hereby amended and restated in
its entirety to read as follows:
"(a) THE PURCHASER COMMON STOCK. Each issued and outstanding
share of the Purchaser Common Stock shall be converted into and become
one fully paid and nonassessable share of common stock of the Company
Surviving Corporation and shall constitute the only outstanding shares
of capital stock of the Surviving Corporation."
ARTICLE IV
AMENDMENTS TO ARTICLES III AND V OF THE AGREEMENT
Section 4.1 AMENDMENT TO SECTION 3.20 OF THE AGREEMENT. The
first sentence of Section 3.20 of the Agreement shall be amended to be restated
as follows:
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"The Average Net Revenue shall be (i) at least $90 per pay
telephone (excluding prison phones) as of the date hereof and as of the
Closing Date and (ii) at least $135 per prison phone in operation as of
the date hereof and as of June 30, 1997."
Section 4.2 AMENDMENT TO SECTION 5.8(B) OF THE AGREEMENT.
Section 5.8(b) of the Agreement is hereby amended by restating the second and
third provisos of such section as follows:
"; provided, further, however, that in no event shall Parent
be required to pay aggregate annual premiums for insurance under this
Section 5.8(b) in excess of $103,250; and provided, further, that if
the Parent or the Surviving Corporation is unable to obtain the amount
of insurance required by this Section 5.8(b) for such aggregate annual
premium, Parent or the Surviving Corporation shall obtain as much
insurance as can be obtained for an annual premium of $103,250."
Section 4.3 ADDITION OF SECTION 5.14. Article V of the
Agreement is hereby amended by adding a new Section 5.14 to read in its entirety
as follows:
"5.14 ACQUISITIONS BY PARENT. Except for those purchases and
other acquisitions set forth in Section 5.14 of the Parent Disclosure
Schedule, without the prior written consent of the Company, from and
after May 15, 1997 and prior to the purchase by the Purchaser of Shares
pursuant to the Offer, Parent shall not, directly or indirectly,
consummate the purchase or other acquisition of, or enter into any
agreement or make any commitment or undertaking to purchase or acquire,
all or substantially all of the outstanding capital stock, or all or
substantially all of the assets, of any public pay phone operator,
whether by stock purchase, asset purchase, share exchange, merger or
otherwise; PROVIDED, HOWEVER, that no provision hereof is intended to
prohibit Parent or the Purchaser from (a) soliciting, evaluating and
making proposals regarding such purchases and
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acquisitions or (b) entering into agreements for the purchase of not
more than 250 pay phones in any one or more related transactions, or
more than 1,250 pay phones in the aggregate."
Section 4.4 ADDITION OF SECTION 5.15. Article V of the
Agreement is hereby amended by adding a new Section 5.15 to read in its entirety
as follows:
"5.15 CREDIT AGREEMENT EXTENSION. Parent and the Company
shall, and the Company shall use its best efforts to cause First Union
National Bank of Georgia, as lender (the "Lender") under the Amended
and Restated Credit Agreement dated as of August 15, 1996, as amended
(the "Credit Agreement"), to negotiate an amendment, in form and
substance reasonably satisfactory to Parent (the "Extension"), to the
Credit Agreement for the purpose, among others, of extending the due
date for the required $12 million principal payment thereunder from
July 1, 1997 until no sooner than July 1, 1998. From and after May 15,
1997 through and including the date on which the Extension is executed
and delivered by the Company and the Lender, the Company shall (x)
provide Parent with true, correct and complete copies of all
correspondence with the Lender, and (y) notify and consult with Parent
and its advisors regarding the Company's meetings and other discussions
with the Lender, in each case, regarding the Credit Agreement,
including with respect to the Extension."
ARTICLE V
AMENDMENTS TO ARTICLES VII AND VIII OF THE AGREEMENT
Section 5.1 AMENDMENT TO SECTION 7.1 OF THE AGREEMENT. Clause
(i) of subsection (b) of Section 7.1 of the Agreement is hereby amended to
delete the reference therein to "May 19, 1997" and to insert in lieu thereof
"August 20, 1997, provided that such right to terminate shall arise on July 21,
1997 if, on or before such date, Parent has not delivered to the Company a
commitment (subject only to the consummation of the Offer
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and other customary conditions, but not subject to due diligence) for $25
million or more of equity capital to finance the Offer and the Merger;".
Section 5.2 AMENDMENT TO SECTION 8.1(B) OF THE AGREEMENT.
Clause (iii) of subsection (b) of Section 8.1 of the Agreement is hereby amended
to be restated as follows:
"(iii) either the Company or Parent terminates this Agreement
pursuant to Section 7.1(b)(i), there shall have been a failure of the
Minimum Condition and prior thereto there shall have been publicly
announced another Acquisition Proposal or an event set forth in
paragraph (h) of Annex A shall have occurred,"
Section 5.3 AMENDMENT TO SECTION 8.1(C)(I) OF THE AGREEMENT.
Clause (i) of subsection (c) of Section 8.1 of the Agreement is hereby amended
to be restated as follows:
"(i) Section 7.1(b) and the only condition to the purchase of
Shares in the Offer that has not been satisfied is the Financing
Condition (except if the sole reason for Parent's failure to satisfy
the Financing Condition is the failure of the Company to satisfy its
obligations under Section 5.13 hereof), or"
ARTICLE VI
MISCELLANEOUS
Section 6.1 ESCROW AMENDMENT; EFFECT.
(a) Simultaneously with the execution and delivery of this
First Amendment, the Company, Parent and the Escrow Agent are entering into a
Release and Termination of the Escrow Agreement, in the form attached to this
First Amendment as Exhibit A (the "Release and Termination") pursuant to which
the Escrow Amount is being released to the Company. The Company shall retain
$3.5 million of such funds in a separate account, and shall not spend or commit
to spend such funds without the prior written consent of Parent until the
earlier of the
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(i) purchase of Shares in the Offer or (ii) termination of the Agreement.
(b)(i) The Company hereby acknowledges and agrees that the
release to the Company of the Escrow Amount pursuant to the Release and
Termination shall constitute liquidated damages, and the Company shall have no
other right or remedy under the Agreement or the Escrow Agreement (or any
agreement, document or instrument entered into in connection herewith or
therewith) with respect to (A) any action of Parent or Purchaser through the
date hereof or (B) the failure of the Minimum Condition or the Financing
Condition, or both, and (ii) in furtherance of the foregoing, from and after the
execution and delivery of this First Amendment and the Release and Termination
by each of the parties hereto and thereto, the Company hereby irrevocably
releases Parent and the Purchaser from any and all liabilities and obligations,
including under the Agreement, arising out of or relating to the failure of the
Minimum Condition or the Financing Condition, or both.
(c)(i) Each of Parent and Purchaser hereby acknowledges and
agrees that the Escrow Amount is being released from escrow without any further
recourse against the Company, and neither Parent nor Purchaser shall have any
right or remedy under the Agreement or the Escrow Agreement (or any agreement,
document or instrument entered into in connection herewith or therewith) with
respect to the Company's obligation to facilitate the Financing Condition, or
any other action, of the Company through the date hereof, and (ii) in
furtherance of the foregoing, from and after the execution and delivery of this
First Amendment and the Release and Termination by each of the parties hereto
and thereto, each of Parent and Purchaser hereby irrevocably releases the
Company from any and all liabilities and obligations, including under the
Agreement, through the date hereof.
Section 6.2 PAYMENT.
(a) Simultaneously with the execution and delivery of this
First Amendment, Parent is paying to the Company as additional consideration to
the Company for entering into this First Amendment, the amount of $1 million
(the "Payment"); provided that the Company shall utilize the Payment for the
sole purpose of paying a
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portion of the principal amount due under the Credit Agreement.
(b) In the event that the Agreement is terminated for any
reason and, at the time of such termination the Extension has not been executed,
the Company shall pay to Parent the amount of $1 million within two business
days following such termination.
(c) In the event the Agreement is terminated by reason of the
failure of the Minimum Condition or any of the conditions set forth in
paragraphs (d), (e), (f) and (g) of Annex A to the Agreement, the Company shall
pay to Parent the amount of $1 million within two business days following such
termination.
Section 6.3 AMENDMENT. All references in the Agreement (and in
the other agreements, documents and instruments entered into in connection
therewith) to the "Agreement" shall be deemed for all purposes to refer to the
Agreement, as amended by this First Amendment.
Section 6.4 LIMITED EFFECT. Except as expressly modified
herein, the Agreement shall continue to be, and shall remain, in full force and
effect and the valid and binding obligation of the parties thereto in accordance
with its terms.
Section 6.5 COUNTERPARTS. This First Amendment may be executed
in two or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 6.6 GOVERNING LAW. This First Amendment shall be
governed by and construed in accordance with the laws of the State of Georgia
without giving effect to the principles of conflicts of law thereof.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this First Amendment to be signed by their respective officers thereunto
duly authorized as of the date first written above.
PHONETEL TECHNOLOGIES, INC.
By /S/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Chief Executive
Officer
PHONETEL ACQUISITION CORP.
By /S/ X.X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: Secretary
COMMUNICATIONS CENTRAL INC.
By /S/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
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RELEASE AND TERMINATION
THIS RELEASE AND TERMINATION ("Release") is made and entered
into as of May 15, 1997 by and among First Union National Bank of Georgia, a
national banking association (the "Escrow Agent"), Communications Central Inc.,
a Georgia corporation (the "Company"), and PhoneTel Technologies, Inc., an Ohio
corporation ("Parent").
WHEREAS, the parties hereto are parties to an Escrow Agreement
dated as of March 14, 1997 (the "Escrow Agreement");
WHEREAS, the Company and Parent desire to direct the Escrow
Agent to release the Escrow Amount to the Company and to remit earnings and
interest thereon to Parent; and
WHEREAS, the parties hereto further desire to terminate the
Escrow Agreement and the Company and Parent desire to release the Escrow Agent
from any further obligations or responsibilities thereunder.
NOW, THEREFORE, in consideration of the premises and intending
to be legally bound hereby, the parties hereto agree as follows:
Section 1. DEFINED TERMS. Capitalized terms
used but not otherwise defined herein shall have the
meanings ascribed to such terms in the Escrow Agreement.
Section 2. DISBURSEMENT OF FUNDS. The Company and PhoneTel
hereby authorize and direct the Escrow Agent (i) to release the Escrow Amount
after deduction of the Escrow Agent's fee (as contemplated by Section 6 of the
Escrow Agreement) to the Company and (b) to remit to Parent all earnings and
interest (adjusted for any increase or decrease in the principal value of any
investment or any capital gain or loss, as the case may be) on the Escrow
Amount.
Section 3. RELEASE OF ESCROW AGENT. Effective immediately upon
disbursement of funds as contemplated by Section 2 hereof, the Company and
Parent hereby (i) discharge the Escrow Agent from its duties under the
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Escrow Agreement and (ii) subject to such disbursement, release the Escrow Agent
from any loss or claim whatsoever (including attorneys' fees) in conjunction
with the performance of its duties under the Escrow Agreement. The Company and
Parent acknowledge and agree that Section 7(b) of the Escrow Agreement shall
survive the termination of such agreement by execution of this Release.
Section 4. TERMINATION. Upon the final distribution of funds
contemplated by Section 2 hereof, but subject to Section 3 hereof, the Escrow
Agreement shall be terminated.
Section 5. COUNTERPARTS. This Release may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same instrument.
Section 6. GOVERNING LAW. This Release shall be construed in
accordance with and governed by the internal laws of the State of Georgia
without giving effect to the principles of conflicts of law thereof.
Section 7. BENEFIT. This Release shall be binding upon and
inure to the benefit of the parties hereto and the successors and assigns of
each of them.
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IN WITNESS WHEREOF, the parties hereto have affixed their
signatures to this Release upon the date first set forth above.
FIRST UNION NATIONAL BANK
OF GEORGIA
By: /s/ R. Xxxxxxx Xxxxxx
-------------------------------
Title: Vice President
COMMUNICATIONS CENTRAL INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Title: President and Chief
Executive Officer
PHONETEL TECHNOLOGIES, INC.
By: /S/ Xxxxx X. Xxxx
-------------------------------
Title: Chief Executive
Officer
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