Exhibit c(2)
ESCROW AGREEMENT
This ESCROW AGREEMENT is made and entered into as of March 14, 1997
("Escrow Agreement") by and among First Union National Bank of Georgia, a
national banking association (the "Escrow Agent"), Communications Central Inc.,
a Georgia corporation (the "Company") and PhoneTel Technologies, Inc., an Ohio
corporation ("Parent").
WHEREAS, Parent and the Company are parties to an Agreement and Plan
of Merger of even date herewith (the "Merger Agreement") pursuant to which, as
of the "Closing Date" (as such term is defined in the Merger Agreement), the
Company will merge with and into PhoneTel Acquisition Corp., a Georgia
corporation and wholly owned subsidiary of Parent ("Sub"), or Sub will merge
with and into the Company;
WHEREAS, Section 1.10 of the Merger Agreement provides for Parent to
deposit into escrow the amount of $5,000,000 (the "Escrow Amount"), being
delivered by Parent upon the signing of this Escrow Agreement;
WHEREAS, the Company and Parent wish to enter into this Escrow
Agreement providing for the terms and conditions upon which the Escrow Amount
will be held and released by the Escrow Agent, and the Escrow Agent wishes to
act as Escrow Agent pursuant to the terms and conditions of this Escrow
Agreement; and
WHEREAS, all capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties hereto agree as follows:
Section 1. Deposit into Escrow Account. On the date of this Agreement,
Parent is depositing the Escrow Amount with the Escrow Agent into an interest
bearing escrow account established with the Escrow Agent entitled PhoneTel
Technologies, Inc. Escrow Account (the "Escrow Account").
Section 2. Investments and Earnings. (a) The Escrow Agent is hereby
authorized and directed to invest the Escrow Amount in (i) any security issued
or guaranteed by the United States government or a governmental authority of
the United States, (ii) certificates of deposit issued by a bank in the United
States having a combined surplus of at least $500 million (a "Bank"), (iii)
commercial paper with a rating of at least "Prime-1" by Xxxxx'x Investors
Services, Inc. ("Moody's"), (iv) corporate bonds with a rating of Aa or Aaa by
Moody's, or (v) publicly-traded money market funds investing in only the
foregoing, in each case as specified by Parent to the Escrow Agent in
writing. In any event, Parent shall not select any investment with a maturity
which does not allow for sufficient liquidity to satisfy the obligations
hereunder.
(b) The Escrow Agent shall remit to Parent, on the last day of each
month prior to the final distribution of the Escrow Amount pursuant to this
Escrow Agreement, all earnings and interest (adjusted for any increase or
decrease in the principal value of any investment or any capital gain or loss,
as the case may be) upon the Escrow Amount.
Section 3. Escrow Amount and Delivery. The Escrow Agent shall hold the
Escrow Amount until the earlier of the Closing or the termination of the Merger
Agreement, and distribute the Escrow Amount as follows:
3.1 Closing. At the Closing the Escrow Agent shall remit to
Parent the Escrow Amount and all earnings and interest (adjusted for any
increase or decrease in the principal value of any investment or any capital
gain or loss, as the case may be) upon the Escrow Amount.
3.2 Termination of Merger Agreement - General. In the event
that the Merger Agreement is terminated prior to the Closing, (i) Parent may
notify the Escrow Agent of such termination and thereby request delivery of the
Escrow Amount, (ii) the Escrow Agent must thereupon promptly notify the Company
of Parent's request, (iii) the Company then shall have ten (10) days within
which the Company can respond to the Escrow Agent and object to Parent's
request on the basis that such termination was not in accordance with the terms
of the
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Merger Agreement or that the Company is entitled to the Escrow Amount pursuant
to Section 1.10 of the Merger Agreement, (iv) failure to respond within ten
(10) days of the Escrow Agent's notification will be deemed as consent on the
part of the Company to the Escrow Agent's delivering the Escrow Amount to
Parent and (v) actual or deemed consent by the Company will result in the
Escrow Agent's delivery of the entire Escrow Amount to Parent.
3.3 Termination of Merger Agreement - Lack of Financing. In
the event that the Merger Agreement is terminated solely due to the failure of
either (x) the Minimum Condition (provided at least 50.1% of the Shares
outstanding on a fully diluted basis have been validly tendered and not
withdrawn) and neither Parent nor the Purchaser has waived the Minimum
Condition, or (y) the Financing Condition (unless the failure of such Financing
Condition is due solely to the failure of the Company to satisfy its
obligations under Section 5.13 of the Merger Agreement), then (i) the Company
may notify the Escrow Agent of such termination and thereby request delivery of
the Escrow Amount pursuant to Section 1.10 of the Merger Agreement, (ii) the
Escrow Agent must thereupon promptly notify Parent of the Company's request,
(iii) Parent then shall have ten (10) days within which it can respond to the
Escrow Agent and object to the Company's request, (iv) failure to respond
within ten (10) days of the Escrow Agent's notification will be deemed as
consent on the part of Parent to the Escrow Agent's delivering the Escrow
Amount to the Company and (v) actual or deemed consent by Parent will result in
the Escrow Agent's delivery of the entire Escrow Amount to the Company.
3.4 Disputes. It is understood and agreed that should any
dispute arise with respect to the payment and/or ownership or right of
possession of the Escrow Amount, the Escrow Agent is authorized and directed to
retain in its possession the amount in controversy until either (i) Parent and
the Company direct the application or payment thereof by delivering a joint
writing to the Escrow Agent or (ii) the Escrow Agent shall receive a certified
copy of a final judgment of a court of competent jurisdiction with respect to a
claim on the Escrow Amount. Upon receipt of such written direction from Parent
and the Company or not sooner than five (5) days after receipt of such
certified copy of a judgment, the Escrow Agent shall take action with respect
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to the amount in controversy as required by such direction or such judgment,
as the case may be.
Section 4. Interpleader Provision. Nothing contained in this Escrow
Agreement shall preclude the right of the Escrow Agent to seek an adjudication
in a court of competent jurisdiction as to the rights of the parties under this
Escrow Agreement, and the Escrow Agent shall not be liable for any delay
occasioned because of such resort to court. The Escrow Agent will be reimbursed
for expenses, including reasonable counsel fees, in connection with performance
of the Escrow Agent's duties under this Agreement, to be paid 50% by Parent and
50% by the Company.
Section 5. Termination. This Escrow Agreement shall terminate upon the
final distribution of the funds held by the Escrow Agent pursuant to this
Agreement.
Section 6. Compensation of Escrow Agent. The Escrow Agent shall be
entitled to a fee for its escrow services in an amount calculated at a rate of
$1,000 per annum, to be deducted from the Escrow Account.
Section 7. Escrow Agent. (a) The Escrow Agent may resign and be
discharged from its duties hereunder at any time by giving notice of such
resignation to the Company and Parent, which shall specify a date (not less
than thirty (30) days following the date of such notice) when such resignation
shall take effect. Upon such notice, a successor escrow agent shall be selected
by the Company and Parent, such successor escrow agent to become the Escrow
Agent hereunder upon the resignation date specified in such notice. If the
Company and Parent are unable to agree upon a successor escrow agent within
fifteen (15) days after the date of such notice, the Escrow Agent shall be
entitled to appoint its successor, which shall be a Bank. The Escrow Agent
shall continue to serve hereunder until its successor accepts the escrow and
acknowledges receipt of the Escrow Amount.
(b) The Company and Parent agree to release and hold the Escrow Agent
harmless and indemnify it from any loss or claim whatsoever in conjunction with
the performance of the duties of the Escrow Agent (including attorney's fees)
as long as the Escrow Agent has complied with the provisions of this Escrow
Agreement. Said
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indemnification shall be borne fifty percent (50%) by Parent and fifty percent
(50%) by the Company (unless otherwise determined by a court of competent
jurisdiction) and shall survive the termination of this Agreement.
Section 8. Notices. Any notices or other communications required or
permitted hereunder shall be given in writing and shall be delivered by hand,
air courier or by confirmed facsimile or by reputable overnight delivery
service, addressed as follows:
If to Parent, to:
PhoneTel Technologies, Inc.
650 Statler Office Building
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Telephone Number: 000-000-0000
Facsimile Number: 000-000-0000
Attn: Chairman
with a copy to:
Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone Number: 000-000-0000
Facsimile Number: 000-000-0000
Attn: Xxxxxxx X Xxxxxx, Esq.
or:
If to the Escrow Agent, to:
First Union National Bank of Georgia
000 Xxxxxxxxx Xxxxxx, X.X.
Corporate Trust Department
Suite 1100
Xxxxxxx, XX 00000
Telephone Number: 000-000-0000
Facsimile Number: 000-000-0000
Attn: Xx. Xxxxxx Xxxxxxxxx
or:
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If to the Company, to:
Communications Central Inc.
0000 Xxxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Telephone Number: 000-000-0000
Facsimile Number: 000-000-0000
Attn: President
with a copy to:
Hunton & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Telephone Number: 000-000-0000
Facsimile Number: 404-888-4190
Attn: J. Xxxxxxx Xxxxxxx, Esq.
or to such other address as shall be furnished in writing by such party, and
any such notice or communication shall be effective and be deemed to have been
given as of the date delivered if by hand, the day after delivery to the air
courier service if sent by overnight mail, and five days following the date of
mailing if mailed.
Section 9. Entire Agreement. This Escrow Agreement is the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.
Section 10. Amendments; Waiver. This Escrow Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived only by written instrument signed by the
parties hereto or, in the case of a waiver, the party waiving compliance.
Section 11. Assignment. No assignment of any rights or delegations of
any obligations provided for herein may be made by any party without the
express written consent of all the other parties hereto.
Section 12. Counterparts. This Escrow Agreement may be executed in
two more counterparts, each of
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which shall be deemed an original but all of which together shall constitute
one and the same instrument.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF GEORGIA
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
Section 14. Benefit. This Escrow Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors and assigns of
each of them.
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IN WITNESS WHEREOF, the parties hereto have affixed their signatures
to this Escrow Agreement upon the date first set forth above.
FIRST UNION NATIONAL BANK
OF GEORGIA
By: /s/ R. Xxxxxxx Xxxxxx, VP
--------------------------------
COMMUNICATIONS CENTRAL INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Execu-
tive Officer
PHONETEL TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxx
--------------------------------
Name: Xxxxx X. Xxxx
Title: Chairman
