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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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TIE/COMMUNICATIONS, INC.
(NAME OF SUBJECT COMPANY)
TIE/COMMUNICATIONS, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(TITLE OF CLASS OF SECURITIES)
87246 42 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
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GEORGE N. BENJAMIN, III
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TIE/COMMUNICATIONS, INC.
8500 WEST 110TH STREET
OVERLAND PARK, KANSAS 66210
(913) 344-0400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE
AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
COPY TO:
CHARLES EVANS GERBER, ESQ.
NEAL GERBER & EISENBERG
TWO NORTH LASALLE STREET, SUITE 2200
CHICAGO, ILLINOIS 60602
(312) 269-8000
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LOGO
TIE/COMMUNICATIONS, INC.
8500 WEST 110TH STREET
OVERLAND PARK, KANSAS 66210
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September 12, 1995
Dear Stockholder:
We are pleased to inform you that TIE/communications, Inc. (the "Company")
has entered into an Agreement and Plan of Merger (the "Merger Agreement") with
TIE Acquisition Co., a Delaware corporation ("Purchaser"). The capital stock of
Purchaser is wholly owned by Paul H. Pfleger, a United States citizen. Pursuant
to the Merger Agreement, Purchaser today commenced a tender offer to purchase
all outstanding shares of common stock of the Company at $8.60 per share in
cash. Under the Merger Agreement, the tender offer will be followed by a merger
of the Company and a wholly owned subsidiary of Purchaser. In the merger, each
share of the Company's common stock then outstanding (other than shares held by
Purchaser or by dissenting stockholders) will be converted into the right to
receive $8.60 in cash.
Your Board of Directors has unanimously approved the Merger Agreement, the
tender offer and the merger and determined that the tender offer and merger are
fair to, and in the best interests of, the stockholders from a financial point
of view. Accordingly, the Board of Directors recommends that stockholders
accept the offer, tender their shares pursuant thereto and, if necessary, vote
their shares in favor of the approval of the merger pursuant to the terms of
the Merger Agreement.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors which are described in the enclosed
Schedule 14D-9, including, without limitation, bids received from other
potential purchasers and the Board of Directors' view that the cash
consideration of $8.60 per share to be received by stockholders pursuant to the
offer and the merger is fair to such stockholders from a financial point of
view.
Additional information with respect to the transaction is contained in the
enclosed Schedule 14D-9, and we urge you to consider this information
carefully.
Sincerely,
LOGO
George N. Benjamin, III
President and Chief Executive
Officer
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is TIE/communications, Inc., a Delaware
corporation (the "Company"), and the address of the Company's principal
executive offices is 8500 West 110th Street, Overland Park, Kansas 66210. The
title of the class of equity securities to which this Statement relates is the
Company's common stock, par value $.10 per share (the "Shares" or the "Common
Stock").
ITEM 2. TENDER OFFER AND BIDDER.
This Statement relates to the tender offer (the "Offer") by TIE Acquisition
Co., a Delaware corporation ("Purchaser"), disclosed in a Tender Offer
Statement on Schedule 14D-1, dated September 12, 1995 ("Schedule 14D-1"), to
purchase all of the outstanding shares of Common Stock of the Company at $8.60
per Share (the "Per Share Amount"), net to the seller in cash, upon the terms
and conditions set forth in the Offer to Purchase, dated September 12, 1995
(the "Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer"). According to the Offer to Purchase, Purchaser
is wholly owned by Paul H. Pfleger, an individual and a United States citizen.
As set forth in the Schedule 14D-1, the address of the principal executive
offices of Purchaser is 1201 Third Avenue, Suite 5400, Seattle, Washington
98101.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as
of September 5, 1995 (the "Merger Agreement"), by and among the Company,
Purchaser and TIE Merger Co., a Delaware corporation and wholly owned
subsidiary of Purchaser ("Merger Co."). The Merger Agreement provides that,
following the consummation of the Offer and subject to the satisfaction or
waiver of certain other conditions, including the purchase by Purchaser of at
least 75% percent of the total number of Shares issued and outstanding (the
"Minimum Tender Condition"), Merger Co. will be merged with and into the
Company (the "Merger"), the Company will become a direct wholly owned
subsidiary of Purchaser and each Share outstanding immediately prior to the
Effective Time (as defined below) (other than Shares held (i) by Purchaser or
Merger Co. or any direct or indirect subsidiary of Purchaser or Merger Co.,
(ii) in the treasury of the Company or any of its subsidiaries or (iii) by
stockholders, if any, who demand and perfect appraisal rights under the
Delaware General Corporation Law (the "DGCL") to the extent available (the
"Dissenting Shares")) will, by virtue of the Merger, be converted into the
right to receive the Per Share Amount.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person filing
this Statement, are set forth in Item 1 above.
(b) (1) Certain information with respect to contracts, agreements,
arrangements and understanding between the Company or its affiliates and
certain of its executive officers, directors or affiliates are described in the
Company's Proxy Statement, dated May 4, 1995, for its Annual Meeting of
Stockholders held on June 12, 1995, under the headings "Certain Transactions"
and "Compensation Committee Interlocks and Insider Participation", copies of
the relevant portions of such sections are filed as Exhibit 1 to this Statement
and are incorporated herein by reference.
The Merger Agreement
The following is a summary of the Merger Agreement and is qualified in its
entirety by reference to the Merger Agreement, a copy of which is filed as
Exhibit 2 hereto and is incorporated herein by reference.
The Merger. The Merger Agreement provides that, upon the terms and subject to
the conditions thereof, at the Effective Time (as defined in the Merger
Agreement) of the Merger (the "Effective Time"), Merger Co. shall be merged
with and into the Company (the "Merger") in accordance with the DGCL. As a
result of the Merger, the separate corporate existence of Merger Co. will cease
and the Company will continue as the surviving corporation as a wholly-owned
subsidiary of Purchaser (the "Surviving Corporation").
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Upon consummation of the Merger, each issued and then outstanding Share
(other than any Shares held in the treasury of the Company, or owned by
Purchaser or any direct or indirect wholly-owned subsidiary of Purchaser or of
the Company, and other than Shares for which appraisal rights under the DGCL
have been perfected) shall be cancelled and extinguished and be converted into
the right to receive the price per share paid pursuant to the Offer.
The Merger Agreement provides that, at the Effective Time, the certificate of
incorporation and bylaws of the Company shall be amended to read as the
certificate of incorporation and bylaws of Merger Co. immediately prior to the
Effective Time, except that the name of the Surviving Corporation shall be
TIE/communications, Inc. In addition, the Merger Agreement requires that the
certificate of incorporation and by-laws of the Surviving Corporation contain
the provisions with respect to indemnification and exculpation of liability of
directors, officers and employees contained in the certificate of incorporation
and by-laws of the Company as of the date of the Merger Agreement and requires
such provision not be amended, repealed or otherwise modified for a period of
five years thereafter.
Pursuant to the Merger Agreement, if required by the DGCL, the Company shall
duly call and hold a meeting of its stockholders as promptly as practicable
following consummation of the Offer for the purpose of considering and taking
action on the Merger Agreement and the transactions contemplated thereby. If
the Minimum Tender Condition is met, Purchaser will have sufficient voting
power to approve the Merger, even if no other stockholder of the Company votes
in favor of the Merger. Furthermore, the DGCL also provides that if a parent
company owns at least 90% of each class of stock of a subsidiary, the parent
company can effect a "short form" merger with that subsidiary with the approval
of the Board of Directors of such subsidiary but without a stockholder vote.
Accordingly, if, as a result of the Offer or otherwise, Purchaser owns at least
90% of the outstanding Shares, Purchaser could, and intends to, effect the
Merger without prior notice to, or any action by, any other stockholder of the
Company.
Pursuant to the Merger Agreement, the Company has agreed that prior to the
Effective Time, unless otherwise consented to by Purchaser, the business of the
Company will in all material respects be conducted in, and the Company will not
take any material action except in, the ordinary course of business, consistent
with past practice. Without limiting the generality of the foregoing, pursuant
to the Merger Agreement, the Company has agreed that, except as otherwise
permitted or disclosed therein, neither it nor any of its subsidiaries will:
(a) amend or propose to amend any of their respective certificates or
articles of incorporation or by-laws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell, pledge, encumber, deliver or otherwise dispose of (whether
through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or
any other equity securities or equity equivalents of the Company or any of
its subsidiaries or amend in any material respect any of the terms of any
such securities;
(c) split, combine or reclassify any shares of its capital stock or the
capital stock of any of its subsidiaries, declare, set aside or pay any
dividend (other than dividends (whether in cash, stock, or property or any
combination thereof), if any, paid by wholly-owned subsidiaries to the
Company or another wholly-owned subsidiary of the Company) or other
distribution in respect of its capital stock or redeem, repurchase or
otherwise acquire any of its securities or any securities of its
subsidiaries or any options, warrants or other rights to acquire any shares
of its capital stock or adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries, other than the
redemption, repurchase or other acquisition of the equity securities of any
subsidiary of the Company which is not wholly-owned by the Company for
aggregate consideration not in excess of the book value of such securities;
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(d) except as set forth in clause (e), incur any additional indebtedness
for borrowed money or issue any debt securities or assume, guarantee or
endorse the obligations of any other person except for the obligations of
wholly-owned subsidiaries of the Company in the ordinary course of business
consistent with past practice; (i) make any loans, advances or capital
contributions to, or investments in, any other person (other than to
wholly-owned subsidiaries of the Company and advances to employees for
travel or other business related expenses in the ordinary course of
business consistent with past practices); (ii) pledge or otherwise encumber
shares of capital stock of the Company or any of its subsidiaries; (iii)
mortgage or pledge any of its material assets, tangible or intangible, or
create or suffer to exist any material Lien thereupon; or (iv) enter into
any contract, agreement, commitment or arrangement to do any of the
foregoing;
(e) incur any advances pursuant to that certain Revolving Credit
Agreement, dated as of June 18, 1991, among the Company, various
subsidiaries of the Company and Marmon Holdings, Inc., a Delaware
corporation and one of the principal stockholders of the Company
("Marmon"), (as amended the "Credit Agreement"), other than advances which
at any time outstanding do not exceed $3,000,000;
(f) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee, or (except for normal increases in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company or an increase in excess of 5% in the case of any
individual (other than compensation based upon the payment of commissions
pursuant to commission schedules previously made available to Purchaser by
the Company)) increase in any manner the compensation or fringe benefits of
any director, officer or employee or pay any benefit not required by any
plan or arrangement in effect as of the date of the Merger Agreement
(including, without limitation, the granting of stock appreciation rights
or performance units) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
(g) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or any assets which in the aggregate are material to the
Company and its subsidiaries, taken as a whole, or commit or agree to do
any of the above;
(h) except as required by generally accepted accounting principles,
change any of the accounting principles or practices used by it;
(i) make any tax election or settle or compromise any income tax
liability material to the Company and its subsidiaries taken as a whole;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business consistent with past practice or in accordance with their terms,
of liabilities reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company and
its subsidiaries or incurred in the ordinary course of business consistent
with past practice; provided that, in no event shall the Company and its
subsidiaries repay any long-term indebtedness except to the extent required
by the terms thereof;
(k) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) enter into or commit to enter into any contract or
agreement other than in the ordinary course of business consistent with
past practice or which requires the payment of amounts in excess of
$100,000 or which gives rise to obligations which extend beyond 90 days
from the date of the Merger Agreement other than agreements to provide
services to customers of the Company or any of its subsidiaries; (iii)
authorize any capital expenditures, other than those as to which the
Company or its subsidiaries have committed, individually in excess of
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$100,000, or in the aggregate in excess of $1,000,000, except with the
consent of Purchaser (which shall not be unreasonably withheld); or (iv)
enter into or amend any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
(l) (i) make or enter into any new lease of real property other than any
new lease of real property which will replace an existing lease or (ii)
extend or amend any existing lease of real property other than in the
ordinary course of business consistent with past practice or on terms and
conditions no less favorable to the Company or the subsidiary than the
existing lease;
(m) enter into or commit to enter into any amendment or modification to
any contract, agreement or arrangement with any material vendor or supplier
identified in the Merger Agreement which individually or in the aggregate
with all other such amendments and modifications is or could reasonably be
expected to be material to such contract, agreement or arrangement;
(n) intentionally take or omit to take, or enter into an agreement to
take or agree to omit to take, any action that would result in any of the
conditions to the Offer or the conditions to the Proposed Merger not being
timely satisfied;
(o) release or relinquish any material contractual rights, other than in
the ordinary course of business consistent with past practice;
(p) settle any pending or threatened material action, suit, claim or
proceeding involving the Company or any subsidiary, other than in the
ordinary course of business consistent with past practice and other than
any settlements which require only the payment of money not in excess of
$50,000 individually or $250,000 in the aggregate;
(q) enter into or commit to enter into any contract, agreement or
arrangement or any amendment or modification to any existing contract,
agreement or arrangement with Marmon or any affiliate thereof; or
(r) commit or agree in writing or otherwise to take any of the action
which would make any of the representations or warranties of the Company
contained in the Merger Agreement untrue or incorrect in any material
respect as of the date when made or as of the Effective Time, or omit to
take or commit or agree to omit to take any action necessary to prevent any
such representation or warranty from being untrue or incorrect in any
material respect at any time which would result in any of the conditions
set forth in the Merger Agreement not being satisfied.
The Company has further agreed in the Merger Agreement that neither it nor
any of its subsidiaries will, directly or indirectly, through any officer,
director, employee, representative or agent of the Company or any of its
subsidiaries, initiate, solicit or encourage (including by way of furnishing
non-public information or assistance) or take any action to knowingly
facilitate any inquiries or the making of any proposals regarding any merger,
sale of substantial assets, sale of shares of capital stock or similar
transactions involving the Company or any of its subsidiaries, except that the
Merger Agreement provides that nothing contained therein shall prevent the
Board of Directors of the Company (the "Board") from considering, negotiating,
approving and recommending to the stockholders of the Company a bona fide
Acquisition Proposal (as defined in the Merger Agreement) not solicited in
violation of the Merger Agreement, provided the Board determines in good faith
(upon advice of counsel) that it is required to do so in order to discharge its
fiduciary duties.
Merger Conditions. The Merger Agreement provides that each party's obligation
to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) if required by the DGCL, the Merger shall have been adopted and
approved by the affirmative vote of the stockholders of the Company;
(b) no law or court order shall have been enacted or entered which shall
prohibit or restrain the Merger;
(c) any waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the regulations thereunder (the "HSR Act")
shall have been terminated or expired; and
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(d) Purchaser shall have acquired at least 75% of the outstanding Shares
pursuant to the Offer (except that if Purchaser shall have failed to accept
for payment or pay for any Shares tendered pursuant to the Offer otherwise
than for failure of a condition to the Offer, this condition to the Merger
Agreement shall be deemed satisfied). In addition, the respective
obligations of the Company and Purchaser to effect the Merger shall be
conditioned upon representations and warranties of the other party in the
Merger Agreement being true and correct in all material respects as of the
Effective Time and such party having performed in all material respects its
material obligations under the Merger Agreement.
Merger Agreement Termination. The Merger Agreement may be terminated at any
time:
(a) by mutual written consent of the Boards of Directors of the Company
and the Purchaser;
(b) by either the Company or Purchaser if the Effective Time shall not
have occurred on or before December 15, 1995; any court shall have issued
an order or ruling restraining, enjoining or otherwise prohibiting the
Merger and such order or ruling shall have become final and nonappealable;
or any Trigger Event (as defined below) shall have occurred;
(c) by Purchaser, if, due to a failure to satisfy certain conditions to
the Offer, the Offer is not commenced or completed within 60 days following
commencement of the Offer;
(d) by the Company if, for any reason other than an occurrence or
circumstance that would result in the failure to satisfy any of the
conditions to the Offer, Purchaser shall have failed to commence the Offer
by September 12, 1995 or terminated the Offer without the purchase of
Shares sufficient to satisfy the Minimum Tender Condition or failed to
accept for payment Shares sufficient to satisfy the Minimum Tender
Condition within 60 days following commencement of the Offer; or
(e) by Purchaser in the event of a breach of any material representation,
warranty, covenant or agreement on the part of the Company set forth in the
Merger Agreement.
Payment of Fees and Expenses. The Merger Agreement provides that if:
(i) any corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person, other entity or group (as defined in
Section 13(d) of the Exchange Act) other than Purchaser or any of its
affiliates (collectively, "Persons") shall have acquired or entered into
any commitment or agreement to acquire, directly or indirectly, at least
25% of the assets of the Company and its subsidiaries;
(ii) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or an agreement in
principle with respect to any Acquisition Proposal;
(iii) any representation or warranty made by the Company in, or pursuant
to, this Agreement shall not have been true and correct in all material
respects when made and any such failure to be true and correct could
reasonably be expected to have a material adverse effect or the Company
shall have failed to observe or perform in any material respect any of its
obligations under the Merger Agreement and Purchaser shall have terminated
the Merger Agreement;
(iv) the Board shall have withdrawn or materially modified in a manner
adverse to Purchaser its approval or recommendation of the Offer, the
Proposed Merger or the Merger Agreement in any such case whether or not
such withdrawal or modification is required by the fiduciary duties of the
Board; or
(v) prior to the purchase of any Shares under the Offer, the Company
shall have received any Acquisition Proposal which the Board has determined
and publicly announced is more favorable to the Company's stockholders than
the transactions contemplated by the Merger Agreement, whether or not such
determination is required by the fiduciary duties of the Board;
(each such event described above being, a "Trigger Event"), then the Company
shall promptly, but in no event later than two days after the termination of
the Merger Agreement as the result of the occurrence thereof, pay to Purchaser
an amount equal to $1,500,000, which amount is inclusive of all expenses of
Purchaser.
If the Merger Agreement is terminated for any reason, other than as a result
of the Offer being terminated based upon the failure of the Financing Condition
(as defined below) or a material adverse change or development in the business
of the Company, and Purchaser is not in material breach of its material
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obligations under the Merger Agreement, then the Company shall reimburse
Purchaser for all out-of-pocket expenses and fees (including, without
limitation, fees and expenses payable to all banks, investment banking firms
and other financial institutions and their respective agents and counsel, for
arranging and providing financing and structuring for the transaction and all
fees of counsel, accountants, experts and consultants to Purchaser) actually
incurred or accrued by it or on its behalf in connection with the Offer and the
Merger and the consummation of the transactions contemplated by the Merger
Agreement, up to a maximum amount of $750,000.
Pursuant to the Merger Agreement, the Offer is conditioned upon Purchaser's
having obtained sufficient financing (including funding thereunder) to enable
it to consummate the Offer and the Merger (the "Financing Condition"). If
Purchaser does not accept for payment Shares pursuant to the Offer on or prior
to the date which is 60 days following commencement of the Offer due to the
failure of the Purchaser to satisfy the Financing Condition, then Purchaser
shall pay to the Company the sum of $750,000; and if the Merger Agreement is
terminated based upon a breach of any material representation, warranty,
covenant or agreement of Purchaser as set forth in the Merger Agreement (other
than representations, warranties or covenants relating to the Financing
Condition), then Purchaser shall pay to the Company an amount equal to
$1,500,000.
Stockholders Option Agreement
The following is a summary of the Stockholders Option Agreement, dated as of
September 5, 1995 (the "Stockholders Option Agreement"), by and among
Purchaser, Marmon, which is the holder of 1,796,681 Shares, and The Pritzker
Family Philanthropic Fund, an Illinois not-for-profit corporation (the "Fund",
and together with Marmon, the "Principal Stockholders"), which is the holder of
1,197,788 Shares. Together, the Principal Stockholders own approximately 75%
percent of the currently issued and outstanding Shares. Such summary is
qualified in its entirety by reference to the Stockholders Option Agreement, a
copy of which is filed as Exhibit 3 hereto and is incorporated herein by
reference.
Under the Stockholders Option Agreement, the Principal Stockholders have
granted to Purchaser an option to purchase all Shares currently owned by the
Principal Stockholders and all Shares subsequently acquired by the Principal
Stockholders at a price of $8.60 per share in the event the Merger Agreement is
terminated as a result of one of the Trigger Events described therein (other
than a breach of a Company representation or warranty). Such option is
exercisable upon the termination of the Merger Agreement by Purchaser as a
result of the occurrence of a Trigger Event as defined in the Merger Agreement
and until the later to occur of ten days following a termination of the Merger
Agreement as a result of the Trigger Event or three days following the
expiration of all waiting periods under the HSR Act.
Each of the Principal Stockholders has also agreed pursuant to the
Stockholders Option Agreement to tender (and, without prior written
notification to Purchaser, that it will not withdraw) all Shares owned by such
Principal Stockholder pursuant to the Offer. Each of the Principal Stockholders
has undertaken to make such tender within five business days after commencement
of the Offer. Pursuant to the Stockholders Option Agreement, each of the
Principal Stockholders has also granted to the Purchaser an irrevocable proxy
to vote all Shares owned by such Principal Stockholder in favor of the Merger
and against any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or other
obligation or agreement of the Company under the Merger Agreement or any action
or agreement that would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer.
Under the Stockholders Option Agreement, Marmon has further agreed to
indemnify each of the Company, Purchaser and Merger Co. against all expenses,
liabilities and losses incurred or suffered by any
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such person and not otherwise paid by insurance in connection with any claim,
action, suit or proceeding arising on or before the date which is one year
following the Effective Time in which any of the Company, Purchaser or Merger
Co. and/or any of their directors, officers, and, in the case of Purchaser and
Merger Co., their stockholders, is, or is threatened to be made a party to any
action or proceeding by or on behalf of any current or former stockholder of
the Company alleging liability or damages resulting from the transactions
contemplated by the Merger Agreement and/or the process undertaken by the
Company which concluded with the execution and delivery of the Merger
Agreement; provided, however, that Marmon's liability for such indemnification
shall not exceed $1,000,000 after application of any coverage under applicable
insurance policies for the benefit of the Company or any indemnified party.
In addition, pursuant to the Stockholders Option Agreement, Marmon has agreed
to modify the Credit Agreement so as to permit the transactions contemplated by
the Merger Agreement, to continue the credit arrangements currently in effect
with Marmon in full force and effect on the same terms and conditions in effect
on the date of the Stockholders Option Agreement, except that the maximum
principal amount of all loans thereunder shall not at any time exceed $3
million and the termination date of the credit agreement shall be the earlier
to occur of the Effective Time of the Merger or 90 days following the date on
which the Offer is consummated.
Agreement of SPII
The following is a summary of the Agreement, dated September 5, 1995 (the
"SPII Agreement"), of SP Investments Inc., a Washington corporation and an
affiliate of Mr. Pfleger, pursuant to which SPII has agreed, among other
things, to guarantee certain obligations of Purchaser under the Merger
Agreement. Such summary is qualified in its entirety by reference to the SPII
Agreement, a copy of which is filed as Exhibit 4 hereto and is incorporated
herein by reference.
Under the SPII Agreement, SPII has guaranteed to the Company the prompt
payment of any termination fee owing from the Purchaser to the Company as a
result of the termination of the Merger Agreement and has covenanted with the
Company and the Principal Stockholders (on behalf of all stockholders of the
Company) that it will (i) cause the initial stockholder's equity in Purchaser
as of the time the Offer is consummated to be at least $8,000,000, (ii) cause
the initial stockholder's equity in the Surviving Corporation as of the
Effective Time to be at least $8,000,000, (iii) that from that date on which
the Offer is consummated to the date which is 91 days following the date on
which payment in full is made on all accounts payable of the Company
outstanding as of the date on which the Offer is consummated, it shall cause
the Surviving Corporation not to declare, set aside or pay any dividend (other
than in the form of capital stock) or other distribution in respect of its
capital stock or redeem, repurchase or otherwise acquire any of its capital
stock if any such action would result in the Surviving Corporation's
stockholders' equity falling below $8,000,000, and (iv) from the date on which
the Offer is consummated to the date which is one year from such date, it shall
cause the Surviving Corporation not to incur any indebtedness secured by the
assets of the Surviving Corporation which would result in the Surviving
Corporation (x) becoming insolvent; (y) having unreasonably small capital with
which to engage in its business or (z) incur any debts beyond its ability to
pay as they become absolute and matured. Under the Stockholders Option
Agreement, Purchaser has made covenants substantially similar to the foregoing
regarding the equity and debt of the Company and the Surviving Corporation.
Reimbursement and Indemnification Agreement
Pursuant to a Reimbursement and Indemnification Agreement, dated as of
September 5, 1995 (the "Reimbursement Agreement"), between the Company and
Marmon, the Company has agreed to reimburse Marmon for any amounts paid by
Marmon on account of any surety, bid, performance or similar bond
(collectively, the "Bonds") that Marmon has obtained for the benefit of the
Company and to indemnify Marmon for any loss, cost or expense incurred by
Marmon in connection therewith. Marmon has from time to time at the request of
the Company obtained Bonds in its name on behalf and for the benefit of the
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Company. Under the Reimbursement Agreement, Marmon has agreed that, until the
earlier to occur of the consummation of the Offer or the termination of the
Merger Agreement, it will continue to obtain new Bonds for the benefit of the
Company in connection with the conduct of the Company's business in the
ordinary course, consistent with past practices and in the manner in which and
on substantially the same terms as which Marmon has previously obtained Bonds
for the benefit of the Company. Thereafter, Marmon will have no obligation to
obtain any new Bonds or to continue, renew or extend any existing Bonds on the
Company's behalf.
In addition, pursuant to the terms of the Reimbursement Agreement, the
Company is required upon the earlier to occur of the Effective Time or 90 days
following the date of the consummation of the Offer to obtain and have in place
new bonds to replace any Bonds then outstanding, at which time Marmon shall be
entitled to cancel, terminate or allow to expire any and all of such Bonds.
The foregoing description of the Reimbursement Agreement is qualified in its
entirety by reference to the Reimbursement Agreement, a copy of which is filed
as Exhibit 5 hereto and is incorporated herein by reference.
Change in Control Agreements
In an effort to assure continuity in the management of the Company's
administration and operations and to enable certain members of management to
continue to work free from distraction in the face of uncertainty and
unsettling circumstances that arise from the possibility of a change in control
of the Company, the Company has entered into agreements ("Change in Control
Agreements") with certain top-level executives of the Company that provide for
the payment of severance benefits in the event that such executive is
Involuntarily Terminated (as defined below) by the Company as a result of or
within a specified period following a Change of Control of the Company (as
defined below). Specifically, the Company has entered into Change in Control
Agreements with each of the following five executives (the "Covered
Executives"): George N. Benjamin, III, President and Chief Executive Officer;
Robert H. Kalina, Vice President--Engineering and Operations; Daniel E. Coomer,
Chief Information Officer; Randolph K. Piechocki, Executive Vice President; and
R. Daniel Baker, Regional Vice President--California.
Under the Change in Control Agreements, in the event that a Covered Executive
is Involuntarily Terminated by the Company as a result of or within a specified
period following a Change in Control of the Company, the Company is obligated
to provide the Covered Executive with certain severance benefits. Although the
amount and nature of severance benefits payable to a Covered Executive upon a
Change in Control vary from contract to contract, all Change in Control
Agreements provide for the continuation of the Covered Executive's salary and
bonus for a specified period (ranging from nine to 24 months). In general, the
Covered Executive's salary is continued at a rate equal to the salary that he
was earning at the time of the Involuntary Termination and his bonus is based
on the average of the bonuses paid to the Covered Executive for the previous
two years. In addition, the Change in Control Agreements generally provide for
the continuation of coverage under Company medical and other benefit plans for
a specified period (ranging from 12 to 30 months) and professional outplacement
search assistance. Other than the Change in Control Agreement with Mr.
Benjamin, the Change in Control Agreements do not require that the Covered
Executives mitigate the amount of any payment or benefit payable to them under
such agreement and severance benefits payable by the Company may not be reduced
in the event that they earn compensation from another employer.
Under the Change in Control Agreements, "Involuntary Termination" is defined
to include the termination of a Covered Executive by the Company within two
years following a Change in Control of the Company for any reason other than
serious misconduct in respect of such Covered Executive's obligations to the
Company, the commission of a crime by such Covered Executive that is likely to
result in economic damage to the Company or the Covered Executive's failure to
comply with a specific directive given to him by the Board. The definition of
"Involuntary Termination" also includes (i) a reduction in the Covered
Executive's total compensation, including benefits, other than in connection
with an across the board
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reduction similarly affecting all executives of the Company, (ii) a material
reduction in the functions, duties or responsibilities of the Covered
Executive's position, as evidenced by total compensation for such position, as
changed, which is less than such Covered Executive's compensation prior to such
change, (iii) a reassignment to another geographic location more than a certain
distance from the Covered Executive's current place of employment, (iv) a
liquidation, dissolution, consolidation or merger of the Company, or transfer
of substantially all of its assets (unless the transferee assumes the Company's
obligations under the Change in Control Agreement), or (v) a breach of the
Change in Control Agreement by the Company.
As defined in the Change of Control Agreements, a "Change of Control of the
Company" includes (i) the acquisition by any party or related or affiliated
parties acting as a group of the beneficial ownership of 50% or more of the
voting shares of the Company (25% in the case of the Change in Control
Agreements with Messrs. Benjamin and Piechocki), (ii) the occurrence of a
transaction requiring stockholder approval for the acquisition of the Company
pursuant to a stock or asset purchase, by merger or otherwise, or (iii) the
election during any 24 month period, or less, of 30%, or more, of the members
of the Board without the approval of the majority of the Board members as
constituted at the beginning of such period.
The foregoing description of the Change in Control Agreements is qualified in
its entirety by reference to each of the Change in Control Agreements between
the Company and Messrs. Benjamin, Kalina, Coomer, Baker and Piechocki, copies
of which are filed as exhibits hereto and are incorporated herein by reference.
Deferred Bonus Agreements
In May 1995, the Company entered into agreements ("Deferred Bonus
Agreements") with approximately 13 of its employees (the "Covered Employees")
to provide for deferred bonus payments to such Covered Employees through
January 1, 1998. The Deferred Bonus Agreements are substantially similar to
three-year deferred bonus agreements entered into between the Company and
various of its employees in 1991, the last payments under which were made in
July, 1995.
In accordance with a formula set forth in each Deferred Bonus Agreement, the
Company is required to contribute a certain percentage of the Covered
Employee's base salary to an account established for the Covered Employee (the
"Deferred Bonus Account"). The Covered Employee is entitled to receive annual
distributions from the Deferred Bonus Account equal to a certain specified
percentage of the outstanding balance thereof, with the entire remaining
balance to be distributed to the Covered Employee on January 1, 1998. However,
in the event of the permanent disability or death of a Covered Employee prior
to such date, the Deferred Bonus Agreements provide that the full outstanding
balance of the Deferred Bonus Account is payable to the Covered Employee or to
his or her beneficiaries, as appropriate. None of the Deferred Bonus Agreements
contains any provision that is triggered by a change in control of the Company.
The foregoing description of the Deferred Bonus Agreements is qualified in
its entirety by reference to the Form of Deferred Bonus Agreement, a copy of
which is filed as an exhibit hereto and is incorporated herein by reference.
Special Bonus Agreement
In recognition of George Benjamin's services on behalf of the Company,
including services relating to the preparation of an offering memorandum and
solicitation of proposals to acquire the Company, the Company and Mr. Benjamin
entered into an agreement, dated August 3, 1995 (the "Special Bonus
Agreement"), whereby the Company agreed to pay to Mr. Benjamin a special bonus
in the event that the Company is sold (or is merged with another company) prior
to December 31, 1995 for consideration in excess of $6.00 per Share. The
Special Bonus Agreement sets forth a formula which entitles Mr. Benjamin to
receive a primary bonus equal to 1% of any consideration in excess of $6.00 per
Share up to $7.25 per Share and a supplemental bonus equal to 2% of any
consideration in excess of $7.25 per share. Accordingly, based on the
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Per Share Amount of $8.60 as provided in the Offer and Merger Agreement, Mr.
Benjamin will be entitled to receive a special bonus in the amount of $157,263
upon the consummation of the transactions contemplated by the Merger Agreement.
By letter dated September 5, 1995, Marmon has agreed to assume, pay and fully
discharge the Company's obligations to Mr. Benjamin under the Special Bonus
Agreement.
The foregoing description of the Special Bonus Agreement and the undertaking
of Marmon with respect thereto is qualified in its entirety to reference to the
Special Bonus Agreement and such undertaking, copies of which are filed as
exhibits hereto and are incorporated herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors.
At meetings held on August 17 and September 2, 1995, the Board of Directors
of the Company (the "Board") unanimously (i) determined that the Offer and
Merger, taken together, are fair to and in the best interests of the
stockholders of the Company from a financial point of view, (ii) approved the
Merger Agreement and the transactions contemplated thereby and (iii) resolved
to recommend that the stockholders of the Company accept the Offer, tender
their Shares to Purchaser pursuant thereto and, if necessary, vote their Shares
in favor of the approval of the Merger pursuant to the terms of the Merger
Agreement. All of the directors participated in the August 17 meeting and all
of the directors except one participated in the September 2 meeting. The
director who was unable to participate in the September 2 meeting had
previously indicated to the other directors his approval of the final terms of
the Merger Agreement. Accordingly, the Board unanimously recommends that the
stockholders of the Company tender their shares pursuant to the Offer and, if
necessary, vote their shares in favor of the approval of the Merger pursuant to
the terms of the Merger Agreement.
(b) Background; Reasons for Board's Recommendation.
In March of 1995, George Benjamin, the President and Chief Executive Officer
of the Company, initiated, in consultation with certain members of the Board, a
process of exploring alternatives to maximize stockholder value, including,
without limitation, the continuation of the Company's current business as a
publicly-held company, the implementation of strategic alliances with one or
more synergistic business partners, and the sale or other disposition of the
Company or all or some of its assets. As part of this process, during April and
May, 1995, an offering memorandum was prepared regarding the Company and
approximately 18 prospective purchasers were contacted to secure indications of
interest with respect to a possible acquisition of the Company. Of those
contacted, nine expressed initial interest and were sent copies of the offering
memorandum and procedures for the submission of initial proposals. Such
offering memorandum and procedures were subsequently provided to three other
prospective purchasers who expressed interest in acquiring the Company.
On May 17, 1995, the Board appointed a special committee comprised of the
Board's independent directors (the "Special Committee") to evaluate any
acquisition proposals and other alternatives to maximize stockholder value.
Specifically, the Special Committee was formed upon the advice of the Company's
counsel in light of the possibility that an acquisition proposal would be
received from management. Because the Special Committee was subsequently
advised that a management bid would not be submitted, at a meeting held on June
12, 1995, and upon the advice of legal counsel, the functions of the Special
Committee were indefinitely suspended and matters relating to a possible
acquisition of the Company were referred to the full Board for consideration.
On or about May 22, 1995, the Company received initial acquisition proposals
from seven prospective purchasers and on June 6, 1995, the Company publicly
announced that it had received indications of interest from various parties. At
a meeting on June 12, 1995, the Board received reports regarding initial
acquisition proposals and the process pursuant to which bidders could conduct
due diligence and submit final proposals.
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Each of the initial bidders who expressed an interest in continuing in the
bid process, as well as another prospective bidder who submitted an expression
of interest, received a set of guidelines regarding the conduct of due
diligence and the procedures for submitting final proposals, which were to be
received by July 21, 1995. Five potential purchasers conducted a due diligence
review of the Company and four of these potential purchasers met with certain
members of the Company's management. In an effort to accommodate all parties
involved in the bidding process, the Company extended the deadline for bid
submissions until July 28, 1995. Ultimately, the Company received three final
acquisition proposals.
At a meeting on August 3, 1995, the Board, in consultation with the Company's
counsel, discussed the terms and conditions of each of the proposals,
including, without limitation, the amount and nature of the consideration to be
paid to the stockholders of the Company and the proposed sources of financing
available to each bidder. At that meeting, the Board determined that the bid
proposal submitted on behalf of Purchaser appeared to be most advantageous to
the stockholders and authorized the Company to enter into negotiations with
Purchaser regarding the terms of a definitive acquisition agreement. In
addition, the Board designated certain directors to oversee such negotiations,
to make a recommendation to the Board regarding the same and to consider
responses to the other bidders.
During the first three weeks of August 1995, the Company, through its legal
counsel and the designated directors, negotiated the terms and conditions of
the acquisition documents with Purchaser. During this period, such directors
conducted an extensive review and detailed analysis of the terms and conditions
of the proposed Merger Agreement, the Offer, the Merger and the Stockholders
Option Agreement and consulted on numerous occasions with the Company's
management and legal counsel. Such directors also continued to evaluate and
consider the other acquisition proposals and amendments thereto that had been
received.
At a meeting on August 17, 1995, following review of the acquisition
documents as then drafted and consideration of the status and revised terms of
another acquisition proposal, and upon the recommendation of the designated
directors, the Board unanimously determined that the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, taken
together, were fair to and in the best interests of the stockholders of the
Company from a financial point of view. Accordingly, the Board authorized the
execution, delivery and performance of the Merger Agreement by the Company and
determined to recommend to the stockholders that they accept the Offer and
tender their Shares to Purchaser pursuant thereto.
Following the August 17, 1995 Board meeting, negotiations with Purchaser
continued regarding the final terms of the Offer and the Merger. From August
28, 1995 through August 31, 1995, certain members of the Board and management
and the Company's legal counsel met with representatives of Purchaser to
discuss the results of certain additional due diligence performed by Purchaser
and the effect of such due diligence on the Per Share Amount and other terms of
the Merger and the Offer. In addition, the parties addressed certain concerns
of the Company with respect to Purchaser's financing, closing conditions and
the timing of the proposed transactions. As a result of these negotiations,
Purchaser's initial proposed Per Share Amount of $9.10 was reduced to $8.60 and
Marmon agreed to assume the obligations of the Company to Mr. Benjamin under
the Special Bonus Agreement.
On August 31 and September 1, 1995, members of the Board held preliminary
discussions with legal counsel to review proposed changes to the Merger
Agreement as well as the status of the other acquisition proposal. Thereafter,
at a meeting of the Board held on September 2, 1995, the Board approved the
final terms of the Merger Agreement and otherwise ratified the resolutions
adopted by the Board at its August 17, 1995 meeting as described above.
The Merger Agreement and ancillary documents were executed on September 5,
1995 and a joint press release regarding the Offer and the Merger was issued at
the start of business on September 6, 1995.
In approving the Merger Agreement and the transactions contemplated thereby
and recommending acceptance of the Offer to the stockholders of the Company,
the Board considered, and based its opinion as
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to the fairness of the transactions contemplated by the Merger Agreement, on a
number of factors, including the following:
(i) the Company publicly announced its willingness to consider various
proposals, strategies and other ideas to optimize stockholder value
(including a sale or similar disposition of the Company or its assets),
actively solicited proposals to acquire the Company from various parties
and received a number of proposals from interested parties;
(ii) the Offer and the Merger, taken together, represent, in the view of
the Board and as compared to other available alternatives, the most
favorable transaction for the Company's stockholders (taking into account,
among other factors, the value and type of consideration payable to the
Company's stockholders and the timing and probability of consummation of
the transactions contemplated by the Merger Agreement) resulting from a
process intended to attract the interest of viable potential purchasers and
to elicit their best proposal for the Company;
(iii) the Offer and the Merger, taken together, in the view of the Board,
are fair to the stockholders of the Company from a financial point of view
and otherwise;
(iv) in the view of the Board, the impact of the acquisition of the
Company by Purchaser on other constituencies of the Company (primarily
employees) is less detrimental to such constituencies than the potential
impact of transactions contemplated by other acquisition proposals or
alternative courses of action;
(v) the Per Share Amount offered by Purchaser represents a significant
premium over the market trading price of the Shares immediately prior to
the Company's public announcement regarding the receipt of indications of
interest and over the current book value of the Shares;
(vi) in light of the business, properties, management, financial
condition, results of operations, and prospects and strategic objectives of
the Company, as well as the likelihood of achieving those prospects and
strategic objectives, and the going concern value of the Company (as
reflected, in part, by the Company's historical and projected operating
results), and taking into account factors relating to timing and risk, in
the view of the Board, a sale of the Company is likely to provide greater
value to the stockholders of the Company than other possible alternatives
to maximize stockholder value;
(vii) the terms and conditions of the Merger Agreement, including the
risks of nonconsummation of the Offer and the Merger, the provisions
regarding the payment to or reimbursement of Purchaser of certain fees and
expenses and, in certain instances, of a break-up fee, the provisions
regarding the payment by Purchaser to the Company of liquidated damages in
the event of the nonconsummation of the Offer under certain circumstances,
the ability of the Board to consider, negotiate, approve and recommend to
the stockholders of the Company bona fide acquisition proposals from
parties other than Purchaser not solicited in violation of the Merger
Agreement, and the likelihood that the conditions to the Offer and the
Merger will be satisfied;
(viii) the terms and conditions of the Stockholders Option Agreement and
the likely effect thereof on the transactions contemplated by the Merger
Agreement;
(ix) the terms and conditions of Purchaser's financing commitments; and
(x) the potential adverse effect on the Company, its stockholders and
other constituencies of continuing uncertainty with respect to the Company
prior to the determination of a specific course of action.
The Board evaluated the factors listed above in light of the directors'
knowledge of the business and operations of the Company and their business
judgment. In view of the variety of factors considered by the Board in
connection with its evaluation of the Merger Agreement, the Offer and the
Merger, the Board did not find it practicable to and did not qualify or
otherwise assign relative weight to the specific factors considered in reaching
its determination. In addition, individual members of the Board may have given
different weights to different factors in making their individual
determinations.
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ITEM 5. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED.
No person or class of persons is employed, retained or to be compensated by
the Company or by any person on its behalf, to make solicitations or
recommendations to security holders concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transactions in the Shares have been effected during the past 60 days
by the Company, or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, all of the Company's executive
officers, directors, affiliates and subsidiaries intend to tender all Shares
that are held of record or beneficially owned by such persons pursuant to the
Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in Item 3(b) above (the provisions of which are
hereby incorporated by reference), there are no negotiations being undertaken
or underway by the Company in response to the Offer which would relate to or
result in:
(i) an extraordinary transaction such as a merger or reorganization
involving the Company or any subsidiary of the Company;
(ii) a purchase, sale or transfer of a material amount of assets by the
Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or
(iv) any material change in the present capitalization or dividend policy
of the Company.
(b) Except as described in Items 3(b) and 4 above (the provisions of which
are hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer that relate to or would result in one or more of the matters referred to
in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Delaware Law. As a Delaware corporation, the Company is subject to Section
203 ("Section 203") of the Delaware Law. Section 203 would prevent an
"Interested Stockholder" (defined as a person beneficially owning 15% or more
of a corporation's voting stock) from engaging in a "Business Combination" (as
defined in Section 203) with a Delaware corporation for three years following
the date such person became an Interested Stockholder unless: (i) before such
person became an Interested Stockholder, the board of directors of the
corporation approved the transaction in which the Interested Stockholder became
an Interested Stockholder or approved the Business Combination, (ii) upon
consummation of the transaction which resulted in the Interested Stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by directors who are also officers
and employee stock ownership plans that do not provide for the confidential
voting by plan participants), or (iii) following the transaction in which such
person became an Interested Stockholder, the Business Combination is (x)
approved by the board of directors of the corporation and (y) authorized at a
meeting of stockholders by the affirmative vote of the holders of 66 2/3% of
the outstanding voting stock of the corporation not owned by the Interested
Stockholder. In accordance with the provisions of Section 203, the Board has
approved the transactions contemplated by the Merger Agreement and the
Stockholders Option Agreement, including the Offer and the Merger, thereby
exempting such transactions from such provisions.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
Exhibit 1 -- Page 5 and Pages 11-12 of the TIE/communications, Inc. Proxy
Statement, dated May 4, 1995, for its Annual Meeting of
Stockholders held on June 12, 1995.
Exhibit 2 -- Agreement and Plan of Merger, dated as of September 5, 1995,
among TIE/communications, Inc., TIE Acquisition Co. and TIE
Merger Co.
Exhibit 3 -- Stockholders Option Agreement, dated as of September 5,
1995, among TIE Acquisition Co., Marmon Holdings, Inc. and
The Pritzker Family Philanthropic Fund.
Exhibit 4 -- Agreement of SP Investments Inc., dated September 5, 1995.
Exhibit 5 -- Reimbursement and Indemnification Agreement, dated as of
September 5, 1995, between TIE/communications, Inc. and
Marmon Holdings, Inc.
Exhibit 6 -- Change in Control Agreement, dated August 3, 1995, between
TIE/communications, Inc. and George N. Benjamin, III.
Exhibit 7 -- Change in Control Agreement, dated June 16, 1995, between
TIE/communications, Inc. and Robert H. Kalina.
Exhibit 8 -- Change in Control Agreement, dated June 16, 1995, between
TIE/communications, Inc. and Daniel E. Coomer.
Exhibit 9 -- Change in Control Agreement, dated May 1, 1995, between
TIE/communications, Inc. and R. Daniel Baker.
Exhibit 10 -- Change in Control Agreement, dated October 18, 1989, between
TIE/communications, Inc. and Randolph Piechocki. (1)
Exhibit 11 -- Form of Deferred Bonus Agreement, dated May 1, 1995, between
TIE/communications, Inc. and various of its employees.
Exhibit 12 -- Agreement, dated August 3, 1995, between TIE/communications,
Inc. and George N. Benjamin, III.
Exhibit 13 -- Letter from Marmon Holdings, Inc. to TIE/communications,
Inc., dated September 5, 1995.
Exhibit 14 -- Letter from TIE/communications, Inc. to its stockholders,
dated September 12, 1995.*
Exhibit 15 -- Joint Press Release issued by TIE/communications, Inc. and
TIE Acquisition Co. on September 6, 1995.
</TABLE>
--------
*Included in copies mailed to stockholders.
(1) Incorporated by reference to Exhibit 10.6 filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989.
14
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
TIE/COMMUNICATIONS, INC.
/s/ George N. Benjamin, III
BY: _________________________________
Name: George N. Benjamin, III
Title:
President and
Chief Executive Officer
Dated: September 12, 1995
15
<PAGE>
EXHIBIT 1
CERTAIN TRANSACTIONS
In January 1992, the Company executed an Employment Agreement with Eric V.
Carter, effective from July 1, 1992 through December 31, 1995, providing for
services by Mr. Carter of an average of 80 hours per calendar quarter and
payment by the Company of $2,435.83 per month, plus $100 per hour for every
hour worked in excess of 80 hours per quarter. The amount paid pursuant to such
agreement in 1994 was $39,700. Pursuant to such agreement, Mr. Carter resigned,
effective as of March 31, 1992, as President of the Company and TIE Canada, and
was appointed as Executive Vice President of the Company. Mr. Carter remains a
director of the Company and TIE Canada. As additional payment under such
employment agreement, the Company has agreed to pay Mr. Carter 85% of medical
insurance premiums for each of Mr. Carter and his wife from 1996 through the
year 2000 in annual amounts not to exceed $9,472, $10,893, $12,528, $14,407 and
$8,284, respectively, or to pay a lump sum equal to the discounted present
value of such amounts. By an amendment dated March 18, 1992, the Company also
agreed to reimburse Mr. Carter for certain medical expenses relating to a pre-
existing condition to the extent such expenses would have been covered had Mr.
Carter remained a full-time employee. See "Compensation Committee Interlocks
and Insider Participation."
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During 1994, the members of the Compensation Committee were Mr. Robert A.
Pritzker, Chairman of the Board of the Company, and Messrs. Robert E. LaBlanc
and Lewis V. Collens, who resigned as a Board member in March 1995, none of
whom is or has been an officer of the Company or any of its subsidiaries.
Neither of the present members of the Compensation Committee is an employee of
the Company or any of its subsidiaries or, except as described below, had any
transactions with the Company or any of its subsidiaries during 1994.
On July 1, 1991 (the "Effective Date"), the First Amended Joint Plan of
Reorganization (the "Plan of Reorganization") of the Company and certain of
its subsidiaries (collectively with the Company, the "Debtors") became
effective. Pursuant to the Plan of Reorganization, (1) HCR Partners, an
Illinois general partnershp ("HCR"), which, as of the Effective Date, held a
$31,593,750 principal amount senior secured note (the "HCR Note") issued by
the Company and guaranteed by certain of the other Debtors, exchange on the
Effective Date the principal amount of the HCR Note for an approximately 75%
fully diluted interest in the Common Stock, or 2,994,469 shares of Common
Stock; and (ii) the holders of record of the Company's old common stock, par
value $0.05 per share (the "Old Common Stock"), received one share of Common
Stock in exchange for every 35 shares of Old Common Stock held, which newly
issued shares aggregated approximately 25% of the Company's outstanding common
Stock.
Immediately after the Effective Date, the Company was advised that pursuant
to an agreement by and between Marmon Holdings, Inc., a Delaware corporation
("MHI"), and The Pritzker Family Philanthropic Fund (the "Fund"), the two
partners of HCR, HCR was liquidated. In connection with such liquidation, the
shares of Common Stock directly owned by HCR were distributed to each of MHI
and the Fund pro rata in accordance with their respective interests in HCR.
Accordingly, as a result thereof, MHI became the direct beneficial owner of
1,796,681 shares of Common Stock (or approximately 45%) and the Fund became
the direct beneficial owner of 1,197,788 shares of Common Stock (or
approximately 30%). The Company has been advised that in connection with the
above-described liquidation of HCR, (i) HCR's rights and obligations pursuant
to the Registration Agreement (described and defined below) were assigned to
and assumed by MHI and the Fund, and (ii) MCR's rights and obligations
pursuant to the Credit Agreement (identified and defined below) were assigned
to and assumed by MHI. The Company has consented to each such assignment.
Messrs. Pritzker, Gluth and Webb, each of whom currently serves as a
director of the Company and is a nominee for re-election, are employees of The
Marmon Group, Inc., a Delaware corporation ("MGI"), which may be deemed to be
under common control with MHI, and Messrs. Pritzker, Gluth and Webb are,
respectively, President, Vice Presdident and Treasurer, and Vice President of
MHI. In addition, Messrs. Pritzker, Gluth and Webb are President, Executive
Vice President and Treasurer, and Vice President and Secretary, respectively,
of The Marmon Corporation, a Delaware corporation, which may be deemed to be
under common control with MGI and MHI. Substantially all of the stock of MGI,
MHI and The Marmon Corporation is owned, directly or indirectly, by trusts
primarily for the benefit of the lineal descendants of Nicholas J. Pritzker,
deceased, and entities controlled by such trusts. In compliance with MGI
policy, during 1994 Messrs. Pritzker, Gluth and Webb remitted to MGI all
Director and Committee fees received by them from the Company during that
year. Except as described herein, there are no arrangements or undertakings
with respect to the election of directors of the Company or the appointment of
executive officers of the Company.
HCR, the Company and certain of the Company's subsidiaries (collectively,
the "Subsidiaries") entered into a Revolving Credit Agreement, effective as of
the Effective Date (the "Credit Agreement"), whereby HCR agreed to provide to
the Company up to $10 million on a revolving basis through December 31, 1993.
The Credit Agreement has been assumed by MHI, and was amended effective
December 31, 1993 to provide to the Company up to $7 million on a revolving
basis through December 31, 1996. A $75,000 facilities fee payable in 1994 in
connection with the extension of the Credit Agreement with MHI was paid in
1995.
<PAGE>
Advances under the Credit Agreement bear interest at the per annum rate of one
percent plus the "reference rate" of Bank of America Illinois, and the Company
pays a quarterly fee of one-quarter percent per annum on the average unused
amounts available under the Credit Agreement. During 1994, the Company had a
maximum advance under the Credit Agreement of $3.8 million, the total of which
was repaid on or before December 31, 1994. The Credit Agreement is guaranteed
by the Subsidiaries and is secured by first priority liens on substantially all
of the assets of the Company and its Subsidiaries.
The Company and HCR also entered into a Registration Rights Agreement dated
as of June 18, 1991 (the "Registration Agreement"), pursuant to which the
Company granted to HCR and its successors certain rights to register the shares
of Common Stock held thereby.
The Company entered into a Revolving Funds Agreement dated as of January 1,
1992 (the "Funds Agreement"), with The Marmon Corporation pursuant to which the
Company deposits its daily available cash balance with MGI acting on behalf of
The Marmon Corporation. The Funds Agreement is terminable by either party upon
30 days' prior written notice. Funds deposited by the Company with MGI are held
in commingled accounts with funds of entities under common control with The
Marmon Corporation, and are deliverable to the Company upon demand. The Marmon
Corporation pays interest to the Company monthly on the average daily balance
of funds held pursuant to the Funds Agreement during such month at the prime
rate made available by The First National Bank of Chicago on the last day of
such month. During 1994, The Marmon Corporation held an average of
approximately $250,000 pursuant to the Funds Agreement.
The Company entered into an Administrative and Consulting Services Agreement
dated as of August 1, 1991 (the "Administrative Agreement"), with MGI pursuant
to which MGI provided certain centralized administrative and consulting
services to the Company. The Administrative Agreement was terminable by either
party on 30 days' prior written notice. In consideration of services performed
during 1994, the Company paid $432,000 to MGI. Pursuant to the Administrative
Agreement, the Company also agreed to reimburse MGI for all reasonable expenses
it incurred in connection with the provision of services to the Company.
Effective January 1, 1995, upon substantially the same terms and conditions,
the Company re-entered into an Administrative Agreement with MGI wherein the
same administrative and consulting services will continue to be provided by
MGI. Currently, the Company pays MGI a monthly fee of $36,000 for each month
during which the Administrative Agreement is in effect.
<PAGE>
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of September
5, 1995, is among TIE/communications, Inc., a Delaware corporation (the
"Company"), TIE Acquisition Co., a Delaware corporation ("Parent") and TIE
Merger Co., a Delaware corporation and wholly-owned subsidiary of Parent
("Acquisition").
WHEREAS, the Board of Directors of the Company (the "Board") desires to
optimize stockholder value and has been evaluating alternatives, including the
continuation of the Company's current business strategies, the implementation of
strategic alliances with one or more synergistic parties or a sale or similar
disposition of the Company;
WHEREAS, various potential purchasers have submitted proposals to acquire
the Company and these proposals have been considered and evaluated by the Board,
with the advice and assistance of its legal and financial advisors;
WHEREAS, the Board has determined that it is in the best interests of the
Company's stockholders for the Company to enter into this Agreement with Parent
and Acquisition, providing for the acquisition of the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, subject to the terms and conditions of this Agreement, and in
furtherance hereof, Parent shall make a tender offer (the "Offer") to acquire
all of the outstanding shares of common stock, par value $.10 per share, of the
Company (the "Shares") for a cash amount of $8.60 per share net to the seller
(such amount, or any greater amount per Share paid pursuant to the Offer, being
hereinafter referred to as the "Per Share Amount");
WHEREAS, the Board has, in light of and subject to the terms and conditions
set forth herein, (i) determined that the Offer and the Merger (as hereinafter
defined), taken together, is fair to and in the best interests of the
stockholders of the Company and (ii) approved and adopted this Agreement and the
transactions contemplated hereby (including, but not limited to, the Offer) and
resolved to recommend acceptance of the Offer and, if required by applicable
law, approval and adoption of this Agreement and the Merger by the stockholders
of the Company;
WHEREAS, subject to the terms and conditions of this Agreement and also in
furtherance of such acquisition, the Managing Board of Parent and the Board of
Directors of Acquisition have each approved the merger (the "Merger") of
Acquisition with and into the Company following the Offer in accordance with the
General Corporation Law of the State of Delaware (the "Delaware Law"), pursuant
to which the holders of Shares (other than
Acquisition, Parent and any direct or indirect subsidiary of Parent or
Acquisition) shall receive the Per Share Amount; and
WHEREAS, Parent has received the written commitment of Marmon Holdings,
Inc. ("Marmon") and The Pritzker Family Philanthropic Fund to tender the
respective Shares owned by each of them pursuant to the Offer, and not to
withdraw such Shares from such tender, and
<PAGE>
each of Marmon Holdings, Inc. and The Pritzker Family Philanthropic Fund has
granted to Parent an irrevocable option to purchase and an irrevocable proxy
with respect to the respective Shares owned or hereafter acquired by each of
them, all pursuant to and subject to the conditions of that certain Stockholders
Option Agreement of even date herewith (the "Stockholders Option Agreement").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company, Parent and Acquisition hereby agree as follows.
ARTICLE I.
THE OFFER
SECTION 1.01 The Offer. (a) Provided that this Agreement shall not have
---------
been terminated in accordance with Section 8.01 hereof and none of the events
set forth in Annex A hereto shall have occurred or be existing, Parent shall
commence the Offer as promptly as reasonably practicable after the date hereof,
but in no event later than September 12, 1995. The obligation of Parent to
accept for payment and to pay for Shares tendered pursuant to the Offer shall be
subject to the condition that at least 2,986,004 Shares (or such greater number
of Shares as equals 75% of the Shares then outstanding) shall have been validly
tendered and not withdrawn prior to the expiration of the Offer (the "Minimum
Tender Condition") and shall also be subject to the satisfaction of the other
conditions set forth in Annex A hereto. Subject to the terms and conditions of
the Offer (including the Minimum Tender Condition), Parent shall pay for Shares
which have been validly tendered and not withdrawn pursuant to the Offer as
promptly as reasonably practicable after expiration of the Offer. Parent
expressly reserves the right to increase the price per Share payable in the
Offer or to make any other changes in the terms and conditions of the Offer;
provided that, unless approved by the Board in writing, no change will be made
that decreases the price per Share payable in the Offer, changes the form of
consideration payable in the Offer, adds additional conditions to the Offer,
decreases the number of Shares being tendered for in the Offer, or makes any
change in the terms and conditions of the Offer which is inconsistent with the
third sentence of this Section 1.01(a) or which is otherwise materially adverse
to holders of Shares. It is agreed that the conditions set forth in Annex A
hereto are for the benefit of Parent and may be asserted by Parent or, subject
to the preceding sentence, may be waived by Parent, in whole or in part at any
time and from time to time, in its sole discretion. The Per Share Amount,
subject to applicable withholding taxes, shall be paid net to the seller in
cash, upon the terms and subject to the conditions of the Offer.
(b) As soon as reasonably practicable on the date of commencement of the
Offer, Parent and Acquisition shall file with the Securities and Exchange
Commission (the "SEC") (i) a Tender Offer Statement on Schedule 14D-1 (together
with any amendments or supplements thereto, the "Schedule 14D-1") with respect
to the Offer and (ii) if required, a Rule 13E-3 Transaction Statement (the
"Schedule 13E-3") with respect to the execution and delivery of the Stockholders
Option Agreement and the Offer. The Schedule 14D-1 shall contain or shall
incorporate by reference an offer to purchase and a form of the related letter
of transmittal and any related summary advertisement (together with all
supplements or amendments thereto and the Schedule 14D-1, the "Offer
Documents"). The Offer Documents and Schedule 13E-3 will
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comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by Parent or Acquisition with respect to
information supplied by the Company for inclusion in the Offer Documents or
Schedule 13E-3. Parent, Acquisition and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents and
Schedule 13E-3 if and to the extent that it shall have become false or
misleading in any material respect and Parent and Acquisition each further
agrees to take all steps necessary to cause the Offer Documents and Schedule
13E-3 as so corrected to be filed with the SEC and to be disseminated to holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and Acquisition agree to provide the Company and its
counsel in writing any comments Parent, Acquisition or their counsel may receive
from the SEC or its Staff with respect to the Offer Documents promptly after the
receipt of such comments.
(c) The Company shall prepare and file with the SEC, subject to the prior
approval of Acquisition (which approval shall not be unreasonably withheld), if
necessary, as soon as practicable after the expiration of the Offer, a proxy or
information statement (the "Proxy Statement") and such other documents relating
to the Merger as required by the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations thereunder, and the Company
shall prepare or shall assist Parent and Acquisition in preparing, as the case
may be, any other filings required under the Exchange Act, the Securities Act of
1933, as amended (the "Securities Act"), or any other federal or state
securities laws relating to the Offer, the Merger and the transactions
contemplated herein (the "Other Filings"). The Company shall obtain and furnish
the information required to be included in the Proxy Statement and shall,
subject to the prior approval of Acquisition (which approval shall not be
unreasonably withheld), respond promptly to any comments made by the SEC with
respect to the Proxy Statement and cause the Proxy Statement to be mailed to the
Company's stockholders at the earliest reasonably practicable date.
SECTION 1.02 Company Action. (a) The Company hereby approves of and
--------------
consents to the Offer and represents and warrants that the Board, at a meeting
duly called and held, has in light of and subject to the terms and conditions
set forth herein, (i) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, taken together, are
fair to and in the best interests of the stockholders of the Company, (ii)
approved and adopted this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, which approval constitutes approval for
purposes of Section 203(a)(1) of the Delaware Law of the Offer, the execution,
delivery and performance of the Stockholders Option Agreement by and among
Acquisition and the stockholders who are parties thereto and the Merger, and
(iii) resolved to recommend that the stockholders of the Company accept the
Offer, tender their Shares thereunder to Acquisition and, if required by
applicable law, approve and adopt this Agreement and the Merger; provided,
--------
however, that such recommendation may be withdrawn, modified or amended to the
-------
extent that the members of the Board, by a majority vote, determine in good
faith (upon advice of counsel) that they are required to do so in the exercise
of their fiduciary duties. The Company hereby consents to the inclusion in the
Offer Documents of the recommendation of the Board described in the immediately
preceding sentence.
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<PAGE>
(b) The Company hereby agrees to file with the SEC as promptly as
reasonably practicable on the date of the commencement of the Offer, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") containing the
recommendations described in Section 1.02(a) hereof and to disseminate the
Schedule 14D-9 to the extent required by Rule 14e-2 promulgated under the
Exchange Act and any other applicable federal securities laws. The Schedule
14D-9 will comply in all material respects with the provisions of applicable
federal securities laws and, on the date filed with the SEC, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Acquisition for inclusion in the Schedule 14D-
9. Parent and its counsel shall be given the opportunity to review the Schedule
14D-9 prior to the filing thereof with the SEC. The Company, Parent and
Acquisition each agrees promptly to correct any information provided by it for
use in the Schedule 14D-9 and to the extent that it shall have become false or
misleading in any material respect the Company further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and disseminated to the holders of Shares, as and to the extent required by
applicable federal securities laws. The Company agrees to provide to
Acquisition and its counsel in writing any comments the Company or its counsel
may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt of such comments. Notwithstanding anything contained in
this Section 1.02(b), but subject to Section 8.03 hereof, if the members of the
Board by majority vote determine in good faith (upon advice of counsel) that it
is required in the exercise of their fiduciary duties to withdraw, modify or
amend the recommendation of the Board, such withdrawal, modification or
amendment shall not constitute a breach of this Agreement.
(c) In connection with the Offer, the Company will promptly furnish Parent
with such information, including current lists of the stockholders of the
Company, mailing labels and lists of security positions and shall furnish Parent
with such additional information and assistance (including, without limitation,
updated lists of stockholders, mailing labels and lists of securities positions)
as Parent or its agents may reasonably request in communicating the Offer to the
record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent and its affiliates and associates shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger, and, if this
Agreement shall be terminated, will deliver to the Company all copies of such
information then in their possession.
SECTION 1.03 Boards of Directors and Committees; Section 14(f). (a)
-------------------------------------------------
Effective upon the purchase by Parent of Shares pursuant to the Offer and from
time to time thereafter, Parent shall be entitled to designate up to such number
of directors, rounded up to the next whole number, on the Board as will give
Parent representation on the Board equal to the product of the number of
directors on the Board and the percentage that such number of Shares so
purchased bears to the total number of outstanding Shares, and the Company shall
take all actions necessary to cause Parent's designees to be elected or
appointed to the Company's Board; provided, however, that prior to the Effective
-------- -------
Time (as hereinafter defined), the Board shall always have at least three (3)
members who are neither officers of the Company nor designees, stockholders,
affiliates or associates of Parent, Acquisition or, unless such designee is
consented
4
<PAGE>
to by Parent (which consent shall not be unreasonably withheld), any party to
the Stockholders Option Agreement (the "Independent Directors"). At such times
the Company will use its best efforts to cause persons designated by Parent to
constitute the same percentage as is on the Board of (i) each committee of the
Board (other than any committee of the Board established to take action under
this Agreement), (ii) each board of directors of each subsidiary of the Company,
and (iii) each committee of each such board.
(b) The Company's obligations to appoint designees to the Board shall be
subject to Section 14(f) of the Exchange Act ("Section 14(f)") and Rule 14f-1
promulgated thereunder ("Rule 14f-1"). The Company shall promptly take all
actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.03 and shall include in the Schedule 14D-9
or the Schedule 14D-1 such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1.
Parent or Acquisition will supply to the Company in writing and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
(c) Following the election or appointment of Acquisition's designees
pursuant to this Section 1.03 and prior to the Effective Time (as hereinafter
defined), (i) any amendment to this Agreement which (A) decreases the price per
Share payable hereunder, (B) changes the form of consideration payable
hereunder, or (C) makes any change in the terms and conditions of this Agreement
which is otherwise materially adverse to holders of Shares, (ii) any extension
by the Company of the time for the performance of any of the obligations or
other acts of Parent or Acquisition or the waiver of any of the Company's rights
hereunder, and (iii) any termination of the Agreement, will require the
concurrence of a majority of the Independent Directors.
ARTICLE II.
THE MERGER
SECTION 2.01 The Merger. At the Effective Time and upon the terms and
----------
subject to the satisfaction or waiver of the conditions of this Agreement and
the Delaware Law, Acquisition shall be merged with and into the Company.
Following the Merger, the separate corporate existence of Acquisition shall
cease. The Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Acquisition.
SECTION 2.02 Effective Time. As soon as practicable after the
--------------
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, the parties hereto shall file a certificate of merger or certificate of
ownership and merger with the Secretary of State of the State of Delaware, and
take all such other and further actions as may be required by law to make the
Merger effective. The Merger shall become effective at such time as the
certificate of merger or certificate of ownership and merger is duly filed with
the Secretary of State of the State of Delaware (the "Effective Time").
SECTION 2.03 Effects of the Merger. The Merger shall have the effects set
---------------------
forth in the Delaware Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and
5
<PAGE>
Acquisition shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Acquisition shall become the debts, liabilities
and duties of the Surviving Corporation.
SECTION 2.04 Certificate of Incorporation and By-Laws. (a) Subject to
----------------------------------------
Section 6.06(b) hereof, the Restated Certificate of Incorporation of the Company
in effect immediately prior to the Effective Time shall be amended at the
Effective Time to read as does the Certificate of Incorporation of Acquisition
immediately prior to the Effective Time, except that the name of the Surviving
Corporation as set forth in such Certificate of Incorporation shall be
"TIE/communications, Inc."
(b) Subject to Section 6.06(b) hereof, the By-Laws of Acquisition in effect
immediately prior to the Effective Time shall be the By-Laws of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 2.05 Directors. The directors of the Company immediately prior to
---------
the Effective Time shall be the initial directors of the Surviving Corporation,
each to hold office from the Effective Time in accordance with the Certificate
of Incorporation and By-Laws of the Surviving Corporation and until his or her
successor is duly appointed and qualified.
SECTION 2.06 Officers. The officers of the Company immediately prior to
--------
the Effective Time shall be the officers of the Surviving Corporation and will
hold office from the Effective Time until their respective successors are duly
elected or appointed and qualified in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation.
SECTION 2.07 Conversion of Securities. At the Effective Time, by virtue
------------------------
of the Merger and without any action on the part of Parent, Acquisition, the
Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be cancelled pursuant to Section
2.07(b) hereof and Dissenting Shares (as hereinafter defined)), shall be
cancelled and extinguished and be converted into the right to receive the
Per Share Amount, in cash, without any interest thereon, upon surrender of
the certificate(s) that formerly evidenced such Shares in the manner
provided in Section 3.02 hereof.
(b) Each Share issued and outstanding immediately prior to the
Effective Time and owned by Parent or Acquisition or any direct or indirect
subsidiary of Parent or Acquisition, or which is held in the treasury of
the Company or any of its subsidiaries, shall be cancelled and retired and
no payment shall be made without respect thereto.
(c) Each share of common stock, par value $.01 per share, of
Acquisition issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $.10 per share, of the
Surviving Corporation.
6
<PAGE>
ARTICLE III.
DISSENTING SHARES; EXCHANGE OF SHARES
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
-----------------
Agreement to the contrary, Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such Shares in accordance with Section 262 of the Delaware Law (collectively,
the "Dissenting Shares") shall not be converted into a right to receive the Per
Share Amount unless such holder fails to perfect or withdraws or otherwise loses
his right to appraisal under the Delaware Law. Such stockholders shall be
entitled to receive payment of the appraised value of such Shares in accordance
with Section 262 of the Delaware Law, except all Dissenting Shares held by
stockholders who have failed to perfect or who effectively shall have withdrawn
or lost their right to appraisal of such Dissenting Shares shall be deemed to
have been converted as of the Effective Time into a right to receive the Per
Share Amount without interest thereon, upon surrender, in the manner provided in
Section 3.02 hereof, of the certificate(s) that formerly evidenced such Shares.
The Company shall provide Parent (i) prompt notice of and copies of any demands
received by the Company for appraisal of Shares, withdrawals of such demands,
and any other instruments served pursuant to the Delaware Law and received by
the Company and, (ii) prior to the Effective Time, the right to direct all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 3.02 Exchange of Certificates. (a) Prior to the Effective
------------------------
Time, a bank or trust company shall be designated by Parent which shall be
reasonably acceptable to the Company (the "Exchange Agent") to act as exchange
agent in effecting the exchange of the Per Share Amount for certificates (the
"Certificates") that, immediately prior to the Effective Time, evidenced Shares
entitled to payment pursuant to Section 2.07(a) hereof. As soon as practicable
after the Effective Time, the Surviving Corporation shall instruct the Exchange
Agent to mail or otherwise deliver to each record holder, immediately prior to
the Effective Time, of an outstanding Certificate or Certificates which
immediately prior to the Effective Time evidenced Shares, a letter of
transmittal and instructions for use in effecting the surrender of the
Certificates for payment thereof (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery to the Exchange Agent and shall be in such form and have such
other provisions as Parent may reasonably specify). Upon the surrender of each
such Certificate, together with a duly executed letter of transmittal and such
other customary documents as may be required pursuant to the instructions, the
Exchange Agent shall pay the holder of such Certificate an amount in cash equal
to the Per Share Amount multiplied by the number of Shares formerly evidenced by
such Certificate, in exchange therefor, and such Certificate shall forthwith be
cancelled. Until so surrendered and exchanged, each such Certificate (other
than Certificates representing Dissenting Shares or Shares held by Parent,
Acquisition or the Company, or any direct or indirect subsidiary thereof) shall
represent solely the right to receive the Per Share Amount multiplied by the
number of Shares formerly evidenced by such Certificate. No interest shall be
paid or accrue on the Per Share Amount. If the Per Share Amount (or any portion
thereof) is to be delivered to any person other than the person in whose name
the Certificate evidencing Shares surrendered in exchange therefor is
registered, it shall be a condition to such exchange that the Certificate so
surrendered shall be
7
<PAGE>
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the payment of the Per Share Amount to a
person other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not applicable. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to Shares, except as
otherwise provided herein or by law.
(b) At or before the Effective Time, Parent shall (or shall cause
Acquisition to) deposit in trust with the Exchange Agent, in immediately
available funds, the aggregate Per Share Amount to which holders of Shares shall
be entitled at the Effective Time pursuant to Section 2.07(a) hereof (the
"Fund"). At the direction of Parent, the Exchange Agent may invest portions of
the Fund in any of (i) readily marketable obligations of the United States or
any agent or instrumentality thereof or obligations unconditionally guaranteed
by the government of the United States; (ii) certificates of deposit of or time
deposits with any commercial bank (including the Exchange Agent) that has
combined capital and surplus of at least $500,000,000; (iii) commercial paper
issued by any corporation which is rated at least "P-1" by Moody's Investors
Service, Inc. or "A-1" by Standard & Poor's Corporation; or (iv) money market
mutual funds investing in obligations of the type described in subclauses (i),
(ii) or (iii) hereof. Any earnings resulting from, or interest or income
produced by, such investments shall be paid to the Surviving Corporation as and
when requested by the Surviving Corporation.
(c) Promptly following the date which is one (1) year after the
Effective Time, the Exchange Agent shall deliver to the Surviving Corporation
all cash and other documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly evidencing a Share may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Per Share Amount multiplied by the number of Shares formerly
evidenced by such Certificate, without any interest or dividends thereon.
(d) At and after the Effective Time, the stock transfer records of the
Company shall be closed, and there shall be no transfers on the stock transfer
books of the Company of any Shares. If, after the Effective Time, Certificates
formerly representing Shares are presented to the Surviving Corporation or the
Exchange Agent, they shall be cancelled and exchanged for the Per Share Amount
multiplied by the number of Shares formerly evidenced by such Certificate, as
provided in this Article III, subject to applicable law in the case of
Dissenting Shares.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Acquisition as
follows:
SECTION 4.01 Organization and Qualification. (a) The Company is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as now being conducted, except
8
<PAGE>
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not have a Material
Adverse Effect (as hereinafter defined). The Company has heretofore delivered
to Parent or Acquisition accurate and complete copies of the certificate of
incorporation and by-laws of the Company, as currently in effect. When used in
connection with the Company or any of its subsidiaries, the term "Material
Adverse Effect" means any change or effect that, individually or when taken
together with all other such changes or effects, is or would reasonably be
likely to be materially adverse to the business, assets, results of operations
or financial condition of the Company and its subsidiaries, taken as a whole.
For purposes of this Agreement, the term "subsidiary" of the Company shall mean
each corporation or other entity in which the Company owns or controls, directly
or through one or more subsidiaries, 50 percent or more of the stock or other
interests having general voting power in the election of directors or persons
performing similar functions.
(b) The Company is duly qualified or licensed and in good standing to
do business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it make such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, individually or in
the aggregate, have a Material Adverse Effect.
SECTION 4.02 Subsidiaries. (a) The subsidiaries of the Company are
------------
listed on Schedule 4.02 hereto together with, as to each subsidiary, a list
identifying (i) the jurisdiction of incorporation of such subsidiary, (ii) each
jurisdiction in which such subsidiary is qualified to conduct business, (iii)
each jurisdiction in which such subsidiary has an office or conducts business.
Except as set forth on Schedule 4.02 hereto, each subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has heretofore delivered
to Parent or Acquisition accurate and complete copies of the certificates of
incorporation and by-laws or equivalent organizational documents of each
subsidiary of the Company, each as currently in effect. Each subsidiary is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it make such qualification or licensing necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as set forth in Schedule 4.02 hereto, the Company is,
directly or indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of its subsidiaries. Except as set
forth on Schedule 4.02 hereto, each outstanding share of capital stock of each
subsidiary of the Company is duly authorized, validly issued, fully paid and
nonassessable and to the extent owned by the Company or any subsidiary of the
Company is free and clear of any security interest, claim, lien, charge,
encumbrance, pledge, option, right of first refusal, limitation on voting rights
or agreement of any kind. There are no proxies with respect to any shares of
capital stock of any subsidiary of the Company to the extent owned by the
Company or any subsidiary of the Company, and no equity securities of any of its
subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe
9
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to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable or exercisable for, shares of any
capital stock of any subsidiary, and there are no contracts, commitments,
undertakings or arrangements by which the Company or any subsidiary is or may be
bound to issue additional shares of its capital stock or securities convertible
into or exchangeable or exercisable for any such shares. Except as set forth on
Schedule 4.02 hereto or in the SEC Reports (as hereinafter defined), the Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation (other than a subsidiary), partnership,
joint venture or other business association or entity which is material (in
assets, earnings or otherwise) to the Company and its subsidiaries as a whole.
SECTION 4.03 Capitalization of the Company. The authorized capital
-----------------------------
stock of the Company consists solely of 10,000,000 Shares of which, as of July
31, 1995, 3,981,338 Shares were issued and outstanding. All outstanding Shares
have been duly authorized, validly issued, and are fully paid, nonassessable and
free of preemptive rights. Except as described above, there are outstanding (i)
no shares of capital stock or other voting securities of the Company, (ii) no
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company, and (iii) no options, warrants or
other rights to acquire from the Company, and no obligation of the Company to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company.
SECTION 4.04 Authority Relative to this Agreement; Governmental
--------------------------------------------------
Approvals. The Company has all necessary corporate power and authority to
---------
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the approval and adoption of this Agreement and the Merger by the
stockholders of the Company as required by applicable law and the Company's
Restated Certificate of Incorporation). The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize the
execution, delivery and performance of this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement and the Merger by the stockholders of
the Company as required by applicable law and the Company's Restated Certificate
of Incorporation). This Agreement has been duly and validly executed and
delivered by the Company and constitutes the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity whether raised at law or in equity. The Company has taken all
appropriate actions so that the restrictions on business combinations contained
in Section 203 of the Delaware Law will not apply with respect to or as a result
of the Offer, the Merger, or the execution, delivery and performance of this
Agreement or the Stockholders Option Agreement. Except as set forth on Schedule
4.04 hereto, the execution, delivery and performance by the Company of this
Agreement and the consummation of the Merger by the Company will not require any
consent, approval, authorization, or permit of, or filing with or notification
to, any United States federal or state or foreign governmental body, agency,
official or authority other than (i) the filing of a certificate of merger or a
certificate of ownership and merger in accordance with the Delaware
10
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Law; (ii) compliance with any applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"); (iii) compliance
with any applicable requirements of the Exchange Act; and (iv) compliance with
any applicable state securities, takeover or "blue sky" laws; and (v) compliance
with any applicable requirements of the Investment Canada Act of 1985 and the
Competition Act (Canada). Except for consents, approvals, licenses,
accreditations, permits, franchises, authorizations or orders currently held by
the Company or its subsidiaries, the conduct by the Surviving Corporation of the
business of the Company and its subsidiaries in the same manner as now conducted
by the Company and its subsidiaries requires no consent, approval, license,
accreditation, permit, franchise, authorization or order of or notice or filing
with any domestic or foreign governmental commission, board or other regulatory
body.
SECTION 4.05 Non-Contravention. Except as set forth on Schedule 4.05
-----------------
hereto, neither the execution and delivery of this Agreement by the Company nor
the consummation of the transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof will (i) violate, conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the loss of a material benefit under, or give to others any right
of termination, amendment, acceleration or cancellation of, or result in a right
of termination or acceleration under, or result in the creation of any mortgage,
pledge, security interest, claim, encumbrance or lien of any kind (a "Lien")
upon any of the properties or assets of the Company or any of its subsidiaries
under any of the terms, conditions or provisions of (x) the certificates or
articles of incorporation or by-laws or similar organizational documents of the
Company or any of its subsidiaries, or (y) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties or assets may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in Section 4.04 hereof, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its subsidiaries or any of their respective
properties or assets, except, in the case of clause (i) above, for such
violations, conflicts, breaches, defaults, losses, terminations, accelerations
or creations of Liens which would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 4.06 SEC Reports. The Company has filed all forms, reports
-----------
and documents required to be filed with the SEC since July 1, 1991
(collectively, the "SEC Reports"), each of which, as heretofore amended, has
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
American Stock Exchange, Inc. As of their respective dates, and except as
disclosed in an amendment to an SEC Report or in a subsequently filed SEC
Report, none of the SEC Reports, including, without limitation, any financial
statements or schedules included therein, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the Company included in the SEC Reports were prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated (except as may be noted
therein) and each fairly presents the consolidated financial position of the
Company and its subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for
11
<PAGE>
the periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements). Except as and to the extent set
forth in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "1994 10-K"), or in its Quarterly Reports on Form 10-Q
filed since that date, neither the Company nor any subsidiary has any liability
or obligation of any nature whatsoever (whether due or to become due, accrued,
fixed, contingent, liquidated, unliquidated or otherwise) that would be required
by GAAP to be reflected on a consolidated balance sheet (or in the applicable
notes thereto) of the Company and its subsidiaries other than liabilities or
obligations which arose in the ordinary course of business since such date and
which do not or would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 4.07 Absence of Certain Changes. Since December 31, 1994,
--------------------------
except as disclosed in the SEC Reports filed thereafter or as set forth on
Schedule 4.07 hereto, the Company and its subsidiaries have not (i) suffered any
Material Adverse Effect, (ii) changed their accounting methods, principles or
practice or (iii) declared, set aside or authorized any dividend or other
distribution in respect of any capital stock of the Company or any of its
subsidiaries or any redemption, purchase or other acquisition of any of their
respective securities, except for any dividend or distribution paid or payable
by a wholly-owned subsidiary of the Company to the Company or another wholly-
owned subsidiary of the Company. Since December 31, 1994, except as disclosed
in the SEC Reports filed thereafter or except as set forth on Schedule 4.07
hereto, the Company has conducted its business and operations in the ordinary
course of business consistent with past practice.
SECTION 4.08 Compliance with Applicable Laws. Except as disclosed in
-------------------------------
the SEC Reports, the businesses and operations of the Company and its
subsidiaries are not being conducted in violation of or conflict with any law,
ordinance, order, rule or regulation of any domestic or foreign public body or
authority, except for possible violations which do not, and, insofar as
reasonably can be foreseen, in the future will not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 4.09 Employee Benefits and Compensation. Schedule 4.09
----------------------------------
hereto sets forth all of the Company's individual employment agreements and any
other plans, programs or arrangements (whether written or oral), covering any
individual, category of individuals or all employees generally, including,
without limitation, any qualified or non-qualified retirement or supplemental
retirement plan, employee benefit plan, incentive, bonus or other compensation
plan or program or any stock option, stock bonus or stock purchase plan or
program (collectively, the "Benefits Arrangements"). The Company has heretofore
made available to Parent or Acquisition true, correct and complete copies of all
Benefit Arrangements. Except as identified on Schedule 4.09 hereto, no Benefit
Arrangement is a "multi employer plan" (within the meaning of Section 3(37) or
Section 4011(a)(3) of Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) or a "multiple employer plan" (within the meaning of
Section 4064 of ERISA or Section 413(c) of the Internal Revenue Code of 1986, as
amended (the "Code")), and neither the Company nor any of its subsidiaries has a
current or potential liability or obligation, whether direct or indirect, with
respect to any multi employer plan or multiple employer plan. Except as set
forth in the SEC Reports or except as set forth in Schedule 4.09 hereto, (i)
each Benefit Arrangement intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service (the "IRS") that it is so qualified and nothing has occurred since the
date of such letter
12
<PAGE>
that could reasonably be expected to affect the qualified status of such plan,
(ii) each Benefit Arrangement has been operated or administrated in all material
respects in accordance with its terms and the requirements of applicable law,
(iii) neither Company nor any of its subsidiaries has incurred any direct or
indirect liability under, arising out of or by operation of ERISA, in connection
with the termination of, or withdrawal from any Benefit Arrangement or other
retirement plan or arrangement, and, to the knowledge of the Company, no fact or
event exists which could reasonably be expected to give rise to any such
liability, (iv) no breach of fiduciary duty, prohibited transaction, or
"reportable event" (within the meaning of Section 4043(b) of ERISA) has occurred
with respect to which the Company, any subsidiary or any Benefit Arrangement may
be liable or otherwise materially damaged, (v) all contributions, premiums, and
other payment obligations with respect to any Benefit Arrangement (A) have been
accrued on the Company's consolidated financial statements in accordance with
GAAP and, to the extent due, have been made on a timely basis and (B) meet the
requirements of deductibility under the Code, and (vi) with respect to each
Benefit Arrangement which provides welfare benefits of the type described in
Section 3(1) of ERISA: (X) no such Benefit Arrangement provides medical or
death benefits with respect to current or former employees, directors or
consultants of the Company and the subsidiaries beyond their termination of
employment, other than coverage mandated by Sections 601-608 of ERISA and
4980B(f) of the Code, (Y) each such Benefit Arrangement has been administered in
material compliance with Sections 601-608 of ERISA and 4980B(f) of the Code, and
(Z) no such Benefit Arrangement has reserves, assets, surpluses or prepaid
premiums except as disclosed in the financial statements of the Company. Except
as set forth in the SEC Reports or except as set forth on Schedule 4.09 hereto,
since December 31, 1994, the Company has not increased or established any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plans, or any other increase
in the compensation payable to or to become payable to any officers or key
employees of the Company or any of its subsidiaries other than normal increases
in the ordinary course of business consistent with past practice that do not, in
the aggregate, result in a material increase in benefits or compensation
expenses to the Company or its subsidiaries or an increase in excess of 5% in
the case of any individual. Notwithstanding the foregoing and except for
compensation based upon the payment of commissions pursuant to commission
schedules previously made available to Parent or Acquisition by the Company,
Schedule 4.09 sets forth a list of all increases to compensation (whether with
respect to salary or benefits) since March 31, 1995 of all employees of the
Company or any of its subsidiaries whose total fixed base
compensation prior to such date exceeded $75,000. The Company has heretofore
delivered to Parent or Acquisition its reasonable estimate (individually and in
the aggregate) of all amounts (whether currently payable or payable in the
future) payable as a result of a change in control of the Company to which
current or former officers, directors or employees of the Company or its
subsidiaries are entitled or would become entitled after the Offer or the
Merger, under the terms of any Benefits Arrangements other than any amounts
payable from any trust, fund, annuity or other insurance contract, existing as
of the date hereof the proceeds of which are segregated to pay such amounts.
SECTION 4.10 Taxes. Each of the Company and the subsidiaries has
-----
duly filed, on a timely basis, with the appropriate federal, state, local and
foreign governmental authorities all tax returns and reports required to be
filed by it with respect to any material taxes of any kind and has paid all
taxes shown thereon as owing, and each such return or report is true, complete
13
<PAGE>
and accurate in all material respects; provided, however, that as to foreign
taxes of any nature and as to taxes other than income taxes, such representation
is made to the best knowledge of the Company's management after due inquiry.
Except as expressly set forth in the notes accompanying the financial statements
of the Company contained in the 1994 10-K, none of the Company and its
subsidiaries has waived any statute of limitations with respect to any income
tax matter or agreed to any extension of time with respect to any income tax
assessment or deficiency. None of the Company and its subsidiaries is a party
to any tax allocation or sharing agreement. None of the Company or its
subsidiaries (i) has been a member of an affiliated group filing a consolidated
federal income tax return (other than a group the common parent of which was the
Company) or (ii) has any liability for the taxes of any person, (other than the
Company and its subsidiaries) under Treas. Reg. (S) 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise. The changes, accruals and reserves for taxes reflected
on the June 30, 1995 balance sheet of the Company contained in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended on such date are
believed to be adequate for the payment of all material liabilities of, or
payable by, the Company and its subsidiaries for taxes (whether disputed or
not), including interest, penalties and additions to tax, accruing through the
date of such balance sheet. Except as set forth on Schedule 4.10 hereto, there
are no claims, actions or assessments relating to taxes that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 4.11 Trademarks, Patents and Copyrights. The Company and its
----------------------------------
subsidiaries own or possess adequate licenses or other valid rights to use all
material patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and its subsidiaries as currently conducted or as contemplated to be conducted,
and except as set forth on Schedule 4.11 hereto, the Company is unaware of any
assertion or claim challenging the validity of any of the foregoing which could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Except as set forth on Schedule 4.11 hereto, the conduct of the
business of the Company and its subsidiaries as currently conducted does not
conflict in any way with any patent, patent right, license, trademark, trademark
right, trade name, trade name right, service mark or copyright of any third
party that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. To the best knowledge of the Company's
management after due inquiry, there are no infringements of any proprietary
rights owned by or licensed by or to the Company or any of its subsidiaries
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
SECTION 4.12 Litigation. Except as and to the extent set forth in
----------
the 1994 10-K or its Quarterly Reports on Form 10-Q filed since that date or
except as set forth on Schedule 4.12 hereto, there is no suit, action, claim or
proceeding pending or, to the knowledge of the Company or its subsidiaries,
threatened against the Company or any of its subsidiaries, which, if adversely
determined, individually or in the aggregate with other such suits, actions,
claims or proceedings, could (i) have a Material Adverse Effect, (ii) materially
and adversely affect the Company's ability to perform its obligations under this
Agreement or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement.
14
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SECTION 4.13 Inventory. (a) The values at which all inventories are
---------
carried on the books of the Company and its subsidiaries as of June 30, 1995
(copies of which books previously have been made available to Parent or
Acquisition), including, without limitation, the reserves with respect thereto,
have been calculated in accordance with GAAP consistent with past practices or
in a manner which results in values determined on a basis more conservative than
with the prior practices of the Company.
(b) Consistent with past practices, taking into account the reserves
for inventory, the inventories reflected on the books of the Company and its
subsidiaries are as of June 30, 1995: (i) in all material respects in good and
merchantable condition; (ii) generally usable for the purposes for which they
are intended, or salable in the ordinary course of business; and (iii) not
excessive in material respects in kind or amount in the context of the business
or of the Company and its subsidiaries taken as a whole. The inventories
reflected on the books of the Company and its subsidiaries as of June 30, 1995
include any and all inventory held on consignment by third parties, all of which
consignment arrangements are described on Schedule 4.13 hereto.
SECTION 4.14 Expenses. All fees and expenses for professional
--------
advisors incurred by the Company and its subsidiaries in connection with this
Agreement and the transactions contemplated hereby, whether incurred before or
after the date hereof and through and including the date on which the Offer is
consummated, are not reasonably expected to exceed $200,000.
SECTION 4.15 Proxy Statement; Schedule 14D-9; Schedule 14D-1; Other
------------------------------------------------------
Filings. None of the information supplied by Company in writing for inclusion
-------
in the Proxy Statement, the Schedule 14D-9, the Schedule 14D-1 or any Other
Filings will, at the respective times that the Proxy Statement, the Schedule
14D-9, the Schedule 14D-1 or any Other Filings or any amendments or supplements
thereto are filed with the SEC and, in the case of the Proxy Statement, the
Schedule 14D-1 or any Other Filings, at the time that it or any amendment or
supplement thereto is mailed to the Company's stockholders, at the time of the
Stockholders' Meeting (as hereinafter defined) or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
SECTION 4.16 Certain Contracts. Except as set forth on Schedule 4.16
-----------------
hereto, as of the date hereof, the Company has not (i) breached any material
obligation or covenant of the Company under that certain Equipment Credit
Agreement, dated September 17, 1993, by and among the Company and Northern
Telecom Inc., including, without limitation the failure of the Company to meet
any volume purchase commitments thereunder, or (ii) taken any action which has
or could reasonably be expected to result in the inability of the Company to
receive any equipment credits payable thereunder based upon any such action.
SECTION 4.17 Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding Shares is the only vote of the holders of any class
or series of Company capital stock necessary to approve the Merger.
SECTION 4.18 Brokerage. Except as previously disclosed to
---------
Acquisition in writing, no broker, finder, agent or investment banker is
entitled to any brokerage, finder's or other fee
15
<PAGE>
or commission payable by the Company in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
the Company.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Each of Parent and Acquisition represents and warrants to the Company
as follows:
SECTION 5.01 Organization. Each of Parent and Acquisition is a
------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and authority to own, lease
and operate its respective properties and to carry on its respective business as
now being conducted, except where the failure to be so organized, existing and
in good standing or to have such power and authority would not in the aggregate
have a Purchaser Material Adverse Effect (as hereinafter defined). Parent and
Acquisition have heretofore delivered to the Company accurate and complete
copies of their respective certificates of incorporation and by-laws, in each
case as currently in effect. When used in connection with Parent and
Acquisition, the term "Purchaser Material Adverse Effect" means any change or
effect that is materially adverse to the assets or financial condition of Parent
and Acquisition, taken as a whole, or in their respective ability to consummate
the transactions contemplated hereby.
SECTION 5.02 Capitalization. As of the date hereof, the authorized
--------------
capital stock of Parent consists of 100 shares of Common Stock, par value $.01,
per share, of which, as of the date hereof, 10 shares are issued and
outstanding. As of the date hereof, all outstanding shares of capital stock of
Parent are owned by SP Investments Inc. ("SPII") or its controlling stockholders
or entities controlled by such persons. As of the date hereof, the authorized
capital stock of Acquisition consists of 100 shares of common stock, par value
$.01, per share, of which, as of the date hereof, 100 shares are issued and
outstanding. As of the date hereof, all the outstanding shares of capital stock
of Acquisition are owned by Parent. All the issued and outstanding shares of
capital stock of Parent and Acquisition have been validly issued and are fully
paid, nonassessable and free of preemptive rights. Except as described above,
there are outstanding (i) no shares of capital stock or other voting securities
of Parent or Acquisition, (ii) no securities of Parent or Acquisition
convertible into or exchangeable for shares of capital stock or voting
securities of Parent or Acquisition, and (iii) except as set forth on Schedule
5.02 hereto, no options, warrants or other rights to acquire from Parent or
Acquisition, and no obligation of Parent or Acquisition to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Parent or Acquisition.
SECTION 5.03 Authority Relative to this Agreement. Each of Parent
------------------------------------
and Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
board of directors of Acquisition and Parent and by Parent as the sole
stockholder of Acquisition, and no other corporate proceedings on the part of
Parent or Acquisition are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Acquisition and constitutes the
valid, legal and binding obligations of each of
16
<PAGE>
Parent and Acquisition, enforceable against each of Parent and Acquisition in
accordance with its terms.
SECTION 5.04 Proxy Statement; Schedule 14D-9; Other Filings. None of
----------------------------------------------
the information supplied by Parent or Acquisition in writing for inclusion in
the Proxy Statement, the Schedule 14D-9, or any Other Filings will, at the
respective times that the Proxy Statement, the Schedule 14D-9 or any Other
Filings or any amendments or supplements thereto are filed with the SEC and, in
the case of the Proxy Statement or any Other Filings, at the time that it or any
amendment or supplement thereto is mailed to the Company's stockholders, at the
time of the Stockholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
SECTION 5.05 Financing. Parent has obtained written commitments from
---------
(i) NationsBank of Georgia, N.A. to provide, subject to the terms and conditions
set forth therein, financing in an amount equal to $20,000,000, and (ii) SPII to
provide, subject to the terms and conditions set forth therein, capital
contributions and/or financing in an amount up to $18,000,000, which amounts,
taken together, are sufficient to enable Parent to consummate the Offer and the
Merger at the Per Share Amount as contemplated hereby (collectively, the
"Financing"). Parent has delivered copies to the Company of the written
commitments referred to above. Parent shall (i) cause the initial stockholders'
equity in Acquisition to equal or exceed $8,000,000, (ii) cause the initial
stockholders' equity in the Surviving Corporation to equal or exceed $8,000,000,
and (iii) from and after the date on which the Offer is consummated to the date
which is ninety-one (91) days following the date on which payment in full is
made on all accounts payable of the Company outstanding as of the date on which
the Offer is consummated as identified on a list to be prepared and delivered by
the Company to Parent promptly following the date on which the Offer is
consummated, cause the Surviving Corporation not to declare, set aside or pay
any dividend (other than dividends in the form of capital stock) or other
distributions in respect of the capital stock of the Surviving Corporation or
redeem, repurchase or otherwise acquire any of the securities of the Surviving
Corporation if any such action would result in the stockholders' equity falling
below $8,000,000.
SECTION 5.06 No Prior Activities. Except for obligations or
-------------------
liabilities incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions contemplated
hereby, including, without limitation, the Financing, Acquisition has neither
incurred any obligations or liabilities nor engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person or entity. To the knowledge of Parent and
Acquisition, (i) no judgment, ruling, order, writ, injunction, decree, statute,
rule or regulation applicable to Parent, Acquisition or the controlling
stockholders of Parent (collectively the "Acquiring Persons"), and (ii) no note,
bond, mortgage, indenture, contract, lease, license, permit, franchise or other
instrument to which any Acquiring Person is a party or by which any of its
material assets is bound, would as the result of the execution and delivery of
this Agreement or the Stockholders Option Agreement by Parent and Acquisition,
as applicable, and the consummation of the transactions contemplated hereby and
thereby, reasonably be expected to result in any of the effects described in
clause (iv)(a) of Annex A hereto.
17
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SECTION 5.07 Brokers. No broker, finder, agent or investment banker
-------
is entitled to any brokerage, finder's or other fee or commission payable by the
Company in connection with the transactions contemplated by this Agreement based
upon arrangements made by and on behalf of Parent or Acquisition.
ARTICLE VI.
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as expressly
----------------------------------
contemplated by this Agreement or as set forth on Schedule 6.01 hereto, during
the period from the date hereof to the Effective Time, the Company and its
subsidiaries will each conduct its operations according to its ordinary course
of business consistent with past practice, and the Company and its subsidiaries
will each use its reasonable best efforts to (i) preserve intact its business
organization, (ii) keep available the services of its officers and employees,
other than those officers and employees identified on Schedule 6.01 hereto, and
(iii) maintain existing relationships with its lenders, suppliers and others
having business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise contemplated by this Agreement or as set
forth on Schedule 6.01 hereto, prior to the Effective Time, neither the Company
nor any of its subsidiaries will, without the prior written consent of
Acquisition:
(a) amend or propose to amend any of their respective certificates or
articles of incorporation or by-laws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell, pledge, encumber, deliver or otherwise dispose of (whether through
the issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class or any other equity
securities or equity equivalents of the Company or any of its subsidiaries or
amend in any material respect any of the terms of any such securities
outstanding as of the date hereof;
(c) split, combine or reclassify any shares of its capital stock or
the capital stock of any of its subsidiaries, declare, set aside or pay any
dividend (other than dividends (whether in cash, stock, or property or any
combination thereof), if any, paid by wholly-owned subsidiaries to the Company
or another wholly-owned subsidiary of the Company) or other distribution in
respect of its capital stock or redeem, repurchase or otherwise acquire any of
its securities or any securities of its subsidiaries or any options, warrants or
other rights to acquire any shares of its capital stock or adopt a plan of
complete or partial liquidation or resolutions providing for or authorizing such
liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
subsidiaries, other than the redemption, repurchase or other acquisition of the
equity securities of any subsidiary of the Company which is not wholly-owned by
the Company for aggregate consideration not in excess of the book value of such
securities;
(d)(i) except as set forth in clause (e), incur any additional
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse the obligations of any other person except for the
obligations of wholly-owned subsidiaries of the Company in the ordinary course
of business consistent with past practice; (ii) make any loans, advances or
capital
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contributions to, or investments in, any other person (other than to wholly-
owned subsidiaries of the Company and advances to employees for travel or other
business related expenses in the ordinary course of business consistent with
past practices); (iii) pledge or otherwise encumber shares of capital stock of
the Company or any of its subsidiaries; (iv) mortgage or pledge any of its
material assets, tangible or intangible, or create or suffer to exist any
material Lien thereupon; or (v) enter into any contract, agreement, commitment
or arrangement to do any of the foregoing;
(e) incur any advances pursuant to that certain Revolving Credit
Agreement, dated as of June 18, 1991, among the Company, various subsidiaries of
the Company and Marmon (as successor in interest to HCR Partners), as amended
(the "Credit Agreement"), other than advances which at any time outstanding do
not exceed $3,000,000.
(f) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust, plan, fund or
other arrangement for the benefit or welfare of any director, officer or
employee, or (except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company or an
increase in excess of 5% in the case of any individual (other than compensation
based upon the payment of commissions pursuant to commission schedules
previously made available to Parent or Acquisition by the Company)) increase in
any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan or arrangement in effect as
of the date hereof (including, without limitation, the granting of stock
appreciation rights or performance units) or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing;
(g) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or any assets which in the aggregate are material to the
Company and its subsidiaries, taken as a whole, or commit or agree to do any of
the above;
(h) except as required by GAAP, change any of the accounting
principles or practices used by it;
(i) make any tax election or settle or compromise any income tax
liability material to the Company and its subsidiaries taken as a whole;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its subsidiaries or
incurred in the ordinary course of business consistent with past practice;
provided that, in no event shall the Company and its subsidiaries repay any
long-term indebtedness except to the extent required by the terms thereof;
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(k)(i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) enter into or commit to enter into any contract or agreement other
than in the ordinary course of business consistent with past practice or which
requires the payment of amounts in excess of $100,000 or which gives rise to
obligations which extend beyond ninety (90) days from the date hereof other than
agreements to provide services to customers of the Company or any of its
subsidiaries; (iii) authorize any capital expenditures, other than those as to
which the Company or its subsidiaries have committed as set forth on Schedule
6.01 hereto, individually in excess of $100,000, or in the aggregate in excess
of $1,000,000, except with the consent of Parent (which shall not be
unreasonably withheld); or (iv) enter into or amend any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(l)(i) make or enter into any new lease of real property other than
any new lease of real property which will replace an existing lease or (ii)
extend or amend any existing lease of real property other than in the ordinary
course of business consistent with past practice or on terms and conditions no
less favorable to the Company or the subsidiary than the existing lease;
(m) enter into or commit to enter into any amendment or modification
to any contract, agreement or arrangement with any vendor or supplier identified
on Schedule 6.01(m) hereto which individually or in the aggregate with all other
such amendments and modifications is or could reasonably be expected to be
material to such contract, agreement or arrangement;
(n) intentionally take or omit to take, or enter into an agreement to
take or agree to omit to take, any action that would result in any of the
conditions to the Offer set forth in Annex A attached hereto or the conditions
to the Merger set forth in Article VII hereof not being timely satisfied;
(o) release or relinquish any material contractual rights, other than
in the ordinary course of business consistent with past practice;
(p) settle any pending or threatened material action, suit, claim or
proceeding involving the Company or any subsidiary, other than in the ordinary
course of business consistent with past practice and other than any settlements
which require only the payment of money not in excess of $50,000 individually or
$250,000 in the aggregate;
(q) enter into or commit to enter into any contract, agreement or
arrangement or any amendment or modification to any existing contract, agreement
or arrangement with Marmon Holdings, Inc. or any affiliate thereof; or
(r) commit or agree in writing or otherwise to take any of the actions
described in Sections 6.01(a) through 6.01(q) hereof or any action which would
make any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect in any material respect as of the date when made
or as of the Effective Time, or omit to take or commit or agree to omit to take
any action necessary to prevent any such representation or warranty from being
untrue or incorrect in any material respect in any respect at any time which
would result in any of the conditions set forth in this Agreement not being
satisfied.
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SECTION 6.02 Access to Employees, Vendors and Information. (a)
--------------------------------------------
Between the date hereof and the Effective Time, the Company will (i) give each
of Parent, Acquisition and persons or entities providing the financing (the
"Financing Sources") and their respective authorized representatives reasonable
access to all employees, offices and other facilities and to all books and
records of the Company and its subsidiaries, will permit each of Parent and
Acquisition and the Financing Sources to make such inspections as Parent or
Acquisition or the Financing Sources may reasonably require and will cause the
Company's officers and those of its subsidiaries to furnish Parent or
Acquisition or the Financing Sources with such financial and operating data and
other information with respect to the business and properties of the Company and
any of its subsidiaries as Parent or Acquisition or the Financing Sources may
from time to time reasonably request and (ii) provide to Acquisition copies of
(A) all SEC Reports filed after the date hereof as soon as practicable after
such reports are filed with the SEC and (B) all correspondence between the
Company or any of its subsidiaries and their respective independent accountants.
The Company acknowledges that access to employees, vendors and information by
Parent, Acquisition and its representatives is essential to the orderly
transition of ownership contemplated hereby and the Company agrees to use its
reasonable best efforts to assist (and cause its employees, agents, and
representatives) to assist in such transition, including, without limitation,
that the Company will, if requested by Parent or Acquisition, facilitate the
introduction of representatives and/or personnel of Parent or Acquisition to any
person or entity with whom the Company has a contractual or other business
relationship. Without limiting the generality of the foregoing, the Company
agrees and consents that Parent and/or Acquisition may communicate with some or
all of the Company's employees regarding the transactions contemplated hereby
and matters related thereto, including, without limitation, plans for future
business operations of the Company and the Surviving Corporation, and that
representatives of Parent and/or Acquisition may visit, inspect and conduct
meetings with employees at any or all business locations of the Company. To the
extent that the reasonableness of any actions taken or to be permitted pursuant
to this Section are to be determined, the parties agree that no events occurring
prior to the date hereof shall establish any course of dealing or other standard
of reasonableness among the parties with respect to any such determination.
(b) Each of Parent and Acquisition agrees to be bound by the
confidentiality agreement with Charles B. McNamee dated on or about April 19,
1995 as amended prior to the date hereof, except that Parent and Acquisition may
make such disclosures in the Offer Documents, Schedule 13E-3, Proxy Statement
and any Other Filings as Parent may determine in its reasonable discretion with
advice of counsel is required by applicable law.
SECTION 6.03 Reasonable Best Efforts. Subject to the terms and
-----------------------
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, (i) the
preparation and filing with the SEC of the Schedule 14D-1, Schedule 13E-3,
Schedule 14D-9 and any Other Filings and any amendments thereto; (ii) such
actions as may be required to have the Proxy Statement cleared by the SEC as
promptly as practicable after filing; (iii) such actions as may be required to
lift or rescind any injunction, order or decree referred to in clause (iv)(a) of
Annex A hereto; (iv) such actions as may be required to facilitate or obtain the
Financing and, in the event that any portion of the Financing becomes
unavailable, regardless of the reason therefor, Parent and Acquisition will each
use its best efforts to obtain alternative financing from other sources, on
21
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and subject to substantially the same terms and conditions as the portion of the
Financing that has become unavailable; and (v) the execution of any additional
instruments necessary to consummate the transactions contemplated hereby. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party hereto shall take all such necessary action.
SECTION 6.04 Consents. Each of Parent, Acquisition and the Company
--------
will use its reasonable best efforts to obtain waivers, permits, consents and
approvals and to effect all registrations, filings and notices with or to all
third parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement (including, without limitation, any
consents or approvals set forth on Schedule 4.05 hereto) and necessary to permit
the continued operations of the Surviving Corporation on a basis substantially
equivalent to the operations of the Company prior to the Effective Time.
SECTION 6.05 Public Announcements. Parent and Acquisition, on the
--------------------
one hand, and the Company, on the other hand, will consult with, and provide an
advance copy of the proposed text to, the other party before issuing any press
release or otherwise making any public statements or mailing any communications
to any stockholder with respect to the transactions contemplated by this
Agreement, including, without limitation, the Offer and the Merger, and shall
not issue any such press release, make any such public statement or mail any
such communication without the prior consent of the other party, except as may
be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange; provided that, in such event it
has used all reasonable efforts to consult with the other party and to obtain
such party's consent but has been unable to do so in a timely manner.
SECTION 6.06 Insurance and Indemnification. (a) In the event of any
-----------------------------
threatened or actual claim, action, suit, proceeding or investigation, whether
civil, criminal or administrative, including, without limitation, any such
claim, action, suit, proceeding or investigation in which any of the present or
former officers or directors (the "Managers") of the Company is, or is
threatened to be, made a party by reason of the fact that such person is or was
a director, officer, or employee of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether
before or after the Effective Time, the parties hereto agree to cooperate and
use their best efforts to defend against and respond thereto. From and after
the Effective Time, the Surviving Corporation shall indemnify and hold harmless,
as and to the full extent permitted by the Delaware Law, as it exists or may
hereafter be amended, each such Manager against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement), reasonably incurred or suffered
by such person in connection with any such claim, action, suit, proceeding or
investigation, and in the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) subject
to the last sentence of this paragraph (a), the Managers may retain counsel
satisfactory to them (provided such counsel is reasonably acceptable to the
Surviving Corporation), and the Surviving Corporation shall pay all reasonable
fees and expenses of no more than one such counsel (and no more than one local
counsel) for the Managers promptly as statements therefor are received, and (ii)
the Surviving Corporation shall use its best efforts to assist in the vigorous
defense of any such matter; provided that, the Surviving Corporation shall not
be liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld); and provided,
22
<PAGE>
further, that the Surviving Corporation shall have no obligation hereunder to
any Manager when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and non-appealable,
that indemnification of such Manager in the manner contemplated hereby is
prohibited by applicable law. Any Manager wishing to claim indemnification
under this Section 6.06(a), upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Surviving Corporation
thereof and shall deliver to the Surviving Corporation the undertaking
contemplated by Section 145(e) of the Delaware Law. The Managers as a group may
retain no more than one law firm (in addition to one local counsel) to represent
them with respect to each such matter unless there is under applicable standards
of professional conduct, a conflict on a significant issue between the positions
of any two or more Managers, in which event such additional counsel as may be
required may be retained.
(b) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation set forth in the Company's Restated Certificate of Incorporation or
By-Laws on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of five years after the Effective
Time in any manner that would adversely affect the rights thereunder of any
present or former directors, officers, employees, fiduciaries or agents of the
Company (collectively, the "Indemnified Parties") unless such modification is
required by law and the Surviving Corporation shall cause to be maintained (i)
for not less than five years after the Effective Time, the provisions with
respect to indemnification in the certificates or articles of incorporation, by-
laws or similar organizational documents of any of the Company's subsidiaries as
in effect as of the date hereof, and (ii) for not less than the shorter of five
years or the termination date specified therein (if any), the indemnification
agreements entered into between the Company and any of the Indemnified Parties,
in each case, with respect to matters occurring on or prior to the Effective
Time. For a period of three years after the Effective Time, Surviving
Corporation shall cause to be maintained the current policies of the directors'
and the officers' liability insurance maintained by the Company (provided that
the Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous) with
respect to matters occurring prior to the Effective Time to the extent
available; provided that, in no event shall Surviving Corporation be required to
expend to maintain or procure insurance coverage pursuant to this Section
6.06(b) any amount per annum in excess of 150% of the aggregate premiums paid or
payable in 1995 on an annualized basis for such purpose (which the Company
represents and warrants to be $131,500); provided, however, that in the event
-------- -------
the payment of such amount for any year is insufficient to maintain such
insurance, the Surviving Corporation shall purchase as much insurance as may be
purchased for the amount indicated.
SECTION 6.07 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent or Acquisition, and Parent or Acquisition shall give
prompt notice to the Company, of (i) any change or event having, or which,
insofar as can reasonably be foreseen, would have a Material Adverse Effect,
(ii) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at or as of the Effective Time, and (iii) any material failure of the Company,
Parent or Acquisition, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
-------- -------
Section 6.07
23
<PAGE>
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 6.08 Prepayment. At such times following consummation of the
----------
Offer as Acquisition may request, the Company will to the extent of available
working capital or the extent capital is contributed to the Company by Parent or
Acquisition, in the manner and to the extent permitted by the instruments
governing the same, prepay, redeem or retire such indebtedness of the Company
and its subsidiaries as Acquisition may request.
SECTION 6.09 Acquisition Proposals. (a) Neither the Company nor any
---------------------
of its subsidiaries will, directly or indirectly, through any officer, director,
employee, representative or agent of the Company or any of its subsidiaries,
initiate, solicit or encourage (including by way of furnishing non-public
information or assistance) or take any action to knowingly facilitate, any
inquiries or the making of any proposals regarding any merger, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving the
Company or any of its subsidiaries (any of the foregoing inquiries or proposals
being referred to herein as an "Acquisition Proposal"). The Company represents
and warrants that (i) as of the date hereof it has ceased any and all
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and (ii) prior to the Effective Time, the
Company will not release, terminate or modify the terms of any existing
confidentiality agreement without the prior written consent of Acquisition
except as required by applicable law or in good faith (upon advice of counsel)
that such action is required in order that the Board discharge its fiduciary
duties. Nothing contained in this Section 6.09 shall prevent the Board from
considering, negotiating, approving and recommending to the stockholders of the
Company a bona fide Acquisition Proposal not solicited in violation of this
Agreement, provided the Board determines in good faith (upon advice of counsel)
that it is required to do so in order to discharge its fiduciary duties.
(b) The Company shall immediately notify Acquisition after receipt of
any Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for non-public information relating to the Company or
any of its subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any subsidiary by any
person or entity that informs the Board or such subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice to
Acquisition shall be made orally (within one business day) and in writing (as
soon thereafter as practicable), and shall indicate whether the Company is
providing or intends to provide the person making the Acquisition Proposal with
access to information concerning the Company.
(c) If the Board receives a request for non-public information by a
person who makes a bona fide Acquisition Proposal, and the Board determines in
good faith (upon the advice of counsel) that it is required to cause the Company
to act as provided in this Section 6.09 in order to discharge properly its
fiduciary duties, then, provided the person making the Acquisition Proposal has
executed a confidentiality agreement substantially equivalent to the one then in
effect between the Company and Charles B. McNamee, the Company may provide such
person with access to information regarding the Company.
SECTION 6.10 HSR Act Filing. To the extent required by applicable
--------------
law, the respective ultimate parent entities of the Company and Parent and
Acquisition shall file
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Notification and Report Forms under the HSR Act (the "HSR Filings") with the
Federal Trade Commission and the Antitrust Division of the Department of
Justice. Each of the Company and Parent agree to cooperate and consult with
each other with respect to the preparation of the HSR Filings and any other
submissions, including, but not limited to, timely responses to written or oral
comments or requests for additional information or documents required to be made
pursuant to the HSR Act in connection with the transactions contemplated hereby.
SECTION 6.11 Certain Benefits. Parent and Acquisition agree to
----------------
cause, for at least one (1) year from the Effective Time, subject to applicable
law, the Surviving Corporation and its subsidiaries to provide benefit plans to
employees employed as of the Effective Time which will, in the aggregate, be no
less favorable than those in effect as of the date on which the Offer is
consummated.
SECTION 6.12 Stockholders' Meeting. (a) If approval by the Company's
---------------------
stockholders is required by applicable law to consummate the Merger, the
Company, acting through the Board, shall in accordance with applicable law and
the Company's Restated Certificate of Incorporation and By-Laws as soon as
practicable following the consummation of the Offer:
(i) duly call, give notice of, convene and hold as soon as
reasonably practicable following consummation of the Offer, a special
meeting of its stockholders or take such other action as may be
permitted under the Delaware Law (the "Stockholders' Meeting") for the
purpose of considering and taking action upon this Agreement and the
Merger;
(ii) include in the Proxy Statement the recommendation of the
Board that stockholders of the Company vote in favor of the approval
and adoption of this Agreement and the transactions contemplated
hereby, unless the Board (or any committee of the Board established to
take action under this Agreement) determines in good faith (upon
advice of counsel) that such recommendation is inconsistent with its
performance of its fiduciary duties under applicable law as determined
by the members thereof by a majority vote; and
(iii) use its reasonable best efforts (A) to obtain and furnish
the information required to be included by it in the Proxy Statement
to be prepared by the Company and filed as soon as reasonably
practicable following consummation of the Offer with the SEC with
respect to the Stockholders' Meeting and, after consultation with
Parent and Acquisition, respond promptly to any comments made by the
SEC with respect to the Proxy Statement and any preliminary version
thereof and cause the Proxy Statement to be mailed to its stockholders
at the earliest practicable time following the consummation of the
Offer and (B) subject to the exercise of the fiduciary duty of the
Board after consultation with its legal counsel, to obtain the
necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby. The information provided and to be
provided by the Company, Parent and Acquisition for use in the Proxy
Statement shall, as of the date of mailing of the Proxy Statement and
as of the date of the Stockholders' Meeting, not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated
25
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therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
Parent and Acquisition agree that they will cause all Shares then owned by
them and their subsidiaries to be voted in favor of approval and adoption of
this Agreement and the transactions contemplated hereby.
(b) Notwithstanding the foregoing, in the event that Parent shall acquire
at least ninety percent (90%) of the outstanding Shares, the parties hereto
agree, at the request of Parent, to take all necessary and appropriate action to
cause the Merger to become effective (or, as contemplated by Section 2.01
hereof, to cause a merger of Acquisition (or any other direct or indirect
subsidiary of Parent) into the Company to become effective), as soon as
reasonably practicable after the expiration of the Offer, without a meeting of
the stockholders of the Company, in accordance with Section 253 of the Delaware
Law.
SECTION 6.13 Proxy Statement; Other Filings. The Proxy Statement will
------------------------------
comply in all material respects with applicable federal securities laws, except
that no representation is made by (i) the Company with respect to information
supplied by Parent or Acquisition in writing for inclusion in the Proxy
Statement, and (ii) Parent or Acquisition with respect to information supplied
by the Company in writing for inclusion in the Proxy Statement. As soon as
practicable after the date hereof, the Company and Parent shall promptly and
properly prepare and file any Other Filings. None of the information supplied
by the Company, Parent or Acquisition in writing for inclusion in the Proxy
Statement and the Other Filings and any amendments thereto to be filed with the
SEC by Parent or Acquisition and the Company in connection with the transactions
contemplated by this Agreement will, at the respective times that the Proxy
Statement and Other Filings or any amendments or supplements thereto are filed
with the SEC, at the time that the Proxy Statement or any amendment or
supplement thereto is mailed to the Company's stockholders, at the time of the
Stockholders' Meeting or at the Effective Time, contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE VII.
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party hereto to effect the Merger are subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) if required by the Delaware Law, this Agreement and the Merger
shall have been adopted and approved by the affirmative vote of the
stockholders of the Company by the requisite vote in accordance with the
Restated Certificate of Incorporation of the Company and the Delaware Law;
(b) no statute, rule, regulation, executive order, decree, judgment,
ruling or injunction (whether temporary, preliminary or permanent) shall
have been enacted, entered, promulgated or enforced by any United States
federal or state court or
26
<PAGE>
governmental authority which prohibits, restrains, enjoins or restricts the
consummation of the Merger; provided that the parties shall use their
reasonable best efforts to cause any such order, decree, judgment, ruling
or injunction to be vacated or lifted;
(c) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired; and
(d) Parent shall have purchased a number of Shares equal to or in
excess of seventy-five percent (75%) of the then issued and outstanding
Shares pursuant to the Offer, provided this condition shall be deemed
satisfied if Acquisition fails to accept for payment or to pay for any
Shares tendered pursuant to the Offer in violation of the terms hereof or
Annex A hereto.
SECTION 7.02 Conditions to Obligation of the Company to Effect the Merger.
-------------------------------------------------------------
The obligation of the Company to effect the Merger is further subject to (i)
each of Parent and Acquisition having performed in all material respects their
respective material obligations under this Agreement required to be performed by
it at or prior to the Effective Time pursuant to the terms hereof, (ii) each of
the representations and warranties of Parent and Acquisition contained in this
Agreement being true and correct as of the Effective Time as though made on and
as of the Effective Time, except for (a) changes permitted by this Agreement,
and (b) any failures which, individually or in the aggregate, would not have a
Purchaser Material Adverse Effect, and (iii) Company having received a
certificate from Parent signed by the chief executive officer of Parent, to the
effect of (ii)(a) and (ii)(b). The provisions of this Section 7.02 shall become
void and shall no longer have any effect in the event that Shares are purchased
pursuant to the Offer.
SECTION 7.03 Conditions to Obligation of Parent and Acquisition to Effect
------------------------------------------------------------
the Merger. The obligation of Parent and Acquisition to effect the Merger is
----------
further subject to (i) the Company having performed in all material respects
each of its obligations under this Agreement required to be performed by it at
or prior to the Effective Time pursuant to the terms hereof, (ii) each of the
representations and warranties of the Company contained in this Agreement being
true and correct as of the Effective Time as though made on and as of the
Effective Time, except for (a) changes permitted by this Agreement, and (b) any
failures which, individually or in the aggregate, would not have a Material
Adverse Effect, and (iii) Acquisition having received a certificate from the
Company signed by the chief executive officer of the Company, to the effect of
(ii)(a) and (ii)(b). The provisions of this Section 7.03 shall become void and
shall no longer have any effect in the event that Shares are purchased pursuant
to the Offer.
ARTICLE VIII.
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Merger
-----------
may be abandoned at any time by written notice, notwithstanding approval thereof
by the stockholders of the Company, but prior to the Effective Time:
27
<PAGE>
(a) by mutual written consent duly authorized by the Boards of
Directors of the Company and Parent;
(b) by Parent, Acquisition or the Company, if (i) the Effective Time
shall not have occurred on or before December 15, 1995 (provided that the
right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Effective
Time to occur on or before such date), (ii) any court of competent
jurisdiction in the United States or other United States governmental
authority shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
nonappealable, or (iii) any of the Trigger Events described in Section 8.03
hereof shall have occurred;
(c) by Parent or Acquisition, if due to an occurrence or circumstance
which would result in a failure to satisfy any of the conditions set forth
in Annex A hereto, Parent shall have (i) failed to commence the Offer on or
before September 12, 1995, (ii) terminated the Offer or the Offer shall
have expired without the purchase of Shares sufficient to satisfy the
condition set forth in Section 7.01(d) hereof, or (iii) failed to accept
for payment Shares sufficient to satisfy the condition set forth in Section
7.01(d) hereof pursuant to the Offer within 60 days following the
commencement of the Offer;
(d) by the Company, if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any of the conditions set forth in
Annex A hereto or otherwise, Parent shall have (A) failed to commence the
Offer on or before September 12, 1995, (B) terminated the Offer or the
Offer shall have expired without the purchase of Shares sufficient to
satisfy the condition set forth in Section 7.01(d) hereof or (C) failed to
accept for payment Shares sufficient to satisfy the condition set forth in
Section 7.01(d) hereof pursuant to the Offer with 60 days following the
commencement of the Offer, or (ii) all conditions set forth in Annex A
hereto have been satisfied or waived and Parent shall have failed to accept
for payment any Shares validly tendered and not withdrawn; or
(e) by Parent or Acquisition, upon a breach of any material
representation, warranty, covenant or agreement on the part of Company set
forth in this Agreement, or if any representation or warranty of Company
shall have become untrue, in either case, such that the condition set forth
in Section 7.03 hereof would be incapable of being satisfied on or before
December 15, 1995 (or as otherwise extended); provided that, in any case, a
willful breach shall be deemed to cause such conditions to be incapable of
being satisfied for purposes of this Section 8.01(e).
SECTION 8.02 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.01 hereof, this Agreement
shall forthwith become void and have no effect, without any liability on the
part of any party hereto or its affiliates, directors, officers or stockholders,
other than the provisions of this Section 8.02 and Sections 6.02(b) and 8.03.
Nothing contained in this Section 8.02 shall relieve any party from liability
for any willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
28
<PAGE>
SECTION 8.03 Fees and Expenses. (a) If (i) any corporation (including
-----------------
the Company or any of its subsidiaries or affiliates), partnership, person,
other entity or group (as defined in Section 13(d) of the Exchange Act) other
than Parent or any of its affiliates (collectively, "Persons") shall have
acquired or entered into any commitment or agreement to acquire, directly or
indirectly, at least 25% of the assets of the Company and its subsidiaries; or
(ii) the Company shall have entered into, or shall have publicly announced
its intention to enter into, an agreement or an agreement in principle with
respect to any Acquisition Proposal; or
(iii) any representation or warranty made by the Company in, or pursuant
to, this Agreement shall not have been true and correct in all material respects
when made and any such failure to be true and correct could reasonably be
expected to have a Material Adverse Effect or the Company shall have failed to
observe or perform in any material respect any of its obligations under this
Agreement and Acquisition has terminated the Agreement pursuant to Section 8.01
hereof; or
(iv) the Board shall have withdrawn or materially modified in a manner
adverse to Acquisition its approval or recommendation of the Offer, the Merger
or this Agreement in any such case whether or not such withdrawal or
modification is required by the fiduciary duties of the Board; or
(v) prior to the purchase of any Shares under the Offer, the Company shall
have received any Acquisition Proposal which the Board has determined and
publicly announced is more favorable to the Company's stockholders than the
transactions contemplated by this Agreement, whether or not such determination
is required by the fiduciary duties of the Board;
(each such event described in this subparagraph (a) being, a "Trigger Event"),
then the Company shall promptly, but in no event later than two days after the
termination of this Agreement pursuant to Section 8.01(b)(iii) hereof as the
result of the occurrence thereof, pay to Acquisition an amount equal to
$1,500,000, which amount is inclusive of all expenses of Acquisition and Parent.
(b) If (i) this Agreement is terminated for any reason other than as a
result of the Offer being terminated based upon the failure of the conditions
set forth in clauses (iii) or (iv)(b) of Annex A hereto, and (ii) neither Parent
nor Acquisition is in material breach of its material covenants and agreements
under this Agreement, then the Company shall, if no payment has been made
pursuant to Section 8.03(a) hereof, reimburse each of Parent, Acquisition and
their respective stockholders and affiliates (not later than two days after
submission of statements therefor) for all out-of-pocket expenses and fees
(including, without limitation, fees and expenses payable to all banks,
investment banking firms and other financial institutions and their respective
agents and counsel, for arranging or providing the Financing and structuring the
transaction and all fees of counsel, accountants, experts and consultants, to
Parent, Acquisition and their respective stockholders and affiliates) actually
incurred or accrued by it or on its behalf in connection with the Offer and the
Merger and the consummation of all transactions contemplated by this Agreement,
including the Financing, and actually incurred or accrued by banks, investment
banking firms and other financial institutions and assumed by Parent,
Acquisition or their respective stockholders or affiliates in connection with
the negotiation,
29
<PAGE>
preparation, execution and performance of this Agreement, the Financing and any
definitive financing agreements relating thereto up to a maximum of $750,000
(all of the foregoing being referred to collectively as the "Expenses").
(c)(i) If Parent does not accept for payment Shares pursuant to the Offer
on or prior to the date which is sixty (60) days following commencement of the
Offer, because of the failure of Parent to satisfy clause (iii) of Annex A
hereto, then Parent, within two days of any termination pursuant to Section
8.01(d) hereof, shall pay to the Company an amount equal to $750,000;
(ii) If this Agreement is terminated based upon a breach of any material
representation, warranty, covenant or agreement on the part of Acquisition or
Parent set forth in this Agreement (other than any representation, warranty or
covenant relating to the Financing which shall be governed solely by subsection
(c)(i) of this Section), then Parent, within two days of any termination
pursuant to Section 8.01(d) hereof, shall pay to the Company an amount equal to
$1,500,000;
(iii) SPII shall enter into an agreement acceptable to SPII and the
Company whereby SPII shall guarantee, among other things, the timely payment of
any amounts described in subclauses (i) and (ii) of this Section 8.03(c).
(d) Except as provided in Section 8.03(a), (b) and (c) hereof, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses
(including, in the case of the Company, the costs of printing the Schedule 14D-
9, the Proxy Statement and any Other Filings to be printed, and in each case all
exhibits, amendments or supplements thereto).
SECTION 8.04 Amendment. Subject to Section 1.03(c) hereof, this Agreement
---------
may be amended by action taken by the Company, Parent and Acquisition at any
time before or after adoption of the Merger by the stockholders of the Company
(if required by applicable law); provided that, after any such approval, no
amendment shall be made which decreases the Per Share Amount or which materially
adversely affects the rights of the Company's stockholders hereunder without the
approval of such stockholders; and, provided, further, that after consummation
of the Offer any amendment referred to in the foregoing provision shall require
approval of a majority of the Shares not beneficially owned by Parent,
Acquisition or any of their Affiliates. This Agreement may not be amended
except by an instrument in writing signed on behalf of the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c) hereof, at any
-----------------
time prior to the Effective Time, each party hereto may (i) extend the time for
the performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance by the other party with any of the agreements
or conditions contained herein. Any agreement on the part of either party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of either
party hereto to assert any of its rights hereunder shall not constitute a waiver
of such rights.
30
<PAGE>
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01 Nonsurvival of Representations and Warranties. The
---------------------------------------------
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
SECTION 9.02 Entire Agreement; Assignment. This Agreement, the Offer
----------------------------
Documents and the documents referenced in Sections 6.02(b) and 8.03(c)(iii)
hereof, constitute the entire agreement between the parties hereto with respect
to the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and shall not be assigned by operation of law or
otherwise; provided that, Parent may assign its rights and obligations to any
subsidiary of Parent, but no such assignment shall relieve Acquisition of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 9.03 Validity. If any provision of this Agreement, or the
--------
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
SECTION 9.04 Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile (with confirmation), or telex, or by registered or certified mail
(postage prepaid, return receipt requested), to the other party as follows:
If to Parent or Acquisition, to:
Charles B. McNamee
President
TIE Acquisition Co.
1201 Third Avenue
Suite 5400
Seattle, Washington 98101
Facsimile: (206) 628-5173
Telephone: (206) 628-8014
31
<PAGE>
with copies to:
Smith, Gambrell & Russell
Suite 3100, Promenade II
1230 Peachtree Street N.E.
Atlanta, Georgia 30309-3592
Attention: Bruce W. Moorhead, Jr., Esq.
Facsimile: (404) 815-3509
Telephone: (404) 815-3660
if to the Company, to:
Robert W. Webb
Vice President, Secretary and
General Counsel
TIE/communications, Inc.
Suite 1900
225 West Washington Street
Chicago, Illinois 60606
Facsimile: (312) 845-8769
Telephone: (312) 372-9500
with a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Suite 2200
Chicago, Illinois 60602
Attention: Charles Evans Gerber, Esq.
Facsimile: (312) 269-1747
Telephone: (312) 269-8050
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.05 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the law of the State of Delaware, without regard to
the principles of conflicts of law.
SECTION 9.06 Descriptive Headings. The descriptive headings herein
--------------------
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Exhibits, Schedules and Annexes. The Exhibits,
-------------------------------
Schedules and Annexes referred to in this Agreement shall be deemed an integral
part of this Agreement, as if fully set forth herein.
32
<PAGE>
SECTION 9.08 Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Sections 6.06, 6.11 and 9.02
hereof, nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.09 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
[The remainder of this page intentionally left blank.]
33
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its representatives thereunto duly authorized, all as
of the day and year first above written.
TIE/COMMUNICATIONS, INC.
By: /s/ George N. Benjamin III
--------------------------
George N. Benjamin III
President
TIE MERGER CO.
By: /s/ Charles B. McNamee
---------------------------
Charles B. McNamee
President
TIE ACQUISITION CO.
By: /s/ Charles B. McNamee
---------------------------
Charles B. McNamee
President
34
<PAGE>
ANNEX A
Notwithstanding any other provision of the Offer but subject to the
obligations of Parent and Acquisition pursuant to Section 6.03 of the Merger
Agreement, Parent shall not be required to accept for payment and may delay the
acceptance for payment of any Shares tendered, and may terminate the Offer and
not accept for payment any Shares tendered, if (i) any applicable waiting period
under the HSR Act shall not have expired or been terminated, (ii) the Minimum
Tender Condition shall not have been satisfied, (iii) Parent shall not have
obtained sufficient financing to enable it to purchase the Shares to be
purchased by it and to pay the fees and expenses incurred or to be incurred in
connection with the financing, or (iv) prior to the acceptance for payment of
Shares, any of the following conditions exist:
(a) any statute, rule, regulation, judgment, injunction (whether
temporary, preliminary or permanent), order or decree shall be enacted,
promulgated, issued, entered, or deemed applicable to (i) Parent,
Acquisition or any other affiliate of Parent or (ii) the Offer, the
Stockholders Option Agreement, this Agreement, or any transactions
contemplated hereby or the Merger, or any other action shall have been
taken by any government or governmental authority, domestic or foreign, (A)
making illegal, delaying beyond the date which is sixty (60) days following
the commencement of the Offer or otherwise directly or indirectly
restraining or prohibiting the acquisition by Parent of Shares pursuant to
the Stockholders Option Agreement, the making of the Offer, the acceptance
for payment of or payment for some of or all the Shares, or the
consummation by Parent and Acquisition of the Merger, (B) restraining or
prohibiting Parent's ownership or operation of, or compelling Parent to
dispose of or hold separate all or any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, (C) imposing
material limitations on the ability of Parent to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or owned by Parent on all matters properly presented to
the Company's stockholders, (D) requiring divestiture by Parent of any
Shares, or (E) otherwise, in the reasonable judgment of Parent, having a
Material Adverse Effect or a Purchaser Material Adverse Effect; provided
that, Parent shall have used its reasonable best efforts to cause any such
action or proceeding to be determined in a manner satisfactory to Parent;
or
(b) any material adverse change or development shall have occurred, or
Parent shall have become aware of any fact that would reasonably be
expected to result in any change or development, in the business, assets,
liabilities, capitalization, earnings, operations, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole, that in the reasonable judgment of Parent, has or would reasonably
be expected to have a Material Adverse Effect; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the American Stock Exchange,
(ii) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States (whether or not mandatory), (iii)
the commencement of a war, armed hostilities or other international or
national calamity having a significant adverse effect on the functioning of
financial markets in the United States, (iv) any limitation (whether or not
mandatory), by any United States governmental authority or agency on the
extension of credit by banks or other financial institutions or (v) in the
case of any of the situations
A-1
<PAGE>
described in clauses (i) through (iv) inclusive, existing at the date of
the commencement of the Offer, a material acceleration or worsening
thereof; or
(d) the Company shall have breached or failed to perform any of its
covenants or agreements which breach is material to the obligations of the
Company under the Agreement or any of the representations and warranties of
the Company set forth in the Agreement shall not be true in any material
respect, in each case, when made or at any time prior to consummation of
the Offer; or
(e) the Agreement or the Stockholders Option Agreement shall have been
terminated; or
(f) the Board shall have publicly (including by amendment of the
Schedule 14D-9) withdrawn or modified in a manner adverse to Parent: (i)
its approval or recommendation of the Offer, the Merger or the Agreement,
or (ii) its actions causing the restrictions on business combinations
contained in Section 203 of the Delaware Law not to apply to the
transactions contemplated hereby, the Offer or the Stockholders Option
Agreement or shall have resolved to do so; or
(g) any party to the Stockholders Option Agreement other than Parent
shall have breached or failed to perform in any material respect any of its
agreements under the Stockholders Option Agreement or any of the
representations and warranties of any such party set forth in the
Stockholders Option Agreement shall not be true in any material respect, in
each case, when made or at any time prior to the consummation of the Offer
as if made at and as of such time, or the Stockholders Option Agreement
shall have been invalidated or terminated with respect to any Shares
subject thereto; or
(h) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in
principle with respect to any Acquisition Proposal; or
(i) Parent, Acquisition and the Company shall have agreed that Parent
shall terminate the Offer or postpone the payment for Shares thereunder;
which, in the reasonable judgment of Parent in any such case, and regardless of
the circumstances giving rise to any such condition makes it inadvisable to
proceed with such acceptance for payment or payments.
The foregoing conditions are for the benefit of Parent and Acquisition and
may be asserted by Parent and/or Acquisition regardless of the circumstances
giving rise to any such condition or, except as otherwise provided herein, may
be waived by Parent in whole or in part at any time and from time to time in its
sole discretion. The failure by Parent at any time to assert any of the
foregoing conditions shall not be deemed a waiver of any such condition and each
such condition shall be deemed an ongoing condition which may be asserted at any
time and from time to time.
A-2
<PAGE>
EXHIBIT 3
STOCKHOLDERS OPTION AGREEMENT
STOCKHOLDERS OPTION AGREEMENT (this "Agreement"), dated September 5, 1995
among TIE Acquisition Co., a Delaware corporation ("Buyer"), and Marmon
Holdings, Inc. a Delaware corporation ("Marmon"), the holder of 1,796,681 shares
of common stock, par value $.10 per share (the "Company Common Stock"), of
TIE/communications, Inc., a Delaware corporation (the "Company") and The
Pritzker Family Philanthropic Fund, an Illinois not-for-profit corporation ("the
Fund", and together with Marmon, the "Principal Stockholders") the holder of
1,197,788 shares of Company Common Stock.
WHEREAS, in order to induce Buyer to enter into the Agreement and Plan of
Merger (the "Merger Agreement"), of even date, among the Company, Buyer and TIE
Merger Co., a Delaware corporation and wholly-owned subsidiary of Buyer. Buyer
has requested that the Principal Stockholders, and the Principal Stockholders
have agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I.
STOCK OPTION
SECTION 1.01. Grant of Stock Option. Each of Marmon and the Fund hereby
---------------------
grants to Buyer an irrevocable option (the "Marmon Option" in the case of the
shares of Company Common Stock owned or hereafter acquired by Marmon and the
"Fund Option" in the case of shares of Company Common Stock owned or hereafter
acquired by the Fund, and the Marmon Option and the Fund Option being
collectively, the "Options") to purchase the number of shares of Company Common
Stock presently owned by such party as set forth in the Preamble hereof and any
additional shares of Company Common Stock acquired by such stockholder (whether
by purchase, exercise of options or otherwise) after the date of this Agreement
(collectively, the "Principal Stockholder Shares") at a purchase price of $8.60
per Principal Stockholder Share (the "Purchase Price").
SECTION 1.02. Exercise of Option. (a) Subject to the conditions set forth
------------------
in Section 1.05 hereof, each of the Marmon Option and the Fund Option may be
exercised by Buyer, in whole only and together only, at any time prior to the
later to occur of (i) the tenth business day after the termination of the Merger
Agreement as a result of one of the Trigger Events (as defined in the Merger
Agreement) described in Section 8.03(a)(i), (ii), (iv), or (v) of the Merger
Agreement and (ii) the third business day following the date on which all
waiting periods under the Hart-Scott Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and
<PAGE>
regulations promulgated thereunder (the "HSR Act") applicable to the exercise of
the Marmon Option or the Fund Option shall have expired or have been earlier
terminated (the later to occur of such dates being the "Expiration Date").
In the event Buyer wishes to exercise the Options, Buyer shall send a
written notice (the "Exercise Notice") to the respective grantor of such option
specifying the place within the city of Chicago, Illinois, the date (not less
than three (3) or more than ten (10) business days from the date of the Exercise
Notice), and the time for the closing of such purchase. The closing of a
purchase of shares of Company Common Stock which are the subject of the Options
(the "Closing") shall take place at the place and on the date and time
designated by Buyer in the Exercise Notice; provided, that if, at the date of
--------
the Closing herein provided for, the conditions set forth in Section 1.05 hereof
shall not have been satisfied (or waived by the affected Principal Stockholder),
Buyer may postpone the Closing until a date within five (5) business days after
such conditions are satisfied (but not beyond the Expiration Date).
(b) Buyer shall not be under any obligation to deliver any Exercise Notice
and may allow the Options to expire without purchasing any shares of Company
Common Stock which are the subject thereof; provided, however, that once Buyer
-------- -------
has delivered an Exercise Notice, subject to the terms and conditions of this
Agreement, Buyer shall be bound, subject to satisfaction of the conditions set
forth in Section 1.06 hereof, to effect the purchase as described in such
Exercise Notice.
SECTION 1.03. Closing. At the Closing (a) the Principal Stockholder shall
-------
(i) deliver to Buyer a certificate or certificates (the "Certificates")
representing such Principal Stockholder Shares owned by such stockholder duly
endorsed or accompanied by stock powers duly executed in blank or (ii) in the
event the shares are not certificated, cause to be made an appropriate book
entry delivery to an account designated by Buyer not less than two (2) business
days prior to the Closing, and (b) Buyer shall pay to the stockholder, by wire
transfer in immediately available funds, an amount equal to (i) the number of
shares of Company Common Stock being purchased at such Closing multiplied by
(ii) the Purchase Price (the "Purchase Amount").
SECTION 1.04. Agreement to Tender. (a) Each of the Principal
-------------------
Stockholders agrees to tender (and agrees that, without prior written
notification to Buyer, it will not withdraw), pursuant to and in accordance with
the terms of the offer to be made pursuant to the terms of the Merger Agreement
(the "Offer"), the Principal Stockholder Shares owned by such stockholder.
Within five (5) business days after the commencement of the Offer, each of the
Principal Stockholders shall deliver to the depositary designated in the Offer
(the "Depositary") (i) an appropriately completed and executed letter of
transmittal with respect to the Principal Stockholder Shares owned by such
stockholder complying with the terms of the Offer, (ii) Certificates or other
evidence of ownership, representing all of the Principal Stockholder Shares
owned by such stockholder and (iii) all other documents or instruments required
to be delivered pursuant to the terms of the Offer. No tender pursuant to this
Section 1.04 will excuse either of the Principal Stockholders from their
respective obligations contained in Article V, and in the case of Marmon,
Article VI of this Agreement.
-2-
<PAGE>
(b) In the event that either of the Principal Stockholders shall, following
the giving of the notice to Buyer required by Section 1.04(a) hereof, withdraw
the tender of any of the Principal Stockholder Shares owned by such stockholder,
such stockholder and any of the Principal Stockholder Shares owned by such
stockholder shall thereafter remain subject to this Agreement.
(c) Notwithstanding Section 1.02(a) hereof, any Principal Stockholder
Shares tendered in accordance with this Section 1.04 shall be paid for at the
consummation of, and in accordance with the terms of, the Offer.
SECTION 1.05. Conditions to the Stockholders' Obligations. The obligation
-------------------------------------------
of each of the Principal Stockholders to sell Principal Stockholder Shares at
any Closing is subject to the following conditions:
(i) The representations and warranties of Buyer contained in Article
IV shall be true and correct in all material respects on the date thereof.
(ii) All waiting periods under the HSR Act applicable to the exercise
of the Marmon Option and the Fund Option shall have expired or have been
earlier terminated.
(iii) There shall be no preliminary or permanent injunction or other
order by any federal or state court or other agency or body, nor any
statute, rule, regulation or order promulgated or enacted by any
governmental authority, restricting, preventing, prohibiting or otherwise
restraining the exercise of the Marmon Option or the Fund Option.
(iv) The Closing with respect to the other Option shall occur
simultaneously with the Closing; provided, this condition shall be deemed
satisfied if the reason for the non-occurrence of the Closing of the other
Option is the result of any breach of any obligation under this Agreement
by the Principal Stockholder which is a party to such other Option.
Notwithstanding the foregoing, to the extent any Principal Stockholder Shares
are tendered and paid for pursuant to Section 1.04(a) hereof, the conditions of
this Section 1.05 shall not apply.
SECTION 1.06. Conditions to the Buyer's Obligation. The Obligation of
------------------------------------
Buyer to purchase Principal Stockholder Shares at any Closing is subject to the
following conditions:
(i) The representations and warranties of each Principal Stockholder
contained in Article III shall be true and correct in all material respects
on the date thereof.
(ii) All waiting periods under the HSR Act applicable to the exercise
of the Marmon Option and the Fund Option shall have expired or have been
earlier terminated.
-3-
<PAGE>
(iii) There shall be no preliminary or permanent injunction or other
order by any federal or state court or other agency or body, nor any
statute, rule, regulation or order promulgated or enacted by any
governmental authority, restricting, preventing, prohibiting or otherwise
restraining the exercise of the Marmon Option or the Fund Option.
(iv) The Closing with respect to the other Option shall occur
simultaneously with the Closing.
Notwithstanding the foregoing, to the extent any Principal Stockholder Shares
are tendered and paid for pursuant to Section 1.04(a) hereof, the conditions of
this Section 1.06 shall not apply.
SECTION 1.07. (a) Adjustment Upon Changes in Capitalization or Merger.
---------------------------------------------------
In the event of any change in the Company's capital stock by reason of stock
dividends, stock splits, mergers, consolidations, recapitalizations,
combinations, conversions, exchanges of shares, extraordinary or liquidating
dividends, or other changes in the corporate or capital structure of the Company
which would have the effect of diluting or changing the Buyer's rights
hereunder, the number and kind of shares or securities subject to the Marmon
Option or the Fund Option, as the case may be, and the purchase price per
Principal Stockholder Share (but not the total purchase price) shall be
appropriately and equitably adjusted so that the Buyer shall receive upon
exercise of the Option the number and class of shares or other securities or
property that the Buyer would have received in respect to the Principal
Stockholder Shares if the Option had been exercised immediately prior to such
event. Each of the Principal Stockholders shall take such steps in connection
with such consolidation, merger, liquidation or other such action as may be
necessary to assure that the provisions hereof shall thereafter apply as nearly
as possible to any securities or property thereafter deliverable upon exercise
of the Marmon Option or the Fund Option, as the case may be.
(b) In the event the consideration per share to be paid by Buyer pursuant
to the Offer is increased, the Purchase Price shall be similarly increased with
respect to the Principal Stockholder Shares; and, in the event the Closing
hereunder shall have occurred, Buyer shall promptly pay to each of the Principal
Stockholders the product of the amount of such increase in the Purchase Price
multiplied by the number of Principal Stockholder Shares purchased from such
stockholder by Buyer at the Closing.
ARTICLE II.
GRANT OF PROXY
Each of the Principal Stockholders hereby revokes any and all previous
proxies granted with respect to any of the Principal Stockholder Shares owned by
such stockholder. By entering into this Agreement, each of the Principal
Stockholders hereby grants a proxy appointing Buyer as such stockholder's
attorney-in-fact and proxy, with full power of substitution, for and in the
stockholder's name, to vote, express consent or dissent, or otherwise to utilize
such voting
-4-
<PAGE>
power to (a) vote such shares in favor of the Merger Agreement and the
transactions contemplated thereby; (b) vote such shares against any action or
agreement that would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement; and (c) vote such shares against any action or
agreement (other than the Merger Agreement and the transactions contemplated
thereby) that would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer, including without limitation any Acquisition
Proposal (as defined in the Merger Agreement). The proxy granted by each of the
Principal Stockholders pursuant to this Article II is irrevocable, is deemed to
be coupled with an interest, and is granted in consideration of Buyer's entering
into this Agreement and the Merger Agreement; provided, however, that such proxy
-------- -------
shall be revoked upon termination of this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL STOCKHOLDERS
Each of the Principal Stockholders, severally and not jointly, represents
and warrants to the Buyer that:
SECTION 3.01. Authority. Such Principal Stockholder has all necessary
---------
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by such Principal
Stockholder and the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of such Principal Stockholder and no other
proceedings are necessary to authorize this Agreement or the performance of all
obligations hereunder, or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by such
Principal Stockholder and, assuming the due authorization, execution and
delivery by Buyer, constitutes the legal, valid and binding obligation of such
Principal Stockholder, enforceable against such stockholder in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors rights and
remedies generally, and subject as to enforceability to general principles of
equity whether raised at law or in equity.
SECTION 3.02. Title. With respect to all Principal Stockholder Shares
-----
owned by such Principal Stockholder, such stockholder is the record and
beneficial owner of such shares with no restrictions on any voting rights or
rights of disposition pertaining thereto except as provided for under applicable
state and federal securities laws. At any Closing, such stockholder will convey
good and valid title to the Principal Stockholder Shares which are the subject
of such Closing, free and clear of any and all claims, liens, charges,
encumbrances, pledges, security interests, restrictions on transfer, conditional
sale or other retention device or arrangement (collectively, "Liens"). None of
the Principal Stockholder Shares owned by such stockholder are subject to any
voting trust or other agreement or arrangement with respect to the voting of
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<PAGE>
such shares. Upon delivery of the Certificates and the receipt of payment
therefor as contemplated by this Agreement, the Buyer will receive good and
valid title to the Principal Stockholder Shares owned by such stockholder, free
and clear of Liens, and subject to no rescission or similar rights or equities
of any kind.
SECTION 3.03. Non-Contravention. The execution and delivery of this
-----------------
Agreement do not, and the performance of the obligations of such stockholder
hereunder and the consummation of the transactions contemplated hereby, will not
(i) conflict with or violate the Certificate of Incorporation, By-Laws or
similar organizational instruments of such stockholder, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to such
stockholder or by which any of its assets or property is bound or affected,
(iii) require any consent, approval, authorization or permit of, or filing with
or notification to any governmental or regulatory authority whether domestic or
foreign except for compliance with the applicable requirements of (A) the HSR
Act, (B) the Securities Exchange Act of 1934, as amended, (C) state securities
or "blue sky" laws, or (D) the Investment Canada Act of 1985 and Competition Act
(Canada), (iv) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any right of termination, acceleration or cancellation of any
right or obligation of such stockholder or cause the loss of any benefit of such
stockholder under any material agreement, contract or other instrument to which
such stockholder is a party or by which the assets and properties of such
stockholder are bound or affected, except in the case of clauses (ii), (iii) or
(iv), any such conflicts, violations, breaches, defaults or other occurrences
which would not in any material respect prevent or delay the exercise by Buyer
of the Marmon Option or the Fund Option, as the case may be, or any other right
of Buyer under this Agreement.
SECTION 3.04. Total Shares. The number of shares set forth in the
------------
Preamble hereof represent the total amount of Principal Stockholder Shares owned
(of record or beneficially) by such stockholder and to the knowledge of such
Principal Stockholder any affiliates of such stockholder as of the date hereof,
and neither such stockholder nor, to the knowledge of such Principal
Stockholder, any affiliate of such stockholder owns any other rights to
subscribe for or otherwise acquire (upon the exercise of options or otherwise)
any equity securities of the Company and has no other interest in or voting
rights with respect to any equity securities of the Company. For purposes of
this Section 3.04, "affiliate" means any person or entity that, directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with such stockholder.
SECTION 3.05. Finder's Fees. No broker, finder or investment banker is
-------------
entitled to any brokerage fees, commissions or finders' fees in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of the Principal Stockholders.
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<PAGE>
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to each of the Principal Stockholders:
SECTION 4.01. Authority. Buyer has all requisite corporate power and
---------
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Buyer and the performance of its obligations hereunder and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Buyer, and no other proceedings
are necessary to authorize this Agreement, to perform its obligations hereunder,
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Buyer and, assuming the due authorization,
execution and delivery by Marmon and the Fund constitutes the legal, valid and
binding obligation of Buyer, enforceable against it in accordance with its
terms.
SECTION 4.02. Acquisition for Buyer's Account. Any Principal Stockholder
-------------------------------
Shares to be acquired upon exercise of the Marmon Option or the Fund Option will
be acquired by Buyer for its own account and not with a present intention of the
public distribution thereof in violation of the federal securities laws, and
will not be transferred except in compliance with the Securities Act of 1933.
SECTION 4.03. Adequate Financing. The Buyer has all funds, or appropriate
------------------
commitments for funds necessary for the consummation of the exercise of the
Marmon Option and the Fund Option.
ARTICLE V.
COVENANTS OF THE PRINCIPAL STOCKHOLDERS
Each of the Principal Stockholders hereby covenants and agrees that:
SECTION 5.01. No Proxies for or Encumbrances on Stockholder Shares.
----------------------------------------------------
Except pursuant to the terms of this Agreement, such stockholder shall not,
without the prior written consent of Buyer, directly or indirectly, (i) grant
any proxies or enter into any voting trust or other agreement or arrangement
with respect to, or (ii) acquire, sell, assign, subject to any Lien, transfer,
encumber or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the direct or indirect acquisition
or sale, assignment, transfer, encumbrance or other disposition of, any
Principal Stockholder Shares owned by such stockholder during the term of this
Agreement. Such stockholder shall not seek or solicit any such acquisition or
sale, assignment, transfer, encumbrance or other disposition or any such
contract, option or other arrangement or assignment or understanding and agrees
to notify Buyer in writing promptly and to provide all details requested by
Buyer if such
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<PAGE>
stockholder shall be approached or solicited, directly or indirectly, by any
person with respect to any of the foregoing.
SECTION 5.02. No Shopping. Such stockholder shall not directly or
-----------
indirectly initiate, solicit or encourage (including by way of furnishing non-
public information or assistance) or take any action to knowingly facilitate (or
authorize any person to initiate, solicit or encourage) any inquiries, or the
making of any proposals regarding any merger, sale of substantial assets, sale
of shares of capital stock (including, without limitation, by way of a tender
offer) or similar transactions involving the Company or any of its subsidiaries.
Such stockholder shall promptly advise Buyer of the terms of any communications
it may receive relating to any of the foregoing.
SECTION 5.03. Fiduciary Duties. Notwithstanding anything in this Article
----------------
V to the contrary, the covenants and agreements set forth in Section 5.02 hereof
shall not be deemed to prevent any officer or director of any Principal
Stockholder from taking any action, subject to the applicable provisions of the
Merger Agreement, while acting in his capacity as director or officer of the
Company to the extent that the Board of Directors of the Company shall determine
in good faith (upon advice of counsel) that the Board is required to take any
such action in order to discharge its fiduciary duties.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.01. Agreements with Respect to Revolving Credit Agreement and
---------------------------------------------------------
Revolving Funds Agreement. Marmon hereby agrees to execute such amendments and
-------------------------
modifications to that certain Revolving Credit Agreement, dated as of June 18,
1991, among the Company, various subsidiaries of the Company and Marmon (as
successor to HCR Partners) and related documentation (collectively, the "Credit
Agreement") so as to (i) permit the transactions contemplated hereby and by the
Merger Agreement and (ii) continue the Credit Agreement in full force and effect
on the same terms and conditions in effect as of the date hereof; except that
(A) the maximum amount of all Loans (as therein defined) shall not at any time
exceed $3,000,000 and (B) the termination date of the Credit Agreement shall be
the earlier to occur of (A) the Effective Time (as defined in the Merger
Agreement) and (B) ninety (90) days following the date on which the Offer is
consummated or the Closing occurs pursuant to Section 1.03 hereof (such date
being, the "Transfer Date"). In addition, Marmon hereby agrees to terminate on
and as of the Transfer Date (i) the Revolving Funds Agreement, dated as of
January 1, 1992, by and between Marmon and the Company and deliver to the
Company any sums held on account of the Company, and (ii) the Administrative and
Consulting Agreement, dated as of January 1, 1995, between Marmon and the
Company.
SECTION 6.02. Indemnification. Marmon hereby unconditionally agrees to
---------------
indemnify each of the Company, Parent and Acquisition against all expense,
liability and loss (including attorneys' fees, judgments, fines or penalties and
amounts paid or to be paid in settlement), incurred or suffered by such person
and not otherwise paid by insurance in connection with any
-8-
<PAGE>
claim, action, suit, proceeding arising on or before the date which is one (1)
year following the Effective Time in which any of the Company, Parent,
Acquisition and/or any of their directors, officers, and, in the case of Parent
and Acquisition, stockholders, is, or is threatened to be made a party to any
action or proceeding by or on behalf of any current or former stockholder of the
Company alleging liability or damages resulting from the transactions
contemplated by the Merger Agreement and/or the process undertaken by the
Company which concluded with the execution and delivery of the Merger Agreement;
provided, however, that Marmon shall not be responsible for any payments
-------- -------
hereunder in excess of $1,000,000 after application of the proceeds of any
coverage under applicable insurance policies for the benefit of the Company or
any such party. Except as set forth in the proviso contained in the previous
sentence, Marmon understands and agrees that any amounts paid pursuant to this
Section shall not be entitled to be reimbursed pursuant to any indemnification
provision of the Merger Agreement, any indemnification agreement with the
Company or any of its subsidiaries, or the certificates of incorporation or by-
laws of the Company or any of its subsidiaries. Buyer hereby agrees to use its
reasonable best efforts in its capacity as a stockholder to cause the Company or
the Surviving Corporation (as defined in the Merger Agreement) to seek coverage
for any matters which are the subject of this Section under any existing
insurance policies or any renewal thereof or substitutions thereof for the
benefit of the Company or any such party; it being understood that except as
provided in the Merger Agreement, neither Buyer, the Company nor the Surviving
Corporation shall have any obligation to secure any additional insurance
coverage or to amend, modify or extend any existing insurance coverage to
satisfy its obligations pursuant to this sentence.
SECTION 6.03. Certain Matters Relating to Buyer and the Surviving
---------------------------------------------------
Corporation. Buyer hereby covenants and agrees for the benefit of the Company
-----------
to be enforced by Marmon and/or the Fund on behalf of the stockholders of the
Company, other than Buyer, Acquisition or any of their respective affiliates as
of the date the Offer is consummated and as of the Effective Time, that (i) the
initial stockholders' equity in Acquisition as of the time the Offer is
consummated shall be at least $8,000,000, (ii) the initial stockholders' equity
in Surviving Corporation as of the Effective Time shall be at least $8,000,000,
(iii) from the date on which the Offer is consummated to the date which is
ninety-one (91) days following the date on which payment in full is made on all
accounts payable of the Company outstanding as of the date on which the Offer is
consummated as identified on a list to be prepared and delivered by the Company
to Parent promptly following the date on which the Offer is consummated, the
Surviving Corporation shall not declare, set aside or pay any dividend (other
than in the form of capital stock) or other distribution in respect of its
capital stock or redeem, repurchase or otherwise acquire any of its capital
stock if any such action would result in its stockholders' equity falling below
$8,000,000 and (iv) from the date on which the Offer is consummated to the date
which is one (1) year from such date, the Surviving Corporation shall not incur
any indebtedness secured by the assets of the Surviving Corporation which would
result in the Surviving Corporation, (x) becoming insolvent; (y) having
unreasonably small capital with which to engage in its business or (z) incurring
debts beyond its ability to pay as they become absolute and matured.
-9-
<PAGE>
ARTICLE VII.
MISCELLANEOUS
SECTION 7.01. Further Assurances. In the event the Buyer exercises the
------------------
Marmon Option and the Fund Option, the Buyer and each of the Principal
Stockholders will each execute and deliver or cause to be executed and delivered
all further documents and instruments and use their respective reasonable best
efforts to secure such consents and take all such further action as may be
reasonably necessary in order to consummate the transactions contemplated hereby
or to enable the Buyer to exercise and enjoy all benefits and rights of such
stockholder with respect to the Principal Stockholder Shares owned by such
stockholder.
SECTION 7.02. Additional Agreements. Subject to the terms and conditions
---------------------
of this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement, to obtain all necessary waivers, consents and approvals and effect
all necessary registrations and filings, including, but not limited to, filings
under the HSR Act, responses to requests for additional information related to
such filings, and submission of information related to such filings, and
submission of information requested by governmental authorities, and to rectify
any event or circumstances which could impede consummation of the transactions
contemplated hereby.
SECTION 7.03. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof and injunctive and other
equitable relief in addition to any other remedy available to such party at law
or in equity.
SECTION 7.04. Termination; Effect of Termination.
----------------------------------
(a) This Agreement may be terminated:
(i) upon the mutual written consent of Buyer and each Principal
Stockholder; or
(ii) one business day following delivery of written notice thereof by
any of Buyer or any Principal Stockholder if the Offer shall not have been
commenced on or prior to September 12, 1995; provided, however, that
-------- -------
neither Principal Stockholder may terminate this Agreement pursuant to this
Section 7.04(a)(ii) if any Principal Stockholder or any officer, director
or employee thereof shall have breached any covenant contained in Articles
V or VI hereof.
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<PAGE>
(b) In the event of termination of this Agreement in accordance with
subclause (a) of this Section 7.04, this Agreement shall forthwith become void
and there shall be no obligation on the part of Buyer or any Principal
Stockholder hereunder.
SECTION 7.05. Notices. All notices and other communications required or
-------
permitted hereunder shall be in writing and delivered as follows:
(a) If to Buyer, to:
TIE Acquisition Co.
1201 Third Avenue
Suite 5400
Seattle, Washington 98101
Attention: Charles B. McNamee, President
Telephone: (206) 628-8014
Facsimile: (206) 628-5173
With a copy to:
Smith, Gambrell & Russell
Suite 3100, Promenade II
1230 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attention: Bruce W. Moorhead, Jr., Esq.
Telephone: (404) 815-3660
Facsimile: (404) 815-3509
(b) If to Marmon, to:
Marmon Holdings, Inc.
225 West Washington Street
Chicago, Illinois 60606
Attention: President
Telephone: (312) 372-9500
Facsimile: (312) 845-8769
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber, Esq.
Telephone: (312) 269-8050
Facsimile: (312) 269-1747
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<PAGE>
(c) If to the Fund, to:
The Pritzker Family
Philanthropic Fund
One South Franklin
Chicago, Illinois 60606
Attention: David Rosen
Telephone: (312) 444-2890
Facsimile: (312) 855-3284
With a copy to:
Diversified Financial Management Corp.
200 W. Madison Street
38th Floor
Chicago, IL 60606
Attention: Glen Miller
Telephone: (312) 750-8465
Facsimile: (312) 920-2436
or to such other address as may have been designated in a prior notice. All
notices hereunder shall be in writing and shall be given by delivery in person,
by facsimile (with confirmation) or by registered or certified mail (postage
pre-paid, return receipt requested). Notices sent by registered or certified
mail, postage prepaid and with return receipt requested, shall be deemed to have
been given two (2) business days after being mailed, and otherwise notices shall
be deemed to have been given when received.
SECTION 7.06. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties contained in this Agreement shall indefinitely
survive delivery of, and payment for, the Principal Stockholder Shares subject
to the option granted hereby; provided, however, that if the shares are tendered
-------- -------
and payment received in connection with the tender offer, only the provisions of
the applicable Offer Documents (as defined in the Merger Agreement) shall
govern.
SECTION 7.07. Expenses. Except as otherwise set forth in the Merger
--------
Agreement, all costs and expenses incurred in connection with the transactions
contemplated hereby shall be paid by the party incurring such expenses.
SECTION 7.08. Amendments. This Agreement may not be modified, amended,
----------
altered or supplemented, except upon the execution and delivery of a written
agreement executed by each of the parties hereto.
SECTION 7.09. Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and
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<PAGE>
assigns, provided that no party may assign, delegate or otherwise transfer any
of their respective rights or obligations under this Agreement without the
written consent of the other party hereto, except that Buyer may assign its
rights and obligations to any affiliate of Buyer, including, without limitation,
TIE Merger Co.
SECTION 7.10. No Strict Construction. The language used in this Agreement
----------------------
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against either
party.
SECTION 7.11. Headings. The headings in this Agreement are intended
--------
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
SECTION 7.12. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
SECTION 7.13. Entire Agreement. This Agreement and the agreements and
----------------
documents referred to in this Agreement or delivered hereunder are the exclusive
statement of the agreement between the parties concerning the subject matter
hereof. All negotiations and prior agreements between the parties are merged
into this Agreement, and there are no representations, warranties, covenants,
understandings, or agreements, oral or otherwise, in relation thereto among the
parties other than those incorporated herein and to be delivered hereunder.
SECTION 7.14. Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
SECTION 7.15 Governing Law. This Agreement, including all matters of
-------------
construction, validity and performance, shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, as applied to
contracts made, executed and to be fully performed in such state by citizens of
such state, without regard to conflict of laws principles.
[The remainder of this page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MARMON HOLDINGS, INC.
By: /s/Robert Gluth
--------------------------
Vice President
THE PRITZKER FAMILY PHILANTHROPIC FUND
By: /s/Glen Miller
--------------------------
Treasurer
TIE ACQUISITION CO.
By: /s/Charles B. McNamee
--------------------------
President
-14-
<PAGE>
EXHIBIT 4
AGREEMENT
WHEREAS, SP Investments Inc., a Washington corporation ("SPII"), is an
entity controlled by the sole stockholder of TIE Acquisition Co., a Delaware
corporation ("Parent");
WHEREAS, Parent is party to that certain Agreement and Plan of Merger,
dated as of the date hereof, among TIE/communications, Inc., a Delaware
corporation ("TIE"), Parent and TIE Merger Co., a Delaware corporation and
wholly-owned subsidiary of Parent ("Acquisition"), whereby subject to the terms
and conditions set forth therein Acquisition shall be merged with and into TIE
(the "Merger Agreement"); capitalized terms used herein and not otherwise
defined shall have the meaning ascribed to such term in the Merger Agreement.
WHEREAS, as a condition to the execution and delivery of the Merger
Agreement, TIE has required, and SPII has agreed to provide its guaranty with
respect to certain monetary obligations which may become payable by Parent or
Acquisition pursuant to the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements of TIE contained in the Merger Agreement, and intending to be legally
bound hereby, SPII agrees as follows:
1. Guaranteed Obligations. SPII hereby guarantees the full payment by
----------------------
Parent and/or Acquisition to TIE of the monetary obligations, if and when due,
which are set forth in Sections 8.03(c)(i) and (c)(ii) of the Merger Agreement
(the "Guaranteed Obligations"). The obligation of SPII hereunder is
unconditional and irrevocable and shall be enforceable five (5) business days
following receipt of written notice to SPII from TIE certifying that the amounts
set forth in Sections 8.03(c)(i) or (c)(ii) are due and payable and that Parent
and/or Acquisition have failed to pay such amounts following receipt of written
notice to Acquisition from TIE of such fact. SPII agrees that the Guaranteed
Obligations may be extended or renewed, in whole or in part, but not increased
without notice or assent from it; it being understood that any increase in the
Guaranteed Obligations shall require the written consent of SPII. SPII waives
presentation of, demand for payment from and protest to Parent and/or
Acquisition and also waives notice of protest for nonpayment. SPII agrees that
this guaranty constitutes a guarantee of payment when due and not just of
collection, and waives any right to require that any resort be had by TIE or any
other person on its behalf against Parent and/or Acquisition including, without
limitation the initiation and pursuit of litigation. SPII's guaranty hereunder
shall not be affected by the genuineness, validity, regularity or enforceability
of the Guaranteed Obligations or, subject to the provisions hereof, the Merger
Agreement as currently in effect or as hereafter amended or modified nor shall
it be subject to any reduction, limitation, impairment or termination for any
reason.
2. Covenant of SPII. SPII hereby agrees (i) to cause the initial
----------------
stockholders' equity in Parent as of the time the Offer is consummated to be at
least $8,000,000, (ii) to cause the initial stockholders' equity in Surviving
Corporation as of the Effective Time to be at least $8,000,000, (iii) that from
the date on which the Offer is consummated to the date which is
<PAGE>
ninety-one (91) days following the date on which payment in full is made on all
accounts payable of the Company outstanding as of the date on which the Offer is
consummated as identified on a list to be prepared and delivered by the Company
promptly following the date on which the Offer is consummated, it shall cause
the Surviving Corporation not to declare, set aside or pay any dividend (other
than in the form of capital stock) or other distribution in respect of its
capital stock or redeem, repurchase or otherwise acquire any of its capital
stock if any such action would result in its stockholders' equity falling below
$8,000,000, and (iv) from the date on which the Offer is consummated to the date
which is one (1) year from such date, it shall cause the Surviving Corporation
not to incur any indebtedness secured by the assets of the Surviving Corporation
which would result in the Surviving Corporation, (x) becoming insolvent; (y)
having unreasonably small capital with which to engage in its business or (z)
incurring debts beyond its ability to pay as they become absolute and matured.
3. Construction. This Agreement shall be governed by and construed and
------------
enforced in accordance with the laws of the State of Delaware.
4. No Third Party Beneficiaries. The guaranty contained in paragraph 1
----------------------------
hereof is solely for the benefit of TIE and its successors and permitted
assigns. No other person or entity shall be entitled to claim any right or
benefit as a third party beneficiary or otherwise. The undertaking set forth in
paragraph 2 hereof is for the benefit of TIE and may be enforced by Marmon
Holdings, Inc. and/or The Pritzker Family Philanthropic Fund on behalf of the
stockholders of TIE, other than Parent, Acquisition or their respective
affiliates as of the date the Offer is consummated and as of the Effective Time.
WHEREFORE, the undersigned has caused this Agreement to be executed by its
duly authorized officer this 5th day of September, 1995.
SP INVESTMENTS INC.
By: /s/ John M. Orehek
--------------------
John M. Orehek
President
<PAGE>
EXHIBIT 5
REIMBURSEMENT AND INDEMNIFICATION AGREEMENT
Reimbursement and Indemnification Agreement (the "Agreement"), dated
September 5, 1995, made by and between TIE/communications, Inc., a Delaware
corporation ("TIE"), and Marmon Holdings, Inc., a Delaware corporation
("Marmon").
R E C I T A L S
Whereas, from time to time at the request TIE, Marmon has obtained, in its
name but on behalf and for the benefit of TIE, various surety, bid, performance
and similar bonds required by TIE in connection with the conduct of its
business (collectively, the "Bonds"); and
Whereas, in consideration of Marmon obtaining the Bonds on TIE's behalf, TIE
has agreed to reimburse and indemnify Marmon as provided herein and to replace
the Bonds upon the occurrence of certain events.
Now, Therefore, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, TIE and Marmon do hereby agree as follows:
1. Reimbursement and Indemnification. TIE shall pay or reimburse Marmon for
any and all amounts owed or paid by Marmon, and shall indemnify Marmon for any
loss, cost or expense (including reasonable attorneys' fees) incurred or
suffered by Marmon, on account of any Bond obtained by Marmon for the benefit
of TIE.
2. Expenses of Collection. TIE shall pay or reimburse Marmon for all costs
and expenses, including reasonable attorneys' fees, incurred by Marmon in the
collection and enforcement of TIE's obligations hereunder.
3. Payment. Any amounts owing to Marmon hereunder shall be payable within ten
days after written demand, together with appropriate evidence of the right to
reimbursement or indemnification, is delivered to TIE. Any amount which is not
paid when due shall bear interest from the date when due until the date paid,
payable on demand, at the fluctuating per annum rate equal to the prime rate as
announced by Bank of America from time to time plus two percent (2%). All
payments made to Marmon pursuant hereto shall be applied first against any
costs or expenses incurred in connection with the enforcement of this
Agreement, then against accrued and unpaid interest payable hereunder and
finally against the amounts payable under Section 1 hereof.
4. No Obligation to Obtain Bonds. Nothing contained herein shall impose any
obligation on Marmon to obtain any new Bonds, or to continue, renew or extend
any existing Bonds, for the benefit of TIE; provided, however, that from the
date hereof until the earlier to occur of (i) the date of consummation of the
Offer (as defined therein) to be made pursuant to that certain Agreement and
Plan of Merger, dated as of September 5, 1995, among TIE, TIE Acquisition Co.
and TIE Merger Co. (the "Merger Agreement") and (ii) the termination of the
Merger Agreement, Marmon agrees to obtain new Bonds for the benefit of TIE in
connection with the conduct of its business in the ordinary course consistent
with past practices and in the manner in which and on the substantially the
terms at which Marmon has heretofore obtained Bonds for the benefit of TIE.
5. Replacement of Bonds. Upon the earlier to occur of (i) the Effective Time
(as defined in the Merger Agreement) and (ii) 90 days following the date of
consummation of the Offer, TIE shall have obtained and have in place new bonds
to replace any Bonds then outstanding and, at such time, Marmon shall be
entitled to cancel, terminate or allow to expire any and all Bonds then
outstanding.
<PAGE>
6. Miscellaneous Provisions.
(a) Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
(b) Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof and supersedes any
prior agreements or understandings with respect thereto.
(c) Amendments; Waivers. This Agreement may not be modified except by
written agreement signed by the each of the parties hereto, and no
provision hereof or breach thereof may be waived except in writing by the
party waiving its rights. The waiver of any term hereof or the breach
thereof in any instance shall not be deemed to be a waiver of such term or
breach in any other instance or of any other term or breach.
(d) Governing Law. The construction and enforcement of this Agreement
shall be governed in all respects by the laws of the State of Delaware
(without regard to its conflict of laws rules).
In Witness Whereof, the parties has executed this Agreement on the date first
above written.
Tie/communications, Inc.,
a Delaware corporation
By: _________________________________
Its: ________________________________
Marmon Holdings, Inc.,
a Delaware corporation
By: _________________________________
Its: ________________________________
2
<PAGE>
EXHIBIT 6
August 3, 1995
Mr. George N. Benjamin, III
8260 W. 116th Street
Overland Park, KS 66210
Dear Mr. Benjamin:
The Board of Directors of TIE/communications, Inc. (the "Company") has
determined that it is in the best interests of the Company and its
shareholders, in order to assure continuity in the management of the Company's
administration and operations, to enter into this Agreement with you which is
intended to encourage you to continue your career with the Company and to
enable you to work free from distraction in the face of uncertainty and
unsettling circumstances that arise from the possibility of a Change in Control
of the Company (as hereafter defined).
In consideration of the Company's agreement to provide you with the benefits
set forth herein, you hereby agree that, in the event the Board of Directors
advises you that a potential Change in Control of the Company may occur, you
will continue in the employ of the Company under the present terms and
conditions of your employment, as the same may be modified from time to time,
for a period of six months after such notification.
In consideration thereof, the Company agrees, in the event of your
Involuntary Termination (as hereafter defined), to provide you with the
following severance benefits:
(a) For a period of 18 months from the date of Involuntary Termination
(the "Termination Date"), the Company will pay you at an annualized rate
equal to your base annual salary in effect on the Termination Date, but in
no event less than $280,230, your present salary, and for a period of six
(6) months thereafter, the Company will pay you at an annualized rate equal
to one-half of such annual base salary. Such payments will be made on a
semi-monthly basis. In addition, you will receive a bonus in an amount
equal to one and one half (1 1/2) times the average of the previous two
years' annual bonus earned by you (excluding from such calculation the
special bonus paid to you on April 11, 1994). Said bonus will be paid in
two equal annual installments on the first and second anniversaries of the
Termination Date. You will also be paid a prorated bonus based on the same
calculation for any portion of a year worked prior to the Termination Date.
(b) For a period of 30 months from the Termination Date, you and your
spouse will be covered under the Company's existing medical plans (or the
equivalent thereof) in the same manner as if you were an active employee of
the Company, or the Company will reimburse you for the cost of equivalent
coverage at the same rate as the Company pays for such insurance for active
employees should you acquire medical coverage on your own; provided,
however, that the foregoing medical benefits will cease in the event you
become eligible for substantially similar coverage under the medical plans
of any new employer.
(c) For up to one year from the Termination Date, the Company will
provide you with employment search assistance through a professional out-
placement organization and office and secretarial support, such as Drake
Beam and Morin, Inc.'s senior executive program at a cost not to exceed
$22,000.
The benefits payable to you under (a) and (b) above shall be payable to your
surviving spouse in the event of your death during the period for which such
benefits are payable; if your spouse shall predecease you, amounts becoming
payable under subsection (a) after your death shall be payable to your estate.
<PAGE>
Mr. George N. Benjamin, III
August 3, 1995
Page 2
As used herein, Involuntary Termination shall mean any termination of your
employment by the Company, its successors or one of its subsidiaries, within
two years following a Change in Control of the Company; provided, however, such
term shall not include a termination for serious, willful misconduct in respect
of your obligations to the Company, its successors or its subsidiaries,
including commission of a felony or perpetration of a common law fraud which
has or is likely to result in material economic damage to the Company, its
successors or any of its subsidiaries, or failure to comply with a specific
directive given to you by the Board of Directors.
In addition to actual termination of employment, the following shall be
deemed an Involuntary Termination:
(a) A reduction in total compensation, including benefits, other than in
connection with an across-the-board reduction similarly affecting all
executives of the Company;
(b) A material reduction in functions, duties or responsibilities of your
present position, as evidenced by a total compensation for your position as
changed which is less than your compensation prior to such change;
(c) A reassignment to another geographic location more than 50 miles from
your current place of employment;
(d) A liquidation, dissolution, consolidation or merger of the Company,
or transfer of all or substantially all of its assets, unless a successor
assumes the Company's obligations under this Agreement; or
(e) A breach of this Agreement by the Company.
Notwithstanding the foregoing, your failure to object in writing to the
changes listed above within 90 days after the occurrence thereof following a
Change in Control of the Company shall constitute a waiver of such change being
deemed an Involuntary Termination.
For the purposes of the Agreement, the term "Change in Control of the
Company" shall mean the happening of any one of the following before December
31, 1995:
(a) The acquisition by any party or related or affiliated parties acting
as a group of the beneficial ownership of 25 percent or more of the voting
shares of the Company;
(b) The occurrence of a transaction requiring shareholder approval for
the acquisition of the Company through purchase of stock or assets, or by
merger, or otherwise; or
(c) A change in the membership of the Board of Directors of the Company
prior to December 31, 1995, of 30 percent or more of the members of the
Board of Directors as constituted on the date hereof without the approval
of a majority of the members of the Board as then constituted;
provided, however, that "Change in Control of the Company" shall not include
any of the foregoing which occur as a result of or following (i) an acquisition
in which you participate, directly or indirectly, as an acquiring party or (ii)
an acquisition by the controlling stockholders of the Company or any of their
affiliates of the shares held by the public.
You will use reasonable efforts to obtain other employment or consulting
engagements commensurate with your experience during the period you are
receiving severance payments hereunder. The amount of any payments provided for
in this Agreement shall be reduced by any compensation earned by you as a
result of any employment or consulting engagements during such period.
In the event of any dispute with respect to this Agreement, the losing party
shall reimburse the prevailing party for his or its reasonable legal fees and
expenses incurred in connection with such dispute.
<PAGE>
Mr. George N. Benjamin, III
August 3, 1995
Page 3
If any one or more of the provisions contained in this Agreement shall be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their personal representatives, and, in the case of the Company, its
successors and assigns.
This Agreement shall terminate and be of no force or effect upon your
retirement, death or termination of employment unless such termination is an
Involuntary Termination. This Agreement shall also terminate and be of no force
or effect in the event that you, whether directly or indirectly, individually
or as part of a group, submit a bid to acquire the Company (a "Management Bid")
or participate in discussions with others regarding, seek financing for or
otherwise assist in the preparation of such a Management Bid at any time
between the date of this Agreement and December 31, 1995. If you receive
inquiries regarding a Management Bid after the date hereof, you shall promptly
(i) advise the inquiring party that you are not interested in discussing or
participating in such a Management Bid and (ii) report such inquiry to the
Chairman or his designee in writing.
On April 29, 1992, the Company entered into an agreement with you concerning
your compensation, including a provision for Post-Termination Salary
Continuation (the "'92 Agreement"). It is understood that the '92 Agreement
will terminate and be of no further force and effect in the event of your
Involuntary Termination.
Any notice required or permitted to be given under this Agreement shall be
sufficient if in writing and if sent by mail to your residence or to the
principal office of the Company, as the case may be; and shall be deemed given
when deposited in the United States mails, postage prepaid. Either party, by
written notice so given, may provide for a change in address to which
subsequent notices are to be given. Subject to change in accordance with the
foregoing provision, notice to the respective party shall be addressed as
follows:
Notice to Company:
TIE/communications, Inc.
c/o The Marmon Group, Inc.
225 W. Washington Street
Chicago, IL 60606
Attention: Chairman
Notice to Benjamin:George N. Benjamin, III
8260 West 116th Street
Overland Park, KS 66210
This Agreement and its validity, interpretation, performance and enforcement
shall be governed by the laws of the State of Kansas.
If you are in agreement with the foregoing, please so indicate by signing and
returning one copy of this letter.
Very truly yours,
TIE/communications, Inc.
By: _________________________________
Title: ______________________________
AGREED:
-------------------------------------
George N. Benjamin, III
<PAGE>
EXHIBIT 7
June 16, 1995
Mr. Robert E. Kalina
5205 W. 132nd Terrace
Overland Park, KS 66209
Dear Mr. Kalina:
The Officers of TIE/communications, Inc. have determined that it is in the
best interest of the Company and its shareholders, in order to assure
continuity in the management of the Company's administration and operations, to
enter into this agreement with you which is intended to encourage you to
continue your career with the Company and to enable you to work free from
distraction in the face of uncertainty and unsettling circumstances that arise
and the possibility of a change in control of the Company. In consideration of
the Company's agreement to provide you with the severance benefits set forth
herein, you hereby agree that, in the event the Board of Directors determines
that a potential change in control of the Company has occurred, you will
continue to be an employee of the Company under the present terms and
conditions of your employment, as may be modified from time to time, for a
period of six months from such occurrence.
This agreement is meant to supplement but not replace your relocation
agreement of July 2 and 13, 1993, as well as your Deferred Bonus Agreement of
May 8, 1995, and is not intended to duplicate or compound any benefits to you
from any prior agreements.
In consideration thereof, the Company agrees, in the event of your
involuntary termination, as a result of a change of control of the Company, to
provide you with the following severance benefits:
(a) Salary continuation for eighteen (18) months payable semimonthly, in
an annual amount equal to your base salary in effect on the date of
involuntary termination but in no event less than $110,240, plus annual
bonus paid on an average of the previous two years' bonus earned by you.
(b) Coverage for eighteen (18) months under all Company benefits
including pension, savings, medical, life, disability, insurance plans,
etc. in the same manner as if you were an active employee. Under the
Omnibus ERISA provisions and, specifically, COBRA, the eighteen (18) months
of premiums shall be provided by the Company and in the event of a change
in the carrier there shall be no preexisting condition exemption. Due to
your preexisting condition the Company shall make available to you medical
coverage for an additional eighteen (18) months with premiums at your
expense upon documented evidence of uninsurability.
(c) Employment search assistance through a professional outplacement
organization and office and secretarial support for up to twelve (12)
months.
In the event any portion of the payment of benefits provided for herein would
not be deductible for the Company for Federal Income Tax purposes as a result
of Statute S280G of the Internal Revenue Code, such payments and benefits shall
be reduced until no portion thereof is not deductible. For purposes of this
limitation, no portion of any payment or benefit which you shall have waived in
writing prior to receipt thereof shall be taken into account.
As used herein, involuntary termination shall mean any termination of
employment by the Company, its successors or one of its subsidiaries, within
two years following a change in control of the Company; provided, however, such
terms shall not include a termination, for serious, willful misconduct in
respect of your obligations to the Company, its successors or its subsidiaries,
including commission of a felony or perpetration of a common law fraud which
has or is likely to result in material economic damage to the
<PAGE>
Mr. Robert E. Kalina
June 16, 1995
Page 2
Company or any of its subsidiaries, or failure to comply with a specific
directive given to you by the Board of Directors.
In addition to actual termination of employment, the following shall be
deemed an involuntary termination:
(a) a reduction in total compensation, including benefits, other than in
connection with an across the board reduction similarly affecting all
executives of the Company;
(b) a material reduction in the functions, duties or responsibilities of
your present position, as evidenced by a competitive rate of total
compensation as changed which is less than that of your present position;
(c) a reassignment to another geographic location more than 50 miles from
your current place of employment;
(d) a liquidation, dissolution, consolidation or merger of the Company or
transfer of all or substantially all of its assets, unless a successor
assumes the Company's obligations under this agreement;
(e) a breach of this agreement by the Company.
Notwithstanding the foregoing, your failure to object in writing to the
changes listed above within 180 days of any such change following a change in
control of the Company shall constitute a waiver of such change being deemed an
involuntary termination.
For the purpose of this agreement, the term "Change in Control of the
Company" shall mean the happening of any one of the following:
(a) the acquisition by any party or related or affiliated party or
parties affecting as a group the beneficial ownership of 50 percent or more
of the voting shares of the Company;
(b) the occurrence of a transaction requiring shareholders approval for
the acquisition of the Company through the purchase of stock or assets or
by merger, or otherwise, or
(c) the election during any period of 24 months, or less, of 30 percent,
or more, of the members of the Board of Directors, without the approval of
the majority of the Board members as constituted at the beginning of the
period.
You shall not be required to mitigate the amount of any payment or benefit
provided for in this agreement by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this agreement be
reduced by any compensation earned by you as a result of employment by another
employer or by retirement benefits after termination, or otherwise.
Any dispute or controversy with respect to this agreement shall first be
settled by discussion between the Chairman of the Board of the Company and
yourself. In the event one of the parties is not in agreement following this
negotiation then the parties may challenge in the appropriate court in the
State of Kansas.
If any one or more of the provisions contained in this agreement shall be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect any other provision hereof.
This agreement is confidential and is to be held so by you. Any documented
breach of confidentiality by you will make this agreement null and void.
Exceptions are between you and your counsel under attorney client privilege and
between the President or principal operating office of the Company (TIE).
The agreement shall be binding upon and endure to the benefit of the parties
hereto and their personal representatives, and, in the case of the Company, its
successors and assigns. This agreement shall continue in
<PAGE>
Mr. Robert E. Kalina
June 16, 1995
Page 3
effect during your employment and shall terminate upon your retirement, death
or termination of employment unless such termination is an involuntary
termination.
Any notice required or permitted to be given under this agreement shall be
sufficient if in writing and if sent by mail to your residence or to the
principal office of the Company as the case may be; and shall be deemed given
when deposited in the United States Mail, postage prepaid. Notice should be
sent to the general counsel of the Company at its address. Either party, by
written notice so given, may provide for a change in address to which
subsequent notices are to be given.
This agreement and its validity, interpretation, performance and enforcement
shall be governed by the laws of the State of Kansas. If you are in agreement
with the foregoing, please so indicate by signing and returning one copy of
this letter.
Very truly yours,
TIE/communications, Inc.
By: _________________________________
George N. Benjamin, III
President & CEO
Accepted:
-------------------------------------
Date: _______________________________
<PAGE>
EXHIBIT 8
June 16, 1995
Mr. Daniel E. Coomer
7802 State Line
Prairie Village, KS 66208
Dear Mr. Coomer:
The Officer's of TIE/communications, Inc. have determined that it is in the
best interest of the Company and its shareholders, in order to assure
continuity in the management of the Company's administration and operations, to
enter into this agreement with you which is intended to encourage you to
continue your career with the Company and to enable you to work free from
distraction in the face of uncertainty and unsettling circumstances that arise
and the possibility of a change in control of the Company. In consideration of
the Company's agreement to provide you with the severance benefits set forth
herein, you hereby agree that, in the event the Board of Directors determines
that a potential change in control of the Company has occurred, you will
continue to be an employee of the Company under the present terms and
conditions of your employment, as may be modified from time to time, for a
period of six months from such occurrence.
This agreement is meant to supplement but not replace your Deferred Bonus
Agreement of May 8, 1995, and is not intended to duplicate or compound any
benefits to you from any prior agreements.
In consideration thereof, the Company agrees, in the event of your
involuntary termination, as a result of a change of control of the Company, to
provide you with the following severance benefits:
(a) Salary continuation for nine (9) months payable semi-monthly, in an
annual amount equal to your base salary in effect on the date of
involuntary termination but in no event less than $83,600, plus annual
bonus paid on an average of the previous two years' bonus earned by you.
(b) Coverage for eighteen (18) months under all Company benefits
including pension, savings, medical, life, disability, insurance plans,
etc. In the same manner as if you were an active employee. Under the
Omnibus ERISA provisions and, specifically, COBRA, the eighteen (18) months
of premiums shall be provided by the Company and in the event of a change
in the carrier there shall be no preexisting condition exemption.
(c) Employment search assistance through a professional out-placement
organization and office and secretarial support for up to twelve (12)
months.
In the event any portion of the payment of benefits provided for herein would
not be deductible for the Company for Federal Income Tax purposes as a result
of Statute S280G of the Internal Revenue Code, such payments and benefits shall
be reduced until no portion thereof is not deductible. For purposes of this
limitation, no portion of any payment or benefit which you shall have waived in
writing prior to receipt thereof shall be taken into account.
As used herein, involuntary termination shall mean any termination of
employment by the Company, its successors or one of its subsidiaries, within
two years following a change in control of the Company; provided, however, such
terms shall not include a termination, for serious, willful misconduct in
respect of your obligations to the Company, its successors or its subsidiaries,
including commission of a felony or perpetration of a common law fraud which
has or is likely to result in material economic damage to the Company or any of
its subsidiaries, or failure to comply with a specific directive given to you
by the Board of Directors.
In addition to actual termination of employment, the following shall be
deemed an involuntary termination:
(a) a reduction in total compensation, including benefits, other than in
connection with an across the board reduction similarly affecting all
executives of the Company;
<PAGE>
Mr. Daniel E. Coomer
June 16, 1995
Page 2
(b) a material reduction in the functions, duties or responsibilities of
your present position, as evidenced by a competitive rate of total
compensation as changed which is less than that of your present position;
(c) a reassignment to another geographic location more than 50 miles from
your current place of employment;
(d) a liquidation, dissolution, consolidation or merger of the Company or
transfer of all or substantially all of its assets, unless a successor
assumes the Company's obligations under this agreement;
(e) a breach of this agreement by the Company.
Notwithstanding the foregoing, your failure to object in writing to the
changes listed above within 180 days of any such change following a change in
control of the Company shall constitute a waiver of such change being deemed an
involuntary termination.
For the purpose of this agreement, the term "Change in Control of the
Company" shall mean the happening of any one of the following:
(a) the acquisition by any party or related or affiliated party or
parties affecting as a group the beneficial ownership of 50 percent or more
of the voting shares of the Company;
(b) the occurrence of a transaction requiring shareholders approval for
the acquisition of the Company through the purchase of stock or assets or
by merger, or otherwise, or
(c) the election during any period of 24 months, or less, of 30 percent,
or more, of the members of the Board of Directors, without the approval of
the majority of the Board members as constituted at the beginning of the
period.
You shall not be required to mitigate the amount of any payment or benefit
provided for in this agreement by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this agreement be
reduced by any compensation earned by you as a result of employment by another
employer or by retirement benefits after termination, or otherwise.
Any dispute or controversy with respect to this agreement shall first be
settled by discussion between the Chairman of the Board of the Company and
yourself. In the event one of the parties is not in agreement following this
negotiation then the parties may challenge in the appropriate court in the
State of Kansas.
If any one or more of the provisions contained in this agreement shall be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect any other provision hereof.
This agreement is confidential and is to be held so by you. Any documented
breach of confidentiality by you will make this agreement null and void.
Exceptions are between you and your counsel under attorney client privilege and
between the President or principal operating office of the Company (TIE).
The agreement shall be binding upon and endure to the benefit of the parties
hereto and their personal representatives, and, in the case of the Company, its
successors and assigns. This agreement shall continue in effect during your
employment and shall terminate upon your retirement, death or termination of
employment unless such termination is an involuntary termination.
Any notice required or permitted to be given under this agreement shall be
sufficient if in writing and if sent by mail to your residence or to the
principal office of the Company as the case may be; and shall be deemed given
when deposited in the United States Mail, postage prepaid. Notice should be
sent to the general
<PAGE>
Mr. Daniel E. Coomer
June 16, 1995
Page 3
counsel of the Company at its address. Either party, by written notice so
given, may provide for a change in address to which subsequent notices are to
be given.
This agreement and its validity, interpretation, performance and enforcement
shall be governed by the laws of the State of Kansas. If you are in agreement
with the foregoing, please so indicate by signing and returning one copy of
this letter.
Very truly yours,
TIE/communications, Inc.
By: _________________________________
George N. Benjamin, III
President & CEO
Accepted:
-------------------------------------
Date: _______________________________
<PAGE>
EXHIBIT 9
May 1, 1995
Mr. R. Daniel Baker
TIE/communications, Inc.
3910 Trust Way
Hayward, CA 94545
Dear Mr. Baker:
The Officer's of TIE/communications, Inc. have determined that it is in the
best interest of the Company and its shareholders, in order to assure
continuity in the management of the Company's administration and operations, to
enter into this agreement with you which is intended to encourage you to
continue your career with the Company and to enable you to work free from
distraction in the face of uncertainty and unsettling circumstances that arise
and the possibility of a change in control of the Company. In consideration of
the Company's agreement to provide you with the severance benefits set forth
herein, you hereby agree that, in the event the Board of Directors determines
that a potential change in control of the Company has occurred, you will
continue to be an employee of the Company under the present terms and
conditions of your employment, as may be modified from time to time, for a
period of six months from such occurrence.
In Mr. Randolph K. Piechocki's letter to you of April 7, 1995, he
specifically stated "reassignment to a comparable position within TIE at your
base salary (with housing relocation, if applicable), will be offered to you in
the event that TIE decides to close or sell TIE California". Additionally, your
employment letter of August 10, 1988, still remains in full force and effect.
In consideration thereof, the Company agrees, in the event of your
involuntary termination, as a result of a change of control of the Company, to
provide you with the following severance benefits which are in addition to your
previously agreed benefits of August 10, 1988:
(a) Salary continuation for one (1) year payable semi-monthly, in an
annual amount equal to your base salary in effect on the date of
involuntary termination plus annual bonus paid on an average of the
previous two years' bonus earned by you.
(b) Coverage for one (1) year under all Company benefits including
pension, savings, medical, life, disability, insurance plans, etc. in the
same manner as if you were an active employee. Under the Omnibus ERISA
provisions and, specifically, COBRA, the last six months of the statutory
18 month term under COBRA would be provided at your expense.
(c) Employment search assistance through a professional out-placement
organization and office and secretarial support for up to six (6) months.
In the event any portion of the payment of benefits provided for herein would
not be deductible for the Company for Federal Income Tax purposes as a result
of Statute S280G of the Internal Revenue Code, such payments and benefits shall
be reduced until no portion thereof is not deductible. For purposes of this
limitation, no portion of any payment or benefit which you shall have waived in
writing prior to receipt thereof shall be taken into account.
As used herein, involuntary termination shall mean any termination of
employment by the Company, its successors or one of its subsidiaries, within
two years following a change in control of the Company; provided, however, such
terms shall not include a termination, for serious, willful misconduct in
respect of your obligations to the Company, its successors or its subsidiaries,
including commission of a felony or perpetration of a common law fraud which
has or is likely to result in material economic damage to the Company or any of
its subsidiaries, or failure to comply with a specific directive given to you
by the Board of Directors.
<PAGE>
Mr. R. Daniel Baker
May 1, 1995
Page 2
In addition to actual termination of employment, the following shall be
deemed an involuntary termination:
(a) a reduction in total compensation, including benefits, other than in
connection with an across the board reduction similarly affecting all
executives of the Company;
(b) a material reduction in the functions, duties or responsibilities of
your present position, as evidenced by a competitive rate of total
compensation as changed which is less than that of your present position;
(c) a reassignment to another geographic location more than 50 miles from
your current place of employment;
(d) a liquidation, dissolution, consolidation or merger of the Company or
transfer of all or substantially all of its assets, unless a successor
assumes the Company's obligations under this agreement;
(e) a breach of this agreement by the Company.
Notwithstanding the foregoing, your failure to object in writing to the
changes listed above within 180 days of any such change following a change in
control of the Company shall constitute a waiver of such change being deemed an
involuntary termination.
For the purpose of this agreement, the term "Change in Control of the
Company" shall mean the happening of any one of the following:
(a) the acquisition by any party or related or affiliated party or
parties affecting as a group the beneficial ownership of 50 percent or more
of the voting shares of the Company;
(b) the occurrence of a transaction requiring shareholders approval for
the acquisition of the Company through the purchase of stock or assets or
by merger, or otherwise, or
(c) the election during any period of 24 months, or less, of 30 percent,
or more, of the members of the Board of Directors, without the approval of
the majority of the Board members as constituted at the beginning of the
period.
You shall not be required to mitigate the amount of any payment or benefit
provided for in this agreement by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this agreement be
reduced by any compensation earned by you as a result of employment by another
employer or by retirement benefits after termination, or otherwise.
Any dispute or controversy with respect to this agreement shall first be
settled by discussion between the Chairman of the Board of the Company and
yourself. In the event one of the parties is not in agreement following this
negotiation then the parties may challenge in the appropriate court in the
State of Kansas.
If any one or more of the provisions contained in this agreement shall be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect any other provision hereof.
This agreement is confidential and is to be held so by you. Any breach of
confidentiality by you will make this agreement null and void. Exceptions are
between you and your counsel under attorney client privilege and between the
President or principal operating office of the Company (TIE).
The agreement shall be binding upon and endure to the benefit of the parties
hereto and their personal representatives, and, in the case of the Company, its
successors and assigns. This agreement shall continue in effect during your
employment and shall terminate upon your retirement, death or termination of
employment unless such termination is an involuntary termination.
<PAGE>
Mr. R. Daniel Baker
May 1, 1995
Page 3
Any notice required or permitted to be given under this agreement shall be
sufficient if in writing and if sent by mail to your residence or to the
principal office of the Company as the case may be; and shall be deemed given
when deposited in the United States Mail, postage prepaid. Notice should be
sent to the general counsel of the Company at its address. Either party, by
written notice so given, may provide for a change in address to which
subsequent notices are to be given.
This agreement and its validity, interpretation, performance and enforcement
shall be governed by the laws of the State of Kansas. If you are in agreement
with the foregoing, please so indicate by signing and returning one copy of
this letter.
Very truly yours,
TIE/communications, Inc.
By: _________________________________
George N. Benjamin, III
President & CEO
Accepted:
-------------------------------------
Date: _______________________________
cc: Randolph K. Piechocki
<PAGE>
EXHIBIT 11
FORM OF DEFERRED BONUS AGREEMENT
This Agreement is made and entered into this 8th day of May, 1995, by and
between TIE/COMMUNICATIONS, INC. (The "Company") and
(the "Employee").
Whereas, the Company and the Employee desire to enter into a Deferred Bonus
Agreement with respect to bonus compensation herein awarded to the Employee;
and
Whereas, the Company desires to induce its key employees to remain faithful
and diligent employees of the Company or one of its subsidiaries; and
Whereas, the Company continues to regard the Employee as a key employee of
the Company or its subsidiaries;
Now, Therefore, in consideration of the mutual covenants herein expressed,
the parties hereto hereby state the Deferred Bonus Agreement as follows:
1. Deferred Compensation. Employee shall be entitled to such deferred
compensation as shall be specified in Appendix A.
2. Accounting of Deferred Bonus. No funds shall be set aside for the payment
of such deferred compensation to the Employee, but an accounting entry
reflecting the deferred compensation determined in accordance with Appendix A
(the "Deferred Amount") shall be credited to an account established for the
Employee, which shall be referred to herein as the "Deferred Bonus Account" or
"Account". In addition, the Employee's Deferred Bonus Account shall be credited
as of each December 31 with an amount, computed as simple interest for the
fiscal year ending on such December 31 on the sum of the balance of the Account
as of such December 31 at the rate determined by dividing (a) the sum of the
rate earned by TIE/communications, Inc. Retirement and Savings Plan section
noted as "CIGNA Long Term Fund" for the calendar year ending with such fiscal
year and the rate earned on five-year Treasury Notes on the most recent sale
date prior to the December 31 immediately preceding such June 30 by (b) two.
3. Entitlement to Payment. Provided the Employee is employed by the Company
or one of its subsidiaries as of a distribution date set forth in the schedule
below (the "Distribution Date"), the Employee shall be entitled to payment on
the Distribution Date indicated equal to such percentage as indicated below of
his Deferred Bonus Account determined as of the December 31 immediately prior
to the Distribution Date:
<TABLE>
<CAPTION>
DISTRIBUTION DATE PERCENTAGE
----------------- ----------
<S> <C>
1/1/96....................................................... 50%
1/1/97....................................................... 85%
1/1/98....................................................... 100%
</TABLE>
Notwithstanding the foregoing, the Employee shall be entitled to the balance of
Employee's Account upon the first to occur of:
(a) his death; and
(b) his permanent disability such that he is, or will continue to be,
unable to perform services in an executive capacity for the Company, as
determined in the Company's sole discretion, and such disability shall have
continued for one year.
In the event of the Employee's disability or death, the Company shall
distribute the value of the Employee's Deferred Bonus Account to the Employee
or, in the event of his death, his beneficiaries (as provided in Section 4
hereof) within 60 days following the earlier of his disability or death in one
lump sum payment. The calculation of the amount to be distributed shall be
based upon the value of such Account as of the December 31 preceding his death
or disability, whichever is earlier. However, should the Employee terminate
his/her employment voluntarily or be terminated for cause no distribution shall
be made.
<PAGE>
4. Beneficiaries. In the event that the Employee shall die while entitled to
benefits hereunder, the payment which would otherwise be made to the Employee
shall be paid to the surviving spouse, and if there is no surviving spouse, to
such of his descendants who survive him, payable in equal shares per stirpes.
If none of the foregoing persons are living, such payment shall be made to his
estate. As used herein, the term spouse shall not include any individual from
whom the Employee is legally separated on the date of his death.
5. Miscellaneous.
(a) No Contract of Employment. Nothing herein contained shall be
construed to be a contract of employment between the Company or its
subsidiaries and the Employee or to obligate the Company or its
subsidiaries to retain the Employee in its employment or the Employee to
remain in the Company's or a subsidiary's employment in any capacity for
any period.
(b) Alienation. Neither the Employee nor his beneficiaries shall have any
right to sell, assign, transfer or pledge any rights under this Agreement.
(c) Assignment and Binding Effect. This Agreement shall not be assignable
by either party hereto or by operation of law or otherwise. The Employee
agrees that in the event of the insolvency or liquidation of the Company,
or sale of all or substantially all of its assets, that he will only have
such rights as those of an unsecured creditor.
(d) Entire Agreement. This Agreement contains the entire understanding
among the parties and shall not be modified except in writing by both of
the parties hereto.
(e) Headings. The descriptive headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall
not affect the meaning or construction of any of the provisions hereof.
(f) Notices. Any notices or other communication with respect to this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered personally or when deposited in the United States mail,
certified or registered, return receipt requested and with proper postage
prepaid, addressed as follows:
If to the Employee, at:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
If to the Company, at:
TIE/communications, Inc.
8500 W. 110th Street
Overland Park, KS 66210
Attn: George N. Benjamin, III
or at such other address as either party hereto may designate for himself or
itself, by written notice given to the other party from time to time in the
manner hereinabove provided.
(g) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the application
thereof to any party or circumstance shall be prohibited by, or invalid
under, applicable law, such provision shall be deemed ineffective to the
minimal extent required without invalidating the remainder of such
provision or to the remaining provisions of this Agreement or the
application of such provisions to other parties or circumstances.
2
<PAGE>
(h) Governing Law. The construction, operation and validity of this
Agreement shall be governed by the laws of the State of Kansas.
(i) Termination. The Company may terminate this Agreement at any time,
provided that no such termination shall divest the Employee of amounts
which accrued under this Agreement prior to the effective date of the
termination. The Employee shall be entitled to payment as a result of
termination of the Agreement only as provided in this Agreement.
(j) Action of Company. Any action required or permitted to be taken by
the Company under this Agreement shall be taken on behalf of the Company by
the President of the Company or his duly authorized representative.
In Witness Whereof, the parties hereto have executed this Agreement all on
the date above written.
TIE/COMMUNICATIONS, INC.
By:
----------------------------------
Its:
----------------------------------
----------------------------------
Employee
3
<PAGE>
APPENDIX A
DEFERRED BONUS CONTRIBUTION
The Company shall credit the Deferred Bonus Account of the Employee on each
of July 1, 1995, October 1, 1995, March 1, 1996, and October 1, 1996.
<TABLE>
<S> <C>
7/1/95.............................. 15%
10/1/95.............................. 15%
7/1/96.............................. 20%
7/1/97.............................. 25%
</TABLE>
The above is the percentage of the employee's base pay to be credited and the
date of the credit. For this purpose, "base pay" shall equal the Employee's
gross annual salary, including draws, but excluding bonuses, commissions and
employee fringe benefits, such as insurance programs, disability benefits paid
under a long-term disability plan, severance payments, expense reimbursements,
moving allowances, tuition reimbursements and deferred compensation.
4
<PAGE>
EXHIBIT 12
August 3, 1995
Mr. George N. Benjamin, III
8260 W. 116th Street
Overland Park, Kansas 66210
Dear Mr. Benjamin:
In recognition of your services on behalf of TIE/communications, Inc. (the
"Company") with respect to a possible sale of the Company, the Company has
determined to pay you a special bonus in the event the Company is sold prior to
December 31, 1995 for consideration in excess of $6.00 per share of outstanding
common stock.
Specifically, in the event the Company is sold prior to December 31, 1995,
for consideration in excess of $6.00 per share, the Company will pay you the
following amount:
Primary Bonus
(a) If the consideration per share in a Subject Transaction shall exceed
$6.00 per share, the amount of such excess (not to exceed $1.25 per share)
shall be determined and multiplied by the number of shares outstanding. The
primary bonus shall be payable in an amount equal to one percent (1%) of
the resulting product; and
Supplemental Bonus
(b) If the consideration per share in a Subject Transaction shall exceed
$7.25 per share, the amount of such excess shall be determined and
multiplied by the number of shares outstanding. The supplemental bonus
shall be payable in an amount equal to two percent (2%) of the resulting
product.
Assuming there are 4,000,000 issued and outstanding shares of stock, the
following examples are given to illustrate the foregoing provisions:
(a) If the sale price per share is $7.00, the excess price per share is
$1.00, which is multiplied by 4,000,000 to establish the basis for purposes
of determining the primary bonus. The resulting product is $4,000,000 and
the primary bonus payable (1%) is $40,000. Because the consideration per
share does not exceed $7.25, there is no supplemental bonus.
(b) If the consideration per share is $8.25, the excess price per share
is limited to $1.25 for purposes of computing primary bonus: this amount
($1.25) is multiplied by 4,000,000 to establish the basis for determining
primary bonus, and the resulting product is $5,000,000, primary bonus
payable, at the rate of one percent (1%), is $50,000. For purposes of
determining supplemental bonus, the excess consideration per share is
determined by deducting $7.25 from $8.25 and the excess per share is $1.00;
this amount is multiplied by 4,000,000 shares and the resulting base for
computing supplemental bonus is $4,000,000. At the specified rate (2%) the
supplemental bonus payable is $80,000. Total bonus payable based on a
selling price of $8.25 is thus $130,000 (primary bonus of $50,000 plus
supplemental bonus of $80,000).
For purposes hereof, a sale of the Company with respect to which a bonus will
be paid includes any merger, acquisition of all of the outstanding common stock
of the Company or acquisition of substantially all of the assets of the
Company, but expressly excludes any transaction in which you participate,
directly or indirectly, as an acquiring party or any acquisition by the
controlling stockholders of the Company or any of their affiliates of the
shares held by the public ("Subject Transaction").
In the event of an asset transaction, the number of shares sold in a
transaction which involves a sale or exchange of assets of the Company, rather
than a sale or exchange of stock, shall be deemed to be that number of shares
which constitutes the same percentage of total outstanding shares of the
Company's stock as the
<PAGE>
Mr. George N. Benjamin, III
August 3, 1995
Page 2
percentage relationship between the assets sold or exchanged in such
transaction and the total assets of the Company at the time of such
transaction. The consideration per share in such transaction shall be
determined by dividing the total number of shares deemed to have been sold into
the total value of the consideration received for the assets sold in such
transaction. The value of any deferred payment obligation received in any
Subject Transaction shall be deemed to be the principal face amount of such
obligation.
Any bonus payable hereunder will be paid in a lump sum within 30 days
following the closing of the sale transaction. In the event of your death
before payment of bonuses earned under the terms of this Agreement, such
bonuses shall be payable to your surviving spouse; if your spouse shall
predecease you, amounts becoming payable after your death shall be payable to
your estate.
Notwithstanding the foregoing, this Agreement shall terminate and be of no
force or effect upon your retirement, death or termination of employment prior
to the time that your bonus is earned under the terms of this Agreement unless
such termination is an Involuntary Termination. This Agreement shall also
terminate and be of no force or effect in the event that you, whether directly
or indirectly, individually or as part of a group, submit a bid to acquire the
Company (a "Management Bid") or participate in discussions with others
regarding, seek financing for or otherwise assist in the preparation of such a
Management Bid at any time between the date of this Agreement and December 31,
1995. If you receive inquiries regarding a Management Bid after the date
hereof, you shall promptly (i) advise the inquiring party that you are not
interested in discussing or participating in such a Management Bid and (ii)
report such inquiry to the Chairman or his designee in writing.
Very truly yours,
TIE/COMMUNICATIONS, INC.
By: _________________________________
Title: ___________________________
The undersigned acknowledges that the foregoing bonus constitutes all
compensation to be paid to him for the possible sale of the Company.
By: _________________________________
George N. Benjamin, III
<PAGE>
EXHIBIT 13
MARMON HOLDINGS, INC.
225 WEST WASHINGTON STREET
CHICAGO, ILLINOIS 60606
September 5, 1995
TIE/communications, Inc.
8500 West 110th Street
Overland Park, Kansas 66210
Ladies and Gentlemen:
In order to facilitate the transactions contemplated by that certain
Agreement and Plan of Merger (the "Merger Agreement"), dated as of the date
hereof, among TIE/communications, Inc. (the "Company"), TIE Acquisition Co. and
TIE Merger Co., Marmon Holdings, Inc. ("Marmon") hereby assumes and agrees to
pay and fully discharge the obligation of the Company to pay a special bonus to
George N. Benjamin, III, President and Chief Executive Officer of the Company,
in connection with the sale of the Company pursuant to the Merger Agreement,
which obligation is set forth in and subject to the terms and conditions of
that certain letter agreement, dated August 3, 1995, between the Company and
Mr. Benjamin.
Marmon further acknowledges and agrees that, from and after the consummation
of the Offer (as defined in the Merger Agreement), the obligation of Marmon
hereunder will be enforceable by either the Company or TIE Acquisition Co.
Very Truly Yours,
MARMON HOLDINGS, INC.
By: _________________________________
Its: ________________________________
<PAGE>
EXHIBIT 14
[TIE/COMMUNICATIONS, INC. LETTERHEAD]
September 12, 1995
Dear Stockholder:
We are pleased to inform you that TIE/communications, Inc. (the "Company")
has entered into an Agreement and Plan of Merger (the "Merger Agreement") with
TIE Acquisition Co., a Delaware corporation ("Purchaser"). The capital stock of
Purchaser is wholly owned by Paul H. Pfleger, a United States citizen. Pursuant
to the Merger Agreement, Purchaser today commenced a tender offer to purchase
all outstanding shares of common stock of the Company at $8.60 per share in
cash. Under the Merger Agreement, the tender offer will be followed by a merger
of the Company and a wholly owned subsidiary of Purchaser. In the merger, each
share of the Company's common stock then outstanding (other than shares held by
Purchaser or byjjj dissenting stockholders) will be converted into the right to
receive $8.60 in cash.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE
TENDER OFFER AND THE MERGER AND DETERMINED THAT THE TENDER OFFER AND MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS FROM A FINANCIAL POINT
OF VIEW. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE OFFER, TENDER THEIR SHARES PURSUANT THERETO AND, IF NECESSARY, VOTE
THEIR SHARES IN FAVOR OF THE APPROVAL OF THE MERGER PURSUANT TO THE TERMS OF
THE MERGER AGREEMENT.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors which are described in the enclosed
Schedule 14D-9, including, without limitation, bids received from other
potential purchasers and the Board of Directors' view that the cash
consideration of $8.60 per share to be received by stockholders pursuant to the
offer and the merger is fair to such stockholders from a financial point of
view.
Additional information with respect to the transaction is contained in the
enclosed Schedule 14D-9, and we urge you to consider this information
carefully.
Sincerely,
George N. Benjamin, III
President and Chief Executive
Officer
<PAGE>
EXHIBIT 15
NEWS RELEASE
FOR IMMEDIATE RELEASE:
----------------------
TIE/COMMUNICATIONS, INC. AND AN AFFILIATE
OF SP INVESTMENTS INC. TO MERGE
Overland Park, Kansas and Seattle, Washington, September 6, 1995 --
TIE/communications, Inc. (AMEX: TIE) ("TIE") and TIE Acquisition Co., a newly
formed entity and affiliate of SP Investments Inc., announced today that they
have entered into an agreement and plan of merger providing for the acquisition
of all of the issued and outstanding shares of common stock, par value $.10 per
share, of TIE at a price of $8.60 per share in cash.
The acquisition will be effected by a cash tender offer for all of TIE's
common stock, to be followed by a second-step merger at the same per share price
as is paid in the tender. The tender offer will be commenced early next week.
The offer will be conditioned on, among other things, not less than
seventy-five percent of TIE's common stock being validly tendered and not
withdrawn, the receipt by TIE Acquisition of the proceeds of certain committed
financing and the expiration or earlier termination of required waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. TIE
Acquisition has entered into an agreement with certain stockholders of TIE who
collectively own approximately seventy-five percent of TIE's common stock to
tender such shares in the offer.
TIE's Board of Directors determined that the offer and merger, taken
together, is fair to and in the best interests of the stockholders of the
company and recommended the acceptance of the offer and, if required, the
approval and adoption of the merger agreement by the stockholders of the
company.
TIE and its subsidiaries are engaged in the sale, installation and
servicing of telecommunications products, services and software in the United
States and Canada.
SP Investments Inc. is a privately held investment management company which
through its subsidiaries and affiliates is engaged in a number of diverse
businesses including, real estate services to the affordable multifamily housing
industry, real estate brokerage, affordable multifamily housing finance,
telecommunications services and oil and gas exploration and development.
<PAGE>
The Robinson-Humphrey Company, Inc. will act as dealer manager for the
offer.
CONTACTS:
TIE/communications, Inc. TIE Acquisition Co.
George N. Benjamin, III Charles B. McNamee
(913) 344-0404 (206) 628-8014
2
