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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE
SECURITIES EXCHANGE ACT OF 1934
TIE/COMMUNICATIONS, INC.
(NAME OF SUBJECT COMPANY)
TIE ACQUISITION CO.
PAUL H. PFLEGER
(BIDDERS)
COMMON STOCK, $.10 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
87246 42 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
PAUL H. PFLEGER
1201 THIRD AVENUE, SUITE 5400
SEATTLE, WASHINGTON 98101
(206) 622-9900
(NAME, ADDRESS, AND TELEPHONE NUMBERS OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF BIDDER)
WITH A COPY TO:
BRUCE W. MOORHEAD, JR., ESQ.
SMITH, GAMBRELL & RUSSELL
SUITE 3100, PROMENADE II
1230 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309-3592
(404) 815-3500
CALCULATION OF FILING FEE
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Transaction valuation: $34,239,506* Amount of filing fee: $6,848
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* For purposes of calculating filing fee only. This amount assumes the
purchase of 3,981,338 shares of Common Stock of TIE/communications, Inc. at
$8.60 in cash per share. The amount of the filing fee, calculated in
accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934,
as amended, equals 1/50 of one percent of the value of the shares to be
purchased.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: _______________________________________________________
Form or Registration No.: _____________________________________________________
Filing Party: _________________________________________________________________
Date Filed: ___________________________________________________________________
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<PAGE>
This Tender Offer Statement on Schedule 14D-1 (the "Statement") relates to
the offer by TIE Acquisition Co., a Delaware corporation (the "Purchaser"), to
purchase shares of common stock, par value $.10 per share (the "Shares" or the
"Common Stock"), of TIE/communications, Inc., a Delaware corporation (the
"Company"), at a price of $8.60 per share, net to the seller in cash, upon the
terms and subject to the conditions set forth in Purchaser's Offer to
Purchase, dated September 12, 1995 (the "Offer to Purchase") and in the
related Letter of Transmittal (which together with the Offer to Purchase
constitutes the "Offer"), copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is TIE/communications, Inc., a Delaware
corporation, which has its principal executive offices at 8500 W. 110th
Street, Overland Park, Kansas 66210.
(b) The class of equity securities being sought is all outstanding shares of
Common Stock, par value $.10 per share, of the Company. As of September 5,
1995, 3,981,338 Shares were outstanding. The information set forth in the
Introduction and Section 1 ("Terms of the Offer") of the Offer to Purchase
with respect to the consideration being offered for the Shares is incorporated
herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low closing prices for the Shares in such
principal market set forth in Section 6 ("Price Range of the Shares; Dividends
on the Shares") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d) and (g) The Statement is filed by the Purchaser and Paul H. Pfleger.
The Purchaser is wholly-owned by Mr. Pfleger. The information concerning the
name, state or other place of organization, principal business and address of
the principal office of the Purchaser and Mr. Pfleger, and the information
concerning the name, business address, present principal occupation or
employment, and the name, principal business and address of any corporation or
other organization in which such employment or occupation is conducted,
material occupation, positions, offices or employments during the last five
(5) years and citizenship of each of the executive officers and directors of
the Purchaser, are set forth in the Introduction, Section 10 ("Certain
Information Concerning the Purchaser") and Schedule I of the Offer to Purchase
and are incorporated herein by reference.
(e) and (f) During the last five (5) years, neither the Purchaser nor, to
the best knowledge of the Purchaser, any of the persons listed in Schedule I
of the Offer to Purchase has been (i) convicted in a criminal proceeding
(excluding traffic violations or other similar misdemeanors) or (ii) a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) The information set forth in Section 12 ("Background of the Offer;
Contacts and Transactions with the Company") of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in the Introduction, Section 10 ("Certain
Information Concerning the Purchaser"), Section 12 ("Background of the Offer;
Contacts and Transactions with the Company") and Section 13 ("Purpose of the
Offer; Plans for the Company") of the Offer to Purchase is incorporated herein
by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(c) The information set forth in Section 11 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth in the Introduction, Section 12
("Background of the Offer; Contacts and Transactions with the Company") and
Section 13 ("Purpose of the Offer; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) and (b) The information set forth in Section 10 ("Certain Information
Concerning the Purchaser") of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in the Introduction, Section 10 ("Certain
Information Concerning the Purchaser"), Section 12 ("Background of the Offer;
Contacts and Transactions with the Company") and Section 13 ("Purpose of the
Offer; Plans for the Company") of the Offer to Purchase is incorporated herein
by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The Purchaser is a newly organized corporation, formed for the purpose of
acquiring the Company, and is not controlled by another entity which is not a
natural person. Based on the foregoing and on the terms of the Offer, the
Purchaser has determined that the Purchaser's financial condition is not
material to the decision of the stockholders of the Company whether to sell,
tender or hold the Shares. Accordingly, current financial information
concerning the Purchaser is not provided.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in Section 12 ("Background of the Offer;
Contacts and Transactions with the Company") is incorporated herein by
reference.
(b), (c) and (e) The information set forth in Section 16 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(f) The information set forth in (i) the Offer to Purchase, (ii) the Letter
of Transmittal, (iii) the Agreement and Plan of Merger, dated as of September
5, 1995, among the Company, the Purchaser and TIE Merger Co., a Delaware
corporation and wholly-owned subsidiary of Purchaser ("Merger Co."), and (iv)
the Stockholders Option Agreement, dated as of September 5, 1995, among
Purchaser, Marmon Holdings, Inc. and The Pritzker Family Philanthropic Fund,
copies of which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and
(c)(2) are incorporated herein by reference.
2
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<C> <S>
(a)(1) Form of Offer to Purchase dated September 12, 1995.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(4) Form of Notice of Guaranteed Delivery.
(a)(5) Form of Letter from The Robinson-Humphrey Company, Inc. to Brokers,
Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to clients.
(a)(7) Summary Advertisement as published in The Wall Street Journal on
September 12, 1995.
(a)(8) Joint Press Release issued by Purchaser and the Company on September
6, 1995.
(a)(9) Form of Special Instructions to Holders of Certificates Representing
Pre-reverse Split Shares of TIE/communications, Inc.
(b)(1) Commitment Letter of NationsBank of Georgia, N.A., dated August 28,
1995.
(b)(2) Commitment Letter of Kellett Investment Corporation and Creditanstalt
Corporate Finance, Inc., dated September 8, 1995.
(c)(1) Agreement and Plan of Merger, dated as of September 5, 1995, among
the Company, the Purchaser and Merger Co.
(c)(2) Stockholders Option Agreement, dated as of September 5, 1995, among
Purchaser, Marmon Holdings, Inc. and The Pritzker Family
Philanthropic Fund.
(c)(3) Agreement of SP Investments Inc., dated as of September 5, 1995.
(c)(4) SP Investments Inc. letter dated September 5, 1995.
(c)(5) Reimbursement and Indemnification Agreement, dated as of September 5,
1995, between the Company and Marmon Holdings, Inc.
(c)(6) Letter from Marmon Holdings, Inc. to the Company dated September 5,
1995.
</TABLE>
3
<PAGE>
SIGNATURES
After due 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 Acquisition Co.
/s/ Charles B. McNamee
September 12, 1995 By:__________________________________
Charles B. McNamee, President
/s/ Paul H. Pfleger
September 12, 1995 _____________________________________
Paul H. Pfleger, Individually
4
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
TIE/COMMUNICATIONS, INC.
AT
$8.60 NET PER SHARE
BY
TIE ACQUISITION CO.
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 10, 1995, UNLESS THE OFFER IS EXTENDED.
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THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
OF COMMON STOCK OF TIE/COMMUNICATIONS, INC. (THE "COMPANY"), PAR VALUE $.10
PER SHARE (THE "SHARES"), THAT REPRESENTS AT LEAST 75% OF ALL OUTSTANDING
SHARES ON THE DATE OF PURCHASE, AND (II) THE PURCHASER HAVING OBTAINED
SUFFICIENT FINANCING TO ENABLE IT TO CONSUMMATE THE OFFER AND THE PROPOSED
MERGER. SEE THE INTRODUCTION AND SECTIONS 1 AND 15.
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IMPORTANT
THE BOARD OF DIRECTORS OF TIE/COMMUNICATIONS, INC. UNANIMOUSLY HAS
DETERMINED THAT THE OFFER AND THE PROPOSED MERGER (AS DEFINED HEREIN), TAKEN
TOGETHER, ARE FAIR FROM A FINANCIAL POINT OF VIEW TO, AND IN THE BEST INTEREST
OF, THE STOCKHOLDERS OF TIE/COMMUNICATIONS, INC. AND RECOMMENDS THAT SUCH
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required
by Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile), or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2 hereof, an Agent's
Message (as defined herein), and any other required documents to the
Depositary and either deliver the certificates for such Shares to the
Depositary along with the Letter of Transmittal (or facsimile) or deliver such
Shares pursuant to the procedure for book-entry transfer set forth in Section
2 hereof or (ii) request such stockholder's broker, dealer, bank, trust
company or other nominee to effect the transaction for such stockholder. A
stockholder having Shares registered in the name of a broker, dealer, bank,
trust company or other nominee must contact such broker, dealer, bank, trust
company or other nominee if such stockholder desires to tender such Shares.
If a stockholder desires to tender Shares and such stockholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined herein), such stockholder's tender may be effected by
following the procedure for guaranteed delivery set forth in Section 2 hereof.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
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The Dealer Manager for the Offer is:
THE ROBINSON-HUMPHREY COMPANY, INC.
September 12, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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INTRODUCTION............................................................. 1
THE TENDER OFFER......................................................... 2
1. Terms of the Offer.............................................. 2
2. Procedure for Tendering Shares.................................. 3
3. Withdrawal Rights............................................... 6
4. Acceptance for Payment and Payment for Shares................... 7
5. Certain Federal Income Tax Consequences......................... 8
6. Price Range of the Shares; Dividends on the Shares.............. 9
7. Effect of the Offer on the Market for the Shares; Stock
Quotations; Exchange Act Registration; Margin Regulations....... 9
8. Certain Information Concerning the Company...................... 10
9. Selected Financial Data......................................... 10
10. Certain Information Concerning the Purchaser.................... 12
11. Source and Amount of Funds...................................... 13
12. Background of the Offer; Contacts and Transactions with the
Company......................................................... 14
13. Purpose of the Offer; Plans for the Company..................... 23
14. Dividends and Distributions..................................... 24
15. Certain Conditions of the Offer................................. 24
16. Certain Legal Matters........................................... 26
17. Fees and Expenses............................................... 28
18. Miscellaneous................................................... 28
SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER; DIRECTOR
DESIGNEES FOR THE COMPANY............................................... S-1
</TABLE>
<PAGE>
To the Holders of Common Stock
of TIE/communications, Inc.:
INTRODUCTION
TIE Acquisition Co., a Delaware corporation (the "Purchaser"), hereby offers
to purchase all outstanding shares of Common Stock, par value $.10 per share
(the "Shares"), of TIE/communications, Inc., a Delaware corporation (the
"Company"), at a price of $8.60 per Share, net to the seller in cash, without
interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
The Purchaser will pay all fees and expenses of The Robinson-Humphrey Company,
Inc. ("Robinson-Humphrey"), which is acting as Dealer Manager (the "Dealer
Manager"), Harris Trust Company of New York, which is acting as the Depositary
(the "Depositary"), and Kissel-Blake Inc. which is acting as Information Agent
(the "Information Agent"), incurred in connection with the Offer. See Section
17.
The purpose of the Offer is to enable Purchaser to acquire control of, and
the entire equity interest in, the Company. The Offer, as the first step in
the acquisition of the Company, is intended to facilitate the acquisition of
all the Shares. The Purchaser, TIE Merger Co., a Delaware corporation and
wholly-owned subsidiary of Purchaser ("Merger Co.") and the Company have
entered into an Agreement and Plan of Merger dated as of September 5, 1995
(the "Merger Agreement") whereunder, as soon as practicable following
consummation of the Offer, Merger Co. will be merged into the Company and the
Company thereafter will become a wholly-owned subsidiary of the Purchaser (the
"Proposed Merger"). The purpose of the Proposed Merger is to acquire all
Shares not tendered and purchased pursuant to the Offer or otherwise. Pursuant
to the Proposed Merger, each then outstanding Share (other than Shares owned
by the Purchaser, Merger Co. or any of their subsidiaries, Shares held in the
treasury of the Company and Shares owned by stockholders who perfect any
available appraisal rights under the Delaware General Corporation Law (the
"DGCL")) would be converted into the right to receive an amount in cash equal
to the price per Share paid pursuant to the Offer.
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
The Offer is subject to the fulfillment of a number of conditions including,
without limitation, the following:
Minimum Tender Condition. THE OFFER IS CONDITIONED UPON THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES (THE "MINIMUM NUMBER OF SHARES") THAT WOULD REPRESENT
AT LEAST 75% OF ALL OUTSTANDING SHARES ON THE DATE OF PURCHASE (THE "MINIMUM
TENDER CONDITION"). The Purchaser has entered into a Stockholders Option
Agreement with certain stockholders of the Company who collectively own
approximately seventy-five percent (75%) of the Shares, pursuant to which such
stockholders have agreed to tender all Shares owned by them. See Section 12.
The Purchaser reserves the right (subject to the applicable rules and
regulations of the Commission), which it presently has no intention of
exercising, to waive or reduce the Minimum Tender Condition and to elect to
purchase, pursuant to the Offer, fewer than the Minimum Number of Shares. See
Sections 1 and 15.
According to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1995 (the "Company 10-Q"), as of June 30, 1995 there
were 3,981,338 Shares outstanding. Based on the foregoing, the Minimum Number
of Shares would be 2,986,004. The actual Minimum Number of Shares, however,
will depend upon the facts as they exist on the date of purchase.
The Financing Condition. THE OFFER IS CONDITIONED UPON THE PURCHASER HAVING
OBTAINED SUFFICIENT FINANCING (INCLUDING FUNDING THEREUNDER) TO ENABLE IT TO
CONSUMMATE THE OFFER AND THE PROPOSED MERGER
<PAGE>
(THE "FINANCING CONDITION"). SEE SECTION 11 FOR A DESCRIPTION OF THE PLANS OF
THE PURCHASER FOR FINANCING THE OFFER AND THE PROPOSED MERGER.
Certain other conditions to the Offer are described in Section 15. The
Purchaser reserves the right (but shall not be obligated) to waive any or all
such conditions. See Sections 1, 12, 15 and 16.
The Offer is being made pursuant to the Merger Agreement. The Merger
Agreement provides, among other things, that as soon as practicable after the
purchase of Shares pursuant to the Offer, the approval, if necessary, of the
Proposed Merger by the stockholders of the Company and the satisfaction of the
conditions set forth in the Merger Agreement and described therein, Merger Co.
will be merged with and into the Company in accordance with the relevant
provisions of the DGCL.
At the Effective Time (as defined in the Merger Agreement) of the Proposed
Merger each Share that is issued and outstanding immediately prior to the
Effective Time (other than Shares held in the treasury of the Company or owned
by Purchaser or any direct or indirect wholly-owned subsidiary of the
Purchaser or the Company, and other than Shares for which any available
appraisal rights have been duly perfected under the DGCL) will be converted
into the right to receive the price per Share paid pursuant to the Offer. The
Merger Agreement requires the Company to use its reasonable best efforts to
prepare and distribute a proxy or information statement as required by
applicable law in connection with action respecting the approval of the
Proposed Merger. The Merger Agreement also permits, subject to compliance with
the rules and regulations of the Securities and Exchange Commission (the
"Commission"), the Purchaser to take control of the Board of Directors of the
Company upon completion of the Offer. See Sections 12 and 13. Ancillary to the
Merger Agreement, the Purchaser has also entered into an agreement with
certain stockholders holding approximately seventy-five percent (75%) of the
Shares (the "Stockholders Option Agreement"), whereunder such stockholders
have agreed to tender all Shares owned by them in the Offer, have granted to
the Purchaser the option to purchase the Shares owned by such stockholders in
the event the Offer is not consummated under certain circumstances, and have
granted to the Purchaser a proxy to vote the Shares in favor of the Proposed
Merger and against certain other transactions which might impede the Proposed
Merger. The Merger Agreement and such ancillary agreements are more fully
described in Section 12.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Tuesday, October 10, 1995, unless and until the Purchaser, in its sole
discretion, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by the Purchaser, will expire.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM TENDER CONDITION,
THE FINANCING CONDITION, THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS
IMPOSED BY THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT"), AND THE SATISFACTION
OF THE OTHER CONDITIONS SET FORTH IN SECTION 15.
Subject to the applicable rules and regulations of the Commission and
applicable provisions of the Merger Agreement, the Purchaser reserves the
right, in its sole discretion, at any time and from time to time, and
regardless of whether or not any of the events or circumstances set forth in
Section 15 hereof shall have occurred or exist, to extend the period of time
during which the Offer is open, and thereby delay acceptance for payment of
and the payment for any Shares, by giving oral or written notice of such
extension to the Depositary and to amend the Offer in any other respect by
giving oral or written notice of such amendment to the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES,
WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
2
<PAGE>
If by 12:00 Midnight, New York City time, on Tuesday, October 10, 1995 (or
any date or time then set as the Expiration Date), any or all of the
conditions to the Offer have not been satisfied or waived, the Purchaser
reserves the right (but shall not be obligated), subject to the applicable
rules and regulations of the Commission and applicable provisions of the
Merger Agreement, to (a) terminate the Offer and not accept for payment or pay
for any Shares and return all tendered Shares to tendering stockholders, (b)
waive any or all of the unsatisfied conditions and accept for payment and pay
for all Shares validly tendered prior to the Expiration Date and not
theretofore withdrawn, (c) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (d) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires that the announcement be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable
law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which
require that any material change in the information published, sent or given
to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. As used in this Offer
to Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance
for payment of Shares) for Shares or it is unable to pay for Shares pursuant
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives any material condition of the
Offer, the Purchaser will disseminate additional tender offer materials and
extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1
under the Exchange Act. The minimum period during which an offer must remain
open following material changes in the terms of the offer or information
concerning the offer, other than a change in price or a change in the
percentage of securities sought, will depend on the facts and circumstances
then existing, including the relative materiality of the changed terms or
information. With respect to a change in price or a change in the percentage
of securities sought, a minimum period of 10 business days is generally
required to allow for adequate dissemination to stockholders and investor
response.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares whose names appear on
the Company's stockholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature
3
<PAGE>
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below), and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date and either certificates for tendered
Shares must be received by the Depositary at one of such addresses or such
Shares must be delivered pursuant to the procedures for book-entry transfer
set forth below (and a Book-Entry Confirmation (as defined below) received by
the Depositary), in each case prior to the Expiration Date, or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company, Midwest Securities Trust Company and Philadelphia
Depository Trust Company (each a "Book-Entry Transfer Facility" and
collectively, the "Book-Entry Transfer Facilities") for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
in accordance with such Book-Entry Transfer Facility's procedures for such
transfer. However, although delivery of Shares may be effected through book-
entry transfer into the Depositary's account at a Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message, and any other required documents, must, in any case, be transmitted
to, and received by, the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of the Shares into
the Depositary's account at a Book-Entry Transfer Facility as described above
is referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO
A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary, which states that such
Book-Entry Transfer Facility has received an express acknowledgment from the
participant in such Book-Entry Transfer Facility tendering the Shares that
such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that the Purchaser may enforce such agreement
against the participant.
THE METHOD OF DELIVERY OF THE SHARES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of the Shares and such
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (b) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If the certificates for the Shares are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for the Shares not
tendered or not accepted for payment are to be returned to a person other than
the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the
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<PAGE>
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as
aforesaid. See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender the Shares pursuant
to the Offer and such stockholder's certificates for the Shares are not
immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such stockholder's tender
may be effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other required
documents are received by the Depositary within three trading days after
the date of execution of such Notice of Guaranteed Delivery. A "trading
day" is any day on which the American Stock Exchange (the "AMEX") is open
for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for the Shares or Book-Entry Confirmations with respect
to the Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.
The valid tender of the Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder
and the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorney-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by the Purchaser and with respect to
any and all other Shares, or other securities or rights issued or issuable in
respect of such Shares on or after September 12, 1995. All such proxies will
be considered coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts for payment the Shares tendered by such stockholder as provided
herein. Upon such appointment, all prior powers of attorney, proxies and
consents given by such stockholder with respect to such Shares or other
securities or rights will, without further action, be revoked and no
subsequent powers of attorney, proxies, consents or revocations may be given
(and, if given, will not be deemed effective). The designees of the Purchaser
will thereby be empowered to exercise all voting and other rights with respect
to such Shares and other securities or rights in respect of any annual,
special or adjourned meeting of the Company's stockholders, actions by written
consent in lieu of any such meeting or otherwise, as they in their sole
discretion deem proper. The Purchaser reserves the right to require that, in
order for the Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such Shares, the Purchaser must be able
to exercise full voting, consent and other rights with respect to such Shares,
and other securities or rights, including voting at any meeting of
stockholders.
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<PAGE>
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in the tender of any Shares of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating thereto
have been cured or waived. None of the Purchaser, Merger Co., the Company, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to
provide the certifications described above, the Internal Revenue Service (the
"IRS") may impose a $50 penalty on such stockholder and payment of cash to
such stockholder pursuant to the Offer may be subject to backup withholding of
31%. All stockholders surrendering Shares pursuant to the Offer should
complete and sign the Letter of Transmittal and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and
the Depositary). Certain stockholders (including, among others, all
corporations and certain foreign individuals and entities) are not subject to
backup withholding. Noncorporate foreign stockholders should complete and sign
the Letter of Transmittal and a Form W-8, Certificate of Foreign Status, a
copy of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of the Shares are
irrevocable. The Shares tendered pursuant to the Offer may be withdrawn
pursuant to the procedures set forth below at any time prior to the Expiration
Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
November 10, 1995.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be
withdrawn, the number of the Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for the Shares have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If the Shares have
been delivered pursuant to the procedure for book-entry transfer as set forth
in Section 2, any notice of withdrawal must also specify the name and number
of the account at the appropriate Book-Entry Transfer Facility to be credited
with the withdrawn Shares and otherwise comply with such Book-Entry Transfer
Facility's procedures. Withdrawals of tenders of the Shares may not be
rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
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Purchaser, Merger Co., the Company, the Depositary, the Information Agent, the
Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay promptly
after the Expiration Date for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 3. All
questions as to the satisfaction of such terms and conditions will be
determined by the Purchaser in its sole discretion, which determination will
be final and binding. See Sections 1 and 15. The Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of or
payment for Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to
a bidder's obligation to pay for or return tendered securities promptly after
the termination or withdrawal of such bidder's offer).
Each of the Company and Paul H. Pfleger, an individual and the holder of all
issued and outstanding shares of the Purchaser filed Notification and Report
Forms with respect to the Offer under the HSR Act on September 11, 1995. The
waiting period under the HSR Act with respect to the Offer will expire at
11:59 p.m., New York City time, on September 26, 1995, unless early
termination of the waiting period is granted. However, the Antitrust Division
of the Department of Justice (the "Antitrust Division") or the Federal Trade
Commission (the "FTC") may extend the waiting period by requesting additional
information or documentary material. If such a request is made, such waiting
period will expire at 11:59 p.m., New York City time, on the 10th day after
substantial compliance with such request. See Section 16 hereof for additional
information concerning the HSR Act and the applicability of the antitrust laws
to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and (c) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any stockholder
pursuant to the Offer will be the highest per Share consideration paid to any
other stockholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE TENDERED
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange
Act), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering stockholder (or, in the case of Shares delivered by
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<PAGE>
book-entry transfer of such Shares into the Depositary's account at a Book-
Entry Transfer Facility pursuant to the procedure set forth in Section 2, such
Shares will be credited to an account maintained at the appropriate Book-Entry
Transfer Facility), as promptly as practicable after the expiration or
termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more direct or indirect wholly-owned
subsidiaries of the Purchaser, the right to purchase Shares tendered pursuant
to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In general, the receipt of cash pursuant to the Offer or the Proposed Merger
will be a taxable transaction for Federal income tax purposes under the
Internal Revenue Code of 1986, as amended (the "Code"), and may also be a
taxable transaction under applicable state, local or foreign income or other
tax laws. Generally, for Federal income tax purposes, a tendering stockholder
will recognize gain or loss equal to the difference between the amount of cash
received by the stockholder pursuant to the Offer or the Proposed Merger and
the aggregate tax basis in the Shares tendered by the stockholder and
purchased pursuant to the Offer or converted in the Proposed Merger, as the
case may be. Gain or loss will be calculated separately for each block of
Shares tendered and purchased pursuant to the Offer or converted in the
Proposed Merger, as the case may be.
If Shares are held by a stockholder as capital assets, gain or loss
recognized by the stockholder will be capital gain or loss, which will be
long-term capital gain or loss if the stockholder's holding period for the
Shares exceeds one year. Under present law, net long-term capital gains
recognized by an individual stockholder will generally be taxed at a maximum
Federal marginal tax rate of 28%, and net long-term capital gains recognized
by a corporate stockholder will be taxed at regular corporate tax rates in the
same manner as ordinary income.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to 31% backup withholding unless the stockholder
provides its TIN and certifies that such number is correct or properly
certifies that it is awaiting a TIN, or unless an exemption applies. A
stockholder that does not furnish its TIN may be subject to a penalty imposed
by the IRS. See Section 2 and Instruction 9 to the Letter of Transmittal.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be
credited against the Federal income tax liability of the person subject to the
backup withholding, provided that the required information is given to the
IRS. If backup withholding results in an overpayment of tax, a refund can be
obtained by the stockholder upon filing an income tax return.
THE FOREGOING DESCRIPTION OF THE FEDERAL TAX CONSEQUENCES OF THE OFFER AND
THE PROPOSED MERGER IS FOR GENERAL INFORMATION ONLY. THE TAX CONSEQUENCES FOR
A PARTICULAR STOCKHOLDER WILL DEPEND ON SUCH STOCKHOLDER'S PARTICULAR
CIRCUMSTANCES. THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO
SHARES RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR
OTHERWISE AS COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT
TO SPECIAL TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE
INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND
MAY NOT APPLY TO A HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES.
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF
ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE
PROPOSED MERGER.
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6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are listed, traded and prices are quoted on the AMEX under the
symbol "TIE." The following table sets forth, for each of the periods
indicated, the high and low sales prices for the Shares on the AMEX Composite
Tape as reported in published financial sources.
TIE/COMMUNICATIONS, INC.
<TABLE>
<CAPTION>
FISCAL YEAR ENDING HIGH LOW
------------------ ------- -------
<S> <C> <C>
December 31, 1993
First Quarter.......................................... $14 3/8 $10 1/2
Second Quarter......................................... $11 3/4 $ 9
Third Quarter.......................................... $ 8 7/8 $ 7 3/4
Fourth Quarter......................................... $10 3/8 $ 7 1/8
December 31, 1994
First Quarter.......................................... $ 9 5/8 $ 7 1/8
Second Quarter......................................... $ 8 1/2 $ 6 7/8
Third Quarter.......................................... $ 9 1/4 $ 7
Fourth Quarter......................................... $ 7 1/8 $ 4 1/4
December 31, 1995
First Quarter.......................................... $ 5 1/8 $ 3 7/8
Second Quarter......................................... $11 1/2 $ 3 7/8
Third Quarter (through September 11, 1995)............. $ 9 1/2 $ 7 3/8
</TABLE>
On September 5, 1995, the last trading day before the first public
announcement of the Merger Agreement and Purchaser's intention to commence the
Offer, the reported closing price of the Shares on the AMEX Composite Tape was
$7.44 per Share. On September 6, 1995, the Company and the Purchaser announced
the execution of the Merger Agreement and the Purchaser's intention to
commence the Offer. On September 7, 1995, the first trading day following such
announcement, the reported closing price for the Shares on the AMEX Composite
Tape was $8.44. On September 11, 1995, which was the last trading day before
commencement of the Offer, the reported closing price for the Shares on the
AMEX Composite Tape was $8.44. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
The Company has not paid any cash dividends on its common stock for at least
the last five years.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
Possible Effects of the Offer on the Market for the Shares. The purchase of
Shares pursuant to the Offer will reduce the number of holders of Shares and
the number of Shares that might otherwise trade publicly and could adversely
affect the liquidity and market value of the remaining Shares held by the
public.
Stock Quotation. The Shares are listed on the AMEX. According to the AMEX's
published guidelines, the AMEX would consider delisting the Shares if, among
other things, the number of holders should fall below 300, the number of
publicly held Shares (exclusive of holdings of officers, directors and
controlling shareholders of the Company and their immediate families) should
fall below 200,000, or the aggregate market value of the publicly held Shares
should fall below $1,000,000. According to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 (the "Company 10-K"), there
were 7,495 holders of record of Shares on February 28, 1995 and according to
the Company 10-Q, as of June 30, 1995, there were 3,981,338 Shares
outstanding.
If the AMEX were to delist the Shares, the market therefor could be
adversely affected. It is possible that the Shares would be traded on other
securities exchanges or in the over-the-counter market, and that price
quotations would be reported by such exchanges, or through the Nasdaq National
Market or other sources. The
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extent of the public market for the Shares and the availability of such
quotations would, however, depend upon the number of stockholders and/or the
aggregate market value of the Shares remaining at such time, the interest in
maintaining a market in the Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act and
other factors. If, as a result of the purchase of the Shares pursuant to the
Offer or otherwise, the Shares no longer meet the requirements of the AMEX for
continued inclusion in the AMEX and the Shares are no longer included in the
AMEX, the market for Shares could be adversely affected.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b)
of the Exchange Act, the requirement of furnishing a proxy statement pursuant
to Section 14(a) of the Exchange Act in connection with stockholders' meetings
and the related requirement of furnishing an annual report to stockholders and
the requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act
of 1933, as amended, may be impaired or eliminated.
If registration of the Shares is not terminated prior to the Proposed
Merger, then the Shares will be delisted from the AMEX and the registration of
the Shares under the Exchange Act will be terminated following the
consummation of the Proposed Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal offices at 8500 W.
110th St., Overland Park, Kansas 66210. According to the Company 10-K, the
Company is engaged in the sale, installation and servicing of
telecommunications products, services and software. The Company's principal
products are multi-featured, fully electronic, digitally controlled key
systems, private automated branch exchange systems and hybrid telephone
systems, voice response and processing products with computer telephone
integration hardware and software, video conferencing systems and network
services including long distance products as well as pre-owned phone systems,
all of which are primarily for business use. The Company's products also
include other peripheral data and telecommunications products. In addition,
the Company not only sells telecommunications equipment but offers a variety
of lease and rental programs to its customers.
The Company sells, installs and services its products through a North
American network of approximately 59 sales, service and warehouse facilities
located throughout Canada and major U.S. metropolitan areas in Arizona,
Arkansas, California, Colorado, Connecticut, Florida, Georgia, Illinois,
Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Mexico,
New Jersey, New York, North Carolina, Ohio, Oregon, Texas, Utah, Virginia and
Washington.
9. SELECTED FINANCIAL DATA
On April 8, 1991, the Company and 24 of its domestic subsidiaries (a 25th
subsidiary filed on April 19, 1991) filed petitions under Chapter 11 of the
United States Bankruptcy Code. By virtue thereof, the Company
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continued to manage its affairs and operate its business as a debtor-in-
possession under supervision of the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"). In connection with the
bankruptcy filings, the Company solicited and obtained from HCR Partners, an
Illinois general partnership and the Company's then principal senior secured
creditor ("HCR"), an agreement respecting reorganization of the Company as
subsequently reflected in the First Amended Joint Plan of Reorganization (the
"Plan"). The Plan, which was confirmed by the Bankruptcy Court and became
effective on July 1, 1991, provided, among other things, for (i) the exchange
by HCR Partners of a $31,593,750 principal amount senior secured note issued
by the Company and guaranteed by certain of the Company's subsidiaries (the
"HCR Note") for an approximate 75% fully diluted interest in the Company's new
common stock, par value $0.10 per share (the "New Common Stock"); and (ii) the
issuance to the holders of record of the Company's old common stock, par value
$0.05 per share (the "Old Common Stock"), of one share of New Common Stock in
exchange for every 35 shares of Old Common Stock held by such persons, with
the New Common Stock thereby issued aggregating approximately 25% of the
outstanding New Common Stock. The Plan further provided for the deferred
payment of certain of the Company's tax liabilities over six years at
statutory interest rates. Other than with respect to the deferred payment of
state and federal tax liabilities and arrangements with HCR in respect of the
HCR Note, all other bona fide prepetition liabilities of the Company were to
be paid in full under the Plan.
Following the effective date of the Plan, the operations of the Company have
been treated for financial statement reporting purposes on a "Fresh Start
Reporting" basis in accordance with Statement of Position 90-7 of the American
Institute of Certified Public Accountants, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code." Accordingly, all references to the
Company with respect to operations and financial statements for any period
prior to July 1, 1991 are referred to as the "Predecessor Company," while
certain references to the Company for operations and financial statement
purposes for periods from July 1, 1991, are referred to as the "Successor
Company."
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Company 10-K and the Company 10-Q. More comprehensive
financial information is included in the Company 10-K, the Company 10-Q and
other documents filed by the Company with the Commission, and the following
summary is qualified in its entirety by reference to the Company 10-K, the
Company 10-Q and such other documents and all the financial information
(including any related notes) as are contained or referred to therein. The
Company 10-K, the Company 10-Q and such other documents are available for
inspection and copies thereof should be obtainable in the manner set forth
below under "Available Information."
11
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<TABLE>
<CAPTION>
SUCCESSOR COMPANY PREDECESSOR COMPANY
------------------------------------------------------------ --------------------------
SIX MONTHS ENDED
JUNE 30 YEARS ENDED DECEMBER 31, SIX MONTHS SIX MONTHS YEAR ENDED
------------------ --------------------------- ENDED ENDED DECEMBER 31,
1995 1994 1994 1993(1) 1992(2) DEC. 31, 1991 JUNE 30, 1991 1990
-------- -------- -------- -------- -------- ------------- ------------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue............. $ 62,203 $ 61,417 $124,907 $102,111 $101,154 $52,269 $ 51,541 $100,587
Income (loss) from
continuing operations.. (1,000) 72 (3,119) 1,365 1,219 (183) (40,788) (11,353)
Income (loss) from
discontinued
operations............. -- -- -- -- -- 7 (4,534) 3,949
Extraordinary income.... -- -- -- -- -- -- 18,896 --
Preferred stock
dividends and
accretion.............. -- -- -- -- -- -- -- (1,335)
Net income (loss)
applicable to common
stock.................. (530) 284 (3,119) 1,365 1,219 (176) (26,426) (8,739)
Earnings (loss) per
common share:
Continuing operations.. $ (0.13) $ 0.07 $ (0.78) $ 0.34 $ 0.31 $ (0.05) $ (40.45) $ (12.82)
Discontinued
operations............ -- -- -- -- -- 0.01 (4.50) 3.99
Extraordinary income... -- -- -- -- -- -- 18.74 --
At period end:
Total assets........... $ 50,214 $ 58,135 $ 54,225 $ 62,994 $ 65,797 $76,531 $ 94,938 $132,398
Working capital........ (599) 4,047 246 5,653 12,503 11,209 10,587 10,495
Long-term debt......... -- -- -- -- 398 777 4,998 33,795
Common stockholders'
equity................ 19,336 23,224 19,740 22,922 21,618 20,781 21,096 31,792
</TABLE>
--------
All references to per share amounts have been restated to reflect the 1 for 35
reverse stock split which was treated as being effective on June 30, 1991.
(1) See Note 19 to the Consolidated Financial Statements in the Company 10-K
regarding restatement of 1993 amounts for correction of errors.
(2) See Note 7 to the Consolidated Financial Statements in the Company 10-K
regarding change in accounting for amortization of intangible assets.
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports, proxy statements and other information relating to its business,
financial condition and other matters. Information as of particular dates
concerning the Company's directors and officers, their remuneration, stock
options and other matters, the principal holders of the Company's securities
and any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements and
other information are available for inspection at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500
West Madison Street (Suite 1400), Chicago, Illinois 60661. Copies of such
information should be obtainable, by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. Such material should also be
available for inspection at the offices of the AMEX, 86 Trinity Place, New
York, New York 10006.
The information concerning the Company contained herein has been taken from
or is based upon publicly available documents on file with the Commission and
other publicly available information.
10. CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser, a Delaware corporation, was organized to acquire the Company
and has not conducted any unrelated activities since its organization. The
principal office of the Purchaser is located at 1201 Third Avenue,
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Suite 5400, Seattle, Washington 98101. All outstanding shares of capital stock
of the Purchaser are owned by Paul H. Pfleger, a United States citizen.
Schedule I attached hereto gives certain information concerning the officers
and directors of the Purchaser.
Except as described in this Offer to Purchase, (i) neither the Purchaser
nor, to the best knowledge of the Purchaser, any of the persons listed in
Schedule I to this Offer to Purchase or any associate or majority-owned
subsidiary of Purchaser or any of the persons so listed beneficially owns or
has any right to acquire, directly or indirectly, any Shares and (ii) neither
Purchaser nor, to the best knowledge of the Purchaser, any of the persons or
entities referred to above nor any director, executive officer or subsidiary
of any of the foregoing has effected any transaction in the Shares during the
past 60 days.
Except as provided in the Merger Agreement and the Stock Option Agreement
and as otherwise described in this Offer to Purchase, neither the Purchaser
nor, to the best knowledge of the Purchaser, any of the persons listed in
Schedule I to this Offer to Purchase, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting
of such securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss,
guaranties of profits, division of profits or loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, since
January 1, 1992, neither the Purchaser nor, to the best knowledge of
Purchaser, any of the persons listed on Schedule I hereto, has had any
business relationship or transaction with the Company or any of its executive
officers, directors or affiliates that is required to be reported under the
rules and regulations of the Commission applicable to the Offer. Except as set
forth in this Offer to Purchase, since January 1, 1992, there have been no
contracts, negotiations or transactions between the Purchaser, or any of its
subsidiaries or, to the best knowledge of the Purchaser, any of the persons
listed in Schedule I to this Offer to Purchase, on the one hand, and the
Company or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
11. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required pursuant to
the Offer to purchase the number of Shares outstanding and to pay fees and
expenses related to the Offer will be approximately $36 million. The Purchaser
plans to obtain the necessary funds through a combination of capital
contributions and advances made by Mr. Pfleger or his affiliates and various
financing options summarized below. Such summary is qualified in its entirety
by reference to the commitment letters of NationsBank of Georgia, N.A.
("NationsBank") and Kellett Investment Corporation/Creditanstalt Corporate
Finance Inc. which are set forth as Exhibits to Purchaser's Tender Offer
Statement on Schedule 14D-1.
NationsBank Facilities. The Purchaser has obtained a written commitment from
NationsBank to provide interim financing for the Offer, subject to terms and
conditions set forth therein. The NationsBank loan commitment provides for a
bridge loan to the Purchaser in the aggregate principal amount of $20 million.
The bridge loan will be payable in full upon the earlier of (i) the
consummation of the purchase of all the issued and outstanding Shares, (ii)
the consummation of the Proposed Merger, and (iii) 90 days from closing of the
bridge loan. The bridge loan shall be secured by a first priority security
interest in certain shares of capital stock of MIDCOM Communications Inc. (an
affiliate of Mr. Pfleger) owned by certain entities controlled by Mr. Pfleger
and John M. Orehek, a director and executive officer of the Purchaser, and the
common stock of the Company purchased by the Purchaser pursuant to the Offer.
In lieu of such collateral, NationsBank will accept a letter of credit from an
issuing bank acceptable to NationsBank in the face amount equal to all
obligations under the bridge loan. In addition, the bridge loan will be
guaranteed by Mr. Pfleger, Mr. Orehek and SP Investments Inc., a Washington
corporation controlled by Mr. Pfleger ("SPII"). The bridge loan will bear
interest on the unpaid principal balance until paid in full at a per annum
rate equal to the NationsBank prime rate plus 2.50%.
The Purchaser has also received a written commitment from NationsBank to
provide a revolving credit facility, subject to the terms and conditions set
forth therein. The revolving credit facility will be utilized to repay the
bridge loan, consummate the purchase of Shares in the Proposed Merger and for
working capital, and will
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<PAGE>
permit borrowings up to an aggregate of $25 million subject to certain
borrowing base limitations. The revolving credit facility will be secured by
(i) a first priority security interest in all of the present and future
accounts, contract rights, chattel paper, deposits, instruments, documents and
general intangibles of the surviving corporation in the Proposed Merger (the
"Surviving Corporation"); (ii) a first priority security interest in all of
the Surviving Corporation's present and future inventory; and (iii) a first
priority security interest in all of the Surviving Corporation's present and
future equipment and real estate. In addition, the Purchaser will be required
to purchase and assign to NationsBank a $5 million life insurance policy
insuring the life of Charles B. McNamee, a director and the President of the
Purchaser. Advances on the revolving credit facility will bear interest at a
per annum rate equal to NationsBank prime rate plus 1.0%. The revolving credit
facility will have a term of three (3) years and will provide that all cash
proceeds of collateral will be deposited in a lock box or special deposit
account and used to reduce the outstanding principal amount of the revolving
credit facility.
Kellett/Creditanstalt Facility. The Purchaser has also received a written
commitment from Kellett Investment Corporation and Creditanstalt Corporate
Finance Inc., as co-lenders (collectively referred to as the "Lenders"), to
provide financing to the Purchaser or an affiliate of Purchaser in the amount
of $10 million, subject to the terms and conditions set forth therein. The
term of the loan is for up to one (1) year following the Effective Time of the
Proposed Merger and bears interest at an annual rate of 10%. The loan will be
guaranteed by Messrs. Pfleger and McNamee, and collateralized by the pledge by
certain entities controlled by Mr. Pfleger of up to 2 million shares of common
stock of MIDCOM Communications Inc. In addition to the stated interest rate
described above, the loan commitment provides for the issuance under certain
circumstances to the Lenders, as additional consideration for the making of
the loan, warrants to purchase up to six percent (6%) of the issued and
outstanding shares of common stock of the Purchaser on a fully diluted basis,
exercisable over a term of three (3) years at an exercise price of $.01 per
share. The warrants will contain certain registration and antidilution rights.
SPII Contribution. The Purchaser has also received a commitment from SPII, a
corporation controlled by Mr. Pfleger and therefore an affiliate of the
Purchaser, to make available to the Purchaser up to $18 million in the form of
equity contributions and/or debt financing, of which at least $8 million shall
be in the form of an equity contribution on behalf of Mr. Pfleger to the
Purchaser. Such commitment is conditioned upon funding of the NationsBank
bridge loan commitment or the funding of other tender offering financing in an
amount not less than $20 million; the consummation of the Offer with
acceptance of not less than 75% of the then issued and outstanding Shares; and
SPII or one of its affiliates having entered into and closed a financing
facility in the amount not less than $10 million secured by shares of common
stock of MIDCOM Communications Inc., the proceeds of which shall be available
to the Purchaser for the purposes of consummating the Offer. The commitment of
the Lenders described above to fund $10 million in financing would be used by
SPII in partial satisfaction of SPII's $18 million commitment described above.
The consummation of the Offer is conditioned upon, among other things, the
Purchaser having obtained sufficient financing to enable it to consummate the
Offer and the Proposed Merger. See the Introduction and Section 15.
12. BACKGROUND OF THE OFFER; CONTACTS AND TRANSACTIONS WITH THE COMPANY
Background of the Offer. In March, 1995, Mr. Charles B. McNamee, on behalf
of himself and Messrs. Pfleger and Orehek, initiated contact with Mr. Robert
Gluth, a director of the Company and an officer and director of Marmon
Holdings, Inc. ("Marmon"), a principal stockholder of the Company, to inquire
whether the Company and its principal stockholders would have any interest in
discussing the possibility of the sale of the Company. At the suggestion of
Mr. Gluth, Mr. McNamee contacted George N. Benjamin III, President and a
director of the Company, and was informed by Mr. Benjamin that the Company was
considering a process of exploring alternatives for providing value to the
stockholders of the Company and that more information would be available
concerning the process in early April.
On April 10, 1995, the Company and Mr. McNamee entered into a
confidentiality agreement with respect to the Company furnishing to Mr.
McNamee certain information concerning the Company.
14
<PAGE>
On April 19, 1995, Mr. McNamee received correspondence from Mr. Benjamin
indicating that the Board of Directors of the Company was in the process of
exploring alternatives for providing value to the stockholders of the Company
(including, without limitation, remaining independent, implementing strategic
alliances, sale of assets and business combinations) and inviting interested
parties to submit to the Board their best proposals to acquire the Company;
such proposals to be received by the Company not later than May 15, 1995,
unless otherwise extended by the Company.
On May 22, 1995, Communications Access, L.L.C., a Washington limited
liability company formed by Messrs. Pfleger and Orehek for the purpose of
consummating potential transactions in the telecommunications field ("Access")
submitted to the Company its indication of interest in entering into an
agreement with the Company and certain of its stockholders to acquire all of
the outstanding shares of common stock of the Company for a price per share
equal to $8.00 per share in cash (the "May 22 Proposal"). The proposed
transaction was to be accomplished by means of the purchase by Access of all
shares of common stock of the Company owned by Marmon and The Pritzker Family
Philantrophic Fund (collectively, the "Principal Stockholders") to be followed
by a recapitalization of the Company by means of a reverse stock split whereby
each stockholder of the Company would realize a per share price for such
stockholder's Shares equal to the price per share proposed to be paid to the
Principal Stockholders. The May 22 Proposal was conditioned upon, among other
conditions, the completion of due diligence by Access with results
satisfactory to Access and receipt by Access of certain financing commitments
sufficient to complete the proposed transaction.
On June 14, 1995, Access received a memorandum from the Board of Directors
of the Company, inviting Access to conduct certain due diligence with respect
to the Company and to submit its final and best proposal to acquire the
Company not later than July 21, 1995.
Commencing on June 27, 1995, Access and its representatives reviewed certain
documents and other information with respect to the Company made available to
them by the Company. In connection with such due diligence, on July 16, 1995,
Messrs. McNamee, Orehek and certain other representatives of Access met with
Mr. Benjamin and other members of the management of the Company and certain of
its subsidiaries to discuss, among other matters, the business operations,
financial results and vendor and customer relationships of the Company and its
subsidiaries.
On July 19, 1995, the Company informed Access that the deadline for
submitting final proposals to acquire the Company had been extended to July
26, 1995.
On July 24, 1995, the Company informed Access that the deadline for
submitting final proposals to acquire the Company had been further extended to
July 28, 1995.
On July 28, 1995, Access submitted a revised proposal to the Company to
acquire all of the outstanding shares of common stock of the Company for a
price per share equal to $9.10 per share in cash (the "July 28 Proposal"). The
transaction proposed by the July 28 Proposal was to be accomplished by means
of a cash tender offer for any and all shares of common stock of the Company
to be followed by a merger of a wholly-owned subsidiary of Access with and
into the Company whereby each remaining stockholder of the Company would
receive $9.10 per share for each share of common stock of the Company to be
converted in the Proposed Merger. The July 28 Proposal was conditioned upon,
among other things, the completion of certain additional due diligence with
respect to the Company by Access and it representatives, the execution and
delivery by the Principal Stockholders of a mutually acceptable stockholders
option agreement with respect to all shares owned by the Principal
Stockholders whereby such Principal Stockholders would agree to tender all
such shares into the proposed tender offer and whereby the Principal
Stockholders would grant to Access the irrevocable option to purchase such
shares at the price per share to be paid in the tender offer in the event the
Merger Agreement was terminated based upon certain "trigger events" (as
therein defined), and the closing and funding of the loans contemplated by
certain financing commitments.
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<PAGE>
On August 3, 1995, the Company informed Access that its Board had authorized
representatives of the Company to attempt to negotiate definitive
documentation with respect to the July 28 Proposal.
During the first three weeks of August, 1995, representatives of Access, the
Company and the Principal Stockholders negotiated the terms and conditions of
(i) an Agreement and Plan of Merger between the Company and Access, (ii) a
Stockholders Option Agreement between a wholly-owned subsidiary of Access and
the Principal Stockholders and (iii) certain other documents relating to the
Merger Agreement and Stockholders Option Agreement. In addition, during this
time certain representatives of Access and its financing sources conducted
additional due diligence reviews of the Company and its subsidiaries.
From August 28 through August 31, 1995, representatives of Access and
certain members of the Board of Directors and management of the Company met to
discuss the results of certain additional due diligence performed on behalf of
Access and the effect of such due diligence on the July 28 Proposal and to
address certain concerns of the Company with respect to the financing,
conditions to closing and timing of the proposed transaction. As a result of
negotiations among the parties, Access agreed to enter into the proposed
transaction at a price equal to $8.60 per share, subject to the condition that
Marmon agree to assume certain special bonus obligations of the Company to Mr.
Benjamin.
On August 31, 1995, Messrs. Pfleger and Orehek determined, based in part
upon the likely inability of Access to secure the financing necessary to
complete the proposed transaction and upon certain tax planning
considerations, not to consummate the proposed transaction through Access, but
rather to accomplish such transaction through the Purchaser.
On September 1, 1995, the respective Boards of Directors and stockholders of
the Purchaser and its wholly-owned subsidiary Merger Co. approved the Merger
Agreement, the Stockholder Option Agreement, certain other related agreements
and the transactions contemplated thereby.
On September 2, 1995, the Company informed the Purchaser that its Board
unanimously (i) determined that the Offer and Merger, taken together were
fair, from a financial point of view, to and in the best interests of the
stockholders of the Company, (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 the
Purchaser pursuant thereto and, if necessary, vote their Shares in favor of
the Merger pursuant to the terms of the Merger Agreement.
On September 5, 1995, the parties executed and delivered the Merger
Agreement, the Stockholders Option Agreement and certain other documents
contemplated thereby.
The Offer. The Merger Agreement requires the Purchaser to commence and
maintain the Offer as promptly as reasonably practicable, but in no event
later than September 12, 1995. The obligation of the Purchaser to accept for
payment Shares tendered pursuant to the Offer is subject to the satisfaction
of the Minimum Tender Condition, the Financing Condition, and the other
conditions that are described in Section 15 hereof. The Purchaser has agreed
that, without the consent of the Company, no change in the Offer may be made
which 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 in the Offer which is otherwise materially
adverse to holders of Shares.
The Merger Agreement provides that upon the purchase of Shares by the
Purchaser pursuant to the Offer and from time to time thereafter, the
Purchaser shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company
(the "Board") as will give the Purchaser 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 such
designees to be elected or appointed to the Company's Board of Directors. In
addition, the Company agrees to use its best efforts to cause persons
designated by the Purchaser 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 the Merger Agreement), (ii) each board
of directors
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of each subsidiary of the Company, and (iii) each committee of each such
board. The foregoing obligation of the Company with respect to Board
representation of the Purchaser is subject to the limitation that, prior to
the Effective Time of the Proposed Merger, the Board shall always have at
least three members who are neither officers of the Company nor designees,
stockholders, affiliates or associates of Purchaser, or, unless such designee
is consented to by Purchaser, any party to the Stockholders Option Agreement,
which is discussed below. The Company's obligation to appoint designees of the
Purchaser to the Board is subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, which provides, in part, that such
designees representing a majority of the Board may not take office unless and
until ten days following dissemination to the stockholders of the Company of
information meeting the requirements of the rule.
The Merger Agreement. The following is a summary of the Merger Agreement, a
copy of which is filed as an Exhibit to the Tender Offer Statement on Schedule
14D-1 (the "Schedule 14D-1") filed by Purchaser with the Commission in
connection with the Offer. Such summary is qualified in its entirety by
reference to the Merger Agreement.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, at the Effective Time, Merger Co. shall be merged
with and into the Company in accordance with the DGCL (the "Merger"). As a
result of the Merger, the separate corporate existence of such subsidiary will
cease and the Company will continue as the Surviving Corporation.
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 the
Purchaser or any direct or indirect wholly-owned subsidiary of Purchaser or of
the Company, and other than Shares for which any available appraisal rights
under the DGCL have been perfected) shall be cancelled and extinguished and
shall 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 liabilities
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 that such provisions 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, the Purchaser will have sufficient voting
power to approve the Proposed 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, the
Purchaser owns at least 90% of the outstanding Shares, the Purchaser could,
and intends to, effect the Proposed 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 the 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;
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<PAGE>
(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;
(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, as amended 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;
18
<PAGE>
(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 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, individually in excess of $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 from considering, negotiating, approving and recommending to the
stockholders of the Company a
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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 Proposed Merger is subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) if required by the DGCL, the Proposed 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 Proposed Merger;
(c) any waiting period under the HSR Act shall have expired or been
terminated; and
(d) the 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 the Purchaser to effect the
Proposed 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 the 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 on or before September 12, 1995 or
completed within 60 days following commencement of the Offer;
(d) by the Company if, (i) for any reason other than an occurrence or
circumstance that would result in the failure to satisfy any of the
conditions to the Offer, the Purchaser shall have failed to commence the
Offer by September 12, 1995 or shall have 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 (ii)
all conditions to the Offer have been satisfied or waived and Purchaser
shall have failed to accept for payment any Shares validly tendered and not
withdrawan; or
(e) by the 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 the 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; 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
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(iii) any representation or warranty made by the Company in, or pursuant
to, the Merger 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 the Purchaser shall have
terminated the Merger Agreement; or
(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 or a material adverse change or development in the business of the
Company, and the Purchaser is not in material breach of its material
obligations under the Merger Agreement, then the Company shall reimburse the
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 Proposed Merger and the consummation of the transactions contemplated by
the Merger Agreement, up to a maximum amount of $750,000.
If the Purchaser does not accept for payment Shares pursuant to the Offer on
or prior to the date which is sixty days following commencement of the Offer
due to the failure of the Purchaser to satisfy the Financing Condition, then
the 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.
Arrangements with Principal Stockholders of the Company. Concurrently with
the execution of the Merger Agreement, the Purchaser entered into a
Stockholders Option Agreement with Marmon, the holder of 1,796,681 Shares and
The Pritzker Family Philanthropic Fund, an Illinois not-for-profit corporation
and the holder of 1,197,788 Shares (such stockholders hereinafter collectively
referred to as the "Principal Stockholders"). Together the Principal
Stockholders own approximately 75% percent of the currently issued and
outstanding Shares.
Under the Stockholders Option Agreement, the Principal Stockholders have
granted to the 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
(3) 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
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Stockholder pursuant to the Offer. Each of the Principal Stockholders has
undertaken to make such tender within five (5) 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
Proposed 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 Proposed Merger or the Offer.
Under the Stockholders Option Agreement, Marmon has further agreed to
indemnify each of the Company, the Purchaser and Merger Co. against all
expense, liability and loss incurred or suffered by any 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, the 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 existing revolving credit agreement among the Company,
various subsidiaries of the Company and Marmon 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 Proposed
Merger or ninety (90) days following the date on which the Offer is
consummated.
As a further matter collateral to the Merger Agreement, SPII has entered
into an agreement dated September 5, 1995 whereunder it 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 (in their own right
and 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.
During the course of the Company's business prior to the initiation of this
transaction, Marmon obtained, in its name but on behalf and for the benefit of
the Company, various surety, bid, performance and similar bonds required by
the Company in connection with the conduct of its business. In connection with
the transaction, the Company has entered into a Reimbursement and
Indemnification Agreement with Marmon whereunder it has agreed to pay and
reimburse Marmon for any and all amounts owed or paid by Marmon, and to
indemnify
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Marmon for any loss, cost or expense incurred or suffered by Marmon on account
of any bonds so obtained by Marmon for the benefit of the Company.
By collateral agreement Marmon has also agreed, following consummation of
the Offer, to assume the obligation of the Company to make a special bonus
payment to George N. Benjamin, III, President of the Company, in respect of
bonus arrangements of the Company relating to consummation of a sale
transaction for the Company.
13. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
Purpose. The purpose of the Offer and the Proposed Merger is to enable the
Purchaser to acquire control of, and the entire equity interest in, the
Company. The Offer, as the first step in the acquisition of the Company, is
intended to facilitate the acquisition of all the Shares. The Purchaser
currently intends, as soon as practicable following consummation of the Offer,
to consummate the Proposed Merger pursuant to the Merger Agreement. The
purpose of the Proposed Merger is to acquire all Shares not tendered and
purchased pursuant to the Offer or otherwise. Pursuant to the Proposed Merger,
each then outstanding Share (other than Shares owned by the Purchaser, or any
of its subsidiaries, Shares held in the treasury of the Company and Shares
owned by stockholders who perfect any available appraisal rights under the
DGCL) would be converted into the right to receive an amount in cash equal to
the price per Share paid by the Purchaser pursuant to the Offer.
Except in the case of a "short-form" merger as described below, the
affirmative vote of holders of a majority of the outstanding Shares (including
any Shares owned by the Purchaser) would be required to approve the Proposed
Merger. Therefore, if the Purchaser acquires, through the Offer or otherwise,
ownership with respect to at least a majority of the outstanding Shares, which
would be the case if the Minimum Tender Condition were satisfied and the
Purchaser were to accept for payment Shares tendered pursuant to the Offer, it
would have sufficient voting power to effect the Proposed Merger without the
vote of any other stockholder of the Company.
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, the Purchaser acquires at least 90% of the
outstanding Shares, the Purchaser could, and intends to, effect the Proposed
Merger without prior notice to, or any action by, any other stockholder of the
Company.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS FROM THE
COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WILL BE MADE ONLY PURSUANT TO
SEPARATE PROXY SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF
SECTION 14(A) OF THE EXCHANGE ACT.
Plans for the Company. In connection with the Offer, the Purchaser has
reviewed, and will continue to review, various possible business strategies
that it might consider in the event that the Purchaser acquires control of the
Company pursuant to the Offer and/or the Proposed Merger. The Purchaser
intends to conduct a detailed review of the Company and its assets, corporate
structure, dividend policy, capitalization, operations, properties, policies,
management and personnel and consider and determine what, if any, changes
would be desirable in light of the circumstances which then exist. Such
strategies could include, among other things, changes in the Company's
business, corporate structure, certificate of incorporation, bylaws,
capitalization, management or dividend policy. If the Offer is successfully
completed, Purchaser currently intends to replace up to five members of the
Board of Directors of the Company with designees of the Purchaser in
accordance with the Merger Agreement and other applicable law. See Section 12.
Such designees of the Purchaser are currently anticipated to be Messrs.
Pfleger, Orehek and McNamee and Dorothy M. Denton and Wilfrid S. Bastine. For
certain information with respect to such designees see Schedule I to this
Offer to Purchase. In addition, if the Offer is successfully completed and
based upon information currently available to Purchaser, the Purchaser
presently intends to seek to retain the Company's management team except that,
as of the date on which the Purchaser consummates the Offer, it will accept
the resignation of George N. Benjamin, III, as President and Chief Executive
Officer of the Company and appoint Charles B. McNamee to that position.
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It is unlikely that, following the Effective Time, the three directors of
the Company who are not replaced following the purchase of the Shares pursuant
to the Offer will continue to serve as directors of the Company.
Except as indicated in this Offer, the Purchaser does not have any present
plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or any
material change in the Company's capitalization or dividend policy or any
other material changes in the Company's corporate structure or business.
14. DIVIDENDS AND DISTRIBUTIONS
If, on or after September 12, 1995, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities or
(c) issue or sell additional Shares, shares of any other class of capital
stock, other voting securities or any securities convertible into, or rights,
warrants or options, conditional or otherwise, to acquire any of the
foregoing, then, the Purchaser, in its sole discretion may make such
adjustments as it deems appropriate in the Offer Price and other terms of the
Offer, including, without limitation, the number or type of securities offered
to be purchased.
If, on or after September 12, 1995, the Company should declare or pay any
cash dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior
to the transfer of the Shares purchased pursuant to the Offer to the Purchaser
or its nominee or transferee on the Company's stock transfer records, (a) the
Offer Price may, in the sole discretion of the Purchaser, be reduced by the
amount of any such cash dividend or cash distribution and (b) the whole of any
such noncash dividend, distribution or issuance to be received by the
tendering stockholders will (i) be received and held by the tendering
stockholders for the account of the Purchaser and will be required to be
promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (ii) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance
and subject to applicable law, the Purchaser will be entitled to all rights
and privileges as owner of any such noncash dividend, distribution, issuance
or proceeds and may withhold the entire Offer Price or deduct from the Offer
Price the amount or value thereof, as determined by the Purchaser in its sole
discretion.
The Merger Agreement prohibits the Company from making any change in its
capitalization or making any distribution on its shares of Common Stock from
the date of such Agreement and until or unless the Merger Agreement is
terminated.
15. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, but subject to any
obligations pursuant to the Merger Agreement, Purchaser 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) Purchaser 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) Purchaser, Merger
Co. or any other affiliate of the Purchaser or (ii) the Offer, the
Stockholders Option Agreement, the
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Merger Agreement, or any transactions contemplated hereby or the Proposed
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 Purchaser 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 the Purchaser
of the Proposed Merger, (B) restraining or prohibiting the Purchaser's
ownership or operation of, or compelling the Purchaser 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 Purchaser to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or owned by the Purchaser on all matters properly
presented to the Company's stockholders, (D) requiring divestiture by the
Purchaser of any Shares, or (E) otherwise, in the reasonable judgment of
the Purchaser, having a Material Adverse Effect (as defined in the Merger
Agreement); provided that, Purchaser shall have used its reasonable best
efforts to cause any such action or proceeding to be determined in a manner
satisfactory to the Purchaser; or
(b) any material adverse change or development shall have occurred, or
the Purchaser 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 Purchaser, 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 AMEX, (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 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 Merger Agreement or any of the representations and
warranties of the Company set forth in the Merger 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 Merger 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 Purchaser: (i) its
approval or recommendation of the Offer, the Proposed Merger or the
Agreement, or (ii) its actions causing the restrictions on business
combinations contained in Section 203 of the DGCL 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 Purchaser
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 other acquisition proposal; or
(i) the Purchaser and the Company shall have agreed that the Purchaser
shall terminate the Offer or postpone the payment for Shares thereunder;
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which, in the reasonable judgment of Purchaser 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 sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances giving rise to
any such condition or may be waived by the Purchaser in whole or in part at
any time and from time to time in its sole discretion. The failure by the
Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right, the waiver of any such right with respect
to particular facts and circumstances will not be deemed a waiver with respect
to any other facts and circumstances and each such right will be deemed an
ongoing right that may be asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS
Regulatory Approvals. Except as described in this Section 16, based on a
review of publicly available filings made by the Company with the Commission
and other publicly available information concerning the Company, the Purchaser
is not aware of any license or regulatory permit that appears to be material
to the business of the Company and its subsidiaries, taken as a whole, that
might be adversely affected by the Purchaser's acquisition of the Shares (and
the indirect acquisition of the stock of the Company's subsidiaries) as
contemplated herein or of any approval or other action by any governmental
entity that would be required or desirable for the acquisition or ownership of
the Shares by the Purchaser as contemplated herein. Should any such approval
or other action be required or desirable, the Purchaser currently contemplates
that such approval or other action will be sought, except as described below
under "State Takeover Laws." While, except as otherwise expressly described in
this Section 16, the Purchaser does not presently intend to delay the
acceptance for payment of or payment for the Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or such other
actions were not taken or in order to obtain any such approval or other
action. If certain types of adverse action are taken with respect to the
matters discussed below, the Purchaser could decline to accept for payment or
pay for any Shares tendered. See Section 15 for certain conditions to the
Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, stockholders, executive offices or places of business in such
states. In Edgar v. MITE Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that made the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and therefore was unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that such laws were applicable only under certain conditions. Subsequently, a
number of federal courts ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside
the state of enactment.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchase nor
any action taken in connection herewith is intended as a waiver of that right.
In the event that any state takeover statute is found applicable to the Offer,
the Purchaser might be unable to accept for payment or pay for the Shares
tendered pursuant to the Offer or be delayed in continuing or consummating the
Offer.
26
<PAGE>
In such case, the Purchaser may not be obligated to accept for payment or
pay for any Shares tendered. See Section 15.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Paul H.
Pfleger, an individual and the holder of all of the issued and outstanding
shares of Purchaser and the Company of Notification and Report Forms with
respect to the Offer, unless such parties receive a request for additional
information or documentary material from the Antitrust Division or the FTC or
unless early termination of the waiting period is granted. Each of Mr. Pfleger
and the Company made such filing on September 11, 1995. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or material concerning the Offer, the waiting period
will be extended and would expire at 11:59 p.m., New York City time, on the
tenth calendar day after the date of substantial compliance with such request.
Only one extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may
be extended only by court order or with the consent of Purchaser. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental
agency concerning possible means of addressing those issues and may agree to
delay consummation of the transaction while such negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed
acquisition of the Company. At any time before or after the Purchaser's
acquisition of the Shares pursuant to the Offer, the Antitrust Division or the
FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
the Shares pursuant to the Offer or the consummation of the Proposed Merger or
seeking the divestiture of the Shares acquired by the Purchaser or the
divestiture of substantial assets of the Company or its subsidiaries. Private
parties may also bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
result thereof.
Appraisal Rights. Holders of the Shares do not have appraisal rights as
result of the Offer. However, if the Proposed Merger is consummated, holders
of the Shares at the Effective Time of the Proposed Merger will have certain
rights pursuant to the provisions of Section 262 of the DGCL ("Section 262")
to dissent and demand appraisal of their Shares. Under Section 262, dissenting
stockholders who comply with the applicable statutory procedures will be
entitled to receive a judicial determination of the fair value of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Proposed Merger) and to receive payment of such fair value
in cash, together with a fair rate of interest, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors
other than, or in addition to, the price per Share to be paid in the Proposed
Merger or the market value of the Shares. The value so determined could be
more or less than the price per Share to be paid in the Proposed Merger.
The foregoing summary of Section 262 does not purport to be complete and is
qualified in its entirety by reference to Section 262.
Going Private Transactions. The Commission has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Proposed Merger or
any other merger involving the Company. However, Rule 13e-3 would be
inapplicable if (a) the Shares are deregistered under the Exchange Act prior
to the merger or (b) any such merger is consummated within one year after the
purchase of the Shares pursuant to the Offer and such merger provided for
stockholders to receive cash for their Shares in an amount at least equal to
the amount paid per Share in the Offer. If applicable, Rule 13e-3 requires,
among other things, that certain financial information concerning the fairness
of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to the consummation of the transaction.
27
<PAGE>
Legal Proceedings. Purchaser is not aware of any pending or overtly
threatened legal proceedings which, if determined in a manner adverse to the
Purchaser, would effect the Offer or the Proposed Merger. If any such matters
were to arise, the Merger Agreement provides that the Purchaser could decline
to accept for payment or pay for any Shares tendered in the Offer. See Section
15.
17. FEES AND EXPENSES
Robinson-Humphrey is acting as Dealer Manager in connection with the Offer
and is providing certain financial advisory services to the Purchaser in
connection with the Offer. Purchaser has agreed to pay Robinson-Humphrey
$100,000 as compensation for such services. Purchaser has also agreed to
reimburse Robinson-Humphrey for its reasonable out-of-pocket expenses,
including the reasonable fees and expenses of its legal counsel, and to
indemnify Robinson-Humphrey and certain related persons against certain
liabilities and expenses, including certain liabilities and expenses under the
federal securities laws.
The Purchaser has retained Kissel-Blake Inc. to act as the Information Agent
and Harris Trust Company of New York to serve as the Depositary in connection
with the Offer. The Information Agent and the Depositary each will receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain
liabilities and expenses under the federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager and the Information Agent) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by the
Purchaser upon request for customary mailing and handling expenses incurred by
them in forwarding material to their customers.
18. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. The Purchaser is not aware of any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. To the extent the Purchaser becomes aware of
any state law that would limit the class of offerees in the Offer, the
Purchaser will amend the Offer and, depending on the timing of such amendment,
if any, will extend the Offer to provide adequate dissemination of such
information to holders of Shares prior to the expiration of the Offer. In any
jurisdiction the securities, blue sky or other laws of which require the Offer
to be made by a licensed broker or dealer, the Offer is being made on behalf
of the Purchaser by the Dealer Manager or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained herein or in the
Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
The Purchaser has filed with the Commission a Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act, together with exhibits, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. Such Schedule 14D-1 and any amendments thereto, including exhibits,
should be available for inspection and copies should be obtainable in the
manner set forth in Section 9 (except that such material will not be available
at the regional offices of the Commission).
TIE Acquisition Co.
September 12, 1995
28
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER; DIRECTOR NOMINEES OF THE
COMPANY
The name, present principal occupation or employment and five-year
employment history of each of the directors and executive officers of the
Purchaser and each director designee of the Company are set forth below. The
principal business address of the Purchaser, SPII, Security Properties Inc.,
Security Properties Real Estate Services Inc., IREMCO, Hallmark Capital
Partners, Ltd., each of the Purchaser's directors and executive officers is
1201 Third Avenue, Suite 5400, Seattle, Washington 98101-3031. The principal
business address of MIDCOM Communications Inc. is 1111 Third Avenue, Seattle,
Washington 98101.
<TABLE>
<CAPTION>
POSITION WITH PURCHASER; PRINCIPAL OCCUPATION
NAME OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
---- ---------------------------------------------
<S> <C>
Paul H. Pfleger...... Director of Purchaser since September 1995; Mr. Pfleger
has been Chairman of the Board of MIDCOM Communications
Inc., a provider of telecommunications services, since
its formation in 1989. He was a founder and currently
serves as Chairman of the Board of Directors of SPII, an
investment management company. Mr. Pfleger has been
Chairman of the Board of Directors of Interfinancial
Real Estate Management Company ("IREMCO") since 1983 and
has been its President since April 1993. IREMCO is the
General Partner of the following four limited
partnerships: Urban Improvement Fund Limited ("UIFL")
1972; UIFL 1973; UIFL 1973-II; and UIFL 1974. Mr.
Pfleger, age 59, is a citizen of the United States.
Charles B. McNamee... President and director of Purchaser since September 1995.
Mr. McNamee served in various capacities, including
President and Vice Chairman, with Realcom Office
Communications, Inc., a telecommunications equipment and
service provider, from 1989 to April 1995, 2030 Powers
Ferry Road, Suite 580, Atlanta, Georgia 30339. Mr.
McNamee, age 48, is a citizen of the United States.
John M. Orehek....... Vice President, Secretary and director of Purchaser since
September 1995. Mr. Orehek has served as a director of
MIDCOM Communications Inc., a provider of
telecommunications services, since 1992. Mr. Orehek has
served in various capacities with SPII, an investment
management company, from 1991 to the present, including
most recently as President and Chief Executive Officer.
In addition, Mr. Orehek has been a director of IREMCO
since 1993. From 1987 to 1991, Mr. Orehek was President
of Hallmark Capital Partners, Ltd., a Seattle-based real
estate development corporation. Mr. Orehek, age 41, is a
citizen of the United States.
Dorothy M. Denton.... Tax Manager of SPII since 1986 and Vice President of
Security Properties Inc. since May, 1994. Ms. Denton,
age 40, is a citizen of the United States.
Wilfrid S. Bastine... Vice President of IREMCO and Security Properties Inc. Mr.
Bastine is also the President of Security Properties
Real Estate Services Inc. In addition, since 1992 Mr.
Bastine has served as a director and Secretary of the
Institute for Responsible Housing Preservation, 1255
23rd Street, N.W., Suite 800, Washington, D.C. 20037.
Mr. Bastine, age 37, is a citizen of the United States.
</TABLE>
S-1
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Facsimile Transmission: By Hand:
(For Eligible Institutions Only)
Wall Street Station Receive Window
P.O. Box 1023 (212) 701-7636 77 Water Street
New York, NY 10268-1023 (212) 701-7637 Fifth Floor
New York, New York
By Overnight Courier: Confirm by Telephone: By Facsimile:
77 Water Street (212) 701-7624 (212) 701-7636
4th Floor (212) 701-7637
New York, NY 10005
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
KISSEL-BLAKE INC.
110 Wall Street, 21st Floor
New York, New York 10005
(212) 344-6733 (Call Collect)
OR
CALL TOLL FREE (800) 554-7733
The Dealer Manager for the Offer is:
THE ROBINSON-HUMPHREY COMPANY, INC.
Atlanta Financial Center
3333 Peachtree Road
Atlanta, Georgia 30326
(404) 266-6460
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
TIE/COMMUNICATIONS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED SEPTEMBER 12, 1995
BY
TIE ACQUISITION CO.
-------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK CITY
TIME,ON TUESDAY, OCTOBER 10, 1995 UNLESS THE OFFER IS EXTENDED.
-------------------------------------------------------------------------------
TO: HARRIS TRUST COMPANY OF NEW YORK, DEPOSITARY
<TABLE>
By Mail: By Courier: By Hand:
<S> <C> <C>
Wall Street Station 77 Water Street Receive Window
P.O. Box 4th Floor 77 Water Street, Fifth Floor
1023 New York, New York 10268-1023 New York, New York 10005 New York, New York
By Facsimile:
(212) 701-7636
(212) 701-7637
Confirm Facsimile by Telephone to:
(212) 701-7624
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used if certificates for Shares (as such
term is defined below) are to be forwarded herewith or, unless an Agent's
Message (as defined in Section 2 of the Offer to Purchase) is utilized, if
delivery of Shares is to be made by book-entry transfer to an account
maintained by the Depositary at a Book-Entry Transfer Facility (as defined in
and pursuant to the procedures set forth in Section 2 of the Offer to
Purchase). Stockholders who deliver Shares by book-entry transfer are referred
to herein as "Book-Entry Stockholders" and other stockholders are referred to
herein as "Certificate Stockholders." Stockholders whose certificates for
Shares are not immediately available or who cannot deliver either the
certificates for, or a Book-Entry Confirmation (as defined in Section 2 of the
Offer to Purchase) with respect to, their Shares and all other documents
required hereby to the Depositary prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase) must tender their Shares in accordance
with the guaranteed delivery procedures set forth in Section 2 of the Offer to
Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
----------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) SHARES TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
-----------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARES
REPRESENTED
CERTIFICATE BY NUMBER OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED (2)
<S> <C> <C>
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
TOTAL SHARES TENDERED
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
described herein are being tendered. See Instruction 4.
--------------------------------------------------------------------------------
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: _____________________________________________
Check box of Book-Entry Transfer Facility:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
[_] Midwest Securities Trust Company
Account Number: __________________________________________________________
Transaction Code Number: _________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s): ____________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution that Guaranteed Delivery: ______________________________
If delivered by book-entry transfer check box:
[_] The Depository Trust Company
[_] Midwest Securities Trust Company
[_] Philadelphia Depository Trust Company
Account Number: ________________________________________________________________
Transaction Code Number: _______________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to TIE Acquisition Co., a Delaware
corporation (the "Purchaser"), the above-described shares of Common Stock, par
value $.10 per share (the "Shares"), of TIE/communications, Inc., a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase dated September 12, 1995 (the
"Offer to Purchase") and this Letter of Transmittal (which, together with the
Offer to Purchase and any amendments or supplements thereto or hereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with
the terms of the Offer, the undersigned hereby sells, assigns and transfers
to, or upon the order of, the Purchaser all right, title and interest in and
to all the Shares that are being tendered hereby (and any and all other
Shares, or other securities or rights issuable in respect thereof on or after
September 12, 1995), and irrevocably constitutes and appoints Harris Trust
Company of New York (the "Depositary"), the true and lawful agent and
attorney-in-fact of the undersigned, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to the full extent of the undersigned's rights with respect to such
Shares (and any such other Shares, or securities or rights), to (a) deliver
certificates for such Shares (and any such other Shares, or securities or
rights) or transfer ownership of such Shares (and any such other Shares, or
securities or rights) on the account books maintained by a Book-Entry Transfer
Facility together, in any such case, with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Purchaser, (b) present
such Shares (and any such other Shares, or securities or rights) for transfer
on the Company's books and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares (and any such other Shares or
securities or rights), all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all other Shares, or other securities or rights issued or
issuable in respect of such Shares on or after September 12, 1995) and, when
the same are accepted for payment by the Purchaser, the Purchaser will acquire
good title thereto, free and clear of all liens, restrictions, claims and
encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the tendered Shares (and any and all other Shares,
or other securities or rights issued or issuable in respect thereof on or
after September 12, 1995).
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable. The
undersigned hereby irrevocably appoints Charles B. McNamee and John M. Orehek,
and each of them, and any other designees of the Purchaser, the attorneys-in-
fact and proxies of the undersigned, each will full power of substitution, to
vote at any annual, special or adjourned meeting of the Company's stockholders
or otherwise in such manner as to each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, to
execute any written consent concerning any matter as each such attorney-in-
fact and proxy or his substitute shall in his sole discretion deem proper with
respect to, the Shares tendered hereby that have been accepted for payment by
the Purchaser prior to the time any such action is taken and with respect to
which the undersigned is entitled to vote (and any and all other Shares, or
other securities or rights issued or issuable in respect of such Shares on or
after September 12, 1995). This appointment is effective when, and only to the
extent that, the Purchaser accepts for payment such Shares as provided in the
Offer to Purchase. This power of attorney and proxy are irrevocable and are
granted in consideration of the acceptance for payment of such Shares and
rights in accordance with the terms of the Offer. Upon such acceptance for
payment, all prior powers of attorney, proxies and consents given by the
undersigned with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be
deemed effective) by the undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer. Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the Offer, the price to be paid to the
undersigned will be the amended price notwithstanding the fact that a
different price is stated in this Letter of Transmittal.
<PAGE>
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered." In the event that the Special Delivery
Instructions and/or the Special Payment Instructions are completed, please
issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment (and any accompanying documents, as
appropriate) in the name of, and/or deliver such check and/or return such
certificates (and any accompanying documents, as appropriate) to, the person or
persons so indicated. The undersigned recognizes that the Purchaser has no
obligation pursuant to the Special Payment Instructions to transfer any Shares
from the name of the registered holder thereof if the Purchaser does not accept
for payment any of the Shares so tendered.
[_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates: ___________
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7) (SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certif- To be completed ONLY if
icates for Shares not tendered certificates for Shares not
or not accepted for payment tendered or not accepted for
and/or the check for the pur- payment and/or the check for the
chase price of Shares accepted purchase price of Shares accepted
for payment are to be issued in for payment are to be sent to
the name of someone other than someone other than the
the undersigned. undersigned, or to the
undersigned at an address other
than that above.
Issue: [_] Check [_] Certificate(s) Mail: [_] Check [_] Certificate(s)
to: to:
Name ____________________________ Name _____________________________
(PLEASE PRINT) (PLEASE PRINT)
Address _________________________ Address __________________________
_________________________________ __________________________________
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
_________________________________
(EMPLOYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
<PAGE>
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: _________________ , 1995
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations
or other acting in a fiduciary or representative capacity, please
provide the following information and see Instruction 5.)
Name(s) _________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title) ___________________________________________________
Address _________________________________________________________________
_________________________________________________________________________
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No. ( ) _______________________________
Employer Identification or Social Security Number _______________________
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ____________________________________________________
Name ____________________________________________________________________
(PLEASE PRINT)
Name of Firm ____________________________________________________________
Address _________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. ( ) _______________________________________
Dated: ____________ , 1995
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined below) is utilized, if delivery of Shares is to be
made pursuant to the procedures for book-entry transfer set forth in Section 2
of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date and either
certificates for tendered Shares must be received by the Depositary at one of
such addresses or Shares must be delivered pursuant to the procedures for
book-entry transfer set forth herein (and a Book-Entry Confirmation received
by the Depositary), in each case prior to the Expiration Date, or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below and in Section 2 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase. Pursuant
to such procedures, (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, must be
received by the Depositary prior to the Expiration Date and (c) the
certificates for all tendered Shares, in proper form for transfer (or a Book-
Entry Confirmation with respect to all such Shares), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of a book-entry transfer,
an Agent's Message, and any other required documents are received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in Section 2 of the Offer to
Purchase. A "trading day" is any day on which the American Stock Exchange is
open for business.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THOUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDERS. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
6
<PAGE>
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled
"Number of Shares Tendered." In any such case, new certificate(s) for the
remainder of the Shares that were evidenced by the old certificate(s) will be
sent to the registered holder, unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the expiration
of the Offer.
All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to the Purchaser of their authority to so act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment or certificates for shares
not tendered or accepted for payment are to be issued to a person other than
the registered owner(s). Signatures on such certificates or stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person(s) other than the registered holder(s),
or if tendered, certificates are registered in the name(s) of any person(s)
other than the person(s) signing this Letter of Transmittal, the amount of any
stock transfer taxes (whether imposed on the registered holder(s) or such
person(s)) payable on account of the transfer to such person(s) will be
deducted from the purchase price unless satisfactory evidence of the payment
of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not accepted for payment are to be
returned to, a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such certificates are to be returned to a
person other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed.
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in
whole or in part, in the case of any Shares tendered.
7
<PAGE>
9. 31% BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify under
penalties of perjury that such TIN is correct and that such stockholder is not
subject to backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on
such stockholder and payment of cash to such stockholder pursuant to the Offer
may be subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
backup withholding can be credited against the Federal income tax liability of
the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employee identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the Letter of
Transmittal and a Form W-8, Certificate of Foreign Status, a copy of which may
be obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the Depositary by checking the box immediately preceding the special
payment/special delivery instructions and indicate the number of Shares lost.
The stockholder will then be instructed as to the steps that must be taken in
order to replace the certificate. This Letter of Transmittal and related
documents cannot be processed until the procedures for replacing lost or
destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF), TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
8
<PAGE>
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
--------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND --------------------
CERTIFY BY SIGNING AND Social Security
DATING BELOW Number(s) OR Employer
Identification Number(s)
SUBSTITUTE
FORM W-9 PART 2--Certification--
Under penalties of perjury,
I certify that:
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
---------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
(1) the number shown on PART 3--
this form is my correct Awaiting TIN
Taxpayer Identification [_]
Number (or I am waiting ---------------------
for a number to be is-
sued to me) and
PART 4--
Exempt TIN
(2) I am not subject to [_]
backup withholding
because (a) I am exempt
from backup withholding
or (b) I have not been
notified by the Inter-
nal Revenue Service
(the "IRS") that I am
subject to backup with-
holding as a result of
a failure to report all
interest or dividends
or (c) the IRS has no-
tified me that I am no
longer subject to
backup withholding.
--------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out
item (2) in Part 2 above if you have been notified
by the IRS that you are subject to backup
withholding because of under reporting interest or
dividends on your tax returns. However, if after
being notified by the IRS that you were subject to
backup withholding you received another
notification from the IRS stating that you are no
longer subject to backup withholding, do not cross
out such item (2). If you are exempt from backup
withholding, check the box in Part 4 above.
--------------------------------------------------------------------------------
SIGNATURE _____________________________________ DATE ______________ , 1995
9
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
-------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered
an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in
the near future. I understand that, if I do not provide a taxpayer
identification number to the Depositary, 31% of all reportable payments
made to me will be withheld, but will be refunded if I provide a certified
taxpayer identification number within 60 days.
---------------------------------- ----------------------------------
Signature Date
-------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
INFORMATION
The Information Agent for the Offer is:
Kissel-Blake Inc.
110 Wall Street, 21st Floor
New York, New York 10005
(212) 344-6733
or
Call Toll Free (800) 554-7733
The Dealer Manager for the Offer is:
The Robinson-Humphrey Company, Inc.
Atlanta Financial Center
3333 Peachtree Road, N.E.
Atlanta, Georgia 30326
(404) 266-6460
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
-----------------------------------------------
<TABLE>
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF --
-----------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one of
the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if
joint funds,
either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor,
guardian or committee for a or incompetent
designated ward, minor, or person(3)
incompetent person
7. a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
</TABLE>
<TABLE>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
--------------------------------------------------
<C> <C>
9. A valid trust, estate, or The legal entity
pension trust (Do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
--------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5 (Application for a Social Security Number Card) or
Form SS-4 (Application for Employer Identification Number) from your local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a) of the Internal Rev-
enue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
. The United States or any agency or instrumentality thereof.
. A state, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a) of the Code.
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441
of the Code.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends un-
der section 852 of the Code).
. Payments described in section 6049(b)(5) of the Code to non-resident al-
iens.
. Payments on tax-free covenant bonds under section 1451 of the Code.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT
ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A
COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A of the
Code.
PRIVACY ACT NOTICE.--Section 5109 of the Code requires most recipients of div-
idend, interest, or other payments to give taxpayer identification numbers to
payers who must report the payments to the Internal Revenue Service. The In-
ternal Revenue Service uses the numbers for identification purposes. Payers
must be given the numbers whether or not recipients are required to file tax
returns. Beginning January 1, 1993, payers must generally withhold 31% of tax-
able interest, dividend, and certain other payments to a payee who does not
furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
properly include any portion of an includible payment for interest, dividends,
or patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convinc-
ing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
TIE/COMMUNICATIONS, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of Common Stock, par value $.10 per
share (the "Shares"), of TIE/communications, Inc., a Delaware corporation (the
"Company"), are not immediately available, (ii) if Share Certificates and all
other required documents cannot be delivered to Harris Trust Company of New
York, as Depositary (the "Depositary"), prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase (as defined below)) or (iii) if
the procedure for delivery by book-entry transfer cannot be completed by the
Expiration Date. This Notice of Guaranteed Delivery may be delivered by hand
or mail or transmitted by telegram or facsimile transmission to the
Depositary. See Section 2 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
By Facsimile: By Mail: By Hand: By Overnight
Courier:
(212) 701-7636 Wall Street Station Receive Window
or P.O. Box 1023 77 Water Street 77 Water Street
(212) 701-7637 New York, NY 10268-1023 5th Floor 4th Floor
New York, NY New York, NY 10005
Confirm by Telephone:
(212) 701-7624
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above, or transmission of instructions via facsimile transmission
other than as set forth above, will not constitute a valid delivery.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to TIE Acquisition Co., a Delaware
corporation, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated September 12, 1995 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, together with the Offer to Purchase,
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares specified below pursuant to the guaranteed delivery procedure
described in Section 2 of the Offer to Purchase.
Number of Shares: ___________
___________________________________
___________________________________
Signature(s) of Holder(s)
Certificate Nos. (If Available): ______________________________________________
Dated: _______________ , 1995
Name(s) of Holder(s):
___________________________________
___________________________________
___________________________________
Address: __________________________
_____________________________
Area Code and
Telephone No.: ____________________
Check one box if Shares will be delivered by book-entry transfer:
[_] The Depository Trust Company
[_] Midwest Securities Trust Company
[_] Philadelphia Depository Trust Company
Account No. _________________
PLEASE TYPE OR PRINT
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or which is a commercial bank or trust company having an office or
correspondent in the United States, guarantees to deliver to the Depositary,
at one of its addresses set forth above, Share Certificates evidencing the
Shares tendered hereby, in proper form for transfer, or confirmation of book-
entry transfer of such Shares into the Depositary's account at The Depository
Trust Company, the Midwest Securities Trust Company or the Philadelphia
Depository Trust Company, with delivery of a Letter of Transmittal (or
facsimile thereof) or, in the case of Book Entry Delivery, an Agents Message,
properly completed and duly executed, and any other required documents, all
within three American Stock Exchange, Inc. trading days of the date hereof.
----------------------------------- -----------------------------------
Name of Firm Authorized Signature
----------------------------------- -----------------------------------
----------------------------------- Title
Address -----------------------------------
Name
-----------------------------------
Area Code and Telephone No. Dated: _____________________ , 1995
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
TIE/COMMUNICATIONS, INC.
AT
$8.60 NET PER SHARE
BY
TIE ACQUISITION CO.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 10, 1995, UNLESS THE OFFER IS EXTENDED.
September 12, 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by TIE Acquisition Co., a Delaware corporation
("Purchaser"), to act as Dealer Manager in connection with Purchaser's offer
to purchase all outstanding shares of Common Stock, par value $.10 per share
(the "Shares"), of TIE/communications, Inc. (the "Company'), at a price of
$8.60 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase, dated September 12,
1995 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with the Offer to Purchase, constitute the "Offer") enclosed
herewith. Please furnish copies of the enclosed materials to those of your
clients for whose accounts you hold Shares registered in your name or in the
name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
THAT REPRESENTS AT LEAST 75% OF ALL OUTSTANDING SHARES ON THE DATE OF
PURCHASE, AND (II) THE PURCHASER HAVING OBTAINED SUFFICIENT FINANCING TO
ENABLE IT TO CONSUMMATE THE OFFER AND THE PROPOSED MERGER.
Enclosed for your information and use are copies of the following documents:
1. Offer to Purchase, dated September 12, 1995;
2. Letter of Transmittal to be used by holders of Shares in accepting the
Offer and tendering Shares, together with Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9, providing
information relating to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or
cannot be delivered to Harris Trust Company of New York (the "Depositary")
by the Expiration Date (as defined in the Offer to Purchase) or if the
procedure for book-entry transfer cannot be completed by the Expiration
Date;
4. A letter to stockholders of the Company from George N. Benjamin, III,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
<PAGE>
5. A form letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer; and
6. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 10, 1995, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), a Letter of Transmittal (or
facsimile thereof) properly completed and duly executed and any other required
documents in accordance with the instructions contained in the Letter of
Transmittal.
If a holder of Shares desires to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery
procedure described in Section 2 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and the
Information Agent as described in the Offer) in connection with the
solicitation of tenders of Shares pursuant to the Offer. However, Purchaser
will reimburse you, upon request, for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients.
Purchaser will pay or cause to be paid any stock transfer taxes payable with
respect to the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
The Robinson-Humphrey Company, Inc. or Kissel-Blake Inc. (the "Information
Agent") at their respective addresses and telephone numbers set forth on the
back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent at the address and telephone numbers set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
The Robinson-Humphrey Company, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PURCHASER, THE COMPANY, THE DEALER MANAGER,
THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THEM,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
TIE/COMMUNICATIONS, INC.
AT
$8.60 NET PER SHARE
BY
TIE ACQUISITION CO.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 10, 1995, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are an Offer to Purchase dated September 12,
1995 (the "Offer to Purchase") and a related Letter of Transmittal in
connection with the offer by TIE Acquisition Co., a Delaware corporation (the
"Purchaser"), to purchase all outstanding shares of Common Stock, par value
$0.10 per share (the "Shares"), of TIE/communications, Inc., a Delaware
corporation (the "Company"), at a price of $8.60 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer
to Purchase and in the related Letter of Transmittal (which, together with the
Offer to Purchase, constitute the "Offer"). We are the holder of record of
Shares held by us for your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY
BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED
BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms
and subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $8.60 per Share, net to the seller in cash.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company unanimously has determined that
the Offer and the Merger (as defined in the Offer to Purchase), taken
together, are fair to, and in the best interests of, the stockholders of
the Company, and recommends that stockholders accept the Offer and tender
their Shares pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Tuesday, October 10, 1995, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer at
least that number of Shares that represents at least 75% of all outstanding
Shares on the date of purchase, and (ii) Purchaser having obtained
sufficient financing to enable it to consummate the Offer and the proposed
Merger.
6. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of September 5, 1995 (the "Merger Agreement") between Purchaser
and the Company. The Merger Agreement provides,
<PAGE>
among other things, that as soon as practicable after the purchase of
Shares pursuant to the Offer and the satisfaction of certain other
conditions, the Purchaser will be merged with and into the Company (the
"Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to
the Effective Time (other than 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) will be cancelled and converted automatically
into the right to receive $8.60 in cash.
7. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, stock transfer taxes with respect to the purchase of Shares
by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. Your instructions
should be forwarded to us in ample time to permit us to submit a tender on
your behalf prior to the expiration of the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, Purchaser will make a good faith effort
to comply with such state statute. If, after such good faith effort, Purchaser
cannot comply with such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such state.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of Purchaser by The Robinson-Humphrey Company, Inc. or one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
SHARES OF COMMON STOCK
OF
TIE/COMMUNICATIONS, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated September 12, 1995, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the Offer by TIE
Acquisition Co., a Delaware corporation, to purchase all outstanding shares of
Common Stock, par value $0.10 per share (the "Shares"), of TIE/communications,
Inc.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
NUMBER OF SHARES TO BE TENDERED: SHARES*
Dated: _________________ , 1995
SIGN HERE
-------------------------------------
-------------------------------------
SIGNATURE(S)
-------------------------------------
-------------------------------------
PLEASE TYPE OR PRINT NAME(S)
-------------------------------------
-------------------------------------
PLEASE TYPE OR PRINT ADDRESS
-------------------------------------
AREA CODE AND TELEPHONE NUMBER
-------------------------------------
TAXPAYER IDENTIFICATION NUMBER
OR SOCIAL SECURITY NUMBER
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
This announcement is not an offer to purchase or a solicitation of an offer to
sell these securities. The Offer is made only by the Offer to Purchase dated
September 12, 1995 and the related Letter of Transmittal which are being mailed
to shareholders of the Company. The Offer is not being made to, nor will tenders
be accepted from, holders of shares of TIE/communications, Inc. in any
jurisdiction in which the making or acceptance thereof would not be in
compliance with the laws of such jurisdiction. In any jurisdiction the laws of
which require the Offer to be made by a licensed broker or dealer, the Offer is
made by the Dealer Manager or one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK OF
TIE/COMMUNICATIONS, INC.
AT $8.60 NET PER SHARE BY
TIE ACQUISITION CO.
TIE Acquisition Co., a Delaware corporation (the "Purchaser"), is offering
to purchase all outstanding shares of common stock, $.10 par value per share
(the "Shares"), of TIE/communications, Inc. (AMEX: TIE), a Delaware
corporation (the "Company"), that are not owned by the Purchaser for $8.60 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal
(which together constitute the "Offer"). Tendering shareholders will not be
obligated to pay brokerage commissions or, subject to Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by the
Purchaser.
The Offer is conditioned upon at least 75% of the outstanding Shares on a
fully diluted basis of the Company being properly tendered, and not withdrawn,
by midnight, New York City Time, on October 10, 1995.
The Offer expires at midnight, New York City Time, on October 10, 1995,
unless extended. The Purchaser may extend the expiration date or the date by
which Shares must be tendered at any time (or from time to time) by giving
oral or written notice to the Depositary.
Subject to the terms of the Offer, the Purchaser will purchase all Shares
properly tendered (and not withdrawn) prior to the expiration of the Offer,
and will purchase such Shares by the deposit of the purchase price with the
Depositary on behalf of the tendering shareholder.
Tenders of Shares will be irrevocable, except that Shares may be withdrawn
(by written notice received by the Depositary) at any time prior to midnight,
New York City Time, on October 10, 1995 and, unless theretofore purchased by
the Purchaser, may also be withdrawn after November 10, 1995. For a withdrawal
to be effective, a written, telegraphic, or facsimile transmission notice of
withdrawal must be timely received by the Depositary at its address set forth
on the back cover of the Offer to Purchase. Any such notice of withdrawal must
specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder if
different from the name of the person who tendered the Shares. If certificates
for Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then prior to the physical release of such certificates, the
serial numbers shown on such certificates must be submitted to the Depositary
and, unless such Shares have been tendered by an Eligible Institution (as
defined in the Offer to Purchase), the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been tendered
pursuant to the procedures for book-entry transfer set forth in Section 2 of
the Offer to Purchase, any notice of withdrawal must also specify the name and
number of the account at the applicable Book-Entry Transfer Facility (as
defined in the Offer to Purchase) to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures. All
questions as to the form and validity (including time of receipt) of a notice
of withdrawal will be determined by the Purchaser, in its sole discretion, and
its determination shall be final and binding on all parties.
The Purchaser will not pay any fee or commission to any broker, dealer or
other person in connection with the solicitation of tenders of Shares pursuant
to the Offer, other than compensation payable to the Dealer Manager in
connection with the solicitation.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO
THE OFFER.
Tenders may be made only by a duly executed Letter of Transmittal. The
Purchaser has requested the Company to provide its lists of stockholders and
security position listings for the purpose of the Purchaser's dissemination of
the Offer to Purchaser and the related Letter of Transmittal to holders of
Shares. The Purchaser intends to ensure that the Offer to Purchase and Letter
of Transmittal, containing information including that required by Rule 14d-
6(e)(1)(vii) under the Securities Exchange Act of 1934 (which is incorporated
herein by this reference), will be mailed to the record holders of Shares and
will be furnished to brokers, banks and similar persons whose name appears, or
whose nominee appears on the shareholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
Copies of the Offer to Purchase and the Letter of Transmittal may be
obtained, at the Purchaser's expense, from the Depositary, Information Agent
or Dealer Manager as set forth below.
The Depositary for the Offer is: The Information Agent for the Offer
is:
HARRIS TRUST COMPANY OF NEW YORK KISSEL-BLAKE INC.
77 Water Street, 4th Floor 110 Wall Street
New York, New York 10005 New York, New York 10005
(212) 701-7624 Brokers and Banks, please call
(212) 344-6733
Call toll free: 1(800) 554-7733
The Dealer Manager for the Offer is:
THE ROBINSON-HUMPHREY COMPANY, INC.
3333 Peachtree Road, N.E.
Atlanta, Georgia 30326
(404) 266-6460
September 12, 1995
<PAGE>
EXHIBIT (A)(8)
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
<PAGE>
EXHIBIT (A)(9)
SPECIAL INSTRUCTIONS TO HOLDERS OF
CERTIFICATES REPRESENTING PRE-REVERSE
SPLIT SHARES OF TIE/COMMUNICATIONS, INC.
The stock transfer records of TIE/communications Inc. (the "Company")
indicate that certain stockholders continue to hold certificates representing
shares of common stock as the same were in effect prior to a one-for-35
reverse stock split effected on July 1, 1991 ("Old Shares"). Tender of such
certificates will only be effective if such certificates are physically
delivered to the Depositary (which is also the exchange agent for the Old
Shares) together with a properly completed Letter of Transmittal on or before
the Expiration Date. Such tender will be deemed i) a request to the Depositary
acting in its role as exchange agent for the Old Shares to exchange the shares
so tendered into shares of post-split denominations, paying any fractional
shares which would be created thereby at the contractual rate established by
the Company at the time the reverse-split was declared (that is, at the rate
of $9.9849 per new Share for any such fractional share) and ii) a tender of
any resulting whole Shares to the Depositary in accordance with the
accompanying Letter of Transmittal. The procedures for effecting tenders by
book-entry transfer or by Notice of Guaranteed Delivery WILL NOT be available
for Shares which continue to be represented by certificates for Old Shares.
Accordingly, holders of certificates for Old Shares are urged to submit their
certificates in sufficient time for the same to reach the Depositary before
the Expiration Date.
Whether or not the Purchaser accepts Shares for payment, the Depositary,
acting as exchange agent for the Company, will effect the exchange of
certificates for Old Shares into post-split shares and will make the
fractional share payment required, if any, on behalf of the Company. The
responsibility to make payment in respect of fractional shares is that solely
of the Company and the Purchaser's Offer to Purchase does not include any
offer in respect of fractional shares or the right to be paid cash in lieu of
fractional shares.
<PAGE>
EXHIBIT (b)(1)
[LETTERHEAD OF NATIONSBANK APPEARS HERE]
August 28, 1995
Mr. Charles B. McNamee
President & CEO
TIE Acquisition Co.
c/o Bruce W. Moorhead, Jr.
Smith, Gambrell & Russell
1230 Peachtree Street, N.E.
Suite 3100 Promenade II
Atlanta, GA 30309-3592
Re: Revised Loan Commitment
Gentlemen:
This letter supersedes and replaces the July 28, 1995 commitment letter (the
"July 28, 1995 Commitment") between NationsBank of Georgia, N.A. ("NationsBank")
and Communications Access, L.L.C. NationsBank is pleased to offer to TIE
Acquisition Co., a Delaware corporation ("Borrower") a commitment (the
"Commitment") for secured financing on the following terms and conditions:
BORROWER: TIE Acquisition Co., a Delaware corporation.
--------
Facility A
----------
BRIDGE LOAN
-----------
FACILITY: A bridge loan (the "Bridge Loan" or "Facility A") in the
-------- original principal amount of $20,000,000.
REPAYMENT: The Bridge Loan will be payable in full upon the earlier of
--------- the consummation of the purchase of all of the issued and
outstanding stock of TIE/communications, Inc. ("TIE") as the
result of a tender offer to be commenced by Borrower or a
wholly-owned subsidiary of Borrower or the consummation of a
merger of Borrower or a wholly-owned subsidiary of Borrower
with and into TIE, whereby TIE
<PAGE>
shall become a wholly-owned subsidiary of
Borrower, and 90 days from closing.
INTEREST: The Bridge Loan shall bear interest on the daily
-------- unpaid principal balance until paid in full at a
per annum rate of interest announced by
NationsBank in Atlanta, Georgia from time to time
as its Prime Rate plus 2.50%. The interest rate
shall be adjusted on the first day of each month
to reflect the Prime Rate in effect as of the
last business day of the previous month. Interest
shall be payable monthly and at maturity and shall
be calculated on the basis of a 360-day year and
actual days elapsed.
GUARANTORS: S.P. Investments Inc., Paul H. Pfleger, and John
---------- M. Orehek will each guarantee all obligations of
Borrower to NationsBank with respect to the Bridge
Loan.
USE OF PROCEEDS: The proceeds of Facility A will be used to
--------------- purchase the capital stock of TIE.
CLOSING FEE: Borrower shall pay to NationsBank a closing fee
----------- equal to $133,000, payable at closing.
COLLATERAL: As security for the Bridge Loan, Borrower and/or
---------- Guarantors shall grant to NationsBank a first
priority security interest in (a) capital stock of
MIDCOM Communications, Inc. (at least 1,000,000
shares) and the TIE stock purchased by Borrower or
a wholly-owned subsidiary of Borrower, pursuant
to the tender offer, with a loan to collateral
ratio at all times mutually satisfactory
to Borrower and NationsBank, or (b) a letter of
credit from an issuing bank acceptable to
NationsBank in the face amount equal to all
obligations under the Bridge Loan. Any stock
collateral shall be subject to no pledge
restrictions.
CONDITIONS
----------
PRECEDENT: The obligation of NationsBank to make Facility A
--------- available is subject to (a) Borrower and TIE
having executed an agreement and plan of merger
providing for commencement of a tender offer by
Borrower or a wholly-owned subsidiary of
Borrower for all outstanding shares of common
stock of TIE (such event being the "Execution
Event"), and (b) NationsBank's receipt of evidence
that
- 2 -
<PAGE>
Borrower has obtained financing (in addition to
the Bridge Loan) on terms reasonably acceptable
to NationsBank sufficient to consummate the
tender offer contemplated by the Execution Event.
Facility B
----------
REVOLVING
---------
LOAN FACILITY: A revolving credit facility ("Facility B")
------------- pursuant to which NationsBank shall, at the
Borrower's request, and subject to the conditions
set forth therein, make advances (hereafter each
individually, the "Revolving Loan", and
collectively, the "Revolving Loans") to Borrower
in a principal amount not to exceed at any one
time outstanding the lesser of $25,000,000
($5,000,000 subject to approval by National Canada
Finance) and the percentages of the borrowing base
set forth below. Advances may take the form of
letters of credit issued for the account of
Borrower.
BORROWING BASE: Revolving Loans will be available under Facility B
-------------- in an amount at any time outstanding up to (1) 85%
of Borrower's eligible receivables plus (2) the
lesser of (a) 50% of the lower of cost or market
value of eligible raw materials and finished goods
inventory, and (b) $12,500,000 minus (3) such
reserves as NationsBank shall in good faith deem
proper. Eligibility of receivables and inventory
shall be determined by NationsBank in accordance
with its usual practices. Each of the Revolving
Loans may be borrowed, repaid and reborrowed in
full or in part at any time during the term of
Facility B.
AVAILABILITY: Facility B will be subject to a minimum
------------ availability requirement of $2,500,000 at funding
and $500,000 thereafter.
COLLATERAL: As security for the Revolving Loans, Borrower
---------- shall assign to NationsBank the $5,000,000 life
insurance policy insuring the life of Charles
McNamee and shall grant to NationsBank:
(a) A first priority security interest in all of
its present and future accounts, contract
rights, chattel paper,
-3-
<PAGE>
deposit accounts, instruments, documents and
general intangibles;
(b) A first priority security interest in all of
its present and future inventory; and
(c) A first priority security interest in all of
its present and future equipment and real
estate.
INTEREST RATE: Each of the Revolving Loans will bear interest on
------------- the daily unpaid principal balance from the date
of such Revolving Loan until paid in full at a per
annum rate of interest announced by NationsBank in
Atlanta, Georgia from time to time as its "Prime
Rate" plus 1.0%. The interest rate shall be
adjusted on the first day of each month to reflect
the Prime Rate in effect on the last business day
of the previous month. Interest shall be payable
monthly, on the first day of each month for the
preceding month and shall be calculated on the
basis of a 360 day year and actual days elapsed.
REPAYMENT: Borrower and NationsBank shall establish a lockbox
--------- or special deposit account arrangement in which
all cash proceeds of collateral will be deposited
and used to reduce the outstanding principal
amount of the Revolving Loans. As consideration
for the delays in collection and clearance of
checks and other remittances, Borrower shall pay
to NationsBank an amount equal to 2 business days
interest computed at the interest rate payable on
the Revolving Loans (except that no collection
days shall be charged with respect to wire and ACH
transfers).
TERM: The initial term (the "Initial Term") of Facility
---- B shall commence on the date of closing and extend
until three years after the date of closing and
shall thereafter automatically renew for
additional periods of one year each (each a
"Renewal Term"), unless either party notifies the
other to the contrary at least 60 days prior to
the end of the Initial Term or any Renewal Term.
If Facility B is terminated by Borrower other than
at the end of the Initial Term or any Renewal
Term, Borrower shall pay to NationsBank a
prepayment fee equal to $750,000, if such
termination occurs in the first year following
closing; $500,000, if termination occurs in the
second year
-4-
<PAGE>
following closing; $100,000, if termination
occurs in the third year following closing; and
$50,000 at any time thereafter.
USE OF PROCEEDS: The proceeds of Facility B shall be used to repay
--------------- all amounts outstanding under the Bridge Loan,
purchase any shares of capital stock of TIE not
previously purchased in the tender offer, and for
general working capital.
UNUSED FEE: Borrower shall pay to NationsBank a facility fee
---------- equal to 1/2% of the average daily unused amount
of Facility B, payable monthly in arrears on the
first day of each month, calculated on the basis
of a 360 day year and actual days elapsed.
CLOSING FEE: Borrower shall pay to NationsBank a closing fee
----------- equal to 1.5% of the amount of Facility B, payable
at closing.
FIELD EXAM/
-----------
SERVICING FEE: NationsBank will charge an annual servicing fee of
------------- $35,000 to cover field examinations and other
costs associated with the administration of
Facility B. The charge will be payable quarterly
in arrears, regardless of the actual number of
examinations performed.
KEY MAN LIFE
------------
INSURANCE: $5,000,000 of life insurance on Charles B.
--------- McNamee.
COVENANTS: The loan documents will contain various covenants,
--------- including, without limitation, Borrower's pledge
to restrict capital expenditures to agreed upon
levels and to maintain a minimum tangible net
worth (with annual step ups) and minimum current,
fixed charge and leverage ratios. Covenants will
be negotiated in discussions to follow.
FINANCIAL
---------
REPORTING: Borrower shall provide to NationsBank (a) within
--------- 120 days after the close of Borrower's fiscal year
annual audited financial statements of Borrower
prepared in accordance with generally accepted
accounting principles and certified by an
independent certified public accountant; (b)
within 30 days following the end of the month,
interim unaudited balance sheet and income
statement of the Borrower for the month and year-
to date period then ended, certified by
-5-
<PAGE>
Borrower's chief financial officer; and (c) an
annual budget of each fiscal year at least 60 days
prior to commencement of such year. Borrower shall
also provide other financial information as may
reasonably be deemed necessary by NationsBank from
time to time.
COLLATERAL
----------
REPORTING: Borrower shall provide to NationsBank (a) a
--------- monthly aging of accounts receivable, (b) weekly
reports of sales and collections, (c) monthly
inventory reports and reconciliation of general
ledger inventory accounts to the perpetual
inventory records, and (d) such other information
relating to the collateral as NationsBank may from
time to time reasonably require.
INSURANCE: Borrower shall provide to NationsBank evidence of
--------- all risks physical damage insurance with respect
to its properties in such amounts with such
companies and such policies and such forms shall
be satisfactory to NationsBank, which policies
shall provide that loss thereunder shall be
payable to NationsBank (upon the New York Standard
Mortgage Clause, Long Form), as its interest may
appear.
CONDITIONS
----------
PRECEDENT: The obligation of NationsBank to make Facility B
--------- available is subject to:
(a) The prior or contemporaneous acquisition by
Borrower or Borrower's wholly-owned
subsidiary of all outstanding shares of
common stock of TIE pursuant to the
consummation of a merger of Borrower's
wholly-owned subsidiary with and into TIE,
whereby TIE shall become a wholly-owned
subsidiary of Borrower.
(b) NationsBank shall have received, reviewed and
found satisfactory Borrower's certified
opening balance sheet.
(c) Borrower shall have provided evidence
satisfactory to NationsBank and its counsel
that Borrower will be solvent following the
consummation of the transactions contemplated
hereby.
-6-
<PAGE>
(d) NationsBank shall have received evidence
satisfactory to it that Borrower has received
an infusion of equity and, if applicable,
other funding, in amounts and on terms
satisfactory to NationsBank in its
discretion.
Facilities A and B
------------------
OTHER TERMS AND
---------------
CONDITIONS: Except as otherwise agreed by NationsBank,
---------- Borrower will:
1. During normal business hours, provide access
for NationsBank personnel to its books,
records and business premises;
2. Maintain and preserve its corporate existence
and all rights, privileges, franchises and
other authority for the conduct of its
business;
3. Maintain its properties and facilities in
good order and repair;
4. Pay and discharge all taxes, assessments and
governmental charges in a timely manner,
except those beings contested in good
faith; and
5. Execute documentation required by Lender,
incorporating such conditions, covenants and
other provisions as NationsBank shall
require.
PRIOR EXPENSE
-------------
DEPOSIT: Borrower previously deposited with NationsBank the
------- sum of $50,000, as an expense deposit (the
"Expense Deposit"), pursuant to the terms of that
certain Proposal Letter from NationsBank to the
Borrower dated July 7, 1995 (the "Proposal
Letter"). The parties acknowledge and agree that
(i) the amount by which the Expense Deposit
exceeded NationsBank's actual expenses incurred
through July 28, 1995 pursuant to the Proposal
Letter (the "Unused Amount") has been earned by
NationsBank as a fee for the issuance of the
July 28, 1995 Commitment (the "Initial
- 7 -
<PAGE>
Commitment Fee"), and (ii) Borrower shall have no
further obligations to NationsBank pursuant to the
Proposal Letter.
REIMBURSEMENT
-------------
OF COSTS: Borrower agrees to reimburse NationsBank for all
-------- costs and expenses incurred by NationsBank
hereunder after July 28, 1995 in connection with
additional due diligence and other activities
toward consummation of Facilities A and B,
including reasonable legal fees and expenses, in
committing and closing the two Facilities,
regardless of whether the financing described
herein is closed. Borrower has previously paid to
NationsBank a $35,000 deposit towards such costs
and expenses. Upon the occurrence of the Execution
Event, the Borrower shall deposit with NationsBank
an additional $15,000 to cover such costs and
expenses.
CONDITIONS
----------
PRECEDENT: The obligation of NationsBank to make the
--------- Facilities available or to advance any loan is
subject to the satisfaction of following
conditions precedent in a manner satisfactory to
NationsBank and its counsel:
(a) Execution and delivery to NationsBank of a
financing agreement and other legal
documentation (including, but not limited to,
security agreements, financing statements,
landlord's waivers, opinions of counsel and
other documents), containing cross-default
and cross-collateralization provisions,
representations, warranties, affirmative,
negative and financial covenants, and events
of default as are satisfactory in form and
substance to NationsBank and its counsel.
(b) No material adverse change shall, in
NationsBank's opinion, have occurred in
Borrower's or TIE's assets, liabilities,
business, financial condition or results of
operations.
(c) No actions or proceedings shall have been
commenced or threatened to restrain, prohibit
or obtain damages with respect to any of the
transactions contemplated by this letter.
-8-
<PAGE>
(d) NationsBank shall have satisfied itself that
Borrower is not subject to any material
liability in respect of any environmental or
other matters.
(e) There shall have occurred no change in the
controlling stock ownership or executive
management of Borrower.
(f) The Borrower shall have a minimum tangible
net worth (including subordinated debt),
computed in accordance with GAAP, in an
amount satisfactory to NationsBank in its
discretion.
COUNTERPARTS: This Commitment may be executed simultaneously in
------------ two or more counterparts, each of which shall be
deemed an original for evidentiary purposes, but
all of which together shall constitute one and the
same instrument.
SUCCESSORS
----------
AND ASSIGNS: The terms and conditions of this Commitment
----------- shall be binding on all parties hereto, their
successors, assigns, and representatives. This
Commitment is not assignable by Borrower without
NationsBank's prior written approval.
COMMITMENT FEE: Borrower will pay to NationsBank an additional
-------------- commitment fee of $25,000 upon the occurrence of
the Execution Event, which fee (together with the
Initial Commitment Fee) will be applied against
the Closing Fee applicable to Facility A.
EXPIRATION: This Commitment shall expire on August 31, 1995,
---------- if not accepted by Borrower and guarantors prior
to such date, and shall expire if Facility A has
not closed by October 25, 1995. Upon termination
of this Commitment, NationsBank shall have no
obligation hereunder.
-9-
<PAGE>
If the terms and conditions outlined in this Commitment are acceptable to you,
please execute and return one copy of this letter to me.
NationsBank of Georgia, N.A.
By: [signature appears here]
-------------------------
Vice President (Title)
Accepted on the 30th day of August, 1995:
BORROWER:
TIE Acquisition Co.
By: /s/ Charles B. McNamee
-------------------------
President (Title)
Accepted on the ___ day of ___________, 1995
GUARANTORS:
S.P. Investments Inc.
By:/s/ John M. Orechek
-------------------------
(Title)
----------------------------
Paul H. Pfleger
/s/ John M. Orechek
----------------------------
John M. Orechek
Communications Access, L.L.C. acknowledges that this letter supersedes and
replaces the July 28, 1995 commitment letter.
Communications Access, L.L.C.
By: /s/ Charles B. McNamee
-------------------------
President (Title)
<PAGE>
EXHIBIT (b)(2)
September 8, 1995
TIE Acquisition Co.
ATTN: Mr. Charles B. McNamee,
President and Chief Executive Officer
8685 River Trace
Roswell, GA 30076
Re: $10,000,000 Loan Commitment
Gentlemen:
Kellett Investment Corporation, a Georgia corporation, as co-lender
("Kellett"), and Creditanstalt Corporate Finance Inc., a Delaware corporation,
as co-lender ("CCF"; and together with Kellett, the "Lender") and collateral
agent, are pleased to issue their several commitments to loan $5,000,000 each
for an aggregate loan commitment of $10,000,000 (the "Loan") to TIE Acquisition
Co., a Delaware corporation (hereinafter "Acquisition") in connection with and
for the purpose of financing a portion of either or both of (i) Acquisition's
tender offer (the "Tender Offer") for all of the outstanding shares of common
stock of TIE/communications, Inc., a Delaware corporation ("TIE"), and/or (ii)
following the Tender Offer, the second-stage merger between TIE and TIE Merger
Co., a wholly-owned subsidiary of Acquisition, as a result of which Acquisition
will own 100% of the stock of TIE (the "Merger"), on the following terms and
conditions:
Borrower: Acquisition (including as successor by merger or
otherwise to TIE), or any Permitted Assignee (as
hereinafter defined) (collectively "Borrower").
Primary Loan Terms
and Funding: A term loan (the "Loan") in the original principal
amount of TEN MILLION AND NO/100THS DOLLARS
($10,000,000), or such lower amount as Borrower
may elect, due one year
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 2
from date of closing of the Merger, bearing
interest at the rate of ten percent (10%) per
annum, with interest payable (i) at the time of
the Merger with respect to interest, if any,
accrued to such date, and (ii) monthly in arrears
thereafter. The Loan may be funded in one or two
fundings, simultaneously with, at the election of
Borrower, (i) the closing of the Tender Offer or
(ii) the closing of the Merger or (iii) both,
provided, however, that (x) interest shall accrue
-------- -------
on the amount funded from and after the date of
funding (y) the maximum amount funded, whether in
one funding or two, shall not exceed $10,000,000
and (z) Borrower shall provide Lender with at
least five (5) days prior written notice, with
respect to each of the Tender Offer and the
Merger, as to the date of closing thereof and the
portion of the Loan to be funded as of such date.
Collateral: Paul H. Pfleger shall from time to time pledge to
Lender, as hypothecated collateral for the Loan, a
number of shares of common stock of MIDCOM
Communications, Inc. ("MIDCOM") which bears the
same ratio to 2,000,000 as the actual unpaid
principal balance of the Loan bears to
$10,000,000. As between Lender and Borrower, the
Loan shall be unsecured.
Guaranties: Paul H. Pfleger and Charles B. McNamee shall
provide guaranties to Lender with respect to the
Loan on terms and conditions mutually acceptable
to Lender and Messrs. Pfleger and McNamee.
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 3
Warrants: Each warrant to be issued in connection herewith
(individually a "Warrant" and collectively, the
"Warrants") shall (i) be exercisable for the
applicable percentage of shares of common stock of
Acquisition on a fully diluted basis and (ii)
shall be exercisable by the holder thereof at any
time within three (3) years from the date of
issuance for an exercise price of $.01 per share
and (iii) shall be evidenced by documentation in
form and substance mutually acceptable to Lender
and Acquisition which shall include, among other
provisions, provisions with respect to (A) pro-
rata "tag-along" and "drag-along" rights to be
triggered in the event of the sale by Acquisition
or its principal shareholders of a mutually agreed
upon percentage of common stock owned by
Acquisition or of Acquisition owned by such
shareholders, (B) the granting of "piggy-back"
registration rights to the holder thereof in any
primary registration (other than registrations on
Form S-8), by Acquisition or any secondary
registration by Acquisition on behalf of any of
the principal shareholders of Acquisition, such
rights to be subject to cut-back rights to be
agreed on in the definitive documentation, (C) the
granting to the holders of a majority of the
Warrants of the right to demand one (1) long form
registration of the securities subject to such
Warrant following any initial public offering (the
"IPO") of shares of common stock by Acquisition,
(D) the protection of
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 4
the holder thereof against dilution upon the
issuance by Acquisition of additional securities
for a consideration below fair market value;
provided, however, such provisions shall not apply
-------- -------
to the issuance by Acquisition of a mutually
agreed upon percentage of common stock to be
issued or held for issuance to certain employees
of Acquisition, and (E) rights of the holders to
transfer or assign the warrants or any shares
issued or issuable pursuant thereto, in whole or
part, only to an affiliate or to an immediate
family member of a principal shareholder of Lender
or to John E. Cunningham, which rights shall be
subject to (i) applicable state and federal
securities laws, (ii) Regulation Y of the Board of
Governors of the Federal Reserve System if such
transferee or assignee is subject to such
regulations, and (iii) the terms and conditions
of, and any defenses or claims, which Acquisition
has or may have had against the original holder
under, any and all agreements with respect to the
Warrants or shares issued or issuable with respect
thereto, and any such assignee or transferee of
the Warrants shall agree in writing prior to such
assignment or transfer to be bound by the terms
and conditions of any and all agreements relating
to the Warrants or shares issued or issuable with
respect thereto.
Compensation to Lender: Commitment Fees: Upon execution of this
---------------
Commitment Letter by Lender and acceptance by
Acquisition (a) Acquisition shall within one (1)
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 5
business day thereafter, pay to Lender the sum of
$200,000, as a fully-earned and non-refundable
commitment fee (the "Cash Commitment Fee"), and
(b) in the event that Acquisition acquires some or
all of the common stock of TIE pursuant to the
Tender Offer, Acquisition shall issue to Lender a
Warrant for a number of shares equal to two
percent (2%) of the common stock of Acquisition,
as additional compensation to Lender for the
issuance of this Commitment Letter.
Additional Warrant as Closing Fee: Upon closing
---------------------------------
of the Merger, Acquisition shall issue to Lender a
Warrant for a number of shares equal to two
percent (2%) of the common stock of Acquisition,
regardless of the amount, if any, requested to be
funded by Borrower.
Notwithstanding the foregoing, if either Kellett
or CCF but not both, shall be unable or unwilling
to fund its several commitments hereunder (the
party able and willing to fund hereinafter
referred to as the "Funding Party" and the party
unable and unwilling to fund hereinafter referred
to as the "Non-Funding Party") then, unless the
Funding Party shall actually fund the amount
requested to be funded by Borrower, not to exceed
$10,000,000, otherwise in accordance with the
terms and conditions hereof, (i) the Funding Party
shall upon notice from Acquisition promptly refund
its respective portion of the Cash Commitment Fee
to Acquisition, (ii) Acquisition shall be under no
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 6
obligation to issue the Warrants to either the
Funding Party or the Non-Funding Party, and (iii)
as to the Non-Funding Party, Acquisition shall
have all of its remedies in law or equity with
respect to such failure to fund.
Repayment Terms and
Warrants: The Loan may be repaid at any time without premium
or penalty. If not sooner paid, all principal and
accrued but unpaid interest on the Loan shall be
due and payable on the first annual anniversary of
the date of closing of the Merger. In the event
that the Loan has not been repaid on or before the
date which is six (6) months after closing of the
Merger, Lender shall thereupon promptly receive a
Warrant for a number of shares of common stock of
Acquisition equal to one percent (1%) of the
common stock of Acquisition. In the event that
the Loan has not been repaid on or before the date
which is nine (9) months after closing of the
Merger, Lender shall thereupon promptly receive a
Warrant for a number of shares of common stock of
Acquisition equal to one percent (1%) of the
common stock of Acquisition.
Option to Sell
Warrants or Stock: At any time during the ninety-day period
commencing on the first annual anniversary of the
closing of the Merger, at the election of Lender,
Acquisition shall purchase and Lender shall sell
some or all (at the election of Lender) of the
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 7
shares of common stock of Acquisition (i) owned by
Lender, and (ii) represented by warrants owned by
Lender, at an aggregate purchase price equal to
the product of (x) the percentage which such
shares represent of the total common stock of
Acquisition on a fully diluted basis and (y)
$34,239,500.
Option to Purchase
Warrants or Stock: At any time during the ninety-day period
commencing on the first annual anniversary of the
closing of the Loan, at the election of
Acquisition, Acquisition shall purchase and Lender
shall sell up to fifty percent (50%) (the actual
amount purchased, within such limitation,
otherwise to be at the election of Acquisition) of
the sum of the number of shares of common stock of
Acquisition (i) owned by Lender, and (ii)
represented by warrants owned by Lender, at an
aggregate purchase price equal to the product of
(x) the percentage which such shares represent of
the total common stock of Acquisition on a fully
diluted basis and (y) $34,239,500.
Additional Provisions
Regarding MIDCOM Stock: At the time of closing of any portion of the Loan,
the MIDCOM stock to be pledged to Lender shall be
free of any "lock-up" or similar agreement which
would prevent the pledge to or resale by Lender of
such stock. Lender acknowledges that the MIDCOM
shares are subject to certain restrictions on
resale pursuant to Rule 144 promulgated under the
Securities Act of 1933, as
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 8
amended ("Rule 144") and the time, manner and
notice requirements set forth therein. Each of
Messrs. Pfleger and Orehek shall enter into
agreements with Lender mutually acceptable to each
party, whereby each will commit, from and during
the continuation of any event of default under the
Loan, to employ his reasonable best efforts to
assist and cause MIDCOM to assist Lender in (i)
causing any of the subject securities to be
registered pursuant to applicable securities laws
in a manner consistent with other agreements
applicable thereto, and to (ii) the resale of the
subject securities in a manner consistent with
Rule 144, other applicable securities laws and
other agreements applicable to such subject
securities. In the event that, at any time after
closing of the Loan and prior to repayment, the
MIDCOM stock pledged to Lender to secure the Loan
has an aggregate market value, for a period of
twenty (20) consecutive trading days, of less than
an amount equal to twice the then outstanding
principal balance (the "Balance") of the Loan,
then Messrs. Pfleger and Orehek shall pledge to
Lender a sufficient number of additional shares of
common stock of MIDCOM such that the aggregate
market value of all MIDCOM stock pledged to Lender
is not less than an amount equal to two and one-
half times the Balance. Similarly, in the event
that the aggregate market value of the shares of
MIDCOM stock pledged to Lender at any time exceeds
an amount equal to four times the Balance, for a
period of
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 9
twenty (20) consecutive trading days, then Lender
shall release from such pledged stock a number of
shares sufficient to cause the remaining pledged
shares to have an aggregate market value of not
more than three and one-half times the Balance.
Expenses: Acquisition shall reimburse Lender for all out-of-
pocket costs and expenses incurred by Lender
hereunder, inclusive of the fees and expenses of
Lender's counsel, up to a maximum reimbursement of
$25,000.
Conditions Precedent: The obligation of Lender to fund the Loan is
subject to satisfaction of the following
conditions precedent in a manner reasonably
satisfactory to Lender:
(a) This Commitment Letter becoming effective in
the manner hereafter provided, and not being
terminated as hereinafter provided;
(b) The simultaneous or contemporaneous closing
of (i) the Tender Offer or (ii) the Merger,
in either event on or before December 31,
1995; and
(c) The execution and delivery of definitive
documentation governing or relating to the
Loan including, without limitation, a Term
Note and Term Note Agreement, a Warrant
Agreement, together with the form of or
actual, as applicable, warrants for common
stock of Acquisition,
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 10
guaranties of the Loan, and a Pledge and
Security Agreement evidencing the pledge of
shares of MIDCOM common stock to Lender.
(d) No action or proceeding shall have been
commenced to restrain, prohibit or obtain
damages with respect to the Tender Offer,
the Merger or the Loan.
(e) Lender shall have received evidence
satisfactory to it that Acquisition will be
solvent following the consummation of the
Tender Offer or the Merger, as applicable.
(f) The closing of the Loan not being in
violation of the applicable provisions of
Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System;
provided, however, that Lender shall have
-------- -------
used its reasonable best efforts to close
the Loan in a manner which would not cause
any such violation.
Assignability: Acquisition reserves the right, if necessary to
comply with the terms and conditions of
Acquisition's senior credit facility, to
substitute (by assignment or otherwise), fully but
not partially as Borrower, SP Investments Inc. or
any other entity owned or controlled, directly or
indirectly, by Paul H. Pfleger (a "Permitted
Assignee") and in the event of any
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 11
such assignment all proceeds of the Loan shall
contemporaneously be loaned to Acquisition on such
terms and conditions as may be necessary to
satisfy such senior credit facility; provided,
--------
however, that no such substitution of a Permitted
-------
Assignee as Borrower shall alter, amend or
otherwise modify Lender's rights with respect to
Warrants hereunder, which shall be issued by
Acquisition notwithstanding any such substitution.
Effectiveness and
Termination of
Commitment: This Commitment Letter, when signed by Lender,
shall constitute a continuing irrevocable offer to
Acquisition for a period of one (1) business day
after the date on which duplicate executed
originals hereof are delivered to Acquisition and
shall become effective upon the occurrence of the
following: (a) acceptance hereof by Acquisition
and receipt by Lender of at least a faxed copy of
a fully executed original hereof within such one
business-day period; and (b) payment to Lender of
the Cash Commitment Fee within one (1) business
day following such acceptance. Upon this
Commitment Letter becoming effective, it shall
supersede and replace that certain Commitment
Letter from Lender with respect to the Loan dated
August 29, 1995, and shall terminate upon the
first to occur of the following events: (y) the
closing of all or any portion of the Loan, at
which time this Commitment Letter shall be
replaced by the definitive documentation with
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 12
respect to the Loan; or (z) the failure of
Acquisition or a Permitted Assignee to close any
portion of the Loan on or before December 31,
1995. Upon termination of this Commitment Letter,
except for the obligation of Acquisition to
reimburse Lender's out-of-pocket expenses incurred
in connection herewith, up to a maximum of
$25,000, neither party shall have any further or
continuing obligations to the other pursuant
hereto.
Miscellaneous: (a) No third party beneficiaries. No person or
----------------------------
entity other than Acquisition, Lender, any
Permitted Assignee and persons or entities
directly or indirectly owning or controlling
Acquisition shall have or be construed to
have any legal or equitable right, remedy or
claim under or in respect of or by virtue of
this Commitment Letter, any provisions
hereof or by their reliance hereon or
thereon.
(b) Counterparts. This Commitment Letter may be
------------
executed in two or more counterparts, each
of which shall be deemed an original and all
of which counterparts together shall
constitute one and the same agreement.
(c) Entire Agreement. This Commitment Letter
----------------
supersedes any and all prior or
contemporaneous discussions, negotiations,
understandings or
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 13
agreements, written or oral, express or
implied, with respect to the subject matter
hereof, all of which are hereby merged
herein. THIS COMMITMENT LETTER MAY NOT BE
CONTRADICTED BY EVIDENCE OF ANY ACTUAL OR
ALLEGED PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
UNDERSTANDINGS OR AGREEMENTS OF THE PARTIES,
WHETHER WRITTEN OR ORAL, EXPRESS OR IMPLIED,
OTHER THAN A WRITING SIGNED BY EACH PARTY
HERETO WHICH EXPRESSLY AMENDS OR SUPERSEDES
THIS COMMITMENT LETTER. THERE ARE NO
UNWRITTEN UNDERSTANDINGS OR AGREEMENTS
BETWEEN, NOR UNWRITTEN OBLIGATIONS OF EITHER
OF, THE PARTIES.
(d) Governing Law and Jury Trial Waiver. This
-----------------------------------
Commitment Letter shall be governed by, and
construed in accordance with, the internal
laws of the State of New York without
reference to principles of conflict of laws.
BECAUSE DISPUTES ARISING IN CONNECTION WITH
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH
APPLICABLE
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 14
STATE LAW TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAW. THEREFORE, TO ACHIEVE
THE BEST COMBINATION OF THE BENEFITS OF THE
JUDICIAL SYSTEM AND OF ARBITRATION (WITHOUT
SUBMITTING TO ARBITRATION), THE PARTIES
WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES
UNDER THIS COMMITMENT LETTER OR ANY OF THE
DEFINITIVE DOCUMENTS COMPRISING OR RELATING
TO THE LOAN.
If the terms of this Commitment Letter are acceptable to you, we ask
that you return to us an executed duplicate original.
Very truly yours,
KELLETT INVESTMENT CORPORATION
BY:_____________________________
Stiles A. Kellett, Jr.
Chairman
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 15
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 16
CREDITANSTALT CORPORATE FINANCE
INC.
BY:_____________________________
Name:___________________________
Title:__________________________
BY:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
TIE Acquisition Co.
September 8, 1995
Page 17
AGREED TO AND ACCEPTED
as of this ____ day of
_______________, 1995.
TIE ACQUISITION CO.
BY:____________________________________
Charles B. McNamee, President
<PAGE>
EXHIBIT (C)(1)
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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(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
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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
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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.
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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
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<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
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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
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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
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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
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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.
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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
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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
18
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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;
19
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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
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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
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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 (C)(2)
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
-5-
<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
-7-
<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.
-10-
<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
-12-
<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.]
-13-
<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 (C)(3)
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>
[LETTERHEAD OF SP INVESTMENTS INC. APPEARS HERE]
EXHIBIT (C)(4)
September 5, 1995
TIE Acquisition Co.
1201 Third Avenue, Suite 5400
Seattle, WA 98101
Attention: Charles B. McNamee, President
Gentlemen:
This letter will confirm that the Board of Directors of SP Investments Inc.
("SPII") has reviewed (i) that certain draft Agreement and Plan of Merger by and
among TIE/communications, Inc. ("TIE"), TIE Acquisition Co. ("Parent") and TIE
Merger Co. ("Acquisition") dated August 31, 1995 (the "Merger Agreement"), (ii)
that certain draft Stockholders Option Agreement among TIE, Marmon Holdings Inc.
and The Pritzker Family Philanthropic Fund dated August 31, 1995 (the "Option
Agreement") and (iii) that certain draft Agreement between SPII and TIE dated
August 31, 1995 (the "Agreement" and collectively with the Merger Agreement and
Option Agreement, the "Draft Documents"), pursuant to which Parent will acquire
all of the outstanding common stock, par value $.10 per share of TIE, pursuant
to the Offer and the Merger (each as defined in the Merger Agreement).
Having reviewed the Draft Documents, SPII hereby commits, subject to the
satisfaction of each of the following conditions, to make available to Parent
funds in an amount up to $18,000,000 in the form of equity contributions and/or
debt financing; provided however, that not less then $8,000,000 of such
contribution shall be in the form of an equity contribution to Parent in
consideration of the issuance by Parent to Paul H. Pfleger, the controlling
stockholder of SPII, of ten (10) shares of common stock, par vale $.01 per
share, of Parent (the "Parent Common Stock") (the "Financing") .
The obligation of SPII to provide the Financing is subject to the satisfaction
or waiver of each of the following conditions:
1. The issuance to Paul H. Pfleger of ten (10) shares of Parent Common Stock;
and
2. The execution and delivery of each of the Merger Agreement, Option Agreement
and Agreement, in form and substance substantially identical to the Draft
Documents, together with such changes as may be approved by Charles B.
McNamee or John M. Orehek, such approval to be definitively established upon
the execution of the Merger Agreement, Option Agreement and Agreement on
behalf of Parent, Acquisition or SPII as the case may be; and
<PAGE>
TIE Acquisition Co.
Attn: Charles B. McNamee
September 5, 1995
Page 2
3. The funding of the Facility A Loan which is the subject of that certain
commitment letter dated August 28, 1995 from NationsBank of Georgia, N.A. to
Parent (the "Commitment Letter") or the funding of other tender offer
financing in an amount not less than $20,000,000 and (ii) the commitment of
NationsBank to fund the Facility B Loan pursuant to the Commitment Letter
remaining in full force and effect or the effectiveness of an alternative
commitment for permanent financing in an amount not less than $25,000,000;
and
4. The satisfaction of or waiver by Parent of each of the conditions to
consummation of the Offer such that, among other matters, shares equal to
not less than seventy-five percent (75%) of the then issued and outstanding
shares of TIE Common Stock shall have been validly tendered and not
withdrawn from the Offer; and
5. SPII or one of its affiliates having entered into and closed a financing
facility in an amount not less than $10,000,000 secured by shares of common
stock of MIDCOM Communications Inc. owned by certain affiliates of SPII the
proceeds of which shall be available to TIE Acquisition Co. for purposes of
consummation of the Offer.
This commitment for Financing shall be for the sole benefit of TIE Acquisition
Co. and no person or entity other than TIE Acquisition Co. shall have or be
construed to have any legal or equitable right, remedy of claim under or in
respect of or by virtue of this Agreement, the provisions hereof, the commitment
for Financing contained herein or their reliance hereon or thereon.
Following the execution and delivery of the Merger Agreement, the commitment to
provide the Financing shall not be terminated by SPII until the earlier to occur
of (i) the date on which the Offer is terminated without at least seventy-five
percent (75%) of the then issued and outstanding shares of TIE Common Stock
being validly tendered and not withdrawn from the Offer; (ii) the date on which
the Merger Agreement is terminated; or (iii) the date which is sixty-four (64)
days following the date on which the Offer is commenced.
SP Investments Inc.
By:/s/ John M. Orehek
------------------
John M Orehek
President
<PAGE>
EXHIBIT (C)(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 (C)(6)
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: ________________________________
