<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
TIE/COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $.10 PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
87246 42 0
---------------------------
(CUSIP Number)
TIE ACQUISITION CO.
PAUL H. PFLEGER
1201 THIRD AVENUE, SUITE 5400, SEATTLE, WASHINGTON 98101, ATTENTION: PRESIDENT
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
WITH A COPY TO:
JOHN R. SCHNEIDER, ESQ., SMITH, GAMBRELL & RUSSELL, SUITE 3100, PROMENADE II,
1230 PEACHTREE STREET N.E., ATLANTA, GEORGIA 30309-3592
OCTOBER 18, 1995
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with this statement [X]. ( A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following page(s))
<PAGE>
- ----------------------- ----------------------
CUSIP NO. 87246 42 0 13D
------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1. SS OR IRS IDENTIFICATION OF ABOVE PERSON
TIE ACQUISTION CO.
91-1694762
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
2. (b) [_]
N/A
- --------------------------------------------------------------------------------
SEC USE ONLY
3.
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4.
BK/WC/AF
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS
5. 2(d) or 2(e) [_]
N/A
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6.
DELAWARE
- --------------------------------------------------------------------------------
SOLE VOTING POWER
NUMBER 7.
OF SHARES
BENEFICIALLY 3,749,587
------------------------------------------------------------------
OWNED BY SHARED VOTING POWER
EACH 8.
REPORTING
PERSON 0
------------------------------------------------------------------
WITH SOLE DISPOSITIVE POWER
9.
3,749,587
------------------------------------------------------------------
SHARED DISPOSITIVE POWER
1
0.
0
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11.
3,749,587
- -------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*[_]
12.
N/A
- -------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.
94.2%
- -------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14.
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
- ----------------------- ----------------------
CUSIP NO. 87246 42 0 13D
------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1. SS OR IRS IDENTIFICATION OF ABOVE PERSON
PAUL H. PFLEGER
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
2. (b) [_]
N/A
- --------------------------------------------------------------------------------
SEC USE ONLY
3.
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4.
BK/WC/AF
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS
5. 2(d) or 2(e) [_]
N/A
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6.
UNITED STATES
- --------------------------------------------------------------------------------
SOLE VOTING POWER
NUMBER 7.
OF SHARES
BENEFICIALLY 3,749,587
------------------------------------------------------------------
OWNED BY SHARED VOTING POWER
EACH 8.
REPORTING
PERSON 0
------------------------------------------------------------------
WITH SOLE DISPOSITIVE POWER
9.
3,749,587
------------------------------------------------------------------
SHARED DISPOSITIVE POWER
1
0.
0
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11.
3,749,587
- -------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*[_]
12.
N/A
- -------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.
94.2%
- --------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14.
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
ITEM 1. SECURITY AND ISSUER.
--------------------
This statement on Schedule 13D (the "Statement") relates to the acquisition
of shares of the common stock, $.10 par value (the "Common Stock") of
TIE/communications, Inc. (the "Issuer"), a Delaware corporation, whose principal
executive offices are located at 8500 West 110th Street, Overland Park, Kansas
66210 .
ITEM 2. IDENTITY AND BACKGROUND.
------------------------
This Statement is being filed by TIE Acquisition Co. ("Acquisition") and
Paul H. Pfleger, a United States citizen and sole stockholder of Acquisition.
Acquisition is a Delaware corporation formed for the principal purpose of
acquiring all of the outstanding shares of Common Stock of Issuer pursuant to
that certain Agreement and Plan of Merger, dated as of September 5, 1995, by and
among Acquisition, TIE Merger Co. and Issuer (the "Merger Agreement"). A copy
of the Merger Agreement is filed as an Exhibit to this filing and is hereby
incorporated herein by reference. The address of Acquisition's principal
business and principal office is: 1201 Third Avenue, Suite 5400, Seattle,
Washington 98101. 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 is conducted with respect to Mr.
Pfleger and each of the other executive officers and directors of Acquisition
are set forth in Exhibit 7(i) to this Statement and are incorporated herein by
reference. Neither Acquisition, Mr. Pfleger, nor, to the best knowledge of
Acquisition, any of the persons listed in Exhibit 7(i), has been convicted in
any criminal proceeding during the past five years. Neither Acquisition, Mr.
Pfleger, nor, to the best knowledge of Acquisition, any of the persons listed in
Exhibit 7(i), has, during the last five years, been party to any civil
proceedings of a judicial or administrative body of competent jurisdiction which
resulted in a judgment, decree or final order enjoining future violations of, or
prohibiting on mandatory activities subject to, Federal or State securities laws
or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS FOR OTHER CONSIDERATION.
---------------------------------------------------
All of the securities which are the subject of this Statement were acquired
by Acquisition pursuant to that certain Offer to Purchase, dated September 12,
1995, as supplemented by that certain Supplement to Offer to Purchase, dated
October 11, 1995, to the shareholders of Issuer (the "Tender Offer"). The
aggregate purchase price of the shares purchased by Acquisition pursuant to the
Tender Offer was $32,246,448.20 and was obtained as follows: (i) approximately
$8 million was provided from working capital of Acquisition, (ii) $20 million
was provided from borrowings pursuant to that certain Loan Agreement, dated
October 18, 1995, by and between Acquisition and NationsBank of Georgia N.A.,
and (iii) an additional $10 million was provided from funds borrowed by
Acquisition from TIE Investment Inc., a Washington corporation and affiliate of
Acquisition, such funds having been borrowed by TIE Investment Inc. pursuant to
that certain Term Loan Agreement, dated as of October 18, 1995, by and between
TIE Investment Inc., Acquisition and Kellett Investment Corporation, as co-
lender, and Creditanstalt Corporate Finance, Inc. as co-lender and collateral
agent.
ITEM 4. PURPOSE OF TRANSACTION.
-----------------------
The acquisition of the securities which are the subject of this Statement
is the first step in the acquisition by Acquisition of all of the outstanding
Common Stock of Issuer pursuant to the Merger Agreement. As set forth in the
Merger Agreement, following the consummation of the Tender Offer Acquisition
intends to cause TIE Merger Co., a wholly-owned subsidiary of Acquisition, to be
merged with and into Issuer, whereupon each shareholder of Issuer (other than
Acquisition) shall by virtue of the merger and without any other action have
their shares of Common Stock converted into the right to receive $8.60 per
share, the same per share consideration offered in the Tender Offer. Subject to
the terms and conditions set forth therein, the Merger Agreement provides for
the merger to be consummated on or before December 15, 1995. As set forth in the
Merger Agreement and as described in the Tender Offer Statement on Schedule 14D-
1 filed by Acquisition with the United States Securities and Exchange Commission
in connection with the Tender Offer, as amended (the "Schedule 14D-1"), upon
consummation of the Tender Offer five directors of Issuer tendered their
resignations from the board of directors of Issuer and on October 23, 1995 the
remaining members of the board of directors filled the vacancies on the board of
directors credited by such resignations by electing to the board of directors
the nominees named by Acquisition in the Schedule 14D-1. In addition, the board
of directors of the Issuer
<PAGE>
named Charles B. McNamee to the position of Chief Executive Officer and
President of Issuer, replacing George N. Benjamin, III . Following the merger,
Acquisition intends to promptly cause shares of the surviving corporation to be
delisted from the American Stock Exchange, Inc. and to terminate the
registration of such shares pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended.
Except as indicated in this filing, the Merger Agreement and the Schedule
14D-1, Acquisition 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 TIE or any of its subsidiaries, a sale
or transfer of a material amount of assets of TIE or any of its subsidiaries or
any change in TIE's capitalization or dividend policy or any other material
changes in TIE's corporate structure or business.
ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER.
-----------------------------------------
(a) Acquisition beneficially owns in the aggregate 3,749,587 shares or 94.2
percent of the outstanding Common Stock of the Issuer. As the sole stockholder
of Acquisition, Mr. Pfleger is deemed to beneficially own all shares of Common
Stock of the Issuer owned by Acquisition.
(b) Acquisition possesses sole voting and dispositive power with respect to
all 3,749,587 shares of Common Stock of the Issuer. Except as described herein,
Acquisition does not share with any other person voting or dispositive power
with respect to any shares of Common Stock of the Issuer. As the sole
stockholder of Acquisition, Mr. Pfleger is deemed to have sole power to direct
the vote or sole power to direct the disposition of all shares of Common Stock
of the Issuer owned by Acquisition.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
-------------------------------------------------------------
RESPECT TO SECURITIES OF THE ISSUER.
-----------------------------------
Except for the Merger Agreement which is filed as Exhibit 7(ii) to this
Statement and is hereby incorporated by reference, there are no contracts,
arrangements, understandings or relationships between Acquisition or any other
person with respect to any securities of the Issuer required to be disclosed
pursuant to this Item.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
---------------------------------
The following exhibits are filed with this Schedule 13D:
(i) Certain Background Information with respect to Executive Officers
and Directors of TIE Acquisition Co.
(ii) Agreement and Plan of Merger, dated as of September 5, 1995, by and
among Acquisition, TIE Merger Co. and Issuer.
(iii) Loan Agreement, dated October 18, 1995, between Acquisition and
NationsBank of Georgia, N.A.
(iv) Term Loan Agreement, dated as of October 18, 1995, by and among TIE
Investment Inc., TIE Acquisition Co. and Kellett Investment
Corporation, as co-lender, and Creditanstalt Corporate Finance,
Inc., as co-lender and collateral agent.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
TIE ACQUISITION CO.
Date: October 30, 1995 /s/ Charles B. McNamee
-----------------------------------
Charles B. McNamee, President
Date: October 30, 1995 /s/ Paul H. Pfleger
-----------------------------------
Paul H. Pfleger, Individually
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential Numbered
Page on which Exhibit
Exhibit Number Description Begins
- -------------- ----------- ---------------------
<S> <C> <C>
7(i) Certain Background Information with
respect to Executive Officers and Directors
of TIE Acquisition Co.
7(ii) Agreement and Plan of Merger,
dated as of September 5, 1995,
by and among TIE Acquisition Co., TIE
Merger Co. and TIE/communications, Inc.
7(iii) Loan Agreement, dated October 18,
1995, between TIE Acquisition Co. and
NationsBank of Georgia, N.A.
7(iv) Term Loan Agreement, dated as of
October 18, 1995, by and among TIE
Investment Inc., TIE Acquisition Co. and
Kellett Investment Corporation, as co-Lender
and Creditanstalt Corporate Finance, Inc., as
co-Lender and collateral agent.
</TABLE>
<PAGE>
EXHIBIT 7(i)
CERTAIN BACKGROUND INFORMATION WITH RESPECT TO
EXECUTIVE OFFICERS AND DIRECTORS OF TIE ACQUISITION CO.
The name, present principal occupation or employment of each of the
directors and executive officers of TIE Acquisition Co. ("Acquisition") 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
Name Occupation or Employment
---- ----------------------------------
<S> <C>
Paul H. Pfleger Director of Acquisition 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 Chief Executive Officer of
TIE/communications, Inc. since October 1995. President
and director of Acquisition since September 1995. Mr.
McNamee, age 48, is a citizen of the United States.
John M. Orehek Vice President, Secretary and director of Acquisition
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.
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, a citizen of the United States.
</TABLE>
<PAGE>
EXHIBIT (7)(ii)
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
2
<PAGE>
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.
3
<PAGE>
(b) The Company hereby agrees to file with the SEC as promptly as
reasonably practicable on the date of the commencement of the Offer, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") containing the
recommendations described in Section 1.02(a) hereof and to disseminate the
Schedule 14D-9 to the extent required by Rule 14e-2 promulgated under the
Exchange Act and any other applicable federal securities laws. The Schedule
14D-9 will comply in all material respects with the provisions of applicable
federal securities laws and, on the date filed with the SEC, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Acquisition for inclusion in the Schedule 14D-
9. Parent and its counsel shall be given the opportunity to review the Schedule
14D-9 prior to the filing thereof with the SEC. The Company, Parent and
Acquisition each agrees promptly to correct any information provided by it for
use in the Schedule 14D-9 and to the extent that it shall have become false or
misleading in any material respect the Company further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and disseminated to the holders of Shares, as and to the extent required by
applicable federal securities laws. The Company agrees to provide to
Acquisition and its counsel in writing any comments the Company or its counsel
may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt of such comments. Notwithstanding anything contained in
this Section 1.02(b), but subject to Section 8.03 hereof, if the members of the
Board by majority vote determine in good faith (upon advice of counsel) that it
is required in the exercise of their fiduciary duties to withdraw, modify or
amend the recommendation of the Board, such withdrawal, modification or
amendment shall not constitute a breach of this Agreement.
(c) In connection with the Offer, the Company will promptly furnish Parent
with such information, including current lists of the stockholders of the
Company, mailing labels and lists of security positions and shall furnish Parent
with such additional information and assistance (including, without limitation,
updated lists of stockholders, mailing labels and lists of securities positions)
as Parent or its agents may reasonably request in communicating the Offer to the
record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent and its affiliates and associates shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger, and, if this
Agreement shall be terminated, will deliver to the Company all copies of such
information then in their possession.
SECTION 1.03 Boards of Directors and Committees; Section 14(f). (a)
-------------------------------------------------
Effective upon the purchase by Parent of Shares pursuant to the Offer and from
time to time thereafter, Parent shall be entitled to designate up to such number
of directors, rounded up to the next whole number, on the Board as will give
Parent representation on the Board equal to the product of the number of
directors on the Board and the percentage that such number of Shares so
purchased bears to the total number of outstanding Shares, and the Company shall
take all actions necessary to cause Parent's designees to be elected or
appointed to the Company's Board; provided, however, that prior to the Effective
-------- -------
Time (as hereinafter defined), the Board shall always have at least three (3)
members who are neither officers of the Company nor designees, stockholders,
affiliates or associates of Parent, Acquisition or, unless such designee is
consented
4
<PAGE>
to by Parent (which consent shall not be unreasonably withheld), any party to
the Stockholders Option Agreement (the "Independent Directors"). At such times
the Company will use its best efforts to cause persons designated by Parent to
constitute the same percentage as is on the Board of (i) each committee of the
Board (other than any committee of the Board established to take action under
this Agreement), (ii) each board of directors of each subsidiary of the Company,
and (iii) each committee of each such board.
(b) The Company's obligations to appoint designees to the Board shall be
subject to Section 14(f) of the Exchange Act ("Section 14(f)") and Rule 14f-1
promulgated thereunder ("Rule 14f-1"). The Company shall promptly take all
actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.03 and shall include in the Schedule 14D-9
or the Schedule 14D-1 such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1.
Parent or Acquisition will supply to the Company in writing and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
(c) Following the election or appointment of Acquisition's designees
pursuant to this Section 1.03 and prior to the Effective Time (as hereinafter
defined), (i) any amendment to this Agreement which (A) decreases the price per
Share payable hereunder, (B) changes the form of consideration payable
hereunder, or (C) makes any change in the terms and conditions of this Agreement
which is otherwise materially adverse to holders of Shares, (ii) any extension
by the Company of the time for the performance of any of the obligations or
other acts of Parent or Acquisition or the waiver of any of the Company's rights
hereunder, and (iii) any termination of the Agreement, will require the
concurrence of a majority of the Independent Directors.
ARTICLE II.
THE MERGER
SECTION 2.01 The Merger. At the Effective Time and upon the terms and
----------
subject to the satisfaction or waiver of the conditions of this Agreement and
the Delaware Law, Acquisition shall be merged with and into the Company.
Following the Merger, the separate corporate existence of Acquisition shall
cease. The Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Acquisition.
SECTION 2.02 Effective Time. As soon as practicable after the
--------------
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, the parties hereto shall file a certificate of merger or certificate of
ownership and merger with the Secretary of State of the State of Delaware, and
take all such other and further actions as may be required by law to make the
Merger effective. The Merger shall become effective at such time as the
certificate of merger or certificate of ownership and merger is duly filed with
the Secretary of State of the State of Delaware (the "Effective Time").
SECTION 2.03 Effects of the Merger. The Merger shall have the effects set
---------------------
forth in the Delaware Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and
5
<PAGE>
Acquisition shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Acquisition shall become the debts, liabilities
and duties of the Surviving Corporation.
SECTION 2.04 Certificate of Incorporation and By-Laws. (a) Subject to
----------------------------------------
Section 6.06(b) hereof, the Restated Certificate of Incorporation of the Company
in effect immediately prior to the Effective Time shall be amended at the
Effective Time to read as does the Certificate of Incorporation of Acquisition
immediately prior to the Effective Time, except that the name of the Surviving
Corporation as set forth in such Certificate of Incorporation shall be
"TIE/communications, Inc."
(b) Subject to Section 6.06(b) hereof, the By-Laws of Acquisition in effect
immediately prior to the Effective Time shall be the By-Laws of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 2.05 Directors. The directors of the Company immediately prior to
---------
the Effective Time shall be the initial directors of the Surviving Corporation,
each to hold office from the Effective Time in accordance with the Certificate
of Incorporation and By-Laws of the Surviving Corporation and until his or her
successor is duly appointed and qualified.
SECTION 2.06 Officers. The officers of the Company immediately prior to
--------
the Effective Time shall be the officers of the Surviving Corporation and will
hold office from the Effective Time until their respective successors are duly
elected or appointed and qualified in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation.
SECTION 2.07 Conversion of Securities. At the Effective Time, by virtue
------------------------
of the Merger and without any action on the part of Parent, Acquisition, the
Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be cancelled pursuant to Section
2.07(b) hereof and Dissenting Shares (as hereinafter defined)), shall be
cancelled and extinguished and be converted into the right to receive the
Per Share Amount, in cash, without any interest thereon, upon surrender of
the certificate(s) that formerly evidenced such Shares in the manner
provided in Section 3.02 hereof.
(b) Each Share issued and outstanding immediately prior to the
Effective Time and owned by Parent or Acquisition or any direct or indirect
subsidiary of Parent or Acquisition, or which is held in the treasury of
the Company or any of its subsidiaries, shall be cancelled and retired and
no payment shall be made without respect thereto.
(c) Each share of common stock, par value $.01 per share, of
Acquisition issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $.10 per share, of the
Surviving Corporation.
6
<PAGE>
ARTICLE III.
DISSENTING SHARES; EXCHANGE OF SHARES
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
-----------------
Agreement to the contrary, Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such Shares in accordance with Section 262 of the Delaware Law (collectively,
the "Dissenting Shares") shall not be converted into a right to receive the Per
Share Amount unless such holder fails to perfect or withdraws or otherwise loses
his right to appraisal under the Delaware Law. Such stockholders shall be
entitled to receive payment of the appraised value of such Shares in accordance
with Section 262 of the Delaware Law, except all Dissenting Shares held by
stockholders who have failed to perfect or who effectively shall have withdrawn
or lost their right to appraisal of such Dissenting Shares shall be deemed to
have been converted as of the Effective Time into a right to receive the Per
Share Amount without interest thereon, upon surrender, in the manner provided in
Section 3.02 hereof, of the certificate(s) that formerly evidenced such Shares.
The Company shall provide Parent (i) prompt notice of and copies of any demands
received by the Company for appraisal of Shares, withdrawals of such demands,
and any other instruments served pursuant to the Delaware Law and received by
the Company and, (ii) prior to the Effective Time, the right to direct all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 3.02 Exchange of Certificates. (a) Prior to the Effective
------------------------
Time, a bank or trust company shall be designated by Parent which shall be
reasonably acceptable to the Company (the "Exchange Agent") to act as exchange
agent in effecting the exchange of the Per Share Amount for certificates (the
"Certificates") that, immediately prior to the Effective Time, evidenced Shares
entitled to payment pursuant to Section 2.07(a) hereof. As soon as practicable
after the Effective Time, the Surviving Corporation shall instruct the Exchange
Agent to mail or otherwise deliver to each record holder, immediately prior to
the Effective Time, of an outstanding Certificate or Certificates which
immediately prior to the Effective Time evidenced Shares, a letter of
transmittal and instructions for use in effecting the surrender of the
Certificates for payment thereof (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery to the Exchange Agent and shall be in such form and have such
other provisions as Parent may reasonably specify). Upon the surrender of each
such Certificate, together with a duly executed letter of transmittal and such
other customary documents as may be required pursuant to the instructions, the
Exchange Agent shall pay the holder of such Certificate an amount in cash equal
to the Per Share Amount multiplied by the number of Shares formerly evidenced by
such Certificate, in exchange therefor, and such Certificate shall forthwith be
cancelled. Until so surrendered and exchanged, each such Certificate (other
than Certificates representing Dissenting Shares or Shares held by Parent,
Acquisition or the Company, or any direct or indirect subsidiary thereof) shall
represent solely the right to receive the Per Share Amount multiplied by the
number of Shares formerly evidenced by such Certificate. No interest shall be
paid or accrue on the Per Share Amount. If the Per Share Amount (or any portion
thereof) is to be delivered to any person other than the person in whose name
the Certificate evidencing Shares surrendered in exchange therefor is
registered, it shall be a condition to such exchange that the Certificate so
surrendered shall be
7
<PAGE>
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the payment of the Per Share Amount to a
person other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not applicable. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to Shares, except as
otherwise provided herein or by law.
(b) At or before the Effective Time, Parent shall (or shall cause
Acquisition to) deposit in trust with the Exchange Agent, in immediately
available funds, the aggregate Per Share Amount to which holders of Shares shall
be entitled at the Effective Time pursuant to Section 2.07(a) hereof (the
"Fund"). At the direction of Parent, the Exchange Agent may invest portions of
the Fund in any of (i) readily marketable obligations of the United States or
any agent or instrumentality thereof or obligations unconditionally guaranteed
by the government of the United States; (ii) certificates of deposit of or time
deposits with any commercial bank (including the Exchange Agent) that has
combined capital and surplus of at least $500,000,000; (iii) commercial paper
issued by any corporation which is rated at least "P-1" by Moody's Investors
Service, Inc. or "A-1" by Standard & Poor's Corporation; or (iv) money market
mutual funds investing in obligations of the type described in subclauses (i),
(ii) or (iii) hereof. Any earnings resulting from, or interest or income
produced by, such investments shall be paid to the Surviving Corporation as and
when requested by the Surviving Corporation.
(c) Promptly following the date which is one (1) year after the
Effective Time, the Exchange Agent shall deliver to the Surviving Corporation
all cash and other documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly evidencing a Share may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Per Share Amount multiplied by the number of Shares formerly
evidenced by such Certificate, without any interest or dividends thereon.
(d) At and after the Effective Time, the stock transfer records of the
Company shall be closed, and there shall be no transfers on the stock transfer
books of the Company of any Shares. If, after the Effective Time, Certificates
formerly representing Shares are presented to the Surviving Corporation or the
Exchange Agent, they shall be cancelled and exchanged for the Per Share Amount
multiplied by the number of Shares formerly evidenced by such Certificate, as
provided in this Article III, subject to applicable law in the case of
Dissenting Shares.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Acquisition as
follows:
SECTION 4.01 Organization and Qualification. (a) The Company is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as now being conducted, except
8
<PAGE>
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not have a Material
Adverse Effect (as hereinafter defined). The Company has heretofore delivered
to Parent or Acquisition accurate and complete copies of the certificate of
incorporation and by-laws of the Company, as currently in effect. When used in
connection with the Company or any of its subsidiaries, the term "Material
Adverse Effect" means any change or effect that, individually or when taken
together with all other such changes or effects, is or would reasonably be
likely to be materially adverse to the business, assets, results of operations
or financial condition of the Company and its subsidiaries, taken as a whole.
For purposes of this Agreement, the term "subsidiary" of the Company shall mean
each corporation or other entity in which the Company owns or controls, directly
or through one or more subsidiaries, 50 percent or more of the stock or other
interests having general voting power in the election of directors or persons
performing similar functions.
(b) The Company is duly qualified or licensed and in good standing to
do business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it make such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, individually or in
the aggregate, have a Material Adverse Effect.
SECTION 4.02 Subsidiaries. (a) The subsidiaries of the Company are
------------
listed on Schedule 4.02 hereto together with, as to each subsidiary, a list
identifying (i) the jurisdiction of incorporation of such subsidiary, (ii) each
jurisdiction in which such subsidiary is qualified to conduct business, (iii)
each jurisdiction in which such subsidiary has an office or conducts business.
Except as set forth on Schedule 4.02 hereto, each subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has heretofore delivered
to Parent or Acquisition accurate and complete copies of the certificates of
incorporation and by-laws or equivalent organizational documents of each
subsidiary of the Company, each as currently in effect. Each subsidiary is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it make such qualification or licensing necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as set forth in Schedule 4.02 hereto, the Company is,
directly or indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of its subsidiaries. Except as set
forth on Schedule 4.02 hereto, each outstanding share of capital stock of each
subsidiary of the Company is duly authorized, validly issued, fully paid and
nonassessable and to the extent owned by the Company or any subsidiary of the
Company is free and clear of any security interest, claim, lien, charge,
encumbrance, pledge, option, right of first refusal, limitation on voting rights
or agreement of any kind. There are no proxies with respect to any shares of
capital stock of any subsidiary of the Company to the extent owned by the
Company or any subsidiary of the Company, and no equity securities of any of its
subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe
9
<PAGE>
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
<PAGE>
Law; (ii) compliance with any applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"); (iii) compliance
with any applicable requirements of the Exchange Act; and (iv) compliance with
any applicable state securities, takeover or "blue sky" laws; and (v) compliance
with any applicable requirements of the Investment Canada Act of 1985 and the
Competition Act (Canada). Except for consents, approvals, licenses,
accreditations, permits, franchises, authorizations or orders currently held by
the Company or its subsidiaries, the conduct by the Surviving Corporation of the
business of the Company and its subsidiaries in the same manner as now conducted
by the Company and its subsidiaries requires no consent, approval, license,
accreditation, permit, franchise, authorization or order of or notice or filing
with any domestic or foreign governmental commission, board or other regulatory
body.
SECTION 4.05 Non-Contravention. Except as set forth on Schedule 4.05
-----------------
hereto, neither the execution and delivery of this Agreement by the Company nor
the consummation of the transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof will (i) violate, conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the loss of a material benefit under, or give to others any right
of termination, amendment, acceleration or cancellation of, or result in a right
of termination or acceleration under, or result in the creation of any mortgage,
pledge, security interest, claim, encumbrance or lien of any kind (a "Lien")
upon any of the properties or assets of the Company or any of its subsidiaries
under any of the terms, conditions or provisions of (x) the certificates or
articles of incorporation or by-laws or similar organizational documents of the
Company or any of its subsidiaries, or (y) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties or assets may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in Section 4.04 hereof, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its subsidiaries or any of their respective
properties or assets, except, in the case of clause (i) above, for such
violations, conflicts, breaches, defaults, losses, terminations, accelerations
or creations of Liens which would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 4.06 SEC Reports. The Company has filed all forms, reports
-----------
and documents required to be filed with the SEC since July 1, 1991
(collectively, the "SEC Reports"), each of which, as heretofore amended, has
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
American Stock Exchange, Inc. As of their respective dates, and except as
disclosed in an amendment to an SEC Report or in a subsequently filed SEC
Report, none of the SEC Reports, including, without limitation, any financial
statements or schedules included therein, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the Company included in the SEC Reports were prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated (except as may be noted
therein) and each fairly presents the consolidated financial position of the
Company and its subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for
11
<PAGE>
the periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements). Except as and to the extent set
forth in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "1994 10-K"), or in its Quarterly Reports on Form 10-Q
filed since that date, neither the Company nor any subsidiary has any liability
or obligation of any nature whatsoever (whether due or to become due, accrued,
fixed, contingent, liquidated, unliquidated or otherwise) that would be required
by GAAP to be reflected on a consolidated balance sheet (or in the applicable
notes thereto) of the Company and its subsidiaries other than liabilities or
obligations which arose in the ordinary course of business since such date and
which do not or would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 4.07 Absence of Certain Changes. Since December 31, 1994,
--------------------------
except as disclosed in the SEC Reports filed thereafter or as set forth on
Schedule 4.07 hereto, the Company and its subsidiaries have not (i) suffered any
Material Adverse Effect, (ii) changed their accounting methods, principles or
practice or (iii) declared, set aside or authorized any dividend or other
distribution in respect of any capital stock of the Company or any of its
subsidiaries or any redemption, purchase or other acquisition of any of their
respective securities, except for any dividend or distribution paid or payable
by a wholly-owned subsidiary of the Company to the Company or another wholly-
owned subsidiary of the Company. Since December 31, 1994, except as disclosed
in the SEC Reports filed thereafter or except as set forth on Schedule 4.07
hereto, the Company has conducted its business and operations in the ordinary
course of business consistent with past practice.
SECTION 4.08 Compliance with Applicable Laws. Except as disclosed in
-------------------------------
the SEC Reports, the businesses and operations of the Company and its
subsidiaries are not being conducted in violation of or conflict with any law,
ordinance, order, rule or regulation of any domestic or foreign public body or
authority, except for possible violations which do not, and, insofar as
reasonably can be foreseen, in the future will not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 4.09 Employee Benefits and Compensation. Schedule 4.09
----------------------------------
hereto sets forth all of the Company's individual employment agreements and any
other plans, programs or arrangements (whether written or oral), covering any
individual, category of individuals or all employees generally, including,
without limitation, any qualified or non-qualified retirement or supplemental
retirement plan, employee benefit plan, incentive, bonus or other compensation
plan or program or any stock option, stock bonus or stock purchase plan or
program (collectively, the "Benefits Arrangements"). The Company has heretofore
made available to Parent or Acquisition true, correct and complete copies of all
Benefit Arrangements. Except as identified on Schedule 4.09 hereto, no Benefit
Arrangement is a "multi employer plan" (within the meaning of Section 3(37) or
Section 4011(a)(3) of Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) or a "multiple employer plan" (within the meaning of
Section 4064 of ERISA or Section 413(c) of the Internal Revenue Code of 1986, as
amended (the "Code")), and neither the Company nor any of its subsidiaries has a
current or potential liability or obligation, whether direct or indirect, with
respect to any multi employer plan or multiple employer plan. Except as set
forth in the SEC Reports or except as set forth in Schedule 4.09 hereto, (i)
each Benefit Arrangement intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service (the "IRS") that it is so qualified and nothing has occurred since the
date of such letter
12
<PAGE>
that could reasonably be expected to affect the qualified status of such plan,
(ii) each Benefit Arrangement has been operated or administrated in all material
respects in accordance with its terms and the requirements of applicable law,
(iii) neither Company nor any of its subsidiaries has incurred any direct or
indirect liability under, arising out of or by operation of ERISA, in connection
with the termination of, or withdrawal from any Benefit Arrangement or other
retirement plan or arrangement, and, to the knowledge of the Company, no fact or
event exists which could reasonably be expected to give rise to any such
liability, (iv) no breach of fiduciary duty, prohibited transaction, or
"reportable event" (within the meaning of Section 4043(b) of ERISA) has occurred
with respect to which the Company, any subsidiary or any Benefit Arrangement may
be liable or otherwise materially damaged, (v) all contributions, premiums, and
other payment obligations with respect to any Benefit Arrangement (A) have been
accrued on the Company's consolidated financial statements in accordance with
GAAP and, to the extent due, have been made on a timely basis and (B) meet the
requirements of deductibility under the Code, and (vi) with respect to each
Benefit Arrangement which provides welfare benefits of the type described in
Section 3(1) of ERISA: (X) no such Benefit Arrangement provides medical or
death benefits with respect to current or former employees, directors or
consultants of the Company and the subsidiaries beyond their termination of
employment, other than coverage mandated by Sections 601-608 of ERISA and
4980B(f) of the Code, (Y) each such Benefit Arrangement has been administered in
material compliance with Sections 601-608 of ERISA and 4980B(f) of the Code, and
(Z) no such Benefit Arrangement has reserves, assets, surpluses or prepaid
premiums except as disclosed in the financial statements of the Company. Except
as set forth in the SEC Reports or except as set forth on Schedule 4.09 hereto,
since December 31, 1994, the Company has not increased or established any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plans, or any other increase
in the compensation payable to or to become payable to any officers or key
employees of the Company or any of its subsidiaries other than normal increases
in the ordinary course of business consistent with past practice that do not, in
the aggregate, result in a material increase in benefits or compensation
expenses to the Company or its subsidiaries or an increase in excess of 5% in
the case of any individual. Notwithstanding the foregoing and except for
compensation based upon the payment of commissions pursuant to commission
schedules previously made available to Parent or Acquisition by the Company,
Schedule 4.09 sets forth a list of all increases to compensation (whether with
respect to salary or benefits) since March 31, 1995 of all employees of the
Company or any of its subsidiaries whose total fixed base
compensation prior to such date exceeded $75,000. The Company has heretofore
delivered to Parent or Acquisition its reasonable estimate (individually and in
the aggregate) of all amounts (whether currently payable or payable in the
future) payable as a result of a change in control of the Company to which
current or former officers, directors or employees of the Company or its
subsidiaries are entitled or would become entitled after the Offer or the
Merger, under the terms of any Benefits Arrangements other than any amounts
payable from any trust, fund, annuity or other insurance contract, existing as
of the date hereof the proceeds of which are segregated to pay such amounts.
SECTION 4.10 Taxes. Each of the Company and the subsidiaries has
-----
duly filed, on a timely basis, with the appropriate federal, state, local and
foreign governmental authorities all tax returns and reports required to be
filed by it with respect to any material taxes of any kind and has paid all
taxes shown thereon as owing, and each such return or report is true, complete
13
<PAGE>
and accurate in all material respects; provided, however, that as to foreign
taxes of any nature and as to taxes other than income taxes, such representation
is made to the best knowledge of the Company's management after due inquiry.
Except as expressly set forth in the notes accompanying the financial statements
of the Company contained in the 1994 10-K, none of the Company and its
subsidiaries has waived any statute of limitations with respect to any income
tax matter or agreed to any extension of time with respect to any income tax
assessment or deficiency. None of the Company and its subsidiaries is a party
to any tax allocation or sharing agreement. None of the Company or its
subsidiaries (i) has been a member of an affiliated group filing a consolidated
federal income tax return (other than a group the common parent of which was the
Company) or (ii) has any liability for the taxes of any person, (other than the
Company and its subsidiaries) under Treas. Reg. (S) 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise. The changes, accruals and reserves for taxes reflected
on the June 30, 1995 balance sheet of the Company contained in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended on such date are
believed to be adequate for the payment of all material liabilities of, or
payable by, the Company and its subsidiaries for taxes (whether disputed or
not), including interest, penalties and additions to tax, accruing through the
date of such balance sheet. Except as set forth on Schedule 4.10 hereto, there
are no claims, actions or assessments relating to taxes that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 4.11 Trademarks, Patents and Copyrights. The Company and its
----------------------------------
subsidiaries own or possess adequate licenses or other valid rights to use all
material patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and its subsidiaries as currently conducted or as contemplated to be conducted,
and except as set forth on Schedule 4.11 hereto, the Company is unaware of any
assertion or claim challenging the validity of any of the foregoing which could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Except as set forth on Schedule 4.11 hereto, the conduct of the
business of the Company and its subsidiaries as currently conducted does not
conflict in any way with any patent, patent right, license, trademark, trademark
right, trade name, trade name right, service mark or copyright of any third
party that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. To the best knowledge of the Company's
management after due inquiry, there are no infringements of any proprietary
rights owned by or licensed by or to the Company or any of its subsidiaries
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
SECTION 4.12 Litigation. Except as and to the extent set forth in
----------
the 1994 10-K or its Quarterly Reports on Form 10-Q filed since that date or
except as set forth on Schedule 4.12 hereto, there is no suit, action, claim or
proceeding pending or, to the knowledge of the Company or its subsidiaries,
threatened against the Company or any of its subsidiaries, which, if adversely
determined, individually or in the aggregate with other such suits, actions,
claims or proceedings, could (i) have a Material Adverse Effect, (ii) materially
and adversely affect the Company's ability to perform its obligations under this
Agreement or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement.
14
<PAGE>
SECTION 4.13 Inventory. (a) The values at which all inventories are
---------
carried on the books of the Company and its subsidiaries as of June 30, 1995
(copies of which books previously have been made available to Parent or
Acquisition), including, without limitation, the reserves with respect thereto,
have been calculated in accordance with GAAP consistent with past practices or
in a manner which results in values determined on a basis more conservative than
with the prior practices of the Company.
(b) Consistent with past practices, taking into account the reserves
for inventory, the inventories reflected on the books of the Company and its
subsidiaries are as of June 30, 1995: (i) in all material respects in good and
merchantable condition; (ii) generally usable for the purposes for which they
are intended, or salable in the ordinary course of business; and (iii) not
excessive in material respects in kind or amount in the context of the business
or of the Company and its subsidiaries taken as a whole. The inventories
reflected on the books of the Company and its subsidiaries as of June 30, 1995
include any and all inventory held on consignment by third parties, all of which
consignment arrangements are described on Schedule 4.13 hereto.
SECTION 4.14 Expenses. All fees and expenses for professional
--------
advisors incurred by the Company and its subsidiaries in connection with this
Agreement and the transactions contemplated hereby, whether incurred before or
after the date hereof and through and including the date on which the Offer is
consummated, are not reasonably expected to exceed $200,000.
SECTION 4.15 Proxy Statement; Schedule 14D-9; Schedule 14D-1; Other
------------------------------------------------------
Filings. None of the information supplied by Company in writing for inclusion
- -------
in the Proxy Statement, the Schedule 14D-9, the Schedule 14D-1 or any Other
Filings will, at the respective times that the Proxy Statement, the Schedule
14D-9, the Schedule 14D-1 or any Other Filings or any amendments or supplements
thereto are filed with the SEC and, in the case of the Proxy Statement, the
Schedule 14D-1 or any Other Filings, at the time that it or any amendment or
supplement thereto is mailed to the Company's stockholders, at the time of the
Stockholders' Meeting (as hereinafter defined) or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
SECTION 4.16 Certain Contracts. Except as set forth on Schedule 4.16
-----------------
hereto, as of the date hereof, the Company has not (i) breached any material
obligation or covenant of the Company under that certain Equipment Credit
Agreement, dated September 17, 1993, by and among the Company and Northern
Telecom Inc., including, without limitation the failure of the Company to meet
any volume purchase commitments thereunder, or (ii) taken any action which has
or could reasonably be expected to result in the inability of the Company to
receive any equipment credits payable thereunder based upon any such action.
SECTION 4.17 Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding Shares is the only vote of the holders of any class
or series of Company capital stock necessary to approve the Merger.
SECTION 4.18 Brokerage. Except as previously disclosed to
---------
Acquisition in writing, no broker, finder, agent or investment banker is
entitled to any brokerage, finder's or other fee
15
<PAGE>
or commission payable by the Company in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
the Company.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Each of Parent and Acquisition represents and warrants to the Company
as follows:
SECTION 5.01 Organization. Each of Parent and Acquisition is a
------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and authority to own, lease
and operate its respective properties and to carry on its respective business as
now being conducted, except where the failure to be so organized, existing and
in good standing or to have such power and authority would not in the aggregate
have a Purchaser Material Adverse Effect (as hereinafter defined). Parent and
Acquisition have heretofore delivered to the Company accurate and complete
copies of their respective certificates of incorporation and by-laws, in each
case as currently in effect. When used in connection with Parent and
Acquisition, the term "Purchaser Material Adverse Effect" means any change or
effect that is materially adverse to the assets or financial condition of Parent
and Acquisition, taken as a whole, or in their respective ability to consummate
the transactions contemplated hereby.
SECTION 5.02 Capitalization. As of the date hereof, the authorized
--------------
capital stock of Parent consists of 100 shares of Common Stock, par value $.01,
per share, of which, as of the date hereof, 10 shares are issued and
outstanding. As of the date hereof, all outstanding shares of capital stock of
Parent are owned by SP Investments Inc. ("SPII") or its controlling stockholders
or entities controlled by such persons. As of the date hereof, the authorized
capital stock of Acquisition consists of 100 shares of common stock, par value
$.01, per share, of which, as of the date hereof, 100 shares are issued and
outstanding. As of the date hereof, all the outstanding shares of capital stock
of Acquisition are owned by Parent. All the issued and outstanding shares of
capital stock of Parent and Acquisition have been validly issued and are fully
paid, nonassessable and free of preemptive rights. Except as described above,
there are outstanding (i) no shares of capital stock or other voting securities
of Parent or Acquisition, (ii) no securities of Parent or Acquisition
convertible into or exchangeable for shares of capital stock or voting
securities of Parent or Acquisition, and (iii) except as set forth on Schedule
5.02 hereto, no options, warrants or other rights to acquire from Parent or
Acquisition, and no obligation of Parent or Acquisition to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Parent or Acquisition.
SECTION 5.03 Authority Relative to this Agreement. Each of Parent
------------------------------------
and Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
board of directors of Acquisition and Parent and by Parent as the sole
stockholder of Acquisition, and no other corporate proceedings on the part of
Parent or Acquisition are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Acquisition and constitutes the
valid, legal and binding obligations of each of
16
<PAGE>
Parent and Acquisition, enforceable against each of Parent and Acquisition in
accordance with its terms.
SECTION 5.04 Proxy Statement; Schedule 14D-9; Other Filings. None of
----------------------------------------------
the information supplied by Parent or Acquisition in writing for inclusion in
the Proxy Statement, the Schedule 14D-9, or any Other Filings will, at the
respective times that the Proxy Statement, the Schedule 14D-9 or any Other
Filings or any amendments or supplements thereto are filed with the SEC and, in
the case of the Proxy Statement or any Other Filings, at the time that it or any
amendment or supplement thereto is mailed to the Company's stockholders, at the
time of the Stockholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
SECTION 5.05 Financing. Parent has obtained written commitments from
---------
(i) NationsBank of Georgia, N.A. to provide, subject to the terms and conditions
set forth therein, financing in an amount equal to $20,000,000, and (ii) SPII to
provide, subject to the terms and conditions set forth therein, capital
contributions and/or financing in an amount up to $18,000,000, which amounts,
taken together, are sufficient to enable Parent to consummate the Offer and the
Merger at the Per Share Amount as contemplated hereby (collectively, the
"Financing"). Parent has delivered copies to the Company of the written
commitments referred to above. Parent shall (i) cause the initial stockholders'
equity in Acquisition to equal or exceed $8,000,000, (ii) cause the initial
stockholders' equity in the Surviving Corporation to equal or exceed $8,000,000,
and (iii) from and after the date on which the Offer is consummated to the date
which is ninety-one (91) days following the date on which payment in full is
made on all accounts payable of the Company outstanding as of the date on which
the Offer is consummated as identified on a list to be prepared and delivered by
the Company to Parent promptly following the date on which the Offer is
consummated, cause the Surviving Corporation not to declare, set aside or pay
any dividend (other than dividends in the form of capital stock) or other
distributions in respect of the capital stock of the Surviving Corporation or
redeem, repurchase or otherwise acquire any of the securities of the Surviving
Corporation if any such action would result in the stockholders' equity falling
below $8,000,000.
SECTION 5.06 No Prior Activities. Except for obligations or
-------------------
liabilities incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions contemplated
hereby, including, without limitation, the Financing, Acquisition has neither
incurred any obligations or liabilities nor engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person or entity. To the knowledge of Parent and
Acquisition, (i) no judgment, ruling, order, writ, injunction, decree, statute,
rule or regulation applicable to Parent, Acquisition or the controlling
stockholders of Parent (collectively the "Acquiring Persons"), and (ii) no note,
bond, mortgage, indenture, contract, lease, license, permit, franchise or other
instrument to which any Acquiring Person is a party or by which any of its
material assets is bound, would as the result of the execution and delivery of
this Agreement or the Stockholders Option Agreement by Parent and Acquisition,
as applicable, and the consummation of the transactions contemplated hereby and
thereby, reasonably be expected to result in any of the effects described in
clause (iv)(a) of Annex A hereto.
17
<PAGE>
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
<PAGE>
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
<PAGE>
(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.
20
<PAGE>
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
<PAGE>
and subject to substantially the same terms and conditions as the portion of the
Financing that has become unavailable; and (v) the execution of any additional
instruments necessary to consummate the transactions contemplated hereby. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party hereto shall take all such necessary action.
SECTION 6.04 Consents. Each of Parent, Acquisition and the Company
--------
will use its reasonable best efforts to obtain waivers, permits, consents and
approvals and to effect all registrations, filings and notices with or to all
third parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement (including, without limitation, any
consents or approvals set forth on Schedule 4.05 hereto) and necessary to permit
the continued operations of the Surviving Corporation on a basis substantially
equivalent to the operations of the Company prior to the Effective Time.
SECTION 6.05 Public Announcements. Parent and Acquisition, on the
--------------------
one hand, and the Company, on the other hand, will consult with, and provide an
advance copy of the proposed text to, the other party before issuing any press
release or otherwise making any public statements or mailing any communications
to any stockholder with respect to the transactions contemplated by this
Agreement, including, without limitation, the Offer and the Merger, and shall
not issue any such press release, make any such public statement or mail any
such communication without the prior consent of the other party, except as may
be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange; provided that, in such event it
has used all reasonable efforts to consult with the other party and to obtain
such party's consent but has been unable to do so in a timely manner.
SECTION 6.06 Insurance and Indemnification. (a) In the event of any
-----------------------------
threatened or actual claim, action, suit, proceeding or investigation, whether
civil, criminal or administrative, including, without limitation, any such
claim, action, suit, proceeding or investigation in which any of the present or
former officers or directors (the "Managers") of the Company is, or is
threatened to be, made a party by reason of the fact that such person is or was
a director, officer, or employee of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether
before or after the Effective Time, the parties hereto agree to cooperate and
use their best efforts to defend against and respond thereto. From and after
the Effective Time, the Surviving Corporation shall indemnify and hold harmless,
as and to the full extent permitted by the Delaware Law, as it exists or may
hereafter be amended, each such Manager against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement), reasonably incurred or suffered
by such person in connection with any such claim, action, suit, proceeding or
investigation, and in the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) subject
to the last sentence of this paragraph (a), the Managers may retain counsel
satisfactory to them (provided such counsel is reasonably acceptable to the
Surviving Corporation), and the Surviving Corporation shall pay all reasonable
fees and expenses of no more than one such counsel (and no more than one local
counsel) for the Managers promptly as statements therefor are received, and (ii)
the Surviving Corporation shall use its best efforts to assist in the vigorous
defense of any such matter; provided that, the Surviving Corporation shall not
be liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld); and provided,
22
<PAGE>
further, that the Surviving Corporation shall have no obligation hereunder to
any Manager when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and non-appealable,
that indemnification of such Manager in the manner contemplated hereby is
prohibited by applicable law. Any Manager wishing to claim indemnification
under this Section 6.06(a), upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Surviving Corporation
thereof and shall deliver to the Surviving Corporation the undertaking
contemplated by Section 145(e) of the Delaware Law. The Managers as a group may
retain no more than one law firm (in addition to one local counsel) to represent
them with respect to each such matter unless there is under applicable standards
of professional conduct, a conflict on a significant issue between the positions
of any two or more Managers, in which event such additional counsel as may be
required may be retained.
(b) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation set forth in the Company's Restated Certificate of Incorporation or
By-Laws on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of five years after the Effective
Time in any manner that would adversely affect the rights thereunder of any
present or former directors, officers, employees, fiduciaries or agents of the
Company (collectively, the "Indemnified Parties") unless such modification is
required by law and the Surviving Corporation shall cause to be maintained (i)
for not less than five years after the Effective Time, the provisions with
respect to indemnification in the certificates or articles of incorporation, by-
laws or similar organizational documents of any of the Company's subsidiaries as
in effect as of the date hereof, and (ii) for not less than the shorter of five
years or the termination date specified therein (if any), the indemnification
agreements entered into between the Company and any of the Indemnified Parties,
in each case, with respect to matters occurring on or prior to the Effective
Time. For a period of three years after the Effective Time, Surviving
Corporation shall cause to be maintained the current policies of the directors'
and the officers' liability insurance maintained by the Company (provided that
the Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous) with
respect to matters occurring prior to the Effective Time to the extent
available; provided that, in no event shall Surviving Corporation be required to
expend to maintain or procure insurance coverage pursuant to this Section
6.06(b) any amount per annum in excess of 150% of the aggregate premiums paid or
payable in 1995 on an annualized basis for such purpose (which the Company
represents and warrants to be $131,500); provided, however, that in the event
-------- -------
the payment of such amount for any year is insufficient to maintain such
insurance, the Surviving Corporation shall purchase as much insurance as may be
purchased for the amount indicated.
SECTION 6.07 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent or Acquisition, and Parent or Acquisition shall give
prompt notice to the Company, of (i) any change or event having, or which,
insofar as can reasonably be foreseen, would have a Material Adverse Effect,
(ii) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at or as of the Effective Time, and (iii) any material failure of the Company,
Parent or Acquisition, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
-------- -------
Section 6.07
23
<PAGE>
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 6.08 Prepayment. At such times following consummation of the
----------
Offer as Acquisition may request, the Company will to the extent of available
working capital or the extent capital is contributed to the Company by Parent or
Acquisition, in the manner and to the extent permitted by the instruments
governing the same, prepay, redeem or retire such indebtedness of the Company
and its subsidiaries as Acquisition may request.
SECTION 6.09 Acquisition Proposals. (a) Neither the Company nor any
---------------------
of its subsidiaries will, directly or indirectly, through any officer, director,
employee, representative or agent of the Company or any of its subsidiaries,
initiate, solicit or encourage (including by way of furnishing non-public
information or assistance) or take any action to knowingly facilitate, any
inquiries or the making of any proposals regarding any merger, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving the
Company or any of its subsidiaries (any of the foregoing inquiries or proposals
being referred to herein as an "Acquisition Proposal"). The Company represents
and warrants that (i) as of the date hereof it has ceased any and all
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and (ii) prior to the Effective Time, the
Company will not release, terminate or modify the terms of any existing
confidentiality agreement without the prior written consent of Acquisition
except as required by applicable law or in good faith (upon advice of counsel)
that such action is required in order that the Board discharge its fiduciary
duties. Nothing contained in this Section 6.09 shall prevent the Board from
considering, negotiating, approving and recommending to the stockholders of the
Company a bona fide Acquisition Proposal not solicited in violation of this
Agreement, provided the Board determines in good faith (upon advice of counsel)
that it is required to do so in order to discharge its fiduciary duties.
(b) The Company shall immediately notify Acquisition after receipt of
any Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for non-public information relating to the Company or
any of its subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any subsidiary by any
person or entity that informs the Board or such subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice to
Acquisition shall be made orally (within one business day) and in writing (as
soon thereafter as practicable), and shall indicate whether the Company is
providing or intends to provide the person making the Acquisition Proposal with
access to information concerning the Company.
(c) If the Board receives a request for non-public information by a
person who makes a bona fide Acquisition Proposal, and the Board determines in
good faith (upon the advice of counsel) that it is required to cause the Company
to act as provided in this Section 6.09 in order to discharge properly its
fiduciary duties, then, provided the person making the Acquisition Proposal has
executed a confidentiality agreement substantially equivalent to the one then in
effect between the Company and Charles B. McNamee, the Company may provide such
person with access to information regarding the Company.
SECTION 6.10 HSR Act Filing. To the extent required by applicable
--------------
law, the respective ultimate parent entities of the Company and Parent and
Acquisition shall file
24
<PAGE>
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
<PAGE>
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
Parent and Acquisition agree that they will cause all Shares then owned by
them and their subsidiaries to be voted in favor of approval and adoption of
this Agreement and the transactions contemplated hereby.
(b) Notwithstanding the foregoing, in the event that Parent shall acquire
at least ninety percent (90%) of the outstanding Shares, the parties hereto
agree, at the request of Parent, to take all necessary and appropriate action to
cause the Merger to become effective (or, as contemplated by Section 2.01
hereof, to cause a merger of Acquisition (or any other direct or indirect
subsidiary of Parent) into the Company to become effective), as soon as
reasonably practicable after the expiration of the Offer, without a meeting of
the stockholders of the Company, in accordance with Section 253 of the Delaware
Law.
SECTION 6.13 Proxy Statement; Other Filings. The Proxy Statement will
------------------------------
comply in all material respects with applicable federal securities laws, except
that no representation is made by (i) the Company with respect to information
supplied by Parent or Acquisition in writing for inclusion in the Proxy
Statement, and (ii) Parent or Acquisition with respect to information supplied
by the Company in writing for inclusion in the Proxy Statement. As soon as
practicable after the date hereof, the Company and Parent shall promptly and
properly prepare and file any Other Filings. None of the information supplied
by the Company, Parent or Acquisition in writing for inclusion in the Proxy
Statement and the Other Filings and any amendments thereto to be filed with the
SEC by Parent or Acquisition and the Company in connection with the transactions
contemplated by this Agreement will, at the respective times that the Proxy
Statement and Other Filings or any amendments or supplements thereto are filed
with the SEC, at the time that the Proxy Statement or any amendment or
supplement thereto is mailed to the Company's stockholders, at the time of the
Stockholders' Meeting or at the Effective Time, contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE VII.
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party hereto to effect the Merger are subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) if required by the Delaware Law, this Agreement and the Merger
shall have been adopted and approved by the affirmative vote of the
stockholders of the Company by the requisite vote in accordance with the
Restated Certificate of Incorporation of the Company and the Delaware Law;
(b) no statute, rule, regulation, executive order, decree, judgment,
ruling or injunction (whether temporary, preliminary or permanent) shall
have been enacted, entered, promulgated or enforced by any United States
federal or state court or
26
<PAGE>
governmental authority which prohibits, restrains, enjoins or restricts the
consummation of the Merger; provided that the parties shall use their
reasonable best efforts to cause any such order, decree, judgment, ruling
or injunction to be vacated or lifted;
(c) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired; and
(d) Parent shall have purchased a number of Shares equal to or in
excess of seventy-five percent (75%) of the then issued and outstanding
Shares pursuant to the Offer, provided this condition shall be deemed
satisfied if Acquisition fails to accept for payment or to pay for any
Shares tendered pursuant to the Offer in violation of the terms hereof or
Annex A hereto.
SECTION 7.02 Conditions to Obligation of the Company to Effect the Merger.
-------------------------------------------------------------
The obligation of the Company to effect the Merger is further subject to (i)
each of Parent and Acquisition having performed in all material respects their
respective material obligations under this Agreement required to be performed by
it at or prior to the Effective Time pursuant to the terms hereof, (ii) each of
the representations and warranties of Parent and Acquisition contained in this
Agreement being true and correct as of the Effective Time as though made on and
as of the Effective Time, except for (a) changes permitted by this Agreement,
and (b) any failures which, individually or in the aggregate, would not have a
Purchaser Material Adverse Effect, and (iii) Company having received a
certificate from Parent signed by the chief executive officer of Parent, to the
effect of (ii)(a) and (ii)(b). The provisions of this Section 7.02 shall become
void and shall no longer have any effect in the event that Shares are purchased
pursuant to the Offer.
SECTION 7.03 Conditions to Obligation of Parent and Acquisition to Effect
------------------------------------------------------------
the Merger. The obligation of Parent and Acquisition to effect the Merger is
- ----------
further subject to (i) the Company having performed in all material respects
each of its obligations under this Agreement required to be performed by it at
or prior to the Effective Time pursuant to the terms hereof, (ii) each of the
representations and warranties of the Company contained in this Agreement being
true and correct as of the Effective Time as though made on and as of the
Effective Time, except for (a) changes permitted by this Agreement, and (b) any
failures which, individually or in the aggregate, would not have a Material
Adverse Effect, and (iii) Acquisition having received a certificate from the
Company signed by the chief executive officer of the Company, to the effect of
(ii)(a) and (ii)(b). The provisions of this Section 7.03 shall become void and
shall no longer have any effect in the event that Shares are purchased pursuant
to the Offer.
ARTICLE VIII.
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Merger
-----------
may be abandoned at any time by written notice, notwithstanding approval thereof
by the stockholders of the Company, but prior to the Effective Time:
27
<PAGE>
(a) by mutual written consent duly authorized by the Boards of
Directors of the Company and Parent;
(b) by Parent, Acquisition or the Company, if (i) the Effective Time
shall not have occurred on or before December 15, 1995 (provided that the
right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Effective
Time to occur on or before such date), (ii) any court of competent
jurisdiction in the United States or other United States governmental
authority shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
nonappealable, or (iii) any of the Trigger Events described in Section 8.03
hereof shall have occurred;
(c) by Parent or Acquisition, if due to an occurrence or circumstance
which would result in a failure to satisfy any of the conditions set forth
in Annex A hereto, Parent shall have (i) failed to commence the Offer on or
before September 12, 1995, (ii) terminated the Offer or the Offer shall
have expired without the purchase of Shares sufficient to satisfy the
condition set forth in Section 7.01(d) hereof, or (iii) failed to accept
for payment Shares sufficient to satisfy the condition set forth in Section
7.01(d) hereof pursuant to the Offer within 60 days following the
commencement of the Offer;
(d) by the Company, if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any of the conditions set forth in
Annex A hereto or otherwise, Parent shall have (A) failed to commence the
Offer on or before September 12, 1995, (B) terminated the Offer or the
Offer shall have expired without the purchase of Shares sufficient to
satisfy the condition set forth in Section 7.01(d) hereof or (C) failed to
accept for payment Shares sufficient to satisfy the condition set forth in
Section 7.01(d) hereof pursuant to the Offer with 60 days following the
commencement of the Offer, or (ii) all conditions set forth in Annex A
hereto have been satisfied or waived and Parent shall have failed to accept
for payment any Shares validly tendered and not withdrawn; or
(e) by Parent or Acquisition, upon a breach of any material
representation, warranty, covenant or agreement on the part of Company set
forth in this Agreement, or if any representation or warranty of Company
shall have become untrue, in either case, such that the condition set forth
in Section 7.03 hereof would be incapable of being satisfied on or before
December 15, 1995 (or as otherwise extended); provided that, in any case, a
willful breach shall be deemed to cause such conditions to be incapable of
being satisfied for purposes of this Section 8.01(e).
SECTION 8.02 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.01 hereof, this Agreement
shall forthwith become void and have no effect, without any liability on the
part of any party hereto or its affiliates, directors, officers or stockholders,
other than the provisions of this Section 8.02 and Sections 6.02(b) and 8.03.
Nothing contained in this Section 8.02 shall relieve any party from liability
for any willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
28
<PAGE>
SECTION 8.03 Fees and Expenses. (a) If (i) any corporation (including
-----------------
the Company or any of its subsidiaries or affiliates), partnership, person,
other entity or group (as defined in Section 13(d) of the Exchange Act) other
than Parent or any of its affiliates (collectively, "Persons") shall have
acquired or entered into any commitment or agreement to acquire, directly or
indirectly, at least 25% of the assets of the Company and its subsidiaries; or
(ii) the Company shall have entered into, or shall have publicly announced
its intention to enter into, an agreement or an agreement in principle with
respect to any Acquisition Proposal; or
(iii) any representation or warranty made by the Company in, or pursuant
to, this Agreement shall not have been true and correct in all material respects
when made and any such failure to be true and correct could reasonably be
expected to have a Material Adverse Effect or the Company shall have failed to
observe or perform in any material respect any of its obligations under this
Agreement and Acquisition has terminated the Agreement pursuant to Section 8.01
hereof; or
(iv) the Board shall have withdrawn or materially modified in a manner
adverse to Acquisition its approval or recommendation of the Offer, the Merger
or this Agreement in any such case whether or not such withdrawal or
modification is required by the fiduciary duties of the Board; or
(v) prior to the purchase of any Shares under the Offer, the Company shall
have received any Acquisition Proposal which the Board has determined and
publicly announced is more favorable to the Company's stockholders than the
transactions contemplated by this Agreement, whether or not such determination
is required by the fiduciary duties of the Board;
(each such event described in this subparagraph (a) being, a "Trigger Event"),
then the Company shall promptly, but in no event later than two days after the
termination of this Agreement pursuant to Section 8.01(b)(iii) hereof as the
result of the occurrence thereof, pay to Acquisition an amount equal to
$1,500,000, which amount is inclusive of all expenses of Acquisition and Parent.
(b) If (i) this Agreement is terminated for any reason other than as a
result of the Offer being terminated based upon the failure of the conditions
set forth in clauses (iii) or (iv)(b) of Annex A hereto, and (ii) neither Parent
nor Acquisition is in material breach of its material covenants and agreements
under this Agreement, then the Company shall, if no payment has been made
pursuant to Section 8.03(a) hereof, reimburse each of Parent, Acquisition and
their respective stockholders and affiliates (not later than two days after
submission of statements therefor) for all out-of-pocket expenses and fees
(including, without limitation, fees and expenses payable to all banks,
investment banking firms and other financial institutions and their respective
agents and counsel, for arranging or providing the Financing and structuring the
transaction and all fees of counsel, accountants, experts and consultants, to
Parent, Acquisition and their respective stockholders and affiliates) actually
incurred or accrued by it or on its behalf in connection with the Offer and the
Merger and the consummation of all transactions contemplated by this Agreement,
including the Financing, and actually incurred or accrued by banks, investment
banking firms and other financial institutions and assumed by Parent,
Acquisition or their respective stockholders or affiliates in connection with
the negotiation,
29
<PAGE>
preparation, execution and performance of this Agreement, the Financing and any
definitive financing agreements relating thereto up to a maximum of $750,000
(all of the foregoing being referred to collectively as the "Expenses").
(c)(i) If Parent does not accept for payment Shares pursuant to the Offer
on or prior to the date which is sixty (60) days following commencement of the
Offer, because of the failure of Parent to satisfy clause (iii) of Annex A
hereto, then Parent, within two days of any termination pursuant to Section
8.01(d) hereof, shall pay to the Company an amount equal to $750,000;
(ii) If this Agreement is terminated based upon a breach of any material
representation, warranty, covenant or agreement on the part of Acquisition or
Parent set forth in this Agreement (other than any representation, warranty or
covenant relating to the Financing which shall be governed solely by subsection
(c)(i) of this Section), then Parent, within two days of any termination
pursuant to Section 8.01(d) hereof, shall pay to the Company an amount equal to
$1,500,000;
(iii) SPII shall enter into an agreement acceptable to SPII and the
Company whereby SPII shall guarantee, among other things, the timely payment of
any amounts described in subclauses (i) and (ii) of this Section 8.03(c).
(d) Except as provided in Section 8.03(a), (b) and (c) hereof, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses
(including, in the case of the Company, the costs of printing the Schedule 14D-
9, the Proxy Statement and any Other Filings to be printed, and in each case all
exhibits, amendments or supplements thereto).
SECTION 8.04 Amendment. Subject to Section 1.03(c) hereof, this Agreement
---------
may be amended by action taken by the Company, Parent and Acquisition at any
time before or after adoption of the Merger by the stockholders of the Company
(if required by applicable law); provided that, after any such approval, no
amendment shall be made which decreases the Per Share Amount or which materially
adversely affects the rights of the Company's stockholders hereunder without the
approval of such stockholders; and, provided, further, that after consummation
of the Offer any amendment referred to in the foregoing provision shall require
approval of a majority of the Shares not beneficially owned by Parent,
Acquisition or any of their Affiliates. This Agreement may not be amended
except by an instrument in writing signed on behalf of the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c) hereof, at any
-----------------
time prior to the Effective Time, each party hereto may (i) extend the time for
the performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance by the other party with any of the agreements
or conditions contained herein. Any agreement on the part of either party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of either
party hereto to assert any of its rights hereunder shall not constitute a waiver
of such rights.
30
<PAGE>
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01 Nonsurvival of Representations and Warranties. The
---------------------------------------------
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
SECTION 9.02 Entire Agreement; Assignment. This Agreement, the Offer
----------------------------
Documents and the documents referenced in Sections 6.02(b) and 8.03(c)(iii)
hereof, constitute the entire agreement between the parties hereto with respect
to the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and shall not be assigned by operation of law or
otherwise; provided that, Parent may assign its rights and obligations to any
subsidiary of Parent, but no such assignment shall relieve Acquisition of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 9.03 Validity. If any provision of this Agreement, or the
--------
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
SECTION 9.04 Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile (with confirmation), or telex, or by registered or certified mail
(postage prepaid, return receipt requested), to the other party as follows:
If to Parent or Acquisition, to:
Charles B. McNamee
President
TIE Acquisition Co.
1201 Third Avenue
Suite 5400
Seattle, Washington 98101
Facsimile: (206) 628-5173
Telephone: (206) 628-8014
31
<PAGE>
with copies to:
Smith, Gambrell & Russell
Suite 3100, Promenade II
1230 Peachtree Street N.E.
Atlanta, Georgia 30309-3592
Attention: Bruce W. Moorhead, Jr., Esq.
Facsimile: (404) 815-3509
Telephone: (404) 815-3660
if to the Company, to:
Robert W. Webb
Vice President, Secretary and
General Counsel
TIE/communications, Inc.
Suite 1900
225 West Washington Street
Chicago, Illinois 60606
Facsimile: (312) 845-8769
Telephone: (312) 372-9500
with a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Suite 2200
Chicago, Illinois 60602
Attention: Charles Evans Gerber, Esq.
Facsimile: (312) 269-1747
Telephone: (312) 269-8050
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.05 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the law of the State of Delaware, without regard to
the principles of conflicts of law.
SECTION 9.06 Descriptive Headings. The descriptive headings herein
--------------------
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Exhibits, Schedules and Annexes. The Exhibits,
-------------------------------
Schedules and Annexes referred to in this Agreement shall be deemed an integral
part of this Agreement, as if fully set forth herein.
32
<PAGE>
SECTION 9.08 Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Sections 6.06, 6.11 and 9.02
hereof, nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.09 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
[The remainder of this page intentionally left blank.]
33
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its representatives thereunto duly authorized, all as
of the day and year first above written.
TIE/COMMUNICATIONS, INC.
By: /s/ George N. Benjamin III
--------------------------
George N. Benjamin III
President
TIE MERGER CO.
By: /s/ Charles B. McNamee
---------------------------
Charles B. McNamee
President
TIE ACQUISITION CO.
By: /s/ Charles B. McNamee
---------------------------
Charles B. McNamee
President
34
<PAGE>
ANNEX A
Notwithstanding any other provision of the Offer but subject to the
obligations of Parent and Acquisition pursuant to Section 6.03 of the Merger
Agreement, Parent shall not be required to accept for payment and may delay the
acceptance for payment of any Shares tendered, and may terminate the Offer and
not accept for payment any Shares tendered, if (i) any applicable waiting period
under the HSR Act shall not have expired or been terminated, (ii) the Minimum
Tender Condition shall not have been satisfied, (iii) Parent shall not have
obtained sufficient financing to enable it to purchase the Shares to be
purchased by it and to pay the fees and expenses incurred or to be incurred in
connection with the financing, or (iv) prior to the acceptance for payment of
Shares, any of the following conditions exist:
(a) any statute, rule, regulation, judgment, injunction (whether
temporary, preliminary or permanent), order or decree shall be enacted,
promulgated, issued, entered, or deemed applicable to (i) Parent,
Acquisition or any other affiliate of Parent or (ii) the Offer, the
Stockholders Option Agreement, this Agreement, or any transactions
contemplated hereby or the Merger, or any other action shall have been
taken by any government or governmental authority, domestic or foreign, (A)
making illegal, delaying beyond the date which is sixty (60) days following
the commencement of the Offer or otherwise directly or indirectly
restraining or prohibiting the acquisition by Parent of Shares pursuant to
the Stockholders Option Agreement, the making of the Offer, the acceptance
for payment of or payment for some of or all the Shares, or the
consummation by Parent and Acquisition of the Merger, (B) restraining or
prohibiting Parent's ownership or operation of, or compelling Parent to
dispose of or hold separate all or any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, (C) imposing
material limitations on the ability of Parent to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or owned by Parent on all matters properly presented to
the Company's stockholders, (D) requiring divestiture by Parent of any
Shares, or (E) otherwise, in the reasonable judgment of Parent, having a
Material Adverse Effect or a Purchaser Material Adverse Effect; provided
that, Parent shall have used its reasonable best efforts to cause any such
action or proceeding to be determined in a manner satisfactory to Parent;
or
(b) any material adverse change or development shall have occurred, or
Parent shall have become aware of any fact that would reasonably be
expected to result in any change or development, in the business, assets,
liabilities, capitalization, earnings, operations, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole, that in the reasonable judgment of Parent, has or would reasonably
be expected to have a Material Adverse Effect; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the American Stock Exchange,
(ii) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States (whether or not mandatory), (iii)
the commencement of a war, armed hostilities or other international or
national calamity having a significant adverse effect on the functioning of
financial markets in the United States, (iv) any limitation (whether or not
mandatory), by any United States governmental authority or agency on the
extension of credit by banks or other financial institutions or (v) in the
case of any of the situations
A-1
<PAGE>
described in clauses (i) through (iv) inclusive, existing at the date of
the commencement of the Offer, a material acceleration or worsening
thereof; or
(d) the Company shall have breached or failed to perform any of its
covenants or agreements which breach is material to the obligations of the
Company under the Agreement or any of the representations and warranties of
the Company set forth in the Agreement shall not be true in any material
respect, in each case, when made or at any time prior to consummation of
the Offer; or
(e) the Agreement or the Stockholders Option Agreement shall have been
terminated; or
(f) the Board shall have publicly (including by amendment of the
Schedule 14D-9) withdrawn or modified in a manner adverse to Parent: (i)
its approval or recommendation of the Offer, the Merger or the Agreement,
or (ii) its actions causing the restrictions on business combinations
contained in Section 203 of the Delaware Law not to apply to the
transactions contemplated hereby, the Offer or the Stockholders Option
Agreement or shall have resolved to do so; or
(g) any party to the Stockholders Option Agreement other than Parent
shall have breached or failed to perform in any material respect any of its
agreements under the Stockholders Option Agreement or any of the
representations and warranties of any such party set forth in the
Stockholders Option Agreement shall not be true in any material respect, in
each case, when made or at any time prior to the consummation of the Offer
as if made at and as of such time, or the Stockholders Option Agreement
shall have been invalidated or terminated with respect to any Shares
subject thereto; or
(h) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in
principle with respect to any Acquisition Proposal; or
(i) Parent, Acquisition and the Company shall have agreed that Parent
shall terminate the Offer or postpone the payment for Shares thereunder;
which, in the reasonable judgment of Parent in any such case, and regardless of
the circumstances giving rise to any such condition makes it inadvisable to
proceed with such acceptance for payment or payments.
The foregoing conditions are for the benefit of Parent and Acquisition and
may be asserted by Parent and/or Acquisition regardless of the circumstances
giving rise to any such condition or, except as otherwise provided herein, may
be waived by Parent in whole or in part at any time and from time to time in its
sole discretion. The failure by Parent at any time to assert any of the
foregoing conditions shall not be deemed a waiver of any such condition and each
such condition shall be deemed an ongoing condition which may be asserted at any
time and from time to time.
A-2
<PAGE>
EXHIBIT 7(iii)
TIE ACQUISITION CO.
AND
NATIONSBANK OF GEORGIA, N.A.
LOAN AGREEMENT
OCTOBER 18, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
1. DEFINITIONS AND ACCOUNTING TERMS....................................... 1
1.1 Definitions...................................................... 1
1.2 Accounting Terms................................................. 8
2. AMOUNT AND TERMS OF THE LOAN........................................... 8
2.1 The Loan......................................................... 8
2.2 The Note......................................................... 8
2.3 Interest......................................................... 9
2.4 Closing Fee...................................................... 9
2.5 Computation of Interest.......................................... 9
2.6 Payment.......................................................... 9
2.7 Payment on Non-banking Days...................................... 9
2.8 Prepayment....................................................... 9
3. CONDITIONS PRECEDENT TO DISBURSEMENT................................... 9
3.1 Documents........................................................ 9
3.2 Additional Conditions Precedent.................................. 12
4. REPRESENTATIONS AND WARRANTIES......................................... 14
4.1 Corporate Existence; Compliance with Law......................... 14
4.2 Corporate Power; Authorization................................... 15
4.3 Enforceable Obligations.......................................... 16
4.4 Taxes............................................................ 16
4.5 Financial Matters................................................ 16
4.6 Litigation....................................................... 17
4.7 Subsidiaries..................................................... 17
4.8 Liens............................................................ 17
4.9 No Burdensome Restrictions; No Defaults.......................... 17
4.10 Tender Offer Documents and Related Documents..................... 17
4.11 Investment Company Act; Public Utility
Holding Company Act.............................................. 17
4.12 Margin Regulations............................................... 18
4.13 Assets........................................................... 18
4.14 Completeness..................................................... 18
4.15 Restricted Distributions......................................... 18
</TABLE>
<PAGE>
<TABLE>
<S> <C>
4.16 Environmental Laws................................................ 18
4.19 Approvals......................................................... 20
5. AFFIRMATIVE COVENANTS................................................... 20
5.1 Application of Proceeds........................................... 20
5.2 Compliance with Laws, Etc......................................... 20
5.3 The Merger........................................................ 20
5.4 Payment of Taxes, Etc............................................. 20
5.5 Maintenance of Insurance.......................................... 21
5.6 Preservation of Corporate Existence, Etc.......................... 21
5.7 Access............................................................ 21
5.8 Keeping of Books.................................................. 21
5.9 Maintenance of Properties, Etc.................................... 21
5.10 Reporting Requirements............................................ 21
5.11 Notice of Plan Reportable Events,
Termination and Litigation........................................ 22
5.12 Environmental Laws................................................ 22
5.13 Loan to Collateral Ratio.......................................... 23
6. NEGATIVE COVENANTS...................................................... 24
6.1 Liens, Etc........................................................ 24
6.2 Indebtedness...................................................... 25
6.3 Plan of Merger.................................................... 26
6.4 Dividends, Etc.................................................... 26
6.5 Mergers, Etc...................................................... 26
6.6 Investments in Other Persons...................................... 26
6.7 Assets............................................................ 27
6.8 Change in Nature of Business...................................... 27
6.9 Capital Structure................................................. 27
6.10 Tender Offer...................................................... 27
6.11 Transactions with Affiliates...................................... 27
6.12 Accounting Changes................................................ 28
6.13 Margin Regulations................................................ 28
6.14 Capital Expenditures.............................................. 28
6.15 Negative Pledges, Etc............................................. 28
7. EVENTS OF DEFAULT....................................................... 28
</TABLE>
<PAGE>
<TABLE>
<S> <C>
8. MISCELLANEOUS........................................................... 32
8.1 No Waiver; Cumulative Remedies.................................... 32
8.2 Amendments, Etc................................................... 32
8.3 Addresses for Notices, Etc........................................ 32
8.4 Costs and Expenses................................................ 33
8.5 Indemnity......................................................... 34
8.6 Applicable Law.................................................... 34
8.7 Successors and Assigns............................................ 34
8.8 Survival of Representations and Warranties........................ 35
8.9 Time is of the Essence............................................ 35
8.10 Headings.......................................................... 35
8.11 Entire Agreement.................................................. 35
8.12 Severability...................................................... 35
8.13 Counterparts...................................................... 35
8.14 GOVERNING LAW; CONSENT TO JURISDICTION............................ 35
8.15 WAIVER OF TRIAL BY JURY........................................... 36
</TABLE>
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of the 18th day of October, 1995, among
NATIONSBANK OF GEORGIA, N.A., a national banking association ("Lender"), and TIE
------
ACQUISITION CO., a Delaware corporation ("Borrower").
--------
W I T N E S S E T H :
-------------------
WHEREAS, Borrower and TIE Merger Co., a Delaware corporation, which is a
wholly-owned subsidiary of Borrower ("Merger Co."), have been formed to effect
----------
the acquisition of the common stock of TIE/communications, Inc. ("TIE"); and
---
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of
September 5, 1995 among TIE, Borrower, and Merger Co., Borrower has commenced an
offer (the "Tender Offer") to purchase all of the issued and outstanding common
------------
stock, $.10 par value per share (the "Shares"), of TIE, on the terms and subject
------
to the conditions of the Offer to Purchase; and
WHEREAS, as soon as practicable following the consummation of the Tender
Offer and the satisfaction or waiver of certain conditions, Merger Co. will be
merged with and into TIE, and TIE will be the corporation surviving the Merger;
and
WHEREAS, in order to finance a portion of the Tender Offer and to pay
related fees and expenses, Borrower desires to borrow up to $25,000,000 from
Lender; and
WHEREAS, Lender is willing to make such loan upon the conditions and terms
set forth in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
1.1 Definitions. For the purposes of this Agreement, the following terms
-----------
shall have the respective meanings specified in this Section 1.1 (such meanings
-----------
to be equally applicable to both the singular and plural forms of the terms
defined).
"Affiliate" means with respect to any designated Person another Person
---------
controlling, controlled by or under common control with such designated Person
but not including the Lender, and shall include the spouse, parents, brothers,
sisters, children and grandchildren of such designated Person and, without
limiting the generality of the foregoing, the term "Affiliate" shall mean with
respect to any designated Person, any association, partnership, trust, entity or
enterprise in which such designated Person is a director, officer or general
partner of such
<PAGE>
Person or in which such designated Person together with Affiliates of such
designated Person own in the aggregate a beneficial interest in assets, profits
and losses equal to at least ten percent (10%) and shall include any Subsidiary
of such designated Person.
"Agreement" means this document as originally executed by the parties
---------
hereto and all permitted amendments and modifications hereof.
"Banking Day" means a day for dealings by and between banks, excluding
-----------
Saturday, Sunday and any day which shall be a legal holiday in the City of
Atlanta, Georgia, or a day on which banking institutions are authorized to
close.
"Black Creek" means Black Creek Limited Partnership, a Washington limited
-----------
partnership.
"Black Creek Pledge Agreement" means the Pledge Agreement dated as of the
----------------------------
Tender Funding Date in substantially the form of Exhibit C-1 attached hereto,
-----------
pursuant to which Black Creek grants to Lender a first priority security
interest in not less than 2,000,000 shares of MIDCOM Stock owned by Black Creek.
"Borrower" means TIE Acquisition Co., a Delaware corporation.
--------
"Borrower Pledge Agreement" means the Pledge Agreement dated as of the
-------------------------
Tender Funding Date in substantially the form of Exhibit C-2 attached hereto,
-----------
pursuant to which Borrower grants to Lender a first priority security interest
in all of the TIE Stock acquired by Borrower pursuant to the Tender Offer or
otherwise owned by Borrower.
"Cash Equivalents" means, at any time:
----------------
(a) securities issued or fully guaranteed or insured by the United
States government or any agency thereof having maturities of three (3) months or
less from the date of acquisition;
(b) certificates of deposit, time deposits, overnight bank deposits
and bankers' acceptances of Lender, any Affiliate of Lender, or any United
States bank or trust company having capital, surplus and undivided profits in
excess of $250,000,000, having maturities of three (3) months or less from the
date of acquisition;
(c) commercial paper rated at least A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investor Service, Inc. and in either case maturing
within three (3) months after the date of acquisition; and
(d) money market funds invested in short-term securities rated at
least as provided in paragraph (c) above.
--------- ---
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time.
-2-
<PAGE>
"Collateral" means the properties in which Lender is granted a security
----------
interest or has rights under the Pledge Agreements and all other properties of
any Loan Party in which Lender may be granted a security interest or at any time
is in the possession or control of Lender, including, without limitation, any
letter of credit delivered to Lender pursuant to clause (ii) of Section 5.13.
------------
"Contractual Obligation" means, with respect to any Person, any provision
----------------------
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument to which such
Person is a party or by which it or any of its property is bound.
"Corporate Guarantor" means SP Investments Inc., a Washington corporation.
-------------------
"Corporate Loan Party" means, collectively, Borrower and the Corporate
--------------------
Guarantor.
"Default" means any event which, with the giving of notice or the lapse of
-------
time, or both, would become an Event of Default.
"DGCL" means the Delaware General Corporation Law.
----
"Disbursement" means delivery to Borrower of the proceeds of the Loan.
------------
"Environmental Laws" means all federal, state, local and foreign laws
------------------
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, spills, releases or threatened releases of any
pollutant, contaminant or Hazardous Substance into the environment (including
without limitation indoor air, ambient air, surface water, ground water or
land), or otherwise relating to the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or Hazardous Substances including, but not limited to,
the Comprehensive Environmental Response Compensation and Liability Act, as
amended (42 U.S.C. (S)(S)9601 et seq.), the Resource Conservation and Recovery
-- ---
Act, as amended (42 U.S.C. (S)(S)6901 et seq.), the Clean Water Act, as amended
------
(33 U.S.C. (S)(S)1251 et seq.), the Clean Air Act, as amended (42 U.S.C.
------
(S)(S)7401 et seq.), the Toxic Substance Control Act, as amended (15 U.S.C.
------
(S)(S)2601 et seq.), and any and all rules, regulations, codes, standards,
------
plans, orders, decrees, judgments, injunctions, notices or demand letters
issued, entered, promulgated or approved thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"GAAP" means generally accepted accounting principles consistently applied
----
to the particular item.
"Governmental Authority" means any nation or government, any federal,
----------------------
state, local or other political subdivision thereof and any central bank thereof
and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
-3-
<PAGE>
"Guarantors" means, collectively, the Corporate Guarantor, Black Creek, and
----------
the Individual Guarantors.
"Guaranty Agreements" means the guarantees, dated as of the Tender Funding
-------------------
Date, executed by the Corporate Guarantor, Black Creek, and the Individual
Guarantors in favor of Lender, substantially in the form of Exhibits B-1, B-2
------------ ---
and B-3.
---
"Hazardous Substances" means any hazardous, toxic or dangerous waste,
--------------------
substance or material, regulated or controlled pursuant to any Environmental
Law, now or at any time hereafter in effect, including, without limiting the
generality of the foregoing, asbestos, PCBs, petroleum products (including crude
oil, natural gas, natural gas liquids, liquified natural gas or synthetic gas)
or any other substance defined as a "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "hazardous material," "hazardous
chemical," "hazardous waste," "hazardous air pollutant," "regulated substance,"
"toxic chemical," "toxic substance" or other similar term in any Environmental
Law.
"Indebtedness" of any Person means without duplication, (a) all
------------
indebtedness for borrowed money; (b) all obligations issued or assumed as the
deferred purchase price of property or services; (c) all reimbursement
obligations with respect to surety bonds, letters of credit and bankers'
acceptances (whether or not matured); (d) all obligations evidenced by notes,
bonds, debentures, commercial paper or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses; (e) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
creditor under such agreement in the event of default are limited to
repossession or sale of such property); (f) all rental obligations under leases
required to be capitalized under GAAP; (g) all indebtedness referred to in
paragraphs (a) through (f) above secured by (or for which the holder of such
- ---------- --- ---
indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contracts rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such indebtedness; and (h) all direct or indirect guaranties in
respect of and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in paragraphs (a)
---------- ---
through (f) above.
---
"Individual Guarantors" means, collectively, Paul H. Pfleger and John M.
---------------------
Orehek.
"Lien" means any mortgage, pledge, hypothecation, assignment for collateral
----
purposes, encumbrance, lien (statutory or other), charge, priority or other
security agreement or arrangement of any kind or nature whatsoever (including
any conditional sale or other title retention agreement).
"Loan" means the loan in the original principal amount equal to the Loan
----
Amount made by Lender to Borrower pursuant to and in accordance with the terms
of this Agreement.
"Loan Amount" means the amount of the Loan, which shall equal $20,000,000
-----------
plus, at
-4-
<PAGE>
Borrower's option exercised in accordance with Section 2.1, an additional amount
-----------
in increments of $1,000,000 up to an additional amount of $5,000,000.
"Loan Documents" means, collectively, this Agreement, the Note, the
--------------
Guaranty Agreements, the Pledge Agreements, the Subordination Agreement and each
other instrument, agreement and document executed and delivered by a Loan Party
in connection with this Agreement.
"Loan Parties" means, collectively, Borrower, the Guarantors, Black Creek,
------------
and each other Person (other than Lender) who is a party to a Loan Document.
"Lock-Up Agreement" means the Lock-Up Agreement dated as of April 28, 1995
-----------------
between Black Creek and Donaldson, Lufkin & Jenrette Securities Corporation,
Solomon Brothers Inc., and The Robinson-Humphrey Company, Inc. with respect to
certain restrictions on the transfer of the MIDCOM Stock pledged pursuant to the
Black Creek Pledge Agreement.
"Marmon Credit Agreement" means that certain Revolving Credit Agreement
-----------------------
dated as of June 18, 1991 among TIE, various Subsidiaries of TIE, and Marmon
Holdings, Inc. (as successor in interest to HCR Partners), as amended from time
to time.
"Material Adverse Effect" means, with respect to any event, act, condition
-----------------------
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), a
material adverse change in, a material adverse effect attributable to, or a
material adverse effect upon, any of (a) the financial condition, operations,
business, properties, or prospects of any of (i) Borrower and its Subsidiaries
taken as a whole, (ii) any of the Guarantors, or (iii) TIE and its Subsidiaries
taken as a whole; (b) the ability of Borrower to purchase the shares of TIE
Stock in the Tender Offer or the ability of Borrower, Merger Co. or TIE to
consummate the Merger; (c) the rights and remedies of Lender under the Loan
Documents unless attributable to an act or omission of Lender; (d) the legality,
validity or enforceability of any Loan Document; or (e) the perfection or
priority of the Lien of Lender granted under the Pledge Agreements unless
attributable to an act or omission of Lender.
"Merger" means the merger of Merger Co. with and into TIE, in which TIE is
------
the surviving entity and pursuant to which all shares of TIE Stock not held in
the treasury of TIE or owned by Borrower or any of its Affiliates or by
shareholders of TIE who properly perfect their appraisal rights under the DGCL,
if any, will be converted into the right to receive the same consideration as is
paid in the Tender Offer, all in accordance with the terms of the Merger
Agreement.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
----------------
September 5, 1995 among TIE, Borrower and Merger Co., as amended from time to
time.
"Merger Co." means TIE Merger Co., a Delaware corporation.
----------
"Merger Financing" means the credit facilities to be provided by certain
----------------
institutions
-5-
<PAGE>
(including Lender) to Borrower and TIE at the time of the Merger.
"MIDCOM" means MIDCOM Communications Inc., a Washington corporation.
------
"Minimum Number of Shares" means, at any time of determination, seventy-
------------------------
five percent (75%) of the total number of shares of TIE Stock outstanding on a
fully diluted basis on such date, or such lesser percentage as shall have been
agreed to by Lender.
"Minimum Share Condition" means the condition contained in the Offer to
-----------------------
Purchase that there shall have been validly tendered prior to the Expiration
Date (as defined in the Offer to Purchase) and not withdrawn a number of shares
of TIE Stock which, together with the shares of TIE Stock owned by Borrower,
would represent at least the Minimum Number of Shares.
"Note" means the promissory note executed by Borrower to the order of
----
Lender substantially in the form of Exhibit A attached hereto, and all
---------
modifications, extensions, renewals and substitutions thereof.
"Notice of Borrowing" has the meaning specified in Section 2.1.
------------------- -----------
"Obligations" means, individually and collectively, the duties, obligations
-----------
and liabilities of Borrower to Lender described in this Agreement, in the Note,
in the other Loan Documents and all other obligations of Borrower to Lender
however and whenever created, arising,or evidenced, whether direct or indirect,
absolute, contingent, or otherwise, now or hereafter existing, or due or to
become due.
"Offer to Purchase" means Borrower's Offer to Purchase dated September 12,
-----------------
1995, as supplemented, amended and modified by that certain Supplement to Offer
to Purchase dated October 11, 1995, containing an offer to purchase, on the
terms and subject to the conditions set forth therein, all outstanding shares of
TIE Stock, as such Offer to Purchase may be amended, supplemented, restated, or
otherwise modified from time to time in accordance with Section 3.2(a)(ii).
------------------
"Permitted Liens" has the meaning specified in Section 6.1.
--------------- -----------
"Person" or "Persons" means any individual, joint venture, partnership,
------ -------
firm, corporation, trust, unincorporated organization or other organization or
entity, or a governmental body or any department or agency thereof, and shall
include both the singular and the plural.
"Plan" means an employee pension benefit plan or plans as defined in
----
Section 3 of ERISA and any trust created thereunder, covered by either Title I
or Title IV of ERISA and which now or hereafter is established or maintained for
employees of Borrower or any Related Company.
"Pledge Agreements" means, collectively, the Borrower Pledge Agreement and
-----------------
the Black Creek Pledge Agreement.
-6-
<PAGE>
"Premises" means all real properties owned or leased by Borrower or any of
--------
its Subsidiaries or on which any of Borrower's or any of its Subsidiaries'
assets may be located from time to time.
"Prime Rate" means the rate of interest announced by Lender in Atlanta,
----------
Georgia, from time to time as its "Prime Rate".
"Related Company" means, as to any Person, any (a) corporation which is a
---------------
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as such Person, (b) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with such Person, or (c) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
such Person or any corporation described in CLAUSE (A) above or any partnership,
trade or business described in CLAUSE (B) above.
"Reportable Event" shall have the meaning assigned to that term in Title IV
----------------
of ERISA.
"Requirement of Law" means, as to any Person, the charter and by-laws or
------------------
other organization or governing documents of such Person, and any law, rule or
regulation (including the requirements of Environmental Laws and ERISA), or
order, decree or other determination of an arbitrator or a court or other
Governmental Authority applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Responsible Officer" means, with respect to any Person, the Chief
-------------------
Executive Officer, the President, any of the Vice Presidents or the Treasurer of
such Person or, with respect to financial matters, the Chief Financial Officer,
the Vice President-Finance or the Treasurer of such Person.
"Solvent" shall mean, as to any Person, that such Person has capital
-------
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and is able to pay its debts as they
mature and owns property having a value, both at fair valuation and at present
fair saleable value, greater than the amount required to pay its debts.
"Stock" means all shares, options, interests, participations or other
-----
equivalents (regardless of how designated) of or in a corporation or other
entity, whether voting or non-voting, of any class, and includes common stock,
preferred stock or warrants or options for any of the foregoing.
"Subordination Agreement" means the subordination agreement, dated as of
-----------------------
the Tender Funding Date, executed by TIE Investment in favor of Lender, pursuant
to which all Indebtedness owing by Borrower to TIE Investment is subordinated to
the Obligations on terms satisfactory to Lender in its sole discretion.
"Subsidiary" means as to any designated corporation, any other corporation
----------
more than twenty percent (20%) of the shares of voting stock of which is owned,
directly or indirectly, by
-7-
<PAGE>
such designated corporation, and shall include subsidiaries of a subsidiary,
and, in the case of Borrower, shall as of the Tender Funding Date include TIE
and its Subsidiaries.
"Tender Funding Date" means the date of the Disbursement hereunder, which
-------------------
date shall be the date on which Borrower shall pay for the TIE Stock acquired in
the Tender Offer.
"Tender Offer" has the meaning specified in the second recital of this
------------ --------------
Agreement.
"Tender Offer Documents" means the Offer to Purchase and all other
----------------------
documents filed by or on behalf of Borrower or its Affiliates with the
Securities and Exchange Commission with respect to the Tender Offer, as amended
from time to time in accordance with Section 3.2(a)(ii).
------------------
"Tender Price" means the price per share at which Borrower purchases shares
------------
of TIE Stock in the Tender Offer in accordance with the Offer to Purchase.
"Termination Date" means the earliest of (a) the effective time of the
----------------
Merger; (b) the date which is ninety (90) days after the Tender Funding Date,
and (c) the date of acceleration of the Obligations pursuant to Section 7.2.
-----------
"TIE" means TIE/communications, Inc., a Delaware corporation.
---
"TIE Investment" means TIE Investment Inc., a Washington corporation.
--------------
1.2 Accounting Terms. All accounting terms used herein shall be
----------------
construed in accordance with GAAP consistently applied with those principles
applied in the preparation of the financial statements referred to in Section
-------
4.5 hereof, and all financial data submitted pursuant to this Agreement shall be
- ---
prepared in accordance with GAAP.
2. AMOUNT AND TERMS OF THE LOAN
----------------------------
2.1 The Loan. Upon the terms and subject to the conditions of, and in
--------
reliance upon the representations and warranties made under, this Agreement,
Lender agrees to make the Loan to Borrower on the Tender Funding Date in the
Loan Amount. In the event Borrower elects that the Loan Amount shall exceed
$20,000,000, Borrower shall provide to Lender, not later than 5:00 p.m.
(Atlanta, Georgia time) on the Banking Day immediately preceding the proposed
Tender Funding Date, an irrevocable notice of borrowing (the "Notice of
---------
Borrowing") by telecopy or telex, specifying therein the proposed Loan Amount.
- ---------
The Loan is due and payable, and shall be repaid in full by Borrower, on the
Termination Date.
2.2 The Note. The Loan (and the obligation of Borrower to pay the Loan)
--------
shall be evidenced by the Note, which shall be issued by Borrower to the order
of Lender and shall be delivered to Lender pursuant to Section 3.1.
-----------
2.3 Interest. The Loan shall bear interest on the unpaid principal
--------
balance from time to time outstanding at a fluctuating annual rate of interest
equal to two and one-half percent (2-
-8-
<PAGE>
1/2%) above the Prime Rate. Each change in the fluctuating interest rate during
the term of the Loan shall take effect on the first day of each calendar month
based on the Prime Rate in effect on the last Banking Day of the immediately
preceding calendar month. Interest shall be due and payable on the date that the
outstanding principal amount of the Loan is paid or due and payable (whether by
acceleration or otherwise) in full. Lender shall advise Borrower of the amount
of interest due and payable as of the day set forth above, and Borrower shall
pay the same when due. From and after the occurrence of an Event of Default,
interest shall accrue on the unpaid principal balance of the Loan at an annual
rate of two percent (2%) above the otherwise applicable rate, payable on demand.
2.4 Closing Fee. On the Tender Funding Date, Borrower shall pay to
-----------
Lender a closing fee equal to 1% of the Loan Amount, in consideration of the
making of the Loan under this Agreement and in order to compensate Lender for
the costs associated with structuring, processing, approving and closing the
Loan, and for which Borrower has not agreed elsewhere in this Agreement to
reimburse Lender; provided, that, the $25,000 commitment fee previously paid by
Borrower to Lender upon the execution of the Merger Agreement shall be applied
against such closing fee. Such fee shall be fully earned by Lender when due and
payable and shall not be subject to refund or rebate. Such fee is for
compensation for services and is not, and shall not be deemed to be, interest or
a charge for the use of money.
2.5 Computation of Interest. Interest on the Loan shall be computed on
-----------------------
the basis of a year of three hundred sixty (360) days and actual days lapsed.
2.6 Payment. All payments by Borrower under the Note shall be made to
-------
Lender at its address referred to in Section 8.3 in lawful money of the United
-----------
States of America and in immediately available funds. When the Loan shall have
been paid in full, together with all other amounts due to Lender under this
Agreement, the Note and the other Loan Documents, Lender shall cancel and return
the Note to Borrower.
2.7 Payment on Non-banking Days. Whenever any payment to be made under
---------------------------
the Note shall be stated to be due on a day which is not a Banking Day, such
payment shall be made on the next succeeding Banking Day, and such extension of
time shall in such case be included in the computation of interest hereunder or
under the Note, as the case may be.
2.8 Prepayment. The outstanding principal balance of the Loan shall not
----------
be prepaid in whole or in part at any time.
3. CONDITIONS PRECEDENT TO DISBURSEMENT
------------------------------------
3.1 Documents. The obligation of Lender to make the Disbursement is
---------
subject to satisfaction of the condition precedent that Lender shall have
received the following, each, unless otherwise specified below, in form and
substance satisfactory to Lender and its counsel:
(a) The Note. The duly executed Note.
--------
-9-
<PAGE>
(b) Board Resolutions; Incumbency Certificates. A certificate of
------------------------------------------
the Secretary or an Assistant Secretary of each Corporate Loan Party certifying
(i) the resolutions of the Board of Directors of such Corporate Loan Party
approving each Loan Document to which such Corporate Loan Party is a party and
the transactions contemplated thereby, and in the case of Borrower and Merger
Co. the Tender Offer, the Merger Agreement, and the transactions contemplated
hereby and thereby, (ii) all documents evidencing other necessary corporate
action, if any, by each Corporate Loan Party, with respect to each Loan
Document, the Tender Offer, the Merger Agreement, and the Merger, and (iii) the
names and signatures of the officers authorized to act with respect to each Loan
Document executed by it.
(c) Articles of Incorporation; By-Laws and Good Standing. Each of
----------------------------------------------------
the following documents:
(i) the articles or certificate of incorporation of each
Corporate Loan Party as in effect on the Tender Funding Date,
certified (x) by the Secretary of State of the state of incorporation
of such Corporate Loan Party as of a date reasonably near the Tender
Funding Date, and (y) by the Secretary or an Assistant Secretary of
such Corporate Loan Party as of the Tender Funding Date; and the by-
laws of each Corporate Loan Party, as in effect on the Tender Funding
Date, certified by the Secretary or an Assistant Secretary of such
Corporate Loan Party as of the Tender Funding Date; and
(ii) a good standing certificate for each Corporate Loan Party
from the Secretary of State of the state of incorporation and each
state where such Corporate Loan Party is qualified to do business as
a foreign corporation as of a date reasonably near the Tender Funding
Date.
(d) Black Creek Documents. Each of the following documents:
---------------------
(i) a certificate of the general partner of Black Creek
certifying (x) all documents evidencing necessary partnership action
by Black Creek with respect to each Loan Document to which it is a
party, and (y) the names and signatures of the officers authorized to
act with respect to each Loan Document to which it is a party;
(ii) the certificate of limited partnership of Black Creek as
in effect on the Tender Funding Date, certified by the Secretary of
State of the state of organization of Black Creek as of a date
reasonably near the Tender Funding Date;
(iii) the limited partnership agreement of Black Creek as in
effect on the Tender Funding Date, certified by the general partner
of Black Creek as of the Tender Funding Date; and
(iv) a good standing certificate for Black Creek from the
Secretary of
-10-
<PAGE>
State of the state of organization of Black Creek as of a date
reasonably near the Tender Funding Date.
(e) Guaranties. Duly executed Guaranty Agreements from each of the
----------
Guarantors.
(f) Pledge Agreements.
-----------------
(i) The duly executed Borrower Pledge Agreement;
(ii) The duly executed Black Creek Pledge Agreement;
(iii) Stock certificates representing the TIE Stock and
MIDCOM Stock pledged pursuant to the Pledge Agreements (together with
duly executed blank stock powers), or, such notices and
acknowledgements as Lender may request to perfect its first priority
security interest in such Stock; and
(iv) A duly executed Federal Reserve Form U-1 with
respect to the TIE Stock and MIDCOM Stock pledged pursuant to the
Pledge Agreements.
(g) Tender Offer Documents. A copy of each Tender Offer Document,
----------------------
and the Merger Agreement, certified as being complete and correct by a
Responsible Officer of Borrower.
(h) Legal Opinions and Memorandum.
-----------------------------
(i) The favorable opinion, dated the Tender Funding Date and
addressed to Lender, from Smith, Gambrell & Russell, special counsel
to the Corporate Loan Parties, in form and substance satisfactory to
Lender and its counsel;
(ii) The favorable opinions, dated the Tender Funding Date
and addressed to Lender, from Riddell, Williams, Bullitt &
Walkinshaw, special counsel to the Corporate Guarantoro and TIE
Investment, each in form and substance satisfactory to Lender and its
counsel; and
(iii) The favorable opinion, dated the Tender Funding Date and
addressed to Lender, from Michael G. Fulbright, General Counsel of
Security Properties Inc., acting as special counsel to Black Creek,
in form and substance satisfactory to Lender.
(i) Officer's Certificate. A certificate from a Responsible Officer
---------------------
of the Borrower as to the satisfaction of the conditions set forth in Sections
--------
3.1(k) and 3.2.
- ------ ---
(j) Solvency Certificate. A certificate from the Chief Financial
--------------------
Officer of
-11-
<PAGE>
each Corporate Loan Party and Black Creek certifying that each such Person is
Solvent, in form and substance satisfactory to the Lender and its counsel.
(k) Governmental and Third Party Approvals, Permits, Consents, Etc.
---------------------------------------------------------------
Copies of all approvals, permits, consents, certificates, waivers, exemptions,
filings and registrations from any Governmental Authority, or any third party,
required or appropriate in connection with the execution and delivery of any
Loan Document or the performance thereof or the completion of any transaction
contemplated thereby.
(l) Certificate re Merger Agreement. A certificate from the
-------------------------------
Secretary or an Assistant Secretary of Borrower certifying that:
(i) Attached thereto is a complete and correct copy of the
Merger Agreement;
(ii) to Borrower's knowledge, TIE has duly complied with and
performed all covenants, agreements, and conditions contained in the
Merger Agreement that are required to be performed or complied with
by TIE on or before the Tender Funding Date; and
(iii) Borrower has not waived TIE's compliance with or
performance of all covenants, agreements, and conditions contained in
the Merger Agreement that are required to be performed or complied
with by TIE on or before the Tender Funding Date.
(m) Lock-Up Agreement. A copy of the Lock-Up Agreement, certified
-----------------
as being complete and correct by the general partner of Black Creek.
(n) Subordination Agreement. The duly executed Subordination
-----------------------
Agreement.
3.2 Additional Conditions Precedent. The obligation of Lender to make
the Disbursement is subject to the further conditions precedent that:
(a) Tender Offer and Merger.
-----------------------
(i) The number of Shares of TIE Stock beneficially owned
by Borrower, together with the number of Shares of TIE Stock validly
tendered, not subject to withdrawal, and accepted for payment on the
Tender Funding Date pursuant to the Tender Offer, shall be no less
than the Minimum Number of Shares or such lesser percentage of TIE
Stock then outstanding on a fully diluted basis as shall enable
Borrower promptly to effect the Merger without the affirmative vote
of any other shareholder of TIE;
(ii) All Tender Offer transactions shall be consummated
simultaneously with the Disbursement pursuant to the terms and
conditions of the
-12-
<PAGE>
Offer to Purchase and in compliance with all relevant Requirements of
Law;
(A) without change or waiver with respect to the Minimum
Share Condition, except for, and to the extent of, changes or
waivers with respect thereto which are satisfactory in form and
substance to Lender;
(B) without material change or waiver with respect to
any other material terms (other than the Tender Price) or
condition of the Offer to Purchase, except for, and to the
extent of, changes or waivers which are satisfactory in form and
substance to Lender; and
(C) without any change with respect to the Tender Price;
and
(iii) the Lender shall be satisfied, in its reasonable
judgment, that, except with respect to the Minimum Share Condition,
there are no legal or contractual impediments (whether in the form of
"anti-takeover" statutes or otherwise) which would restrict, limit,
or delay the prompt consummation of, or frustrate the purposes of,
the Merger or any other transaction contemplated by the Tender Offer
or the Loan Documents.
(b) Margin Regulations. The Loan made by Lender is in full
------------------
compliance with all applicable requirements of law, including Regulations G, T,
U and X of the Federal Reserve Board.
(c) No Material Adverse Change.
--------------------------
(i) There shall have occurred no Material Adverse Effect
since the date of the financial statements described in Section 4.5;
-----------
and
(ii) Nothing shall have occurred (including the institution or
threat of litigation with respect to the Tender Offer, the Merger or
the transactions contemplated by the Loan Documents, or the adoption,
interpretation, or promulgation of any law, rule or regulation) since
the date of the financial statements described in Section 4.5, which,
-----------
in the judgment of Lender, has a reasonable likelihood of having a
Material Adverse Effect.
(d) Corporate Structure. Lender shall be satisfied with all
-------------------
antitrust and other regulatory aspects related to the Tender Offer, the Merger,
and the financing thereof.
(e) [intentionally omitted]
(f) Fees, Costs and Expenses. Borrower shall have paid all fees
------------------------
referred to in Section 2.4 and all costs and expenses referred to in Section 8.4
----------- -----------
(including legal fees and expenses) and any indemnity pursuant to Section 8.5
-----------
which, in each case, may be then due and payable.
-13-
<PAGE>
(g) Matters Relating to Collateral. Lender shall have been granted a
------------------------------
perfected first-priority security interest in the Collateral, with a loan to
collateral ratio of no more than .5 to 1 with respect to the TIE Stock and no
more than .5 to 1 with respect to the MIDCOM Stock. The MIDCOM Stock and TIE
Stock subject to the Pledge Agreements shall be subject to no restrictions on
transfer or Lender's exercise of remedies thereunder other than as set forth in
the Lock-Up Agreement (with respect to the MIDCOM Stock) and as set forth in the
Pledge Agreements (including Section 5.7 of each Pledge Agreement).
(h) Merger Financing. Commitments shall have been obtained from
----------------
financial institutions, and/or Affiliates of Borrower, satisfactory to Lender,
which, together with Lender's October 11, 1995 commitment, are sufficient to
consummate the Merger.
(i) Accuracy of Representations; No Default; Etc. The following
---------------------------------------------
statements shall be true on the date of the Disbursement, before and after
giving effect thereto and to the application of the proceeds therefrom:
(i) The representations and warranties contained in Article 4
---------
and in each other Loan Document are correct on and (except
for representations and warranties relating solely to a particular
point in time) as of such date as though made on and as of such date;
and
(ii) No Default or Event of Default has occurred and is
continuing or would result from the Disbursement.
4. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants the
------------------------------
following:
4.1 Corporate Existence; Compliance with Law.
----------------------------------------
(a) Each of Merger Co. and Borrower
(i) is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation;
(ii) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction in which the
character of the properties owned or held under lease by it requires
such qualification except where the failure to be so qualified has no
reasonable likelihood of having a Material Adverse Effect;
(iii) has all requisite corporate power and authority to
own, pledge, mortgage, hold under lease and operate its properties
and to conduct its business as now or currently proposed to be
conducted; and
-14-
<PAGE>
(iv) is in compliance with all Requirements of Law except
for such non-compliance as has no reasonable likelihood of having a
Material Adverse Effect.
(b) Borrower (i) was organized on August 16, 1995 for the sole
purpose of making the Tender Offer and acquiring and holding the shares of TIE
Stock and since such date has not carried on any activities other than those
incident to its formation, the execution, delivery and performance of its
obligations under the Merger Agreement, and the commencement and making of the
Tender Offer, and the transactions related thereto, and (ii) has the requisite
corporate power and authority to purchase the shares of TIE Stock pursuant to
the Tender Offer in accordance with the Offer to Purchase.
4.2 Corporate Power; Authorization. The execution, delivery and
------------------------------
performance by Borrower of the Loan Documents to which it is a party, the
purchase by Borrower of the TIE Stock pursuant to the Tender Offer, and the
consummation of the Merger in accordance with the terms of the Merger Agreement:
(a) are within the respective corporate powers of Borrower and
Merger Co.;
(b) have been, or prior to such execution will have been, duly
authorized by all necessary corporate action, including the consent of
shareholders where required;
(c) do not:
(i) contravene the articles or certificate of
incorporation or by-laws of Borrower and Merger Co.;
(ii) violate any other Requirement of Law (including the
Securities Exchange Act of 1934, Regulations G, T, U and X of the
Federal Reserve Board, or any order or decree of any court or other
Governmental Authority);
(iii) conflict with or result in the breach of, or
constitute a default under, any Contractual Obligation of Borrower or
Merger Co., except for such conflicts, breaches, or defaults which
have no reasonable likelihood of having a Material Adverse Effect; or
(iv) result in the creation or imposition of any Lien upon
any of the property of Borrower or Merger Co., other than pursuant to
the Pledge Agreements; and
(d) do not require the consent of, authorization by, approval of or
notice to, or filing or registration with, any Governmental Authority or any
other Person other than those which have been obtained, made or given.
-15-
<PAGE>
4.3 Enforceable Obligations. This Agreement and the other Loan Documents
-----------------------
to which Borrower is a party have been duly executed and delivered by Borrower.
This Agreement is, and the other Loan Documents to which Borrower is a party
when delivered hereunder will be, legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or limiting
creditors' rights generally.
4.4 Taxes. Borrower has filed all federal, state, local and foreign tax
-----
returns which are required to have been filed in any jurisdiction and have paid
all taxes shown to be due thereon or otherwise assessed, to the extent the same
have become due and payable and before they have become delinquent, except for
any taxes and assessments the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which Borrower has set aside on its books reserves (adequate in
accordance with, and segregated to the extent required by, GAAP) and the non-
filing or non-payment of which has no reasonable likelihood of having a Material
Adverse Effect.
4.5 Financial Matters.
-----------------
(a) The October 18, 1995 pro forma balance sheet of Borrower, a copy
which has been delivered by Borrower prior to the execution of this Agreement to
Lender, is complete and correct in all material respects and fairly represents
on a pro forma basis the financial condition of Borrower, TIE, and their
Subsidiaries, and reflects on a pro forma basis those liabilities reflected in
the notes thereto and resulting from the transactions contemplated by the Tender
Offer, including the financing therefor and the payment of all fees and expenses
in connection therewith; and the assumptions expressed therein were reasonably
based on the information available to Borrower at the time so furnished. To
Borrower's knowledge, the unaudited financial statements of TIE contained in
TIE's Form 10-Q for the fiscal quarter ended September 30, 1995, a copy of which
has been delivered by Borrower prior to the execution of this Agreement to
Lender, are complete and correct and fairly represent in all material respects
the financial condition of TIE and its Subsidiaries.
(b) Since the date of the financial statements referred to in clause
(a) above, there has been no Material Adverse Effect and no development which
has a reasonable likelihood of having a Material Adverse Effect.
(c) To Borrower's knowledge, there is no obligation, contingent
liability or liability for taxes, long-term leases or unusual forward or long-
term commitments, which is not reflected in the financial statements of TIE
delivered pursuant to clause (a) above, or in the notes thereto, which are
required by GAAP to be disclosed and which would have a Material Adverse Effect.
(d) Each of Borrower and Merger Co. is Solvent.
4.6 Litigation. There are no pending or, to the knowledge of Borrower,
----------
threatened,
-16-
<PAGE>
actions or proceedings affecting Borrower, TIE, or any of their Subsidiaries,
before any court or other Governmental Authority or any arbitrator that has a
reasonable likelihood of having a Material Adverse Effect. To the best of
Borrower's knowledge, all pending or threatened actions or proceedings affecting
Borrower, TIE, or any of their Subsidiaries, as of the date hereof are described
in Schedule 4.6. None of the purchase of TIE Stock pursuant to the Tender Offer
------------
or the consummation of the Merger or the performance by Borrower or Merger Co.
of any of the Loan Documents to which it is a party is restrained or enjoined
(either temporarily, preliminarily or permanently) and no conditions have been
imposed upon any of the foregoing transactions as a result of any such action or
proceeding, compliance with which would have a Material Adverse Effect.
4.7 Subsidiaries. Borrower has no Subsidiaries other than Merger Co. and
------------
on and after the Tender Funding Date, TIE and its Subsidiaries.
4.8 Liens. There are no Liens of any nature whatsoever on any properties
-----
of Borrower, TIE, or any of their Subsidiaries, other than Permitted Liens.
4.9 No Burdensome Restrictions; No Defaults.
---------------------------------------
(a) Neither Borrower, nor any Subsidiary of Borrower, is a party to
any Contractual Obligation the performance of which has a reasonable likelihood
of having a Material Adverse Effect or the performance of which by any thereof
will result in the creation of a Lien on the property or assets of any thereof
other than a Permitted Lien.
(b) As of the Tender Funding Date, no provision or provisions of any
applicable Requirement of Law has a reasonable likelihood of having a Material
Adverse Effect.
(c) Neither Borrower, nor any Subsidiary of Borrower, is in default
under or with respect to any Contractual Obligation (or any other agreement or
instrument to which Borrower or such Subsidiary is a party) which is material to
the financial condition, operations, business, properties, or prospects of
Borrower or any such Subsidiary, or which default, individually or in the
aggregate, has a reasonable likelihood of having a Material Adverse Effect.
(d) No Default or Event of Default has occurred and is continuing.
4.10 Tender Offer Documents and Related Documents. The Offer to Purchase
--------------------------------------------
has not been amended or modified in any respect, and no provision therein has
been waived, except, in each case, in accordance with Section 3.2(a)(ii).
------------------
4.11 Investment Company Act; Public Utility Holding Company Act. Neither
----------------------------------------------------------
Borrower nor any Subsidiary of Borrower is an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter for" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended, or a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended. The
-17-
<PAGE>
making of the Loan by Lender, the application of the proceeds and repayment
thereof by Lender, the application of the proceeds and repayment thereof by
Borrower, and the consummation of the transactions contemplated by the Loan
Documents, will not violate any provision of the Investment Company Act of 1940,
as amended, or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder.
4.12 Margin Regulations. No part of the proceeds of the Loan will be used
------------------
in violation of Regulation G, T, U or X of the Federal Reserve Board.
4.13 Assets. Each of Borrower and Borrower's Subsidiaries has good title
------
to all of its material properties and assets, free and clear of all Liens except
Permitted Liens.
4.14 Completeness. None of the statements of Borrower nor any of its
------------
Subsidiaries contained herein, in any other Loan Document to which such entity
is a party, or in any certificate or written statement furnished by Borrower or
any such Subsidiary to Lender in accordance with this Agreement or any other
Loan Document, when made contained any untrue statement of a material fact, or
failed to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
4.15 Restricted Distributions. Borrower has not declared or made, or
------------------------
permitted any of its non-wholly-owned Subsidiaries to declare or make, any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of its Stock, or purchased,
redeemed, defeased or otherwise acquired for value or made any payment in
respect of (or permitted any of its Subsidiaries to do so) any shares of its
Stock.
4.16 Environmental Laws.
------------------
(a) After due inquiry to the appropriate governmental agencies,
Borrower and each of its Subsidiaries have obtained all material permits,
licenses and other authorizations, if any, which are required in connection with
its ownership or use of the Premises under Environmental Laws and Borrower and
each of its Subsidiaries is in material compliance with all terms and conditions
of the required permits, licenses and authorizations, and is also in material
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
the Environmental Laws and Borrower and each of its Subsidiaries has filed all
material notifications required under Environmental Laws relating to air
emissions, effluent discharges, and the generation, storage, treatment and
disposal of Hazardous Substances.
(b) Borrower and each of its Subsidiaries has duly investigated the
present and past uses of its Premises and has made due inquiry to the
appropriate governmental agencies having jurisdiction over its Premises and
neither Borrower nor any of its Subsidiaries is aware of, and has not received
notice of, the disposal, spill or release of Hazardous Substances on the
Premises or any other properties that Borrower or any of its Subsidiaries now
owns or occupies or formerly owned or occupied (whether such disposal, spill or
release originates or originated
-18-
<PAGE>
from its Premises or from another property), or of any past, present or future
events, conditions, circumstances, activities, practices, incidents, actions or
plans which may interfere with or prevent compliance or continued compliance on
the part of Borrower or any of its Subsidiaries or the Premises with material
Environmental Laws, or may give rise to any material common law or legal
liability, or otherwise form the basis of any material claim, action, demand,
suit, lien, proceeding, hearing, study or investigation, based on or related to
Environmental Laws or otherwise related to the generation, manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant or Hazardous Substance.
(c) No material personal or real property owned, leased or operated
by Borrower or any of its Subsidiaries is contaminated by Hazardous Substances,
and the generation, use and disposal of any pollutant, contaminant or Hazardous
Substances by or on behalf of Borrower or any of its Subsidiaries is in strict
compliance with all material applicable Environmental Laws.
(d) Borrower and each of its Subsidiaries has duly investigated the
Premises and no underground storage tank containing or that at one time
contained any substance regulated under any Environmental Law, including
Hazardous Substances, is or at any time was under the Premises.
(e) To the knowledge of Borrower, no Hazardous Substances, now or in
the past generated by Borrower or any of its Subsidiaries, are being sent or
have been sent, directly or indirectly to any site listed or formally proposed
for listing on the national priority list, promulgated pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act, or to any
site listed on any state list of sites contaminated by Hazardous Substances that
require investigation or clean-up.
4.17 ERISA. Borrower, each Related Company and each Plan is in
-----
substantial compliance with those portions of ERISA and the Code pertaining to
each Plan. No Plan which is subject to the minimum funding standards of ERISA or
the Code has incurred any material accumulated funding deficiency within the
meaning of ERISA or the Code. Neither Borrower nor any Related Company has
incurred any material liability to the Pension Benefit Guaranty Corporation in
connection with any Plan. The assets of each Plan which is subject to Title IV
of ERISA are sufficient to provide the benefits under such Plan which the
Pension Benefit Guaranty Corporation would guarantee the payment thereof if such
Plan terminated, and are also sufficient to provide all other benefits due under
the Plan. No Reportable Event has occurred and is continuing with respect to any
Plan, except for those listed on Schedule 4.17 attached hereto. No Plan or any
-------------
trust created thereunder, or any trustee or administrator thereof, has engaged
in a "prohibited transaction" (as such term is defined in Section 406 of ERISA
or Section 4975 of the Code) which would subject any Plan, any trust created
thereunder, or any trustee or administrator thereof, or any party dealing with
any Plan or any such trust, to the tax or penalty on "prohibited transactions"
imposed by Section 502 of ERISA or Section 4975 of the Code. Except as set
forth on Schedule 4.17, neither Borrower nor any Related Company is required to
-------------
contribute to and is not contributing to a "multiemployer pension plan" (as such
-19-
<PAGE>
term is defined in the Multiemployer Pension Plan Amendments Act of 1980), and
neither Borrower nor any Related Company has any "withdrawal liability" (as also
defined in such Act) to any multiemployer pension plan.
4.18 Merger Agreement. No material amendments or modifications have been
----------------
made to the Merger Agreement since the date thereof. Each of Borrower and
Merger Co. has complied with and performed all covenants, agreements and
conditions contained in the Merger Agreement that are required to be performed
or complied with by Borrower or Merger Co. on or before the Tender Funding Date.
The Merger Agreement is in full force and effect.
4.19 Approvals. All necessary governmental and third party approvals in
---------
connection with the Tender Offer, the purchase of TIE Stock, and the financing
therefor provided by Lender, have been obtained and remain in effect and all
applicable waiting periods, including all applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, have expired
or been terminated without any action being taken by any competent authority
which restrains, prevents or imposes materially adverse conditions upon, the
Tender Offer or the Merger, or the exercise by Borrower or any transferee of
Borrower of all ownership rights with respect to the TIE Stock acquired in
connection with the Tender Offer or otherwise owned by Borrower.
5. AFFIRMATIVE COVENANTS. Borrower covenants, for so long as any of the
---------------------
principal amount of or interest evidenced by the Note is outstanding and unpaid
or any duty or obligation of Borrower hereunder or any of the Obligations
remains unpaid or unperformed, as follows:
5.1 Application of Proceeds. Borrower will apply the entire amount of
-----------------------
the proceeds of the Loan to consummate the transactions contemplated by the
Offer to Purchase, and to the payment of fees and expenses relating to the
Tender Offer.
5.2 Compliance with Laws, Etc. Borrower will comply, and cause each of
--------------------------
its Subsidiaries to comply, in all material respects with all applicable
Requirements of Law except for such non-compliance as is being contested in good
faith by appropriate proceedings and has no reasonable likelihood of having a
Material Adverse Effect.
5.3 The Merger. Borrower will use its best efforts to cause the Merger
----------
to be completed in accordance with the terms of the Merger Agreement and all
applicable laws, Borrower's, TIE's and Merger Co.'s respective certificates of
incorporation, and the terms set forth in Section 6.5, on or before December 15,
-----------
1995.
5.4 Payment of Taxes, Etc. Borrower will pay and discharge, and cause
----------------------
each of its Subsidiaries to pay and discharge, before the same shall become
delinquent, all lawful claims and all taxes, assessments and governmental
charges or levies, except where contested in good faith, by proper proceedings,
if adequate reserves therefor have been established on the books of Borrower or
such Subsidiary in accordance with, and to the extent required by, GAAP, and if
such non-payment (individually and in the aggregate with all other such non-
payments) has
-20-
<PAGE>
no reasonable likelihood of having a Material Adverse Effect.
5.5 Maintenance of Insurance. Borrower will maintain, and cause each of
------------------------
its Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which Borrower and such Subsidiaries operate,
consistent with the past practices of TIE and its Subsidiaries.
5.6 Preservation of Corporate Existence, Etc. Borrower will preserve and
-----------------------------------------
maintain, and cause each of its Subsidiaries to preserve and maintain, its
corporate existence, rights (charter and statutory), and franchises, except as
permitted under Sections 6.5.
------------
5.7 Access. Borrower will from time to time, during normal business
------
hours upon reasonable notice, or, if a Default or an Event of Default shall have
occurred and be continuing, at any time, permit Lender and any agent or
representative thereof, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, Borrower and any
of its Subsidiaries, and to discuss the affairs, finances and accounts of
Borrower and any of its Subsidiaries with any of their respective officers.
5.8 Keeping of Books. Borrower will keep proper books of record and
----------------
account, in which full and correct entries, on a consolidated basis for Borrower
and its Subsidiaries, shall be made of all financial transactions and the assets
and business of Borrower and its Subsidiaries in accordance with GAAP
consistently applied.
5.9 Maintenance of Properties, Etc. Borrower will maintain and preserve,
-------------------------------
and cause each of its Subsidiaries to maintain and preserve, all of its
properties in good repair, working order and condition, and from time to time
make or cause to be made all necessary and proper repairs, renewals,
replacements and improvements so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
--------
however, that nothing in this Section 5.9 shall prevent Borrower or any of its
- ------- -----------
Subsidiaries from discontinuing the maintenance or preservation of any of its
properties if such discontinuance is desirable in the conduct of its business
and has no reasonable likelihood of having a Material Adverse Effect.
5.10 Reporting Requirements. Borrower will furnish to Lender:
----------------------
(a) promptly (and in any event within three (3) Banking Days after
Borrower becomes aware of the existence thereof) after the commencement thereof,
notice of all actions, suits, and proceedings before any court or other
Governmental Authority affecting Borrower or any Subsidiary of Borrower which,
individually or in the aggregate, has a reasonable likelihood of having a
Material Adverse Effect;
(b) promptly and in any event within three (3) Banking Days after
Borrower becomes aware of the existence of (i) any Default or Event of Default,
(ii) any breach or non-performance of, or any default under, any Contractual
Obligation or any other agreement or instrument to which Borrower or any of its
Subsidiaries is a party which has a reasonable
-21-
<PAGE>
likelihood of having a Material Adverse Effect, or (iii) any Material Adverse
Effect or any development which has a reasonable likelihood of having a Material
Adverse Effect, notice by telephone or telecopy specifying the nature of such
Default, Event of Default, Material Adverse Effect or development, including the
anticipated effect thereof, which notice, if given by telephone, shall be
promptly confirmed in writing within five (5) Banking Days;
(c) promptly after sending or filing thereof, copies of all reports
which Borrower or any of its Subsidiaries sends to its security holders
generally, and copies of all reports and registration statements which Borrower
or any of its Subsidiaries files with the Securities and Exchange Commission or
any national securities exchange, including amendments to the Tender Offer
Documents;
(d) promptly after receipt thereof, copies of all other statements
or reports prepared by or supplied to Borrower or any of its Subsidiaries by
their accountants or auditors reflecting the financial position of Borrower or
any of its Subsidiaries; and
(e) such other information respecting the business, prospects,
properties, operations, or condition, financial or otherwise, of Borrower or any
of its Subsidiaries, as Lender may from time to time reasonably request.
5.11 Notice of Plan Reportable Events, Termination and Litigation. As
------------------------------------------------------------
soon as possible and in any event within thirty (30) days after Borrower knows
or has reason to know that any Reportable Event or a "prohibited transaction"
(as defined in Section 4.17 hereof) with respect to any Plan has occurred or
------------
that the Pension Benefit Guaranty Corporation or Borrower or any Related Company
has instituted or will institute proceedings under ERISA to terminate a Plan
subject to Title IV of ERISA, or a partial termination of a Plan has or is
alleged to have occurred, or any litigation regarding a Plan or naming the
trustee of a Plan or Borrower or any Related Company with respect to a Plan is
threatened or instituted, Borrower shall provide to Lender the written statement
of the Chief Financial Officer of Borrower setting forth details of such
Reportable Event, prohibited transaction, termination proceeding, partial
termination or litigation and the action being or proposed to be taken with
respect thereto, together with copies of the notice of such Reportable Event or
any other notices, applications or forms submitted to the Pension Benefit
Guaranty Corporation, Internal Revenue Service or the United States Department
of Labor, and copies of any notices or correspondence received from the Pension
Benefit Guaranty Corporation, Internal Revenue Service or the United States
Department of Labor, and copies of any pleadings, notices or other documents
relating to such litigation.
5.12 Environmental Laws. Borrower will, and will cause each of its
------------------
Subsidiaries to:
(a) comply in all material respects with all Environmental Laws, now
or hereafter in effect and maintain all required federal, state and local
permits, licenses, certification and approvals and other authorizations, if any,
which are required in connection with its ownership or use of the Premises and
file, when due, all notifications relating to air emissions, effluent discharges
and the generation, storage, treatment or disposal of any Hazardous Substances;
-22-
<PAGE>
(b) in the event that Borrower or any of its Subsidiaries receives
notice or otherwise discovers that it is materially not in compliance with any
Environmental Law or that there has been a spill, release or threatened release
of any Hazardous Substance onto, from, at or under the Premises which spill,
release or threatened release requires or may require notification, response,
assessment, investigation or remedial action pursuant to any Environmental Law,
Borrower shall notify Lender and all appropriate governmental agencies thereof
and proceed with due diligence and at Borrower's cost and expense to respond
appropriately, in accordance with all requirements of the Environmental Laws,
provided that nothing contained herein shall be deemed to authorize the Lender
to exercise dominion or control over operation of the facility or the Premises
or handling of Hazardous Substances; and
(c) indemnify and hold Lender, its Affiliates, agents, employees,
officers, directors, Subsidiaries, successors and assigns, harmless from and
with respect to each and every claim, debt, demand, loss, damage, action, cause
of action, liability, cost and expense (including reasonable attorneys' fees) or
suit of any kind or nature whatsoever, direct or indirect, known or unknown, in
any manner arising out of a Default or Event of Default hereunder or in any way
arising out of or, directly or indirectly, related to or connected with the
operation of Borrower's or any of its Subsidiaries' business, including without
limitation, claims arising under any Environmental Laws, except to the extent
such claim, debt, demand, loss, damage, action, liability, cost or expense has
resulted from such indemnified party's gross negligence or willful misconduct.
Borrower shall indemnify the Lender and its successors and assigns as provided
herein upon demand and in immediately available funds.
5.13 Loan to Collateral Ratio. In the event that at any time the
------------------------
principal balance of the Loan shall, for a period of three consecutive Banking
Days, exceed the sum of (a) 50% of the market value of the Stock Collateral
subject to the Pledge Agreements, plus (b) the face amount of any letter of
credit Collateral delivered to Lender pursuant to clause (ii) below, Borrower
shall, within three Banking Days, (i) cause Black Creek to subject to the first-
priority Lien of the Black Creek Pledge Agreement such additional shares of
MIDCOM Stock (subject to no restrictions on transfer or Lender's exercise of
remedies thereunder other than as set forth in the Lock-Up Agreement and as set
forth in the Black Creek Pledge Agreement) as shall be necessary to cause the
outstanding principal balance of the Loan to be equal to or less than the sum of
clauses (a) and (b) above, or (ii) deliver to Lender a letter of credit from an
issuing bank acceptable to Lender, and in form and substance acceptable to
Lender, in a face amount equal or greater than the amount necessary to cause the
outstanding principal balance of the Loan to be equal to or less than the sum of
clauses (a) and (b) above.
6. NEGATIVE COVENANTS. Borrower covenants, for so long as any of the
------------------
principal amount of or interest on the Note is outstanding and unpaid or any
obligation of Borrower hereunder or any of the Obligations remains unpaid or
unperformed, as follows:
6.1 Liens, Etc. Borrower shall not create or suffer to exist, or permit
-----------
any of its Subsidiaries to create or suffer to exist, any Lien upon or with
respect to any of its properties, whether now owned or hereafter acquired, other
than the following ("Permitted Liens"):
---------------
-23-
<PAGE>
(a) Liens existing on property of TIE or any of its Subsidiaries on
the Tender Funding Date or granted pursuant to a commitment that was legally
binding on the Tender Funding Date, to the extent permitted by the Merger
Agreement;
(b) Liens created pursuant to the Pledge Agreements;
(c) extensions, renewals and replacements of Liens referred to in
paragraphs (a) and (b) above, provided, any such extension, renewal or
- ---------- --- --- --------
replacement Lien is limited to the property or assets covered by the Lien
extended, renewed or replaced and does not secure any Indebtedness in addition
to that secured immediately prior to such extension, renewal or replacement;
(d) Liens securing taxes, assessments and other governmental charges or levies
(excluding any Lien imposed pursuant to any of the provisions of ERISA) or the
claims of materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business, but
only if payment shall not at the time be required to be made in accordance with
Section 5.4;
- -----------
(e) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation or
under surety or performance bonds, in each case arising in the ordinary course
of business;
(f) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of the
Premises, which do not materially detract from the value of such Premises or
impair the use thereof in the business of Borrower or its Subsidiaries;
(g) Liens arising out of or resulting from any judgment or award,
the time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which Borrower or the applicable Subsidiary of
Borrower is fully protected by insurance or in respect of which Borrower or such
Subsidiary shall at any time in good faith be prosecuting an appeal or pro
ceeding for a review and in respect of which a stay of execution pending such
appeal or proceeding for review shall have been secured, and as to which
appropriate reserves have been established on the books of Borrower or such
Subsidiary; and
(h) Liens securing Indebtedness permitted under Section 6.2(a)(ix),
------------------
but only if any such Lien shall be confined solely to the tangible asset the
purchase price of which was financed through the incurrence of such
Indebtedness.
6.2 Indebtedness. Borrower shall not:
------------
(a) create or suffer to exist, or permit any of its Subsidiaries to
create or suffer to exist, any Indebtedness except the following:
-24-
<PAGE>
(i) the Loan and any other Indebtedness under this
Agreement;
(ii) Indebtedness of TIE or any of its Subsidiaries
outstanding on the Tender Funding Date or incurred pursuant to a
commitment that was legally binding on the Tender Funding Date, to
the extent permitted by the Merger Agreement;
(iii) Indebtedness of TIE or any of its Subsidiaries
incurred under the Marmon Credit Agreement in an aggregate
outstanding amount at any time not to exceed $3,000,000;
(iv) Indebtedness of TIE to any of its wholly-owned
Subsidiaries, of any wholly-owned Subsidiary of TIE to TIE, or of any
wholly-owned Subsidiary of TIE to another wholly-owned Subsidiary of
TIE;
(v) (A) debt (other than for borrowed money) incurred by
any Subsidiary of Borrower in the ordinary course of business, (B)
payment and performance bonds posted by or on behalf of any such
Subsidiary, (C) letters of credit for the account of any such
Subsidiary to guarantee the payment of bid and performance bonds,
insurance claims and contested appeals, and (D) commercial letters of
credit in support of trade obligations of any such Subsidiary, in
each case in the ordinary course of business in a manner and to an
extent consistent with its past practices and necessary or desirable
for the prudent operation of its business;
(vi) Indebtedness secured by Liens permitted pursuant to
Section 6.1 above;
-----------
(vii) Extensions, renewals, replacements and refinancings
of the foregoing not exceeding the principal amount thereof
outstanding on the Tender Funding Date;
(viii) Indebtedness of Borrower subject to the Subordination
Agreement in an aggregate amount not to exceed $10,000,000; and
(ix) Indebtedness of TIE or any of its Subsidiaries on or
after the Tender Funding Date (A) under capitalized leases in the
ordinary course of business, or (B) created in the ordinary course of
business to finance the payment of all or any part of the purchase
price (not in excess of the fair market value thereof) of any
tangible asset and incurred at the time of or within 10 days prior to
or after the acquisition of such tangible asset in an aggregate
amount not to exceed $500,000; or
(b) cancel, or permit any of its Subsidiaries to cancel, any claim
or Indebtedness owed to it, except for adequate consideration and in the
ordinary course of
-25-
<PAGE>
business, other than claims or Indebtedness in the aggregate not to exceed
$50,000.
6.3 Plan of Merger. Borrower shall not, and Borrower shall not permit
--------------
Merger Co. to, amend in any material respect the Merger Agreement.
6.4 Dividends, Etc. Borrower shall not declare or make, or permit any of
---------------
its Subsidiaries to declare or make, any dividend payment or other distribution
of assets, properties, cash, rights, obligations or securities on account of its
Stock or purchase, redeem, prepay, defease or otherwise acquire for value or
make any payment in respect of any of its Stock except (i) any payments or other
distributions by any wholly-owned Subsidiary of TIE to TIE or to any other
wholly-owned Subsidiary of TIE; and (ii) any payments or other distributions by
Borrower or TIE in connection with the Tender Offer or the Merger.
6.5 Mergers, Etc. Borrower shall not merge or consolidate with or into,
-------------
or convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets, whether
now owned or hereafter acquired, to any Person, or acquire all or substantially
all of the Stock of any Person (other than the TIE Stock in the Tender Offer),
or acquire all or substantially all of the assets of any Person or enter into
any joint venture or partnership with, any Person, or permit any of its
Subsidiaries to do so, except pursuant to the Tender Offer and the Merger,
provided that after giving effect to the Merger, TIE shall continue to be
- --------
Solvent, and the Loan and other amounts outstanding hereunder and under the
other Loan Documents are paid in full upon the Merger.
6.6 Investments in Other Persons. Borrower shall not make or permit any
----------------------------
of its Subsidiaries to make any loan or advance to any Person (other than, in
the case of Subsidiaries of the Borrower, accounts receivable created in the
ordinary course of business) or, except as permitted under Sections 6.5 and
------------
6.11, purchase or otherwise acquire, or permit any of its Subsidiaries to
- ----
purchase or otherwise acquire, any Stock or other equity interest or
Indebtedness of any Person, or make, or permit any of its Subsidiaries to make,
any capital contribution to, or otherwise invest in, any Person, except:
(a) investments in Cash Equivalents;
(b) loans or advances permitted pursuant to Section 6.2(a)(iv);
------------------
(c) advances made by TIE or any of its Subsidiaries to employees of
TIE or any of its Subsidiaries for travel or other business related expenses in
the ordinary course of business; and
(d) loans or advances by Borrower to any of its wholly-owned
Subsidiaries, by any of its wholly-owned Subsidiaries to TIE, or by any of its
wholly-owned Subsidiaries to another of its wholly-owned Subsidiaries.
6.7 Assets. Borrower shall not sell or otherwise dispose of any assets,
------
or permit any of its Subsidiaries to sell or otherwise dispose of any of its
assets, except for, in the case of
-26-
<PAGE>
Subsidiaries of Borrower, (i) the sale or disposition of inventory in the
ordinary course of business; and (ii) the sale or distribution of any assets
which have become obsolete or surplus to the business of such Subsidiary.
6.8 Change in Nature of Business. Borrower shall not (a) engage in any
----------------------------
business other than the making of the Tender Offer or the purchasing and owning
of TIE Stock (which shall include, but not be limited to, any and all direction,
supervision and oversight of or with respect to the business of TIE and its
Subsidiaries), (b) permit any of its Subsidiaries to make any material change in
the nature of its business as carried on at the date hereof, or (c) enter into,
or permit any of its Subsidiaries to enter into, any new business except as
contemplated by the Tender Offer.
6.9 Capital Structure. Borrower shall not make, or permit any of its
-----------------
Subsidiaries to make, any change in its capital structure (including changes in
the terms of its outstanding Stock), or amend its certificate of incorporation
or by-laws, in any case in a manner which might in any way materially adversely
affect the Tender Offer, the Merger or the repayment of the Loan or any other
amounts due hereunder.
6.10 Tender Offer.
------------
(a) Borrower shall not change the Tender Offer (i) from an all cash
offer for not less than the Minimum Number of Shares (after giving effect to the
shares of TIE Stock owned by Borrower), or (ii) in any other material respect
from the terms set forth in the Offer to Purchase.
(b) Borrower shall not change any of the conditions to the Tender
Offer contained in the Offer to Purchase, except, and to the extent, permitted
by Section 3.2(a)(ii).
------------------
(c) Borrower shall not waive any of the conditions to the Tender
Offer contained in the Offer to Purchase except, and to the extent, permitted by
Section 3.2(a)(ii).
- ------------------
6.11 Transactions with Affiliates. Borrower shall not enter into or be a
----------------------------
party to, or permit any of its Subsidiaries to enter into or be a party to, any
transaction with any Affiliate of Borrower (including, after the Tender Funding
Date, TIE and its Subsidiaries), except for the incurrence of the Indebtedness
permitted by Section 6.2(a)(viii) and as otherwise provided herein and, in the
--------------------
case of TIE and its Subsidiaries, in the ordinary course of business and in a
manner necessary or desirable for the prudent operation of its business for fair
consideration and on terms no less favorable to TIE or such Subsidiary as are
available from unaffiliated third parties.
6.12 Accounting Changes. Borrower shall not make, or permit any of its
------------------
Subsidiaries to make, any significant change in accounting treatment and
reporting practices except as permitted by GAAP or the Securities and Exchange
Commission.
6.13 Margin Regulations. Borrower shall not use the proceeds of the Loan
------------------
in violation of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
-27-
<PAGE>
6.14 Capital Expenditures. Borrower shall not make, or after the Tender
--------------------
Funding Date permit any of its Subsidiaries to make, any expenditure for fixed
or capital assets, other than, in the case of TIE and its Subsidiaries, pursuant
to commitments entered into by TIE and its Subsidiaries prior to the Tender
Funding Date, or entered into at any time thereafter, in the ordinary course of
business not in violation of the Merger Agreement.
6.15 Negative Pledges, Etc. Borrower shall not, and shall not permit any
----------------------
of its Subsidiaries to, enter into any agreement (other than this Agreement, any
other Loan Document, or any agreement governing Indebtedness permitted by
Section 6.2(a)(ii) as in effect on the Tender Funding Date or Section 6.2(a)(vi)
- ------------------ ------------------
as to assets financed with the proceeds of such Indebtedness), prohibiting or
restricting the creation or assumption of any Lien upon its properties, revenues
or assets, whether now owned or hereafter acquired or restricting the ability of
Borrower or any other Loan Party to amend or otherwise modify this Agreement or
any other Loan Document.
7. EVENTS OF DEFAULT.
-----------------
7.1 Events of Default. The term "Event of Default" shall mean the
-----------------
occurrence of any of the following events:
(a) Default in Payment of Loan. Borrower shall default in any
---------------------------
payment of principal of, or interest on, the Loan when and as due (whether at
maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. Borrower shall default in the payment,
---------------------
as and when due, of principal or interest on, any other Obligation, and such
default shall continue for five days after written notice thereof has been given
to Borrower by Lender.
(c) Misrepresentation. Any representation or warranty made or
-----------------
deemed to be made by Borrower or Merger Co. under or in connection with this
Agreement or any other Loan Document or any amendment hereto or thereto shall at
any time prove to have been incorrect or misleading in any material respect when
made.
(d) Default in Performance. Borrower shall default in the
----------------------
performance or observance of any term, covenant, condition or agreement
contained in (i) Sections 5.1, 5.13 (subject to the right to cure set forth
------------ ----
therein), 6.1 or 6.2(a) (with respect to any Lien or Indebtedness which would
--- ------
have a Material Adverse Effect), 6.2(b), 6.3 through 6.5 inclusive, 6.7, 6.8(a),
------ --- --- --- ------
6.8(b) or (c) (if a Material Adverse Effect would result), 6.10, or 6.13, (ii)
- ------ --- ---- ----
Sections 5.2, 5.5 through 5.11 inclusive, 6.1 or 6.2(a) (with respect to any
- ------------ --- ---- --- ------
Lien or Indebtedness which would not have a Material Adverse Effect), 6.6, 6.9,
--- ---
6.11, 6.12, 6.14 or 6.15, and (in the case of defaults described in this clause
- ---- ---- ---- ----
(ii)), such default shall continue for a period of 10 days after written notice
thereof has been given to Borrower by Lender, (iii) Section 6.8(b) or (c) (if no
-------------- ---
Material Adverse Effect would result) or any other provision of this Agreement
and (in the case of defaults described in clause (iii)) such default shall
continue for a period of 30 days after
-28-
<PAGE>
written notice thereof has been given to Borrower by Lender.
(e) Indebtedness Cross-Default. (i) Borrower or any of Borrower's
--------------------------
Subsidiaries shall fail to pay when due and payable (after the expiration of any
applicable grace period) the principal of or interest on Indebtedness (other
than the Loan) where the principal amount of such Indebtedness is in excess of
$500,000, or (ii) the Corporate Guarantor or Paul H. Pfleger shall fail to pay
when due and payable (after the expiration of any applicable grace period) the
principal of or interest on Indebtedness (other than the Loan) where the
principal amount of such Indebtedness equals or exceeds $5,000,000, or (iii) the
maturity of any such Indebtedness shall have (A) been accelerated in accordance
with the provisions of any indenture, contract or instrument providing for the
creation of or concerning such Indebtedness, or (B) been required to be prepaid
prior to the stated maturity thereof, or (iv) any event shall have occurred and
be continuing which would permit any holder or holders of such Indebtedness, any
trustee or agent acting on behalf of such holder or holders or any other Person
so to accelerate such maturity, and any applicable grace period shall have
expired.
(f) Other Cross-Defaults. Any Loan Party, Borrower, or any of
--------------------
Borrower's Subsidiaries shall default in the payment when due or in the
performance or observance of any Contractual Obligation (after the expiration of
any applicable grace period), if the exercise of remedies thereunder by the
other party to such agreement is reasonably likely to have a Material Adverse
Effect.
(g) Voluntary Bankruptcy Proceeding. Any Loan Party, Borrower, or
-------------------------------
any of Borrower's Subsidiaries shall (i) commence a voluntary case under the
federal bankruptcy laws (as now or hereafter in effect), (ii) commence a
proceeding to take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or composition for adjustment
of debts, (iii) consent to or fail to contest in a timely and appropriate manner
any petition filed against it in an involuntary case under such bankruptcy laws
or other laws, (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of a substantial part of
its property, domestic or foreign, (v) admit in writing its inability to pay its
debts as they become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any corporate action for the purpose of authorizing any
of the foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other proceeding
---------------------------------
shall be commenced against any Loan Party, Borrower, or any of Borrower's
Subsidiaries in any court of competent jurisdiction seeking (i) relief under the
federal bankruptcy laws (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or adjustment of debts, or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of such Person or of all or any substantial
part of the assets, domestic or foreign, of such Person, and such case or
proceeding shall continue undismissed or unstayed for a period of 60 consecutive
calendar days, or an order granting the relief requested in such case or
proceeding against such Person (including, but not limited to, an order for
relief under such federal bankruptcy laws) shall be entered.
-29-
<PAGE>
(i) Loan Documents. Any event of default or Event of Default under
--------------
any other Loan Document shall occur, any representation or warranty made or
deemed to be made by any Loan Party under or in connection with any Loan
Document or any amendment thereto shall at any time prove to have been incorrect
or misleading in any material respect when made, or Borrower, or any other Loan
Party, shall default in the performance or observance of any material term,
covenant, condition or agreement contained in, or the payment of any other sum
covenanted to be paid by Borrower or any other Loan Party under, any such Loan
Document, or any provision of this Agreement or of any other Loan Document after
delivery thereof hereunder shall for any reason cease to be valid and binding,
other than a nonmaterial provision rendered unenforceable by operation of law,
or Borrower or any other Loan Party shall so state in writing, or this Agreement
or any other Loan Document, after delivery thereof hereunder, shall for any
reason (other than any action not taken or taken independently by Lender and
except to the extent permitted by the terms thereof) cease to create a valid,
perfected and, except as otherwise expressly permitted herein, first priority
Lien on, or security interest in, any of the Collateral purported to be covered
thereby.
(j) Judgment. A judgment or order for the payment of money which
--------
equals or exceeds (i) $500,000 in amount shall be entered against Borrower, or
(ii) $5,000,000 in amount shall be entered against the Corporate Guarantor or
Paul H. Pfleger, by any court and such judgment or order shall continue
undischarged or unstayed for 30 days.
(k) Attachment. A warrant or writ of attachment or execution or
----------
similar process which equals or exceeds (i) $500,000 in value shall be issued
against any property of Borrower, or (ii) $5,000,000 in amount shall be entered
against the Corporate Guarantor or Paul H. Pfleger, and such warrant or process
shall continue undischarged or unstayed for 30 days.
(l) ERISA. Any event, which Lender determines in good faith
-----
constitutes grounds for the termination of any Plan subject to Title IV of ERISA
by the appropriate United States District Court or for the appointment by the
appropriate United States District Court of a trustee to administer any such
Plan or the termination of a Plan subject to Title IV of ERISA with an existing
funding deficit under the Plan, or the law or any applicable regulations such
that the Plan is unable to pay benefits when due, or the appointment of a
trustee by an appropriate United States District Court to administer any Plan
subject to Title IV of ERISA, or the institution of proceedings by the Pension
Benefit Guaranty Corporation to terminate any Plan subject to Title IV of ERISA
or to appoint a trustee to administer any such Plan, or the failure of Borrower
or any Rebated Party to meet its minimum funding requirements under ERISA and
the Code with respect to a Plan, or a partial termination of a Plan has or is
alleged to have occurred, and Lender determines in good faith that such actions
---
or occurrences will have a Material Adverse Effect.
-30-
<PAGE>
7.2 Remedies. Upon the occurrence of an Event of Default specified in
--------
Section 7.1(g) or (h), the principal of and the interest on the Loan and the
- ---------------------
Note, and all other amounts owed to Lender under this Agreement or any of the
Loan Documents, and all other Obligations, shall thereupon become due and
payable without presentment, demand, protest or other notice of any kind, all of
which are expressly waived, anything in this Agreement or any of the Loan
Documents to the contrary notwithstanding. If any Event of Default (other than
as specified in Section 7.1(g) or (h)) shall have occurred and be continuing,
---------------------
Lender, in its sole and absolute discretion, may (a) declare the principal of
and interest on the Loan and the Note, and all other amounts owed to Lender
under this Agreement or any of the Loan Documents, and all other Obligations, to
be forthwith due and payable, whereupon the same shall immediately become due
and payable without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, anything in this Agreement or any of the Loan
Documents to the contrary notwithstanding, (b) exercise any and all of its
rights under any and all of the Loan Documents, and (c) exercise all of the
rights and remedies of a secured party under the UCC (whether or not the UCC is
applicable) and under any other applicable law. Borrower agrees to pay all
costs of the Lender of collection of the Obligations, and enforcement of the
rights hereunder, and, if collected by or through an attorney, or upon advice
therefrom, reasonable attorneys' fees.
8. MISCELLANEOUS.
-------------
8.1 No Waiver; Cumulative Remedies. No failure or delay on the part of
------------------------------
Lender in exercising any right, power or remedy hereunder, under the Note, or
any other Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder or thereunder. The remedies herein and therein provided are
cumulative and not exclusive of any remedies provided by law or in equity.
8.2 Amendments, Etc. No amendment, modification, termination or waiver
---------------
of any provision of this Agreement or of the Note, or any other Loan Document,
nor consent to any departure by Borrower or any other Loan Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Lender and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No notice to or
demand on Borrower or any other Loan Party in any case shall entitle Borrower or
any other Loan Party to any other or further notice or demand in similar or
other circumstances.
8.3 Addresses for Notices, Etc. All notices, requests, demands and other
--------------------------
communications provided for hereunder, other than routine communications in the
ordinary course of business, shall be in writing (including telex and facsimile
communications) and mailed, telexed or faxed (with confirmation) or delivered to
the applicable party at the address indicated below:
-31-
<PAGE>
If to Borrower: Charles B. McNamee
President
TIE Acquisition Co.
1201 Third Avenue, Suite 5400
Seattle, Washington 98101
(206) 628-5173 (fax)
With a Copy to: Bruce W. Moorhead, Jr., Esq.
Smith, Gambrell & Russell
Suite 3100, Promenade II
Atlanta, Georgia 30309-3592
(404) 815-3509 (fax)
If to Lender: Paul Warley
Vice President
NationsBank of Georgia, N.A.
NationsBank Business Credit
P.O. Box 3406
Atlanta, Georgia 30302-3406
(404) 607-6439 (fax)
If to the Guarantors: At their addresses set forth
in their respective Guaranty
Agreements
If to Black Creek: As set forth in the Black Creek
Pledge Agreement.
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to the delivery with the
terms of this Section. Except as otherwise expressly provided in this
Agreement, all such notices, requests, demands and other communications shall,
when mailed, telexed or faxed, be effective when deposited in the mails (postage
paid), sent over a telex owned or operated by a party hereto with an answerback
response set forth on the sender's copy of the document, or sent by facsimile
(with confirmation), respectively, addressed as aforesaid.
8.4 Costs and Expenses. Borrower agrees to pay on demand:
------------------
(a) all reasonable out-of-pocket costs and expenses incurred by
Lender in connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents and any other document to be
delivered hereunder or thereunder or in connection with the transactions
contemplated hereby or thereby, including the out-of-pocket expenses and
reasonable fees of counsel for Lender with respect thereto and, after the
occurrence of a Default or Event of Default, with respect to advising Lender as
to its rights and responsibilities under the Loan Documents;
-32-
<PAGE>
(b) all out-of-pocket costs and expenses incurred by Lender in
connection with the preservation of any rights under any Loan Document or in
connection with any restructuring or "work-out" of any of the Obligations after
the occurrence of a Default or Event of Default (whether through negotiations,
legal proceedings or otherwise), including the reasonable out-of-pocket expenses
and reasonable fees of counsel for Lender;
(c) all reasonable out-of-pocket costs and expenses incurred by
Lender in connection with the enforcement of any of the Obligations, including
the reasonable out-of-pocket expenses and reasonable fees of counsel for Lender;
and
(d) all reasonable out-of-pocket costs and expenses of Lender
incurred in connection with due diligence, transportation, use of computers,
duplication, appraisals, surveys, environmental and other audits, insurance
consultants and search reports and all filing and recording fees; provided, that
the aggregate amount of such costs and expenses incurred after the Tender
Funding Date shall not exceed $50,000 unless an Event of Default has occurred.
8.5 Indemnity.
---------
(a) Borrower agrees to indemnify and hold harmless Lender and each
of its Affiliates and all directors, officers, employees, agents and advisors of
all of the foregoing (each, an "Indemnified Party") from and against any and all
-----------------
claims, actions, proceedings, suits, damages, losses, liabilities, costs,
expenses and disbursements, including the out-of-pocket expenses and reasonable
fees of counsel which may be incurred by or asserted against any Indemnified
Party as a result of any investigation, litigation, suit, action or proceeding
(regardless of whether an Indemnified Party is a party thereto) arising out of,
relating to, or in connection with, the Tender Offer, the Merger or any
transaction or proposed transaction (whether or not consummated) financed or to
be financed, in whole or in part, directly or indirectly, with the proceeds of
the Loan (other than costs of the type covered by Section 8.4), or any other
-----------
transaction contemplated hereby; except to the extent such claim, damage, loss,
liability, cost or expense has resulted from such Indemnified Party's gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction. Notwithstanding any other provision contained in this
Agreement, this indemnity shall not be limited in any way by the passage of time
or the occurrence of any event.
8.6 Applicable Law. This Agreement, and each of the documents and
--------------
transactions contemplated herein (unless specifically stipulated to the contrary
in such document), shall be governed by and interpreted in accordance with the
laws of the State of Georgia.
8.7 Successors and Assigns. All of the terms of this Agreement, and each
----------------------
of the documents and agreements executed and delivered pursuant hereto and in
accordance herewith, shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, representatives, transferees, successors
and assignees of the parties hereto, whether so expressed or not. Borrower
shall not assign or transfer this Agreement, or any of its rights hereunder,
without the prior written consent of Lender. Prior to the occurrence and
continuance of an Event of Default, Lender shall not assign or transfer this
Agreement, or any of its rights
-33-
<PAGE>
hereunder, to any Person other than an Affiliate of Lender.
8.8 Survival of Representations and Warranties. All representations,
------------------------------------------
warranties, covenants, and agreements contained herein or made in writing by
Borrower and each other Merger Co. in connection herewith shall survive the
execution and delivery of this Agreement, the Note and any and all other Loan
Documents.
8.9 Time is of the Essence. Time is of the essence of this Agreement and
----------------------
the Note.
8.10 Headings. The headings in this Agreement are intended to be for
--------
convenience of reference only, and shall not define or limit the scope, extent
or intent or otherwise affect the meaning of any portion hereof.
8.11 Entire Agreement. Except as otherwise expressly provided, this
----------------
Agreement and the other Loan Documents embody the entire Agreement and
understanding between the parties hereto and thereto and supersede all prior
agreements and understandings relating to the subject matter hereof.
8.12 Severability. Wherever possible, each provision of this Agreement,
------------
the Note and each other Loan Document shall be interpreted in such
manner as to be effective and valid under applicable law. In case any one or
more of the provisions contained in this Agreement, the Note or any other Loan
Document shall for any reason be held to be prohibited by or invalid under
applicable law such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement, the Note or any other Loan
Document.
8.13 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.14 GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND THE
--------------------------------------
OTHER DOCUMENTS AND AGREEMENTS EXECUTED IN CONNECTION HEREWITH (UNLESS
SPECIFICALLY STIPULATED TO THE CONTRARY IN SUCH DOCUMENT OR AGREEMENT), AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF GEORGIA WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR STATE COURT SITTING IN ATLANTA, GEORGIA, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS OR
AGREEMENTS DESCRIBED OR CONTEMPLATED HEREIN, AND BORROWER HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH UNITED STATES FEDERAL OR STATE COURT.
-34-
<PAGE>
8.15 WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH WAIVE ALL RIGHTS
-----------------------
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO TRANSACTIONS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS DESCRIBED OR
CONTEMPLATED HEREIN.
-35-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed, sealed and delivered, as applicable, by its duly authorized
officers on the day and year first above written.
Borrower:
TIE ACQUISITION CO.
By: /s/ Charles B. McNamee
---------------------------------
Charles B. McNamee
President
Lender:
NATIONSBANK OF GEORGIA, N.A.
By: /s/ Paul P. Warley, Jr.
---------------------------------
Paul P. Warley, Jr.
Vice President
<PAGE>
EXHIBIT 7(iv)
________________________________________________________________
TERM LOAN AGREEMENT
DATED AS OF OCTOBER 18, 1995
BY AND AMONG
TIE INVESTMENT INC.,
as a Borrower,
TIE ACQUISITION CO.,
as a Borrower,
KELLETT INVESTMENT CORPORATION,
as Co-Lender,
and
CREDITANSTALT CORPORATE FINANCE, INC.,
as Co-Lender and Collateral Agent.
_________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS, TERMS AND REFERENCES
1.1 Certain Definitions..................................................... 1
1.2 Use of Defined Terms.................................................... 8
1.3 Accounting Terms........................................................ 8
1.4 Other Terms............................................................. 8
1.5 Terminology............................................................. 8
1.6 Exhibits................................................................ 8
2. THE LOANS
2.1 Loans 8
2.2 Borrowing Procedures.................................................... 9
2.3 Principal Payments; Prepayments......................................... 10
2.4 Use of Proceeds......................................................... 10
2.5 Several Obligations of Banks; Remedies Independent...................... 11
2.6 Pro Rata Treatment...................................................... 12
3. FEES AND INTEREST
3.1 Interest................................................................ 12
3.2 Cash Commitment Fee..................................................... 12
3.3 Issuance of Warrants as Portion of Commitment Fee, as Closing Fee,
and Based on Time of Repayment.......................................... 13
3.4 Increased Costs and Reduced Return...................................... 13
3.5 Indemnity............................................................... 13
3.6 Notice of Amounts Payable to Lenders.................................... 13
3.7 Interest Savings Clause................................................. 14
4. REPRESENTATIONS AND WARRANTIES
4.1 Corporate Existence and Qualification................................... 14
4.2 Partnership Matters..................................................... 14
4.3 Authority; Valid and Binding Effect..................................... 15
4.4 No Conflict............................................................. 15
4.5 Governmental Action..................................................... 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
4.6 No Litigation........................................................... 15
4.7 Solvency................................................................ 15
4.8 Taxes................................................................... 15
4.9 Financial Information................................................... 16
4.10 Title to Assets......................................................... 16
4.11 Violations of Law....................................................... 16
4.12 Margin Stock............................................................ 16
4.13 No Default.............................................................. 16
4.14 Chief Executive Office.................................................. 16
4.15 Investments............................................................. 17
4.16 Regulatory Matters...................................................... 17
4.17 Disclosure.............................................................. 17
4.18 DLJ Letter Agreement
5.1 Reporting Requirements.................................................. 17
5.2 Tax Returns............................................................. 19
5.3 Compliance With Laws.................................................... 19
5.4 Books and Records....................................................... 19
5.5 Notifications to the Lenders............................................ 19
5.6 Preservation of Corporate Existence..................................... 19
6. NEGATIVE COVENANTS
6.1 Prohibition of Fundamental Changes...................................... 20
6.2 Fiscal Year............................................................. 20
6.3 Relocations; Use of Name................................................ 20
6.4 DLJ Letter Agreement.................................................... 20
7. EVENTS OF DEFAULT
7.1 Obligations............................................................. 20
7.2 Misrepresentations...................................................... 20
7.3 Certain Covenants....................................................... 21
7.4 Other Covenants......................................................... 21
7.5 Loan Documents.......................................................... 21
7.6 Other Debts............................................................. 21
7.7 Tax Lien................................................................ 21
7.8 Voluntary Bankruptcy.................................................... 21
7.9 Involuntary Bankruptcy.................................................. 22
7.10 Suspension of Business.................................................. 22
7.11 Judgments............................................................... 22
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
7.12 Ownership............................................................... 22
7.13 Failure of Security..................................................... 23
7.14 Guaranty Agreements..................................................... 23
8. REMEDIES
8.1 Default Rate............................................................ 23
8.2 Termination; Acceleration of the Obligations............................ 23
8.3 Set-Off................................................................. 24
9. CONDITIONS PRECEDENT
9.1 Conditions Precedent to Facility A Loan................................. 24
9.2 Conditions Precedent to Facility B Loan................................. 27
9.3 All Loans............................................................... 30
9.4 Delay in Satisfaction of Conditions Precedent........................... 31
10. THE COLLATERAL AGENT
10.1 Appointment, Powers and Immunities...................................... 31
10.2 Reliance by Collateral Agent............................................ 31
10.3 Defaults................................................................ 32
10.4 Rights as a Lender...................................................... 32
10.5 Indemnification......................................................... 32
10.6 Non-Reliance on Collateral Agent and other Lenders...................... 33
10.7 Failure to Act.......................................................... 33
10.8 Resignation of Collateral Agent......................................... 33
10.9 Collateral Matters...................................................... 34
10.10 Borrower Not a Beneficiary.............................................. 35
11. MISCELLANEOUS
11.1 Waiver.................................................................. 36
11.2 Survival................................................................ 36
11.3 Assignments; Successors and Assigns..................................... 36
11.4 Counterparts............................................................ 38
11.5 Expense Reimbursement................................................... 38
11.6 Severability............................................................ 39
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
11.7 Notices................................................................. 39
11.8 Entire Agreement; Amendment............................................. 39
11.9 Time of the Essence..................................................... 39
11.10 Reinstatement........................................................... 39
11.11 Interpretation.......................................................... 39
11.12 Lenders Not Joint Venturers............................................. 40
11.13 Cure of Defaults by Lenders............................................. 40
11.14 Indemnity............................................................... 40
11.15 Consequential Damages................................................... 40
11.16 Attorney-in-Fact........................................................ 41
11.17 Governing Law; Jurisdiction............................................. 41
11.18 Waiver of Jury Trial.................................................... 41
</TABLE>
<TABLE>
<S> <C>
Schedule 4.6 - Litigation and Related Proceedings
Schedule 4.8 - Federal Tax Identification Numbers
Schedule 4.15 - Investments
Exhibit A - Form of Facility A Note
Exhibit B - Form of Facility B Note
Exhibit C - Form for Compliance Certificate
Exhibit D - Form of Tender Date Opinion of Smith, Gambrell & Russell
Exhibit E - Form of Merger Date Opinion of Smith, Gambrell & Russell
</TABLE>
iv
<PAGE>
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT (the "Agreement") is made and entered into as of
the day of October 18, 1995, by and among TIE INVESTMENT INC., a Washington
corporation, having a principal place of business at 1201 Third Avenue, Suite
5400, Seattle, Washington 98101-3031 ("TI"); TIE ACQUISITION CO., a Delaware
corporation, having a principal place of business at 1201 Third Avenue, Suite
5400, Seattle, Washington 98101-3031 ("Parent"); KELLETT INVESTMENT CORPORATION,
a Georgia corporation having its principal place of business at Suite 1800, 200
Galleria Parkway, Atlanta, Georgia 30339 ("Kellett"), and CREDITANSTALT
CORPORATE FINANCE, INC., a Delaware corporation having its principal place of
business in Greenwich, Connecticut ("Creditanstalt"), as a co-lenders (Kellett
and Creditanstalt are hereinafter sometimes referred to jointly as the "Lenders"
and individually as a "Lender") and CREDITANSTALT CORPORATE FINANCE, INC., as
collateral agent (in such capacity, hereinafter referred to as "Collateral
Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrowers have requested that the Lenders make available to
Borrowers a term loan facility, to include two loans with the aggregate
outstanding amount at any time not to exceed Ten Million Dollars ($10,000,000);
and
WHEREAS, the Lenders are willing to extend such financing to Borrowers
subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt, adequacy and sufficiency of which
are acknowledged by the parties hereto, Borrowers and Lenders hereby agree as
follows:
1. DEFINITIONS, TERMS AND REFERENCES
1.1 CERTAIN DEFINITIONS. When used herein, the following terms
shall have the following respective meanings:
"Affiliate" shall mean, as to any Person, any other Person which,
---------
directly or indirectly, owns or controls, on an aggregate basis, including all
beneficial ownership and ownership or control as a trustee, guardian or other
fiduciary, at least ten percent (10%) of the outstanding shares of capital stock
having ordinary voting power to elect a majority of the board of directors or
other governing body (irrespective of whether, at the time, stock of any other
<PAGE>
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) of such Person or at least ten
percent (10%) of the partnership or other ownership interest of such Person; or
which controls, is controlled by or is under common control with such Person;
provided, however, that in no event shall Borrowers and the Lenders be deemed or
- -------- -------
regarded as Affiliates of each other. For the purposes of this definition,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of management and policies, whether through the ownership
of voting securities, by contract or otherwise.
"Affiliate Loan" shall mean the subordinated loan made by TI to the
--------------
Parent on the Tender Date in a principal amount equal to the aggregate principal
amount of the Facility A Loans made by Lenders to TI.
"Agreement" shall mean this Term Loan Agreement, as amended, modified
---------
or supplemented from time to time.
"Applicable Law" shall mean all provisions of statutes, rules,
--------------
regulations and orders of any Governmental Authority applicable to a Person, and
all orders and decrees of all courts and arbitrators in proceedings or actions
in which the Person in question is a party.
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978, as may
---------------
be amended from time to time.
"Borrower" shall mean TI, in the case of the Facility A Loan, and
--------
Parent, in the case of the Facility B Loan.
"Business Day" shall mean a day on which banks are not required or
------------
authorized to close in Atlanta, Georgia or New York City, New York.
"Capital Stock" shall mean, as to any Person, any and all shares,
-------------
interests, warrants, participations or other equivalents (however designated) of
corporate stock of such Person.
"Cash Commitment Fee" shall have the meaning assigned to that term in
-------------------
Section 3.2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
----
the rules and regulations promulgated thereunder from time to time.
"Collateral" shall mean the Pledged Shares and all other assets or
----------
property provided from time to time by any of the Obligors as collateral or
security for repayment or performance of the Obligations.
2
<PAGE>
"Company" shall mean TIE/communications, Inc., a Delaware corporation,
-------
prior to the Merger described below.
"Corporate Obligor" and "Corporate Obligors" shall have the meaning
----------------- ------------------
assigned to those terms in Section 4.1 hereof.
"Default" shall mean the occurrence of any event or condition which,
-------
after satisfaction of any requirement for the giving of notice or the lapse of
time, or both, would become an Event of Default.
"Default Rate" shall mean twelve percent (12%) per annum.
------------
"Defaulting Lender" shall have the meaning assigned to that term in
-----------------
Section 2.6 hereof.
"DLJ Letter Agreement" shall mean the letter agreement executed by
--------------------
Pledgor on April 28, 1995, in favor of Donaldson, Lufkin & Jenrette Securities
Corporation.
"Environmental Laws" shall mean all federal, state, local and foreign
------------------
laws relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of any
Hazardous Substance into the environment (including without limitation ambient
air, surface water, ground water or land), or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Substances and any and all
regulations, codes, standards, plans, orders, decrees, writs, judgments,
injunctions, notices or demand letters issued, entered, promulgated or approved
thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time, and all rules and regulations from time to
time issued or promulgated thereunder.
"Event of Default" shall mean any of the events or conditions
----------------
described in Article 7 hereof.
"Facility A Loans" shall mean, collectively, the loans made pursuant
----------------
to Section hereof, and "Facility A Loan" shall mean any loan made pursuant to
---------------
Section hereof.
"Facility A Note" or "Facility A Notes" shall have the meanings given
--------------- ----------------
to such terms in Section hereof.
3
<PAGE>
"Facility B Loans" shall mean, collectively, the loans made pursuant
----------------
to Section hereof, and "Facility B Loan" shall mean any loan made pursuant to
---------------
Section hereof.
"Facility B Note" or "Facility B Notes" shall have the meanings given
--------------- ----------------
to such terms in Section hereof.
"GAAP" shall mean, as to any Person, generally accepted accounting
----
principles consistently applied and maintained throughout the period indicated
and consistent with the prior financial practice of such Person, as reflected in
the most recent financial statements of such Person issued prior to the date
hereof.
"Governmental Authority" shall mean any nation or government, any
----------------------
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government.
"Guarantors" shall mean, collectively, Pledgor, Paul H. Pfleger,
----------
Charles B. McNamee and any other Person hereafter executing a guaranty agreement
or any other guaranty of all or any portion of the Obligations or otherwise
becoming contingently liable for all or any portion of the Obligations.
"Guaranty Agreements" shall have the meaning assigned to that term in
-------------------
Section hereof.
"Indebtedness" shall mean, as applied to any Person at any time, (a)
------------
all indebtedness, obligations or other liabilities of such Person (i) for
borrowed money or evidenced by debt securities, debentures, acceptances, notes
or other similar instruments, and any accrued interest, fees and charges
relating thereto; (ii) under profit payment agreements or similar agreements
(other than discretionary contribution profit sharing plans governed by ERISA);
(iii) with respect to letters of credit issued for such Person's account; (iv)
to pay the deferred purchase price of property or services, except unsecured
accounts payable and accrued expenses arising in the ordinary course of business
which are less than 60 days past due; or (v) obligations under any lease
required under GAAP to be capitalized on the balance sheet of the lessee; (b)
all indebtedness, obligations or other liabilities of such Person or others
secured by a Lien on any property of such Person, whether or not such
indebtedness, obligations or liabilities are assumed by such Person, all as of
such time; (c) all Capital Stock of such Person subject (upon the occurrence of
any contingency or otherwise) to mandatory redemption prior to the first
anniversary of the Maturity Date; and (d) indebtedness of others guaranteed by
such Person.
"Lien" shall mean any mortgage or deed of trust, pledge,
----
hypothecation, assignment, deposit arrangement (other than deposit accounts not
intended as security maintained in the ordinary course of business with
financial institutions), lien, charge, claim, security
4
<PAGE>
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the UCC or comparable law of any
jurisdiction).
"Loans" shall mean, collectively, the Facility A Loans and the
-----
Facility B Loans and "Loan" shall mean either a Facility A Loan or a Facility B
----
Loan under this Agreement.
"Loan Documents" shall mean this Agreement, the Notes, the Guaranty
--------------
Agreements, any Stock Pledge Agreement, the Warrant Agreement, and all other
instruments, documents or agreements executed by any of the Obligors or any of
their Affiliates in connection with this Agreement, and "Loan Document" shall
-------------
mean any one of the Loan Documents.
"Material Adverse Effect" shall mean any event or condition which,
-----------------------
alone or when taken with other events or conditions occurring or existing
concurrently therewith, (a) has or is reasonably expected to have a material
adverse effect on the business, operations, condition (financial or otherwise),
assets, liabilities, prospects, or properties of Obligors, or any of them; (b)
has or is reasonably expected to have any material adverse effect on the
validity or enforceability of this Agreement or any Loan Document; (c)
materially impairs or is reasonably expected to materially impair the ability of
any Obligor to pay and perform the Obligations; (d) materially impairs or is
reasonably expected to materially impair the ability of the Collateral Agent or
either of the Lenders to enforce its rights and remedies under this Agreement
and the Loan Documents; or (e) has or is reasonably expected to have any
material adverse effect on the Collateral, the Liens of either of the Lenders in
the Collateral or the priority of such Liens.
"Margin Stock" shall mean "margin stock" as such term is defined from
------------
time to time in Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System.
"Maturity Date" shall be the first anniversary of the Merger Date.
-------------
"Merger" shall mean the merger of the Company with Merger Co., as
------
described in the "Agreement and Plan of Merger" executed as of September 5,
1995.
"Merger Co." shall mean TIE Merger Co., a Delaware corporation and a
----------
wholly-owned subsidiary of Parent.
"Merger Date" shall mean the date that the Merger is effected.
-----------
"MIDCOM" shall mean MIDCOM Communications, Inc., a Washington
------
corporation.
5
<PAGE>
"New TIE" shall mean TIE/communications, Inc., a Delaware corporation
-------
and the corporation surviving the Merger.
"Non-Defaulting Lender" shall have the meaning assigned to that term
---------------------
in Section 2.6 hereof.
"Notes" shall mean, collectively, the Facility A Notes and the
-----
Facility B Notes.
"Obligations" shall mean the Loans and any and all other indebtedness,
-----------
liabilities and obligations of Obligors, or any of them, to the Lenders or to
the Collateral Agent of every kind and nature (including, without limitation,
interest, charges, expenses, attorneys' fees and other sums chargeable to
Borrowers, or either of them, by either of the Lenders and future advances made
to or for the benefit of Borrowers, or either of them), arising under this
Agreement or under any of the other Loan Documents, or acquired by either of the
Lenders from any other source, whether arising by reason of an extension of
credit, opening of a letter of credit, loan, lease, guaranty, indemnification,
interest hedge agreement, or in any other manner, direct or indirect, absolute
or contingent, primary or secondary, due or to become due, now existing or
hereafter acquired.
"Obligors" shall mean the Borrowers, Pledgor, Paul H. Pfleger, Charles
--------
B. McNamee, and any other individual or entity who (i) has executed the Notes, a
guaranty, or any other document assuming any liability in connection with
repayment of the Obligations; or (ii) has provided any collateral or other
security for repayment or performance of the Obligations.
"Partnership Obligor" and "Partnership Obligors" shall have the
------------------- --------------------
meaning assigned to those terms in Section 4.2 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
----
under ERISA, or any successor agency or Person performing substantially the same
functions.
"Person" shall mean and include any individual, sole proprietorship,
------
partnership, limited partnership, joint venture, limited liability company,
limited liability partnership, trust, unincorporated organization, association,
corporation, institution, entity, party or government (whether national,
federal, state, county, city, municipal, or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
"Pledged Shares" shall mean all shares of the common stock of MIDCOM
--------------
pledged for the benefit of the Lenders or either of them pursuant to a Stock
Pledge Agreement.
"Pledgor" shall mean Black Creek Limited Partnership, a limited
-------
partnership organized under the laws of the State of Washington, and any other
Person hereafter executing a Stock Pledge Agreement.
6
<PAGE>
"Pro Rata Share" shall mean, as to each Lender, fifty percent (50%).
--------------
"Regulation G" shall mean Regulation G of the Board of Governors of
------------
the Federal Reserve System, as it may be amended from time to time.
"Solvent" shall mean, as to any Person, that such Person (a) has
-------
capital sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage, (b) is able to pay its debts as
they mature and (c) owns property whose fair saleable value is greater than the
amount required to pay its obligations (including contingent obligations).
"Stock Pledge Agreements" shall mean the agreement defined in Section
-----------------------
9.1(f)(iv) hereof and any other stock pledge agreements executed to provide any
shares as Collateral for the payment and performance of the Obligations
hereunder, and "Stock Pledge Agreement" shall mean any of the Stock Pledge
----------------------
Agreements.
"Subsidiary" shall mean, as to any Person, any other Person of which
----------
more than fifty percent (50%) of the outstanding shares of Capital Stock or
other ownership interest having ordinary voting power to elect a majority of the
board of directors of such corporation or similar governing body of such other
Person (irrespective of whether or not at the time stock or other ownership
interests of any other class or classes of such other Person shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or by one or more
"Subsidiaries" of such Person.
"Tax" shall mean and include any present or future tax, levy, cost or
---
charge of any nature imposed by any government or any authority or political
subdivision thereof, excluding taxes on or measured by the net income of a
Lender imposed by any jurisdiction in which the principal or relevant lending
office of the Lender is located.
"Tender Date" shall mean the date of the closing of the Tender Offer.
-----------
"Tender Offer" shall mean the offer by Parent to purchase for cash all
------------
outstanding shares of the common stock of the Company, a Delaware corporation
for $8.60 net per share as evidenced by the offer to purchase dated September
12, 1995.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of New York.
"Warrant Agreement" shall mean the Warrant Agreement executed by and
-----------------
among Parent and the Lenders of even date herewith, as amended, modified or
supplemented from time to time.
"Warrants" shall have the meaning described in Section 3.3 hereof, the
--------
number and time of issuance of which are described in more detail in the Warrant
Agreement.
7
<PAGE>
1.2 USE OF DEFINED TERMS. All terms defined in this Agreement
and the Exhibits hereto shall have the same defined meanings when used in any
other Loan Document, unless the context shall require otherwise.
1.3 ACCOUNTING TERMS; CALCULATIONS. All accounting terms not
specifically defined herein shall have the meanings generally attributed to such
terms under GAAP. Calculations hereunder shall be made and financial data
required hereby shall be prepared, both as to classification of items and as to
amounts, in accordance with GAAP, consistently applied (except as otherwise
specifically required herein).
1.4 OTHER TERMS. All other terms used in this Agreement which
are not specifically defined herein but which are defined in the UCC shall have
the meanings set forth therein.
1.5 TERMINOLOGY. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles of Articles and Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement, and all references in this Agreement to Articles, Sections,
Subsections, paragraphs, clauses, subclauses, Exhibits or Schedules shall refer
to the corresponding Article, Section, Subsection, paragraph, clause, subclause
of, Exhibit or Schedule attached to, this Agreement, unless specific reference
is made to the articles, sections or other subdivisions of, Exhibits or
Schedules to, another document or instrument. All references to any instrument,
document or agreement shall, unless the context otherwise requires, refer to
such instrument, document or agreement as the same may be, from time to time,
amended, modified, supplemented, renewed, extended, replaced or restated.
1.6 EXHIBITS. All Exhibits and Schedules attached hereto are by
reference made a part hereof.
2. THE LOANS
2.1 LOANS.
(a) FACILITY A LOANS. Subject to the terms and conditions
hereof and provided there exists no Default or Event of Default, each of the
Lenders severally, but not jointly, agrees to make, upon request of TI therefor,
a loan (collectively, the "Facility A Loans") to TI on the Tender Date in a
principal amount requested by TI not to exceed such Lender's Pro Rata Share of
Ten Million Dollars ($10,000,000.00). The Facility A Loan made by each Lender
shall be evidenced by a promissory note substantially in the form of Exhibit A
---------
attached hereto, executed by TI and payable to such Lender in the original
principal amount of such Lender's Pro
8
<PAGE>
Rata Share of $10,000,000.00 (each a "Facility A Note" and collectively, the
"Facility A Notes").
(b) FACILITY B LOANS. Subject to the terms and conditions
hereof and provided there exists no Default or Event of Default, each of the
Lenders severally, but not jointly, agrees to make, upon the request of Parent
therefor, a loan (collectively, the "Facility B Loans") to Parent on the Merger
Date in a principal amount requested by Parent not to exceed such Lender's Pro
Rata Share of Ten Million Dollars ($10,000,000.00); provided, however, that any
-------- -------
request by Parent for the making of a Facility B Loan shall be deemed to be a
notice of the payment of the Facility A Loans by TI and the Lenders shall (i) be
entitled to treat the making of the Facility B Loans as a simultaneous repayment
by Parent of the Affiliate Loan and a repayment by TI of the Facility A Loans;
(ii) be entitled to apply the proceeds of the Facility B Loans to the
outstanding principal balance of the Facility A Loans and to the accrued and
unpaid interest thereon; and (iii) be obligated to remit to Parent the proceeds
of the Facility B Loans only to the extent such proceeds exceed the outstanding
principal balance of the Facility A Loan owed to such Lender and to the accrued
and unpaid interest thereon; provided, further, neither Lender shall have any
-------- -------
obligation to make a Facility B Loan after December 29, 1995. The Facility B
Loan made by each Lender shall be evidenced by a promissory note substantially
in the form of Exhibit B attached hereto, executed by Parent and payable to such
---------
Lender in the original principal amount of such Lender's Pro Rata Share of
$10,000,000.00 (each a "Facility B Note" and collectively, the "Facility B
Notes").
2.2 BORROWING PROCEDURES.
(a) Borrower shall give each Lender written notice of each
request for a Loan hereunder in accordance with subsection (b) below. Not later
than 2:00 p.m. (prevailing Eastern time), on the date specified for each
borrowing hereunder, each Lender shall make available to the relevant Borrower,
at the principal office of such Lender, the amount of the Loan to be made and
disbursed by such Lender, in immediately available funds.
(b) All notices given by Borrowers, or either of them, to the
Lenders of borrowings of Loans hereunder shall either be oral, with prompt
written confirmation (which may be by telecopy) or in writing; shall be
irrevocable; shall be effective only if received by Lenders prior to 10:00 a.m.
(prevailing Eastern time) on a Business Day which is at least five (5) days
prior to the Tender Date, in the case of the Facility A Loan, or five (5) days
prior to the Merger Date, in the case of the Facility B Loan. Each such notice
shall specify: (1) the amount of such borrowing; and (2) the date such Loan is
to be made, (which shall be a Business Day). Each request for a borrowing
pursuant to this Agreement or the other Loan Documents shall constitute (x) an
automatic warranty and representation by Borrowers to Lenders that there does
not then exist a Default or Event of Default or any event or condition which,
with the making of such Loan, would constitute a Default or Event of Default and
(y) an affirmation that as of the date of such request all of the
representations and warranties of Obligors contained in
9
<PAGE>
this Agreement and the other Loan Documents are true and correct in all material
respects, both before and after giving effect to the making of such Loan.
2.3 PRINCIPAL PAYMENTS; PREPAYMENTS.
(a) TI shall pay all principal, accrued and unpaid interest, and
other charges and expenses in connection with the Facility A Loan in full on the
earlier to occur of the Merger Date and December 29, 1995. Parent shall pay all
principal, accrued and unpaid interest, and other charges and expenses in
connection with the Facility B Loans in full on the Maturity Date.
(b) Each payment by the Borrowers to Lenders pursuant to this
Agreement or the Notes shall be made prior to 1:00 p.m. (prevailing Eastern
time) on the date due and shall be made without set-off or counterclaim by wire
transfer to the account of each such Lender specified for such Lender on its
signature page hereto or at such other place or places as such Lender may
designate from time to time in writing to Borrowers. Each such payment shall be
in lawful currency of the United States of America and in immediately available
funds.
(c) Each payment made by Borrowers hereunder shall either (i) be
exempt from, and be made without reduction by reason of, any Tax or (ii) to the
extent that any such payment shall be subject to any Tax, be accompanied by an
additional payment by Borrowers of such amount as may be necessary so that the
net amount received by the Lenders (after deducting all applicable Taxes) is the
same as Lenders would have received had such payment not been subject to such
Tax. Upon any payment of Tax by Borrowers, Borrowers shall promptly (and in any
event within 30 days) furnish to the Lenders such tax receipts, certificates and
other evidence of such payment as Borrowers may have or the Lenders may
reasonably request.
(d) If the due date of any payment hereunder or under any of the
Notes would otherwise fall on a day which is not a Business Day, then such
payment shall be due on the next succeeding Business Day and interest shall be
payable on the principal amount of such payment for the period of such
extension.
(e) The Loans may be prepaid, in whole or in part, without
premium or penalty, in integral multiples of $100,000, at any time upon written
notice to the Lenders on the date and in the amount specified in such notice, by
paying to the Lenders the amount of such prepayment and all accrued and unpaid
interest thereon.
2.4 USE OF PROCEEDS. The proceeds of the Loans shall be used as
follows:
(a) TI shall use the proceeds of the Facility A Loans to fund the
Affiliate Loan to Parent and Parent shall use the proceeds of the Affiliate Loan
to provide a portion of the cash payments required to complete the Tender Offer;
and
10
<PAGE>
(b) Parent shall use the proceeds of the Facility B Loans, (i) to the
extent of the outstanding principal and accrued and unpaid interest on the
Facility A Loan, to repay the Affiliate Loan and TI shall use the proceeds of
such payment to pay in full the outstanding principal amount of the Facility A
Loan and all accrued interest thereon and (ii) to the extent of the balance, to
provide a portion of the consideration payable to the shareholders (other than
Parent) of the Company pursuant to the Merger.
No portion of the proceeds of any Loan may be used by the Borrowers,
or either of them, in any manner which would cause such Loan or the application
of the proceeds thereof to violate any of Regulations G, T, U or X of the Board
of Governors of the Federal Reserve System.
2.5 SEVERAL OBLIGATIONS OF BANKS; REMEDIES INDEPENDENT. The
failure of any Lender to make any Loan required to be made by it on the date
specified therefor shall not relieve any other Lender of its obligation to make
its Loan on such date, but neither the other Lender nor the Collateral Agent
shall be responsible for the failure of a Lender to make a Loan to be made by
such other Lender (the Lender able and willing to fund being hereinafter
referred to as the "Non-Defaulting Lender" and the party unable and unwilling to
fund being hereinafter referred to as the "Defaulting Lender"); provided,
--------
however, that if any Lender is a Defaulting Lender, then:
- -------
(a) with respect to the Defaulting Lender (i) the Parent shall be
entitled to a prompt refund of the Cash Commitment Fee paid to the
Defaulting Lender; (ii) Parent shall be under no obligation to issue the
Warrants to the Defaulting Lender and any Warrants previously issued to the
Defaulting Lender shall be null and void; and (iii) Parent or TI, as the
case may be, shall have all of its remedies in law or equity with respect
to such failure to fund; and
(b) unless the Non-Defaulting Lender shall actually fund the
amount requested by Borrower in accordance with the terms of Section
hereof; (i) the Non-Defaulting Lender shall upon notice from Parent
promptly refund its respective portion of the Cash Commitment Fee to
Parent; and (ii) Parent shall be under no obligation to issue the Warrants
to the Non-Defaulting Lender and the Non-Defaulting Lender shall return to
Parent any Warrants previously issued to the Non-Defaulting Lender;
(c) if the Non-Defaulting Lender makes the entire amount of the
Loans properly requested by Borrower in accordance with the terms of
Section hereof: the Non-Defaulting Lender shall be entitled (i) to act as
Collateral Agent and to receive all payments to be made under this
Agreement, the Notes, and the other Loan Documents; (ii) to receive all
warrants to be issued pursuant to this Agreement and the other Loan
Documents; and (iii) to receive from the Borrower the Defaulting Lender's
share of the Cash Commitment Fee. TI and Parent agree that in such event
the Non-
11
<PAGE>
Defaulting Lender shall be entitled to deduct the amount to which it is
entitled pursuant to clause (iii) above from the proceeds of the Loan made
by it.
The amounts payable by Borrowers at any time hereunder and under the Notes to
each Lender shall be a separate and independent debt and each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement and the
Notes, and it shall not be necessary for any other Lender or the Collateral
Agent to consent to, or be joined as an additional party in, any proceeding for
such purposes.
2.6 PRO RATA TREATMENT. Except to the extent otherwise provided
herein: (a) each borrowing from the Lenders under Sections hereof shall be made
from the Lenders and each payment of the Cash Commitment Fee under Section
hereof shall be made for the account of the Lenders, pro rata according to their
Pro Rata Share; and (b) each payment or prepayment of principal of Loans shall
be made for the account of relevant Lenders pro rata in accordance with the
respective unpaid principal amounts of the relevant Loans held by such Lenders.
3. FEES AND INTEREST
3.1 INTEREST.
(a) Subject to modification pursuant to Section hereof, the
average daily outstanding principal amount of the Obligations shall bear
interest from the date thereof until paid in full at the following rates:
(i) the outstanding principal amount of the Loan shall
bear interest at the rate of ten percent (10%) per annum, calculated
daily on the basis of a 360-day year and actual days elapsed; or
(ii) the amount of any payment of principal and, to the
extent permitted by Applicable Law, interest or other amount payable
hereunder which is not paid when due, shall, unless otherwise elected
by the Lenders, bear interest at the Default Rate.
(b) Accrued interest shall be payable (i) in the case of the
Facility A Loans, on the earlier to occur of the Merger Date and December 29,
1995; and (ii) in the case of the Facility B Loans, on the first day of each
month for the previous month, commencing with the first such date after the
Merger Date.
3.2 CASH COMMITMENT FEE. Parent has heretofore paid to the
Lenders a cash commitment fee (the "Cash Commitment Fee") in an amount equal to
$200,000.00. Except
12
<PAGE>
as provided in Section hereof, such fee was fully earned and non-refundable on
payment thereof, and shall not be subject to proration or rebate for any reason.
3.3 ISSUANCE OF WARRANTS AS PORTION OF COMMITMENT FEE, AS
CLOSING FEE, AND BASED ON TIME OF REPAYMENT. Parent has also agreed to issue
certain warrants to the Lenders (the "Warrants") as described in more detail in
the Warrant Agreement, with such Warrants to be issued as a portion of the
commitment fee for the Term Loan, as a closing fee upon execution of this
Agreement, and based on the time of repayment by Borrowers of the Term Loan.
3.4 INCREASED COSTS AND REDUCED RETURN.
(a) If any Lender shall have determined that the applicability
of any law, rule, regulation or guideline adopted pursuant to or arising out of
the July 1988 report of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of Capital Measurement
and Capital Standards," or the adoption after the date hereof of any other law,
rule, regulation or guideline regarding capital adequacy, or any change in any
of the foregoing or in the enforcement or interpretation or administration of
any of the foregoing by any court or any central bank or other Governmental
Authority, charged with the enforcement or interpretation or administration
thereof, or compliance by such Lender (or any lending office of such Lender) or
one of such Lender's parent company with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's capital or on the capital of such Lender's
parent company, if any, as a consequence of its making or maintaining any Loan
or its incurring any obligations under this Agreement to a level below that
which such Lender or such Lender's parent company could have achieved but for
such applicability, adoption, change or compliance (taking into consideration
such Lender's policies and the policies of such Lender's parent company with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then, upon demand by such Lender, the Borrowers, jointly and severally, hereby
- ----
agree to pay to such Lender from time to time such additional amount or amounts
as will compensate such Lender or such Lender's parent company for any such
reduction suffered.
3.5 INDEMNITY. Each Borrower hereby indemnifies and agrees to
hold harmless each of the Lenders from and against any and all losses or
expenses which such Lender may sustain or incur as a consequence of failure by
such Borrower to consummate any notice of prepayment or borrowing made by such
Borrower. Borrowers' obligations under this Section shall survive the
termination of this Agreement and the repayment of the Obligations.
3.6 NOTICE OF AMOUNTS PAYABLE TO LENDERS. If a Lender shall
seek payment of any amounts from Borrowers pursuant to Sections , , or hereof,
it shall promptly notify Borrowers of the amount payable by Borrowers to the
Lender thereunder. A certificate of the Lender seeking payment pursuant to
Sections , or hereof, setting
13
<PAGE>
forth in reasonable detail the factual basis for and the computation of the
amounts specified, shall be conclusive and binding on all parties for all
purposes, absent manifest error, as to the amounts owed. Borrowers' obligations
under this Section shall survive the termination of this Agreement and the
repayment of the Obligations.
3.7 INTEREST SAVINGS CLAUSE. Nothing contained in this
Agreement or in the Notes or any other Loan Documents shall be construed to
permit the Lenders to receive at any time interest, fees or other charges in
excess of the amounts which the Lenders are legally entitled to charge and
receive under any law to which such interest, fees or charges are subject. In no
contingency or event whatsoever shall the compensation payable to the Lenders by
Borrowers, or either of them, howsoever characterized or computed, hereunder or
under any of the Notes or under any other agreement or instrument evidencing or
relating to the Obligations, exceed the highest rate permissible under any law
to which such compensation is subject. There is no intention that either Lender
shall contract for, charge or receive compensation in excess of the highest
lawful rate, and, in the event it should be determined that any excess has been
charged or received, then, ipso facto, such rate shall be reduced to the highest
---- -----
lawful rate so that no amounts shall be charged which are in excess thereof; and
the Lenders shall apply such excess against the Loans then outstanding and then
to any other Obligations and, to the extent of any amounts remaining thereafter,
refund such excess to Borrowers.
4. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to make
Loans hereunder, Borrowers, jointly and severally, hereby make the following
representations and warranties to the Lenders which shall be true and correct in
all material respects on the date hereof and shall continue to be true and
correct in all material respects at the time of the making of any Loan and until
the Loans have been repaid in full:
4.1 CORPORATE EXISTENCE AND QUALIFICATION. TI, Parent, and each
Obligor identified as a corporation in any of the Loan Documents (collectively,
"Corporate Obligors," and, individually, a "Corporate Obligor") is organized,
validly existing and in good standing under the laws of the state of its
incorporation. Each Corporate Obligor is duly qualified as a foreign
corporation in good standing in each state wherein the conduct of its business
or the ownership of its property requires such qualification except where the
failure to so qualify would not have a Material Adverse Effect.
4.2 PARTNERSHIP MATTERS. Each of Pledgor and any other Obligor
identified as a partnership in any of the Loan Documents (collectively,
"Partnership Obligors," and individually a "Partnership Obligor") is a
partnership duly organized, validly existing and in good standing under the laws
of that Obligor's state of organization, and no events have occurred which have
or would result in dissolution or winding up of the affairs of any of the
Partnership Obligors. To the extent required by the laws of any state where a
Partnership Obligor conducts its business or owns property, the Partnership
Obligors are duly qualified to
14
<PAGE>
do business in such states as partnerships organized under the laws of a
different jurisdiction except where the failure to so qualify would not have a
Material Adverse Effect.
4.3 AUTHORITY; VALID AND BINDING EFFECT. Each Corporate Obligor
and each Partnership Obligor has the power and authority to execute, deliver and
perform under this Agreement and the other Loan Documents to which it is a
party, and to borrow hereunder, and has taken all necessary and appropriate
partnership or corporate action to authorize the execution, delivery and
performance of this Agreement and such other Loan Documents. This Agreement and
the other Loan Documents to which each such Obligor is a party constitute the
valid and legally binding obligations of such Obligor, enforceable against such
Obligor in accordance with their respective terms; except that enforceability
may be limited by bankruptcy, insolvency and other laws affecting creditor's
rights generally and except that the availability of certain remedies may be
limited by general principles of equity.
4.4 NO CONFLICT. The execution, delivery and performance by
each Obligor of this Agreement and the other Loan Documents (a) are not in
contravention of any provisions of Applicable Law applicable to such Obligor;
(b) will not violate or result in a default under any material agreement or
indenture to which such Obligor is a party or by which such Obligor is bound;
(c) do not contravene the Certificate or Articles of Incorporation or By-laws of
any Corporate Obligor nor the partnership agreement of any Partnership Obligor;
and (d) will not result in or require the creation or imposition of any Lien on
any of the property or assets of such Obligor other than Liens on the Pledged
Shares in favor of the Lenders created by the Loan Documents.
4.5 GOVERNMENTAL ACTION. The execution, delivery and
performance of this Agreement and the other Loan Documents by the Obligors do
not require any registration with, consent or approval of, or any notice to, or
other action to, with or by any Governmental Authority except filings, consent
or notices which have been obtained and a copy thereof furnished to the Lenders.
4.6 NO LITIGATION. Except as set forth on Schedule 4.6 hereto,
------------
there are no proceedings pending or threatened against TI, Parent, or Pledgor
before or by any court or administrative agency.
4.7 SOLVENCY. After giving effect to the execution and delivery
of this Agreement, the Loan Documents, the consummation of the transactions
contemplated hereby and thereby and the making of each Loan hereunder, each
Obligor is Solvent.
4.8 TAXES. Each Obligor has filed all federal, state, local and
foreign tax returns, reports and estimates which are required to be filed by it
and all taxes (including penalties and interest, if any) shown on such returns,
reports and estimates as being due and payable or which are otherwise due and
payable have been fully paid. Such tax returns properly and correctly reflect
the income and taxes of such Obligor for the periods covered thereby. The
15
<PAGE>
federal tax identification numbers for TI, Parent, and the Pledgor are set forth
on Schedule 4.8 attached hereto.
------------
4.9 FINANCIAL INFORMATION. The opening balance sheet of Parent
as of October 18, 1995, a true and correct copy of which has been delivered to
Lenders, giving effect to the consummation of the Tender Offer, the Merger and
the other transactions contemplated thereby and hereby, contains no material
misstatement or omission and fairly presents the financial position of Parent as
of the date thereof, giving effect to the consummation of the Tender Offer, the
Merger and the other transactions contemplated thereby and hereby, based on the
assumptions set forth therein and herein.
4.10 TITLE TO ASSETS. Each Obligor that has executed a Stock
Pledge Agreement has good and marketable title to and ownership of the portion
of the Pledged Shares identified as that Obligor's property on Schedule I to the
Stock Pledge Agreement, free and clear of any and all Liens whatsoever, and none
of the Pledged Shares are subject to any "lock-up" or similar arrangement which
would prevent the pledge to Lenders of such stock or, with the exception of the
DLJ Letter Agreement, would prevent, delay, or otherwise affect the resale of
such stock by the Collateral Agent or the Lenders. Each Obligor that provides
any Collateral other than Pledged Shares after execution of this Agreement has
good and marketable title to and ownership of that Collateral, free and clear of
any and all Liens whatsoever, and none of that Collateral is subject to any
arrangements which would prevent its pledge to, or resale by, Lenders.
4.11 VIOLATIONS OF LAW. No Obligor is in violation of any
applicable statute, rule, regulation or ordinance of any Governmental Authority,
the violation of which could reasonably be expected to have a Material Adverse
Effect.
4.12 MARGIN STOCK. No Obligor is engaged principally, or as one
of its important activities, in the business of extending credit for buying or
carrying Margin Stock, and the consummation of the transactions contemplated by
this Agreement, including, but not limited to, the Tender Offer, the Merger, the
making of the Loans and the use of the proceeds thereof, shall result in the
violation of Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
4.13 NO DEFAULT. No Obligor is in default with respect to (a)
any note, indenture, loan agreement, mortgage, lease, deed or other similar
agreement relating to Indebtedness to which such Obligor is a party or by which
such Obligor is bound or (b) any other instrument, document or agreement to
which such Obligor is a party or by which such Obligor or any of such Obligor's
properties are bound, the default of which would have a Material Adverse Effect.
16
<PAGE>
4.14 CHIEF EXECUTIVE OFFICE. The principal place of business,
chief executive office and office for each of the Borrowers and the location
where each keeps all of its books and records is: 1201 Third Avenue, Suite 5400,
Seattle, Washington 98101-3031.
4.15 INVESTMENTS. Except as set forth on Schedule 4.15 hereto,
-------------
neither Borrower has any Subsidiaries or any interest in any partnership or
joint venture with or investment in any Person.
4.16 REGULATORY MATTERS. Neither the Company nor any of the
Obligors is subject to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 1935, as amended, the Federal
Power Act, the Interstate Commerce Act or any other federal or state statute or
regulation which limits its ability to incur indebtedness or its ability to
consummate the transactions contemplated hereby.
4.17 DISCLOSURE. Neither this Agreement nor any other
instrument, document, agreement, financial statement or certificate furnished to
either of the Lenders or any shareholder of the Company by or on behalf of any
Obligor in connection herewith or in connection the Tender Offer or the Merger,
including all documents and financial information concerning the Company or
MIDCOM, contains an untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or omits to state any
fact which may in the future have a Material Adverse Effect.
4.18 DLJ LETTER AGREEMENT. The DLJ Letter Agreement expires on
January 4, 1996, and has not been amended, modified, or supplemented prior to
execution of this Agreement.
5. AFFIRMATIVE COVENANTS
Each Borrower hereby jointly and severally covenants with the Collateral
Agent and the Lenders that from and after the date hereof, and until, in the
case of TI, the repayment in full of the Facility A Loan, and, in the case of
Parent, the termination of this Agreement and the payment and satisfaction in
full of the Obligations, whichever last occurs, unless the Lenders otherwise
consent in writing, such Borrower will, and will cause each of its Subsidiaries
to:
5.1 REPORTING REQUIREMENTS. Furnish or cause to be furnished to
the Lenders:
(a) Until such time as the Facility A Loan is repaid in full, as
soon as practicable, and in any event within 30 days after the end of each
month, interim unaudited financial statements for TI, including a balance sheet,
income statements and statements of cash flow, for the month and year-to-date
period then ended, prepared in accordance with GAAP and certified as to truth
and accuracy thereof by the chief financial officer for TI;
17
<PAGE>
(b) As soon as practicable, and in any event within 30 days
after the end of each month, interim unaudited financial statements for Parent
and its consolidated Subsidiaries, prepared on a consolidated basis for Parent
and its consolidated Subsidiaries, including a consolidated balance sheet,
consolidated income statements and consolidated statements of cash flow, for the
month and year-to-date period then ended, prepared in accordance with GAAP and
certified as to truth and accuracy thereof by the chief financial officer for
Parent;
(c) As soon as available, and in any event within 90 days after
the end of the fiscal year of Parent, audited annual financial statements of
Parent and its consolidated Subsidiaries, prepared on a consolidated basis for
Parent and its consolidated Subsidiaries, including consolidated balance sheets,
consolidated income statements and consolidated statements of cash flow for the
fiscal year then ended, prepared in accordance with GAAP, in comparative form
and accompanied by the unqualified opinion of a nationally recognized firm of
independent certified public accountants retained by Parent and acceptable to
the Lenders;
(d) As soon as practicable, and in any event within 45 days
after the end of each fiscal quarter of MIDCOM, interim unaudited financial
statements for MIDCOM and its consolidated Subsidiaries, prepared on a
consolidated basis for MIDCOM and its consolidated Subsidiaries, including a
consolidated balance sheet, consolidated income statements and consolidated
statements of cash flow, for the quarter and year-to-date period then ended,
prepared in accordance with GAAP and certified as to truth and accuracy thereof
by the chief financial officer for MIDCOM;
(e) As soon as available, and in any event within 90 days after
the end of the fiscal year of MIDCOM, audited annual financial statements of
MIDCOM and its consolidated Subsidiaries, prepared on a consolidated basis for
MIDCOM and its consolidated Subsidiaries, including consolidated balance sheets,
consolidated income statements and consolidated statements of cash flow for the
fiscal year then ended, prepared in accordance with GAAP, in comparative form
and accompanied by the unqualified opinion of a nationally recognized firm of
independent certified public accountants retained by MIDCOM;
(f) Together with the annual financial statements referred to in
clause (c) above, a statement from such independent certified public accountants
that, in making their examination of such financial statements, they obtained no
knowledge of any Default or Event of Default or, in lieu thereof, a statement
specifying the nature and period of existence of any such Default or Event of
Default disclosed by their examination;
(g) Promptly after the sending or filing thereof, as the case
may be, copies of any definitive proxy statements, financial statements or
reports which MIDCOM or any Obligor sends to its shareholders and copies of any
regular periodic and special reports or registration statements which MIDCOM or
any Obligor files with the Securities and Exchange Commission (or any
Governmental Authority substituted therefor), including, but not limited to,
18
<PAGE>
all Form 10-K and Form 10-Q reports, if any, or any report or registration
statement which MIDCOM or any Obligor files with any national securities
exchange;
(h) Such other information respecting the condition or
operations, financial or otherwise, of MIDCOM or Obligors, and each of them, and
their Affiliates, and each of them, as either of the Lenders may from time to
time reasonably request.
5.2 TAX RETURNS. File all federal, state and local tax returns
and other reports that such Borrower or such Subsidiary is required by law to
file, maintain adequate reserves for the payment of all taxes, assessments,
governmental charges and levies imposed upon its income, or its profits, or upon
any property belonging to it, and pay and discharge all such taxes, assessments,
governmental charges and levies prior to the date on which penalties attach
thereto, except where the same may be contested in good faith by appropriate
proceedings and for which adequate reserves have been established.
5.3 COMPLIANCE WITH LAWS. Comply with all laws, statutes,
rules, regulations and ordinances of any Governmental Authority applicable to
any such Borrower or any Subsidiary, including, without limitation, ERISA, all
Environmental Laws and any such laws, statutes, rules, regulations or ordinances
regarding the collection, payment, and deposit of employees' income,
unemployment, and Social Security taxes and with respect to pension liabilities,
the violation of which could have a Material Adverse Effect.
5.4 BOOKS AND RECORDS. Keep adequate records and books of
account with respect to its business activities in which proper entries are made
in accordance with GAAP reflecting all its financial transactions.
5.5 NOTIFICATIONS TO THE LENDERS. Notify the Lenders
immediately by telephone (with each such notice to be confirmed in writing
within three (3) Business Days): (a) upon any Borrower's learning thereof, of
any litigation affecting such Borrower claiming damages of $250,000 or more,
individually or when aggregated with other litigation pending against such
Borrower or its Affiliates, whether or not covered by insurance, and of the
threat or institution of any suit or administrative proceeding against any
Borrower or its Affiliates which, if adversely determined, might have a Material
Adverse Effect, and establish such reserves with respect thereto as may be
required in accordance with GAAP; (b) upon the occurrence thereof, of any
Default or Event of Default hereunder; (c) upon the occurrence thereof, of any
event or condition which could have a Material Adverse Effect; and (d) upon the
occurrence thereof, of any Borrower's or any Affiliate's default under (i) any
note, indenture, loan agreement, mortgage, lease, deed or other similar
agreement relating to any indebtedness of such Borrower or any Affiliate or (ii)
any other instrument, document or agreement to which such Borrower or any
Affiliate is a party or by which such Borrower or any Affiliate or any of their
respective property is bound, the default of which could have a Material Adverse
Effect.
19
<PAGE>
5.6 PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain
its corporate existence, rights, franchises and privileges in the jurisdiction
of its organization, and qualify and remain qualified as a foreign corporation
or partnership in each jurisdiction in which such qualification is necessary in
view of its business and operations or the ownership of its properties except
where the failure to so qualify would not have a Material Adverse Effect.
6. NEGATIVE COVENANTS
Each Borrower hereby jointly and severally covenants with the Lenders that
from and after the date hereof and until, in the case of TI, the indefeasible
repayment in full of the Facility A Loan, and, in the case of Parent, the
termination of this Agreement and the payment and satisfaction in full of the
Obligations, whichever last occurs, it will not, nor will it permit any of their
Subsidiaries to, without the prior written consent of the Lenders:
6.1 PROHIBITION OF FUNDAMENTAL CHANGES. Enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution) or make any
substantial change in the basic type of business conducted by such Borrower or
Subsidiary as of the date hereof.
6.2 FISCAL YEAR. Change TI's fiscal year end from June 30 or
Parent's fiscal year end from December 31.
6.3 RELOCATIONS; USE OF NAME. Relocate its executive offices,
open new places of business, relocate existing places of business, or use any
corporate name (other than its own) or any fictitious name, in each case, except
upon thirty (30) days prior written notice to the Lenders and after the delivery
to the Lenders of financing statements, if required by the Lenders, in form
satisfactory to the Lenders.
6.4 DLJ LETTER AGREEMENT. Amend, modify, supplement, or extend
the DLJ Letter Agreement.
7. EVENTS OF DEFAULT
The occurrence of any of the following events or conditions shall
constitute an Event of Default hereunder:
7.1 OBLIGATIONS. Any Obligor shall fail to make any payments of
principal of or interest on any Loan or any other Obligation when due.
7.2 MISREPRESENTATIONS. Any Obligor shall make any
representation or warranty in this Agreement or any of the other Loan Documents
or in any certificate or statement furnished at any time hereunder or in
connection with this Agreement or any of the
20
<PAGE>
other Loan Documents which proves to have been untrue or misleading when made or
furnished and which continues to be untrue or misleading.
7.3 CERTAIN COVENANTS. Either Borrower shall default in the
observance or performance of any covenant or agreement contained in Sections or
or Article of this Agreement.
7.4 OTHER COVENANTS. Either Borrower shall default in the
observance or performance of any other covenant or agreement contained in this
Agreement or under any of the other Loan Documents to which Borrower is a party
and such default continues for more than ten (10) days after notice thereof to
Borrower by either Lender or the Collateral Agent.
7.5 LOAN DOCUMENTS. The occurrence of an "Event of Default"
under, and as such term is defined in, any of the other Loan Documents.
7.6 OTHER DEBTS. (a) MIDCOM shall fail to pay any principal of
or premium or interest on any of its Indebtedness, which is outstanding in a
principal amount of at least $5,000,000 in the aggregate, when the same becomes
due and payable and such Indebtedness has either matured or been accelerated; or
(b) any Obligor shall fail to pay any principal of or premium or interest on any
of its Indebtedness, which is outstanding in a principal amount of at least
$500,000 in the aggregate, when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace or cure period, if any,
specified in the agreement, mortgage, indenture or instrument relating to such
Indebtedness; or (c) any other event shall occur or condition shall exist under
any agreement, mortgage, indenture or instrument relating to any such
Indebtedness and shall continue after the applicable grace or cure period, if
any, specified in such agreement, mortgage, indenture or instrument, if the
effect of such event or condition is to accelerate, or (except in the case of
MIDCOM) to permit the acceleration of, the maturity of such Indebtedness; or (d)
any such Indebtedness shall be accelerated or otherwise declared to be due and
payable prior to the stated maturity thereof, or (e) any such Indebtedness shall
be required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to repay, redeem,
purchase or defease such Indebtedness shall be required to be made, in each case
prior to the stated maturity thereof.
7.7 TAX LIEN. A notice of Lien, levy or assessment is filed of
record with respect to all or any assets of MIDCOM or the Obligors, or any of
them, or any Affiliates of the Obligors, or any of them, by the United States or
any other Governmental Authority, including, without limitation, the PBGC, which
adversely affects the priority of the Liens granted to the Collateral Agent
under any of the other Loan Documents.
7.8 VOLUNTARY BANKRUPTCY. MIDCOM, the Obligors, or any of them,
or their respective Subsidiaries, or any of them, shall: (a) file a voluntary
petition or assignment
21
<PAGE>
in bankruptcy or a voluntary petition or assignment or answer seeking
liquidation, reorganization, arrangement, readjustment of its debts, or any
other relief under the Bankruptcy Code, or under any other act or law pertaining
to insolvency or debtor relief, whether State, Federal, or foreign, now or
hereafter existing; (b) enter into any agreement indicating consent to, approval
of, or acquiescence in, any such petition or proceeding; (c) apply for or permit
the appointment, by consent or acquiescence, of a receiver, custodian or trustee
of itself or themselves or for all or a substantial part of its or their
property; (d) make an assignment for the benefit of creditors; or (e) be unable
or shall fail to pay its or their debts generally as such debts become due,
admit in writing its or their inability or failure to pay its or their debts
generally as such debts become due, or otherwise cease to be Solvent.
7.9 INVOLUNTARY BANKRUPTCY. There occurs (a) a filing or
issuance against MIDCOM, the Obligors, or any of them, or their respective
Subsidiaries, or any of them, an involuntary petition in bankruptcy or seeking
liquidation of MIDCOM, any such Obligor or Subsidiary, reorganization,
arrangement, readjustment of its or their debts or any other relief under the
Bankruptcy Code, or under any other act or law pertaining to insolvency or
debtor relief, whether State, Federal or foreign, now or hereafter existing and
such proceeding or case shall continue undismissed for a period of 60 or more
days or an order for relief against the Borrower or such Subsidiary shall be
entered in an involuntary case under the Bankruptcy Code or such other act or
law pertaining to insolvency or debtor relief; (b) the involuntary appointment
of a receiver, liquidator, custodian or trustee of MIDCOM, the Obligors, or any
of them, their respective Subsidiaries or for all or a substantial part of its
or their property; or (c) the issuance of a warrant of attachment, execution or
similar process against all or any substantial part of the property of MIDCOM,
such Obligors, or any of them, or such Subsidiaries, or any of them.
7.10 SUSPENSION OF BUSINESS. The suspension of the transaction
of the usual business of MIDCOM, the Obligors, or any of them, or the
dissolution of MIDCOM, the Obligors or any of them.
7.11 JUDGMENTS. Any judgment, decree or order for the payment of
money which, when aggregated with all other judgments, decrees or orders for the
payment of money pending against MIDCOM, the Obligors, or any of them exceeds
the sum of Two Hundred Fifty Thousand Dollars ($250,000.00), shall be rendered
against such Obligors or any of them and remain unsatisfied and in effect for a
period of sixty (60) consecutive days or more without being vacated, discharged,
satisfied or stayed or bonded pending appeal.
7.12 OWNERSHIP. Paul H. Pfleger shall, at any time, fail to own,
directly or indirectly, beneficially and of record, with power to vote, fifty-
one percent (51%) of the issued and outstanding shares of each class of voting
stock of TI, Parent and Black Creek Management Ltd. ("BML"); BML shall at any
time, fail to be the sole general partner of Pledgor; Paul H. Pfleger shall, at
any time, fail to own, directly or indirectly, beneficially and of record, a
majority of the partnership interests issued by Pledgor; or Parent shall, at any
time
22
<PAGE>
before the Merger, fail to own, beneficially and of record, with power to vote,
one hundred percent (100%) of the issued and outstanding shares of Capital Stock
of Merger Co. or, at any time after the Merger, fail to own, beneficially and of
record, with power to vote, one hundred percent (100%) of the issued and
outstanding shares of Capital Stock of New TIE.
7.13 FAILURE OF SECURITY. At any time (a) Liens in favor of the
Collateral Agent contemplated by the Loan Documents shall, at any time, for any
reason, be invalidated or otherwise cease to be in full force and effect; (b)
such Liens shall be subordinated or shall not have the priority contemplated by
this Agreement or the other Loan Documents; or (c) any Obligor or other obligor
under any such Loan Document seeks to repudiate its or his obligations
thereunder.
7.14 GUARANTY AGREEMENTS; STOCK PLEDGE AGREEMENTS. At any time,
for any reason other than the consent of the Lenders, (a) any of the Guaranty
Agreements or any other guaranty of the Obligations ceases to be in full force
and effect in any material respect or guarantor thereunder seeks to repudiate
its obligations thereunder; (b) the Liens intended to be created in connection
with the Guaranty Agreements, the Stock Pledge Agreements, or any other Loan
Documents are, or an Obligor seeks to render such Liens, invalid and
unperfected; or (c) any Obligor fails to provide additional collateral as
required under the terms and conditions of any Guaranty Agreement, Stock Pledge
Agreement, or other Loan Document.
8. REMEDIES
Upon the occurrence or existence of any Event of Default, and during the
continuation thereof, without prejudice to the rights of either of the Lenders
to enforce its claims against Obligors for damages for failure by Obligors to
fulfill any of the obligations hereunder, the Lenders shall have the following
rights and remedies, in addition to any other rights and remedies available to
the Lenders at law, in equity or otherwise:
8.1 DEFAULT RATE. At the election of the Lenders, evidenced by
written notice from the Collateral Agent to the Obligors, the outstanding
principal balance of the Obligations, and to the extent permitted by Applicable
Law, accrued and unpaid interest thereon, shall bear interest at the Default
Rate until paid in full.
8.2 TERMINATION; ACCELERATION OF THE OBLIGATIONS. In the event
of an Event of Default set forth in Sections or hereof, all obligations of the
Lenders to make any further Loans hereunder shall automatically and immediately
terminate and in the event of any other Event of Default, the Lenders, at their
option, may terminate their obligations to make any further Loans Commitment,
whereupon in either case all of the Obligations shall become immediately due and
payable, without presentment, demand, protest, notice of non-payment or any
other notice required by law relative thereto, all of which are hereby expressly
waived by each Obligor, anything contained herein to the contrary
notwithstanding.
23
<PAGE>
8.3 SET-OFF. The right of either Lender to set-off, without
notice to any Obligor, any and all deposits at any time credited by or due from
that Lender to such Obligor, whether in a general or special, time or demand,
final or provisional account or any other account or represented by a
certificate of deposit and whether or not unmatured or contingent against any or
all of the Obligations of such Obligor, now existing or hereafter arising,
whether or not the Lender shall have made any demand under this Agreement or any
of the Loan Documents.
9. CONDITIONS PRECEDENT
9.1 CONDITIONS PRECEDENT TO FACILITY A LOANS. Notwithstanding
any other provision of this Agreement, it is understood and agreed that no
Lender shall have any obligation to make its Facility A Loan hereunder, unless
and until the following conditions have been met, to the sole and complete
satisfaction of Lenders:
(a) Adequacy of Funds. The proceeds of the Facility A Loans
-----------------
received by Parent as proceeds of the Affiliate Loan, together with the other
sources of funds available to Parent, shall be adequate, in Lenders' judgment,
to provide sufficient funds for the closing of the Tender Offer.
(b) Affiliate Loan. Simultaneously with the making of the
--------------
Facility A Loans, TI shall make use the proceeds of the Facility A Loan to make
the Affiliate Loan to Parent.
(c) Closing of the Tender Offer. Simultaneously with the making
---------------------------
of the Facility A Loans, Parent shall be closing under the Tender Offer
substantially on the terms and conditions set forth in the Offer to Purchase
dated September 12, 1995.
(d) Litigation. No action, suit, litigation, proceeding,
----------
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or legislative body which (i)
seeks to enjoin, restrain, or prohibit, or to obtain substantial damages in
respect to the Tender Offer, the Merger, or the Loans or which is related to or
arises out of this Agreement or the making of any Loan hereunder; or (ii) if
decided adversely to Obligors, or any of them, may result in a Material Adverse
Effect.
(e) Solvency. Lenders shall have received evidence satisfactory
--------
to each of Lenders that each Obligor will be Solvent following the execution and
delivery of the Loan Documents, the making of the Facility A Loans, the
consummation of the Tender Offer, and the consummation of the other transactions
contemplated in connection therewith.
24
<PAGE>
(f) Documentation. Lenders shall have received the following
-------------
documents, each dated the Tender Date (unless otherwise specified), each duly
executed and delivered to the Lenders, and each to be satisfactory in form and
substance to Lenders and their counsel:
(i) this Agreement;
(ii) the Facility A Notes, duly executed by TI;
(iii) Guaranty Agreements signed by each of Pledgor, Paul
H. Pfleger, and Charles B. McNamee (the "Guaranty Agreements");
(iv) a Stock Pledge Agreement, duly executed and delivered
by Pledgor (the "Stock Pledge Agreement"), pledging to the Collateral
Agent, for the benefit of Lenders, a number of shares of MIDCOM common
stock (the "Pledged Shares") equal to the greater of (A) 2,000,000,
multiplied by a fraction, the numerator of which is the aggregate principal
amount of the Facility A Loans requested and the denominator of which is
10,000,000; and (B) the quotient obtained by dividing (1) the product of
two (2) times the aggregate principal amount of the Facility A Loans
requested by (2) the current market value (as defined under Regulation G)
on the Tender Date of the MIDCOM common stock, as reported in the New York
--- ----
Times or the Wall Street Journal;
----- ---- ------ -------
(v) the certificates evidencing the Pledged Shares,
together with stock powers duly executed in blank by Pledgor, with
signatures guaranteed, and such other instruments, documents or agreements
with respect thereto as the Lenders may require to be delivered to the
Collateral Agent;
(vi) evidence satisfactory to Lenders that the Pledged
Shares are subject to (A) no Liens whatsoever other than in favor of the
Collateral Agent and (B) no "lock-ups" or any similar agreement which would
prevent the pledge thereof to the Collateral Agent for the benefit of the
Lenders or, with the exception of the DLJ Letter Agreement, might prevent,
affect, or delay the resale thereof by the Collateral Agent for the benefit
of the Lenders;
(vii) the Warrant Agreement;
(viii) Warrants issued in the name of Lenders pursuant to
the Warrant Agreement exercisable, as to each Lender, for such Lender's Pro
Rata Share of two percent (2%) of Parent's common stock on a fully diluted
basis;
(ix) a certificate signed by each individual Guarantor, by
the President or chief financial officers of each corporate Guarantor and
by the President or chief financial officers of the general partner of each
Partnership Obligor, certifying that
25
<PAGE>
(A) the representations and warranties set forth in the Loan Documents to
which each such Obligor is a party are true and correct in all respects on
and as of such date with the same effect as though made on and as of such
date; (B) such Obligor is on such date in compliance with all the terms
and conditions set forth in the Loan Documents to which it is a party on
its part to be observed and performed, and (C) on the Tender Date, after
giving effect to the making of the Facility A Loans, no Default or Event of
Default has occurred or is continuing;
(x) a certificate of the Secretary of each Corporate
Obligor certifying (A) that attached thereto is a true and complete copy of
the Articles of Incorporation of such Obligor as in effect on the date of
such certification; (B) that attached thereto is a true and complete copy
of the By-Laws of such Obligor, as in effect on the date of such
certification; (C) that attached thereto is a true and complete copy of
Resolutions adopted by the Board of Directors of such Obligor, authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents to which such Obligor is a party; and (D) as to the
incumbency and genuineness of the signatures of the officers of such
Obligor executing this Agreement or any of the other Loan Documents;
(xi) a certificate of the general partner of each
Partnership Obligor certifying (A) that attached thereto is a true and
complete copy of the partnership agreement and/or partnership certificate
of such Obligor as in effect on the Tender Date and that the attached
documents are the only agreements among the partners; (B) that attached
thereto is a true and complete copy of the partnership consent or other
appropriate documentation of authorization of the execution, delivery and
performance on behalf of such Obligor of the Loan Documents to which such
Obligor is a party; and (C) as to the incumbency and genuineness of the
signatures of the representatives of such Obligor executing this Agreement
or any of the other Loan Documents;
(xii) a copy of the Articles of Incorporation of TI, and
all restatements thereof or amendments thereto, certified as of a date
close to the Tender Date, by the Secretary of State of the State of
Washington; a copy of the Certificate of Incorporation of Parent, and all
restatements thereof or amendments thereto, certified as of a date close to
the Tender Date, by the Secretary of State for Delaware; and a copy of the
partnership certificate and all restatements thereof or amendments thereto,
certified as of a date close to the Tender Date by an appropriate official
of the State of Washington.
(xiii) good standing certificates for each Corporate Obligor
and each Partnership Obligor, certified as of a date close to the Tender
Date, and issued in each case by those secretaries of state of those states
set forth on Schedule 9.1 hereto;
------------
26
<PAGE>
(xiv) a duly completed and signed Federal Reserve Form
FR G-3 in favor of each Lender, showing that the making of the Facility A
Loan by such Lender complies with the requirements of Regulation G;
(xv) the written opinion of Smith Gambrell & Russell,
counsel to Obligors, in the form attached hereto as Exhibit D, as to the
---------
transactions contemplated by this Agreement;
(xvi) such UCC termination statements and other Lien
releases and terminations as the Lenders may require with respect to the
Collateral;
(xvii) copies of all required regulatory approvals,
including, without limitation, any which may be required by regulatory
authorities having jurisdiction over any Obligor and any that may be
required for any transactions contemplated by this Agreement or any of the
other Loan Documents;
(xviii) such other documents, instruments and agreements with
respect to the transactions contemplated by this Agreement, in each case in
such form and containing such additional terms and conditions as may be
satisfactory to the Lenders.
9.2 CONDITIONS PRECEDENT TO FACILITY B LOAN. Notwithstanding any
other provision of this Agreement, it is understood and agreed that no Lender
shall have any obligation to make its Facility B Loan hereunder, unless and
until the following conditions have been met, to the sole and complete
satisfaction of Lenders:
(a) Adequacy of Funds. The proceeds of the Facility B Loans
-----------------
disburseable to Parent pursuant to the terms hereof, together with the other
sources of funds available to Parent, shall be adequate, in Lenders' judgment,
to provide sufficient funds for the closing of the Merger.
(b) Repayment of Affiliate Loan and Facility A Loan; Consent of
-----------------------------------------------------------
Senior Lender. Simultaneously with the making of the Facility B Loans, Parent
- ------
shall repay the Affiliate Loan and TI shall pay in full all outstanding
principal and interest on the Facility A Loan. Simultaneously with, or prior to,
the making of the Facility B Loans, NationsBank of Georgia, N.A. ("NationsBank")
shall either (i) acknowledge in writing that the obligations defined as the
"Senior Claims" in the Agreement of Subordination executed by TI, Parent, and
NationsBank in connection with the Tender Offer have either been paid in full;
or (ii) consent in writing to payment of the Affiliate Loan.
(c) Closing of the Merger. Simultaneously with the making of the
---------------------
Facility B Loans, the Merger shall become effective substantially on the terms
and conditions set forth in the Offer to Purchase dated September 12, 1995.
27
<PAGE>
(d) Litigation. No action, suit, litigation, proceeding,
----------
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or legislative body which (i)
seeks to enjoin, restrain, or prohibit, or to obtain substantial damages in
respect to the Merger, or the Loans or which is related to or arises out of this
Agreement or the making of any Loan hereunder; or (ii) if decided adversely to
Obligors, or any of them, may result in a Material Adverse Effect.
(e) Solvency. Lenders shall have received evidence satisfactory to
--------
each of Lenders that each Obligor will be Solvent following the making of the
Facility B Loans, the consummation of the Merger, and the consummation of the
other transactions contemplated in connection therewith.
(f) Documentation. Lenders shall have received the following
-------------
documents, each dated the Merger Date (unless otherwise specified), each duly
executed and delivered to the Lenders, and each to be satisfactory in form and
substance to Lenders and their counsel:
(i) the Facility B Notes, duly executed by Parent;
(ii) reaffirmations of the Guaranty Agreements signed by
each of the Guarantors;
(iii) an amendment to the Stock Pledge Agreement, duly
executed and delivered by Pledgor (the "Stock Pledge Agreement"), pledging
to the Collateral Agent, for the benefit of the Lenders, a number of
additional shares of MIDCOM common stock (the "Additional Pledged Shares")
such that the aggregate number of shares pledged to the Collateral Agent is
equal to the greater of (A) 2,000,000, multiplied by a fraction, the
numerator of which is aggregate principal amount of the Facility B Loans
requested and the denominator of which is 10,000,000; and (B) the quotient
obtained by dividing (1) the product of two (2) times the aggregate
principal amount of the Facility B Loans requested by (2) the current
market value (as defined under Regulation G) on the Tender Date of the
MIDCOM common stock, as reported in the New York Times or the Wall Street
--- ---- ----- ---- ------
Journal;
-------
(iv) the certificates evidencing the Additional Pledged
Shares, together with stock powers duly executed in blank by Pledgor, with
signatures guaranteed, and such other instruments, documents or agreements
with respect thereto as the Collateral Agent may require to be delivered to
the Collateral Agent;
(v) evidence satisfactory to Lenders that the Additional
Pledged Shares are subject to (A) no Liens whatsoever other than in favor
of the Collateral Agent and (B) no "lock-ups" or any similar agreement
which would prevent the pledge thereof to the Collateral Agent for the
benefit of the Lenders or, with the exception of the DLJ
28
<PAGE>
Letter Agreement, might prevent, affect, or delay the resale thereof by the
Collateral Agent for the benefit of the Lenders;
(vi) evidence satisfactory to Lenders that the repayment
of the Affiliate Loan and of the Facility A Loan will not be subject to any
impediment or cause a default or event of default relating to any agreement
for borrowed money to which Parent or TI is party or to which Parent or TI
is bound;
(vii) additional warrants issued in the name of Lenders
pursuant to the Warrant Agreement exercisable, as to each Lender, for such
Lender's Pro Rata Share of two percent (2%) of Parents common stock on a
fully diluted basis;
(viii) a certificate signed by each individual Guarantor, by
the President or chief financial officers of each corporate Guarantor and
by the President or chief financial officers of the general partner of each
Partnership Obligor, certifying that (A) the representations and warranties
set forth in the Loan Documents to which each such Obligor is a party are
true and correct in all respects on and as of such date with the same
effect as though made on and as of such date; (B) such Obligor is on such
date in compliance with all the terms and conditions set forth in the Loan
Documents to which it is a party on its part to be observed and performed,
and (C) on the Merger Date, after giving effect to the making of the
Facility B Loans, no Default or Event of Default has occurred or is
continuing;
(ix) a "bring-down" certificate of the Secretary of each
Corporate Obligor as to the certificate delivered by such Corporate Obligor
pursuant to Section hereof and as to the documents relating to such
Corporate Obligor delivered pursuant to Section hereof;
(x) a "bring-down" certificate of the general partner of
the Partnership Obligor as to the certificate delivered by the Partnership
Obligor pursuant to Section hereof and as to the partnership agreement
delivered pursuant to Section hereof;
(xi) a copy of the Certificate of Incorporation of Parent,
and all restatements thereof or amendments thereto, certified as of a date
close to the Merger Date, by the Secretary of State for Delaware;
(xii) a duly completed and signed Federal Reserve Form
FR G-3 in favor of each Lender, showing that the making of the Facility B
Loan by such Lender complies with the requirements of Regulation G;
29
<PAGE>
(xiii) the written opinion of Smith Gambrell & Russell,
counsel to Obligors, in the form attached hereto as Exhibit E, as to the
---------
transactions contemplated by this Agreement;
(xiv) such UCC termination statements and other Lien
releases and terminations as the Lender may require with respect to the
Collateral;
(xv) copies of all required regulatory approvals,
including, without limitation, any which may be required by regulatory
authorities having jurisdiction over any Obligor and any that may be
required for any transactions contemplated by this Agreement or any of the
other Loan Documents;
(xvi) such other documents, instruments and agreements with
respect to the transactions contemplated by this Agreement as may be
requested by the Lenders or the Collateral Agent, in each case in such form
and containing such additional terms and conditions as may be satisfactory
to the Lenders and the Collateral Agent.
9.3 ALL LOANS. The obligation of each Lender to make any Loan
hereunder shall be subject to fulfillment of the following conditions:
(a) No Material Adverse Change. There shall not have occurred any
--------------------------
material adverse change in the assets, liabilities, business, operations or
condition (financial or otherwise) of the Obligors, or any event, condition, or
state of facts which would be expected to have a Material Adverse Effect
subsequent to the making of such Loan to Parent, as determined by the Lenders in
their sole reasonable discretion;
(b) No Default or Event of Default. There shall exist no Default
------------------------------
or Event of Default or any event or condition which, with the making of such
Loan, would constitute a Default or Event of Default; and
(c) Representations and Warranties. All representations and
------------------------------
warranties made by Obligors hereunder and under the Loan Documents shall be true
and correct in all material respects as of the date of such Loan with the same
force and effect as if made on and as of such date.
(d) Regulatory Restrictions. No Obligor shall be subject to any
-----------------------
statute, rule, regulation, order, writ or injunction of any Governmental
Authority which would restrict or hinder the performance by such Obligor of its
obligations under the Loan Documents to which it is a party.
(e) Regulatory Approvals. Obligors shall have received all
--------------------
required regulatory and other approvals or consents with regard to the Tender
Offer, the Merger, this Agreement
30
<PAGE>
and the Loan Documents, such Loan or in respect of any Collateral being pledged
in connection with such Loan.
9.4 DELAY IN SATISFACTION OF CONDITIONS PRECEDENT. If the Lenders
makes any Loans prior to the fulfillment of any condition precedent set forth in
this Article , the making of such Loans shall constitute only an extension of
time for the fulfillment of such condition and not a waiver thereof. The failure
of Obligors, for any reason, to satisfy or cause to be satisfied any such
condition precedent within thirty (30) days after the date thereof shall
constitute an Event of Default for all purposes under this Agreement and the
Loan Documents, unless such failure is waived in writing by the Lenders.
10. THE COLLATERAL AGENT
10.1 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Collateral Agent to act as its agent
hereunder with such powers as are specifically delegated to the Collateral Agent
by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. The Collateral Agent (which term as used in this
sentence and in Section and the first sentence of Section hereof shall include
reference to its Affiliates and its own and its Affiliates' officers, directors,
employees and agents): (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement, and shall not by reason of this Agreement
be a trustee for any Lender; (b) shall not be responsible to the Lenders for any
recitals, statements, representations or warranties contained in this Agreement
or any of the other Loan Documents, or in any certificate or other instrument,
document or agreement referred to or provided for in, or received by any of them
under, this Agreement or any of the other Loan Documents, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any Note or any of the other Loan Documents or for any failure by
Borrower or any other Person to perform any of its obligations hereunder or
thereunder; (c) subject to Section hereof, shall not be required to initiate or
conduct any litigation or collection proceedings hereunder; and (d) shall not be
responsible for any action taken or omitted to be taken by it hereunder or under
any other agreement, document or instrument referred to or provided for herein
or in connection herewith, except for its own gross negligence or willful
misconduct. The Collateral Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Collateral Agent may deem
and treat the payee of any Note as the holder thereof for all purposes hereof
unless and until a written notice of the assignment or transfer complying with
the terms and conditions of Section hereof.
10.2 RELIANCE BY COLLATERAL AGENT. The Collateral Agent shall be
entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, facsimile, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Collateral Agent.
31
<PAGE>
As to any matters not expressly provided for by this Agreement, the Collateral
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by the Lenders, and
such instructions and any action taken or failure to act pursuant thereto shall
be binding on the Lenders; provided, however, the Collateral Agent shall not be
-------- -------
required to take any action which (a) the Collateral Agent reasonably believes
will expose it to personal liability unless the Collateral Agent receives an
indemnification satisfactory to it from the Lenders with respect to such action
or (b) is contrary to this Agreement, the Notes, the other Loan Documents or
Applicable Law.
10.3 DEFAULTS. The Collateral Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default or Event of Default unless
the Collateral Agent has received notice from a Lender or the Borrower
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default." In the event that the Collateral Agent receives such a
notice of the occurrence of a Default or Event of Default, the Collateral Agent
shall (subject to Section hereof) take such action with respect to such Default
or Event of Default as shall be directed by Lenders, provided that, unless and
until the Collateral Agent shall have received such directions, the Collateral
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interest of the Lenders.
10.4 RIGHTS AS A LENDER. With respect to its obligations to make
loans hereunder and the Loans made by it, Creditanstalt (and any successor
acting as Collateral Agent) in its capacity as a Lender hereunder shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not acting as the Collateral Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include Creditanstalt
in its individual capacity. Creditanstalt (and any successor acting as
Collateral Agent) and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with Borrower (and any of its Affiliates) as
if it were not acting as the Collateral Agent, and Creditanstalt and its
Affiliates may accept fees and other consideration from Borrower for services in
connection with this Agreement or otherwise without having to account for the
same to the any Lender.
10.5 INDEMNIFICATION. The Lenders agree to indemnify the Collateral
Agent (to the extent not reimbursed under Sections or hereof, but without
limiting the respective obligations of Borrowers under said Sections and ), for
their Pro Rata Share of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Collateral Agent in any way relating to or arising out of this
Agreement or any other instruments, documents or agreements contemplated by or
referred to herein or the transactions contemplated hereby (including, without
limitation, the costs and expenses which either Borrower is obligated to pay
under Section hereof but excluding, unless an Event of Default has occurred and
is continuing, normal administrative costs and
32
<PAGE>
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or of any such other instruments,
documents or agreements, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified. The obligations of the Lenders under
this Section shall survive the termination of this Agreement.
10.6 NON-RELIANCE ON COLLATERAL AGENT AND OTHER LENDERS. Each
Lender agrees that it has, independently and without reliance on the Collateral
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrowers, MIDCOM and
the other Obligors and its own decision to enter into this Agreement and that it
will, independently and without reliance upon the Collateral Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement. The Collateral Agent shall not be required
to keep itself informed as to the performance or observance by the Borrowers,
MIDCOM or the other Obligors of this Agreement or any other instrument, document
or agreement referred to or provided for herein or to inspect the properties or
books of the Borrowers, MIDCOM or the other Obligors. Except for notice,
reports and other documents and information expressly required to be furnished
to the Lenders by the Collateral Agent hereunder or under the Loan Documents,
the Collateral Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Obligors (or any of their Affiliates) which may
come into the possession of the Collateral Agent or any of its Affiliates.
10.7 FAILURE TO ACT. Except for action expressly required of the
Collateral Agent hereunder and under the Loan Documents, the Collateral Agent
shall in all cases be fully justified in failing or refusing to act hereunder
unless it shall receive further assurances to its satisfaction from the Lenders
of their indemnification obligations under Section hereof against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
10.8 RESIGNATION OF COLLATERAL AGENT. Subject to the appointment
and acceptance of a successor Collateral Agent as provided below, the Collateral
Agent may resign at any time by giving notice thereof to the Lenders and the
Borrowers. Upon any such resignation, the Lenders shall have the right to
appoint a successor Collateral Agent. If no successor Collateral Agent shall
have been so appointed by the Lenders and shall have accepted such appointment
with thirty (30) days after the retiring Collateral Agent's giving of notice of
resignation, the retiring Collateral Agent may, on behalf of the Lenders,
appoint a successor Collateral Agent, which shall be a bank which has a combined
capital and surplus of at least Three Hundred Million Dollars ($300,000,000).
Upon the acceptance of any appointment as Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall be discharged from its duties and obligations
hereunder. After any
33
<PAGE>
retiring Collateral Agent's resignation hereunder as Collateral Agent, the
provisions of this Article shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as the
Collateral Agent.
10.9 COLLATERAL MATTERS.
(a) Authority. Each Lender authorizes and directs the Collateral
---------
Agent to enter into the Loan Documents relating to the Collateral for the
benefit of the Lenders. Each Lender agrees that any action taken by the
Collateral Agent in accordance with the provisions of this Agreement or the
other Loan Documents, and the exercise by the Collateral Agent of the powers as
are reasonably incidental thereto, shall be authorized and binding upon all of
the Lenders. Without limiting the generality of the foregoing, the Collateral
Agent shall have the sole and exclusive right and authority to (i) execute and
deliver each Loan Document relating to the Collateral and accept delivery of
each such agreement delivered by the Borrowers; (ii) act as collateral agent for
the Lenders for purposes of the perfection of all security interests and Liens
created by such agreements and all other purposes stated therein, provided,
--------
however, the Collateral Agent hereby appoints, authorizes and directs the
- -------
Lenders to act as collateral sub-agents for the Collateral Agent and the Lenders
for purposes of the perfection of all security interests and Liens with respect
to any of the Collateral held by such Lenders; (iii) manage, supervise and
otherwise deal with the Collateral; (iv) take such action as is necessary or
desirable to maintain the perfection and priority of the security interest and
Liens created or purported to be created by the Loan Documents, and (v) except
as may be otherwise specifically restricted by the terms of this Agreement or
any other Loan Document, exercise all remedies given to the Collateral Agent
with respect to the Collateral under the Loan Documents, Applicable Law or
otherwise.
(b) Each Lender hereby directs, in accordance with the terms of
this Agreement, the Collateral Agent to release or to subordinate any Lien held
by the Collateral Agent for the benefit of the Lenders:
(i) against all of the Collateral upon final and
indefeasible payment in full of the Obligations and the termination of this
Agreement;
(ii) against any part of the Collateral to which the
Pledgor is entitled to have released pursuant to the terms of the Stock
Pledge Agreement executed by such Pledgor;
(iii) against any part of the Collateral constituting
property in which the Borrower owned no interest at the time the Lien was
granted or at any time thereafter; or
(iv) if approved, authorized or ratified in writing by the
Collateral Agent at the direction of all of the Lenders.
34
<PAGE>
Each Lender hereby directs the Collateral Agent to execute and deliver or file
such termination and partial release statements and do such other things as are
necessary to release Liens to be released pursuant to Section hereof promptly
upon the effectiveness of any such release.
(c) Without in any manner limiting the Collateral Agent's
authority to act without any specific or further authorization or consent by the
Lenders (as set for in Section ), each Lender agrees to confirm in writing, upon
request by the Borrower, the authority to release Collateral conferred upon the
Collateral Agent under clauses (i) through (iv) of Section hereof. So long as no
Default or Event of Default is then continuing, upon receipt by the Collateral
Agent of any such written confirmation from the Lenders of its authority to
release any particular items or types of Collateral, and in any event upon any
sale and transfer of Collateral which is expressly permitted pursuant to the
terms of this Agreement or the applicable Loan Document, and upon at least five
(5) Business Days prior written request by the Pledgor, the Collateral Agent
shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the Liens granted to
the Collateral Agent for the benefit of Lenders pursuant to the Loan Documents
upon such Collateral; provided, that (i) the Collateral Agent shall not be
--------
required to execute any such document on terms which, in the Collateral Agent's
opinion, would expose the Collateral Agent to liability or create any obligation
or entail any consequence other that the release of such Liens without recourse
or warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of the Borrower in
respect of) all interests retained by the Collateral, including without
limitation the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.
(d) The Collateral Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists or is owned
by the Pledgor or is cared for, protected or insured or has been encumbered or
that the Liens granted to the Collateral Agent pursuant to this Agreement or any
of the Loan Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Collateral Agent in this
Section or in any of the Loan Documents, it being understood and agreed that in
respect of the Collateral, or in any act, omission or event related thereto, the
Collateral Agent may act in any manner it may deem appropriate, in its sole
discretion, given its own interest in the Collateral as one of the Lenders and
that the Collateral Agent shall have no duty or liability whatsoever to any
Lender.
10.10 BORROWER NOT A BENEFICIARY. The provisions of this Article
are solely for the benefit of the Collateral Agent and the Lenders and the
Borrower shall not have any right to rely on or enforce any of the provisions
hereof. In performing its functions and duties under this Agreement, the
Collateral Agent shall act solely as the agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligations or relationship
of agency, trustee or fiduciary with or for the Borrower.
35
<PAGE>
11. MISCELLANEOUS
11.1 WAIVER. Each and every right and remedy granted to the
Lenders under this Agreement, the other Loan Documents or any other document
delivered hereunder or in connection herewith or allowed it by law or in equity,
shall be cumulative and may be exercised from time to time. No failure on the
part of either or both of the Lenders to exercise, and no delay in exercising,
any right or remedy shall operate as a waiver thereof, nor shall any single or
partial exercise by either or both of the Lenders of any right or remedy
preclude any other or future exercise thereof or the exercise of any other right
or remedy. No waiver by either or both of the Lenders of any Default or Event
of Default shall constitute a waiver of any subsequent Default or Event of
Default.
11.2 SURVIVAL. All representations, warranties and covenants made
herein shall survive the execution and delivery of all of the Loan Documents.
The terms and provisions of this Agreement shall continue in full force and
effect until all of the Obligations have been paid in full and all obligations
of the Lenders hereunder to make Loans have terminated, whichever last occurs;
provided, further, that Obligors' obligations under Sections 2.3(c), 3.4, 3.5,
- -------- -------
11.5 and 11.14 shall survive the repayment of the Obligations and the
termination of this Agreement.
11.3 ASSIGNMENTS; SUCCESSORS AND ASSIGNS.
(a) This Agreement and the Loan Documents shall be binding upon,
and inure to the benefit of, the successors of each of the Lenders, the
permitted successors of Borrowers and Pledgor, and the respective assigns,
transferees and endorsees of Lenders. No Person shall be deemed to be a third-
party beneficiary of any of the provisions of this Agreement or the Loan
Documents or otherwise have any rights by reason of any provisions of this
Agreement or the Loan Documents.
(b) Either or both of the Lenders may, in accordance with
Applicable Law, at any time sell to one or more banks or other financial
institutions ("Participants") participating interests in any Loans owing to the
Lenders, any of the Notes held by the Lenders, or any other interests of the
Lenders hereunder. Borrower agrees that each Participant shall be entitled to
the benefits of Section 2.3(c), 3.4, 3.5 and 11.14 with respect to its
participation; provided that no Participant shall be entitled to receive any
-------- ----
greater amount pursuant to such Section than the Lender would have been entitled
to receive in respect of the amount of the participation transferred by that
Lender to such Participant had no such transfer occurred.
(c) Either of the Lenders may, in accordance with Applicable Law,
at any time assign, without the Obligors' consent, to one or more banks or
financial institutions having unimpaired capital and surplus of Two Hundred
Fifty Million Dollars ($250,000,000) or more or may assign with the Borrower's
consent (which shall not be unreasonably withheld) to any other Person (in
either case, "Assignees") all or any part of any Loans owing to the Lenders,
36
<PAGE>
the Note held on behalf of the Lenders or any other interest of the Lenders
hereunder. The Obligors and the Lenders agree that to the extent of any
assignment the Assignee shall be deemed to have the same rights and benefits
with respect to the Obligors under this Agreement and the Notes as it would have
had if it were one of the "Lenders" hereunder on the date hereof and the
assigning Lender shall be released from its obligations hereunder to the extent
of such assignment.
(d) Each Obligor authorizes the Lenders to disclose to any
Participant or Assignee ("Transferee") and any prospective Transferee any and
all financial information in the Lenders' possession concerning such Obligor
which has been delivered to the Lenders by such Obligor pursuant to this
Agreement or which has been delivered to the Lenders by such Obligor in
connection with the Lenders' credit evaluation of such Obligor prior to entering
into this Agreement.
(e) The Lenders shall be entitled to have any Note subdivided in
connection with a permitted assignment of all or any portion of such Note and
the respective Loans evidenced thereby pursuant to Section above. In the case
of any such subdivision, the new Note (the "New Note") issued in exchange for a
Note (the "Old Note") previously issued hereunder (i) shall be dated the date of
such assignment, (ii) shall be otherwise duly completed and (iii) shall bear a
legend, to the effect that such New Note is issued in exchange for such Old Note
and that the indebtedness represented by such Old Note shall not have been
extinguished by reason of such exchange. Upon delivery of the New Note, the Old
Note shall be marked cancelled and returned to Borrowers.
(f) If, pursuant to this Section , any interest in this Agreement
or any Note is transferred to any Transferee which is organized under the laws
of any jurisdiction other than the United States or any State thereof, the
Lender making such transfer shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the Borrowers and the
Lenders that under Applicable Law and treaties no taxes will be required to be
withheld by Borrowers or Lenders with respect to any payments to be made to such
Transferee hereunder or in respect of the Loans, (ii) to furnish to Lenders and
Borrowers either United States Internal Revenue Service Form 4224 or United
States Internal Revenue Service Form 1001 (wherein such Transferee claims
entitlement to complete exemption from United States federal withholding tax on
all payments hereunder) and (iii) to agree (for the benefit of Lenders and
Borrowers) to provide Lenders and Borrowers a new Form 4224 or Form 1001 upon
the obsolescence of any previously delivered form and comparable statements in
accordance with applicable United States laws and regulations and amendments
duly executed and completed by such Transferee, and to comply from time to time
with all applicable United States laws and regulations with regard to such
withholding tax exemption.
(g) No Obligor shall be permitted to assign its interest in this
Agreement or any Loan Document without the prior written consent of the Lenders.
37
<PAGE>
(h) In addition to the assignments and participations permitted
under the foregoing provisions of this Section , (i) Creditanstalt or its parent
may assign and pledge all or any portion of its Loans and its Notes to any
Federal Reserve Lender as collateral security pursuant to Regulation A and any
Operating Circular issued by such Federal Reserve Lender and (ii) Kellett may
assign and pledge all or any portion of its Loans and its Notes to any financial
institution which may be financing Kellett's obligations hereunder. No such
assignment shall release the assignee from its obligations hereunder.
11.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when fully executed shall be an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
agreement. Any signature page to this Agreement may be witnessed by a telecopy
or other facsimile of any original signature page and any signature page of any
counterpart hereof may be appended to any other counterpart hereof to form a
completely executed counterpart hereof.
11.5 EXPENSE REIMBURSEMENT. The Obligors, jointly and severally,
agree to reimburse the Lenders for all of the Lenders' expenses incurred in
connection with the negotiation, preparation, execution, delivery, modification,
and enforcement of this Agreement, the Notes, the Guaranty Agreements, the Stock
Pledge Agreement, the Warrant Agreement, and the other Loan Documents,
including, without limitation, audit costs, appraisal costs, the cost of
searches, filings and filing fees, taxes and the fees and disbursements of
Lenders' attorneys, Troutman Sanders LLP, and any counsel retained by them,
provided, however, that the total of such reimbursement by Obligors for work
- -------- -------
performed through the execution of this Agreement shall not exceed Twenty-Five
Thousand ($25,000.00) Dollars, and to reimburse the Lenders for all costs and
expenses incurred by the Lenders (including, without limitation, attorneys' fees
and disbursements) to: (a) commence, defend or intervene in any court
proceeding; (b) file a petition, complaint, answer, motion or other pleading,
or to take any other action in or with respect to any suit or proceeding
(bankruptcy or otherwise) relating to the Collateral, or this Agreement, the
Notes or any of the other Loan Documents; (c) protect, collect, lease, sell,
take possession of, or liquidate any of the Collateral; (d) attempt to enforce
any Lien in any of the Collateral or to seek any advice with respect to such
enforcement; and (e) enforce any of the Lenders' rights to collect any of the
Obligations. Obligors also agree, jointly and severally, to pay, and to save
harmless the Lenders from any delay in paying, any intangibles, documentary
stamp and other taxes, if any, which may be payable in connection with the
execution and delivery of this Agreement, the Notes, or any of the other Loan
Documents, or the recording of any thereof, or in any modification hereof or
thereof. Additionally, the Obligors, jointly and severally, agree to pay to the
Lenders on demand any and all fees, costs and expenses which the Lenders pays to
a bank or other similar institution arising out of or in connection with (i) the
forwarding to Obligors, or any of them, or any other Person, on behalf of
Obligors, or any of them, by the Lenders of proceeds of any Loan and (ii) the
depositing for collection by the Lenders of any check or item of payment
received by or delivered to the Lenders on account of the Obligations. The
Obligors' obligations under this Section shall survive the termination of this
Agreement and the repayment of the Obligations.
38
<PAGE>
11.6 SEVERABILITY. If any provision of this Agreement or any of the
Loan Documents or the application thereof to any party thereto or circumstances
shall be invalid, illegal or unenforceable to any extent, the remainder of this
Agreement or such Loan Document and the application of such provisions to any
other party thereto or circumstance shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
11.7 NOTICES. Except as otherwise provided herein, all notices,
requests, demands and other communications under this Agreement shall be in
writing and shall be deemed to have been given or made when (a) delivered by
hand, (b) sent by telex or facsimile transmitter (with receipt confirmed),
provided that a copy is mailed by certified mail, return receipt requested, or
(c) when received by the addressee, if sent by Express Mail, Federal Express or
other overnight delivery service (receipt requested), in each case to the
appropriate addresses, telex numbers, facsimile numbers designated for a party
at the "Address for Notices" specified below its name on the signature pages
hereto or to such other addresses as may be designated hereafter in writing by
the respective parties hereto.
11.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Loan
Documents constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior negotiations,
understandings and agreements between such parties in respect of such subject
matter, including, without limitation, as set forth in that certain commitment
letter dated September 8, 1995, from the Lenders. Neither this Agreement nor
any provision hereof may be changed, waived, discharged, modified or terminated
except pursuant to a written instrument signed by Obligors and the Lenders.
11.9 TIME OF THE ESSENCE. Time is of the essence in this Agreement
and the other Loan Documents.
11.10 REINSTATEMENT. This Agreement shall continue to be
effective, or be reinstated, as the case may be, in respect to either Borrower
if at any time payment, or any part thereof, of any of the Obligations of such
Borrower is rescinded or must otherwise be restored or returned by any Lender or
the Collateral Agent upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of either of the Borrowers, any of the other Obligors, or
their Affiliates or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or custodian, trustee or similar officer for,
either of the Borrowers, any of the other Obligors, or their Affiliates or any
part of any of those parties' property, or otherwise, all as though such
payments had not been made.
11.11 INTERPRETATION. No provision of this Agreement shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other Governmental Authority by reason of such party having or being
deemed to have structured or dictated such provision.
11.12 LENDERS NOT JOINT VENTURERS. Neither this Agreement, the
Loan Documents, any agreements, instruments, documents executed and delivered
pursuant hereto or thereto or in connection herewith or therewith, nor any of
the transactions contemplated hereby
39
<PAGE>
or thereby shall in any respect be interpreted, deemed or construed as making
either of the Lenders a partner or joint venturer with any Obligor or as
creating any similar relationship or entity, and any Obligor agrees that it will
not make any assertion, contention, claim or counterclaim to the contrary in any
action, suit or other legal proceeding involving either of the Lenders and any
Obligor.
11.13 CURE OF DEFAULTS BY LENDERS. If, hereafter, any Obligor
defaults in the performance of any duty or obligation to any third party, either
or both of the Lenders may, at its option, but without obligation, cure such
default and any costs, fees and expenses incurred by the Lenders in connection
therewith including, without limitation, for payment on mortgage or note
obligations, for the purchase of insurance, the payment of taxes and the removal
or settlement of Liens and claims, shall be included in the Obligations and be
secured by the Collateral.
11.14 INDEMNITY. In addition to any other indemnity provided for
herein, the Obligors, jointly and severally, hereby indemnify the Lenders from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including, without limitation, fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against either of the
Lenders in any litigation, proceeding or investigation instituted or conducted
by any Governmental Authority or any other Person (other than the Obligors) with
respect to any aspect of, or any transaction contemplated by, or referred to in,
or any matter related to, this Agreement or the other Loan Documents, whether or
not either of the Lenders is a party thereto, except to the extent that any of
the foregoing arises out of gross negligence, willful misconduct or a breach of
this Agreement by the Lenders, as the case may be. Additionally, the Obligors,
jointly and severally, hereby indemnify and hold the Lenders harmless from all
loss, cost (including, without limitation, fees and disbursements of counsel),
liability and damage whatsoever incurred by the Lenders by reason of any
violation of any applicable Environmental Laws for which any Obligor or any of
its Affiliates or predecessors has any liability or which occurs upon any real
estate owned by or under the control of any such Obligor or any of its
Affiliates or predecessors, or by reason of the imposition of any governmental
Lien for the recovery of environmental cleanup costs expended by reason of such
violation, provided that the Lenders have no independent Liability therefor.
The Obligors' obligations under this Section shall survive the termination of
this Agreement and the repayment of the Obligations.
11.15 CONSEQUENTIAL DAMAGES. THE LENDERS SHALL NOT BE RESPONSIBLE
OR LIABLE TO THE OBLIGORS, OR ANY OF THEM, OR ANY OTHER PERSON OR ENTITY FOR ANY
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
40
<PAGE>
11.16 ATTORNEY-IN-FACT. Each Borrower hereby designates, appoints
and empowers each of the Lenders irrevocably as its attorney-in-fact, at such
Borrower's cost and expense, to do in the name of such Borrower any and all
actions which the Lenders may deem necessary or advisable to carry out the terms
hereof upon the failure, refusal or inability of such Borrower to do so, and
each Borrower hereby agrees to indemnify and hold the Lenders harmless from any
costs, damages, expenses or liabilities arising against or incurred by the
Lenders in connection therewith except to the extent that any of such costs,
damages, expenses or liabilities arise out of Lenders' gross negligence or
willful misconduct or for acts taken in breach of this Agreement.
11.17 GOVERNING LAW; JURISDICTION. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH
OBLIGOR HEREBY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, OR THE OTHER LOAN DOCUMENTS;
(B) AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK SHALL APPLY TO THIS AGREEMENT AND THE LOAN DOCUMENTS; AND (C)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDERS TO
BRING PROCEEDINGS AGAINST ANY OBLIGOR IN THE COURTS OF ANY OTHER JURISDICTION.
11.18 WAIVER OF JURY TRIAL. AFTER REVIEWING THIS PROVISION
SPECIFICALLY WITH ITS RESPECTIVE COUNSEL, EACH OBLIGOR AND EACH OF THE LENDERS
HEREBY KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING BASED ON OR
ARISING OUT OF, UNDER, IN CONNECTION WITH, OR RELATING TO THIS AGREEMENT, ANY
OF THE NOTES, ANY OF THE OTHER LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED
HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF OBLIGORS OR THE LENDERS. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDERS TO MAKE THE LOANS TO BORROWERS.
________________
Initials
41
<PAGE>
IN WITNESS WHEREOF, Obligors and Lenders have caused their duly authorized
officers to set their hands and seals as of the day and year first above
written.
"PARENT"
TIE ACQUISITION CO.
By:_________________________________________
Name:
Title:
Attest:_____________________________________
Name:
Title:
[CORPORATE SEAL]
Address for Notices:
--------------------
1201 Third Avenue
Suite 5400
Seattle, Washington 98101-3031
Attn: Paul H. Pfleger
Facsimile: (206) 628-8031
WITH A COPY TO:
Smith, Gambrell & Russell
Suite 3100
1230 Peachtree Street
Atlanta, Georgia 30309
Attn: Bruce W. Moorehead, Jr., Esq.
Facsimile: (404) 815-3509
42
<PAGE>
"TI"
--
TIE INVESTMENT INC.
By:_________________________________________
Name:
Title:
Attest:_____________________________________
Name:
Title:
[CORPORATE SEAL]
Address for Notices:
--------------------
1201 Third Avenue
Suite 5400
Seattle, Washington 98101-3031
Attn: Paul H. Pfleger
Facsimile: (206) 628-8031
WITH A COPY TO:
Smith, Gambrell & Russell
Suite 3100
1230 Peachtree Street
Atlanta, Georgia 30309
Attn: Bruce W. Moorehead, Jr., Esq.
Facsimile: (404) 815-3509
43
<PAGE>
"LENDER"
CREDITANSTALT CORPORATE FINANCE, INC.
By:___________________________
Robert M. Biringer
Senior Vice President
By:___________________________
Joseph P. Longosz
Vice President
Account for Payments:
--------------------
Chemical Bank
New York, New York
ABA Routing Number: 021000128
For the account of: Creditanstalt New York
Account No.: 544-7-73095
Address for Notices:
--------------------
Creditanstalt Corporate Finance, Inc.
Two Greenwich Plaza
Greenwich, CT 06830
Attn: Lisa Bruno
Facsimile No: (203) 851-1234
WITH COPIES TO:
Creditanstalt Corporate Finance, Inc.
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attn: Robert M. Biringer
Facsimile No: (770) 390-1851
and
Troutman Sanders
600 Peachtree Street, N.W.
Suite 5200
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Facsimile No.: (404) 885-3900
44
<PAGE>
"LENDER"
KELLETT INVESTMENT CORPORATION
By:___________________________
Stiles A. Kellett, Jr.
Chairman
Account for Payments:
--------------------
Wachovia Bank of Georgia
ABA Routing Number: 061000010
For the account of:
Kellett Investment Corporation
Account No.:
12677570
Address for Notices:
--------------------
Kellett Investment Corporation
Suite 1800
200 Galleria Parkway
Atlanta, Georgia 30339
Attn: Stiles A. Kellett, Jr.
Facsimile No: (770) 956-7412
WITH A COPY TO:
Troutman Sanders
600 Peachtree Street, N.W.
Suite 5200
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Facsimile No.: (404) 885-3900
45
<PAGE>
"COLLATERAL AGENT"
CREDITANSTALT CORPORATE FINANCE, INC.
By:___________________________
Robert M. Biringer
Senior Vice President
By:___________________________
Joseph P. Longosz
Vice President
Account for Payments:
--------------------
Chemical Bank
New York, New York
ABA Routing Number: 021000128
For the account of: Creditanstalt New York
Account No.: 544-7-73095
Address for Notices:
--------------------
Creditanstalt Corporate Finance, Inc.
Two Greenwich Plaza
Greenwich, CT 06830
Attn: Lisa Bruno
Facsimile No: (203) 851-1234
WITH COPIES TO:
Creditanstalt Corporate Finance, Inc.
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attn: Robert M. Biringer
Facsimile No: (770) 390-1851
and
Troutman Sanders
600 Peachtree Street, N.W.
Suite 5200
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Facsimile No.: (404) 885-3900
46
