SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) :
November 9, 1995
SHARED TECHNOLOGIES INC.
DELAWARE 0-17366 87-0424558
--------- ------- ----------
(State or other (Commission (I.R.S.
jurisdiction of File Number) Employer
incorporation) Identification
No.)
100 Great Meadow Road, Suite 104
Wethersfield, CT. 06109
--------------------------------- ----------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code
(860-258-2400)
Total number of sequentially numbered paged in this
filing, including exhibits hereto: 148
Item 5 Other Events.
On November, 9, 1995, Shared Technologies Inc., ("Shared
Technologies"),entered into an Agreement and Plan of Merger dated
as of November 9, 1995 (the "Merger Agreement") with the
Fairchild Corporation ("Fairchild") and its subsidiaries, RHI
Holdings, Inc. ("RHI") and Fairchild Industries, Inc. ("FII"),
pursuant to which Shared Technologies will acquire the
telecommunications systems and service business operated by
Fairchild Communications Services Company ("FCSC").
The acquisition is to be effected by a merger of FII with and
into Shared Technologies (the "Merger"). Prior to the Merger,
FII will transfer all of its assets to, and have all of its
liabilities assumed by RHI, except for (i) the assets and
liabilities of FCSC, (ii) the outstanding Series A and Series C
Preferred Stock of FII (having a current aggregate liquidation
value of $44,237,745), (iii) the outstanding 12 1/4% Senior Notes
due 1999 (the "Senior Notes") of FII (having a current aggregate
principal amount of $125,000,000) and (iv) an amount of bank and
other indebtedness of approximately $54,263,000 (the "Assumed
Indebtedness"). Pursuant to the Merger, the Series A and C
Preferred Stock will be redeemed in cash at their liquidation
value ($45 per share plus accrued and unpaid dividends). Prior
to the Merger, FII (or Shared Technologies) will make a cash
tender offer (at a price to be determined) to purchase all of the
outstanding Senior Notes and, in connection therewith, will seek
to obtain such Noteholders' consent to amend the indenture under
which the Senior Notes were issued to remove all covenants which
can be amended or deleted by majority vote. The amount of
Assumed Indebtedness will be reduced (x) to the extent the
purchase price to be paid in such offer for the Senior Notes
exceed par and (y) by the amount of accrued and unpaid dividends
on the Series A and Series C Preferred Stock on the date of the
Merger.
Upon the Merger, Shared Technologies, as the surviving
corporation, will (i) purchase all Senior Notes tendered pursuant
to the aforesaid tender offer (and assume FII's obligations with
respect to any Senior Notes not so tendered), (ii) repay the
Assumed Indebtedness in full and (iii) deposit in escrow the
funds necessary to redeem the Series A and C Preferred Stock. As
a result of the Merger, RHI will receive (i) 6,000,000 shares of
Common Stock of Shared Technologies (representing approximately
41% of the outstanding shares after giving effect to such
issuance), (ii) shares of 6% Cumulative Convertible Preferred
Stock of Shared Technologies having an initial aggregate
liquidation preference of $25,000,000 (subject to upward
adjustment) and which are convertible into Common Stock of Shared
Technologies at a conversion price of $6.3750 per share (which if
converted, would represent, together with the other Common Stock
issued to RHI, approximately 42% of the Common Stock of Shared
Technologies on a fully diluted basis) and (iii) shares of a
Special Preferred Stock having an initial aggregate liquidation
preference of $20,000,000 (which could accrete up to a maximum of
$30,000,000 over a ten-year period if not earlier redeemed). In
connection with its stock ownership, Fairchild and RHI will have
the right to elect four of the eleven member of the Board of
Directors of Shared Technologies and have agreed, subject to
certain exceptions, not to sell any of such shares for a two-year
period.
The closing of the Merger is subject to a number of conditions,
including (i) the approval of the Merger by the shareholders of
Shared Technologies, (ii) holders of at least 51% of the
outstanding principal amount of Senior Notes tendering their
Notes and giving their consent to the covenant changes described
above, and (iii) Fairchild obtaining a favorable tax ruling from
the Internal Revenue Service.
For a more complete description of the proposed terms of the
Merger and the transactions contemplated thereby, reference is
hereby made to the Merger Agreement (a copy of which is filed as
an exhibit hereto).
Item 7. Exhibits.
(c) Exhibits.
----------
1. Agreement and Plan of Merger dated as of November 9, 1995 by
and among Fairchild, RHI, FII and Shared Technologies Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Shared Technologies Inc.
By: /s/ Vincent DiVincenzo
-------------------------
Vincent DiVincenzo
Senior Vice President-Finance
and Administration, Treasurer,
Chief Financial Officer
Date: November 21, 1995
LIST OF EXHIBITS
Exhibit No. Exhibit Page
----------- -------- -----
10.1 Agreement and Plan of Merger
dated as of November 9, 1995
by and among Fairchild, RHI,
FII and Shared Technologies... 7
EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of November 9, 1995, by
and among Fairchild Industries, Inc., a Delaware corporation
("Fairchild"), RHI Holdings, Inc., a Delaware corporation
("RHI"), The Fairchild Corporation, a Delaware corporation
("TFC"), and Shared Technologies Inc., a Delaware corporation
("Shared Technologies").
WITNESSETH:
----------
WHEREAS, the Boards of Directors of Fairchild and Shared
Technologies have approved the merger of Fairchild with and into
Shared Technologies (the "Merger") upon the terms and subject to
the conditions set forth herein and in accordance with the laws
of the State of Delaware;
WHEREAS, RHI, which is a wholly owned subsidiary of TFC, is the
sole owner of all of the outstanding common stock of Fairchild
and has approved the Merger upon the terms and subject to the
conditions set forth herein, and RHI has received an irrevocable
proxy from the holder of approximately 9.84% of Shared
Technologies' common stock (based on the shares outstanding as of
the date hereof) agreeing to vote for the Merger;
WHEREAS, Fairchild is the sole owner of 100% of the issued and
outstanding capital stock of VSI Corporation ("VSI");
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
MERGER
1.1 The Merger. At the Effective Time (as hereinafter defined),
Fairchild shall be merged with and into Shared Technologies as
provided herein. Thereupon, the corporate existence of Shared
Technologies, with all its purposes, powers and objects, shall
continue unaffected and unimpaired by the Merger, and the
corporate identity and existence, with all the purposes, powers
and objects, of Fairchild shall be merged with and into Shared
Technologies and Shared Technologies as the corporation
surviving the Merger shall be fully vested therewith and shall
change its name to "Shared Technologies Fairchild Inc." The
separate existence and corporate organization of Fairchild shall
cease upon the Merger becoming effective as herein provided and
thereupon Fairchild and Shared Technologies shall be a single
corporation, Shared Technologies Fairchild Inc. (herein sometimes
called the "Surviving Corporation"). Prior to the Effective Time,
Fairchild and its subsidiaries will undergo a corporate
reorganization (the "Fairchild Reorganization") pursuant to which
all the assets of Fairchild and its subsidiaries (other than
certain indebtedness and preferred stock) will be transferred to,
and liabilities of Fairchild and its subsidiaries will be assumed
by, RHI except for the assets and liabilities comprising the
telecommunications systems and service business of Fairchild
Communications Services Company, which as a result of said
reorganization, will reside in VSI, all as described on
Schedule 9.1. Except where indicated to the contrary, all
references herein to "Fairchild" shall be deemed to refer to
Fairchild as it will exist following the Fairchild Reorganization
and, accordingly, none of the representations, warranties,
restrictions or covenants contained in this Agreement apply to
the businesses, operations, assets or liabilities of Fairchild
Industries, Inc. and its subsidiaries other than as they relate
to the telecommunications systems and service business of
Fairchild, and each of TFC, RHI and Fairchild may operate such
other businesses and assets (including without limitation selling
assets and businesses and incurring liabilities) as it deems
appropriate in the exercise of its business judgment.
1.2 Filing. As soon as practicable after the requisite approval
of the Merger by the stockholders of Shared Technologies and the
fulfillment or waiver of the conditions set forth in Sections
9.1, 9.2 and 9.3 or on such later date as may be mutually agreed
to between Fairchild and Shared Technologies, the parties hereto
will cause to be filed with the office of the Secretary of State
of the State of Delaware, a certificate of merger (the
"Certificate of Merger"), in such form as required by, and
executed in accordance with, the relevant provisions of the
Delaware General Corporation Law (the "DGCL").
1.3 Effective Time of the Merger. The Merger shall be effective
at the time that the filing of the Certificate of Merger with the
office of the Secretary of State of the State of Delaware is
completed, or at such later time specified in such Certificate of
Merger, which time is herein sometimes referred to as the
"Effective Time" and the date thereof is herein sometimes
referred to as the "Effective Date."
ARTICLE II
CERTIFICATE OF INCORPORATION; BY-LAWS;
SHAREHOLDERS AGREEMENT
2.1 Certificate of Incorporation. The Certificate of
Incorporation of Shared Technologies, as amended in accordance
with this Agreement, shall be the Certificate of Incorporation of
the Surviving Corporation.
2.2 By-Laws. The By-Laws of Shared Technologies, as amended in
accordance with this Agreement, shall be the By-Laws of the
Surviving Corporation until the same shall thereafter be altered,
amended or repealed in accordance with law, the Certificate of
Incorporation of the Surviving Corporation or said By-Laws.
2.3 Shareholders Agreement. At the Effective Time, Shared
Technologies, RHI and Anthony D. Autorino shall enter into a
shareholders agreement in the form of Exhibit A hereto (the
"Shareholders Agreement") providing for the election of directors
and officers of the Surviving Corporation.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion. At the Effective Time the issued shares of
capital stock of Fairchild shall, by virtue of the Merger and
without any action on the part of the holders thereof, become and
be converted as follows: (A) each outstanding share of Common
Stock, $100.00 par value per share, of Fairchild (the "Fairchild
Common Stock") shall be converted into and become the right to
receive a Pro Rata Amount (as defined below) of the Merger
Consideration (as defined below); and (B) each outstanding share
of Series A Preferred Stock, without par value, of Fairchild (the
"Series A Preferred Stock") and each outstanding share of Series
C Preferred Stock, without par value, of Fairchild (the "Series C
Preferred Stock") shall be converted into the right to receive an
amount in cash equal to $45.00 per share ($44,237,745 in the
aggregate for all such shares of Series A Preferred Stock and
Series C Preferred Stock) plus accrued and unpaid dividends
thereon to the Effective Time. "Merger Consideration" means
(x) 6,000,000 shares of Common Stock, $.004 par value per share,
of Shared Technologies (the "Technologies Common Stock"),
(y) shares of Convertible Preferred Stock of Shared Technologies
(the "Convertible Preferred Stock") having an initial aggregate
liquidation value of $25,000,000 and the other terms set forth
on the attached Schedule 3.1(a) and (z) shares of Special
Preferred Stock of Shared Technologies (the "Special Preferred
Stock") having an initial aggregate liquidation value of
$20,000,000 and the other terms set forth on the attached
Schedule 3.1(b). The Convertible Preferred Stock and Special
Preferred Stock are collectively referred to as the "Preferred
Stock." With respect to any share of capital stock, "Pro Rata
Amount" means the product of the Merger Consideration multiplied
by a fraction, the numerator of which is one and the denominator
of which is the aggregate number of all issued and outstanding
shares of such capital stock on the Effective Date.
3.2 Preferred Stock Pledge. Immediately after the Effective
Time, RHI shall pledge all of the shares of Preferred Stock then
issued to it (other than shares of Convertible Preferred Stock
having an aggregate liquidation preference of $1,500,000) to
secure RHI's and Fairchild's obligations under the
Indemnification Agreement of TFC and RHI (the form of which is
attached as Exhibit B-1 hereto) pursuant to the terms of a Pledge
Agreement (the form of which is attached as Exhibit C hereto) and
with a pledge agent mutually agreed upon by the parties. Such
shares will be released from such pledge on the later to occur of
(i) third anniversary of the Effective Time and (ii) the date on
which the consolidated net worth (computed in accordance with
generally accepted accounting principles) of The Fairchild
Corporation at such time (or evidenced by any audited balance
sheet) is at least (x) $25 million greater than such net worth at
September 30, 1995 (excluding for such purpose any value
attributed to the Preferred Stock on such balance sheet) and
(y) $225 million (including for such purpose the value of the
Preferred Stock).
ARTICLE IV
CERTAIN EFFECTS OF THE MERGER
4.1 Effect of the Merger. On and after the Effective Time and
pursuant to the DGCL, the Surviving Corporation shall possess all
the rights, privileges, immunities, powers, and purposes of each
of Fairchild and Shared Technologies; all the property, real and
personal, including subscriptions to shares, causes of action and
every other asset (including books and records) of Fairchild and
Shared Technologies, shall vest in the Surviving Corporation
without further act or deed; and the Surviving Corporation shall
assume and be liable for all the liabilities, obligations and
penalties of Fairchild and Shared Technologies; provided,
however, that this shall in no way impair or affect the
indemnification obligations of any party pursuant to
indemnification agreements entered into in connection with this
Agreement. No liability or obligation due or to become due and
no claim or demand for any cause existing against either
Fairchild or Shared Technologies, or any stockholder, officer or
director thereof, shall be released or impaired by the Merger,
and no action or proceeding, whether civil or criminal, then
pending by or against Fairchild or Shared Technologies, or any
stockholder, officer or director thereof, shall abate or be
discontinued by the Merger, but may be enforced, prosecuted,
settled or compromised as if the Merger had not occurred, and the
Surviving Corporation may be substituted in any such action or
proceeding in place of Fairchild or Shared Technologies.
4.2 Further Assurances. If at any time after the Effective Time,
any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of either of Fairchild
or Shared Technologies, the officers of such corporation are
fully authorized in the name of their corporation or otherwise to
take, and shall take, all such further action and TFC will, and
cause each of its subsidiaries (direct or indirect) to, take all
actions reasonably requested by the Surviving Corporation (at the
Surviving Corporation's expense) in furtherance thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SHARED TECHNOLOGIES
Shared Technologies represents and warrants to Fairchild that:
5.1 Organization and Qualification. Each of Shared Technologies
and its subsidiaries (which for purposes of this Agreement,
unless indicated to the contrary, shall not include Shared
Technologies Cellular, Inc.) 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 to own, lease and operate its properties and
to carry on its business as now being conducted. Each of Shared
Technologies and its subsidiaries is duly qualified as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or
leased or the nature of its activities makes such qualification
necessary, except for failures to be so qualified or in good
standing which would not, individually or in the aggregate, have
a material adverse effect on the general affairs, management,
business, operations, condition (financial or otherwise) or
prospects of Shared Technologies and its subsidiaries taken as a
whole (a "Shared Technologies Material Adverse Effect"). Neither
Shared Technologies nor any of its subsidiaries is in violation
of any of the provisions of its Certificate of Incorporation (or
other applicable charter document) or By-Laws. Shared
Technologies has delivered to Fairchild accurate and complete
copies of the Certificate of Incorporation (or other applicable
charter document) and By-Laws, as currently in effect, of each of
Shared Technologies and its subsidiaries.
5.2 Capital Stock of Subsidiaries. The only direct or indirect
subsidiaries of Shared Technologies are those listed in
Section 5.2 of the Disclosure Statement previously delivered by
Shared Technologies to Fairchild (the "Disclosure Statement").
Shared Technologies is directly or indirectly the record (except
for directors' qualifying shares) and beneficial owner (including
all qualifying shares owned by directors of such subsidiaries as
reflected in Section 5.2 of the Disclosure Statement) of all of
the outstanding shares of capital stock of each of its
subsidiaries, there are no proxies with respect to such shares,
and no equity securities of any of such subsidiaries are or may
be required to be issued by reason of any options, warrants,
scrip, rights to subscribe for, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock
of any such subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any such subsidiary is
bound to issue additional shares of its capital stock or
securities convertible into or exchangeable for such shares.
Other than as set forth in Section 5.2 of the Disclosure
Statement, all of such shares so owned by Shared Technologies are
validly issued, fully paid and nonassessable and are owned by it
free and clear of any claim, lien or encumbrance of any kind with
respect thereto. Except as disclosed in Section 5.2 of the
Disclosure Statement, Shared Technologies does not directly or
indirectly own any interest in any corporation, partnership,
joint venture or other business association or entity.
5.3 Capitalization. The authorized capital stock of Shared
Technologies consists of 20,000,000 shares of Common Stock, par
value $.004 per share, and 10,000,000 shares of Preferred Stock,
par value $.01 per share. As of the date hereof, 8,495,815
shares of Common Stock were issued and outstanding and 1,527,970
shares of Preferred Stock were issued and outstanding. All of
such issued and outstanding shares are validly issued, fully paid
and nonassessable and free of preemptive rights. As of the date
hereof 5,022,083 shares of Common Stock were reserved for
issuance upon exercise of outstanding convertible securities,
warrants, options, and options which may be granted under the
stock option plans of Shared Technologies (the "Stock Option
Plans"), all of which warrants, options and Stock Option Plans
are listed and described in Section 5.3 of the Disclosure
Statement. Other than the Stock Option Plans, Shared
Technologies has no other plan which provides for the grant of
options to purchase shares of capital stock, stock appreciation
or similar rights or stock awards. Except as set forth above,
there are not now, and at the Effective Time, except for shares
of Common Stock issued after the date hereof upon the conversion
of convertible securities and the exercise of warrants and
options outstanding on the date hereof or issued after the date
hereof pursuant to the Stock Option Plans, there will not be, any
shares of capital stock of Shared Technologies issued or
outstanding or any subscriptions, options, warrants, calls,
claims, rights (including without limitation any stock
appreciation or similar rights), convertible securities or other
agreements or commitments of any character obligating Shared
Technologies to issue, transfer or sell any of its securities.
5.4 Authority Relative to This Agreement. Shared Technologies
has full corporate power and authority to execute and deliver
this Agreement and to consummate the Merger and other
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the Merger and other
transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Shared Technologies and
no other corporate proceedings on the part of Shared Technologies
are necessary to authorize this Agreement or to consummate the
Merger or other transactions contemplated hereby (other than,
with respect to the Merger, the approval of Shared Technologies'
stockholders pursuant to Section 251(c) of the DGCL). This
Agreement has been duly and validly executed and delivered by
Shared Technologies and, assuming the due authorization,
execution and delivery hereof by Fairchild, constitutes a valid
and binding agreement of Shared Technologies, enforceable against
Shared Technologies in accordance with its terms, except to the
extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by
general equitable or fiduciary principles.
5.5 No Violations, etc.
(a) Assuming that all filings, permits, authorizations, consents
and approvals or waivers thereof have been duly made or obtained
as contemplated by Section 5.5(b) hereof, except as listed in
Section 5.5 of the Disclosure Statement, neither the execution
and delivery of this Agreement by Shared Technologies nor the
consummation of the Merger or other transactions contemplated
hereby nor compliance by Shared Technologies 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 termination or suspension of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of
the properties or assets of Shared Technologies or any of its
subsidiaries under, any of the terms, conditions or provisions of
(x) their respective charters or by-laws, (y) except as set forth
in Section 5.5 of the Disclosure Statement, any note, bond,
mortgage, indenture or deed of trust, or (z) any license, lease,
agreement or other instrument or obligation to which Shared
Technologies or any such subsidiary is a party or to which they
or any of their respective properties or assets may be subject,
or (ii) subject to compliance with the statutes and regulations
referred to in the next paragraph, violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation
applicable to Shared Technologies or any of its subsidiaries or
any of their respective properties or assets, except, in the case
of clauses (i)(z) and (ii) above, for such violations, conflicts,
breaches, defaults, terminations, suspensions, accelerations,
rights of termination or acceleration or creations of liens,
security interests, charges or encumbrances which would not,
individually or in the aggregate, either have a Shared
Technologies Material Adverse Effect or materially impair Shared
Technologies' ability to consummate the Merger or other
transactions contemplated hereby.
(b) No filing or registration with, notification to and no
permit, authorization, consent or approval of any governmental
entity is required by Shared Technologies in connection with the
execution and delivery of this Agreement or the consummation by
Shared Technologies of the Merger or other transactions
contemplated hereby, except (i) in connection with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware, (iii) the approval of Shared Technologies' stockholders
pursuant to the DGCL, (iv) filings with applicable state public
utility commissions and (v) such other filings, registrations,
notifications, permits, authorizations, consents or approvals the
failure of which to be obtained, made or given would not,
individually or in the aggregate, either have a Shared
Technologies Material Adverse Effect or materially impair Shared
Technologies' ability to consummate the Merger or other
transactions contemplated hereby.
(c) As of the date hereof, Shared Technologies and its
subsidiaries are not in violation of or default under (x) their
respective charter or bylaws, and (y) except as set forth in
Section 5.5 of the Disclosure Statement, any note, bond,
mortgage, indenture or deed of trust, or (z) any license, lease,
agreement or other instrument or obligation to which Shared
Technologies or any such subsidiary is a party or to which they
or any of their respective properties or assets may be subject,
except, in the case of clauses (y) and (z) above, for such
violations or defaults which would not, individually or in the
aggregate, either have a Shared Technologies Material Adverse
Effect or materially impair Shared Technologies' ability to
consummate the Merger or other transactions contemplated hereby.
5.6 Commission Filings; Financial Statements.
(a) Shared Technologies has filed all required forms, reports and
documents during the past three years (collectively, the "SEC
Reports") with the Securities and Exchange Commission (the
"SEC"), all of which complied when filed in all material respects
with all applicable requirements of the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder
(the "Securities Act") and the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act"). As of their respective dates the SEC
Reports (including all exhibits and schedules thereto and
documents incorporated by reference therein) did not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary 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 Shared Technologies and its subsidiaries included
or incorporated by reference in such SEC Reports have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto), and
fairly present the consolidated financial position of Shared
Technologies and its subsidiaries as of the dates thereof and the
consolidated results of operations and consolidated cash flows
for the periods then ended (subject, in the case of any unaudited
interim financial statements, to normal year-end adjustments and
to the extent they may not include footnotes or may be condensed
or summary statements).
(b) Shared Technologies will deliver to Fairchild as soon as they
become available true and complete copies of any report or
statement mailed by it to its securityholders generally or filed
by it with the SEC, in each case subsequent to the date hereof
and prior to the Effective Time. As of their respective dates,
such reports and statements (excluding any information therein
provided by Fairchild, as to which Shared Technologies makes no
representation) will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not
misleading and will comply in all material respects with all
applicable requirements of law. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of Shared Technologies and its subsidiaries to be
included or incorporated by reference in such reports and
statements (excluding any information therein provided by
Fairchild, as to which Shared Technologies makes no
representation) will be prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in
the notes thereto) and will fairly present the consolidated
financial position of Shared Technologies and its subsidiaries as
of the dates thereof and the consolidated results of operations
and consolidated cash flows for the periods then ended (subject,
in the case of any unaudited interim financial statements, to
normal year-end adjustments and to the extent they may not
include footnotes or may be condensed or summary statements).
5.7 Absence of Changes or Events. Except as set forth in Shared
Technologies' Form 10-K for the fiscal year ended December 31,
1994, as filed with the SEC, since December 31, 1994:
(a) there has been no material adverse change, or any development
involving a prospective material adverse change, in the general
affairs, management, business, operations, condition (financial
or otherwise) or prospects of Shared Technologies and its
subsidiaries taken as a whole;
(b) there has not been any direct or indirect redemption,
purchase or other acquisition of any shares of capital stock of
Shared Technologies or any of its subsidiaries, or any
declaration, setting aside or payment of any dividend or other
distribution by Shared Technologies or any of its subsidiaries in
respect of its capital stock (except for the distribution of the
shares of Shared Technologies Cellular, Inc.);
(c) except in the ordinary course of its business and consistent
with past practice neither Shared Technologies nor any of its
subsidiaries has incurred any indebtedness for borrowed money, or
assumed, guaranteed, endorsed or otherwise as an accommodation
become responsible for the obligations of any other individual,
firm or corporation, or made any loans or advances to any other
individual, firm or corporation;
(d) there has not been any change in accounting methods,
principles or practices of Shared Technologies or its
subsidiaries;
(e) except in the ordinary course of business and for amounts
which are not material, there has not been any revaluation by
Shared Technologies or any of its subsidiaries of any of their
respective assets, including, without limitation, writing down
the value of inventory or writing off notes or accounts
receivables;
(f) there has not been any damage, destruction or loss, whether
covered by insurance or not, except for such as would not,
individually or in the aggregate, have a Shared Technologies
Material Adverse Effect; and
(g) there has not been any agreement by Shared Technologies or
any of its subsidiaries to (i) do any of the things described in
the preceding clauses (a) through (f) other than as expressly
contemplated or provided for in this Agreement or (ii) take,
whether in writing or otherwise, any action which, if taken prior
to the date of this Agreement, would have made any representation
or warranty in this Article V untrue or incorrect.
5.8 Proxy Statement. None of the information supplied by Shared
Technologies for inclusion in the proxy statement to be sent to
the shareholders of Shared Technologies in connection with the
Special Meeting (as hereinafter defined), including all
amendments and supplements thereto (the "Proxy Statement"), shall
on the date the Proxy Statement is first mailed to shareholders,
at the time of the Special Meeting or at the Effective Time, be
false or misleading with respect to any material fact, or omit to
state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light
of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Special
Meeting which has become false or misleading. None of the
information to be filed by Fairchild and Shared Technologies with
the SEC in connection with the Merger or in any other documents
to be filed with the SEC or any other regulatory or governmental
agency or authority in connection with the transactions
contemplated hereby, including any amendments thereto (the "Other
Documents"), insofar as such information was provided or supplied
by Shared Technologies, will contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not
misleading. The Proxy Statement shall comply in all material
respects with the requirements of the Exchange Act.
5.9 Litigation. Except as set forth in Section 5.9 of the
Disclosure Statement, there is no (i) claim, action, suit or
proceeding pending or, to the best knowledge of Shared
Technologies or any of its subsidiaries, threatened against or
relating to Shared Technologies or any of its subsidiaries before
any court or governmental or regulatory authority or body or
arbitration tribunal, or (ii) outstanding judgment, order, writ,
injunction or decree, or application, request or motion therefor,
of any court, governmental agency or arbitration tribunal in a
proceeding to which Shared Technologies, any subsidiary of Shared
Technologies or any of their respective assets was or is a party
except, in the case of clauses (i) and (ii) above, such as would
not, individually or in the aggregate, either have a Shared
Technologies Material Adverse Effect or materially impair Shared
Technologies' ability to consummate the Merger.
5.10 Insurance. Section 5.10 of the Disclosure Statement lists
all insurance policies in force on the date hereof covering the
businesses, properties and assets of Shared Technologies and its
subsidiaries, and all such policies are currently in effect.
True and complete copies of all such policies have been delivered
to Fairchild. Except as set forth in Section 5.10 of the
Disclosure Statement, Shared Technologies has not received notice
of the cancellation of any such insurance policy.
5.11 Title to and Condition of Properties. Except as set forth
in Section 5.11 of the Disclosure Statement, Shared Technologies
and its subsidiaries have good title to all of the real property
and own outright all of the personal property (except for leased
property or assets) which is reflected on Shared Technologies'
and its subsidiaries' December 31, 1994 audited consolidated
balance sheet contained in Shared Technologies' Form 10-K for the
fiscal year ended December 31, 1994 filed with the SEC (the
"Balance Sheet") except for property since sold or otherwise
disposed of in the ordinary course of business and consistent
with past practice. Except as set forth in Section 5.11 of the
Disclosure Statement, no such real or personal property is
subject to claims, liens or encumbrances, whether by mortgage,
pledge, lien, conditional sale agreement, charge or otherwise,
except for those which would not, individually or in the
aggregate, have a Shared Technologies Material Adverse Effect.
Section 5.11 of the Disclosure Statement contains a true and
complete list of all real properties owned by Shared Technologies
and its subsidiaries.
5.12 Leases. There has been made available to Fairchild true and
complete copies of each lease requiring the payment of rentals
aggregating at least $35,000 per annum pursuant to which real or
personal property is held under lease by Shared Technologies or
any of its subsidiaries, and true and complete copies of each
lease pursuant to which Shared Technologies or any of its
subsidiaries leases real or personal property to others. A true
and complete list of all such leases is set forth in Section 5.12
of the Disclosure Statement. All of the leases so listed are
valid and subsisting and in full force and effect and are subject
to no default with respect to Shared Technologies or its
subsidiaries, as the case may be, and, to Shared Technologies'
knowledge, are in full force and effect and subject to no default
with respect to any other party thereto, and the leased real
property is in good and satisfactory condition.
5.13 Contracts and Commitments. Other than as disclosed in
Section 5.13 of the Disclosure Statement, no existing contract or
commitment contains an agreement with respect to any change of
control that would be triggered by the Merger. Other than as set
forth in Section 5.13 of the Disclosure Statement, neither this
Agreement, the Merger nor the other transactions contemplated
hereby will result in any outstanding loans or borrowings by
Shared Technologies or any subsidiary of Shared Technologies
becoming due, going into default or giving the lenders or other
holders of debt instruments the right to require Shared
Technologies or any of its subsidiaries to repay all or a portion
of such loans or borrowings.
5.14 Labor Matters. Each of Shared Technologies and its
subsidiaries is in compliance in all material respects with all
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and
neither Shared Technologies nor any of its subsidiaries is
engaged in any unfair labor practice. There is no labor strike,
slowdown or stoppage pending (or, to the best knowledge of Shared
Technologies, any labor strike or stoppage threatened) against
or affecting Shared Technologies or any of its subsidiaries. No
petition for certification has been filed and is pending before
the National Labor Relations Board with respect to any employees
of Shared Technologies or any of its subsidiaries who are not
currently organized.
5.15 Compliance with Law. Except for matters set forth in the
Disclosure Statement, neither Shared Technologies nor any of its
subsidiaries has violated or failed to comply with any statute,
law, ordinance, regulation, rule or order of any foreign,
federal, state or local government or any other governmental
department or agency, or any judgment, decree or order of any
court, applicable to its business or operations, except where any
such violation or failure to comply would not, individually or in
the aggregate, have a Shared Technologies Material Adverse
Effect; the conduct of the business of Shared Technologies and
its subsidiaries is in conformity with all foreign, federal,
state and local energy, public utility and health requirements,
and all other foreign, federal, state and local governmental and
regulatory requirements, except where such nonconformities would
not, individually or in the aggregate, have a Shared Technologies
Material Adverse Effect. Shared Technologies and its
subsidiaries have all permits, licenses and franchises from
governmental agencies required to conduct their businesses as now
being conducted, except for such permits, licenses and franchises
the absence of which would not, individually or in the aggregate,
have a Shared Technologies Material Adverse Effect.
5.16 Board Recommendation. The Board of Directors of Shared
Technologies has, by a majority vote at a meeting of such Board
duly held on, or by written consent of such Board dated,
November 9, 1995, approved and adopted this Agreement, the Merger
and the other transactions contemplated hereby, determined that
the Merger is fair to the holders of shares of Shared
Technologies Common Stock and recommended that the holders of
such shares of Common Stock approve and adopt this Agreement, the
Merger and the other transactions contemplated hereby.
5.17 Employment and Labor Contracts. Neither Shared Technologies
nor any of its subsidiaries is a party to any employment,
management services, consultation or other similar contract with
any past or present officer, director, employee or other person
or, to the best of Shared Technologies' knowledge, any entity
affiliated with any past or present officer, director or employee
or other person other than those set forth in Section 5.17 of the
Disclosure Statement and other than those which (x) have a term
of less than one year and (y) involve payments of less than
$30,000 per year, in each case true and complete copies of which
contracts have been delivered to Fairchild, and other than the
agreements executed by employees generally, the forms of which
have been delivered to Fairchild.
5.18 Patents and Trademarks. Shared Technologies and its
subsidiaries own or have the right to use all patents, patent
applications, trademarks, trademark applications, trade names,
inventions, processes, know-how and trade secrets necessary to
the conduct of their respective businesses, except for those
which the failure to own or have the right to use would not,
individually or in the aggregate, have a Shared Technologies
Material Adverse Effect ("Proprietary Rights"). All issued
patents and trademark registrations and pending patent and
trademark applications of the Proprietary Rights have previously
been delivered to Fairchild. No rights or licenses to use
Proprietary Rights have been granted by Shared Technologies or
its subsidiaries except those listed in Section 5.18 of the
Disclosure Statement; and no contrary assertion has been made to
Shared Technologies or any of its subsidiaries or notice of
conflict with any asserted right of others has been given by any
person except those which, even if correct, would not,
individually or in the aggregate, have a Shared Technologies
Material Adverse Effect. Shared Technologies has not given
notice of any asserted claim or conflict to a third party with
respect to Shared Technologies' Proprietary Rights. True and
complete copies of all material license agreements under which
Shared Technologies or any of its subsidiaries is a licensor or
licensee have been delivered to Fairchild.
5.19 Taxes. "Tax" or "Taxes" shall mean all federal, state,
local and foreign taxes, duties, levies, charges and assessments
of any nature, including social security payments and deductibles
relating to wages, salaries and benefits and payments to
subcontractors (to the extent required under applicable Tax law),
and also including all interest, penalties and additions imposed
with respect to such amounts. Except as set forth in
Section 5.19 of the Disclosure Statement: (i) Shared
Technologies and its subsidiaries have prepared and timely filed
or will timely file with the appropriate governmental agencies
all franchise, income and all other material Tax returns and
reports required to be filed for any period ending on or before
the Effective Time, taking into account any extension of time to
file granted to or obtained on behalf of Shared Technologies
and/or its subsidiaries; (ii) all material Taxes of Shared
Technologies and its subsidiaries in respect of the pre-Merger
period have been paid in full to the proper authorities, other
than such Taxes as are being contested in good faith by
appropriate proceedings and/or are adequately reserved for in
accordance with generally accepted accounting principles;
(iii) all deficiencies resulting from Tax examinations of
federal, state and foreign income, sales and franchise and all
other material Tax returns filed by Shared Technologies and its
subsidiaries have either been paid or are being contested in good
faith by appropriate proceedings; (iv) to the best knowledge of
Shared Technologies, no deficiency has been asserted or assessed
against Shared Technologies or any of its subsidiaries, and no
examination of Shared Technologies or any of its subsidiaries is
pending or threatened for any material amount of Tax by any
taxing authority; (v) no extension of the period for assessment
or collection of any material Tax is currently in effect and no
extension of time within which to file any material Tax return
has been requested, which Tax return has not since been filed;
(vi) no material Tax liens have been filed with respect to any
Taxes; (vii) Shared Technologies and each of its subsidiaries
will not make any voluntary adjustment by reason of a change in
their accounting methods for any pre-Merger period that would
affect the taxable income or deductions of Shared Technologies or
any of its subsidiaries for any period ending after the Effective
Date; (viii) Shared Technologies and its subsidiaries have made
timely payments of the Taxes required to be deducted and withheld
from the wages paid to their employees; (ix) the Tax Sharing
Agreement under which Shared Technologies or any subsidiary will
have any obligation or liability on or after the Effective Date
is attached as Exhibit E; (x) Shared Technologies has foreign
losses as defined in Section 904(f)(2) of the Code listed in
Section 5.19 of the Disclosure Statement; (xi) Shared
Technologies and its subsidiaries have unused foreign tax credits
set forth in Section 5.19 of the Disclosure Statement; and
(xii) to the best knowledge of Shared Technologies, there are no
transfer pricing agreements made with any taxation authority
involving Shared Technologies and its subsidiaries.
5.20 Employee Benefit Plans; ERISA.
(a) Except as set forth in Section 5.20 of the Disclosure
Statement, there are no "employee pension benefit plans" as
defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), covering employees
employed in the United States, maintained or contributed to by
Shared Technologies or any of its subsidiaries, or to which
Shared Technologies or any of its subsidiaries contributes or is
obligated to make payments thereunder or otherwise may have any
liability ("Pension Benefits Plans").
(b) Shared Technologies has furnished Fairchild with a true and
complete schedule of all "welfare benefit plans" (as defined in
Section 3(1) of ERISA) covering employees employed in the United
States, maintained or contributed to by Shared Technologies or
any of its subsidiaries ("Welfare Plans"), all multiemployer
plans as defined in Section 3(37) of ERISA covering employees
employed in the United States to which Shared Technologies or any
of its subsidiaries is required to make contributions or
otherwise may have any liability, and, to the extent covering
employees employed in the United States, all stock bonus, stock
option, restricted stock, stock appreciation right, stock
purchase, bonus, incentive, deferred compensation, severance and
vacation plans maintained or contributed to by Shared
Technologies or a subsidiary.
(c) Shared Technologies and each of its subsidiaries, and each of
the Pension Benefit Plans and Welfare Plans, are in compliance
with the applicable provisions of ERISA (the "Code") and other
applicable laws except where the failure to comply would not,
individually or in the aggregate, have a Shared Technologies
Material Adverse Effect.
(d) All contributions to, and payments from, the Pension Benefit
Plans which are required to have been made in accordance with the
Pension Benefit Plans and, when applicable, Section 302 of ERISA
or Section 412 of the Code have been timely made except where the
failure to make such contributions or payments on a timely basis
would not, individually or in the aggregate, have a Shared
Technologies Material Adverse Effect. All contributions required
to have been made in accordance with Section 302 of ERISA or
Section 412 of the Code to any employee pension benefit plan (as
defined in Section 3(2) of ERISA) maintained by an ERISA
Affiliate of Shared Technologies or any of its subsidiaries have
been timely made except where the failure to make such
contributions on a timely basis would not individually or in the
aggregate have a Shared Technologies Material Adverse Effect.
For purposes of this Agreement, "ERISA Affiliate" shall mean any
person (as defined in Section 3(9) of ERISA) that is a member of
any group of persons described in Section 414(b), (c), (m) or (o)
of the Code of which Shared Technologies or a subsidiary is a
member.
(e) The Pension Benefit Plans intended to qualify under
Section 401 of the Code are so qualified and have been determined
by the Internal Revenue Service ("IRS") to be so qualified and
nothing has occurred with respect to the operation of such
Pension Benefit Plans which would cause the loss of such
qualification or exemption or the imposition of any material
liability, penalty or tax under ERISA or the Code. Such plans
have been or will be, on a timely basis, (i) amended to comply
with changes to the Code made by the Tax Reform Act of 1986, the
Unemployment Compensation Amendments of 1992, the Omnibus Budget
Reconciliation Act of 1993, and other applicable legislative,
regulatory or administrative requirements; and (ii) submitted to
the Internal Revenue Service for a determination of their tax
qualification, as so amended; and no such amendment will
adversely affect the qualification of such plans.
(f) Each Welfare Plan that is intended to qualify for exclusion
of benefits thereunder from the income of participants or for any
other tax-favored treatment under any provisions of the Code
(including, without limitation, Sections 79, 105, 106, 125 or 129
of the Code) is and has been maintained in compliance with all
pertinent provisions of the Code and Treasury Regulations
thereunder.
(g) Except as disclosed in Shared Technologies' Form 10-K for the
fiscal year ended December 31, 1994, there are (i) no
investigations pending, to the best knowledge of Shared
Technologies, by any governmental entity involving the Pension
Benefit Plans or Welfare Plans, (ii) no termination proceedings
involving the Pension Benefit Plans and (iii) no pending or, to
the best of Shared Technologies' knowledge, threatened claims
(other than routine claims for benefits), suits or proceedings
against any Pension Benefit or Welfare Plan, against the assets
of any of the trusts under any Pension Benefit or Welfare Plan or
against any fiduciary of any Pension Benefit or Welfare Plan with
respect to the operation of such plan or asserting any rights or
claims to benefits under any Pension Benefit or Welfare Plan or
against the assets of any trust under such plan, which would, in
the case of clause (i), (ii) or (iii) of this paragraph (f), give
rise to any liability which would, individually or in the
aggregate, have a Shared Technologies Material Adverse Effect,
nor, to the best of Shared Technologies' knowledge, are there any
facts which would give rise to any liability which would,
individually or in the aggregate, have a Shared Technologies
Material Adverse Effect in the event of any such investigation,
claim, suit or proceeding.
(h) None of Shared Technologies, any of its subsidiaries or any
employee of the foregoing, nor any trustee, administrator, other
fiduciary or any other "party in interest" or "disqualified
person" with respect to the Pension Benefit Plans or Welfare
Plans, has engaged in a "prohibited transaction" (as such term is
defined in Section 4975 of the Code or Section 406 of ERISA)
which would be reasonably likely to result in a tax or penalty on
Shared Technologies or any of its subsidiaries under Section 4975
of the Code or Section 502(i) of ERISA which would, individually
or in the aggregate, have a Shared Technologies Material Adverse
Effect.
(i) Neither the Pension Benefit Plans subject to Title IV of
ERISA nor any trust created thereunder has been terminated nor
have there been any "reportable events" (as defined in
Section 4043 of ERISA and the regulations thereunder) with
respect to either thereof which would, individually or in the
aggregate, have a Shared Technologies Material Adverse Effect nor
has there been any event with respect to any Pension Benefit Plan
requiring disclosure under Section 4063(a) of ERISA or any event
with respect to any Pension Benefit Plan requiring disclosure
under Section 4041(c)(3)(C) of ERISA which would, individually or
in the aggregate, have a Shared Technologies Material Adverse
Effect.
(j) Neither Shared Technologies nor any subsidiary of Shared
Technologies has incurred any currently outstanding liability to
the Pension Benefit Guaranty Corporation (the "PBGC") or to a
trustee appointed under Section 4042(b) or (c) of ERISA other
than for the payment of premiums, all of which have been paid
when due. No Pension Benefit Plan has applied for, or received,
a waiver of the minimum funding standards imposed by Section 412
of the Code. The information supplied to the actuary by Shared
Technologies or any of its subsidiaries for use in preparing the
most recent actuarial report for Pension Benefit Plans is
complete and accurate in all material respects.
(k) Neither Shared Technologies, any of its subsidiaries nor any
of their ERISA Affiliates has any liability (including any
contingent liability under Section 4204 of ERISA) with respect to
any multiemployer plan, within the meaning of Section 3(37) of
ERISA, covering employees employed in the United States.
(l) Except as disclosed in Section 5.20 of the Disclosure
Statement, with respect to each of the Pension Benefit and
Welfare Plans, true, correct and complete copies of the following
documents have been delivered to Fairchild: (i) the current
plans and related trust documents, including amendments thereto,
(ii) any current summary plan descriptions, (iii) the most recent
Forms 5500, financial statements and actuarial reports, if
applicable, (iv) the most recent IRS determination letter, if
applicable; and (v) if any application for an IRS determination
letter is pending, copies of all such applications for
determination including attachments, exhibits and schedules
thereto.
(m)Neither Shared Technologies, any of its subsidiaries, any
organization to which Shared Technologies is a successor or
parent corporation, within the meaning of Section 4069(b) of
ERISA, nor any of their ERISA Affiliates has engaged in any
transaction, within the meaning of Section 4069(a) of ERISA, the
liability for which would, individually or in the aggregate, have
a Shared Technologies Material Adverse Effect.
(n) Except as disclosed in Section 5.20 of the Disclosure
Statement, none of the Welfare Plans maintained by Shared
Technologies or any of its subsidiaries are retiree life or
retiree health insurance plans which provide for continuing
benefits or coverage for any participant or any beneficiary of a
participant following termination of employment, except as may be
required under the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended ("COBRA"), or except at the expense of the
participant or the participant's beneficiary. Shared
Technologies and each of its subsidiaries which maintain a "group
health plan" within the meaning of Section 5000(b)(1) of the Code
have complied with the notice and continuation requirements of
Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title I
of ERISA and the regulations thereunder except where the failure
to comply would not, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect.
(o) No liability under any Pension Benefit or Welfare Plan has
been funded nor has any such obligation been satisfied with the
purchase of a contract from an insurance company as to which
Shared Technologies or any of its subsidiaries has received
notice that such insurance company is in rehabilitation.
(p) Except pursuant to the agreements listed in Section 5.20 of
the Disclosure Statement, the consummation of the transactions
contemplated by this Agreement will not result in an increase in
the amount of compensation or benefits or accelerate the vesting
or timing of payment of any benefits or compensation payable to
or in respect of any employee of Shared Technologies or any of
its subsidiaries.
(q) Shared Technologies has disclosed to Fairchild in
Section 5.20 of the Disclosure Statement each material Foreign
Plan to the extent the benefits provided thereunder are not
mandated by the laws of the applicable foreign jurisdiction.
Shared Technologies and each of its subsidiaries and each of the
Foreign Plans are in compliance with applicable laws and all
required contributions have been made to the Foreign Plans,
except where the failure to comply or make contributions would
not, individually or in the aggregate, have a Shared Technologies
Material Adverse Effect. For purposes hereof, the term "Foreign
Plan" shall mean any plan, with respect to benefits voluntarily
provided by Shared Technologies or any subsidiary with respect to
employees of any of them employed outside the United States.
5.21 Environmental Matters.
(a) Except as set forth in Section 5.21 of the Disclosure
Statement:
(i) each of Shared Technologies and its subsidiaries, and the
properties and assets owned by them, and to the actual knowledge
of Shared Technologies, all properties operated, leased, managed
or used by Shared Technologies and its subsidiaries are in
compliance with all applicable Environmental Laws except where
the failure to be in compliance would not, individually or in the
aggregate, have a Shared Technologies Material Adverse Effect;
(ii) there is no Environmental Claim that is (1) pending or
threatened against Shared Technologies or any of its subsidiaries
or (2) pending or threatened against any person or entity or any
assets owned by Shared Technologies or its subsidiaries whose
liability for such Environmental Claim has been retained or
assumed by contract or otherwise by Shared Technologies or any of
its subsidiaries or can be imputed or attributed by law to Shared
Technologies or any of its subsidiaries, the effect of any of
which would, individually or in the aggregate, have a Shared
Technologies Material Adverse Effect;
(iii) there are no past or present actions, activities,
circumstances, conditions, events or incidents arising out of,
based upon, resulting from or relating to the ownership,
operation or use of any property or assets currently or formerly
owned, operated or used by Shared Technologies or any of its
subsidiaries (or any predecessor in interest of any of them),
including, without limitation, the generation, storage, treatment
or transportation of any Hazardous Materials, or the emission,
discharge, disposal or other Release or threatened Release of any
Hazardous Materials into the Environment which is presently
expected to result in an Environmental Claim;
(iv) no lien has been recorded under any Environmental Law with
respect to any material property, facility or asset owned by
Shared Technologies or any of its subsidiaries; and to the actual
knowledge of Shared Technologies, no lien has been recorded under
any Environmental Law with respect to any material property,
facility or asset, operated, leased or managed or used by Shared
Technologies or its subsidiaries and relating to or resulting
from Shared Technologies or its subsidiaries operations, lease,
management or use for which Shared Technologies or its
subsidiaries may be legally responsible;
(v) neither Shared Technologies nor any of its subsidiaries has
received notice that it has been identified as a potentially
responsible party or any request for information under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), the Resource Conservation and
Recovery Act, as amended ("RCRA"), or any comparable state law
nor has Shared Technologies or any of its subsidiaries received
any notification that any Hazardous Materials that it or any of
their respective predecessors in interest has used, generated,
stored, treated, handled, transported or disposed of, or arranged
for transport for treatment or disposal of, or arranged for
disposal or treatment of, has been found at any site at which any
person is conducting or plans to conduct an investigation or
other action pursuant to any Environmental Law;
(vi) to the actual knowledge of Shared Technologies, there has
been no Release of Hazardous Materials at, on, upon, under, from
or into any real property in the vicinity of any property
currently or formerly owned by Shared Technologies or any of its
subsidiaries that, through soil, air, surface water or ground-
water migration or contamination, has become located on, in or
under such properties and, to the actual knowledge of Shared
Technologies, there has been no release of Hazardous Materials
at, on, upon, under or from any property currently or formerly
operated, leased, managed or used by Shared Technologies or any
of its subsidiaries that through soil, air, surface water or
groundwater migration or contamination has become located on, in
or under such properties as resulting from or relating to Shared
Technologies or any of its subsidiaries operations, lease,
management or use thereof of for which Shared Technologies and
any of its subsidiaries may be legally responsible;
(vii) no asbestos or asbestos containing material or any
polychlorinated biphenyls are contained within products presently
manufactured and, to the best knowledge of Shared Technologies
manufactured at any time by Shared Technologies or any of its
subsidiaries and, to the actual knowledge of Shared Technologies
there is no asbestos or asbestos containing material or any
polychlorinated biphenyl in, on or at any property or any
facility or equipment owned, operated, leased, managed or used by
Shared Technologies or any of its subsidiaries;
(viii) no property owned by Shared Technologies or any of its
subsidiaries and to the actual knowledge of Shared Technologies,
no property operated, leased, managed or used by Shared
Technologies and any of its subsidiaries is (i) listed or
proposed for listing on the National Priorities List under CERCLA
or (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated
pursuant to CERCLA, or on any comparable list published by any
governmental authority;
(ix) no underground storage tank or related piping is located at,
under or on any property owned by Shared Technologies or any of
its subsidiaries or to the actual knowledge of Shared
Technologies, any property operated, leased, managed or used by
Shared Technologies, nor to the actual knowledge of Shared
Technologies, has any such tank or piping been removed or
decommissioned from or at such property;
(x) all environmental investigations, studies, audits,
assessments or reviews conducted of which Shared Technologies has
actual knowledge in relation to the current or prior business or
assets owned, operated, leased, managed or used of Shared
Technologies or any of its subsidiaries or any real property,
assets or facility now or previously owned, operated, leased,
managed or used by Shared Technologies or any of its subsidiaries
have been delivered to Fairchild; and
(xi)each of Shared Technologies and its subsidiaries has obtained
all permits, licenses and other authorizations ("Authorizations")
required under any Environmental Law with respect to the
operation of its assets and business and its use, ownership and
operation of any real property, and each such Authorization is in
full force and effect.
(b)For purposes of Section 5.21(a):
(i)"Actual Knowledge of Shared Technologies" means the actual
knowledge of individuals at the corporate management level of
Shared Technologies and its subsidiaries.
(ii)"Environment" means any surface water, ground water, drinking
water supply, land surface or subsurface strata, ambient air and
including, without limitation, any indoor location;
(iii)"Environmental Claim" means any notice or claim by any
person alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup
costs, governmental costs, or harm, injuries or damages to any
person, property or natural resources, and any fines or
penalties) arising out of, based upon, resulting from or relating
to (1) the emission, discharge, disposal or other release or
threatened release in or into the Environment of any Hazardous
Materials or (2) circumstances forming the basis of any
violation, or alleged violation, of any applicable Environmental
Law;
(iv)"Environmental Laws" means all federal, state, and local
laws, codes, and regulations relating to pollution, the
protection of human health, the protection of the Environment or
the emission, discharge, disposal or other release or threatened
release of Hazardous Materials in or into the Environment;
(v)"Hazardous Materials" means pollutants, contaminants or
chemical, industrial, hazardous or toxic materials or wastes, and
includes, without limitation, asbestos or asbestos-containing
materials, PCBs and petroleum, oil or petroleum or oil products,
derivatives or constituents; and
(vi)"Release" means any past or present spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of Hazardous Materials
into the Environment or within structures (including the
abandonment or discarding of barrels, containers or other closed
receptacles containing any Hazardous Materials).
5.22 Disclosure. No representation or warranty by Shared
Technologies herein, or in any certificate furnished by or on
behalf of Shared Technologies to Fairchild in connection
herewith, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not
misleading.
5.23 Absence of Undisclosed Liabilities. Neither Shared
Technologies nor any of its subsidiaries has any liabilities or
obligations (including without limitation any liabilities or
obligations related to Shared Technologies Cellular, Inc.) of any
nature, whether absolute, accrued, unmatured, contingent or
otherwise, or any unsatisfied judgments or any leases of
personalty or realty or unusual or extraordinary commitments,
except the liabilities recorded on the Balance Sheet and the
notes thereto, and except for liabilities or obligations incurred
in the ordinary course of business and consistent with past
practice since December 31, 1994 that would not individually or
in the aggregate have a Shared Technologies Material Adverse
Effect.
5.24 Finders or Brokers. Except as set forth in Section 5.24 of
the Disclosure Statement, none of Shared Technologies, the
subsidiaries of Shared Technologies, the Board of Directors or
any member of the Board of Directors has employed any investment
banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee
or any commission in connection with the Merger, and Section 5.24
of the Disclosure Statement sets forth the maximum consideration
(present and future) agreed to be paid to each such party.
5.25 State Antitakeover Statutes. Shared Technologies has
granted all approvals and taken all other steps necessary to
exempt the Merger and the other transactions contemplated hereby
from the requirements and provisions of Section 203 of the DGCL
and any other applicable state antitakeover statute or regulation
such that none of the provisions of such Section 203 or any other
"business combination," "moratorium," "control share" or other
state antitakeover statute or regulation (x) prohibits or
restricts Shared Technologies' ability to perform its obligations
under this Agreement or its ability to consummate the Merger and
the other transactions contemplated hereby, (y) would have the
effect of invalidating or voiding this Agreement any provision
hereof, or (z) would subject Fairchild to any material impediment
or condition in connection with the exercise of any of its rights
under this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TFC, RHI AND FAIRCHILD
Each of TFC, RHI and Fairchild represents and warrants to Shared
Technologies that:
6.1 Organization and Qualification. Each of Fairchild and its
subsidiaries 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
to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Fairchild and its
subsidiaries is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except for
failures to be so qualified or in good standing which would not,
individually or in the aggregate, have a material adverse effect
on the general affairs, management, business, operations,
condition (financial or otherwise) or prospects of Fairchild and
its subsidiaries taken as a whole (a "Fairchild Material Adverse
Effect"). Neither Fairchild nor any of its subsidiaries is in
violation of any of the provisions of its Certificate of
Incorporation (or other applicable charter document) or By-Laws.
Fairchild has delivered to Shared Technologies accurate and
complete copies of the Certificate of Incorporation (or other
applicable charter document) and By-Laws, as currently in effect,
of each of Fairchild and its subsidiaries.
6.2 Capital Stock of Subsidiaries. The only direct or indirect
subsidiaries of Fairchild are those listed in Section 6.2 of the
Disclosure Statement previously delivered by Fairchild to Shared
Technologies (the "Disclosure Statement"). Fairchild is directly
or indirectly the record (except for directors' qualifying
shares) and beneficial owner (including all qualifying shares
owned by directors of such subsidiaries as reflected in
Section 6.2 of the Disclosure Statement) of all of the
outstanding shares of capital stock of each of its subsidiaries,
there are no proxies with respect to such shares, and no equity
securities of any of such subsidiaries are or may be required to
be issued by reason of any options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any such subsidiary is
bound to issue additional shares of its capital stock or
securities convertible into or exchangeable for such shares.
Other than as set forth in Section 6.2 of the Disclosure
Statement, all of such shares so owned by Fairchild are validly
issued, fully paid and nonassessable and are owned by it free and
clear of any claim, lien or encumbrance of any kind with respect
thereto. Except as disclosed in Section 6.2 of the Disclosure
Statement, Fairchild does not directly or indirectly own any
interest in any corporation, partnership, joint venture or other
business association or entity.
6.3 Capitalization. The authorized capital stock of Fairchild
consists of 1,400 shares of Common Stock, par value $100.00 per
share, and 3,000,000 shares of Preferred Stock, without par
value. As of the date hereof, 1,400 shares of Common Stock are
issued and outstanding (all of which are owned by RHI), 424,701
shares of Series A Preferred Stock are issued and outstanding,
2,278 shares of Series B Preferred Stock are issued and
outstanding (which will be extinguished immediately prior to the
Effective Time) and 558,360 shares of Series C Preferred Stock
are issued and outstanding. All of such issued and outstanding
shares are validly issued, fully paid and nonassessable and free
of preemptive rights. Except as set forth above, there are not
now, and at the Effective Time, there will not be, any shares of
capital stock of Fairchild issued or outstanding or any
subscriptions, options, warrants, calls, claims, rights
(including without limitation any stock appreciation or similar
rights), convertible securities or other agreements or
commitments of any character obligating Fairchild to issue,
transfer or sell any of its securities.
6.4 Authority Relative to This Agreement. Each of TFC and RHI is
a corporation duly organized, validly existing and in good
standing under the laws of Delaware. Each of TFC, RHI and
Fairchild has full corporate power and authority to execute and
deliver this Agreement and to consummate the Merger and other
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the Merger and other
transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of each of TFC (which owns
all of the outstanding common stock of RHI), RHI and Fairchild
and no other corporate proceedings on the part of TFC, RHI or
Fairchild are necessary to authorize this Agreement or to
consummate the Merger or other transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered
by each of TFC (which owns all of the outstanding common stock of
RHI), RHI and Fairchild and, assuming the due authorization,
execution and delivery hereof by Shared Technologies, constitutes
a valid and binding agreement of each of TFC, RHI and Fairchild,
enforceable against each of TFC, RHI and Fairchild in accordance
with its terms, except to the extent that its enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
6.5 No Violations, etc.
(a) Assuming that all filings, permits, authorizations, consents
and approvals or waivers thereof have been duly made or obtained
as contemplated by Section 6.5(b) hereof, neither the execution
and delivery of this Agreement by TFC, RHI or Fairchild nor the
consummation of the Merger or other transactions contemplated
hereby nor compliance by Fairchild 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 termination or suspension of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of
the properties or assets of TFC, RHI or Fairchild or any of their
respective subsidiaries under, any of the terms, conditions or
provisions of (x) their respective charters or by-laws,
(y) except as set forth in Section 6.5 of the Disclosure
Statement, any note, bond, mortgage, indenture or deed of trust,
or (z) any license, lease, agreement or other instrument or
obligation, to which TFC, RHI or Fairchild or any such subsidiary
is a party or to which they or any of their respective properties
or assets may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in the next paragraph,
violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to TFC, RHI or Fairchild
or any of their respective subsidiaries or any of their
respective properties or assets, except, in the case of clauses
(i)(z) and (ii) above, for such violations, conflicts, breaches,
defaults, terminations, suspensions, accelerations, rights of
termination or acceleration or creations of liens, security
interests, charges or encumbrances which would not, individually
or in the aggregate, either have a Fairchild Material Adverse
Effect or materially impair Fairchild's ability to consummate the
Merger or other transactions contemplated hereby.
(b) No filing or registration with, notification to and no
permit, authorization, consent or approval of any governmental
entity is required by TFC, RHI or Fairchild or any of their
respective subsidiaries in connection with the execution and
delivery of this Agreement or the consummation by Fairchild of
the Merger or other transactions contemplated hereby, except
(i) in connection with the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware,
(iii) filings with applicable state public utility commissions,
and (iv) such other filings, registrations, notifications,
permits, authorizations, consents or approvals the failure of
which to be obtained, made or given would not, individually or in
the aggregate, either have a Fairchild Material Adverse Effect or
materially impair Fairchild's ability to consummate the Merger or
other transactions contemplated hereby.
(c) As of the date hereof, Fairchild and its subsidiaries are not
in violation of or default under (x) their respective charter or
bylaws, and (y) except as set forth in Sections 6.5 and 6.9 of
the Disclosure Statement, any note, bond, mortgage, indenture or
deed of trust, or (z) any license, lease, agreement or other
instrument or obligation to which Fairchild or any such
subsidiary is a party or to which they or any of their respective
properties or assets may be subject, except, in the case of
clauses (y) and (z) above, for such violations or defaults which
would not, individually or in the aggregate, either have a
Fairchild Material Adverse Effect or materially impair
Fairchild's ability to consummate the Merger or other
transactions contemplated hereby.
6.6 Commission Filings; Financial Statements.
(a) Fairchild has filed all required forms, reports and documents
during the past three years (collectively, the "SEC Reports")
with the Securities and Exchange Commission (the "SEC"), all of
which complied when filed in all material respects with all
applicable requirements of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder
(the "Securities Act") and the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act"). As of their respective dates the SEC
Reports (including all exhibits and schedules thereto and
documents incorporated by reference therein) did not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary 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 Fairchild and its subsidiaries included or
incorporated by reference in such SEC Reports were prepared in
accordance with generally accepted accounting principles applied
on a consistent basis during the periods involved (except as may
be indicated in the notes thereto), and fairly presented the
consolidated financial position of Fairchild and its subsidiaries
(before giving effect to the Fairchild Reorganization) as of the
dates thereof and the consolidated results of operations and
consolidated cash flows for the periods then ended (subject, in
the case of any unaudited interim financial statements, to normal
year-end adjustments and to the extent they may not include
footnotes or may be condensed or summary statements).
(b) Fairchild will deliver to Shared Technologies as soon as they
become available true and complete copies of any report or
statement mailed by it to its securityholders generally or filed
by it with the SEC, in each case subsequent to the date hereof
and prior to the Effective Time. As of their respective dates,
such reports and statements (excluding any information therein
provided by Shared Technologies, as to which Fairchild makes no
representation) will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not
misleading and will comply in all material respects with all
applicable requirements of law. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of Fairchild and its subsidiaries to be included or
incorporated by reference in such reports and statements
(excluding any information therein provided by Shared
Technologies, as to which Fairchild makes no representation) will
be prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and
will fairly present the consolidated financial position of
Fairchild and its subsidiaries (before giving effect to the
Fairchild Reorganization unless otherwise specified therein) as
of the dates thereof and the consolidated results of operations
and consolidated cash flows for the periods then ended (subject,
in the case of any unaudited interim financial statements, to
normal year-end adjustments and to the extent they may not
include footnotes or may be condensed or summary statements).
(c) Fairchild has delivered to Shared Technologies audited
financial statements for the three years ended June 30, 1995 (the
"Fairchild Financial Statements") which were prepared in
accordance with generally accepted accounting principles applied
on a consistent basis and which fairly present the consolidated
financial position, results of operations and cash flows of
Fairchild and its subsidiaries as if the Fairchild Reorganization
had occurred at the beginning of such three-year period. In
addition, Fairchild has delivered to Shared Technologies an
unaudited pro forma balance sheet of each of D-M-E Inc.,
Fairchild Fasteners Inc. and RHI as of June 30, 1995 which was
prepared in accordance with generally accepted accounting
principles applied on a consistent basis and which fairly
presents the consolidated financial position of such entities if
the Fairchild Reorganization had occurred at such date.
(d) Fairchild will deliver to Shared Technologies within 45 days
of the end of each fiscal quarter subsequent to the date hereof
and prior to the Effective Time unaudited consolidated interim
financial statements for such quarter prepared in accordance with
generally accepted accounting principles on the same basis as the
Fairchild Financial Statements were prepared.
6.7 Absence of Changes or Events. Except as set forth in
Fairchild's Form 10-K for the fiscal year ended June 30, 1995, as
filed with the SEC, since June 30, 1995:
(a) there has been no material adverse change, or any development
involving a prospective material adverse change, in the general
affairs, management, business, operations, condition (financial
or otherwise) or prospects of Fairchild and its subsidiaries
taken as a whole; (it being understood that no such material
adverse change shall be deemed to have occurred with respect to
Fairchild and VSI, taken as a whole, if the pro forma
consolidated net worth of Fairchild, as evidenced by a pro forma
closing date balance sheet to be delivered to Shared Technologies
on the Effective Date, is at least $80,000,000);
(b) except as contemplated by Schedule 9.1 and except for
dividends by Fairchild to RHI in an amount not exceeding capital
contributions made to Fairchild by RHI since June 30, 1995 plus
$4,000,000, there has not been any direct or indirect redemption,
purchase or other acquisition of any shares of capital stock of
Fairchild or any of its subsidiaries, or any declaration, setting
aside or payment of any dividend or other distribution by
Fairchild or any of its subsidiaries in respect of their capital
stock;
(c) except in the ordinary course of its business and consistent
with past practice neither Fairchild nor any of its subsidiaries
has incurred any indebtedness for borrowed money, or assumed,
guaranteed, endorsed or otherwise as an accommodation become
responsible for the obligations of any other individual, firm or
corporation, or made any loans or advances to any other
individual, firm or corporation;
(d) there has not been any change in accounting methods,
principles or practices of Fairchild or its subsidiaries;
(e) except in the ordinary course of business and for amounts
which are not material, there has not been any revaluation by
Fairchild or any of its subsidiaries of any of their respective
assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivables;
(f) there has not been any damage, destruction or loss, whether
covered by insurance or not, except for such as would not,
individually or in the aggregate, have a Fairchild Material
Adverse Effect; and
(g) there has not been any agreement by Fairchild or any of its
subsidiaries to (i) do any of the things described in the
preceding clauses (a) through (f) other than as expressly
contemplated or provided for in this Agreement or (ii) take,
whether in writing or otherwise, any action which, if taken prior
to the date of this Agreement, would have made any representation
or warranty in this Article VI untrue or incorrect.
6.8 Proxy Statement. None of the information supplied by
Fairchild or any of its subsidiaries for inclusion in the proxy
statement to be sent to the shareholders of Shared Technologies
in connection with the Special Meeting (as hereinafter defined),
including all amendments and supplements thereto (the "Proxy
Statement"), shall on the date the Proxy Statement is first
mailed to shareholders, and at the time of the Special Meeting or
at the Effective Time, be false or misleading with respect to any
material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made,
not misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies
for the Special Meeting which has become false or misleading.
None of the information to be filed by Fairchild and Shared
Technologies with the SEC in connection with the Merger or in any
other documents to be filed with the SEC or any other regulatory
or governmental agency or authority in connection with the
transactions contemplated hereby, including any amendments
thereto (the "Other Documents"), insofar as such information was
provided or supplied by Fairchild or any of its subsidiaries,
will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
Proxy Statement shall comply in all material respects with the
requirements of the Exchange Act.
6.9 Litigation. Except as set forth in Section 6.9 of the
Disclosure Statement, there is no (i) claim, action, suit or
proceeding pending or, to the best knowledge of TFC, RHI,
Fairchild or any of their subsidiaries, threatened against or
relating to Fairchild or any of its subsidiaries before any court
or governmental or regulatory authority or body or arbitration
tribunal, or (ii) outstanding judgment, order, writ, injunction
or decree, or application, request or motion therefor, of any
court, governmental agency or arbitration tribunal in a
proceeding to which Fairchild, any subsidiary of Fairchild or any
of their respective assets was or is a party except, in the case
of clauses (i) and (ii) above, such as would not, individually or
in the aggregate, either have a Fairchild Material Adverse Effect
or materially impair Fairchild's ability to consummate the Merger
or other transactions contemplated hereby.
6.10 Insurance. Section 6.10 of the Disclosure Statement lists
all insurance policies in force on the date hereof covering the
businesses, properties and assets of Fairchild and its
subsidiaries, and all such policies are currently in effect.
True and complete copies of all such policies have been delivered
to Shared Technologies. Except as set forth in Section 6.10 of
the Disclosure Statement, Fairchild has not received notice of
the cancellation of any such insurance policy.
6.11 Title to and Condition of Properties. Except as set forth in
Section 6.11 of the Disclosure Statement, Fairchild and its
subsidiaries have good title to all of the real property and own
outright all of the personal property (except for leased property
or assets) which is reflected on Fairchild's and its
subsidiaries' June 30, 1995 audited consolidated balance sheet
contained in the Fairchild Financial Statements (the "Balance
Sheet") except for property since sold or otherwise disposed of
in the ordinary course of business and consistent with past
practice. Except as set forth in Sections 6.9 and 6.11 of the
Disclosure Statement, no such real or personal property is
subject to claims, liens or encumbrances, whether by mortgage,
pledge, lien, conditional sale agreement, charge or otherwise,
except for those which would not, individually or in the
aggregate, have a Fairchild Material Adverse Effect.
Section 6.11 of the Disclosure Statement contains a true and
complete list of all real properties owned by Fairchild and its
subsidiaries.
6.12 Leases. There has been made available to Shared
Technologies true and complete copies of each lease requiring the
payment of rentals aggregating at least $35,000 per annum
pursuant to which real or personal property is held under lease
by Fairchild or any of its subsidiaries, and true and complete
copies of each lease pursuant to which Fairchild or any of its
subsidiaries leases real or personal property to others. A true
and complete list of all such leases is set forth in Section 6.12
of the Disclosure Statement. All of the leases so listed are
valid and subsisting and in full force and effect and subject to
no default with respect to Fairchild or its subsidiaries, as the
case may be, and, to Fairchild's knowledge, are in full force and
effect and subject to no default and subject to no default with
respect to any other party thereto, and the leased real property
is in good and satisfactory condition.
6.13 Contracts and Commitments. Other than as disclosed in
Section 6.13 of the Disclosure Statement, no existing contract or
commitment contains an agreement with respect to any change of
control that would be triggered as a result of the Merger. Other
than as set forth in Section 6.13 of the Disclosure Statement,
neither this Agreement, the Merger nor the other transactions
contemplated hereby will result in any outstanding loans or
borrowings by Fairchild or any subsidiary of Fairchild becoming
due, going into default or giving the lenders or other holders of
debt instruments the right to require Fairchild or any of its
subsidiaries to repay all or a portion of such loans or
borrowings.
6.14 Labor Matters. Each of Fairchild and its subsidiaries is in
compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and
conditions of employment and wages and hours, and neither
Fairchild nor any of its subsidiaries is engaged in any unfair
labor practice. There is no labor strike, slowdown or stoppage
pending (or, to the best knowledge of Fairchild, any labor strike
or stoppage threatened) against or affecting Fairchild or any of
its subsidiaries. No petition for certification has been filed
and is pending before the National Labor Relations Board with
respect to any employees of Fairchild or any of its subsidiaries
who are not currently organized.
6.15 Compliance with Law. Except for matters set forth in the
Disclosure Statement, neither Fairchild nor any of its
subsidiaries has violated or failed to comply with any statute,
law, ordinance, regulation, rule or order of any foreign,
federal, state or local government or any other governmental
department or agency, or any judgment, decree or order of any
court, applicable to its business or operations, except where any
such violation or failure to comply would not, individually or in
the aggregate, have a Fairchild Material Adverse Effect; the
conduct of the business of Fairchild and its subsidiaries is in
conformity with all foreign, federal, state and local energy,
public utility and health requirements, and all other foreign,
federal, state and local governmental and regulatory
requirements, except where such nonconformities would not,
individually or in the aggregate, have a Fairchild Material
Adverse Effect. Fairchild and its subsidiaries have all permits,
licenses and franchises from governmental agencies required to
conduct their businesses as now being conducted, except for such
permits, licenses and franchises the absence of which would not,
individually or in the aggregate, have a Fairchild Material
Adverse Effect.
6.16 Board Recommendation. The Board of Directors of Fairchild
has, by a unanimous vote at a meeting of such Board duly held on,
or by unanimous written consent of such Board dated, November 9,
1995, approved and adopted this Agreement, the Merger and the
other transactions contemplated hereby.
6.17 Employment and Labor Contracts. Neither Fairchild nor any of
its subsidiaries is a party to any employment, management
services, consultation or other similar contract with any past or
present officer, director, employee or other person or, to the
best of Fairchild's knowledge, any entity affiliated with any
past or present officer, director or employee or other person
other than those set forth in Section 6.17 of the Disclosure
Statement and other than those which (x) have a term of less than
one year and (y) involve payments of less than $30,000 per year,
in each case true and complete copies of which contracts have
been delivered to Shared Technologies, and other than the
agreements executed by employees generally, the forms of which
have been delivered to Shared Technologies.
6.18 Patents and Trademarks. Fairchild and its subsidiaries own
or have the right to use all patents, patent applications,
trademarks, trademark applications, trade names, inventions,
processes, know-how and trade secrets necessary to the conduct of
their respective businesses, except for those which the failure
to own or have the right to use would not, individually or in the
aggregate, have a Fairchild Material Adverse Effect ("Proprietary
Rights"). All issued patents and trademark registrations and
pending patent and trademark applications of the Proprietary
Rights have previously been delivered to Shared Technologies. No
rights or licenses to use Proprietary Rights have been granted by
Fairchild or its subsidiaries except those listed in Section 6.18
of the Disclosure Statement; and no contrary assertion has been
made to Fairchild or any of its subsidiaries or notice of
conflict with any asserted right of others has been given by any
person except those which, even if correct, would not,
individually or in the aggregate, have a Fairchild Material
Adverse Effect. Fairchild has not given notice of any asserted
claim or conflict to a third party with respect to Fairchild's
Proprietary Rights. True and complete copies of all material
license agreements under which Fairchild or any of its
subsidiaries is a licensor or licensee have been delivered to
Shared Technologies.
6.19 Taxes. "Tax" or "Taxes" shall mean all federal, state,
local and foreign taxes, duties, levies, charges and assessments
of any nature, including social security payments and deductibles
relating to wages, salaries and benefits and payments to
subcontractors (to the extent required under applicable Tax law),
and also including all interest, penalties and additions imposed
with respect to such amounts. Except as set forth in
Sections 6.9 and 6.19 of the Disclosure Statement: (i) Fairchild
and its subsidiaries have prepared and timely filed or will
timely file with the appropriate governmental agencies all
franchise, income and all other material Tax returns and reports
required to be filed for any period ending on or before the
Effective Time, taking into account any extension of time to file
granted to or obtained on behalf of Fairchild and/or its
subsidiaries; (ii) all material Taxes of Fairchild and its
subsidiaries in respect of the pre-Merger period have been paid
in full to the proper authorities, other than such Taxes as are
being contested in good faith by appropriate proceedings and/or
are adequately reserved for in accordance with generally accepted
accounting principles; (iii) all deficiencies resulting from Tax
examinations of federal, state and foreign income, sales and
franchise and all other material Tax returns filed by Fairchild
and its subsidiaries have either been paid or are being contested
in good faith by appropriate proceedings; (iv) to the best
knowledge of Fairchild, no deficiency has been asserted or
assessed against Fairchild or any of its subsidiaries, and no
examination of Fairchild or any of its subsidiaries is pending or
threatened for any material amount of Tax by any taxing
authority; (v) no extension of the period for assessment or
collection of any material Tax is currently in effect and no
extension of time within which to file any material Tax return
has been requested, which Tax return has not since been filed;
(vi) no material Tax liens have been filed with respect to any
Taxes; (vii) Fairchild and each of its subsidiaries will not make
any voluntary adjustment by reason of a change in their
accounting methods for any pre-Merger period that would affect
the taxable income or deductions of Fairchild or any of its
subsidiaries for any period ending after the Effective Date;
(viii) Fairchild and its subsidiaries have made timely payments
of the Taxes required to be deducted and withheld from the wages
paid to their employees; (ix) the Tax Sharing Agreement under
which Fairchild or any subsidiary will have any obligation or
liability on or after the Effective Date is attached as
Exhibit E; (x) Fairchild has foreign losses as defined in
Section 904(f)(2) of the Code listed in Section 6.19 of the
Disclosure Statement; (xi) Fairchild and its subsidiaries have
unused foreign tax credits set forth in Section 6.19 of the
Disclosure Statement; and (xii) to the best knowledge of
Fairchild, there are no transfer pricing agreements made with any
taxation authority involving Fairchild and its subsidiaries.
6.20 Employee Benefit Plans; ERISA.
(a) Except as set forth in Section 6.20 of the Disclosure
Statement, there are no "employee pension benefit plans" as
defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), covering employees
employed in the United States, maintained or contributed to by
Fairchild or any of its subsidiaries, or to which Fairchild or
any of its subsidiaries contributes or is obligated to make
payments thereunder or otherwise may have any liability ("Pension
Benefits Plans").
(b) Fairchild has furnished Shared Technologies with a true and
complete schedule of all "welfare benefit plans" (as defined in
Section 3(1) of ERISA) covering employees employed in the United
States, maintained or contributed to by Fairchild or any of its
subsidiaries ("Welfare Plans"), all multiemployer plans as
defined in Section 3(37) of ERISA covering employees employed in
the United States to which Fairchild or any of its subsidiaries
is required to make contributions or otherwise may have any
liability, and, to the extent covering employees employed in the
United States, all stock bonus, stock option, restricted stock,
stock appreciation right, stock purchase, bonus, incentive,
deferred compensation, severance and vacation plans maintained or
contributed to by Fairchild or a subsidiary.
(c) Fairchild and each of its subsidiaries, and each of the
Pension Benefit Plans and Welfare Plans, are in compliance with
the applicable provisions of ERISA and other applicable laws
except where the failure to comply would not, individually or in
the aggregate, have a Fairchild Material Adverse Effect.
(d) All contributions to, and payments from, the Pension Benefit
Plans which are required to have been made in accordance with the
Pension Benefit Plans and, when applicable, Section 302 of ERISA
or Section 412 of the Code have been timely made except where the
failure to make such contributions or payments on a timely basis
would not, individually or in the aggregate, have a Fairchild
Material Adverse Effect. All contributions required to have been
made in accordance with Section 302 of ERISA or Section 412 of
the Code to any employee pension benefit plan (as defined in
Section 3(2) of ERISA) maintained by an ERISA Affiliate of
Fairchild or any of its subsidiaries have been timely made except
where the failure to make such contributions on a timely basis
would not individually or in the aggregate have a Fairchild
Material Adverse Effect. For purposes of this Agreement, "ERISA
Affiliate" shall mean any person (as defined in Section 3(9) of
ERISA) that is a member of any group of persons described in
Section 414(b), (c), (m) or (o) of the Code of which Fairchild or
a subsidiary is a member.
(e) The Pension Benefit Plans intended to qualify under
Section 401 of the Code are so qualified and have been determined
by the Internal Revenue Service ("IRS") to be so qualified and
nothing has occurred with respect to the operation of such
Pension Benefit Plans which would cause the loss of such
qualification or exemption or the imposition of any material
liability, penalty or tax under ERISA or the Code. Such plans
have been or will be, on a timely basis, (i) amended to comply
with changes to the Code made by the Tax Reform Act of 1986, the
Unemployment Compensation Amendments of 1992, the Omnibus Budget
Reconciliation Act of 1993, and other applicable legislative,
regulatory or administrative requirements; and (ii) submitted to
the Internal Revenue Service for a determination of their tax
qualification, as so amended; and no such amendment will
adversely affect the qualification of such plans.
(f) Each Welfare Plan that is intended to qualify for exclusion
of benefits thereunder from the income of participants or for any
other tax-favored treatment under any provisions of the Code
(including, without limitation, Sections 79, 105, 106, 125, or
129 of the Code) is and has been maintained in compliance with
all pertinent provisions of the Code and Treasury Regulations
thereunder.
(g) Except as disclosed in Fairchild's Form 10-K for the fiscal
year ended June 30, 1995, there are (i) no investigations
pending, to the best knowledge of Fairchild, by any governmental
entity involving the Pension Benefit Plans or Welfare Plans,
(ii) no termination proceedings involving the Pension Benefit
Plans and (iii) no pending or, to the best of Fairchild's
knowledge, threatened claims (other than routine claims for
benefits), suits or proceedings against any Pension Benefit or
Welfare Plan, against the assets of any of the trusts under any
Pension Benefit or Welfare Plan or against any fiduciary of any
Pension Benefit or Welfare Plan with respect to the operation of
such plan or asserting any rights or claims to benefits under any
Pension Benefit or Welfare Plan or against the assets of any
trust under such plan, which would, in the case of clause (i),
(ii) or (iii) of this paragraph (f), give rise to any liability
which would, individually or in the aggregate, have a Fairchild
Material Adverse Effect, nor, to the best of Fairchild's
knowledge, are there are any facts which would give rise to any
liability which would, individually or in the aggregate, have a
Fairchild Material Adverse Effect in the event of any such
investigation, claim, suit or proceeding.
(h) None of Fairchild, any of its subsidiaries or any employee of
the foregoing, nor any trustee, administrator, other fiduciary or
any other "party in interest" or "disqualified person" with
respect to the Pension Benefit Plans or Welfare Plans, has
engaged in a "prohibited transaction" (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA) which would be
reasonably likely to result in a tax or penalty on Fairchild or
any of its subsidiaries under Section 4975 of the Code or
Section 502(i) of ERISA which would, individually or in the
aggregate, have a Fairchild Material Adverse Effect.
(I) Neither the Pension Benefit Plans subject to Title IV of
ERISA nor any trust created thereunder has been terminated nor
have there been any "reportable events" (as defined in
Section 4043 of ERISA and the regulations thereunder) with
respect to either thereof which would, individually or in the
aggregate, have a Fairchild Material Adverse Effect nor has there
been any event with respect to any Pension Benefit Plan requiring
disclosure under Section 4063(a) of ERISA or any event with
respect to any Pension Benefit Plan requiring disclosure under
Section 4041(c)(3)(C) of ERISA which would, individually or in
the aggregate, have a Fairchild Material Adverse Effect.
(j) Neither Fairchild nor any subsidiary of Fairchild has
incurred any currently outstanding liability to the Pension
Benefit Guaranty Corporation (the "PBGC") or to a trustee
appointed under Section 4042(b) or (c) of ERISA other than for
the payment of premiums, all of which have been paid when due.
No Pension Benefit Plan has applied for, or received, a waiver of
the minimum funding standards imposed by Section 412 of the Code.
The information supplied to the actuary by Fairchild or any of
its subsidiaries for use in preparing the most recent actuarial
report for Pension Benefit Plans is complete and accurate in all
material respects.
(k) Except as set forth in Section 6.20 of the Disclosure
Statement, neither Fairchild, any of its subsidiaries nor any of
their ERISA Affiliates has any liability (including any
contingent liability under Section 4204 of ERISA) with respect to
any multiemployer plan, within the meaning of Section 3(37) of
ERISA, covering employees employed in the United States.
(l) Except as disclosed in Section 6.20 of the Disclosure
Statement, with respect to each of the Pension Benefit and
Welfare Plans, true, correct and complete copies of the following
documents have been delivered to Shared Technologies: (i) the
current plans and related trust documents, including amendments
thereto, (ii) any current summary plan descriptions, (iii) the
most recent Forms 5500, financial statements and actuarial
reports, if applicable, (iv) the most recent IRS determination
letter, if applicable; and (v) if any application for an IRS
determination letter is pending, copies of all such applications
for determination including attachments, exhibits and schedules
thereto.
(m) Neither Fairchild, any of its subsidiaries, any organization
to which Fairchild is a successor or parent corporation, within
the meaning of Section 4069(b) of ERISA, nor any of their ERISA
Affiliates has engaged in any transaction, within the meaning of
Section 4069(a) of ERISA, the liability for which would,
individually or in the aggregate, have a Fairchild Material
Adverse Effect.
(n) Except as disclosed in Section 6.20 of the Disclosure
Statement, none of the Welfare Plans maintained by Fairchild or
any of its subsidiaries are retiree life or retiree health
insurance plans which provide for continuing benefits or coverage
for any participant or any beneficiary of a participant following
termination of employment, except as may be required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), or except at the expense of the participant or
the participant's beneficiary. Fairchild and each of its
subsidiaries which maintain a "group health plan" within the
meaning of Section 5000(b)(1) of the Code have complied with the
notice and continuation requirements of Section 4980B of the
Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the
regulations thereunder except where the failure to comply would
not, individually or in the aggregate, have a Fairchild Material
Adverse Effect.
(o) No liability under any Pension Benefit or Welfare Plan has
been funded nor has any such obligation been satisfied with the
purchase of a contract from an insurance company as to which
Fairchild or any of its subsidiaries has received notice that
such insurance company is in rehabilitation.
(p) Except pursuant to the agreements listed in Section 6.20 of
the Disclosure Statement, the consummation of the transactions
contemplated by this Agreement will not result in an increase in
the amount of compensation or benefits or accelerate the vesting
or timing of payment of any benefits or compensation payable to
or in respect of any employee of Fairchild or any of its
subsidiaries.
(q) Fairchild has disclosed to Shared Technologies in
Section 6.20 of the Disclosure Statement each material Foreign
Plan to the extent the benefits provided thereunder are not
mandated by the laws of the applicable foreign jurisdiction.
Fairchild and each of its subsidiaries and each of the Foreign
Plans are in compliance with applicable laws and all required
contributions have been made to the Foreign Plans, except where
the failure to comply or make contributions would not,
individually or in the aggregate, have a Fairchild Material
Adverse Effect. For purposes hereof, the term "Foreign Plan"
shall mean any plan with respect to benefits voluntarily provided
by Fairchild or any subsidiary with respect to employees of any
of them employed outside the United States.
6.21 Environmental Matters.
(a) Except as set forth in Section 6.21 of the Disclosure
Statement:
(i) each of Fairchild and its subsidiaries, and the properties
and assets owned by them, and to the actual knowledge of
Fairchild, all properties operated, leased, managed or used by
Fairchild and its subsidiaries are in compliance with all
applicable Environmental Laws except where the failure to be in
compliance would not, individually or in the aggregate, have a
Fairchild Material Adverse Effect;
(ii) there is no Environmental Claim that is (1) pending or
threatened against Fairchild or any of its subsidiaries or
(2) pending or threatened against any person or entity or any
assets owned by Fairchild or its subsidiaries whose liability for
such Environmental Claim has been retained or assumed by contract
or otherwise by Fairchild or any of its subsidiaries or can be
imputed or attributed by law to Fairchild or any of its
subsidiaries, the effect of any of which would, individually or
in the aggregate, have a Fairchild Material Adverse Effect;
(iii) there are no past or present actions, activities,
circumstances, conditions, events or incidents arising out of,
based upon, resulting from or relating to the ownership,
operation or use of any property or assets currently or formerly
owned, operated or used by Fairchild or any of its subsidiaries
(or any predecessor in interest of any of them), including,
without limitation, the generation, storage, treatment or
transportation of any Hazardous Materials, or the emission,
discharge, disposal or other Release or threatened Release of any
Hazardous Materials into the Environment which is presently
expected to result in an Environmental Claim;
(iv) no lien has been recorded under any Environmental Law with
respect to any material property, facility or asset owned by
Fairchild or any of its subsidiaries, and to the actual knowledge
of Fairchild, no lien has been recorded under any Environmental
Law with respect to any material property, facility or asset,
operated, leased or managed or used by Fairchild or its
subsidiaries and relating to or resulting from Fairchild or its
subsidiaries operations, lease, management or use for which
Fairchild or its subsidiaries may be legally responsible;
(v) neither Fairchild nor any of its subsidiaries has received
notice that it has been identified as a potentially responsible
party or any request for information under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), the Resource Conservation and Recovery
Act, as amended ("RCRA"), or any comparable state law nor has
Fairchild or any of its subsidiaries received any notification
that any Hazardous Materials that it or any of their respective
predecessors in interest has used, generated, stored, treated,
handled, transported or disposed of, or arranged for transport
for treatment or disposal of, or arranged for disposal or
treatment of, has been found at any site at which any person is
conducting or plans to conduct an investigation or other action
pursuant to any Environmental Law;
(vi) to the actual knowledge of Fairchild, there has been no
Release of Hazardous Materials at, on, upon, under, from or into
any real property in the vicinity of any property currently or
formerly owned by Fairchild or any of its subsidiaries that,
through soil, air, surface water or groundwater migration or
contamination, has become located on, in or under such properties
and, to the actual knowledge of Fairchild, there has been no
release of Hazardous Materials at, on, upon, under or from any
property currently or formerly operated, leased, managed or used
by Fairchild or any of its subsidiaries that through soil, air,
surface water or groundwater migration or contamination has
become located on, in or under such properties as resulting from
or relating to Fairchild or any of its subsidiaries operations,
lease, management or use thereof of for which Fairchild and any
of its subsidiaries may be legally responsible;
(vii)no asbestos or asbestos containing material or any
polychlorinated biphenyls are contained within products presently
manufactured and, to the best knowledge of Fairchild manufactured
at any time by Fairchild or any of its subsidiaries and, to the
actual knowledge of Fairchild there is no asbestos or asbestos
containing material or any polychlorinated biphenyl in, on or at
any property or any facility or equipment owned, operated,
leased, managed or used by Fairchild or any of its subsidiaries;
(viii) no property owned by Fairchild or any of its subsidiaries
and to the actual knowledge of Fairchild, no property operated,
leased, managed or used by Fairchild and any of its subsidiaries
is (i) listed or proposed for listing on the National Priorities
List under CERCLA or (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information
System List promulgated pursuant to CERCLA, or on any comparable
list published by any governmental authority;
(ix) no underground storage tank or related piping is located at,
under or on any property owned by Fairchild or any of its
subsidiaries or, to the actual knowledge of Fairchild, any
property operated, leased, managed or used by Fairchild and any
of its subsidiaries, nor, to the actual knowledge of Fairchild,
has any such tank or piping been removed or decommissioned from
or at such property;
(x) all environmental investigations, studies, audits,
assessments or reviews conducted of which Fairchild has actual
knowledge in relation to the current or prior business or assets
owned, operated, leased managed or used by Fairchild or any of
its subsidiaries or any real property, assets or facility now or
previously owned operated, managed, leased or used by Fairchild
or any of its subsidiaries have been delivered to Shared
Technologies; and
(xi) each of Fairchild and its subsidiaries has obtained all
permits, licenses and other authorizations ("Authorizations")
required under any Environmental Law with respect to the
operation of its assets and business and its use, ownership and
operation of any real property, and each such Authorization is in
full force and effect.
(b) For purposes of Section 6.21(a):
(i) "Actual Knowledge of Fairchild" means the actual knowledge of
individuals at the corporate management level of Fairchild and
its subsidiaries.
(ii) "Environment" means any surface water, ground water,
drinking water supply, land surface or subsurface strata, ambient
air and including, without limitation, any indoor location;
(iii)"Environmental Claim" means any notice or claim by any
person alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup
costs, governmental costs, or harm, injuries or damages to any
person, property or natural resources, and any fines or
penalties) arising out of, based upon, resulting from or relating
to (1) the emission, discharge, disposal or other release or
threatened release in or into the Environment of any Hazardous
Materials or (2) circumstances forming the basis of any
violation, or alleged violation, of any applicable Environmental
Law;
(iv)"Environmental Laws" means all federal, state and local laws,
codes and regulations relating to pollution, the protection of
human health, the protection of the Environment or the emission,
discharge, disposal or other release or threatened release of
Hazardous Materials in or into the Environment;
(v)"Hazardous Materials" means pollutants, contaminants or
chemical, industrial, hazardous or toxic materials or wastes,
and includes, without limitation, asbestos or asbestos-containing
materials, PCBs and petroleum, oil or petroleum or oil products,
derivatives or constituents; and
(vi)"Release" means any past or present spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of Hazardous Materials
into the Environment or within structures (including the
abandonment or discarding of barrels, containers or other closed
receptacles containing any Hazardous Materials).
6.22 Disclosure. No representation or warranty by Fairchild
herein, or in any certificate furnished by or on behalf of
Fairchild to Shared Technologies in connection herewith, contains
or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary in order to make
the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
6.23 Absence of Undisclosed Liabilities. Except as set forth in
Section 6.9 of the Disclosure Statement, neither Fairchild nor
any of its subsidiaries has any liabilities or obligations of any
nature, whether absolute, accrued, unmatured, contingent or
otherwise, or any unsatisfied judgments or any leases of
personalty or realty or unusual or extraordinary commitments,
except the liabilities recorded on the Balance Sheet and the
notes thereto, and except for liabilities or obligations incurred
in the ordinary course of business and consistent with past
practice since June 30, 1995 that would not individually or in
the aggregate have a Fairchild Material Adverse Effect.
6.24 Finders or Brokers. Except as set forth in Section 6.24 of
the Disclosure Statement, none of Fairchild, the subsidiaries of
Fairchild, the Board of Directors or any member of the Board of
Directors has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated
hereby who might be entitled to a fee or any commission in
connection with of the Merger, and Section 6.24 of the Disclosure
Statement sets forth the maximum consideration (present and
future) agreed to be paid to each such party.
ARTICLE VII
CONDUCT OF BUSINESS OF FAIRCHILD AND
SHARED TECHNOLOGIES PENDING THE MERGER
7.1 Conduct of Business of Fairchild and Shared Technologies
Pending the Merger. Except as contemplated by this Agreement or
as expressly agreed to in writing by Fairchild and Shared
Technologies, during the period from the date of this Agreement
to the Effective Time, each of Fairchild and its subsidiaries and
Shared Technologies and its subsidiaries will conduct their
respective operations according to its ordinary course of
business consistent with past practice, and will use all
commercially reasonable efforts to preserve intact its business
organization, to keep available the services of its officers and
employees and to maintain satisfactory relationships with
suppliers, distributors, customers and others having business
relationships with it and will take no action which would
materially adversely affect the ability of the parties to
consummate the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, prior to the
Effective Time, neither Fairchild nor Shared Technologies will
nor will they permit any of their respective subsidiaries to,
without the prior written consent of the other party:
(a) amend its certificate of incorporation or by-laws, except
Shared Technologies may amend its certificate of incorporation
and bylaws as required by the terms of this Agreement;
(b) authorize for issuance, issue, sell, deliver, grant any
options for, or otherwise agree or commit to issue, sell or
deliver any shares of any class of its capital stock or any
securities convertible into shares of any class of its capital
stock, except (i) pursuant to and in accordance with the terms of
currently outstanding convertible securities, warrants and
options, and (ii) options granted under the Stock Option Plans of
Shared Technologies, in the ordinary course of business
consistent with past practice;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof)
in respect of its capital stock or purchase, redeem or otherwise
acquire any shares of its own capital stock or of any of its
subsidiaries, except as otherwise expressly provided in this
Agreement (including, without limitation, Section 6.7(b)) and
except for the distribution of the shares of Shared Technologies
Cellular Inc. to the shareholders of Shared Technologies;
(d) except in the ordinary course of business, consistent with
past practice (i) create, incur, assume, maintain or permit to
exist any long-term debt or any short-term debt for borrowed
money other than under existing lines of credit; (ii) assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations
of any other person except its wholly owned subsidiaries in the
ordinary course of business and consistent with past practices;
or (iii) make any loans, advances or capital contributions to, or
investments in, any other person;
(e) except as otherwise expressly contemplated by this Agreement
(including without limitation as set forth in Schedule 6.17 to
the Disclosure Statement) or in the ordinary course of business,
consistent with past practice, (i) increase in any manner the
compensation of any of its directors, officers or other
employees; (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit not required, or enter into
or agree to enter into any agreement or arrangement with such
director, officer or employee, whether past or present, relating
to any such pension, retirement allowance or other employee
benefit, except as required under currently existing agreements,
plans or arrangements; (iii) grant any severance or termination
pay to, or enter into any employment or severance agreement with,
any of its directors, officers or other employees; or (iv) except
as may be required to comply with applicable law, become
obligated (other than pursuant to any new or renewed collective
bargaining agreement) under any new pension plan, welfare plan,
multiemployer plan, employee benefit plan, benefit arrangement,
or similar plan or arrangement, which was not in existence on the
date hereof, including any bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation
right, group insurance, severance pay, retirement or other
benefit plan, agreement or arrangement, or employment or
consulting agreement with or for the benefit of any person, or
amend any of such plans or any of such agreements in existence on
the date hereof;
(f) except as otherwise expressly contemplated by this Agreement,
enter into any other agreements, commitments or contracts, except
agreements, commitments or contracts for the purchase, sale or
lease of goods or services in the ordinary course of business,
consistent with past practice;
(g) except in the ordinary course of business, consistent with
past practice, or as contemplated by this Agreement, authorize,
recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or
an agreement with respect to, any plan of liquidation or
dissolution, any acquisition of a material amount of assets or
securities, any sale, transfer, lease, license, pledge, mortgage,
or other disposition or encumbrance of a material amount of
assets or securities or any material change in its
capitalization, or any entry into a material contract or any
amendment or modification of any material contract or any release
or relinquishment of any material contract rights; or
(h) agree to do any of the foregoing.
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1 Approval of Stockholders; SEC and Other Filings.
(a) Shared Technologies shall cause a special meeting of its
stockholders (the "Special Meeting") to be duly called and held
as soon as reasonably practicable for the purpose of (i) voting
on this Agreement, (ii) authorizing Shared Technologies' Board of
Directors, to the extent permitted by law, to make modifications
of or amendments to this Agreement as Shared Technologies' Board
of Directors deems proper without further stockholder approval
and (iii) voting on all other actions contemplated hereby which
require the approval of Shared Technologies' stockholders,
including without limitation any such approval needed to amend
Shared Technologies' Certificate of Incorporation and Bylaws as
required by this Agreement. Shared Technologies shall comply
with all applicable legal requirements in connection with the
Special Meeting.
(b) Shared Technologies and Fairchild shall cooperate with each
other and use their best efforts to file with the SEC or other
applicable regulatory or governmental agency or authority, as the
case may be, as promptly as practicable the Proxy Statement and
the Other Documents. The parties shall use their best efforts to
have the Proxy Statement cleared by the SEC as promptly as
practicable after filing and, as promptly as practicable after
the Proxy Statement has been so cleared, shall mail the Proxy
Statement to the stockholders of Shared Technologies as of the
record date for the Special Meeting. Subject to the fiduciary
obligations of Shared Technologies' Board of Directors under
applicable law as advised by Gadsby & Hannah or other nationally
recognized counsel, the Proxy Statement shall contain the
recommendation of the Board in favor of the Merger and for
approval and adoption of this Agreement. In addition to the
irrevocable proxy received from a stockholder of Shared
Technologies prior to the date hereof, Shared Technologies shall
use its best efforts to solicit from stockholders of Shared
Technologies proxies or consents in favor of such approval and to
take all other action necessary or, in the reasonable judgment of
Fairchild, helpful to secure the vote of stockholders required by
law to effect the Merger. Shared Technologies and Fairchild each
shall use its best efforts to obtain and furnish the information
required to be included in the Proxy Statement and any Other
Document, and Shared Technologies, after consultation with
Fairchild, shall use its best efforts to respond as promptly as
is reasonably practicable to any comments made by the SEC or any
other applicable regulatory or governmental agency or authority
with respect to any of the foregoing (or any preliminary version
thereof). Shared Technologies will promptly notify Fairchild of
the receipt of the comments of the SEC or any other applicable
regulatory or governmental agency or authority, as the case may
be, and of any request by any of the foregoing for amendments or
supplements to the Proxy Statement or any Other Document, as the
case may be, or for additional information, and will supply
Fairchild with copies of all correspondence between Shared
Technologies and its representatives, on the one hand, and the
SEC, any other applicable regulatory or governmental agency or
authority or the members of the staff of any of the foregoing, on
the other hand, with respect to the Proxy Statement or any Other
Document, as the case may be. If at any time prior to the
Special Meeting any event should occur relating to Shared
Technologies or any of its subsidiaries or Fairchild or any of
its affiliates or associates, or relating to the Financing (as
hereinafter defined) which should be set forth in an amendment of
or a supplement to, the Proxy Statement or any Other Document,
Shared Technologies will promptly inform Fairchild or Fairchild
will promptly inform Shared Technologies, as the case may be.
Whenever any event occurs which should be set forth in an
amendment of, or a supplement to, the Proxy Statement or any
Other Document, as the case may be, Fairchild and Shared
Technologies will upon learning of such event, cooperate and
promptly prepare, file and mail such amendment or supplement.
(c) Fairchild shall use its best efforts to file with and obtain
from the Internal Revenue Service a favorable ruling to the
effect set forth in Schedule 9.2(d) hereto. Fairchild and Shared
Technologies shall cooperate with each other and use their best
efforts to effect a tender offer and consent solicitation for the
outstanding 12/% Senior Notes due 1999 of Fairchild and, if the
Merger is consummated, to retire all such Notes tendered in such
offer.
8.2 Additional Agreements; Cooperation.
(a)Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions
contemplated by this Agreement, and to cooperate with each other
in connection with the foregoing, including using its best
efforts (i) to obtain all necessary waivers, consents and
approvals from other parties to loan agreements, leases and other
contracts that are specified on Schedule 8.2 to the Disclosure
Statement, (ii) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal,
state or foreign law or regulations, (iii) to defend all lawsuits
or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iv) to
lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby, (v) to effect
all necessary registrations and filings, including, but not
limited to, filings under the HSR Act and any pre-merger
notifications required in any other country, if any, and
submissions of information requested by governmental authorities,
(vi) provide all necessary information for the Proxy Statement
and (vii) to fulfill all conditions to this Agreement. In
addition, Fairchild agrees to use its best efforts (subject to
compliance with all applicable securities laws) to solicit and
receive the irrevocable proxies from shareholders of Shared
Technologies contemplated by Section 10.1(b). Shared
Technologies agrees to use its best efforts to cause the
distribution to its shareholders of all shares of capital stock
of Shared Technologies Cellular, Inc. ("STCI") owned by Shared
Technologies and its subsidiaries to be completed prior to the
Effective Time and, prior to such distribution to cause STCI, to
enter into an agreement preventing STCI from competing in the
telecommunications systems and service business.
(b)Shared Technologies will supply Fairchild with copies of all
correspondence, filings or communications (or memoranda setting
forth the substance thereof) between Shared Technologies or its
representatives, on the one hand, and the Federal Trade
Commission, the Antitrust Division of the United States
Department of Justice, the SEC and any other regulatory or
governmental agency or authority or members of their respective
staffs, on the other hand, with respect to this Agreement, the
Merger and the other transactions contemplated hereby. Each of
the parties hereto agrees to furnish to the other party hereto
such necessary information and reasonable assistance as such
other party may request in connection with its preparation of
necessary filings or submissions to any regulatory or
governmental agency or authority, including, without limitation,
any filing necessary under the provisions of the HSR Act or any
other applicable Federal or state statute.
(c)Fairchild will supply Shared Technologies with copies of all
correspondence, filings or communications (or memoranda setting
forth the substance thereof) between Fairchild or its
representatives, on the one hand, and the Federal Trade
Commission, the Antitrust Division of the United States
Department of Justice, the SEC or any other regulatory or
governmental agency or authority or members of their respective
staffs, on the other hand, with respect to this Agreement, the
Merger and the other transactions contemplated hereby.
8.3 Publicity. Shared Technologies and Fairchild agree to consult
with each other in issuing any press release and with respect to
the general content of other public statements with respect to
the transactions contemplated hereby, and shall not issue any
such press release prior to such consultation, except as may be
required by law.
8.4 No Solicitation.
(a) Each of Shared Technologies and Fairchild agrees that, prior
to the Effective Time, it shall not, and shall not authorize or
permit any of its subsidiaries or any of its or its subsidiaries'
directors, officers, employees, agents or representatives to,
directly or indirectly, solicit, initiate, facilitate or
encourage (including by way of furnishing or disclosing non-
public information) any inquiries or the making of any proposal
with respect to any merger, consolidation or other business
combination involving Shared Technologies or its subsidiaries or
Fairchild or its subsidiaries or acquisition of any kind of all
or substantially all of the assets or capital stock of Shared
Technologies and its subsidiaries taken as a whole or Fairchild
and its subsidiaries taken as a whole (an "Acquisition
Transaction") or negotiate, explore or otherwise communicate in
any way with any third party (other than Shared Technologies or
Fairchild, as the case may be) with respect to any Acquisition
Transaction or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by
this Agreement; provided that Shared Technologies or Fairchild
may, in response to an unsolicited written proposal with respect
to an Acquisition Transaction from a financially capable third
party that contains no financing condition, (i) furnish or
disclose non-public information to such third party and
(ii) negotiate, explore or otherwise communicate with such third
party, in each case only if the Board of Directors of such party
determines in good faith by a majority vote, after consultation
with its legal and financial advisors, and after receipt of the
written opinion of outside legal counsel of such party that
failing to take such action would constitute a breach of the
fiduciary duties of such Board of Directors, that taking such
action is reasonably likely to lead to an Acquisition Transaction
that is more favorable to the stockholders of such party than the
Merger and that failing to take such action would constitute a
breach of the Board's fiduciary duties.
(b) Each of Shared Technologies and Fairchild shall immediately
advise the other in writing of the receipt of any inquiries or
proposals relating to an Acquisition Transaction and any actions
taken pursuant to Section 8.4(a).
8.5 Access to Information.
(a) From the date of this Agreement until the Effective Time,
each of Shared Technologies and Fairchild will give the other
party and its authorized representatives (including counsel,
environmental and other consultants, accountants and auditors)
full access during normal business hours to all facilities,
personnel and operations and to all books and records of it and
its subsidiaries, will permit the other party to make such
inspections as it may reasonably require and will cause its
officers and those of its subsidiaries to furnish the other party
with such financial and operating data and other information with
respect to its business and properties as such party may from
time to time reasonably request.
(b)Each of the parties hereto will hold and will cause its
consultants and advisors to hold in strict confidence pursuant to
the Confidentiality Agreement dated October 1995 between the
parties (the "Confidentiality Agreement") all documents and
information furnished to the other in connection with the
transactions contemplated by this Agreement as if each such
consultant or advisor was a party thereto, and the provisions of
the Confidentiality Agreement shall survive any termination of
this Agreement but will be extinguished at the Effective Time if
the Merger occurs.
8.6 Financing. Fairchild will cooperate with Shared Technologies
to assist Shared Technologies in obtaining the financing required
for Shared Technologies to effect the Merger (including the funds
necessary to repay the indebtedness referred to on Exhibit 9.1
and to pay the amounts owing to the holders of the Series A and
Series C Preferred Stock) (the "Financing"). Immediately prior
to the Effective Time, Fairchild will certify the aggregate
amount of accrued and unpaid dividends on the Series A Preferred
Stock and Series C Preferred Stock to be paid by Shared
Technologies pursuant to the Merger.
8.7 Notification of Certain Matters. Shared Technologies or
Fairchild, as the case may be, shall promptly notify the other of
(i) its obtaining of actual knowledge as to the matters set forth
in clauses (x) and (y) below, or (ii) the occurrence, or failure
to occur, of any event which occurrence or failure to occur would
be likely to cause (x) any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time,
or (y) any material failure of Shared Technologies or Fairchild,
as the case may be, or of any officer, director, employee or
agent thereof, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall
affect the representations or warranties of the parties or the
conditions to the obligations of the parties hereunder.
8.8 Board of Directors of Shared Technologies. The Shared
Technologies Board of Directors shall take such corporate action
as may be necessary to cause the directors comprising its full
board to be changed at the Effective Time to include, subject to
the requisite vote of the shareholders of Shared Technologies,
immediately after the Effective Time on the Surviving Corporation
Board of Directors the persons specified pursuant to the
Shareholders Agreement.
8.9 Indemnification.
(a) The Surviving Corporation shall indemnify, defend and hold
harmless the present and former officers, directors, employees
and agents of Fairchild and its subsidiaries against all losses,
claims, damages, expenses or liabilities arising out of actions
or omissions or alleged actions or omissions occurring at or
prior to the Effective Time to the same extent and on the same
terms and conditions (including with respect to advancement of
expenses) provided for in Fairchild's Certificate of
Incorporation and By-Laws and agreements in effect at the date
hereof (to the extent consistent with applicable law); provided
that such actions or omissions or alleged actions or omissions
are exclusively related to the business of the Fairchild
Communications Services Company; and, provided, further, that in
no event will this indemnity extend to the transactions effected
pursuant to this Agreement, including but not limited to the
Fairchild Reorganization.
(b)The provisions of this Section 8.9 are intended to be for the
benefit of and shall be enforceable by each indemnified party
hereunder, his or her heirs and his or her representatives.
8.10 Fees and Expenses.
(a)Except as set forth in Section 8.10(b), in the event this
Agreement is terminated, Shared Technologies and Fairchild shall
bear their respective expenses incurred in connection with the
Merger, including, without limitation, the preparation, execution
and performance of this Agreement and the transactions
contemplated hereby, and all fees and expenses of investment
bankers, finders, brokers, agents, representatives, counsel and
accountants, except that the fees and expenses of CS First Boston
shall be shared equally by Shared Technologies and Fairchild. If
the Merger occurs, then the Surviving Corporation shall be
responsible, and reimburse Fairchild, for all of such expenses
incurred by Shared Technologies and Fairchild in connection with
the Merger (but Fairchild's expenses shall only be borne by the
Surviving Corporation to the extent set forth in Schedule 8.10).
(b)If this Agreement is terminated pursuant to Section 10.1(d),
(e) or (h), then Shared Technologies shall promptly, but in no
event later than the next business day after the date of such
termination, pay Fairchild, in immediately available funds, the
amount of any and all fees and expenses incurred by Fairchild
(including, but not limited to, fees and expenses of Fairchild's
counsel, investment banking fees and expenses and printing
expenses) in connection with this Agreement, the Merger and the
other transactions contemplated hereby and, in addition, if such
termination is pursuant to Section 10.1(h), a fee of $5,000,000.
If this Agreement is terminated pursuant to Section 10.1(f) or
(i) or pursuant to Section 10.1(c) solely due to the failure of
Fairchild to satisfy the condition in Section 9.2(d) or to
obtain tenders and consents from at least 51% of the outstanding
principal amount of Fairchild's 12/% Senior Notes due 1999 as
contemplated by Schedule 9.1, then Fairchild shall promptly, but
in no event later than the next business day after the date of
such termination, pay Shared Technologies, in immediately
available funds, the amount of any and all fees and expenses
incurred by Shared Technologies (including, but not limited to,
fees and expenses of Shared Technologies' counsel, investment
banking fees and expenses and printing expenses) in connection
with this Agreement, the Merger and the other transactions
contemplated hereby and in addition, if such termination is
pursuant to Section 10.1(i), a fee of $5,000,000.
8.11 Post-Merger Cooperation. After the Effective Time, the
Surviving Corporation shall cooperate with RHI and permit RHI to
take all actions (including without limitation the right to
endorse checks and enter into agreements) reasonably required by
RHI to allow RHI to assert title (and prosecute claims against
and defend claims brought by third parties), whether in its own
name or in the name of Fairchild, with respect to all assets,
claims and privileges of Fairchild that were owned by it, and
defend against all liabilities and claims attributable to it, in
each case, immediately prior to the Fairchild Reorganization and
that did not relate to the telecommunications systems and service
business. After the Effective Time, RHI will cooperate with the
Surviving Corporation and permit the Surviving Corporation to
take all actions (including without limitation the right to
endorse checks and enter into agreements) reasonably required by
the Surviving Corporation to allow the Surviving Corporation to
assert title (and prosecute claims against third parties) whether
in its own name or in the name of Fairchild, with respect to all
assets, claims and privileges of Fairchild's telecommunications
systems and service business.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger
shall be subject to the fulfillment or waiver by the Board of
Directors of the waiving party (subject to applicable law) at or
prior to the Effective Date of each of the following conditions:
(a)Shared Technologies' shareholders shall have duly approved and
adopted the Merger, this Agreement and any other transactions
contemplated hereby which require the approval of such
shareholders by law as required by applicable law;
(b)any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have
expired or been terminated;
(c)no order, statute, rule, regulation, executive order,
injunction, stay, decree or restraining order shall have been
enacted, entered, promulgated or enforced by any court of
competent jurisdiction or governmental or regulatory authority or
instrumentality that prohibits the consummation of the Merger or
the transactions contemplated hereby;
(d)all necessary consents and approvals of any United States or
any other governmental authority or any other third party
required for the consummation of the transactions contemplated by
this Agreement shall have been obtained except for such consents
and approvals the failure to obtain which individually or in the
aggregate would not have a material adverse effect on the
Surviving Corporation and any waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired
or been terminated;
(e)each of the transactions set forth on the attached Schedule
9.1 shall have been consummated;
(f)the parties shall have received the written opinion of
Donaldson, Lufkin & Jenrette Securities Corporation or another
investment banking firm of nationally recognized standing
selected by Fairchild that the fair market value of the Preferred
Stock is at least equal to the positive difference between $47.5
million and the value of the Shared Technologies Common Stock to
be received as Merger Consideration (based upon the closing price
thereof on the date preceding the Effective Time); and
(g)Mel D. Borer shall have been offered an employment agreement
on terms satisfactory to both Fairchild and Shared Technologies.
9.2 Additional Conditions to Obligations of Fairchild. The
obligations of Fairchild to effect the Merger shall be subject to
the fulfillment or waiver (subject to applicable law), at or
prior to the Effective Date, of each of the following conditions:
(a) Shared Technologies shall have furnished Fairchild with
certified copies of resolutions duly adopted by its Board of
Directors approving the execution and delivery of this Agreement
and the Merger and all other necessary corporate action to enable
Shared Technologies to comply with the terms of this Agreement;
(b) Shared Technologies shall have performed or complied in all
material respects with all its agreements, obligations and
covenants required by this Agreement to be performed by it on or
prior to the Effective Date, and Shared Technologies shall have
delivered to Fairchild a certificate, dated the Effective Date,
of its President and its Secretary to such effect;
(c) the representations and warranties of Shared Technologies
contained herein shall be true and correct in all material
respects on the date of this Agreement and the Effective Date as
though such representations and warranties were made at and on
such date, and Shared Technologies shall have delivered to
Fairchild a certificate, dated the Effective Date, of its
President and its Secretary to such effect;
(d) Fairchild shall have received a favorable ruling of the
Internal Revenue Service to the effect set forth in Schedule
9.2(d) hereto;
(e) Shared Technologies shall have amended its Certificate of
Incorporation and Bylaws to the extent set forth in Schedule
9.2(e);
(f) there shall not have occurred since December 31, 1994 any
material adverse change in the business, operations, assets,
financial condition or results of operations of Shared
Technologies and its subsidiaries taken as a whole;
(g) Shared Technologies shall have executed and delivered a
registration rights agreement in the form of Exhibit D hereto;
(h) Shared Technologies shall have entered into a Tax Sharing
Agreement with RHI in the form of Exhibit E hereto; and
(I) Shared Technologies shall have, prior to the Effective Time,
completed the distribution to its shareholders of all of the
capital stock of Shared Technologies Cellular, Inc. owned by
Shared Technologies and Shared Technologies Cellular, Inc. shall
have executed a non-competition agreement with Shared
Technologies, in form and substance satisfactory to Fairchild.
9.3 Additional Conditions to Obligations of Shared Technologies.
The obligations of Shared Technologies to effect the Merger shall
be subject to the fulfillment or waiver (subject to applicable
law), at or prior to the Effective Date, of each of the following
conditions:
(a) Each of TFC, RHI and Fairchild shall have furnished Shared
Technologies with certified copies of resolutions duly adopted by
its Board of Directors approving the execution and delivery of
this Agreement and the Merger and all other necessary corporate
action to enable Fairchild to comply with the terms of this
Agreement;
(b) Fairchild shall have performed or complied in all material
respects with all its agreements, obligations and covenants
required by this Agreement to be performed by it on or prior to
the Effective Date and Fairchild shall have delivered to Shared
Technologies a certificate, dated the Effective Date, of its
President and its Secretary to such effect;
(c) the representations and warranties of TFC, RHI and Fairchild
contained herein shall be true and correct in all material
respects on the date of this Agreement and the Effective Date as
though such representations and warranties were made at and on
such date and Fairchild shall have delivered to Shared
Technologies a certificate, dated the Effective Date, of its
President and its Secretary to such effect;
(d) there shall not have occurred since June 30, 1995 any
material adverse change in the business, operations, assets,
financial condition or results of operations of Fairchild and its
wholly owned subsidiary, VSI, taken as a whole (it being
understood that no such material adverse change shall be deemed
to have occurred with respect to Fairchild and VSI, taken as a
whole, if the pro forma consolidated net worth of Fairchild, as
evidenced by a pro forma closing date balance sheet to be
delivered to Shared Technologies on the Effective Date, is at
least $80,000,000); and
(e) RHI, The Fairchild Corporation, D-M-E Inc. and Fairchild
Fasteners Inc. shall have entered into Indemnification Agreements
with Shared Technologies in the forms of Exhibits B1-3 hereto;
and RHI shall have delivered to Shared Technologies an executed
Pledge Agreement in the form of Exhibit C hereto, as well as the
Preferred Stock required to be pledged thereby.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time whether before or after approval by
the stockholders of Shared Technologies:
(a) by mutual written consent of Fairchild and Shared
Technologies;
(b) by Fairchild if RHI has not received within 10 business days
after the date of this Agreement irrevocable proxies from holders
of more than 50% of Shared Technologies common stock (on a fully
diluted basis) agreeing to vote for the Merger; provided, that
such right of termination must be exercised, if at all, within 13
business days after the date of this Agreement;
(c)by either Fairchild or Shared Technologies if the Effective
Time has not occurred on or prior to January 31, 1996 unless the
Merger has not occurred at such time solely by reason of the
condition set forth in Section 9.2(d) having not yet been
satisfied or because of the failure of the Securities and
Exchange Commission to give timely approval to the proxy
materials for Shared Technologies shareholders, in which case
February 28, 1996 or such other date, if any, as Fairchild and
Shared Technologies shall agree upon, unless the absence of such
occurrence shall be due to the failure of the party seeking to
terminate this Agreement (or its subsidiaries or affiliates) to
perform in all material respects each of its obligations under
this Agreement required to be performed by it at or prior to the
Effective Time;
(d) by either Fairchild or Shared Technologies if, at the Special
Meeting (including any adjournment thereof), the stockholders of
Shared Technologies fail to adopt and approve this Agreement, the
Merger and any of the other transactions contemplated hereby in
accordance with Delaware law;
(e) by Fairchild if Shared Technologies fails to perform in any
material respect any of its obligations under this Agreement;
(f) by Shared Technologies if Fairchild fails to perform in any
material respect any of its obligations under this Agreement;
(g) by Fairchild or Shared Technologies if a court of competent
jurisdiction or a governmental, regulatory or administrative
agency or commission shall have issued an order, decree, or
ruling or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable;
(h) by Shared Technologies if its Board of Directors shall have
withdrawn, modified or amended in an adverse manner its
recommendation of the Merger as a result of its exercise of its
fiduciary duties; or
(i) by Fairchild if its Board of Directors shall have withdrawn,
modified or amended in an adverse manner its recommendation of
the Merger as a result of its exercise of its fiduciary duties;
or
(j) by either Shared Technologies or Fairchild if either of their
respective Board of Directors reasonably determine that market
conditions will not permit the completion of the Financing
contemplated by Section 8.6 in a timely manner or on acceptable
terms or it becomes obvious that the necessary marketing
activities or filings necessary for such Financing have not been
completed in a timely manner necessary to complete the Merger.
10.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to the foregoing provisions of this
Article X, this Agreement shall become void and have no effect,
with no liability on the part of any party or its stockholders or
directors or officers in respect thereof except for agreements
which survive the termination of this Agreement and except for
liability that TFC, RHI, Fairchild or Shared Technologies might
have arising from a breach of this Agreement.
ARTICLE XI
SURVIVAL AND INDEMNIFICATION
11.1 Survival of Representations and Warranties. All
representations and warranties made in this Agreement shall
survive from the Effective Time until March 31, 1997 and shall
not be extinguished by the Merger or any investigation made by or
on behalf of any party hereto.
11.2 Indemnification by TFC and RHI. Each of TFC and RHI hereby
agrees, jointly and severally, to indemnify and hold harmless
Shared Technologies against any and all losses, liabilities and
damages or actions (or actions or proceedings, whether commenced
or threatened) or claims (including, without limitation, counsel
fees and expenses of Shared Technologies in the event that TFC or
RHI fail to assume the defense thereof) in respect thereof
(hereinafter referred to collectively as "Losses") resulting from
any breach of the representations and warranties made by TFC, RHI
or Fairchild in this Agreement; provided, however, that TFC's and
RHI's obligations under this Section 11.2 is to the extent that
the Losses exceed $4,000,000. Notwithstanding the foregoing, in
no event shall Shared Technologies be entitled to indemnification
for, and the term "Losses" shall not include any consequential
damages or damages which are speculative, remote or conjectural
(except to the extent represented by a successful claim by a
third party).
If any action, proceeding or claim shall be brought or asserted
against Shared Technologies by any third party, which action,
proceeding or claim, if determined adversely to the interests of
Shared Technologies would entitle Shared Technologies to
indemnity pursuant to this Agreement, Shared Technologies shall
promptly but in no event later than 10 days from the date Shared
Technologies receives written notice of such action, proceeding
or claim, notify TFC and RHI of the same in writing specifying in
detail the basis of such claim and the facts pertaining thereto
(but the failure to give such notice in a timely fashion shall
not affect TFC's and RHI's obligations under this Section 11.2
except to the extent it prejudiced or damaged their ability to
defend, settle or compromise such claim or to pay any Losses
resulting therefrom), and TFC and RHI shall be entitled (but not
obligated) to assume the defense thereof by giving written notice
thereof within 10 days after TFC and RHI received notice of the
claim from Shared Technologies to Shared Technologies and have
the sole control of defense and settlement thereof (but only,
with respect to any settlement, if such settlement involves an
unconditional release of Shared Technologies and its
subsidiaries in respect of such claim), including the employment
of counsel and the payment of all expenses.
11.3 Indemnification by Shared Technologies. Shared Technologies
hereby agrees to indemnify and hold harmless TFC and RHI against
any and all losses, liabilities and damages or actions (or
actions or proceedings, whether commenced or threatened) or
claims (including, without limitation, counsel fees and expenses
of TFC and RHI in the event that Shared Technologies fails to
assume the defense thereof) in respect thereof hereinafter
referred to as the "Shared Technologies' Losses") resulting from
the breach of the representations and warranties made by Shared
Technologies in this Agreement; provided, however, that Shared
Technologies' obligation under this Section 11.3 is to the extent
that the Shared Technologies' Losses exceed $4,000,000.
Notwithstanding the foregoing, in no event shall TFC or RHI be
entitled to indemnification for, and the term "Shared
Technologies' Losses" shall not include any consequential damages
or damages which are speculative, remote or conjectural (except
to the extent represented by a successful claim by a third
party).
Shared Technologies at its option may make any indemnification
pursuant to this Section 11.3 in cash or in shares of Common
Stock of Shared Technologies having a fair market value at the
time of issuance in an amount equal to the amount of such loss.
In the event that Shared Technologies makes a payment in cash in
fulfillment of its obligation under this Section 11.3, the term
"Shared Technologies' Losses" shall also include the diminution
as a result of such payment in the value of the shares of Common
Stock and Preferred Stock as a result of such payment. In the
event that Shared Technologies issues Common Stock in fulfillment
of its obligation under this Section 11.3, the term "Shared
Technologies' Losses" shall also include the diminution as a
result of such issuance in the value of the shares of Common
Stock and Preferred Stock of Shared Technologies owned by RHI
prior to such issuance.
If any action, proceeding or claim shall be brought or asserted
against TFC or RHI by any third party, which action, proceeding
or claim, if determined adversely to the interests of TFC or RHI
would entitle TFC or RHI to indemnity pursuant to this Agreement,
TFC or RHI shall, promptly but in no event later than 10 days
from the date TFC or RHI receives written notice of such action,
proceeding or claim, notify Shared Technologies of the same in
writing specifying in detail the basis of such claim and the
facts pertaining thereto (but the failure to give such notice in
a timely fashion shall not affect Shared Technologies'
obligations under this Section 11.3 except to the extent it
prejudiced or damaged Shared Technologies' ability to defend,
settle or compromise such claim or to pay any Losses resulting
therefrom), and Shared Technologies shall be entitled (but not
obligated) to assume the defense thereof by giving written notice
thereof within 10 days after Shared Technologies received notice
of the claim from TFC or RHI to TFC or RHI and have the sole
control of defense and settlement thereof (but only, with respect
to any settlement, if such settlement involves an unconditional
release of TFC and RHI and their respective subsidiaries in
respect of such claim), including the employment of counsel and
the payment of all expenses.
11.4 Set-Off. In the event that either TFC, RHI or Shared
Technologies fails to make any payment required by Section 11.2
or 11.3 hereof, the party entitled to receive such payment may
set off the amount thereof against any other payments owed by it
to the party failing to make such payment.
ARTICLE XII
MISCELLANEOUS
12.1 Closing and Waiver.
(a) Unless this Agreement shall have been terminated in
accordance with the provisions of Section 10.1 hereof, a closing
(the "Closing" and the date and time thereof being the "Closing
Date") will be held as soon as practicable after the conditions
set forth in Sections 9.1, 9.2 and 9.3 shall have been satisfied
or waived. The Closing will be held at the offices of Cahill
Gordon & Reindel, 80 Pine Street, New York, New York or at such
other places as the parties may agree. Immediately thereafter,
the Certificate of Merger will be filed.
(b) At any time prior to the Effective Date, any party hereto may
(i) extend the time for the performance of any of the obligations
or other acts of any other party hereto, (ii) waive any
inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant
hereto, and (iii) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations
contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in
an instrument in writing duly authorized by and signed on behalf
of such party.
12.2 Notices.
(a) Any notice or communication to any party hereto shall be duly
given if in writing and delivered in person or mailed by first
class mail (registered or certified, return receipt requested),
facsimile or overnight air courier guaranteeing next day
delivery, to such other party's address.
If to The Fairchild Corporation, RHI Holdings, Inc. or Fairchild
Industries, Inc.:
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Facsimile No.: (703) 888-5674
Attention: Donald Miller, Esq.
with a copy to:
James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
If to Shared Technologies Inc.:
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Facsimile No.: (203) 258-2401
Attention: Legal Department
with a copy to:
Walter D. Wekstein, Esq.
Harold J. Carroll, Esq.
Gadsby & Hannah
125 Summer Street
Boston, MA 02110
Facsimile No.: (617) 345-7050
(b) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail,
if mailed; when sent, if sent by facsimile; and the next business
day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
12.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
12.4 Interpretation. The headings of articles and sections
herein are for convenience of reference, do not constitute a part
of this Agreement, and shall not be deemed to limit or affect any
of the provisions hereof. As used in this Agreement, "person"
means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof; "subsidiary" of any person means
(i) a corporation more than 50% of the outstanding voting stock
of which is owned, directly or indirectly, by such person or by
one or more other subsidiaries of such person or by such person
and one or more subsidiaries thereof or (ii) any other person
(other than a corporation) in which such person, or one or more
other subsidiaries of such person or such person and one or more
other subsidiaries thereof, directly or indirectly, have at least
a majority ownership and voting power relating to the policies,
management and affairs thereof; and "voting stock" of any person
means capital stock of such person which ordinarily has voting
power for the election of directors (or persons performing
similar functions) of such person, whether at all times or only
so long as no senior class of securities has such voting power by
reason of any contingency.
12.5 Variations and Amendment. This Agreement may be varied or
amended only by written action of Shared Technologies and
Fairchild, before or after the Special Meeting at any time prior
to the Effective Time.
12.6 No Third Party Beneficiaries. Except for the provisions of
Sections 8.9 (which are intended to be for the benefit of the
persons referred to therein, and may be enforced by such persons)
and 8.11, nothing in this Agreement shall confer any rights upon
any person or entity which is not a party or permitted assignee
of a party to this Agreement.
12.7 Use of Fairchild Name. RHI hereby grants a royalty free
license in perpetuity to Shared Technologies for the use of the
Fairchild name to Shared Technologies for exclusive use by Shared
Technologies as a trade name in the telecommunications system and
services business but not for any other use. In no event may
Shared Technologies assign the right to use the Fairchild name to
any other person.
12.8 Governing Law. Except as the laws of the State of Delaware
are by their terms applicable, this Agreement shall be governed
by, and construed in accordance with, the laws of the State of
New York without regard to principles of conflicts of laws.
12.9 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter
hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof.
12.10 No Recourse Against Others. No director, officer or
employee, as such, of Shared Technologies, TFC, RHI or any of
their respective subsidiaries shall have any liability for any
obligations of Shared Technologies, TFC or RHI, respectively,
under this Agreement for any claim based on, in respect of or by
reason of such obligations or their creation.
12.11 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Merger
Agreement to be executed by their duly authorized officers all as
of the day and year first above written.
Shared Technologies Inc.
By: /s/ Anthony D. Autorino
-------------------------
Title: Chairman of the Board,
Chief Executive Officer and
President
Fairchild Industries, Inc.
By: /s/ Jeffrey J. Steiner
------------------------
Title: Chairman of the Board,
Chief Executive Officer and
President
The Fairchild Corporation
By: /s/ Jeffrey J. Steiner
------------------------
Title: Chairman of the Board,
Chief Executive Officer and
President
RHI Holdings, Inc.
By: /s/ Jeffrey J. Steiner
----------------------
Title: Chairman of the Board,
Chief Executive Officer and
President
EXHIBIT A
SHAREHOLDERS' AGREEMENT
among
SHARED TECHNOLOGIES INC.
RHI HOLDINGS, INC.
and
ANTHONY D. AUTORINO
SHAREHOLDERS' AGREEMENT
This SHAREHOLDERS' AGREEMENT (this "Agreement") is executed on _
_ _ _ _ _ , 1995, by and among Shared Technologies Inc., a
Delaware corporation (the "Company"), RHI Holdings Inc. ("RHI")
and Anthony D. Autorino, shareholders of Shared Technologies Inc.
(RHI and Anthony D. Autorino and their respective legal
representatives, successors and assigns are referred to herein
individually as a "Shareholder" and collectively as the
"Shareholders").
WHEREAS, pursuant to the terms of an Agreement and Plan of Merger
dated as of November _ _ _, 1995 (the "Merger Agreement") among
the Company, The Fairchild Corporation, RHI and RHI's subsidiary,
Fairchild Industries, Inc. ("FII"), FII is merging with and into
the Company (the "Merger");
WHEREAS, each Shareholder owns as of the date hereof (after
giving effect to the Merger) the number of shares of common
stock, $.004 par value per share ("Common Stock"), of the Company
set forth opposite such Shareholder's name on Schedule I;
WHEREAS, the shares of Common Stock owned by the Shareholders
represent approximately [47]% of the issued and outstanding
Common Stock of the Company;
WHEREAS, the Shareholders and the Company deem it to be in their
respective best interests to impose certain restrictions on, and
to provide for certain rights and obligations in respect of, the
shares of Common Stock owned by them or any interest therein, now
or hereafter held by the Shareholders or the Company;
NOW, THEREFORE, in consideration of the mutual promises,
covenants, agreements and conditions made herein, and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and accepted, the parties hereto hereby
agree as follows:
ARTICLE I RESTRICTIONS ON TRANSFERS AND
PURCHASES BY THE SHAREHOLDERS
1.1. General Restrictions.
(a) No share of Common Stock, Convertible Preferred Stock, any
other capital stock or equity security (excluding the Special
Preferred Stock) of the Company or any interest in any of the
foregoing, owned as of the date hereof (beneficially or
otherwise) by any Shareholder (the "Shares") shall be sold,
assigned, donated or transferred in any manner (collectively, a
"Transfer"), except in accordance with this Agreement; provided,
that the pledge or grant of a security interest in Shares, and
any subsequent foreclosure thereof and sale or transfer resulting
from such foreclosure, effected in good faith in a bona fide
transaction with andddddds institutional lender, shall not
constitute a Transfer and shall not be prevented by the terms of
this Agreement.
(b) Except for (i) Common Stock issuable upon conversion of
Convertible Preferred Stock, or exercise of stock options,
(ii) shares of Common Stock issued by the Company to RHI to
satisfy indemnification obligations of the Company under the
Merger Agreement and (iii) shares of Common Stock issued as a
dividend or distribution to shareholders of the Company, no
Shareholder shall purchase or acquire, directly or indirectly,
any additional shares of Common Stock during the two-year period
following the date of this Agreement without the prior approval
of not less than 80% of the members of the Board of Directors of
the Company.
(c) Except for Transfers permitted by Section 1.2, no Shareholder
shall Transfer any Shares during the two-year period following
the date of this Agreement without the prior approval of not less
than 80% of the members of the Board of Directors and full
compliance with the Securities Act of 1933, as amended (the
"Act"), and any applicable state securities laws. If the Board
of Directors approves a Transfer within such two-year period
after the date of this Agreement, the conditions of this
Agreement, including, but not limited to this Article I, must be
met. Every Transfer of Shares by a Shareholder pursuant to this
paragraph shall be subject to the condition that the proposed
transferee, if not already bound by this Agreement, shall first
agree in writing, in form satisfactory to the Company, to be
bound by the terms hereof.
1.2. Certain Permitted Transfers.
(a) Notwithstanding any other provision of this Agreement, either
Shareholder may, at any time following notice to the other
Shareholder, Transfer any of his or her Shares or any interest
therein to (i) an entity that is directly or indirectly
controlled by such Shareholder or an affiliate of such
Shareholder, (ii) his or her spouse, children, grandchildren or
parents or a trust solely for the benefit of any such person or
persons or (iii) to any other person not mentioned in clauses (i)
and (ii) of this Section 1.2(a) as long as the aggregate of all
such Transfers made by either Shareholder pursuant to this clause
(iii) does not exceed 10% of the number of shares of Common Stock
owned by such Shareholder as of the date of this Agreement, in
each case without the consent of any other party hereto and
without first offering such Shares to any other party; provided,
however, that such Transfer must be in full compliance with the
Act, all applicable state securities laws. Every Transfer of
Shares by a Shareholder pursuant to clauses (i) and (ii) of this
paragraph shall be subject to the condition that the proposed
transferee, if not already bound by this Agreement, shall first
agree in writing, in form satisfactory to the Company, to be
bound by the terms hereof.
In addition, notwithstanding any other provision of this
Agreement, shares of Common Stock, Convertible Preferred Stock or
other capital stock or equity securities of the Company acquired
by either Shareholder after the date of this Agreement (other
than through the exercise of options or warrants or through the
conversion of convertible securities outstanding as of the date
hereof and other than shares received as a result of stock splits
or stock dividends) shall not be subject to any of the provisions
of Article I of this Agreement.
1.3. First Negotiation Rights.
Subject to Sections 1.4 and 1.5, following the expiration of the
two-year period after the date of this Agreement, a Shareholder
may Transfer any or all Shares (or any interest therein) owned by
it free and clear of all restrictions and other obligations
imposed by this Agreement provided such Shareholder first
complies with Section 1.3. If any Shareholder (for purposes of
this Section 1.3, the "Offering Party") desires to Transfer all
or any portion of the Shares (or any interest therein) held by
such Offering Party, the Offering Party shall deliver written
notice to the other parties hereto (the "Notice"), which Notice
shall state the number of Shares (or interest therein) which the
Offering Party owns and wishes to sell (the "Offered Shares").
By giving the Notice, the Offering Party shall be deemed to have
granted to the other parties hereto an option to negotiate for
the purchase of all of (but not less than all of) such shares at
a price to be negotiated and agreed to (the "Negotiated Price")
by the Offering Party and such other Shareholder for a 30-day
period following the date of the Notice.
1.4. Take-Along Rights.
(a) Notwithstanding Section 1.3 of this Agreement, neither
Shareholder may effect a Transfer (or a series of related
Transfers) of Shares (except for Transfers permitted by Section
1.2) constituting more than 50% of the Shares then owned by such
Shareholder to one person or a related group of persons (other
than Transfers effected by sales of Shares through underwriters
in a public offering or in the securities markets generally)
(the "Section 1.4 Shares") without first complying with this
Section 1.4. If either Shareholder (for purposes of this Section
1.4, the "Section 1.4 Offering Party") desires to Transfer the
Section 1.4 Shares, such shareholder shall give written notice
(the "Take-Along Notice") to the other Shareholder (the "Non-
Selling Shareholder") stating (i) the name and address of the
transferee (the "Non-Qualified Transferee"), and (ii) the price
and terms upon which the Non-Qualified Transferee proposes to
purchase the Section 1.4 Shares. The Non-Selling Shareholder
shall have the irrevocable and exclusive option, but not the
obligation (the "Take-Along Option"), to sell to the Non-
Qualified Transferee, up to such number of Shares proposed to be
sold by the Section 1.4 Offering Party (the "Included Shares")
determined in accordance with Section 1.4(b), at the price and on
the terms set forth in the Take-Along Notice. The Take-Along
Option shall be exercised by the Non-Selling Shareholder by
giving written notice to the Section 1.4 Offering Party, within
ten business days of receipt of the Take-Along Notice, indicating
its election to exercise the Take-Along Option (the
"Participating Shareholder"). Failure by such Non-Selling
Shareholder to give such notice within the ten business day
period shall be deemed an election by such Non-Selling
Shareholder not to sell its Shares pursuant to that Take-Along
Notice. The closing with respect to any sale to a Non-Qualified
Transferee pursuant to this Section shall be held at the time and
place specified in the Take-Along Notice but in any event within
30 days of the date the Take-Along Notice is given; provided,
that if through the exercise of reasonable efforts the Section
1.4 Offering Party is unable to cause such transaction to close
within 30 days, such period may be extended for such reasonable
period of time as may be necessary to close such transaction.
Consummation of the sale of Shares by the Section 1.4 Offering
Party to a Non-Qualified Transferee shall be conditioned upon
consummation of the sale by the Participating Shareholder to such
Non-Qualified Transferee of the Included Shares, if any.
(b) The number of Shares purchased from the Participating
Shareholder shall be determined by multiplying the number of
Shares proposed to be purchased from the Section 1.4 Offering
Party by a Non-Qualified Transferee by a fraction, the numerator
of which is the total number of Shares owned by the Participating
Shareholder and the denominator of which is the sum of the total
number of Shares owned by the Section 1.4 Offering Party and the
Participating Shareholder.
(c) The Section 1.4 Offering Party shall arrange for payment
directly by the Non-Qualified Transferee to the Participating
Shareholder, upon delivery of the certificate or certificates
representing the Shares duly endorsed for transfer, together
with such other documents as the Non-Qualified Transferee may
reasonably request. The reasonable costs and expenses incurred
by the Section 1.4 Offering Party and the Participating
Shareholder in connection with a sale of Shares subject to this
Section 1.4 shall be allocated pro rata based upon the number of
Shares sold by each Shareholder to a Non-Qualified Transferee.
(d) If at end of 30 days following the date on which a Take-Along
Notice was given, the sale of Shares by the Section 1.4 Offering
Party and the sale of the Included Shares have not been completed
in accordance with the terms of the Non-Qualified Transferee's
offer, all certificates representing the Included Shares shall be
returned to the Non-Selling Shareholder, and all the restrictions
on transfer contained in this Agreement with respect to Shares
owned by the Section 1.4 Offering Party shall again be in effect.
1.5. Right of First Refusal.
(a) Notwithstanding Section 1.3 of this Agreement, if at any time
following the expiration of the two-year period after the date of
this Agreement, either Shareholder receives an offer (or related
series of offers) (an "Offer") from any person or related group
of persons to purchase a number of Shares equal to 10% or more of
the outstanding Shares of the Company (the "Section 1.5 Shares")
and such Shareholder desires to accept the Offer, (the "Selling
Shareholder") shall give written notice of its intent to accept
the Offer (a "Transfer Notice") to the other Shareholder (the
"Section 1.5 Non-Selling Shareholder"). Such notice shall
contain a true and complete description of the Offer (including a
copy thereof) containing (i) the Shares subject to such Offer,
(ii) the proposed purchase price, (iii) the identity of the
person or group making the Offer and, if known by the Selling
Shareholder, whether they are an agent for another party and
(iv) all other material terms and conditions of the Offer.
The Section 1.5 Non-Selling Shareholder shall have the right, but
not the obligation, to purchase the Shares subject to the Offer
(the "First Option") on the same terms and conditions as set
forth in such notice, which option shall be exercised by
delivering to the Selling Shareholder written notice of its
commitment to purchase the Shares subject to the Offer within
five business days after receipt of the Transfer Notice (the
"Option Period"). Failure by the Section 1.5 Non-Selling
Shareholder to give such notice within such five-business-day
period shall be deemed an election by such Section 1.5 Non-
Selling Shareholder not to purchase the Section 1.5 Shares.
(b) The purchase of any Shares pursuant to the exercise of the
First Option shall be completed not later than 45 days following
delivery of the Transfer Notice with respect to such Shares. In
the event that the First Option is not exercised, the Selling
Shareholder shall have the right for a period of 45 days after
the termination of the Option Period to transfer the Shares
subject to such Offer to the person named in the Transfer Notice
and on terms and conditions no less favorable to the Selling
Shareholder than those set forth in the Transfer Notice.
(c) This Section 1.5 shall not be applicable with respect to
Transfers of Shares effected through underwriters in a public
offering or in the securities markets generally or Transfers
permitted under Section 1.2.
ARTICLE II LEGEND
In addition to any other legend required by applicable law, all
certificates representing Shares owned by any Shareholder (other
than Shares subject to Section 1.2(a)(iii)), or their permitted
transferees, shall bear legend number (1) to assure the
enforceability of this Agreement until such time as such shares
are sold to a non-Shareholder after the two-year period following
the date of this Agreement in accordance with the terms hereof.
All certificates representing shares not registered under the Act
shall bear in addition to legend (1), legend (2):
(1) "THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED BY AN AGREEMENT ON FILE AT THE
OFFICES OF THE CORPORATION. THE CORPORATION WILL FURNISH A
COPY OF SUCH AGREEMENT TO THE RECORD HOLDER OF THIS
INSTRUMENT WITHOUT CHARGE ON REQUEST TO THE CORPORATION AT
ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE."
(2) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS AND THE
COMPANY MAY REQUIRE AN OPINION OF COUNSEL WITH RESPECT TO
SUCH EXEMPTION."
ARTICLE III VOTING COVENANTS
(a) The Company and the Shareholders agree to take all actions
necessary to cause the Board of Directors of the Company to
consist at all times of eleven directors (subject to the rights
of any holders of Preferred Stock of the Company to elect
directors in the event of a dividend arrearage). The nominees to
the Board of Directors shall be determined in the following
manner: the Shareholders (other than RHI) shall nominate seven
(7) members and RHI shall nominate four (4) members; provided,
that so long as Mel D. Borer shall be the President of the
Company, the Shareholders and the Company will take all actions
necessary to elect Mr. Borer as a member of the Board of
Directors and during such time as Mr. Borer is the President and
a Director RHI shall only be entitled to nominate three (3)
members. In the event that any Shareholder reasonably objects to
the nomination of any particular person or persons as a director,
the Shareholder who nominated such person or persons shall
withdraw such nomination and nominate another person or persons
in replacement thereof.
(b) Each Shareholder shall, in any election for the Company's
Board of Directors, vote to cause the nominee or nominees of each
party listed in this section to be elected to the Board of
Directors of the Company. Each Shareholder shall cause the
holder of any proxy given by such Shareholder to comply with this
Article III.
(c) Should any director elected to the Board be removed, become
incapacitated, or die (the "Affected Director") the shareholder
or party which nominated the Affected Director shall have the
right to designate a replacement director to complete the term of
the Affected Director on the Board of Directors of the Company.
(d) The Company and the Shareholders agree to take all actions
necessary to cause the Executive Committee of the Board of
Directors to consist of Anthony D. Autorino, who shall be
Chairman and Chief Executive Officer of the Company, the
President and Chief Operating Officer of the Company (who
initially shall be Mel D. Borer) and Jeffrey J. Steiner (or
another person designated by RHI), who shall be Vice-Chairman of
the Company.
ARTICLE IV MISCELLANEOUS
4.1. Termination. This Agreement, and all rights and obligations
of each party hereto, shall terminate upon (i) agreement of all
of the Shareholders and the Company, (ii) the voluntary or
involuntary dissolution of the Company, (iii) the sale of all or
substantially all of the assets of the Company, (iv) when either
Shareholder and its affiliates own less than 25% of the shares of
Common Stock (including options to purchase shares of Common
Stock) owned by such Shareholder on the date of this Agreement
(adjusted accordingly for any stock splits or stock dividends by
the Company after the date hereof) or (v) on the date that
Anthony D. Autorino is no longer the Chief Executive Officer of
the Company.
4.2. Further Assurances. Each party hereto shall do and perform
or cause to be done and performed all such further acts and
things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto
reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
4.3. Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future
law, and if the rights or obligations of the parties under this
Agreement would not be materially and adversely affected thereby,
such provision shall be fully separable, and this Agreement shall
be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part thereof, the
remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance therefrom, and in
lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Agreement, a
legal, valid and enforceable provision as similar in terms to
such illegal, invalid or unenforceable provision as may be
possible, and the parties hereto request the court or any
arbitrator to whom disputes relating to this Agreement are
submitted to reform the otherwise illegal, invalid or
unenforceable provision in accordance with this Section 4.3.
4.4. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the transactions
contemplated hereby and supersede all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof.
4.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the
counterparts have been signed by each party and delivered to the
other parties, it being understood that all parties need not sign
the same counterpart.
4.6. Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be
validly given, if in writing and delivered personally, by
confirmed telecopy or sent by registered mail, postage prepaid,
to:
if to any Shareholder:
addressed to such Shareholder at the address set forth opposite
such Shareholders' name in Schedule I
if to the Company:
Shared Technologies Inc.
100 Great Meadow Road, Suite 104
Suite 104
Wethersfield, Connecticut 06109
Facsimile No.: (203) 258-2401
Attention: Legal Department
or to such other address as any party may, from time to time,
designate in a written notice given in a like manner, and any
such notice or communication shall be deemed to have been given
on the fifth business day after the date so sent, unless actually
received earlier.
4.7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE
PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
4.8. Specific Performance. Each party hereto acknowledges that
monetary damages would not adequately compensate the other
parties hereto for the breach of this Agreement and that this
Agreement shall therefore be specifically enforceable, and any
breach or threatened breach of this Agreement shall be the proper
subject of a temporary or permanent injunction or restraining
order. Further, each party hereto and its successors, heirs,
representatives and assigns waive any claim or defense that there
is an adequate remedy at law for such breach or threatened
breach.
4.9. Attorney's Fees. If attorneys' fees or other costs are
incurred to secure performance of any of the obligations herein
provided for, or to establish damages for the breach thereof, or
to obtain any other appropriate relief, whether by way of
prosecution or defense, the prevailing party or parties shall be
entitled to recover reasonable attorney's fees and costs incurred
therein.
4.10. Waiver. No amendment or waiver of any provision of this
Agreement, nor consent to any departure therefrom, shall be
effective unless the same shall be in writing and signed by each
party thereto, and then such waiver or consent shall be effective
only in a specific instance and for the specific purpose for
which given. No failure on the part of a party hereto to
exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The
remedies provided in this Agreement are cumulative and not
exclusive of any remedies provided by law.
4.11. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of each party hereto and his or its
successors, heirs, representatives and permitted assigns. This
Agreement shall be binding upon and inure to the benefit of each
individual signatory hereto and his, her or its respective heirs,
personal representatives and assigns, and any receiver, trustee
in bankruptcy or representative of the creditors of each such
person.
4.12. Person Defined. For purposes of this Agreement, "Person"
means all natural persons, corporations, business trusts,
associations, companies, partnerships, joint ventures, and other
entities and governments and agencies and political subdivisions.
4.13. After-Acquired Shares. Subject to Section 1.1(b),
whenever a Shareholder shall hereafter acquire any shares of
Common Stock, Convertible Preferred Stock or rights or options
with respect thereto, such shares so acquired shall be voted in
accordance with the terms of Article III of this Agreement but
shall not otherwise be subject to any of the other terms and
conditions contained herein.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto, all as of the date first
above written.
SHARED TECHNOLOGIES INC.
By:_ _ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
RHI HOLDINGS, INC.
By:_ _ _ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
-------------------------------
Anthony D. Autorino
SCHEDULE I
List of Shareholders
Common
Shareholder and Address Stock
RHI Holdings, Inc.
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001 6,000,000
Anthony D. Autorino [ ]
[Address]
Total [ ]
EXHIBIT B-1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made and
entered into this _ _ _ _ _ day of _ _ _ _ _ _ _ _, 1995 by
and between Shared Technologies Inc. ("Shared Technologies"), a
Delaware corporation, The Fairchild Corporation ("TFC"), a
Delaware corporation, and RHI Holdings Inc. ("RHI"), a Delaware
corporation and the sole common stockholder of Fairchild
Industries, Inc. ("Fairchild").
WITNESSETH:
- - - - - -
WHEREAS, Shared Technologies, TFC, RHI and Fairchild have
entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated as of November _ _ _ _, 1995; and
WHEREAS, capitalized terms used herein without definition shall
have the respective meanings ascribed to such terms in the
Merger Agreement; and
WHEREAS, TFC is the sole common stockholder of RHI; and
WHEREAS, the execution and delivery of this Agreement is a
condition to effecting the Merger at the Closing and each of
the parties has agreed to effect the Merger in reliance upon
the execution and delivery of this Agreement;
NOW, THEREFORE, in consideration of the transactions
contemplated by the Merger Agreement and other good and
valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Indemnification by RHI and TFC.
RHI and TFC, jointly and severally, hereby agree to indemnify
and hold harmless Shared Technologies against any and all
losses, liabilities and damages or actions or claims (or
actions or proceedings, whether commenced or threatened) in
respect thereof (hereinafter referred to collectively as
"Losses") resulting from any liability or claims (including
without limitation counsel fees and expenses of Shared
Technologies in the event RHI and TFC fail to assume the
defense thereof) which related to the operations of Fairchild
Industries, Inc. or any of its subsidiaries prior to the
Effective Time, including without limitation those which have
been assumed by RHI pursuant to the Fairchild Recapitalization
described in Schedule 9.1 to the Merger Agreement except for
(x) Losses related to or arising out of the telecommunications
systems and service business of Fairchild Communication
Services Company and (y) the other obligations of Fairchild
expressly assumed by Shared Technologies as specified on
Schedule 9.1 to the Merger Agreement (clauses (x) and (y) being
defined as the "Assumed Liabilities"). Notwithstanding the
foregoing, in no event shall Shared Technologies be entitled to
indemnification for, and the term "Losses" shall not include
any consequential damages or damages which are speculative,
remote or conjectural (except to the extent represented by a
successful claim by a third party).
If any action, proceeding or claim shall be brought or asserted
against Shared Technologies by any third party, which action,
proceeding or claim, if determined adversely to the interests
of Shared Technologies would entitle Shared Technologies to
indemnity pursuant to this Agreement, Shared Technologies shall
promptly, but in no event later than 10 days from the date
Shared Technologies receives written notice of such action,
proceeding or claim, notify TFC and RHI of the same in writing
specifying in detail the basis of such claim and the facts
pertaining thereto (but the failure to give such notice in a
timely fashion shall not affect TFC's and RHI's obligations
under this Section 1 except to the extent it prejudiced or
damaged their ability to defend, settle or compromise such
claim or to pay any Losses resulting therefrom), and TFC and
RHI shall be entitled (but not obligated) to assume the defense
thereof by giving written notice thereof within 10 days after
TFC and RHI received notice of the claim from Shared
Technologies to Shared Technologies and have the sole control
of defense and settlement thereof (but only, with respect to
any settlement, if such settlement involves an unconditional
release of Shared Technologies or any of its subsidiaries in
respect of such claim), including the employment of counsel and
the payment of all expenses.
2. Indemnification by Shared Technologies.
Shared Technologies hereby agrees to indemnify and hold
harmless RHI and TFC against any and all losses, liabilities
and damages or actions or claims (or actions or proceedings,
whether commenced or threatened) in respect thereof resulting
from any liability or claims (including without limitation
counsel fees and expenses of RHI and TFC in the event Shared
Technologies fails to assume the defense thereof) which related
to the Assumed Liabilities (hereinafter referred to
collectively as "STI Losses"). Notwithstanding the foregoing,
in no event shall TFC and RHI be entitled to indemnification
for, and the term "STI Losses" shall not include, any
consequential damages or damages which are speculative, remote
or conjectural (except to the extent represented by a
successful claim by a third party).
If any action, proceeding or claim shall be brought or asserted
against RHI or TFC by any third party, which action, proceeding
or claim, if determined adversely to the interests of RHI or
TFC would entitle RHI or TFC to indemnity pursuant to this
Agreement, RHI or TFC shall promptly, but in no event later
than 10 days from the date RHI or TFC receives written notice
of such action, proceeding or claim, notify Shared Technologies
of the same in writing specifying in detail the basis of such
claim and the facts pertaining thereto (but the failure to give
such notice in a timely fashion shall not affect Shared
Technologies' obligations under this Section 2 except to the
extent it prejudiced or damaged Shared Technologies' ability to
defend, settle or compromise such claim or to pay any Losses
resulting therefrom), and Shared Technologies shall be entitled
(but not obligated) to assume the defense thereof by giving
written notice thereof within 10 days after Shared Technologies
received notice of the claim from RHI or TFC to RHI or TFC and
have the sole control of defense and settlement thereof (but
only, with respect to any settlement, if such settlement
involves an unconditional release of TFC and RHI or any of
their respective subsidiaries in respect of such claim),
including the employment of counsel and the payment of all
expenses.
3. Miscellaneous.
3.1 Modification; Waivers. This Agreement may be modified or
amended only with the written consent of each party hereto. No
party hereto shall be released from its obligations hereunder
without the written consent of the other party. The observance
of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but
any such waiver shall be effective only if in a writing signed
by the party against which such waiver is to be asserted.
Except as otherwise specifically provided herein, no delay on
the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party hereto of any right,
power or privilege hereunder operate as a waiver of any other
right, power or privilege hereunder nor shall any single or
partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder.
3.2 Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
3.3 Severability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement or the
application of such provision to other Persons or circumstances
shall not be affected thereby; provided that the parties shall
negotiate in good faith with respect to an equitable
modification of the provision or application thereof held to be
invalid.
3.4 Notices. (a) Any notice or communication to any party
hereto shall be duly given if in writing and delivered in
person or mailed by first class mail (registered or certified,
return receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to such other party's address.
If to RHI Holdings, Inc.:
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Facsimile No.: (703) 888-5674
Attention: Donald Miller, Esq.
If to The Fairchild Corporation:
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Attention: Donald Miller, Esq.
with a copy to:
James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
If to Shared Technologies Inc.:
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Facsimile No.: (203) 258-2401
Attention: Legal Department
with a copy to:
Walter D. Wekstein, Esq.
Gadsby & Hannah
125 Summer Street
Boston, Massachusetts 02110
Facsimile No. (617) 345-7050
(b) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the
mail, if mailed; when sent, if sent by facsimile; and the next
business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
3.5 Successors and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon RHI, TFC and Shared
Technologies and their respective successors and assigns.
3.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which for all purposes shall be
deemed to be an original and all of which together shall
constitute the same agreement.
3.7 Headings. The Section headings in this Agreement are for
convenience of reference only, and shall not be deemed to alter
or affect the meaning or interpretation of any provisions
hereof.
3.8 Construction. This Agreement shall be governed, construed
and enforced with the laws of the state of New York, without
regard to principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers thereunto duly
authorized as of the date first written above.
THE FAIRCHILD CORPORATION
By:_ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
RHI HOLDINGS, INC.
By:_ _ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
SHARED TECHNOLOGIES INC.
By:_ _ _ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
EXHIBIT B-2
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made and
entered into this _ _ _ day of _ _ _ _ _ _ _, 1995 by and
between Shared Technologies Inc. ("Shared Technologies"), a
Delaware corporation, and Fairchild Fasteners, Inc.
("Fasteners"), a Delaware corporation.
WITNESSETH:
WHEREAS, Shared Technologies, The Fairchild Corporation, RHI
Holdings Inc. and Fairchild Industries, Inc. ("Fairchild") have
entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated as of November _ _ _, 1995; and
WHEREAS, Fasteners owns the assets and liabilities, and
conducts the operations, of the aerospace and industrial
fasteners business previously owned and conducted by Fairchild
and its subsidiaries; and
WHEREAS, capitalized terms used herein without definition shall
have the respective meanings ascribed to such terms in the
Merger Agreement; and
WHEREAS, the execution and delivery of this Agreement is a
condition to effecting the Merger at the Closing and the
parties to the Merger Agreement have agreed to effect the
Merger in reliance upon the execution and delivery of this
Agreement;
NOW, THEREFORE, in consideration of the transactions
contemplated by the Merger Agreement and other good and
valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Indemnification by Fasteners.
Fasteners hereby agrees to indemnify and hold harmless Shared
Technologies against any and all losses, liabilities and
damages or actions or claims (or actions or proceedings whether
commenced or threatened) in respect thereof (hereinafter
referred to collectively as "Losses") resulting from any
liability or claims (including without limitation counsel fees
and expenses for Shared Technologies in the event Fasteners
fails to assume the defense thereof) which related to the
aerospace and industrial fasteners business as previously owned
and conducted by Fairchild and its subsidiaries prior to the
Effective Time, including without limitation those which have
directly and indirectly been assumed by Fasteners pursuant to
the Fairchild Recapitalization described in Schedule 9.1 to the
Merger Agreement. Notwithstanding the foregoing, in no event
shall Shared Technologies be entitled to indemnification for,
and the term "Losses" shall not include, any consequential
damages or damages which are speculative, remote or conjectural
(except to the extent represented by a successful claim by a
third party).
If any action, proceeding or claim shall be brought or asserted
against Shared Technologies by any third party, which action,
proceeding or claim, if determined adversely to the interests
of Shared Technologies would entitle Shared Technologies to
indemnity pursuant to this Agreement, Shared Technologies shall
promptly, but in no event later than 10 days from the date
Shared Technologies receives written notice of such action,
proceeding or claim, notify Fasteners of the same in writing
specifying in detail the basis of such claim and the facts
pertaining thereto (but the failure to give such notice in a
timely fashion shall not affect Fasteners' obligations under
this Section 1 except to the extent it prejudiced or damaged
Fasteners' ability to defend, settle or compromise such claim
or to pay any Losses resulting therefrom), and Fasteners shall
be entitled (but not obligated) to assume the defense thereof
by giving written notice thereof within 10 days after Fasteners
received notice of the claim from Shared Technologies to Shared
Technologies and have the sole control of defense and
settlement thereof (but only, with respect to any settlement,
if such settlement involves an unconditional release of Shared
Technologies or any of its subsidiaries), including the
employment of counsel and the payment of all expenses.
2. Indemnification by Shared Technologies.
Shared Technologies hereby agrees to indemnify and hold
harmless Fasteners against any and all losses, liabilities and
damages or actions or claims (or actions or proceedings whether
commenced or threatened) in respect thereof (hereinafter
referred to collectively as "STI Losses") resulting from (x)
losses related to or arising out of the telecommunications
systems and service business of Fairchild Communication
Services Company and (y) the other obligations of Fairchild
expressly assumed by Shared Technologies as specified on
Schedule 9.1 to the Merger Agreement (including without
limitation counsel fees and expenses of Fasteners in the event
Shared Technologies fails to assume the defense thereof).
Notwithstanding the foregoing, in no event shall Fasteners be
entitled to indemnification for, and the term "STI Losses"
shall not include, any consequential damages or damages which
are speculative, remote or conjectural (except to the extent
represented by a successful claim by a third party).
If any action, proceeding or claim shall be brought or asserted
against Fasteners by any third party, which action, proceeding
or claim, if determined adversely to the interests of Fasteners
would entitle Fasteners to indemnity pursuant to this
Agreement, Fasteners shall promptly, but in no event later than
10 days from the date Fasteners receives written notice of such
action, proceeding or claim, notify Shared Technologies of the
same in writing specifying in detail the basis of such claim
and the facts pertaining thereto (but the failure to give such
notice in a timely fashion shall not affect Shared
Technologies' obligations under this Section 2 except to the
extent it prejudiced or damaged Shared Technologies' ability to
defend, settle or compromise such claim or to pay any Losses
resulting therefrom), and Shared Technologies shall be entitled
(but not obligated) to assume the defense thereof by giving
written notice thereof within 10 days after Shared Technologies
received notice of the claim from Fasteners to Fasteners and
have the sole control of defense and settlement thereof (but
only, with respect to any settlement, if such settlement
involves an unconditional release of Fasteners or any of its
subsidiaries), including the employment of counsel and the
payment of all expenses.
3. Miscellaneous
3.1 Modification; Waivers. This Agreement may be modified or
amended only with the written consent of each party hereto. No
party hereto shall be released from its obligations hereunder
without the written consent of the other party. The observance
of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but
any such waiver shall be effective only if in a writing signed
by the party against which such waiver is to be asserted.
Except as otherwise specifically provided herein, no delay on
the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party hereto of any right,
power or privilege hereunder operate as a waiver of any other
right, power or privilege hereunder nor shall any single or
partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder.
3.2 Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
3.3 Severability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement or the
application of such provision to other Persons or circumstances
shall not be affected thereby; provided that the parties shall
negotiate in good faith with respect to an equitable
modification of the provision or application thereof held to be
invalid.
3.4 Notices. (a) Any notice or communication to any party
hereto shall be duly given if in writing and delivered in
person or mailed by first class mail (registered or certified,
return receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to such other party's address.
If to Fairchild Fasteners, Inc.:
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Facsimile No.: (703) 888-5674
Attention: Donald Miller, Esq.
with a copy to:
James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
If to Shared Technologies Inc.:
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Facsimile No.: (203) 258-2401
Attention: Legal Department
with a copy to:
Walter D. Wekstein, Esq.
Gadsby & Hannah
125 Summer Street
Boston, Massachusetts 02110
Facsimile No. (617) 345-7050
(b) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail,
if mailed; when receipt acknowledged, if sent by facsimile; and
the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
3.5 Successors and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon Fasteners and Shared
Technologies and their respective successors and assigns.
3.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which for all purposes shall be deemed to
be an original and all of which together shall constitute the
same agreement.
3.7 Headings. The Section headings in this Agreement are for
convenience of reference only, and shall not be deemed to alter
or affect the meaning or interpretation of any provisions hereof.
3.8 Construction. This Agreement shall be governed, construed
and enforced with the laws of the state of New York, without
regard to principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers thereunto duly authorized as of
the date first written above.
FAIRCHILD FASTENERS, INC.
By:_ _ _ _ _ _ _ _ _ _ _
Name:
Title:
SHARED TECHNOLOGIES INC.
By:_ _ _ _ _ _ _ _ _ _ _
Name:
Title:
EXHIBIT B-3
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made and
entered into this _ _ _ day of _ _ _ _ _ _, 1995 by and between
Shared Technologies Inc. ("Shared Technologies"), a Delaware
corporation, and D-M-E, Inc. ("DME"), a Delaware corporation.
WITNESSETH:
-----------
WHEREAS, Shared Technologies, The Fairchild Corporation, RHI
Holdings Inc. and Fairchild Industries, Inc. ("Fairchild") have
entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated as of November _ _ _ , 1995; and
WHEREAS, DME owns the assets and liabilities, and conducts the
operations, of the plastic injection molding business previously
owned and conducted by Fairchild and its subsidiaries; and
WHEREAS, capitalized terms used herein without definition shall
have the respective meanings ascribed to such terms in the Merger
Agreement; and
WHEREAS, the execution and delivery of this Agreement is a
condition to effecting the Merger at the Closing and the parties
to the Merger Agreement have agreed to effect the Merger in
reliance upon the execution and delivery of this Agreement;
NOW, THEREFORE, in consideration of the transactions contemplated
by the Merger Agreement and other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as
follows:
1. Indemnification by DME.
DME hereby agrees to indemnify and hold harmless Shared
Technologies against any and all losses, liabilities and damages
or actions or claims (or actions or proceedings whether commenced
or threatened) in respect thereof (hereinafter referred to
collectively as "Losses") resulting from any liability or claims
(including without limitation counsel fees and expenses of Shared
Technologies in the event DME fails to assume the defense
thereof) which related to the plastic injection molding business
as previously conducted by Fairchild and its subsidiaries prior
to the Effective Time, including without limitation those which
have been directly and indirectly assumed by DME pursuant to the
Fairchild Recapitalization described in Schedule 9.1 to the
Merger Agreement. Notwithstanding the foregoing, in no event
shall Shared Technologies be entitled to indemnification for, and
the term "Losses" shall not include, any consequential damages or
damages which are speculative, remote or conjectural (except to
the extent represented by a successful claim by a third party).
If any action, proceeding or claim shall be brought or asserted
against Shared Technologies by any third party, which action,
proceeding or claim, if determined adversely to the interests of
Shared Technologies would entitle Shared Technologies to
indemnity pursuant to this Agreement, Shared Technologies shall
promptly, but in no event later than 10 days from the date Shared
Technologies receives written notice of such action, proceeding
or claim, notify DME of the same in writing specifying in detail
the basis of such claim and the facts pertaining thereto (but the
failure to give such notice in a timely fashion shall not affect
DME's obligations under this Section 1 except to the extent it
prejudiced or damaged DME's ability to defend, settle or
compromise such claim or to pay any Losses resulting therefrom),
and DME shall be entitled (but not obligated) to assume the
defense thereof by giving written notice thereof within 10 days
after DME received notice of the claim from Shared Technologies
to Shared Technologies and have the sole control of defense and
settlement thereof (but only, with respect to any settlement, if
such settlement involves an unconditional release of Shared
Technologies or any of its subsidiaries in respect of such
claim), including the employment of counsel and the payment of
all expenses.
2. Indemnification by Shared Technologies.
Shared Technologies hereby agrees to indemnify and hold harmless
DME against any and all losses, liabilities and damages or
actions or claims (or actions or proceedings whether commenced or
threatened) in respect thereof (hereinafter referred to
collectively as "STI Losses") resulting from (x) losses related
to or arising out of the telecommunications systems and service
business of Fairchild Communication Services Company and (y) the
other obligations of Fairchild expressly assumed by Shared
Technologies as specified on Schedule 9.1 to the Merger Agreement
(including without limitation counsel fees and expenses of DME
in the event Shared Technologies fails to assume the defense
thereof). Notwithstanding the foregoing, in no event shall DME
be entitled to indemnification for, and the term "STI Losses"
shall not include, any consequential damages or damages which are
speculative, remote or conjectural (except to the extent repre-
sented by a successful claim by a third party).
If any action, proceeding or claim shall be brought or asserted
against DME by any third party, which action, proceeding or
claim, if determined adversely to the interests of DME would
entitle DME to indemnity pursuant to this Agreement, DME shall
promptly, but in no event later than 10 days from the date DME
receives written notice of such action, proceeding or claim,
notify Shared Technologies of the same in writing specifying in
detail the basis of such claim and the facts pertaining thereto
(but the failure to give such notice in a timely fashion shall
not affect Shared Technologies' obligations under this Section 2
except to the extent it prejudiced or damaged Shared Technolo-
gies' ability to defend, settle or compromise such claim or to
pay any Losses resulting therefrom), and Shared Technologies
shall be entitled (but not obligated) to assume the defense
thereof by giving written notice thereof within 10 days after
Shared Technologies received notice of the claim from DME to DME
and have the sole control of defense and settlement thereof (but
only, with respect to any settlement, if such settlement involves
an unconditional release of DME or any of its subsidiaries in
respect of such claim), including the employment of counsel and
the payment of all expenses.
3. Miscellaneous
3.1. Modification; Waivers. This Agreement may be modified or
amended only with the written consent of each party hereto. No
party hereto shall be released from its obligations hereunder
without the written consent of the other party. The observance
of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but
any such waiver shall be effective only if in a writing signed by
the party against which such waiver is to be asserted. Except as
otherwise specifically provided herein, no delay on the part of
any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party hereto of any right, power or privilege
hereunder operate as a waiver of any other right, power or
privilege hereunder nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege hereunder.
3.2. Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
3.3. Severability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement or the
application of such provision to other Persons or circumstances
shall not be affected thereby; provided that the parties shall
negotiate in good faith with respect to an equitable modification
of the provision or application thereof held to be invalid.
3.4. Notices. (a) Any notice or communication to any party
hereto shall be duly given if in writing and delivered in person
or mailed by first class mail (registered or certified, return
receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to such other party's address.
If to D-M-E, Inc.:
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Facsimile No.: (703) 888-5674
Attention: Donald Miller, Esq.
with a copy to:
James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
If to Shared Technologies Inc.:
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Facsimile No.: (203) 258-2401
Attention: Legal Department
with a copy to:
Walter D. Wekstein, Esq.
Gadsby & Hannah
125 Summer Street
Boston, Massachusetts 02110
Facsimile No.: (617) 345-7050
(b) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail,
if mailed; when receipt acknowledged, if sent by facsimile; and
the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
3.5. Successors and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon DME and Shared Technologies
and their respective successors and assigns.
3.6. Counterparts. This Agreement may be executed in one or
more counterparts, each of which for all purposes shall be deemed
to be an original and all of which together shall constitute the
same agreement.
3.7. Headings. The Section headings in this Agreement are for
convenience of reference only, and shall not be deemed to alter
or affect the meaning or interpretation of any provisions hereof.
3.8. Construction. This Agreement shall be governed, construed
and enforced with the laws of the state of New York, without
regard to principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers thereunto duly authorized as of
the date first written above.
D-M-E, INC.
By:_ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
SHARED TECHNOLOGIES INC.
By:_ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
EXHIBIT C
PLEDGE AGREEMENT
PLEDGE AGREEMENT (the "Agreement"), dated as of _ _ _ _ _ , 1995,
made by RHI HOLDINGS, INC., a Delaware corporation ("Pledgor"),
in favor of [NAME OF PLEDGE AGENT] (the "Pledgee").
RECITALS:
--------
A. Pursuant to the terms of an Agreement and Plan of Merger dated
as of _ _ _ _ _, 1995 (the "Merger Agreement") among Shared
Technologies Inc. ("Shared Technologies"), The Fairchild
Corporation ("TFC"), RHI and Fairchild Industries, Inc. (a
wholly-owned subsidiary of RHI), RHI has received _ _ _ shares of
6% Cumulative Convertible Preferred Stock, par value $_ _ _ per
share (the "Convertible Preferred Stock"), of Shared Technologies
and _ _ _ shares of Special Preferred Stock, par value $_ _ _ per
share (the "Special Preferred Stock" and, together with the
Convertible Preferred Stock, the "Preferred Stock").
B. This Agreement is given by Pledgor in favor of Pledgee for the
benefit of Shared Technologies to secure the payment and
performance by the Indemnifying Parties (as hereinafter defined)
of Indemnification Agreements dated the date hereof (the
"Indemnification Agreements") between Shared Technologies and
each of TFC, RHI, D-M-E Inc. and Fairchild Fasteners, Inc.
(collectively, the "Indemnifying Parties").
AGREEMENT:
----------
NOW, THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor and Pledgee
hereby agree as follows:
SECTION 1. Pledge. As collateral security for the payment and
performance when due of all of the Indemnifying Parties'
obligations to Shared Technologies under the Indemnification
Agreements (the "Secured Obligations"), Pledgor hereby pledges,
assigns and grants to Pledgee for the benefit of and as agent for
Shared Technologies, until this Agreement terminates, a
continuing first priority security interest in and to all of the
right, title and interest of Pledgor in shares of Preferred Stock
of Shared Technologies described in Schedule I hereto (the
"Pledged Shares"). The term "Pledged Collateral" shall mean (i)
the Pledged Shares and all other securities or property issued in
exchange or as replacement for (by reason of merger,
reorganization or otherwise) the Pledged Shares by the Company or
a third party ("New Pledged Shares") and (ii) all other assets or
property substituted for the Pledged Shares in accordance with
Section 6 of this Agreement.
SECTION 2. Delivery of Pledged Shares. The certificates
representing the Pledged Shares, together with stock powers, are,
concurrently with the execution of this Agreement, being
delivered to Pledgee (and with respect to any New Pledged Shares
will be promptly delivered to Pledgee when received by Pledgor)
and will be held by Pledgee pursuant to and in accordance with
the terms of this Agreement.
SECTION 3. Voting Rights; Distributions; etc.
(a) Pledgor shall be entitled to exercise any and all voting and
other consensual rights (including rights to exercise) pertaining
to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms or purpose of this Agreement.
(b) Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all
dividends or distributions made with respect to the Pledged
Collateral, provided, however, if a Dispute Notice (as
hereinafter defined) has been delivered, until there has been a
resolution of the dispute to which such Dispute Notice relates,
all dividends and distributions on the portion of Pledged
Collateral required to satisfy Shared Technologies' claims under
the relevant Dispute Notice, shall be delivered to and held by
the Pledge Agent. Upon resolution of the dispute which is the
subject of the Dispute Notice all dividends and distributions
shall forthwith be delivered to the party in whose favor the
dispute was resolved.
(c) Pledgee shall be deemed without further action or formality
to have granted to Pledgor all necessary consents relating to
voting rights and shall, if necessary, upon written request of
Pledgor, from time to time execute and deliver (or cause to be
executed and delivered) to Pledgor all such instruments as
Pledgor may reasonably request in order to permit Pledgor to
exercise the voting and other rights which it is entitled to
exercise pursuant to Section 3(a) hereof and to receive the
dividends and distributions which it is authorized to receive and
retain pursuant to Section 3(b) hereof.
SECTION 4. Other Liens. Pledgor shall not (i) sell, convey,
assign or otherwise dispose of (except pursuant to Section 6), or
grant any option, right or warrant with respect to, any of the
Pledged Collateral, or (ii) create or permit to exist any lien
upon or with respect to any Pledged Collateral other than the
lien and security interest granted to Pledgee for the benefit of
Shared Technologies under this Agreement.
SECTION 5. Cancellation of Pledged Shares upon Payment Default.
In the event that Shared Technologies claims it is entitled to a
payment from an Indemnifying Party in accordance with the terms
of an Indemnification Agreement because of a payment that Shared
Technologies has made or is then obligated to make to a third
party and for which it is entitled to indemnification under the
Indemnification Agreements, such Indemnifying Party shall have 30
days (the "Notice Period") from its receipt of written notice of
such claim to pay to Shared Technologies the amount of such claim
in cash or dispute responsibility for indemnification of such
claim by delivering a written notice thereof to Shared
Technologies (a "Dispute Notice"). In the event that such
Indemnifying Party fails to pay any such claim or deliver a
Dispute Notice within such 30-day period, Pledgee shall deliver
to Shared Technologies, at Shared Technologies' request (a
"Pledge Notice"), Pledged Shares or, if applicable, New Pledged
Shares (in each case valued at their liquidation preference) in
an amount equal to such claimed amount and Shared Technologies
shall cancel the same and they will cease to be Pledged
Collateral for all purposes of this Agreement. In the event of a
claim subject to a Dispute Notice, upon settlement of such
dispute, if the Indemnifying Party fails to pay the amount owing
to Shared Technologies, if any, as a result of such settlement
(the "Undisputed Claim Amount"), within 30 days thereof, Pledgee
shall deliver to Shared Technologies, upon delivery to Pledgee of
a Pledge Notice, Pledged Shares or, if applicable, New Pledged
Shares (in each case valued at their liquidation preference)
equal to the Undisputed Claim Amount and Shared Technologies
shall cancel the same. Any such cancellation of Pledged Shares
or New Pledged Shares pursuant to this Section 5 will be deemed
to have satisfied the Indemnifying Party's obligations under the
Indemnification Agreements for the claim to the extent of the
liquidation preference of the Pledged Shares or New Pledged
Shares so cancelled. The foregoing rights of Shared Technologies
shall not obviate Shared Technologies' other available rights to
seek indemnification payments from the Indemnifying Parties.
SECTION 6. Substitution of Collateral. At its election, Pledgor
may substitute property or assets owned by it for all or a
portion of the Pledged Shares (or New Pledged Shares) so long as
(i) the fair market value of such substitute property or assets
is at least equal to the fair market value of the Pledged Shares
(or New Pledged Shares) for which substitution is sought, as
evidenced by the written opinion of an investment banking firm
of nationally recognized standing reasonably acceptable to Shared
Technologies, (ii) such substitute property or assets are not
subject to any other lien or security interest at the time of
such substitution, (iii) Pledgor delivers to Pledgee such
instruments and documents which are necessary for Pledgee to
perfect a first priority lien on and security interest in such
substitute property or assets and (iv) Pledgor, Pledgee and
Shared Technologies shall have entered into such amendments or
supplements to this Agreement as are reasonably requested by
Pledgee and Shared Technologies in order to ensure Pledgee's
rights and remedies hereunder with respect to such substituted
property or assets.
SECTION 7. Termination of Agreement; Release of Pledged
Collateral. On the Termination Date, this Agreement shall
terminate and Pledgee's and Shared Technologies' rights with
respect to the Pledged Collateral shall terminate and Pledgee
shall promptly deliver the certificates (or other property or
assets) representing the Pledged Collateral to Pledgor, free and
clear of any lien or encumbrance thereon. "Termination Date"
means the later to occur of (i) the third anniversary of the date
of this Agreement and (ii) the date on which the consolidated net
worth (computed in accordance with generally accepted accounting
principles) of The Fairchild Corporation at such time (as
evidenced by an audited balance sheet delivered to Pledgee by
Pledgor) is at least (x) $25 million greater than such net worth
at September 30, 1995 (excluding for such purpose any value
attributed to the Preferred Stock on such balance sheet) and
(y) $225 million (including for such purpose the value of the
Preferred Stock); provided that in the event of any outstanding
claims under the Indemnification Agreements that are subject to a
Dispute Notice, the Termination Date shall not be deemed to occur
with respect to an amount of Pledged Collateral equal to the
claim which is the subject of such Dispute Notice, until such
dispute is resolved unless, as to any such claim, the appropriate
Indemnifying Parties accept, by written agreement reasonably
satisfactory to Shared Technologies, full and unconditional
liability for such claim and agree to assume the defense thereof
and full responsibility therefor (an "Assumption"). The
foregoing provisions notwithstanding, in the event that a Pledge
Notice has been delivered as to which Pledgor has not yet
responded and the Notice Period has not yet expired, such claims
shall be subject to the terms of the proviso of the preceding
sentence until the earlier to occur of the payment by Pledgor of
the Undisputed Claim Amount or delivery by Pledgor to Shared
Technologies of an Assumption.
SECTION 8. Continuing Security Interest; Assignment. This
Agreement shall create a continuing security interest in the
Pledged Shares and shall (i) be binding upon Pledgor, its
successors and assigns, and (ii) inure, together with the rights
and remedies of each of Pledgee and Shared Technologies
hereunder, to the benefit of each of Pledgee and Shared
Technologies and their respective successors, transferees and
assigns; no other Person (including, without limitation, any
other creditor of Pledgor or Shared Technologies) shall have any
interest herein or any right or benefit with respect hereto.
SECTION 9. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PROPERTY ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
SECTION 10. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
SECTION 11. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
and delivered shall be deemed to be an original, but all such
counterparts together shall constitute one and the same
agreement.
SECTION 12. Headings. The Section headings used in this
Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
SECTION 13. Arbitration. Any controversy, dispute or question
arising out of or in connection with this Agreement, or the
interpretation, performance or non-performance of this Agreement
or any breach hereof, shall be determined by arbitration held in
New York, in accordance with the then existing rules of the
American Arbitration Association. Any decision or award of such
arbitration shall be final, conclusive and binding on the parties
hereto. Nothing contained herein shall in any way deprive either
party of its right to obtain injunctions or other equitable
relief, including preliminary relief pending arbitration. All
costs and expenses (including counsel and expert witness fees)
associated with any such arbitration shall be paid by the party
adjudged by the arbitrator to be responsible for the costs. Any
award rendered by an arbitrator shall be enforceable in any court
of competent jurisdiction.
SECTION 14. Pledgee. Shared Technologies hereby appoints [NAME
OF PLEDGE AGENT] as its agent to act as its pledge agent with
respect to the Pledged Collateral pursuant to this Agreement.
The actions of Pledgee hereunder are subject to the provisions of
this Agreement. Pledgee shall have the right hereunder to make
demands, to give notices, to exercise or refrain from exercising
any rights, and to take or refrain from taking action (including,
without limitation, the release or substitution of Pledged
Collateral), in accordance with this Agreement. Pledgee may
resign as long as Pledgee is replaced by a successor Pledgee
approved by Pledgor and Shared Technologies. Upon the acceptance
of any appointment as Pledgee by a successor Pledgee, that
successor Pledgee shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the
retiring Pledgee under this Agreement, and the retiring Pledgee
shall thereupon be discharged from its duties and obligations
under this Agreement. After any retiring Pledgee's resignation,
the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this
Agreement while it was Pledgee.
SECTION 15. Notices.
(a) Any notice or communication to any party hereto shall be duly
given if in writing and delivered in person or mailed by first
class mail (registered or certified, return receipt requested),
facsimile or overnight air courier guaranteeing next day delivery
to such other party's address.
If to RHI Holdings, Inc.:
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Facsimile No.: (703) 888-5674
Attention: Donald Miller, Esq.
with a copy to:
James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
If to Shared Technologies Inc.:
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Facsimile No.: (203) 258-2401
Attention: Legal Department
with a copy to:
Walter D. Wekstein, Esq.
Harold J. Carroll, Esq.
Gadsby & Hannah
125 Summer Street
Boston, MA 02110
Facsimile No.: (617) 345-7050
If to [Pledge Agent]:
[ ]
with a copy to:
(b) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail,
if mailed; when sent, if sent by facsimile; and the next business
day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
SECTION 16. Entire Agreement. This Agreement constitutes the
entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be
executed and delivered by its duly authorized officer as of the
date first above written.
RHI HOLDINGS, INC.,
as Pledgor
By:_ _ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
[NAME],
as Pledgee
By:_ _ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
SHARED TECHNOLOGIES INC.
By:_ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
SCHEDULE I
Pledged Shares
>
TABLE
<
>
CAPTION
<
[S] [C] [C] [C] [C]
Class Par Certificate Number
Issuer of Stock Value No(s) of Shares
TABLE
</ >
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
between
RHI HOLDINGS, INC.
THE FAIRCHILD CORPORATION
and
SHARED TECHNOLOGIES INC.
Dated _ _ _ _ _ _ _, 1995
REGISTRATION RIGHTS AGREEMENT dated as of _ _ _ _ _ _ _ _ _,
1995, between SHARED TECHNOLOGIES INC., a Delaware corporation
(the "Company"), RHI HOLDINGS, INC., a Delaware corporation
("RHI") and THE FAIRCHILD CORPORATION, a Delaware corporation
("TFC").
WITNESSETH:
-----------
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of
November _ _, 1995 (the "Merger Agreement"), among the Company,
TFC, RHI and Fairchild Industries, Inc. ("Fairchild"), RHI has
obtained (i) 6,000,000 shares of Common Stock shares of the
Company, par value $.004 (the "Common Stock"), (ii) [ ] shares
of 6% Cumulative Convertible Preferred Stock, par value $_ _ _
(the "Convertible Preferred Stock"), of the Company and
(iii) [ ] shares of Special Preferred Stock, par value $____
(the "Special Preferred Stock" and, together with the Convertible
Preferred Stock, the "Preferred Stock").
WHEREAS, the Company desires to provide RHI and its successors
and assigns with certain rights regarding the registration of the
Common Stock and the Preferred Stock (including Common Stock
issuable upon conversion of the Convertible Preferred Stock and
Common Stock issuable by the Company to RHI to satisfy
indemnification obligations of the Company under the Merger
Agreement).
NOW, THEREFORE, in consideration of the mutual covenants and
agreements made herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and accepted, the parties hereto agree as follows:
1. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective
meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect on the date of this Agreement), it
being understood that any limited partner of a partnership shall
not be an Affiliate of such partnership solely by virtue of its
status as such a limited partner.
"Commission" means the United States Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
"Common Stock" means the common stock of Shared Technologies
Inc., par value $.004.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, as the same shall be in
effect at the time. Reference to a particular section of the
Securities Exchange Act of 1934, as amended, shall include
reference to the comparable section, if any, of any such
subsequent similar federal statute.
"Merger Agreement" is defined in the Recitals.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government or
department or agency of a government.
"Preferred Stock" means, collectively, (i) the 6% Cumulative
Convertible Preferred Stock of the Company, par value $ ,
issued pursuant to the Merger Agreement and (ii) the Special
Preferred Stock of the Company, par value $____, issued pursuant
to the Merger Agreement.
"Registrable Common Securities" means the shares of Common Stock
(i) issued to RHI pursuant to the Merger Agreement, (ii) issued
to RHI in the future to satisfy indemnification obligations of
the Company under the Merger Agreement and (iii) issuable and
issued upon conversion of any shares of Convertible Preferred
Stock. As to any particular Registrable Common Securities, once
issued such securities shall cease to be Registrable Common
Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) they shall have
been sold as permitted by, and in compliance with, Rule 144 (or
successor provision) promulgated under the Securities Act or
(c) they shall have ceased to be outstanding.
"Registrable Preferred Securities" means the shares of Preferred
Stock issued to RHI pursuant to the Merger Agreement. As to any
particular Registrable Preferred Securities, once issued such
securities shall cease to be Registrable Preferred Securities
when (a) a registration statement with respect to the sale of
such securities shall have become effective under the Securities
Act and such securities shall have been disposed of in accordance
with such registration statement, (b) they shall have been sold
as permitted by, and in compliance with, Rule 144 (or successor
provision) promulgated under the Securities Act or (c) they shall
have ceased to be outstanding.
"Registrable Securities" means collectively the Registrable
Common Securities and Registrable Preferred Securities and any
other securities issuable in connection therewith or in
replacement thereof by way of a dividend, distribution,
recapitalization, exchange, merger, consolidation or other
reorganization.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 2, including,
without limitation, all registration, filing and National
Association of Securities Dealers, Inc. fees, all listing fees,
all fees and expenses of complying with securities or blue sky
laws (including, without limitation, reasonable fees and
disbursements of counsel for the underwriters in connection with
blue sky qualifications of the Registrable Securities), all word
processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for the
Company and of its independent public accountants, including the
expenses of "comfort" letters required by or incident to such
performance and compliance, and any fees and disbursements of
underwriters customarily paid by issuers or sellers of
securities; provided, however, that Registration Expenses shall
exclude, and RHI shall pay, underwriters' fees and underwriting
discounts and commissions and transfer taxes in respect of the
Registrable Securities being registered.
"Securities Act" means the Securities Act of 1933, as amended, or
any subsequent similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time. References to a particular section of
the Securities Act of 1933, as amended, shall include a reference
to the comparable section, if any, of any such subsequent similar
federal statute.
"Special Securities" is defined in the definition of "Trigger
Date" below.
"Trigger Date" means (i) with respect to shares of Common Stock
issued to satisfy indemnification obligations of the Company
under the Merger Agreement (collectively "Special Securities"),
on the date of their issuance, (ii) with respect to the shares of
Special Preferred Stock, on their date of issuance and (iii) with
respect to all other Registrable Securities, on the date which is
two years after the date of this Agreement.
2. Registration Rights.
2.1. Registration on Demand.
2.1.1 Demand. At any time following a Trigger Date, upon the
written request (the "Demand") of RHI that the Company effect the
registration under the Securities Act of all or part of RHI's
Registrable Securities, the Company shall: use its best efforts
to effect, as soon as practicable and in any event within 90 days
after the Demand is received from RHI, the registration under the
Securities Act (but not including by means of a shelf
registration pursuant to Rule 415 under the Securities Act), of
the Registrable Securities which the Company has been so
requested to register by RHI.
2.1.2 Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 2.1 in
connection with an underwritten offering by RHI of Registrable
Securities, holders of securities of the Company who have
"piggyback" registration rights may include all or a portion of
such securities in such registration, offering or sale; provided
that, if the amount of Registrable Securities to be sold by RHI
is to be reduced because of the views of the managing underwriter
or underwriters, then the securities (other than the Registrable
Securities) to be sold by such other holders participating in
such offering shall be reduced by allocating the securities to be
sold by such other holders in proportion to the number of
securities proposed to be sold in such offering by such holders.
2.1.3 Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate registration form of the
Commission as shall be selected by the Company. The Company
shall include in any such registration statement all information
which, in the opinion of counsel to the Company, is required to
be included.
2.1.4 Expenses. The Company shall pay the Registration Expenses
in connection with any registration requested pursuant to this
Section 2.1.
2.1.5 Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to
have been effected (i) unless a registration statement with
respect thereto has become effective, (ii) if after it has become
effective, such registration is interfered with by any stop
order, injunction or other order or requirement of the Commission
or other governmental agency or court for any reason not
attributable to RHI and has not thereafter become effective, or
(iii) if the conditions to closing specified in the underwriting
agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of
a failure on the part of RHI.
2.1.6 Selection of Underwriters. In connection with each
underwritten offering, RHI shall promptly select an underwriter
subject to the approval of the Company (which approval shall not
be unreasonably withheld by the Company).
2.1.7 Limitations on Registration on Demand. The Company shall
not be required to prepare and file a registration statement
pursuant to this Section 2.1 which would become effective within
90 days following the effective date of a registration statement
(other than a registration statement filed on Form S-8) filed by
the Company with the Commission pertaining to an underwritten
public offering of convertible debt securities or equity
securities for cash for the account of the Company or another
holder of securities of the Company or if the Company gives
written notice to RHI within 10 days of receipt of a Demand that
the Company will initiate within 30 days the preparation of such
registration statement, and in each such case RHI was afforded
the opportunity to include Registrable Securities in such
registration pursuant to Section 2.2 (unless the managing
underwriter for such registration is of the opinion that such
inclusion would adversely affect the Company's ability to
complete its underwritten offering). Notwithstanding anything in
this Section 2.1 to the contrary, in no event shall the Company
be required to effect (i) in the aggregate, more than three
registrations pursuant to this Section 2.1 (other than
registrations pertaining to Special Securities, which shall be
unlimited in number and not otherwise reduce the number of
registrations available to the Company pursuant to this Section
2.1) and (ii) more than one registration pursuant to this Section
2.1 in any 180-day period (other than registrations pertaining to
Special Securities, which shall not affect or be affected by this
clause (ii)).
2.1.8 Right to Purchase in Lieu of Registration. If the Company
receives a request for a Demand registration and the Company
desires not to comply with such request, then the Company may
purchase all but not less than all of the Registrable Securities
proposed to be disposed of in such request (the "Redeemable
Shares") by delivering to RHI a notice of the Company's election
to purchase such Registrable Securities (the "Redemption Notice")
within seven (7) days of receipt by the Company of the request
for the Demand registration pursuant to Section 2.1.1. Upon
issuance of the Redemption Notice, the Company shall be
irrevocably committed to purchase the Registrable Securities on
the terms set forth herein. The purchase price to be paid for
the Registrable Securities shall be the Closing Price on the
Trading Day immediately prior to the date the Company receives
the notice for the Demand registration; provided, that in the
event the Registrable Securities are not listed and traded on any
national securities exchange or on NASDAQ (as defined below), the
purchase price shall be established by the written opinion of a
nationally recognized investment banking firm selected by RHI
delivered to the Company at time of the request for a Demand
registration. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the
Registrable Securities in question shall be listed or admitted to
trading shall be open for the transaction of business or, if the
Registrable Securities shall not be listed or admitted to trading
on any national securities exchange, any day on which trading
takes place in the over-the-counter market. The Company shall
purchase the Registrable Securities within thirty (30) business
days of the issuance of the Redemption Notice by delivering the
purchase price in cash to RHI against delivery of the Registrable
Securities. "Closing Price" means the last sale price, regular
way, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which
the Registrable Securities shall be listed or admitted to trading
or, if the Registrable Securities shall not be listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers Automated Quotations
System ("NASDAQ") or such other system then in use.
2.2. Piggyback Registration.
2.2.1 Right to Include Registrable Securities. If the Company
at any time proposes to register any of its securities under the
Securities Act by registration on Forms S-1, S-2, S-3 or any
successor or similar form(s) (except registrations on such Forms
or similar form(s) solely for registration of securities in
connection with (i) an employee benefit plan or dividend
reinvestment plan or a merger or consolidation or (ii) debt
securities which are not convertible into Common Stock), whether
or not for sale for its own account, it shall, subject to
Section 2.8, each such time give written notice to RHI of its
intention to do so and of RHI's rights under this Section 2.2 at
least 15 days prior to the filing of a registration statement
with respect to such registration with the Commission. Upon the
written request of RHI made as promptly as practicable and in any
event within 5 business days after the receipt of any such
notice, which request shall specify the Registrable Securities
intended to be disposed of by RHI, the Company shall, subject to
Section 2.7, use its best efforts to effect the registration
under the Securities Act of all Registrable Securities which the
Company has been so requested to register by RHI; provided, that
with respect to registrations effected for the account of another
holder of securities of the Company, RHI's rights to include
Registrable Securities will be subject to the consent of such
other holder under agreements existing as of the date of this
Agreement; provided, further, that if, at any time after giving
written notice of its intention to register any securities and
prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine
for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice
of such determination to RHI and (i) in the case of a
determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection
with such registration (but not from any obligation of the
Company to pay the Registration Expenses in connection
therewith), without prejudice; provided, however, that RHI may
request that such registration be effected as a registration
under Section 2.1 hereof and (ii) in the case of a determination
to delay registering, shall be permitted to delay registering any
Registrable Securities for the same period as the delay in
registering such other securities. No registration effected
under this Section 2.2 shall relieve the Company of its
obligation to effect any registration upon demand under
Section 2.1. The Company shall pay all Registration Expenses in
connection with registration of Registrable Securities requested
pursuant to this Section 2.2.
2.2.2 Priority in Piggyback Registrations. Notwithstanding
anything in paragraph 2.2.1 above to the contrary, if the
managing underwriter of any underwritten offering shall inform
the Company by letter of its belief that the number or type of
Registrable Securities requested to be included in such
registration would materially and adversely affect such offering,
then the Company shall include in such registration, to the
extent of the number and type which the Company is so advised can
be sold in (or during the time of) such offering, first, all
securities proposed by the Company to be sold for its own account
or by the holder of securities who initiated a demand
registration, and second, by reducing the other securities
(including Registrable Securities to be sold by other holders of
securities (including RHI)) in proportion to the number of
securities proposed to be sold in such offering by such holders.
2.3. Registration Procedures.
2.3.1 In connection with the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1
and 2.2, the Company shall as expeditiously as possible:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and thereafter
use its best efforts to cause such registration statement to
become and remain effective (subject to clause (ii) below);
provided, however, that the Company may discontinue any
registration of its securities which are not Registrable
Securities at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such registration
statement for such period as shall be required for the
disposition of all of such Registrable Securities; provided, that
such period need not exceed 90 days;
(iii) furnish to RHI such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of
copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as RHI may reasonably
request;
(iv) use its best efforts (x) to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities or Blue Sky
laws of such States of the United States of America where an
exemption is not available and as RHI shall reasonably request,
(y) to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and (z) to
take any other action which may reasonably be necessary or
advisable to enable RHI to consummate the disposition in such
jurisdictions of the securities to be sold by RHI, except that
the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any
jurisdiction wherein it would not, but for the requirements of
this paragraph (iv), be obligated to be so qualified or to
consent to general service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to the
Company and counsel to RHI to consummate the disposition of such
Registrable Securities in accordance with their intended method
of disposition;
(vi) furnish to RHI and its underwriters, if any, (x) an opinion
of counsel for the Company, and (y) a "comfort" letter signed by
the independent public accountants who have certified the
Company's financial statements included or incorporated by
reference in such registration statement, each covering
substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case
of the accountant's comfort letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountant's comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates
such opinions and comfort letters are customarily dated);
(vii) notify RHI when a prospectus relating thereto is required
to be delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, in the
light of the circumstances under which they were made, and at the
request of RHI promptly prepare and furnish to it a reasonable
number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the
circumstances under which they were made;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning
with the first full calendar month after the effective date of
such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder, and promptly furnish the same to
RHI;
(ix) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration; and
(x) use its best efforts to list all Registrable Securities
covered by such registration statement on any national securities
exchange or over-the-counter market, if any, on which Registrable
Securities of the same class and, if applicable, series, covered
by such registration statement are then listed.
The Company may require RHI to furnish the Company such
information regarding RHI and the distribution of RHI's
Registrable Securities as the Company may from time to time
reasonably request in writing.
RHI agrees that upon receipt of any notice from the Company of
the happening of an event of the kind described in
Section 2.3.1(vii), RHI will forthwith discontinue its
disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities
until RHI's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 2.3.1(vii) and, if so directed
by the Company, RHI will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in
RHI's possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
2.4. Underwritten Offerings.
2.4.1 Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by RHI pursuant to a
registration requested under Section 2.1, the Company will enter
into an underwriting agreement with such underwriters for such
offering, such agreement to be reasonably satisfactory in
substance and form to the Company, RHI and the underwriters, and
to contain such representations and warranties by the Company and
RHI and such other terms as are generally prevailing in
agreements of that type, including, without limitation,
indemnities to the effect and to the extent provided in
Section 2.8. RHI will cooperate with the Company in the
negotiation of the underwriting agreement and will give
consideration to the reasonable suggestions of the Company
regarding the form and substance thereof. RHI shall be a party
to such underwriting agreement. RHI shall not be required to
make any representations or warranties to or agreements with the
Company or the underwriters other than representations,
warranties or agreements regarding RHI, RHI's Registrable
Securities, RHI's intended method of distribution and any other
representations or warranties required by law or customarily
given by selling shareholders in an underwritten public offering.
2.4.2 Piggyback Underwritten Offerings. If the Company proposes
to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be
distributed by or through one or more underwriters, the Company
will, subject to Section 2.2 and Section 2.7 hereof, if requested
by RHI, arrange for such underwriters to include all the
Registrable Securities to be offered and sold by RHI among the
securities of the Company to be distributed by such underwriters
(subject to the provisio stated in Section 2.2). RHI shall
become a party to the underwriting agreement negotiated between
the Company and such underwriters. RHI shall not be required to
make any representations or warranties to or agreements with the
Company or the underwriters other than representations,
warranties or agreements regarding RHI, RHI's Registrable
Securities and RHI's intended method of distribution or any other
representations or warranties required by law or customarily
given by selling shareholders in an underwritten public offering.
2.4.3 Holdback Agreements.
(i) If any registration of Registrable Securities (other than
special securities) shall be in connection with an underwritten
public offering, RHI agrees not to effect any public sale or
distribution, including any sale pursuant to Rule 144 under the
Securities Act, of any Registrable Securities, and not to effect
any such public sale or distribution of any other equity security
of the Company or of any security convertible into or
exchangeable or exercisable for any equity security of the
Company (in each case, other than as part of such underwritten
public offering) during the 15 days prior to, and during the 90-
day period beginning on, the effective date of such registration
statement, provided that RHI has received written notice of such
registration at least 15 days prior to such effective date.
(ii) If any registration of Registrable Securities (other than
special securities) shall be in connection with an underwritten
public offering, the Company agrees (x) not to effect any public
sale or distribution of any of its equity securities or of any
security convertible into or exchangeable or exercisable for any
equity security of the Company (other than in connection with any
employee stock option or other benefit plan) during the 15 days
prior to, and during the 90-day period beginning on the effective
date of such registration statement (except as part of such
registration) and (y) that any agreement entered into after the
date of this Agreement pursuant to which the Company issues or
agrees to issue any privately placed equity securities shall
contain a provision under which holders of such securities agree
not to effect any public sale or distribution of any such
securities during the period referred to in the foregoing
clause (x), including any sale pursuant to Rule 144 under the
Securities Act (except as part of such registration, if
permitted), if such holder is participating in the offering
pursuant to such registration.
2.5. Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under
the Securities Act pursuant to this Agreement, the Company will
give RHI, its underwriters, if any, and their respective counsel
and accountants the opportunity to participate in the preparation
of such registration statement, each prospectus included therein
or filed with the Commission, and each amendment thereof or
supplement thereto, and give each of them such access to its
books and records, such opportunities to discuss the business of
the Company with officers and the independent public accountants
who have certified its financial statements as shall be
necessary, in the opinion of RHI's and such underwriters'
respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act. Any expenses incurred by RHI
in connection with any such investigation shall be borne by RHI.
2.6. Limitations, Conditions and Qualifications to Obligations
under Registration Covenants. The obligations of the Company to
use its best efforts to cause the Registrable Securities to be
registered under the Securities Act are subject to each of the
following limitations, conditions and qualifications:
In addition to its rights under Section 2.1.8 the Company shall
be entitled to postpone for a reasonable period of time (but not
exceeding 60 days) the filing of any registration statement
otherwise required to be prepared and filed by it pursuant to
Section 2.1 if the Company determines, in its reasonable
judgment, that such registration and offering would interfere
with any financing, acquisition, corporate reorganization or
other material transaction involving the Company or any of its
Affiliates or would require premature disclosures thereof and
promptly give RHI written notice of such determination,
containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If
the Company shall so postpone the filing of a registration
statement, RHI shall have the right to withdraw the request for
registration by giving written notice to the Company within 30
days after receipt of the notice of postponement and, in the
event of such withdrawal, such request shall not be counted for
purposes of the requests for registration to which RHI is
entitled pursuant to Section 2.1 hereof.
2.7. Indemnification.
2.7.1 Indemnification by the Company. In the event of any
registration of any securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and
hold harmless, in the case of any registration statement filed
pursuant to Section 2.1 or 2.2, RHI, its directors, officers,
partners, agents, and affiliates and each other Person who
participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls RHI or any
such underwriter within the meaning of the Securities Act,
insofar as losses, claims, damages, or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus,
final prospectus, or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein in light of
the circumstances in which they were made not misleading, and the
Company will reimburse RHI and each such director, officer,
partner, agent or affiliate, underwriter and controlling Person
for any legal or any other expenses reasonably incurred by them
in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, that the
Company shall not be liable in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an
instrument duly executed by or on behalf of RHI or such
underwriter, as the case may be, specifically stating that it is
for use in the preparation thereof; and provided, further, that
the Company shall not be liable to RHI or any Person who
participates as an underwriter in the offering or sale of
Registrable Securities or any other person, if any, who controls
RHI or such underwriter within the meaning of the Securities Act,
in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense
arises out of such Person's failure to send or give a copy of the
final prospectus, as the same may be then supplemented or
amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to
the written confirmation of the sale of Registrable Securities to
such Person if such statement or omission was corrected in such
final prospectus so long as such final prospectus, and any
amendments or supplements thereto, have been furnished to such
underwriter or RHI, as applicable. Such indemnity shall remain
in full force and effect regardless of any investigation made by
or on behalf of RHI or any such director, officer, partner, agent
or affiliate or controlling Person and shall survive the transfer
of such securities by RHI.
2.7.2 Indemnification by RHI. If any Registrable Securities are
included in any registration statement, each of TFC and RHI will,
and each hereby does, jointly and severally indemnify and hold
harmless (in the same manner and to the same extent as set forth
in Section 2.7.1 above) the Company, and each director of the
Company, each officer of the Company and each other Person, if
any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the
Company through an instrument duly executed by TFC or RHI
specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement.
2.7.3 Notice of Claims, Etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding
paragraphs of this Section 2.7, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying
party, immediately give written notice to the latter of the
commencement of such action; provided, however, that the failure
of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under the
preceding paragraphs of this Section 2.7, except to the extent
that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in
and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof
other than reasonable costs related to the indemnified party's
cooperation with the indemnifying party, unless in such
indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties arises in
respect of such claim after the assumption of the defense
thereof. No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably
withheld. No indemnifying party shall, without the consent of
the indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to
such claim or litigation.
2.7.4 Contribution. If the indemnification provided for in this
Section 2.7 shall for any reason be held by a court to be
unavailable to an indemnified party under paragraph 2.7.1 or
2.7.2 hereof in respect of any loss, claim, damage or liability,
or any action in respect thereof, then, in lieu of the amount
paid or payable under paragraph 2.7.1 or 2.7.2 hereof, the
indemnified party and the indemnifying party under paragraph
2.7.1 or 2.7.2 hereof shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the
relative fault of the Company on one hand and TFC and RHI on the
other which resulted in such loss, claim, damage or liability, or
action in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other
relevant equitable considerations or (ii) if the allocation
provided by paragraph (i) above is not permitted by applicable
law, in such proportion as shall be appropriate to reflect the
relative benefits received by the Company on one hand and TFC and
RHI on the other. No Person guilty of fraudulent
misrepresentation (within the meaning of the Securities Act)
shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. In addition, no
Person shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or claim, effected
without such Person's consent, which consent shall not be
unreasonably withheld.
2.7.5 Other Indemnification. Indemnification and contribution
similar to that specified in the preceding paragraphs of this
Section 2.7 (with appropriate modifications) shall be given by
the Company and TFC and RHI with respect to any required
registration or other qualification of securities under any
federal or state law or regulation of any governmental authority
other than the Securities Act.
2.7.6 Indemnification Payments. The indemnification and
contribution required by this Section 2.7 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
2.7.7 Disclosure of Results of Investigation. Each of TFC and
RHI covenants and agrees that if in the course of its
investigation of the Company anything comes to its attention that
indicates there is or there could become a breach of the
Company's representations and warranties, covenants and
agreements contained in any underwriting agreement, TFC and RHI
shall promptly notify the Company of such matter. Failure to so
notify the Company shall cause TFC and RHI to lose its right to
indemnification under Section 2.7 with respect to such discovered
matter.
3. Rule 144. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public
without registration, after such time as a public market exists
for its Common Stock, the Company agrees to:
(a) use its best efforts to facilitate the sale of the
Registrable Securities to the public, without registration under
the Securities Act, pursuant to Rule 144 promulgated under the
Securities Act, provided that this shall not require the Company
to file reports under the Securities Act and the Exchange Act at
any time prior to the Company's being otherwise required to file
such reports;
(b) make and keep public information available, as those terms
are understood and defined in Rule 144 promulgated under the
Securities Act at all times after ninety (90) days after the
effective date of the first registration under the Securities Act
filed by the Company for an offering of its securities to the
general public;
(c) use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and
(d) deliver a written statement as to whether it has complied
with such requirements of this Section, to RHI upon RHI's
request.
4. Legend. Any certificate evidencing Registrable Securities
shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A REGISTRATION RIGHTS AGREEMENT, DATED AS OF _ _ _ _ _ _
_ _ BY AND BETWEEN RHI HOLDINGS, INC. AND SHARED
TECHNOLOGIES INC. A COPY OF SUCH AGREEMENT SHALL BE
FURNISHED WITHOUT CHARGE BY SHARED TECHNOLOGIES INC. TO THE
HOLDER HEREOF UPON SUCH HOLDER'S WRITTEN REQUEST."
5. Modification; Waivers. This Agreement may be modified or
amended only with the written consent of each party hereto. No
party hereto shall be released from its obligations hereunder
without the written consent of the other party. The observance
of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but
any such waiver shall be effective only if in a writing signed by
the party against which such waiver is to be asserted. Except as
otherwise specifically provided herein, no delay on the part of
any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party hereto of any right, power or privilege
hereunder operate as a waiver of any other right, power or
privilege hereunder nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege hereunder.
6. Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
7. Severability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement or the
application of such provision to other Persons or circumstances
shall not be affected thereby; provided, that the parties shall
negotiate in good faith with respect to an equitable modification
of the provision or application thereof held to be invalid.
8. Notices. (a) Any notice or communication to any party hereto
shall be duly given if in writing and delivered in person or
mailed by first class mail (registered or certified, return
receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to such other party's address.
If to RHI Holdings, Inc.:
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Facsimile No.: (703) 888-5674
Attention: Donald Miller, Esq.
If to Shared Technologies Inc.:
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Facsimile No.: (203) 258-2401
Attention: Legal Department
(b) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail,
if mailed; when receipt acknowledged, if sent by facsimile; and
the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
9. Successors and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon RHI and Shared Technologies
and their respective successors and assigns. In the event that
RHI assigns its rights to a holder or holders of only a portion
of the Registrable Securities, then all references to RHI herein
shall also be deemed to refer to such other holder or holders but
in such event RHI will have the sole right to make decisions by
and give notices for such holder or holders under this Agreement;
provided, that if RHI no longer owns any Registrable Securities,
then all decisions and notices hereunder must be made by the
holders of not less than a majority of the Registrable Securities
outstanding.
10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which for all purposes shall be deemed to
be an original and all of which together shall constitute the
same agreement.
11. Headings. The Section headings in this Agreement are for
convenience of reference only, and shall not be deemed to alter
or affect the meaning or interpretation of any provisions hereof.
12. Construction. This Agreement shall be governed, construed
and enforced in accordance with the laws of the state of New
York, without regard to its principles of conflict of laws.
13. No Inconsistent Agreements. The Company has not previously,
and will not hereafter, enter into any agreement with respect to
its securities which is inconsistent with the rights granted to
RHI in this Agreement; except that holders of piggy-back
registration rights with respect to 9,458 shares of Common Stock
have such registration rights without allowance for cut-back.
14. Recapitalizations, etc. In the event that any capital stock
or other securities are issued in respect of, in exchange for, or
in substitution of, any Registrable Securities by reason of any
reorganization, recapitalization, reclassification, merger,
consolidation, spin-off, partial or complete liquidation, stock
dividend, split-up, sale of assets, distribution to stockholders
or combination of the shares of Registrable Securities or any
other change in the Company's capital structure, appropriate
adjustments shall be made in this Agreement so as to fairly and
equitably preserve, as far as practicable, the original rights
and obligations of the parties hereto under this Agreement.
15. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement by a party hereto, or
where any provision hereof is validly asserted as a defense by
such party, such party, if successful, shall be entitled to
recover reasonably attorneys' fees in addition to any other
available remedy.
16. Specific Performance. The parties hereto agree that the
Registrable Securities of the Company cannot be purchased or sold
in the open market and that, for these reasons, among others, the
parties will be irreparably damaged in the event that this
Agreement is not specifically enforceable. Accordingly, in the
event of any controversy concerning the Registrable Securities
which is the subject of this Agreement, or any right or
obligation to register such securities, such right or obligation
shall be enforceable in a court of equity by specific
performance. The rights granted in this Section 16 shall be
cumulative and not exclusive, and shall be in addition to any and
all other rights which the parties hereto may have hereunder, at
law or in equity.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
SHARED TECHNOLOGIES INC.
By:_ _ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
RHI HOLDINGS, INC.
By:_ _ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
THE FAIRCHILD CORPORATION
By:_ _ _ _ _ _ _ _ _ _ _ _ _ _
Name:
Title:
EXHIBIT E
TAX SHARING AGREEMENT
THIS AGREEMENT is made this _ _ _ day of November, 1995 between
RHI Holdings, Inc., a Delaware corporation ("RHI") and Shared
Technologies Inc., a Delaware corporation ("Shared Tech-
nologies").
WHEREAS, RHI currently owns all of the outstanding common stock
of Fairchild Industries, Inc., a Delaware corporation ("FII"),
and FII owns all of the outstanding common stock of VSI
Corporation, a Delaware corporation ("VSI");
WHEREAS, the operations of RHI, FII and VSI are presently
included in the consolidated Federal income tax return filed for
an affiliated group (within the meaning of S 1504 of the Internal
Revenue Code of 1986, as amended ("Code")) (the "TFC Group") of
which The Fairchild Corporation, a Delaware corporation ("TFC")
is the common parent;
WHEREAS, TFC, RHI, FII and Shared Technologies have signed an
Agreement and Plan of Merger on November _ _ _, 1995 (the "Merger
Agreement") under which, inter alia, FII will merge into Shared
Technologies;
WHEREAS, RHI and Shared Technologies desire to enter into an
agreement providing for payments between RHI and Shared
Technologies with respect to certain tax benefits and for indem-
nification with respect to certain tax liabilities;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties
hereto, intending to be legally bound, agree as follows:
1. Indemnity
A. Definition
This agreement applies to all Federal, State, local, and foreign
taxes (including income, franchise, withholding, and alternative
minimum taxes), and also includes all interest, penalties and
additions imposed with respect to such amounts (all such taxes
and other amounts are collectively, "Taxes").
B. Tax Indemnification
(1) RHI shall pay and indemnify and shall hold Shared
Technologies harmless from and against (i) all Taxes and claims
for Taxes paid or payable by FII or VSI with respect to any
taxable year or period of FII or VSI or predecessor entities of
either of them which ends on or before the date of the merger of
FII into Shared Technologies (the "Deconsolidation Date"),
including any tax liability which arises because FII and VSI
cease on the Deconsolidation Date to be members of the TFC Group
or of any other group filing a combined or consolidated tax
return for foreign, state, or local tax purposes, and (ii) all
taxes and claims for Taxes paid or payable by FII or VSI by
virtue of Section 1.1502-6 of the Treasury Regulations, or by
virtue of any similar provision of foreign, state, or local law
by reason that FII and VSI were members of a group which files or
has filed a consolidated federal income tax return, or a combined
or consolidated foreign, state, or local tax return. For purpos-
es of this Agreement, any taxable year beginning before and
ending after the Deconsolidation Date shall be treated as ending
on the Deconsolidation Date.
For purposes of this Agreement any income or deduction arising
from transactions characterized as deferred intercompany
transactions for Federal income tax purposes which occurred
before the Deconsolidation Date shall be deemed attributable to a
period ending on or before the Deconsolidation Date (the "Pre-
Deconsolidation Period").
(2) Shared Technologies shall pay RHI and indemnify RHI and shall
hold RHI harmless to the extent of any reduction in tax payable
by Shared Technologies for any taxable year beginning on or after
the Deconsolidation Date (a "Post-Deconsolidation Period") as a
result of a final disallowance of any loss, deduction, or credit
claimed by FII or VSI as members of the TFC Group in a Pre-
Deconsolidation Period and the allowance of such deduction or
credit in a Post-Deconsolidation Period (or as a result of a
final determination that additional income is to be recognized in
a Pre-Deconsolidation Period in lieu of income which had been
recognized in a Post-Deconsolidation Period).
(3) Any reduction in tax payable by Shared Technologies for a
Post-Deconsolidation Period as a result of utilization of net
operating loss carryforwards or tax credit carryforwards of FII
and VSI originating in a Pre-Deconsolidation Period shall result
in payment by Shared Technologies to RHI of 50% of the reduction
in actual tax otherwise payable by Shared Technologies. All
carryforwards and carrybacks shall be utilized in the order
provided by the Code and Treasury Regulations thereunder.
Notwithstanding any other representation and warranty or other
provision in the Merger agreement, RHI makes no representation
and warranty regarding (i) the amount of any net operating loss
and tax credits of the TFC Group allocable to FII or VSI on the
Effective Date of the Merger of FII into Shared Technologies;
(ii) the amount of any net operating loss and tax credit of FII
and VSI that will be utilized by other members of the TFC Group
before the Deconsolidation Date; and (iii) the amount of any
reduction in tax payable by Shared Technologies due to utiliza-
tion of any net operating loss and tax credit of the TFC Group
allocable to FII and VSI.
(4) Any reduction in tax payable by the TFC Group as a result of
the allowance of any additional loss, deduction, or credit
claimed by the TFC Group on a claim for refund or amended return
filed after the Deconsolidation Date for a Pre-Deconsolidation
Period shall result in payment by RHI to Shared Technologies of
an amount equal to the increase in actual tax otherwise payable
by Shared Technologies caused by the allowance of the loss,
deduction or credit claimed by the TFC Group. Said payment shall
be made at the time the increase in tax is paid by Shared
Technologies.
(5) Any reduction in tax payable by the TFC Group as a result of
utilization of net operating losses or tax credits of FII or VSI
that originated in a Post-Deconsolidation Period shall result in
payment by RHI to Shared Technologies of an amount equal to the
increase in actual tax otherwise payable by Shared Technologies
caused by the TFC Group's use of such net operating loss or
credit. RHI shall pay such amount at the time such increase is
calculable. The TFC Group is not required to take any action to
reduce its taxes to the extent such reduction causes a permanent
tax detriment to the TFC Group.
(6) Except as provided in Paragraph 1(B)(5), all tax refunds
received by FII or VSI for any periods prior to the
Deconsolidation Date received by Shared Technologies shall be
promptly paid by Shared Technologies to RHI.
(7) Shared Technologies is responsible for, and will not be
indemnified for, any taxes arising out of an election under S 338
of the Code and Shared Technologies will not make any election
under S 338 of the Code regarding the transactions contemplated
by the Merger Agreement. Shared Technologies and RHI agree to
report the merger of FII into Shared Technologies on their
Federal and state income tax returns as a statutory merger under
S 368(a)(1)(A) of the Code. Shared Technologies and RHI agree to
report all dividends declared and paid by Shared Technologies to
RHI with respect to Convertible Preferred Stock on their Federal
and State Income Tax Returns as dividends.
(8) If any item resulting in an indemnification hereunder is
disallowed by a taxing authority and all remedies discussed in
paragraph 2 below are exhausted, then the indemnitee shall
promptly return the related indemnification amounts to the
indemnitor.
(9) Fifty Percent (50%) of any reduction in tax payable by Shared
Technologies resulting from premiums, interest and deferred
financing fees associated with retirement of $125,000,000 of
FII's 12.25% Senior Notes due 1999 and existing bank indebtedness
of VSI in the Post-Deconsolidation Period shall be paid by Shared
Technologies to RHI.
C. Time for Indemnification
Unless otherwise specified herein, payments required under
paragraph 1(B) above shall be made not later than the date or
dates on which the estimated payments or returns are filed, or,
if later, the date of any required notice or exhaustion of
remedies, as applicable.
D. Returns, Payments and Refunds
(1) The TFC Group shall include the results of FII and VSI
operations for the Pre-Deconsolidation Period in its consolidated
Federal income tax return and any combined state tax return or
report for the Pre-Deconsolidation Period. The TFC Group and RHI
shall file or cause to be filed, when due, all required federal,
state, foreign, local, and other returns, reports and
declarations involving taxes for (either mandatorily or at the
discretion of TFC and on a consolidated, separate or any other
basis) the operations and assets of FII and VSI for all taxable
periods ending or deemed to end on or before the Deconsolidation
Date. Shared Technologies shall file or cause to be filed, when
due, all required, Federal, state, foreign, local, and other
returns, reports and declarations involving taxes for the
operations and assets of FII and VSI for any taxable period
beginning on or after the Deconsolidation Date. RHI and Shared
Technologies shall cooperate in filing the returns, reports and
declarations for FII and VSI described in this subparagraph (1)
and shall make relevant records available to each other and to
FII and VSI at no cost. Each return, report or declaration filed
for a Pre-Deconsolidation Period pursuant to this subparagraph
(1) shall be prepared in a manner consistent with the accounting
principles and methods, elections and practices employed by the
TFC Group in preparing the same or similar returns, reports and
declarations for taxable periods prior to the Deconsolidation
Date.
(2) RHI and Shared Technologies shall each pay or cause to be
paid to the appropriate authorities all amounts payable with
respect to any returns, reports or declarations which such party
is required to file or cause to be filed pursuant to the
preceding subparagraph (1).
2. Tax Contests
A. If a written claim is made by any taxing authority that, if
successful, could result in the indemnification of Shared
Technologies by RHI hereunder (an "Indemnifiable Claim"), Shared
Technologies shall promptly notify RHI in writing of such fact.
In the event that such written notice is not given within thirty
(30) days of the receipt of such claim, the obligation to
indemnify with respect to such claim shall terminate if RHI is
thereafter unable, directly or indirectly, to contest such claim,
pursue other administrative remedies, or sue for refund upon
payment of the amount which is the subject of the claim.
B. Shared Technologies shall take, and shall cause FII and VSI to
take, any and all actions in connection with any audit or similar
proceeding relating to a Pre-Deconsolidation Period, or in
connection with contesting any Indemnifiable Claim, as RHI shall
reasonably request from time to time. RHI shall control all
audits or similar proceedings relating to a Pre-Deconsolidation
Period and all proceedings in connection with contesting any
Indemnifiable Claim and shall be entitled to utilize counsel of
its own choosing in connection therewith; provided that, where
the results of any such contest would have a material adverse
impact on the ability of Shared Technologies, FII or VSI to
obtain the benefit of any item of deduction, loss or credit (or
require Shared Technologies, FII or VSI to recognize additional
income) in any Post-Deconsolidation Period, RHI shall reasonably
consult with Shared Technologies in connection with such contest.
In connection with any such proceedings, RHI, in its sole
discretion, may: pursue or forego any administrative appeal,
proceedings, hearings and conferences with the relevant taxing
authority; pay the tax claims and sue for a refund (where
applicable law permits such refund suits) or contest the claim in
any other legally permissible manner; prosecute such contest to a
determination in a court of initial jurisdiction and in any
applicable appellate courts; or take any other action it deems
appropriate. RHI shall reimburse Shared Technologies for all
reasonable out-of-pocket costs (including fees and disbursements
of outside counsel and accountants) incurred in complying with
any request by RHI pursuant to the first sentence of this sub-
paragraph (B). If costs are incurred in connection with a
dispute involving both Pre-Deconsolidation Period and Post-
Deconsolidation Periods, RHI and Shared Technologies shall agree
on a reasonable allocation of such costs.
C. Shared Technologies shall not settle or otherwise compromise
any Indemnifiable Claim of FII and VSI without RHI's prior
written consent; provided, however, that, nothing contained
herein shall require Shared Technologies to contest a claim which
it would otherwise be required to contest pursuant hereto if
Shared Technologies shall reasonably consult with RHI with
respect to such claim and shall waive payment by RHI of any
amount that might otherwise be payable by RHI hereunder by way of
indemnity in respect of such or any similar claim.
D. The payments for Taxes between RHI and Shared Technologies
under their agreement are not subject to the $4 Million Basket in
Sections 11.2 and 11.3 of the Merger Agreement.
3. Interest
If any amount payable by RHI to Shared Technologies or by Shared
Technologies to RHI pursuant this Agreement is not paid at the
time set forth herein, the amount shall bear interest, from the
date of such event, at a rate equal to rate of interest as
described in S 6621(a) of the Code and computed thereunder from
time to time.
4. Entire Agreement: Prior Tax Agreements
This Tax Agreement constitutes the entire agreement of the
parties concerning the subject matter hereof and supersedes and
terminates all prior tax agreements among RHI, FII and VSI
effective on the day immediately preceding the merger of FII into
Shared Technologies.
5. Expenses
Unless otherwise expressly provided in this Agreement, each party
shall bear any and all expenses that arise from its respective
obligations under this Agreement.
6. Amendment
This Agreement may not be amended except by an agreement in
writing signed by the parties hereto.
7. Notices
All notices and other communications hereunder shall be in
writing and shall be delivered by hand or mailed by registered or
certified mail (return receipt requested) to the parties at the
following addresses (or at such other addresses for the party as
shall be specified by like notice) and shall be deemed given on
the date on which such notice is received:
If To: RHI Holdings, Inc.
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Facsimile No.: (703) 888-5674
Attention: Donald Miller, Esq.
With a copy to: James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
If To: Shared Technologies Inc.
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Facsimile No.: (203) 258-2401
Attention: Legal Department
With a copy to: Walter D. Wekstein, Esq.
Harold J. Carroll, Esq.
Gadsby & Hannah
125 Summer Street
Boston, MA 02110
Facsimile No.: (617) 345-7050
8. Successors or Assigns
This Agreement shall constitute a direct obligation of RHI and
Shared Technologies and shall be binding upon, and shall inure to
the benefit of, the successors and assigns of the corporations
bound hereby.
9. Titles and Headings
Titles and headings to sections herein are included for the
convenience of reference only and are not intended to be a part,
or to affect the meaning or interpretation, of this Agreement.
10. Legal Enforceability
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforce-
ability without invalidating the remaining provisions hereof.
Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in
any other jurisdiction. Without prejudice to any rights or
remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy
for any breach of the provisions of this Agreement and agrees
that the obligations of the parties hereunder shall be specifi-
cally enforceable.
11. Governing Law
This Agreement shall be governed by the laws of the State of
Delaware, without regard to the principles of conflict of laws
thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first set forth above.
SHARED TECHNOLOGIES INC.
By:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Title
RHI HOLDINGS, INC.
By: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Title
Schedule 3.1(a)
SUMMARY OF TERMS OF 6% CUMULATIVE
CONVERTIBLE PREFERRED STOCK
<TABLE>
<CAPTION>
<C> <S>
Issuer Shared Technologies Inc. (the "Company").
Issue $25 million of cumulative convertible
preferred stock convertible into the common
stock of the Company (the "Convertible
Preferred Stock"). The Convertible
Preferred Stock will be issued in such
nations as is requested by RHI.
denomi
Preferred Stock Payable quarterly at $[ ] per share (6%
Dividends per annum) in cash. If for any reason a
dividend is not paid in cash when scheduled,
the amount of such dividend shall accrue
interest at a rate of 12% per annum until
paid.
Liquidation $25,000,000 in the aggregate plus an
Preference additional amount (the "Additional Amount")
equal to the total amount of dividends the
holder of the Convertible Preferred Stock
would have received if dividends were paid
quarterly in cash at the rate of 10% per
annum for the life of the issue minus the
total amount of cash dividends actually
paid.
Conversion Each share of Convertible Preferred Stock is
convertible at anytime at the option of the
holder into such number of Common Shares as
is determined by dividing the liquidation
erence thereof by the con
pref version price
of $6.3750. The conversion price is subject
to adjustment upon occurrence of customary
adjustment events including, but not limited
to stock dividends, stock subdi sions and
vi
reclassification or combinations.
Optional Redemption The Convertible Preferred Stock is not
redeemable at the option of the Company
during the first three years after issuance
but thereafter, upon 30 days' prior written
notice, is redeemable at the option of the
Company at a redemption price of 100% of
liquidation preference plus the Additional
Amount.
On the 12th anniversary date of original
Mandatory issuance of the Preferred Stock, the Company
Redemption shall redeem 100% of the outstanding shares
of Convertible Preferred Stock for
$25,000,000 plus the Additional Amount.
Ranking The Company is not permitted to issue
Preferred Stock ranking senior to the
Convertible Preferred Stock as to rights on
liquidation and as to payment of dividends
without the approval of the holders of at
least two-thirds of the issued and
outstanding shares of the Convertible
Preferred Stock. The Convertible Preferred
Stock will rank junior to the Series C
Preferred Stock of the Company and on a
parity with each of the Series D and
F c
Series lasses of preferred stock and the
Special Preferred Stock of the Company
with regard to the right to receive
dividends and amounts distributable upon
tion, disso
liquida lution or winding up of
the Company.
Voting Rights In the event that the Company fails to make
four consecutive dividend payments on the
vertible Preferred Stock, RHI will be
Con
entitled to appoint one director to the
Board of Directors of the Company in
addition to other directors to which RHI is
entitled (with such additional directors(s)
to be added in lieu of existing non-RHI
directors); and if eight consecutive
dividend payments fail to be made, RHI will
tled to elect two directors in
be enti
addition to other directors to which RHI is
entitled (with such additional director(s)
to be added in lieu of existing non-RHI di-
rectors). The Preferred Stock has no other
voting rights, except as required by law.
Certain No dividends or distributions on junior or
Restrictions parity equity securities shall be permitted
if the Company has failed to pay in full all
accrued dividends or failed to satisfy its
mandatory redemption obligation at maturity
with respect to the Convertible Preferred
Stock. No redemptions or repurchases of
junior or parity equity securities (other
than the Special Preferred Stock) shall be
permitted while the Convertible Preferred
Stock is in arrears or in default. The
Company will not be permitted to create or
permit to exist any contractual restriction
which would restrict in any way the Compa-
ny's ability to make required payments on
the Convertible Preferred Stock or the
Series C Preferred Stock of the Company.
</TABLE>
Schedule 3.1(b)
SUMMARY OF TERMS OF
SPECIAL PREFERRED STOCK
<TABLE>
<CAPTION>
<C> <S>
Issuer Shared Technologies Inc. (the
"Company").
Issue Special Preferred Stock of the
Company (the "Special Preferred
Stock"). The Special Preferred
Stock will be issued in such
denominations as is requested
by RHI.
Preferred Stock Dividends None.
Liquidation Preference $20,000,000 initially in the
aggregate increasing by
$1,000,000 each year after 1996
to a maximum liquidation pref-
erence of $30,000,000 in 2007.
Optional Redemption Redeemable at the option of the
Company at any time upon
30 days' prior written notice,
at a redemption price of 100%
of liquidation preference.
Mandatory Redemption All outstanding Special Pre-
ferred Stock will be mandato-
rily redeemable in its entirety
at 100% of liquidation prefer-
ence upon a Change of Control
(to be defined) of the Company
and, in any event, in 2007. In
addition, on March 31 of each
year, commencing with March 31,
1997, the Company shall manda-
torily redeem at 100% of liqui-
dation preference an amount
(the "Required Redemption
Amount") of Special Preferred
Stock equal to 50% of the
amount, if any, by which the
Consolidated EBITDA of Shared
Technologies and its subsidiar-
ies exceeds the Threshold
Amount for the immediately
preceding year ended on Decem-
ber 31. To the extent the Re-
quired Redemption Amount ex-
ceeds 50% of the sum (the "In-
come Limitation") of (i) the
consolidated net income of
Shared Technologies and its
subsidiaries for the immedi-
ately preceding year ended on
December 31 (without deducting
therefrom any amounts on ac-
count of dividends paid or
payable on any preferred stock
or redemptions of any preferred
stock of the Company, including
the Convertible Preferred
Stock, Special Preferred Stock
and Series C, D and F classes
of preferred stock of the Com-
pany) plus (ii) amounts attrib-
utable to the amortization of
goodwill for such immediately
preceding year, such excess
amount shall be carried forward
and be considered a Required
Redemption Amount for the next
succeeding year and for each
year thereafter until paid.
The Threshold Amount for each
year shall be as follows:
Year Ended Threshold
December 31, Amount*
1996 $47.0 million
1997 53.0 million
1998 57.5 million
1999 60.5 million
2000 63.5 million
2001 66.5 million
2002 69.5 million
2003 72.5 million
2004 75.5 million
2005 78.5 million
2006 81.5 million
Ranking The Company is not permitted to
issue Preferred Stock ranking
senior to the Special Preferred
Stock as to rights on liquida-
tion and as to payment of divi-
dends without the approval of
the holders of at least
two-thirds of the issued and
outstanding shares of the Spe-
cial Preferred Stock. The
Special Preferred Stock will
rank junior to the Series C
Preferred Stock of the Company
and on a parity with each of
the Series D, and Series F
classes of preferred stock and
the Convertible Preferred Stock
of the Company with regard to
the right to receive dividends
and amounts distributable upon
liquidation, dissolution or
winding up of the Company.
Voting Rights The Special Preferred Stock has
no voting rights, except as
required by law.
Certain Restrictions No dividends, distributions,
redemptions or repurchases on
junior or parity equity securi-
ties shall be permitted if the
Company has failed to satisfy
its mandatory redemption obli-
gations with respect to the
Special Preferred Stock. The
Company will not be permitted
to create or permit to exist
any contracted restriction
which would restrict in any way
the Company's payment obliga-
tions with respect to the Spe-
cial Preferred Stock or the
Series C Preferred Stock of the
Company.
</TABLE>
* In the event that the Company or any subsidiary sells or
disposes of any material asset or business, the Threshold Amount
for each year thereafter shall be reduced by the amount of EBITDA
attributable to such asset or business for the four fiscal
quarters immediately preceding such sale or disposition.
Schedule 9.1
The steps comprising the Fairchild Recapitalization are as
follows:
1. Fairchild Industries, Inc., as it exists on the date of the
Merger Agreement ("FII"), will cause Fairchild Communications
Services Company, a Delaware partnership ("FCSC") to merge into
FII's wholly owned subsidiary, VSI Corporation ("VSI").
2. FII will then cause VSI to transfer all of VSI's assets and
liabilities (other than those of the former FCSC, but excluding
from those real estate owned by FCSC, and other than the Assumed
Indebtedness described below) to one or more wholly owned
subsidiaries.
3. FII (or Shared Technologies) will make a cash tender offer to
purchase all of the outstanding 12/% Senior Notes due 1999 (the
"12/% Notes") of FII and, in connection therewith, will obtain
such Noteholders' consent (representing at least 51% of the
outstanding principal amount of the 12/% Notes) to the transfer
by FII of all of the assets of FII (other than the stock of VSI)
to RHI and to amend the indenture under which the 12/% Notes were
issued to remove all covenants which can be amended or deleted by
majority vote. The aggregate amount needed to be paid to
consummate such tender offer and consent solicitation is herein
called the "Note Purchase Amount".
4. Prior to the Effective Time, FII will transfer (in one or more
transactions) all of its assets to RHI, and RHI will assume all
liabilities, except for (i) the stock of VSI (which will only
have in it the assets and liabilities of the former FCSC),
(ii) the 12/% Senior Notes, (iii) the Series A and C Preferred
Stock and (iv) an amount of bank and other indebtedness (the
"Assumed Indebtedness") equal to $223,500,000 minus (x) the Note
Purchase Amount and (y) $44,237,745 (the aggregate redemption
price of the Series A and C Preferred Stock) plus accrued
dividends thereon through the Effective Time, and RHI will
contribute all of the outstanding Series B Preferred Stock to
FII.
5. Concurrently with the consummation of the Merger, the
Surviving Corporation will (i) purchase the 12/% Notes tendered
for the Note Purchase Amount, (ii) repay the Assumed Indebtedness
in full and (iii) deposit in escrow the funds necessary to pay
the holders of the Series A and Series C Preferred Stock the
amounts owed to them under the Merger Agreement.
Schedule 9.2(d)
TAX RULINGS REQUESTED BY FAIRCHILD
Fairchild requests the following rulings be issued regarding the
mergers of the three corporate subsidiaries of VSI into VSI:
1. The mergers will qualify as a complete liquidation of each of
the three corporate subsidiaries (FCSII, FCSI, and FCNMC, which
are the partners in FCSC) under S 332(a) of the Internal Revenue
Code of 1986, as amended (the "Code");
2. No gain or loss will be recognized by VSI on its receipt of
the assets from each of the three corporate subsidiaries under
S 332(a);
3. No gain or loss will be recognized by the three corporate
subsidiaries on the distribution of their respective assets to
VSI in complete liquidation under S 336 and S 337(a).
Fairchild requests the following rulings regarding the formation
of Subsidiary 1, the distribution of the stock of Subsidiary 1 by
VSI to FII, and the distribution of the stock of Subsidiary 1 by
FII to RHI:
4. VSI will recognize no gain or loss on its transfer of assets
(except the Telecommunications business) to Subsidiary 1 in
exchange for common stock of Subsidiary 1 and assumption of
liabilities by Subsidiary 1 (SS 351 and 357(a) of the Code and
Rev. Rul. 77-449, 1977-2 C.B. 110).
VSI's basis in the stock of Subsidiary 1 received in the
transaction will equal the basis of the property transferred in
exchange therefor, reduced by the sum of the liabilities assumed
by Subsidiary 1, or to which assets transferred are taken subject
(S 358(a) and (d)).
5. Subsidiary 1 will recognize no gain or loss on its transfer of
assets to Subsidiaries 2, 3, 4, 5, 6 and 7 in exchange for the
common stock of Subsidiaries 2, 3, 4, 5, 6 and 7 and the
assumption of liabilities by Subsidiaries 2 to 7 (SS 351 and
357(a) and Rev. Rul. 77-449).
Subsidiary 1's basis in the stock of Subsidiaries 2 to 7 received
in the transaction will equal the basis of the property
transferred to Subsidiaries 2 to 7, respectively, in exchange
therefor, reduced by the sum of the liabilities assumed by
Subsidiaries 2 to 7 or to which assets transferred are taken
subject (S 358(a) and (d)).
6. No income, gain or loss will be recognized by Subsidiary 1
upon the receipt of the assets of Fastener and D-M-E businesses,
stock of FDC, plus real estate held for sale in exchange for
stock of Subsidiary 1 and Subsidiary 1's assumption of
liabilities (S 1032(a)).
7. The basis of the assets received by Subsidiary 1 will be the
same as the basis of such assets in the hands of VSI immediately
prior to the Distribution (S 362(b)).
8. No income, gain or loss will be recognized by FII as the
Shareholder of VSI on its receipt of the Subsidiary 1 common
stock pursuant to the Distribution (S 355(a)).
9. No income, gain or loss will be recognized by RHI as the
Shareholder of FII on its receipt of Subsidiary 1 common stock
pursuant to the Distribution (S 355(a)).
10. No income, gain or loss will be recognized by VSI and FII
upon the distributions to their respective Shareholders of all of
the Subsidiary 1's common stock pursuant to the Distribution
(S 355(c)).
Schedule 9.2(e)
The Restated Certificate of Incorporation of Shared Technologies
(the "Certificate") shall be amended in the following manner:
(a) Article Four of the Certificate shall be amended to (i)
increase the authorized common shares of the Corporation, $.004
par value, to 50,000,000 and (ii) to increase the authorized
shares of preferred stock of the Corporation, $.01 par value, to
25,000,000; and
(b) The Certificate shall be amended or a certificate of
designation shall be filed to reflect the terms of the
Convertible Preferred Stock and the [Special] Preferred Stock in
form and substance satisfactory to RHI and consistent with
Schedules 3.1 (c) and (b) hereof; and
The Amended and Restated Bylaws of the Corporation (the "Bylaws")
shall be amended in the following manner:
(a) Article II, Section 11 of the Bylaws is deleted in its
entirety and is replaced by the following paragraph:
"No action requiring shareholder approval may be taken without a
meeting of the shareholders entitled to vote thereon."
(b) Article III, Section 1 of the Bylaws shall be amended to
include the following sentences at the end of such section:
"So long as The Fairchild Corporation and its affiliates
(collectively, "TFC") owns 25% or more of the common stock of the
Corporation that TFC owned on the [Date of Merger] TFC shall have
the irrevocable right to appoint four (4) members of the Board of
Directors; provided, that so long as Mel D. Borer is President
and a Director of the Corporation, TFC shall only be entitled to
appoint three (3) directors."
"The Board of Directors may not grant any options for, or any
other rights to acquire, common stock of the Corporation, except
for options issued pursuant to a plan approved by the
shareholders or in a transaction with non-affiliates where such
party pays cash for such option or right, unless such transaction
is approved by a majority of the shareholders."
(c) Article III, Section 10 of the Bylaws shall be deleted in its
entirety and replaced with the following paragraph:
"Executive Committee. The Board of Directors of the Corporation
shall have an executive committee consisting of the President, a
director appointed by TFC as long as TFC owns at least 25% of the
common stock of the Corporation that TFC owned on the [Date of
Merger], and a third director appointed by the Board of Directors
of the Corporation. All actions taken by the Executive Committee
may only be taken pursuant to a unanimous vote by the members
thereof."
(d) Article III, Sections 11, 12 and 13 shall be amended to
include the following sentence as the second sentence of each
such section:
"As long as TFC owns at least 25% of the common stock of the
Corporation, TFC will be entitled to appoint one director to such
committee."
(e) Article IV, Section 5 shall be amended to include the
following sentence at the end of such section:
"The Corporation shall have a Vice Chairman of the Board of
Directors who shall have such duties as are designated by the
Board of Directors."
(f) Article IV, Section 6 shall be deleted in its entirety and
replaced with the following paragraph:
"Executive Officers. The Chairman of the Board of the Corporation
shall also be the Chief Executive Officer of the Corporation and
shall be the senior executive of the Corporation and shall have
overall supervision of the affairs of the Corporation. The
President of the Corporation shall also be the Chief Operating
Officer of the Company and he shall be responsible for the day-
to-day business operations of the Corporation under the direction
of the Chief Executive Officer. Each of the Chief Executive
Officer and the President shall see that all orders and
resolutions of the Board of Directors of the Corporation are
carried into effect, subject, however, to the right of the Board
of Directors to delegate any specific powers, except as may be
exclusively conferred on the President by law, to the Chairman or
any other officer of the Corporation. Each of the Chief
Executive Officer and the President may execute bonds, mortgages,
and other contracts requiring a signature under the seal of the
Corporation.
(g) Article VIII, Section 1 shall be deleted in its entirety and
replaced with the following paragraph:
"By Directors or Shareholders. The bylaws of the Corporation may
be altered, amended or repealed at any validly called and
convened meeting of the shareholders by the affirmative vote of
the holders of a majority of the voting power of shares entitled
to vote thereon represented at such meeting in person or by proxy
and at any validly called and convened meeting of the board of
directors by the affirmative vote of at least a majority of the
directors (unless such alteration, amendment or repeal in any way
adversely affects the rights granted to TFC hereunder or in
Article II, Section 11, Article III, Section 10 or Article IV,
Section 6 of these bylaws, in which event a vote of 80% of the
directors shall be required); provided, however, that the notice
of such meeting shall state that such alteration, amendment or
repeal will be proposed."
IRREVOCABLE PROXY
November 9, 1995
RHI Holdings, Inc.
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Gentlemen:
This irrevocable proxy is being delivered to RHI Holdings, Inc.
("RHI") by the undersigned in connection with, and to induce RHI
to enter into, the Agreement and Plan of Merger by and among
Fairchild Industries, Inc. ("Fairchild"), RHI, The Fairchild
Corporation, and Shared Technologies Inc. ("Shared
Technologies"), dated as of November 9, 1995 (the "Merger Agree-
ment"), a copy of which has been received by the undersigned.
The undersigned hereby represents and warrants to, and covenants
and agrees with, RHI as follows:
(a) The undersigned is the beneficial and record holder of shares
(the "Shares") of Common Stock, $.004 par value per share (the
"Common Stock"), of Shared Technologies representing
approximately 9.84% of the outstanding Common Stock of Shared
Technologies as of the date hereof.
(b) The undersigned will not assign, sell, transfer or otherwise
dispose of, including by way of pledge, hypothecation or grant of
any security interest, any of the Shares, or enter into any
direct or indirect agreement or arrangement to effect any of the
foregoing, on or before February 28, 1996, unless the Merger
Agreement is terminated prior to such date in accordance with its
terms.
(c) The undersigned hereby revokes any previous proxies and
appoints RHI as the proxy of the undersigned to vote all Shares
owned by the undersigned on the date hereof or hereafter
acquired, and to attend all meetings of the shareholders of
Shared Technologies and to represent and otherwise to act for the
undersigned in the same manner and with the same effect as if
done by the undersigned, with respect to the approval of the
Merger (as defined in the Merger Agreement) of Fairchild with
and into Shared Technologies, when the same is submitted to
shareholders of Shared Technologies for approval.
This proxy shall be deemed to be a proxy coupled with an interest
and is irrevocable and shall remain in effect until February 28,
1996.
The undersigned authorizes such proxy to substitute any other
person to act hereunder, to revoke any substitution and to file
this proxy and any substitution or revocation with the Secretary
of Shared Technologies.
Very truly yours,
-------------------------
Anthony D. Autorino
