SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 13, 1996
Shared Technologies Fairchild Inc.
(Exact name of registrant as specified in charter)
Delaware 0-17366 87-0424558
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 Great Meadow Road, Suite 104, Wethersfield, CT 06109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 258-2400
Shared Technologies Inc.
(Former name or former address, if changed since last report).
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Item 2. Acquisition or Disposition of Assets.
Pursuant to an Agreement and Plan of Merger dated as of November 9,
1995, as amended on February 2, 1996, February 24, 1996 and March 1, 1996
(collectively, the "Merger Agreement"), among Shared Technologies Fairchild Inc.
(formerly named Shared Technologies Inc. and referred to herein before the
Merger, as defined below, as "STI"), Fairchild Industries, Inc. ("FII"), RHI
Holdings, Inc. ("RHI") and The Fairchild Corporation ("TFC"), STI completed the
merger of FII with and into STI on March 13, 1996 (the "Merger") and the
surviving corporation was renamed Shared Technologies Fairchild Inc. ("STFI" or
the "Company").
The Merger combines the businesses of STI and FII, which will be
conducted by STFI and its subsidiaries following the Merger. These businesses
include (a) shared telecommunications services and (b) telecommunications
systems. The Acquired Business had combined pro forma sales of approximately
$204.0 million for the twelve month period ended September 30, 1995.
Upon consummation of the Merger, STFI issued to RHI (a) 6.0 million
shares of STFI's common stock, par value $.004 par value per share ("Common
Stock"), representing approximately 41.4% of the Common Stock after such
issuance, (b) Series G Cumulative Convertible Preferred Stock of STFI with an
initial liquidation preference of $25.0 million (the "Series G Preferred") and
(c) Series H Special Preferred Stock of STFI with an initial liquidation
preference of $20.0 million (the "Series H Preferred"). In connection with the
financing transactions described in the following paragraph, STFI entered into
an agreement with RHI under which the Series G Preferred and the Series H
Preferred will be exchanged for STFI's Series I Cumulative Convertible Preferred
Stock and Series J Special Preferred Stock, respectively, having terms
substantially identical to the Series G Preferred and Series H Preferred.
The Company's sources of capital to finance the foregoing acquisition
are (a) approximately $112.0 million in cash representing all of the proceeds
from the issuance and sale of $163,637,000 aggregate principal amount ($115
million aggregate initial accreted value) of STFI's 12 1/4% Senior Subordinated
Discount Notes Due March 1, 2006 and (b) approximately $125 million from
borrowings under a $145 million term and revolving credit facility with Credit
Suisse, Citicorp USA, Inc. and NationsBank.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
At the time of the filing of this Form 8-K, it is impracticable for the
Company to provide the pro forma financial statements required by Rule 3-05(b)
of Regulation S-X with respect to the Merger. Such required financial
information will be filed by amendment under cover of Form 8-K/A not later than
May 27, 1996, in accordance with Item 7, paragraph (a)(4) of Form 8-K.
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(b) PRO FORMA FINANCIAL INFORMATION.
At the time of the filing of this Form 8-K, it is impracticable for the
Company to provide the pro forma financial information required by Rule 11-01(c)
of Regulation S-X with respect to the Merger. Such required financial
information will be filed by amendment under cover of Form 8 not later than May
27, 1996, in accordance with Item 7, paragraph (b)(2) of Form 8-K.
(c) EXHIBITS.
1. Purchase Agreement dated March 8, 1996 among the Company, STI, the guarantors
named therein and CS First Boston Corporation and Citicorp Securities, Inc.
(filed herewith).
2.1 Agreement and Plan of Merger dated as of November 9, 1995 among Shared
Technologies Fairchild Inc. (formerly Shared Technologies Inc.)("STFI"),
Fairchild Industries, Inc. ("FII"), RHI Holdings, Inc. ("RHI") and The Fairchild
Corporation ("TFC") filed herewith).
2.2 First Amendment to Agreement and Plan of Merger dated as of February 2, 1996
among STFI, FII, RHI and TFC (filed herewith).
2.3 Second Amendment to Agreement and Plan of Merger dated as of February 24,
1996 among STFI, FII, RHI and TFC (filed herewith).
2.4 Third Amendment to Agreement and Plan of Merger dated as of March 1, 1996
among STFI, FII, RHI and TFC (filed herewith).
3(i).1 Restated Certificate of Incorporation of the Company (filed herewith).
3(i).2 Certificate of Merger of STI and FII (filed herewith).
3(i).3 Certificate of Incorporation of Shared Technologies Fairchild
Communications Corp. ("STFCC") (filed herewith).
3(ii).1 Amended and Restated By-laws of STI (filed herewith).
3(ii).2 Amendment to Amended and Restated By-laws of STI (filed herewith).
3(ii).3 By-laws of STFCC (filed herewith).
4.1 Certificate of Designations of Series G 6% Cumulative Convertible Preferred
Stock of STFI (filed herewith).
4.2 Certificate of Designations of Series H Special Preferred Stock of STFI
(filed herewith).
4.3 Certificate of Designations of Series I 6% Cumulative Convertible Preferred
Stock of STFI (filed herewith).
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4.4 Certificate of Designations of Series J Special Preferred Stock of STFI
(filed herewith).
4.5 Indenture dated as of March 1, 1996 among the Company, the guarantors named
therein and United States Trust Company of New York, as trustee (filed
herewith).
4.6 First Supplemental Indenture dated as of March 13, 1996 among the Company,
the guarantors named therein and United States Trust Company of New York, as
trustee (filed herewith).
10.1 Registration Rights Agreement dated March 8, 1996 among the Company, STFI,
the guarantors named therein and CS First Boston Corporation and Citicorp
Securities, Inc. (filed herewith).
10.2 Registration Rights Agreement dated March 13, 1996 among STI, RHI and TFC
(filed herewith).
10.3 Credit Agreement dated as of March 12, 1996 among the Company, STFI, Credit
Suisse, Citicorp USA, Inc., NationsBank and the other lenders named therein
(filed herewith).
10.4 Security Agreement dated as of March 13, 1996 among STFCC, STFI, each
subsidiary of STFCC named therein and Credit Suisse, as collateral agent for the
secured parties (filed herewith).
10.5 Pledge Agreement dated as of March 13, 1996 among STFCC, STFI, each
subsidiary of STFCC named therein and Credit Suisse, as collateral agent for the
secured parties (filed herewith).
10.6 Pledge Agreement dated as of March 13, 1996 among STFI, RHI and Gadsby &
Hannah, as interim pledge agent.
10.7 Parent Guarantee Agreement dated as of March 12, 1996 between STI and
Credit Suisse, as collateral agent for the secured parties (filed herewith).
10.8 Subsidiary Guarantee Agreement dated as of March 12, 1996 among the
subsidiaries of STFCC and STFI named therein and Credit Suisse, as collateral
agent for the secured parties (filed herewith).
10.9 Agreement to Exchange 6% Cumulative Convertible Preferred Stock and Special
Preferred Stock dated as of March 1, 1996 among STI, FII, RHI and TFC (filed
herewith).
10.10 Shareholders' Agreement dated as of March 13, 1996 among STI, RHI and
Anthony D. Autorino (filed herewith).
10.11 Tax Sharing Agreement dated as of March 13, 1996 between STI and RHI
(filed herewith).
10.12 Indemnification Agreement dated as of March 13, 1996 between STI and
Fairchild Holdings Corp. (filed herewith).
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10.13 Indemnification Agreement dated as of March 13, 1996 among STI, TFC and
RHI (filed herewith).
10.14 Indemnity, Subrogation and Contribution Agreement dated as of March 12,
1996 between STFCC and and Credit Suisse, as collateral agent for the secured
parties (filed herewith).
23.1 Consent of Rothstein, Kass & Company, P.C. (to be filed by amendment).
23.2 Consent of Arthur Andersen LLP (to be filed by amendment).
SHARED TECHNOLOGIES FAIRCHILD INC.
By /s/ Vincent DiVincenzo
--------------------------------------
Vincent DiVincenzo
Senior Vice President-Administration,
Chief Financial Officer and Treasurer
(Principal Accounting and Financial
Officer)
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<TABLE>
<CAPTION>
Exhibit Index
Exhibit No. Exhibit Description Page No.
<S> <C> <C>
1. Purchase Agreement dated March 8, 1996 among the Company, STI, the guarantors
named therein and CS First Boston Corporation and Citicorp Securities, Inc.
(filed herewith).
2.1 Agreement and Plan of Merger dated as of November 9, 1995 among Shared
Technologies Fairchild Inc. (formerly Shared Technologies Inc.)("STFI"),
Fairchild Industries, Inc. ("FII"), RHI Holdings, Inc. ("RHI") and The Fairchild
Corporation ("TFC") filed herewith).
2.2 First Amendment to Agreement and Plan of Merger dated as of February 2, 1996
among STFI, FII, RHI and TFC (filed herewith).
2.3 Second Amendment to Agreement and Plan of Merger dated as of February 24,
1996 among STFI, FII, RHI and TFC (filed herewith).
2.4 Third Amendment to Agreement and Plan of Merger dated as of March 1, 1996
among STFI, FII, RHI and TFC (filed herewith).
3(i).1 Restated Certificate of Incorporation of the Company (filed herewith).
3(i).2 Certificate of Merger of STI and FII (filed herewith).
3(i).3 Certificate of Incorporation of Shared Technologies Fairchild
Communications Corp. ("STFCC") (filed herewith).
3(ii).1 Amended and Restated By-laws of STI (filed herewith).
3(ii).2 Amendment to Amended and Restated By-laws of STI (filed herewith).
3(ii).3 By-laws of STFCC (filed herewith).
4.1 Certificate of Designations of Series G 6% Cumulative Convertible Preferred
Stock of STFI (filed herewith).
4.2 Certificate of Designations of Series H Special Preferred Stock of STFI
(filed herewith).
4.3 Certificate of Designations of Series I 6% Cumulative Convertible Preferred
Stock of STFI (filed herewith).
4.4 Certificate of Designations of Series J Special Preferred Stock of STFI
(filed herewith).
4.5 Indenture dated as of March 1, 1996 among the Company, the guarantors named
therein and United States Trust Company of New York, as trustee (filed
herewith).
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4.6 First Supplemental Indenture dated as of March 13, 1996 among the Company,
the guarantors named therein and United States Trust Company of New York, as
trustee (filed herewith).
10.1 Registration Rights Agreement dated March 8, 1996 among the Company, STFI,
the guarantors named therein and CS First Boston Corporation and Citicorp
Securities, Inc. (filed herewith).
10.2 Registration Rights Agreement dated March 13, 1996 among STI, RHI and TFC
(filed herewith).
10.3 Credit Agreement dated as of March 12, 1996 among the Company, STFI, Credit
Suisse, Citicorp USA, Inc., NationsBank and the other lenders named therein
(filed herewith).
10.4 Security Agreement dated as of March 13, 1996 among STFCC, STFI, each
subsidiary of STFCC named therein and Credit Suisse, as collateral agent for the
secured parties (filed herewith).
10.5 Pledge Agreement dated as of March 13, 1996 among STFCC, STFI, each
subsidiary of STFCC named therein and Credit Suisse, as collateral agent for the
secured parties (filed herewith).
10.6 Pledge Agreement dated as of March 13, 1996 among STFI, RHI and Gadsby &
Hannah, as interim pledge agent.
10.7 Parent Guarantee Agreement dated as of March 12, 1996 between STI and
Credit Suisse, as collateral agent for the secured parties (filed herewith).
10.8 Subsidiary Guarantee Agreement dated as of March 12, 1996 among the
subsidiaries of STFCC and STFI named therein and Credit Suisse, as collateral
agent for the secured parties (filed herewith).
10.9 Agreement to Exchange 6% Cumulative Convertible Preferred Stock and Special
Preferred Stock dated as of March 1, 1996 among STI, FII, RHI and TFC (filed
herewith).
10.10 Shareholders' Agreement dated as of March 13, 1996 among STI, RHI and
Anthony D. Autorino (filed herewith).
10.11 Tax Sharing Agreement dated as of March 13, 1996 between STI and RHI
(filed herewith).
10.12 Indemnification Agreement dated as of March 13, 1996 between STI and
Fairchild Holdings Corp. (filed herewith).
10.13 Indemnification Agreement dated as of March 13, 1996 among STI, TFC and
RHI (filed herewith).
10.14 Indemnity, Subrogation and Contribution Agreement dated as of March 12,
1996 between STFCC and and Credit Suisse, as collateral agent for the secured
parties (filed herewith).
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23.1 Consent of Rothstein, Kass & Company, P.C. (to be filed by amendment).
23.2 Consent of Arthur Andersen LLP (to be filed by amendment).
</TABLE>
SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP.
$163,637,000
12 1/4% SENIOR SUBORDINATED DISCOUNT NOTES
DUE 2006
PURCHASE AGREEMENT
March 8, 1996
CS First Boston Corporation
Citicorp Securities Inc.
c/o CS First Boston Corporation
Park Avenue Plaza
New York, NY 10055
Ladies and Gentlemen:
1. Introductory. Shared Technologies Fairchild Communications Corp., a
Delaware corporation (the "Issuer"), proposes to issue and sell to the initial
purchasers named in Schedule A hereto (the "Initial Purchasers") $163,637,000
principal amount of its 12 1/4% Senior Subordinated Discount Notes Due 2006 (the
"Notes") to be unconditionally guaranteed on a senior subordinated basis ("the
Guaranties") by Shared Technologies Inc. to be renamed Shared Technologies
Fairchild Inc. ("STFI") and by each subsidiary of the Issuer listed on the
signature pages hereto (each a "Subsidiary"; collectively, the "Subsidiaries"
and, together with STFI, the "Guarantors"). The Notes and the Guaranties are
collectively referred to as the "Offered Securities". The Offered Securities are
to be issued under an Indenture, to be dated as of March 1, 1996 (the
"Indenture"), between the Issuer, the Guarantors named therein and the United
States Trust Company of New York as trustee (the "Trustee").
Pursuant to an Agreement and Plan of Merger, dated as of November 9,
1995, as amended on February 2 and 23, 1996 (the "Merger Agreement"), among the
Issuer, Shared Technologies Inc. ("STI"), Fairchild Industries, Inc. ("FII"),
RHI Holdings, Inc. ("RHI") and The Fairchild Corporation ("TFC"), FII will be
merged with and into STI (the "Merger") and STI, as the surviving corporation,
will be renamed Shared Technologies Fairchild Inc. ("STFI"). As preconditions to
the Merger, (i) FII will undergo a recapitalization (the "FII
<PAGE>
Recapitalization") pursuant to which FII will transfer all of its assets to, and
cause all of its liabilities to be assumed by, its immediate parent, RHI or
RHI's affiliates except for the assets and liabilities of the communication
services business of FII and certain other specified liabilities and (ii) STI
will cause the Issuer to be incorporated. As part of the Merger, RHI, TFC and
Fairchild Holding Corp. will enter into indemnification agreements (the
"Indemnification Agreements") pursuant to which they will indemnify STFI with
respect to the liabilities assumed by RHI as part of the FII Recapitalization.
The Offered Securities will be offered and sold to the Initial
Purchasers without being registered under the Securities Act of 1933 (the
"Securities Act"), in reliance on an exemption therefrom. The Issuer has
prepared a preliminary offering circular dated February 17, 1966 (such
preliminary offering circular being hereinafter referred to as the "Preliminary
Offering Circular"), and an offering circular dated March 8, 1996 (such offering
circular, in the form first furnished to the Initial Purchasers for use in
connection with the offering of the Securities, being hereinafter referred to as
the "Offering Circular"), setting forth information regarding the Issuer, the
Guarantors and the Offered Securities. The Issuer and each Guarantor, jointly
and severally, hereby confirm that they have authorized the use of the
Preliminary Offering Circular and the Offering Circular in connection with the
offering and sale of the Securities.
Holders (including subsequent transferees) of the Offered Securities
will have the registration rights set forth in the Exchange and Registration
Rights Agreement of even date herewith (the "Registration Rights Agreement"),
between the Issuer and the Initial Purchasers. Pursuant to the Registration
Rights Agreement, the Issuer has agreed to file with the Securities and Exchange
Commission (the "Commission") (i) a registration statement (the "Exchange Offer
Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), registering an issue of a series of senior notes (the
"Exchange Securities") identical in all material respects to the Offered
Securities (except that the Exchange Securities will not contain terms with
respect to transfer restrictions) to be offered in exchange for the Offered
Securities (the "Exchange Offer") and (ii) under certain circumstances specified
in the Registration Rights Agreement, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement").
This Agreement, the Indenture, the Registration Rights Agreement and
each Guaranty are referred to herein collectively as the "Operative Documents".
The Issuer and each Guarantor are referred to herein individually as a "Relevant
Company" and collectively as the "Relevant Companies".
2
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The Issuer, each Subsidiary and STFI, jointly and severally, agree
with the several Initial Purchasers as follows:
2. Representations and Warranties of the Issuer. As used in this
Section 2, references to the "Issuer" or "its subsidiaries" shall mean the
Issuer or its subsidiaries prior to the consummation of the Merger and shall
mean the Issuer or its subsidiaries, effective upon the consummation of the
Merger. The Issuer, STFI and the Subsidiaries jointly and severally represent
and warrant to, and agree with, the several Initial Purchasers as of the date
hereof and as of the Closing Date (as defined in Section 3 hereof) that:
(a) Each of the Preliminary Offering Circular and the Offering
Circular has been prepared by the Issuer and STI. Such Preliminary
Offering Circular and Offering Circular, as supplemented as of the date
of this Agreement and any other document approved by the Issuer for use
in connection with the contemplated resale of the Offered Securities,
are hereinafter collectively referred to as the "Offering Documents".
As of their respective dates and, in the case of the Offering Circular,
as of the date of this Agreement, no Offering Document includes any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding
sentence does not apply to statements in or omissions from an Offering
Document based upon written information furnished to the Issuer by any
Initial Purchaser through CS First Boston Corporation ("CSFBC")
specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(b). Except
disclosed in the Offering Documents, on the date of this Agreement each
of FII's and STI's Annual Report on Form 10-K most recently filed with
the Commission and all subsequent reports which have been filed with
the Commission or sent to stockholders pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") do not include 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 not misleading. Such documents, when they were filed with the
Commission, conformed in all material respects to the requirements of
the Exchange Act and the rules and regulations of the Commission
thereunder.
(b) Each of STFI and the Issuer has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering
Documents; and each of STFI and the Issuer is duly qualified to do
business as a foreign corporation in good standing in all
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other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to so qualify would not have a material adverse effect on STFI
and the Issuer.
(c) Each of the Issuer and STFI has an authorized capitalization as
set forth in the Offering Documents and all of the issued shares of
capital stock of each of the Issuer and STFI have been duly authorized
and validly issued and are fully paid and nonassessable. The Capital
Stock of each of the Issuer and STFI conforms in all material respects
to the description thereof contained in the Offering Documents.
(d) Each subsidiary of the Issuer that is a corporation or limited
partnership has been duly incorporated and is an existing corporation
or limited partnership in good standing under the laws of the
jurisdiction of its incorporation or organization, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Offering Documents; and each subsidiary of
the Issuer that is a corporation or limited partnership is duly
qualified to do business as a foreign corporation or limited
partnership in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to so qualify would not
have a material adverse effect on such subsidiaries, taken as a whole;
all of the issued and outstanding capital stock of each subsidiary of
the Issuer has been duly authorized and validly issued and is fully
paid and nonassessable; and the capital stock of each subsidiary owned
by the Issuer, directly or through subsidiaries, is owned free from
liens, encumbrances and defects, except that (1) STI owns 99% of the
interests in Financial Place Communications Company, an Illinois
general partnership, (2) STI's interests in its wholly-owned
subsidiary, Access Telemanagement, Inc., a Texas corporation
("Access"), have been pledged in favor of Martnet Inc. pursuant to a
Pledge Agreement dated as of June 27, 1994 (the "Pledge Agreement"),
(3) STI's 99% limited partnership interest in Access Telecommunication
Group L.P., a Texas limited partnership ("Access L.P."), have been
pledged pursuant to the Pledge Agreement and (4) Access L.P., all
interests in which have been pledged pursuant to the Pledge Agreement,
is the holder of 100% of the common stock of Access Network Services,
Inc.
(e) STFI owns all of the issued and outstanding capital stock of the
Issuer and the Issuer owns all of the issued and outstanding capital
stock or equity interests of the Subsidiaries, except as described in
paragraph (d) above, and all such capital stock has been duly
authorized and validly issued and is fully paid and nonassessable; and,
except as described in paragraph (d) above, the capital stock or equity
interests of each subsidiary owned by a Subsidiary,
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directly or through subsidiaries, is owned free from liens,
encumbrances and defects; there are no outstanding subscriptions,
rights, warrants, calls, commitments of sale or options to acquire, or
instruments convertible into or exchangeable for, any such shares of
capital stock or other equity interest of the Subsidiaries.
(f) The Notes have been duly authorized by the Issuer; the Indenture
has been duly authorized by the Issuer and the Guarantors; each
Guaranty has been duly authorized by each Guarantor party to it; and
when the Offered Securities are delivered and paid for pursuant to this
Agreement on the Closing Date (as defined below) and authenticated by
the Trustee, the Indenture will have been duly executed and delivered
by the Issuer, STFI and the Subsidiaries and such Offered Securities
will have been duly executed, authenticated, issued and delivered and
will conform in all material respects to the description thereof
contained in the Offering Documents; and when the Merger is consummated
each Guaranty will have been duly executed and delivered by each
Guarantor party to it. The Indenture conforms in all material respects
to the requirements of the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder; and the
Indenture, each Guaranty and such Offered Securities will constitute
valid and legally binding obligations of the Issuer and the Guarantors
and each of the Indenture, each Guaranty and such Offered Securities
will be enforceable in accordance with their terms subject to (i)
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
or similar laws relating to creditors' rights and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(g) The Registration Rights Agreement has been duly authorized,
executed and delivered by each of the Issuer and the Guarantors and
conforms in all material respects to the description thereof contained
in the Offering Documents. The Registration Rights Agreement
constitutes a valid and legally binding obligation of the Issuer and
each Guarantor and is enforceable in accordance with its terms.
(h) This Agreement has been duly authorized, executed and delivered
by the Issuer, STFI and the Subsidiaries.
(i) Except as contemplated by this Agreement or disclosed in the
Offering Documents, there is no broker, finder or other party that is
entitled to receive from the Issuer, any of its subsidiaries or any
Initial Purchaser any brokerage or finder's fee or other fee or
commission as a result of the transactions contemplated by this
Agreement.
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(j) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 4 of this Agreement, no
consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court is required for the
consummation of the transactions, other than the Merger, as
contemplated by the Operative Documents or in connection with the
issuance and sale of the Offered Securities by the Issuer, except such
as have been obtained or made or as may be required under the
Securities Act and the Rules and Regulations of the Commission
thereunder with respect to the Registration Rights Agreement, the
Exchange Offer and the transactions contemplated thereunder or state or
foreign securities laws or by the regulations of the National
Association of Securities Dealers, Inc.
(k) The execution, delivery and performance by each of the Issuer,
STFI and the Subsidiaries of the Operative Documents to which it is a
party and the issuance and sale of the Offered Securities and
compliance with the terms and provisions of the Operative Documents and
the Offered Securities will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under (i) any
material statute, rule, regulation or order of any governmental agency
or body or any court, domestic or foreign, having jurisdiction over any
Relevant Company or any subsidiary of any Relevant Company or any of
their respective properties; (ii) any material agreement or instrument
relating to borrowed money to which any Relevant Company or any such
subsidiary is a party or by which any Relevant Company or any such
subsidiary is bound or to which any of the properties of any Relevant
Company or any such subsidiary is subject; (iii) any other material
agreement or instrument to which any Relevant Company or any such
subsidiary is a party or by which any Relevant Company or any such
subsidiary is bound or to which any of the properties of any Relevant
Company or any such subsidiary is subject which would individually or
in the aggregate have a material adverse effect on the condition
(financial or other), results of operations, business or prospects of
STFI, the Issuer and its subsidiaries taken as a whole (a "Material
Adverse Effect"); or (iv) the charter or by-laws of any Relevant
Company or any such subsidiary. The Issuer and each Guarantor has full
power and authority to authorize, issue and sell the Notes and the
Guaranties respectively, as contemplated by this Agreement.
(l) The Merger Agreement has been duly authorized, executed and
delivered by each of the parties thereto and conforms in all material
respects to the description thereof in the Offering Documents. The
Merger Agreement constitutes a valid and legally binding obligation of
each of the parties thereto and is enforceable in accordance with its
terms subject to (i) bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or similar laws relating to
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creditors' rights and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in
equity).
(m) Each Indemnification Agreement has been duly authorized, executed
and delivered by each of the parties thereto and conforms in all
material respects to the description thereof in the Offering Documents.
Each Indemnification Agreement constitutes a valid and legally binding
obligation of each of the parties thereto and is enforceable in
accordance with its terms subject to (i) bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar laws
relating to creditors' rights and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(n) The execution, delivery and performance by each of STI, FII and,
to the best of the Issuer's knowledge after due inquiry, by RHI and TFC
of the Merger Agreement and compliance with the terms and provisions of
the Merger Agreement will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under (i) any
material statute, rule, regulation or order of any governmental agency
or body or any court, domestic or foreign, having jurisdiction over the
Issuer, STI, FII, RHI, TFC or any of their respective subsidiaries or
any of their properties; (ii) any material agreement or instrument
relating to borrowed money to which the Issuer, STI, FII, RHI, TFC or
any of their respective subsidiaries is a party or by which the Issuer,
STI, FII, RHI, TFC or any of their respective subsidiaries is bound or
to which any of the properties of the Issuer, STI, FII, RHI, TFC or any
of their respective subsidiaries is subject; (iii) any other material
agreement or instrument to which the Issuer, STI, FII, RHI, TFC or any
of their respective subsidiaries is a party or by which the Issuer,
STI, FII, RHI, TFC or any of their respective subsidiaries is bound or
to which any of the properties of the Issuer, STI, FII, RHI, TFC or any
of their respective subsidiaries is subject, which would individually
or in the aggregate have a material adverse effect on the condition
(financial or other) business or results of operations of (A) the
Issuer and its subsidiaries taken as a whole (B) STI and its
subsidiaries taken as a whole; or (iv) the charter or by-laws of the
Issuer, STI, FII, RHI, TFC or any of their respective subsidiaries.
(o) Each Relevant Company and its subsidiaries has good and
marketable title to all real properties and all other properties and
assets owned by them, in each case free from liens, encumbrances and
defects that would materially interfere with the use made or to be made
thereof by them; and each Relevant Company and its Subsidiaries hold
any leased real or personal property under valid and enforceable leases
7
<PAGE>
with no exceptions that would materially interfere with the use made or
to be made thereof by them.
(p) Each Relevant Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them and have not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
that, if determined adversely to any Relevant Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(q) No labor dispute with the employees of any Relevant Company or
any subsidiary exists or, to the knowledge of the Issuer, is imminent
that might have a Material Adverse Effect.
(r) Each Relevant Company and its subsidiaries owns, possesses or can
acquire on reasonable terms adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively,
"intellectual property rights") necessary to conduct the business now
operated by them, or presently employed by them, and have not received
any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if
determined adversely to any Relevant Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(s) Except as disclosed in the Offering Documents, no Relevant
Company nor any of its subsidiaries is in violation of any statute, any
rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "environmental laws"), owns or operates
any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation,
contamination, liability or claim would individually or in the
aggregate have a Material Adverse Effect; and no Relevant Company is
aware of any pending investigation which might lead to such a claim.
(t) Except as disclosed in the Offering Documents, there are no
pending nor threatened actions, suits or proceedings against or
affecting any Relevant Company, any of its subsidiaries or any of their
respective properties that are reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect, or would materially and
8
<PAGE>
adversely affect the ability of any Relevant Company to perform its
obligations under the Operative Documents to which it is a party or the
Merger Agreement or which are otherwise material in the context of the
sale of the Offered Securities; and no such actions, suits or
proceedings are threatened or, to STFI's or Issuer's knowledge,
contemplated.
(u) The Issuer has delivered to the Initial Purchasers true and
correct copies of the Merger Agreement, the Indenture and the
Registration Rights Agreement, in the form as originally executed, and
there have been no amendments, alterations, modifications or waivers
thereto or in the exhibits or schedules thereto other than those as to
which the Initial Purchasers shall have been advised. The Merger
Agreement, the Indenture and the Registration Rights Agreement conform
in all material respects to the descriptions thereof in the Offering
Documents.
(v) The historical financial statements (including the related notes
and supporting schedules, if any) included in the Preliminary Offering
Circular and the Offering Circular comply in all material respects with
the requirements applicable to a Registration Statement on Form S-1.
(w) The financial statements with respect to the Issuer included in
the Offering Documents present fairly the financial position of the
Issuer and its consolidated subsidiaries as of the dates shown and
their results of operations and cash flows for the periods shown, and,
except as otherwise stated in the Offering Documents, such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent
basis.
(x) The financial statements with respect to STFI included in the
Offering Document present fairly the financial position of STFI and its
consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and, except as
otherwise stated in the Offering Documents, such financial statements
have been prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis.
(y) The financial statements with respect to STI included in the
Offering Documents present fairly the financial position of STI and its
consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and, except as
otherwise stated in the Offering Documents, such financial statements
have been prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis.
(z) The financial statements with respect to FII included in the
Offering Documents present fairly the
9
<PAGE>
financial position of FII and its consolidated subsidiaries as of the
dates shown and their results of operations and cash flows for the
periods shown, and, except as otherwise stated in the Offering
Documents, such financial statements have been prepared in conformity
with the generally accepted accounting principles in the United States
applied on a consistent basis.
(aa) Except as disclosed in the Offering Circular, since the date of
the latest audited consolidated financial statements of each of STI and
FII included in the Offering Documents there has been no material
adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other),
business, properties or results of operations of either STI or FII and
their respective subsidiaries taken as a whole, and, except as
disclosed in or contemplated by the Offering Documents, there has been
no dividend or distribution of any kind declared, paid or made by
either STI or FII on any class of its respective capital stock.
(bb) No Relevant Company is an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the United States
Investment Company Act of 1940 (the "Investment Company Act"), nor is
it a closed-end investment company required to be registered, but not
registered, thereunder; and no Relevant Company is, and after giving
effect to the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the Offering
Documents, will not be an "investment company" as defined in the
Investment Company Act.
(cc) No securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as the Offered Securities are
listed on any national securities exchange registered under Section 6
of the Exchange Act or quoted in a U.S. automated interdealer quotation
system. The Issuer and STFI have been advised that the Offered
Securities have been designated as Private Offerings, Resale and
Trading through Automated Linkages ("PORTAL") securities in accordance
with the rules and regulations of NASD.
(dd) Assuming the accuracy of the representations, of the Initial
Purchasers contained herein, the offer and sale of the Offered
Securities in the manner contemplated by this Agreement will be exempt
from the registration requirements of the Securities Act by reason of
Section 4(2) thereof, Regulation D thereunder and Regulation S
thereunder; and it is not necessary to qualify an indenture in respect
of the Offered Securities under the United States Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act").
(ee) No Relevant Company, no affiliate of a Relevant Company, nor any
person acting on their behalf
10
<PAGE>
(i) has, within the six-month period prior to the date hereof, offered
or sold in the United States or to any U.S. person (as such terms are
defined in Regulation S under the Securities Act) the Offered
Securities, or any security of the same class or series as the Offered
Securities or (ii) has offered or will offer or sell the Offered
Securities (A) in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act or (B) with respect to any such securities
sold in reliance on Rule 903 of Regulation S ("Regulation S") under the
Securities Act, by means of any directed selling efforts within the
meaning of Rule 902(b) of Regulation S. The Relevant Companies, their
affiliates and any person acting on their behalf have complied and will
comply with the offering restrictions requirement of Regulation S. The
Issuer has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities
except for this Agreement.
(ff) No Relevant Company owns any "margin securities" as that term is
defined in Regulations G and U of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), and none of the proceeds
of the sale of the Offered Securities will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security
or for any other purpose which might cause any of the Offered
Securities to be considered a "purpose credit" within the meanings of
Regulation G, T, U or X of the Federal Reserve Board.
(gg) The Offered Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(hh) The Issuer has not taken nor has any Guarantor taken, nor will
they take, directly or indirectly, any action prohibited by Rule 10b-6
under the Exchange Act in connection with the offering of the Offered
Securities.
(ii) STFI is subject to Section 13 or 15(d) of the Exchange Act.
(jj) There is no "substantial U.S. market interest" as defined in
Rule 902(n) of Regulation S in the Issuer's debt securities.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Issuer agrees to sell to the
Initial Purchasers, and the Initial Purchasers agree, severally and not jointly,
to purchase from the Issuer the respective principal amounts of Offered
Securities set forth
11
<PAGE>
opposite the names of the Initial Purchasers in Schedule A hereto, at a purchase
price of 67.817% of the principal amount thereof plus accrued interest from
March 13, 1996 to the Closing Date (as hereinafter defined).
The Issuer will deliver against payment of the purchase price the
Offered Securities in the form of one or more permanent global Securities in
definitive form (the "Global Securities") deposited with the Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC. Interests in any permanent global Securities
will be held only in book-entry form through DTC, except in the limited
circumstances described in the Offering Document. Payment for the Offered
Securities shall be made by the Initial Purchasers in Federal (same-day) funds
by wire transfer to an account in New York previously designated to CSFBC by the
Issuer at a bank acceptable to CSFBC at the office of Cravath, SwaineE& Moore at
10:00 a.m. (New York time), on March 13, 1996, or at such other time not later
than seven full business days thereafter as CSFBC and the Issuer determine, such
time being herein referred to as the "Closing Date", against delivery to the
Trustee as custodian for DTC of the Global Securities representing all of the
Offered Securities. The Global Securities will be made available for checking at
the above office of Cravath, SwaineE& Moore at least 24Ehours prior to the
Closing Date.
Notwithstanding the foregoing, any Offered Securities sold to
Institutional Accredited Investors (as hereinafter defined) pursuant to
Section 4(c) shall be issued in definitive, fully registered form and shall bear
the legend relating thereto set forth under "Transfer Restrictions" in the
Offering Documents, but shall be paid for in the same manner as any Offered
Securities to be purchased by the Initial Purchasers hereunder and to be offered
and sold by them in reliance on Rule 144A under the Securities Act.
4. Representations by Initial Purchasers; Resale by Initial
Purchasers. (a) Each Initial Purchaser represents and warrants to the Issuer
that it is an "accredited investor" within the meaning of Regulation D under the
Securities Act.
(b) Each Initial Purchaser severally acknowledges that the Offered
Securities have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S or pursuant to an
exemption from the registration requirements of the Securities Act. Each Initial
Purchaser severally represents and agrees that it has offered and sold the
Offered Securities and will offer and sell the Offered Securities only in
accordance with Rule 903 or Rule 144A under the Securities Act ("Rule 144A") or,
in the case of CSFBC or any other Initial
12
<PAGE>
Purchaser authorized by CSFBC, to a limited number of Institutional Accredited
Investors (as hereinafter defined) in accordance with subsectionE(c). Each
Initial Purchaser severally represents, warrants and agrees that neither such
Initial Purchaser nor its affiliates, nor any persons acting on its or their
behalf, have engaged or will engage in any directed selling efforts with respect
to the Offered Securities, and such Initial Purchaser, its affiliates and all
persons acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S and any applicable foreign
securities laws, regulations or restrictions, in connection with the offering of
the Offered Securities outside the United States. Each Initial Purchaser
severally agrees that, at or prior to confirmation of sale of the Offered
Securities, other than a sale pursuant to Rule 144A or a sale to an
Institutional Accredited Investor in accordance with subsectionE(c), such
Initial Purchaser will have sent to each distributor, dealer or person receiving
a selling concession, fee or other remuneration that purchases the Offered
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the 'Securities Act') and may
not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the date of the commencement of the offering and
the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities
Act. Terms used above have the meanings given to them by
Regulation S."
Unless otherwise defined herein, terms used in this subsectionE(b)
have the meanings given to them by Regulation S.
(c) CSFBC and any other Initial Purchaser authorized by CSFBC may
offer and sell Offered Securities in definitive, fully registered form to a
limited number of institutions, each of which is reasonably believed by the
applicable Initial Purchaser to be an "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities Act or an entity in
which all of the equity owners are accredited investors within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act (each, an
"Institutional Accredited Investor"); provided, however, that each such
Institutional Accredited Investor executes and delivers to such Initial
Purchaser and the Issuer, prior to the consummation of any sale of Offered
Securities to such Institutional Accredited Investor, an Initial Purchaser's
Letter in substantially the form attached
13
<PAGE>
as Annex A to the Offering Circular (an "Initial Purchaser's Letter").
(d) Each Initial Purchaser severally agrees that it and each of its
affiliates has not entered and will not enter into any contractual arrangement
with respect to the distribution of the Offered Securities except for any such
arrangements with the other Initial Purchasers or affiliates of the other
Initial Purchasers or with the prior written consent of the Issuer.
(e) Each Initial Purchaser severally agrees that it and each of its
affiliates or any one acting in its behalf will not offer or sell the Offered
Securities purchased hereby in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act, including, but not limited to (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
Each Initial Purchaser severally agrees, with respect to resales made in
reliance on Rule 144A of any of the Offered Securities, to deliver either with
the confirmation of such resale or otherwise prior to settlement of such resale
a notice to the effect that the resale of such Offered Securities has been made
in reliance upon the exemption from the registration requirements of the
Securities Act provided by Rule 144A.
(f) Each of the Initial Purchasers severally represents and agrees
that (i) it has not offered or sold and prior to the date six months after the
date of issue of the Offered Securities will not offer or sell any Offered
Securities to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Offered Securities in, from or otherwise
involving the United Kingdom and (iii) it has only issued or passed on, and will
only issue or pass on, in the United Kingdom, any document received by it in
connection with the issue of the Offered Securities to a person who is of a kind
described in ArticleE11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) OrderE1995 or is a person to whom such document may
otherwise lawfully be issued or passed on.
14
<PAGE>
(g) Each Initial Purchaser represents and agrees that (i) it has not
solicited, and will not solicit, offers to purchase any of the Offered
Securities from, (ii) it has not sold, and will not sell, any of the Offered
Securities to, and (iii) it has not distributed, and will not distribute, the
Preliminary Offering Circular or the Offering Circular to, any person or entity
in any jurisdiction outside of the United States except, in each case, in
compliance in all material respects with all applicable laws. For the purpose of
this Agreement, "United States" means the United States of America, its
territories, its possessions and other areas subject to its jurisdiction.
5. Certain Agreements of the Issuer. The Issuer and, unless otherwise
specified, the Guarantors jointly and severally agree with the several Initial
Purchasers that:
(a) The Issuer will advise CSFBC promptly of any proposal to amend or
supplement the Offering Documents and will not effect such amendment or
supplementation without CSFBC's consent. If, at any time prior to the completion
of the initial resale of the Offered Securities by the Initial Purchasers, any
event occurs as a result of which the Offering Documents as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, the
Issuer promptly will notify CSFBC of such event and promptly will prepare, at
its own expense, an amendment or supplement which will correct such statement or
omission. Neither CSFBC's consent to, nor the Initial Purchasers' delivery to
offerees or investors of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(b) The Issuer will furnish to CSFBC copies of the Preliminary
Offering Circular, the Offering Documents and all amendments and supplements to
such documents, in each case as soon as available and in such quantities as
CSFBC reasonably requests, and the Issuer will furnish to CSFBC on the date
hereof three copies of the Offering Documents signed by a duly authorized
officer of the Issuer, one of which will include the independent accountants'
reports therein manually signed by such independent accountants. At any time
when the Issuer is not subject to Section 13 or 15(d) of the Exchange Act, the
Issuer will promptly furnish or cause to be furnished to CSFBC (and, upon
request, to each of the other Initial Purchasers) and, upon request of holders
and prospective purchasers of the Offered Securities, to such holders and
purchasers, a reasonable number of copies of the information required to be
delivered to holders and prospective purchasers of the Offered Securities
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto) in order to permit compliance with Rule 144A in connection with resales
by such
15
<PAGE>
holders of the Offered Securities. The Issuer will pay the expenses of printing
and distributing to the Initial Purchasers all such documents.
(c) The Issuer will arrange for the qualification of the Offered
Securities for sale and the determination of their eligibility for investment
under the laws of such jurisdictions in the United States and Canada as CSFBC
designates and will continue such qualifications in effect so long as required
for the resale of the Offered Securities by the Initial Purchasers; provided,
however, that neither the Issuer nor any Guarantor will be required to qualify
as a foreign corporation or to file a general consent to service of process in
any such jurisdiction.
(d) During the period of five years after the Closing Date, each of
STFI and the Issuer will furnish to CSFBC and, upon request, to each of the
other Initial Purchasers, as soon as practicable after the end of each fiscal
year, a copy of its annual report to stockholders for such year; and the Issuer
will furnish to CSFBC and upon request, to each of the other Initial Purchasers
(i) as soon as available, a copy of each report and any definitive proxy
statement of STFI or the Issuer (as applicable) filed with the Commission under
the Exchange Act or mailed to stockholders and (ii) from time to time, such
other information concerning the Issuer and the Guarantors as CSFBC may
reasonably request.
(e) During the period of three years after the Closing Date, the
Issuer will, upon request, furnish to CSFBC, each of the other Initial
Purchasers and any holder of Offered Securities a copy of the restrictions on
transfer applicable to the Offered Securities.
(f) During the period of three years after the Closing Date, the
Issuer will not, and will not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Offered Securities that
have been reacquired by any of them.
(g) During the period of three years after the Closing Date, the
Issuer will not be or become an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Issuer Act and is not, and will not be or
become, a closed-end investment company required to be registered, but not
registered, under the Investment Issuer Act.
(h) Except following the effectiveness of the Exchange Offer or Shelf
Registration Statement, as the case may be, the Issuer will not, and will not
permit any affiliate (as such term is defined in Rule 501(b) under the
Securities Act) of the Issuer or authorize or knowingly permit any person
16
<PAGE>
acting on its or their behalf to, solicit any offer to buy or offer to sell the
Securities by means of any form of general solicitation or general advertising
(as such terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(i) The Issuer will pay all expenses incidental to the performance of
the Issuer's and each Guarantors' obligations (as applicable) under the
Operative Documents, including (i) the fees and expenses of the Trustee;
(ii) all expenses in connection with the execution, issue, authentication,
packaging and initial delivery of the Offered Securities, the preparation and
printing of this Agreement, the Registration Rights Agreement, the Offered
Securities, the Indenture, the Guaranties, the Offering Documents and amendments
and supplements thereto, and any other document relating to the issuance, offer,
sale and delivery of the Offered Securities; (iii) the cost of qualifying the
Offered Securities for trading in the PORTAL market and any expenses incidental
thereto; and (iv) the cost of any advertising approved by the Issuer in
connection with the issue of the Offered Securities. The Issuer will also pay or
reimburse the Initial Purchasers (to the extent incurred by them) for any
reasonable expenses (including the reasonable fees and disbursements of counsel)
incurred in connection with qualification of the Offered Securities for sale
under the laws of such jurisdictions in the United States and Canada as CSFBC
designates and the printing of memoranda relating thereto, for any fees charged
by investment rating agencies for the rating of the Offered Securities, for all
reasonable travel expenses of the Issuer's officers and employees and any other
reasonable out-of-pocket expenses of the Issuer in connection with attending
meetings with prospective purchasers of the Offered Securities from the Initial
Purchasers and for expenses incurred in distributing the Preliminary Offering
Circular and the Offering Documents (including any amendments and supplements
thereto).
(j) In connection with the offering, until CSFBC shall have notified
the Issuer and the other Initial Purchasers of the completion of the resale of
the Offered Securities, neither the Issuer nor any of its affiliates has or
will, either alone or with one or more other persons, bid for or purchase for
any account in which it or any of its affiliates has a beneficial interest any
Offered Securities or attempt to induce any person to purchase any Offered
Securities; and neither it nor any of its affiliates will make bids or purchases
for the purpose of creating actual, or apparent, active trading in, or of
raising the price of, the Offered Securities.
(k) For a period of 180 days after the date of the Offering Circular,
none of STFI, the Issuer or any of its
17
<PAGE>
subsidiaries will offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, except to an affiliate which agrees to be bound by the
provisions of this Section, any United States dollar-denominated debt securities
issued or guaranteed by STFI, the Issuer or any of its subsidiaries and having a
maturity of more than one year from the date of issue or publicly disclose the
intention to make any such offer, sale, pledge or disposal, without the prior
written consent of CSFBC. None of STFI, the Issuer or any of its subsidiaries
will at any time offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any securities under circumstances where such offer,
sale, pledge, contract or disposition would cause the exemption afforded by
Section 4(2) of the Securities Act or the safe harbor of Regulation S thereunder
to cease to be applicable to the offer and sale of the Offered Securities.
(l) The Issuer will apply the net proceeds of the offering and the sale of the
Offered Securities in the manner set forth in the Offering Documents under the
caption "Use of Proceeds".
(m) The Issuer will use its best efforts to cause the Offered
Securities to be eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.
(n) The Issuer will cause each Note to bear the legend set forth in
the form of Note attached as ExhibitEA to the Indenture until such legend shall
no longer be necessary or advisable because the Offered Securities are no longer
subject to the restrictions on transfer described therein.
(o) The Issuer will comply with the Registration Rights Agreement and
all agreements set forth in the representation letter of the Issuer to The
Depository Trust Issuer relating to the approval of the Offered Securities for
"book-entry" transfer.
6. Conditions of the Obligations of the Initial Purchasers. The
obligations of the several Initial Purchasers to purchase and pay for the
Offered Securities will be subject to the accuracy of the representations and
warranties on the part of the Issuer and the Guarantors herein, to the accuracy
of the statements of officers of the Issuer and the Guarantors made pursuant to
the provisions hereof, to the performance by the Issuer and the Guarantors of
their obligations hereunder and to the following additional conditions
precedent:
(a) The Initial Purchasers shall have received:
(i) a letter, dated the date of this Agreement, of Arthur
Andersen LLP confirming that they are independent public
accountants within the meaning of the Securities Act
18
<PAGE>
and the applicable published rules and regulations thereunder
("Rules and Regulations") and to the effect that:
(A) in their opinion the financial statements and
schedules examined by them and included in the
Offering Documents comply as to form in all material
respects with the applicable accounting requirements
of the Securities Act and the related published Rules
and Regulations that would apply to the Offering
Documents if the Offering Documents were prospectuses
included in a registration statement on FormES-1
under the Securities Act;
(B) they have performed the procedures specified by
the American Institute of Certified Public
Accountants for a review of interim financial
information as described in Statement of Auditing
Standards No.E71, Interim Financial Information, on
the unaudited financial statements with respect to
FII included in the Offering Documents;
(C) on the basis of the review referred to in
clauseE(B) above, a reading of the latest available
interim financial statements of FII, inquiries of
officials of FII who have responsibility for
financial and accounting matters and other specified
procedures, nothing came to their attention that
caused them to believe that:
(1) the unaudited financial statements with
respect to FII included in the Offering
Documents do not comply as to form in all
material respects with the applicable
accounting requirements of the Securities
Act and the related published Rules and
Regulations that would apply to the Offering
Documents if the Offering Documents were
prospectuses included in a registration
statement on FormES-1 under the Securities
Act or any material modifications should be
made to such unaudited financial statements
for them to be in conformity with generally
accepted accounting principles;
(2) at the date of the latest available
balance sheet of FII read by such
accountants, or at a subsequent specified
date not more than five days prior to the
date of this Agreement, there was any change
in the capital stock or any increase in
short-term indebtedness or long-term debt of
FII and its consolidated subsidiaries or, at
the date of the latest available balance
sheet read by such accountants, there was
any decrease in consolidated net current
assets (working capital) or net assets as
compared with amounts shown on the latest
balance sheet included in the Offering
Documents; or
(3) for the period from the closing date of
the latest income statement with respect to
FII included in the Offering Documents to a
subsequent date not more than five days
prior to the date of this agreement the
closing date of the latest available income
statement read by such
19
<PAGE>
accountants there were any decreases, as
compared with the corresponding period of
the previous year, in consolidated net
sales, consolidated income before
extraordinary items or net income,
except in all cases set forth in clausesE(2) and (3)
above for changes, increases or decreases which the
Offering Documents disclose have occurred or may
occur and which are fully described and set out in
such letter;
(D) on the basis of an examination of the unaudited
pro forma financial statements included in the
Offering Documents and inquiries of officials of the
Issuer and FII respectively, who have responsibility
for financial and accounting matters, nothing came to
their attention that caused them to believe that the
pro forma financial statements included in the
Offering Documents do not comply in all material
respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the
historical amounts in the compilation of such
financial statements or on the pro forma basis
described in the notes thereto; and
(E) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and
other financial information contained in the Offering
Documents (in each case to the extent that such
dollar amounts, percentages and other financial
information are derived from the general accounting
records of FII and its subsidiaries subject to the
internal controls of FII's accounting system or are
derived directly from such records by analysis or
computation) with the results obtained from
inquiries, a reading of such general accounting
records and other procedures specified in such letter
and have found such dollar amounts, percentages and
other financial information to be in agreement with
such results, except as otherwise specifically set
forth in such letter.
(ii) a letter, dated the date of this Agreement, of Rothstein,
KassE& Company, P.C. confirming that they are independent
public accountants within the meaning of the Securities Act
and the Rules and Regulations and confirming each matter set
forth in subsectionsEa(i)(A), (B), (C), (D) and (E) above as
if each reference to FII was to STI.
(b) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) a change in U.S. or international
financial, political or economic conditions or currency exchange rates
or exchange controls that would, in the judgment of CSFBC, be likely to
prejudice materially the success of the proposed issue, sale or
distribution of the Offered Securities, whether in the primary market
or in respect of dealings in the secondary market, or (ii)(A) any
change, or any development or event involving a
20
<PAGE>
prospective change, in the condition (financial or other), business,
properties or results of operations of the Issuer or its subsidiaries
which, in the judgment of a majority in interest of the Initial
Purchasers including CSFBC, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the offering
or the sale of and payment for the Offered Securities; (B) any
downgrading in the rating of any debt securities of the Issuer by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Securities Act) or any public
announcement that any such organization has under surveillance or
review its rating of any debt securities of the Issuer (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (C) any
suspension or limitation of trading in securities generally on the
New York Stock Exchange, The Nasdaq Stock Market's National Market, the
American Stock Exchange or any setting of minimum prices for trading on
such exchange, or any suspension of trading of any securities of the
Issuer, STI or FII on any exchange or in the over-the-counter market;
(D) any banking moratorium declared by U.S. Federal or New York
authorities; or (E) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress
or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the Initial
Purchasers including CSFBC, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the offering or sale of and
payment for the Offered Securities.
(c) Each condition (other than the issuance and sale of the Offered
Securities) to the closing contemplated by the Merger Agreement shall
have been satisfied or waived. There shall exist at and as of the
Closing Date (after giving effect to the transactions contemplated by
this Agreement) no condition that would constitute a default (or an
event that with notice or the lapse of time, or both, would constitute
a default) under the Merger Agreement, which has not been waived.
Concurrently with the issue and sale of the Offered Securities, the
Merger shall be consummated on terms that conform in all material
respects to the description thereof in the Offering Documents and the
Initial Purchasers shall have received true and correct copies of all
documents pertaining thereto and evidence satisfactory to the Initial
Purchasers of the consummation thereof.
(d) The offer to purchase for cash the 12 1/4% Senior Secured Notes
due 1999 of FII and the solicitation of consents to an amendment of the
indenture relating to such notes by FII, pursuant to an Offer to
Purchase and Consent Solicitation Statement, the "Debt Tender Offer")
shall have expired and the supplemental indenture related thereto shall
have been executed and remain in full force and effect.
21
<PAGE>
(e) The Issuer and the Guarantors shall have entered into the Credit
Facility ("Credit Facility") with Credit Suisse, Citicorp USA, Inc. and
NationsBank providing for up to $160.0 million of loans and the closing
thereunder shall have occurred no later than the Closing Date. The
Initial Purchasers shall have received counterparts, conformed and
executed, thereof and all other documents and agreements entered into
and received thereunder in connection with the closing of the Credit
Facility. There shall exist at and as of the Closing Date (after giving
effect to the transactions contemplated by this Agreement and the
Merger) no condition that would constitute a default (or an event that
with notice or lapse of time, or both, would constitute a default)
under the Credit Facility.
(f) The Initial Purchasers shall have received an opinion, dated the
Closing Date, of GadsbyE& Hannah counsel for STI, the Issuer and the
Guarantors, to the effect that:
(i) Each of the Issuer and STFI has been duly incorporated
and is an existing corporation in good standing under the laws
of the State of Delaware, with power and authority (corporate
and other) to own its properties and conduct its businesses as
described in the Offering Documents and is duly qualified to
do business as a foreign corporation and is in good standing
in all jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires
such qualification, except where the failure to so qualify
would not have a material adverse effect on the Issuer and
STFI and their consolidated subsidiaries, taken as a whole;
(ii) Each subsidiary of the Issuer is duly incorporated or
organized and is an existing corporation or limited
partnership in good standing under the laws of the
jurisdiction of its incorporation or organization; and each
such subsidiary is duly qualified to do business as a foreign
corporation or limited partnership and is in good standing in
each jurisdiction in which it owns or leases substantial
properties or in which the conduct of its business requires
such qualification, except where the failure to so quality
would not have a material adverse effect on the Issuer and
STFI and such subsidiaries, taken as a whole;
(iii) The descriptions in the Offering Documents of statutes,
legal and governmental proceedings and of contracts as they
relate to STI before the Merger are accurate and to our
knowledge fairly present, as to such statutes, legal or
governmental proceedings and contracts described therein, the
descriptions that would be required to be presented with
respect thereto if the Offering Documents were prospectuses
included in registration statements on FormES-1 under the Act;
as of its date and at the date hereof,
<PAGE>
the Offering Circular complies (with respect to form only) in
all material respects with the requirements of PartEI (other
than in relation to the outside front cover) of FormES-1 under
the Act, as such provisions are applicable to a prospectus
forming part of a registration statement on FormES-1 under the
Act (it being understood that such counsel express no opinions
as to the sufficiency of the content thereof, the financial
statements or other financial data contained in the Offering
Circular or as to whether independent comments of the
Securities and Exchange Commission would be received and would
need to be accommodated). Nothing in such opinion shall be
construed to be an opinion that there are no material
omissions with respect to statutes, legal and governmental
proceedings or of contracts;
(iv) STFI owns all of the capital stock of the Issuer and the
Issuer owns all of the issued and outstanding capital stock
of, or equity interests in, the Subsidiaries and all such
capital stock has been duly authorized and validly issued and
is fully paid and nonassessable; and such capital stock or
equity interests are owned free from liens, encumbrances and
defects, except that (1) STI owns 99% of the interests in
Financial Place Communications Company, an Illinois general
partnership, (2) STI's interests in its wholly-owned
subsidiary, Access Telemanagement, Inc., a Texas corporation
("Access"), have been pledged in favor of Martnet Inc.
pursuant to a Pledge Agreement dated as of JuneE27, 1994 (the
"Pledge Agreement"), (3) STI's 99% limited partnership
interest in Access Telecommunication Group L.P., a Texas
limited partnership ("Access L.P."), have been pledged
pursuant to the Pledge Agreement and (4) Access L.P., all
interests in which have been pledged pursuant to the Pledge
Agreement, is the holder of 100% of the common stock of Access
Network Services, Inc.; and to such counsel's knowledge there
are no outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any such shares of
capital stock or other equity interest of the Subsidiaries;
(v) The Issuer and each Guarantor has full legal right,
power and authority to execute and deliver the Operative
Documents and to perform its respective obligations hereunder
and thereunder; and all corporate or other action required to
be taken for the due and proper authorization, execution and
delivery of the Operative Documents and the consummation of
the transactions contemplated hereby and thereby have been
duly and validly taken;
(vi) The Operative Documents and the Offered Securities
constitute valid and legally binding obligations of the Issuer
and the Guarantors; and each Operative Document and such
Offered Securities will be enforceable in accordance with
their terms;
23
<PAGE>
(vii) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 4 of
this Agreement, no consent, approval, authorization or order
of, or filing with, any governmental agency or body or any
court is required for the consummation of the transactions
contemplated by the Operative Documents or in connection with
the issuance and sale of the Offered Securities by the Issuer,
except such as have been obtained or made or as may be
required under the Securities Act or the Exchange Act and the
Rules and Regulations of the Commission thereunder with
respect to the Registration Rights Agreement, the Exchange
Offer and the transactions contemplated thereunder or state or
foreign securities laws or by the regulations of the National
Association of Securities Dealers, Inc.;
(viii) The execution, delivery and performance by the Issuer
and each Guarantor of the Operative Documents to which it is a
party and the issuance and sale of the Offered Securities and
compliance with the terms and provisions of the Operative
Documents and the Offered Securities will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under (i) any material statute, rule,
regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over such
Relevant Company or any subsidiary of any Relevant Company or
any of their properties; (ii) any agreement or instrument to
which any Relevant Company or any such subsidiary is a party
or by which any Relevant Company or any such subsidiary is
bound or to which any of the properties of any Relevant
Company or any such subsidiary is subject, which agreement or
instruments have been filed by STI under the Securities Act or
the Exchange Act which would individually or in the aggregate
have a material adverse effect on the condition (financial or
other), business or results of operations of any Relevant
Company and its subsidiaries taken as a whole; or (iii) the
charter or by-laws of any Relevant Company or any such
subsidiary;
(ix) The execution, delivery and performance by STI and
compliance with the terms and provisions of the Merger
Agreement will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under
(i) any material statute, rule, regulation or order of any
governmental agency or body or any court, domestic or foreign,
having jurisdiction over STI or any of its subsidiaries or any
of their properties; (ii) any agreement or instrument to which
the STI or any of its subsidiaries is a party or by which STI
or any of its subsidiaries is bound or to which any of the
properties of the STI or any of its subsidiaries is subject,
which agreement or instruments have been filed by STI under
the Securities Act or the Exchange Act which would
individually or in the aggregate have a material adverse
effect on the condition (financial or other) business,
24
<PAGE>
properties or results of operations of STI and its
subsidiaries taken as a whole; or (iii) the charter or by-laws
of STI or any of its subsidiaries;
(x) Except for the filing of the Certificate of Merger with
the Secretary of State of Delaware, each consent,
authorization, order and approval of, and filing and
registration with, any governmental commission, board or other
regulatory body required to be made or obtained by STI for the
execution and delivery of the Merger Agreement by the Issuer
of the transactions contemplated thereby has been made or
obtained;
(xi) Upon the filing of the Certificate of Merger with the
Secretary of State of Delaware in accordance with the Merger
Agreement, the Merger became effective in accordance with the
General Corporation Law of the State of Delaware.
(xii) Except as disclosed in the Offering Documents, there
are, to the knowledge of such counsel, no pending or
threatened actions, suits or proceedings against or affecting
the Issuer, the Guarantors or any of their subsidiaries or any
of their respective properties that if determined adversely
would be reasonably likely to have, individually or in the
aggregate, a material adverse effect on the condition
(financial or other), business or results of operations of the
Issuer and the Guarantors and their respective subsidiaries
taken as a whole, or would materially and adversely affect the
ability of the Issuer or the Guarantors to perform their
obligations under the Operative Documents, the Merger
Agreement or which are otherwise material in the context of
the sale of the Offered Securities;
(xiii) Neither the Issuer nor any Guarantor is an open-end
investment company, unit investment trust or face-amount
certificate company that is or is required to be registered
under Section 8 of the United States Investment Company Act of
1940 (the "Investment Company Act"), nor is it a closed-end
investment company required to be registered, but not
registered, thereunder; and each of the Issuer and each
Guarantor is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the
proceeds thereof as described in the Offering Documents, will
not be an "investment company" as defined in the Investment
Company Act;
(xiv) The Indenture conforms as to form in all material
respects with the requirements of the Trust Indenture Act and
the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder;
(xv) Assuming the accuracy of the representations and
warranties of the Initial Purchasers
25
<PAGE>
contained in Section 4 of this Agreement, the offer and sale
of the Offered Securities in the manner contemplated by this
Agreement will be exempt from the registration requirements of
the Securities Act; and it is not necessary to qualify the
Indenture under the Trust Indenture Act.
(xvi) In addition, such counsel shall state that they have
participated in conferences with representatives of the Issuer
and the Guarantors, at which conferences the contents of the
Offering Documents, any amendment thereof and supplement
thereto and related matters were discussed, and nothing has
come to the attention of such counsel to cause such counsel to
believe that the Offering Documents or any amendment thereof
or supplement thereto contains any untrue statement of a
material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading, provided that such
counsel need not express any view with respect to the
financial statements and schedules or other financial data
included therein; and further provided that the statement set
forth in this clauseE(xvi) may be set forth in a separate
statement in such counsel's opinion and not in a numbered
paragraph therein.
In rendering such opinion, such counsel may rely as to matters
governed by the law of any jurisdiction other than the Commonwealth of
Massachusetts, the State of Delaware or the United States of America on local
counsel in such jurisdictions; provided, however, that such counsel shall state
that they believe that they and the Initial Purchasers are justified in relying
on such other counsel.
Such opinion shall also state that it is being delivered to the
Initial Purchasers at the request of the Issuer and the Guarantors.
(g) At the Closing Date, the Initial Purchasers shall have received
an opinion of Cahill GordonE& Reindel and Stuart Meister,EEsq., counsel
for FII, RHI, TFC and Fairchild Communications Services Company
("FCSC") (divided between such counsel as they deem appropriate,
subject to the reasonable satisfaction of the Initial Purchasers),
dated as of the Closing Date, in form and substance satisfactory to
counsel for the Initial Purchasers, to the effect that:
(i) ach of TFC, RHI, FII and Fairchild Holding Corp. are
corporations organized, validly existing and in good standing
under the laws of the State of Delaware;
(ii) ach of TFC, RHI and FII has full corporate power and
authority to execute and deliver the Merger Agreement and to
perform its respective obligations thereunder; and all
necessary corporate action has been taken by TFC, RHI and FII
for the due and proper authorization,
26
<PAGE>
execution and delivery of the Merger Agreement and the
consummation of the transactions contemplated thereby,
including but not limited to the Fairchild Reorganization; the
Merger Agreement and all agreements and other documents
executed by TFC and its affiliates to effect the FII
Reorganization (the "Reorganization Documents") have been duly
and validly executed;
(iii) ach of the Merger Agreement and Reorganization
Documents constitutes a valid and legally binding obligation
of each of TFC, RHI and FII and their affiliates who are a
party thereto and is enforceable against them in accordance
with its terms subject to (i) bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding at
law or in equity);
(iv) ach of TFC, RHI and Fairchild Holding Corp. has full
corporate power and authority to execute and deliver the
Indemnification Agreement to which it is a party, the Pledge
Agreement and the Registration Rights Agreement and to perform
its respective obligations thereunder; and all necessary
corporate action has been taken by TFC, RHI and Fairchild
Holding Corp. for the due and proper authorization, execution
and delivery of the Indemnification Agreement to be signed by
them and the Pledge Agreement and the Registration Rights
Agreement;
(v) ach of the Indemnification Agreements, Pledge Agreement
and Registration Rights Agreement constitute a valid and
legally binding obligation of TFC, RHI and Fairchild Holding
Corp., as the case may be, and are enforceable against them in
accordance with their respective terms subject to
(i) bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights generally and
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity);
(vi) Prior to the Closing Date, FCSC is a general
partnership duly organized and validly existing in good
standing under the laws of the State of Delaware, is duly
qualified to do business and is in good standing in each other
jurisdiction in which its ownership or lease of property or
the conduct of the FII Telecommunications Business requires
such qualification;
(vii) With respect to FCSC, the execution, delivery and
performance by FII and compliance with the terms and
provisions of the Merger Agreement will not result in a breach
or violation of any of the terms and provisions of, or
27
<PAGE>
constitute a default under (a) any material statute, rule,
regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction of FCSC or any
of their properties which would individually or in the
aggregate have a material adverse effect on the condition
(financial or other), business, properties or results of
operation of FCSC taken as a whole, except as provided in the
Offering Circular under the caption "Risk Factors", subheading
"Government Regulation" and in paragraphsE3 and 6 of the
opinion of Swidler & Berlin addressed to FCSC ("Swidler &
Berlin OpinionEI") and paragraphsE5 and 6 of the opinion of
Swidler & Berlin addressed to the Lenders and the Initial
Purchasers ("Swidler & Berlin OpinionEII"); (b) any agreement
or instrument to which FCSC is a party or by which FCSC or any
of its subsidiaries is bound or to which any of the properties
of FCSC is subject, which would individually or in the
aggregate have a material adverse effect on the condition
(financial or other), business, properties or results of
operations of FCSC taken as a whole, except as provided in
Section 6.13 of the Merger Agreement and Section 6.13 of the
Disclosure Statement; or (c) the partnership agreement of
FCSC;
(viii) With respect to FCSC, the execution, delivery and
performance by each of TFC, RHI and Fairchild Holding Corp.
and compliance with the terms and provisions of the
Indemnification Agreements will not result in a breach or
violation of any of the terms and provisions of, or constitute
a default or conflict under (a) any material statute, rule,
regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction of FCSC or any
of their properties which would individually or in the
aggregate have a material adverse effect on the condition
(financial or other), business, properties or results of
operations of FCSC taken as a whole, except as provided in the
Offering Circular under the caption "Risk Factors", subheading
"Government Regulation" and in paragraphsE3 and 6 of Swidler &
Berlin OpinionEI and paragraphsE5 and 6 of Swidler & Berlin
OpinionEII; (b) any agreement or instrument relating to
borrowed money to which FCSC is a party or by which FCSC is
bound or to which any of the properties of FCSC is subject,
except as provided in Section 6.13 of the Merger Agreement and
Section 6.13 of the Disclosure Statement; or (c) any other
agreement or instrument to which FCSC is bound or to which any
of the properties of FCSC is subject, which would individually
or in the aggregate have a material adverse effect on the
condition (financial or other), business, properties or
results of operations of FCSC taken as a whole, except as
provided in Section 6.13 of the Merger Agreement and
Section 6.13 of the Disclosure Statement; or (d) the
partnership agreement of FCSC;
(ix) With respect to FCSC (or directors of officers of FCSC),
statements in the Offering Circular under
28
<PAGE>
the captions (a) "Offering Circular Summary", subheadings
"General" and "Business Strategy", (b) "Risk Factors",
subheadings "Business Integration", "Competition",
"Operational Demands Resulting from Growth", "Governmental
Regulation", "Reliance on Third Parties for Equipment" and
"Dependence on Key Personnel", and (c) "Business", subheadings
"General", "Business Strategy", "Historical Information
Regarding STI and FII", "Description of Business" fairly
summarize the matters described therein with respect to FCSC
in all material respects.
In rendering such opinion, such counsel may rely as to matters
governed by the law of any jurisdiction other than the State of New York,
Delaware or the United States of America on local counsel in such jurisdictions;
provided, however, that such counsel shall state that they believe that they and
the Initial Purchasers are justified in relying on such other counsel.
Such opinion shall also state that it is being delivered to the
Initial Purchasers at the request of the Issuer and the Guarantors.
(h) The Initial Purchasers shall have received from Cravath, SwaineE&
Moore, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to the incorporation of the
Issuer, the validity of the Offered Securities, the Offering Documents,
the exemption from registration for the offer and sale of the Offered
Securities by the Issuer to the several Initial Purchasers and the
resales by the several Initial Purchasers as contemplated hereby and
other related matters as CSFBC may require, and the Issuer shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(i) The Initial Purchasers shall have received a certificate dated
the Closing Date:
(i) of the President or any Vice President and a principal
financial or accounting officer of the Issuer in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that the representations and
warranties of the Issuer and its subsidiaries in this
Agreement are true and correct, that the Issuer and its
subsidiaries have complied with all agreements and satisfied
all conditions on their part to be performed or satisfied
hereunder at or prior to the Closing Date and that, subsequent
to the date of the most recent financial statements with
respect to the Issuer and its subsidiaries in the Offering
Circular there has been no material adverse change nor any
development or event involving a prospective material adverse
change, in the condition (financial or other), business,
properties or results of operations of any Relevant Company
29
<PAGE>
and its subsidiaries taken as a whole, except as set forth in
or contemplated by the Offering Circular or as described in
such certificate.
(ii) execution of the Guaranties, dated the Closing Date, of
the President or any Vice President and a principal financial
or accounting officer of STFI confirming each of the matters
referred to in sub-paragraphE(i).
(j) The Initial Purchasers shall have received:
(i) a letter, dated the Closing Date, of Arthur Andersen LLP
which meets the requirements of subsectionE(a)(i) of this
Section; and
(ii) a letter, dated the Closing Date, of Rothstein, KassE&
Company, P.C. which meets the requirements of
subsectionE(a)(ii) of this Section;
except that, in each case, the specified date referred to in such
subsection will be a date not more than five days prior to such the
Closing Date for the purposes of this subsection.
The Issuer will furnish the Initial Purchasers with such conformed
copies of such opinions, certificates, letters and documents as the Initial
Purchasers reasonably request. CSFBC may in its sole discretion waive on behalf
of the Initial Purchasers compliance with any conditions to the obligations of
the Initial Purchasers hereunder, whether in respect of the Closing Date or
otherwise.
Any certificate of the Issuer or any of its subsidiaries signed by any
officer thereof and delivered to the Initial Purchasers or to counsel for the
Initial Purchasers shall be deemed a representation and warranty by the Issuer
or such subsidiary to the Initial Purchasers as to the matters covered thereby
and not the representation and warranty of any such officer.
7. Indemnification and Contribution. (a) The Issuer, STFI and the
Subsidiaries, jointly and severally, will indemnify and hold harmless each
Initial Purchaser against any losses, claims, damages or liabilities, joint or
several, to which such Initial Purchaser may become subject, under the
Securities Act or the Securities Exchange Act of 1934 (the "Exchange Act") or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Offering Documents, or
any amendment or supplement thereto, or any related preliminary offering
circular, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary in order to make the
30
<PAGE>
statements therein, in the light of the circumstances under which they were
made, not misleading and will reimburse each Initial Purchaser for any legal or
other expenses reasonably incurred by such Initial Purchaser in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Issuer, STFI and the
Subsidiaries will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Issuer, STIF and the Subsidiaries by such Initial
Purchaser through CSFBC specifically for use therein, it being understood and
agreed that the such information only consists of the information described as
such in subsectionE(b) below; and provided further, however, that with respect
to any untrue statement or omission or alleged untrue statement or omission made
in any preliminary offering circular the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Initial Purchaser that sold
the Offered Securities concerned to the person asserting any such losses,
claims, damages or liabilities, to the extent that such sale was an initial
resale by such Initial Purchaser and any such loss, claim, damage or liability
of such Initial Purchaser results from the fact that there was not sent or given
to such person, at or prior to the written confirmation of the sale of such
Offered Securities to such person, a copy of the Offering Documents (exclusive
of any material included therein but not attached thereto) if the Issuer had
previously furnished copies thereof to such Initial Purchaser.
(b) Each Initial Purchaser, severally and not jointly, will indemnify
and hold harmless the Issuer, STFI and the Subsidiaries against any losses,
claims, damages or liabilities to which the Issuer, STFI and the Subsidiaries
may become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Offering Documents, or any
amendment or supplement thereto, or any related preliminary offering circular,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Issuer, STFI
and the Subsidiaries by such Initial Purchaser through CSFBC specifically for
use therein, and will reimburse any legal or other expenses reasonably incurred
by the Issuer, STFI and the Subsidiaries
31
<PAGE>
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Initial Purchaser
consists of the following information in the Offering Documents furnished on
behalf of each Initial Purchaser: the last paragraph at the bottom of the cover
page concerning the terms of the offering by the Initial Purchasers; the legend
concerning over-allotments and stabilizing on the inside front cover page; and
the fifth paragraph, the third and fourth sentences of the seventh paragraph and
the eighth paragraph under the caption "Plan of Distribution."
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsectionE(a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsectionE(a) or (b) above except to the extent that the
indemnifying party is prejudiced by the failure to give such notice. In case any
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, which consent shall
not unreasonably be withheld, be counsel to the indemnifying party if such
representation of both the indemnifying and the indemnified party would be
inappropriate due to an actual or potential conflict of interest between them),
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action. No indemnifying party shall be
liable for any amounts paid in settlement of any action or claim without its
written consent, which consent shall not be unreasonably withheld.
32
<PAGE>
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsectionE(a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsectionE(a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Issuer, STFI and
the Subsidiaries on the one hand and the Initial Purchasers on the other from
the offering of the Offered Securities or (ii) if the allocation provided by
clauseE(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clauseE(i)
above but also the relative fault of the Issuer, STFI and the Subsidiaries on
the one hand and the Initial Purchasers on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Issuer, STFI and the Subsidiaries on the one
hand and the Initial Purchasers on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Offered Securities
(before deducting expenses) received by the Issuer, STIF and the Subsidiaries
bear to the total discounts and commissions received by the Initial Purchasers
under this Agreement. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer, STFI and the Subsidiaries or the Initial
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsectionE(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsectionE(d). Notwithstanding the
provisions of this subsectionE(d), no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities purchased by it were resold exceeds the amount of any
damages which such Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations in this subsectionE(d) to contribute are several in
proportion to their respective purchase obligations and not joint.
33
<PAGE>
(e) The obligations of the Issuer, STIF and the Subsidiaries under
this Section shall be in addition to any liability which the Issuer, STFI and
the Subsidiaries may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Initial Purchaser within
the meaning of the Securities Act or the Exchange Act; and the obligations of
the Initial Purchasers under this Section shall be in addition to any liability
which the respective Initial Purchasers may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Issuer, STIF and the Subsidiaries within the meaning of the Securities Act or
the Exchange Act.
8. Default of Initial Purchasers. If any Initial Purchaser or Initial
Purchasers default in their obligations to purchase Offered Securities hereunder
and arrangements satisfactory to CSFBC and the Issuer for the purchase of such
Offered Securities by other persons are not made within 36Ehours after such
default, this Agreement will terminate without liability on the part of any
nondefaulting Initial Purchaser or the Issuer, STIF and the Subsidiaries, except
as provided in Section 9. As used in this Agreement, the term "Initial
Purchaser" includes any person substituted for a Initial Purchaser under this
Section. Nothing herein will relieve a defaulting Initial Purchaser from
liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuer and the Guarantors or their officers and of the several Initial
Purchasers set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Initial Purchaser, the Issuer, the
Guarantors or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the Offered
Securities. If this Agreement is terminated pursuant to Section 8 or if for any
reason the purchase of the Offered Securities by the Initial Purchasers is not
consummated, the Issuer and the Guarantors shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Issuer, the Guarantors and the Initial Purchasers pursuant to
Section 7 shall remain in effect. If the purchase of the Offered Securities by
the Initial Purchasers is not consummated for any reason other than solely
because of the termination of this Agreement pursuant to Section 8 or the
occurrence of any event specified in clauseE(C), (D) or (E) of Section 6(b)(ii),
the Issuer will reimburse the Initial Purchasers for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them (x) as
Initial Purchasers in connection with the offering of the Offered Securities and
34
<PAGE>
(y) as Dealer Managers and Solicitation Agents in connection with the Debt
Tender Offer.
10. Notices. All communications hereunder will be in writing and, if
sent to the Initial Purchasers will be mailed, delivered or telegraphed and
confirmed to the Initial Purchasers, c/o CS First Boston Corporation, Park
Avenue Plaza, New York, NY 10055, Attention: Investment Banking DepartmentE--
Transactions Advisory Group, or, if sent to the Issuer, will be mailed,
delivered or telegraphed and confirmed to it at 100 Great Meadow Road,
Wethersfield, CTE06109, Attention: [KennethEM. Dorros, Esq., General Counsel];
provided, however, that any notice to a Initial Purchaser pursuant to Section 7
will be mailed, delivered or telegraphed and confirmed to such Initial
Purchaser.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Issuer as if such holders
were parties thereto.
12. Representation of Initial Purchasers. CSFBC will act for the
several Initial Purchasers in connection with this purchase, and any action
under this Agreement taken by CSFBC will be binding upon all the Initial
Purchasers.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEWEYORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Issuer hereby submits to the nonexclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
If the foregoing is in accordance with the Initial
Purchaser's understanding of our agreement, kindly sign and return to us
one of the counterparts hereof, whereupon it will become a binding
agreement between the Issuer and the several Initial Purchasers in
accordance with its terms.
Very truly yours,
35
<PAGE>
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.
by: /s/ Vincent DiVincenzo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
SHARED TECHNOLOGIES INC.
as Guarantor
by: /s/ Vincent DiVincenzo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
MULTI-TENANT SERVICES, INC.,
as Guarantor
by: /s/ Vincent DiVincenzo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
BOSTON TELECOMMUNICATIONS
GROUP, INC.,
as Guarantor
by: /s/ Vincent DiVincenzo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
OFFICE TELEPHONE MANAGEMENT,
as Guarantor
by: /s/ Vincent DiVincenzo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
36
<PAGE>
STI INTERNATIONAL, INC.,
as Guarantor
by: /s/ Vincent DiVincenzo
---------------------
Name: Vincent DiVincenzo
Title: Treasurer
The foregoing Purchase Agreement
is hereby confirmed
and accepted as of the date first
above written.
CS FIRST BOSTON CORPORATION
CITICORP SECURITIES, INC.
by: CS FIRST BOSTON CORPORATION
By: /s/ Richard H. Ivers
--------------------------
Name: Richard H. Ivers
Title: Managing Director
37
<PAGE>
Schedule A
Principal Amount
Initial Purchaser of Offered Securities
CS First Boston $130,909,600
Citicorp Securities, Inc. 32,727,400
------------
Total 163,637,000
EXHIBIT 2.1
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").
W I T N E S S E T H :
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
("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 groundwater
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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);
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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;
<PAGE>
(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
<PAGE>
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;
<PAGE>
(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
<PAGE>
(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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
(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
<PAGE>
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 1/4% 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
<PAGE>
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.
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
consents from at least 51% of the outstanding principal amount of Fairchild's 12
1/4% 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:
<PAGE>
(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
<PAGE>
(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,
<PAGE>
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
<PAGE>
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;
<PAGE>
(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
<PAGE>
(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;
<PAGE>
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
<PAGE>
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.
<PAGE>
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.:
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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 1/4% Senior Notes due 1999 (the "12 1/4%
Notes") of FII and, in connection therewith, will obtain such Noteholders'
consent (representing at least 51% of the outstanding principal amount of the 12
1/4% 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 1/4% 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 1/4% 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 1/4% Notes tendered for the Note
Purchase Amount, (ii) repay the Assumed Indebtedness in full and (iii) deposit
in escrow the funds
<PAGE>
necessary to pay the holders of the Series A and Series C Preferred Stock the
amounts owed to them under the Merger Agreement.
<PAGE>
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) underss. 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 underss.
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 underss. 336 andss. 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.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 (ss. 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.ss. 351 and 357(a) and Rev. Rul.
77-449).
<PAGE>
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 (ss. 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 (ss.
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 (ss. 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 (ss. 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 (ss. 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 (ss. 355(c)).
<PAGE>
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."
<PAGE>
(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
<PAGE>
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."
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER dated as of
February 2, 1996 ("First Amendment") is made 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"),
amending certain provisions of the Agreement and Plan of Merger dated as of
November 9, 1995, including the exhibits and schedules thereto (the "Merger
Agreement") by and among Fairchild, RHI, TFC and Shared Technologies. Terms not
otherwise defined herein which are defined in the Merger Agreement shall have
the same respective meanings herein as therein.
WHEREAS, Fairchild, RHI, TFC and Shared Technologies have agreed to
modify certain terms and conditions of the Merger Agreement as specifically set
forth in this First Amendment.
NOW THEREFORE, in consideration of the premises and mutual agreements
contained herein and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
AMENDMENTS TO MERGER AGREEMENT
1.1 References to the distribution of shares of Shared Technologies
Cellular Inc. shall be deleted from sections 5.7(b) and 7.1(c) and in Section
5.5 of the Disclosure Statement.
1.2 Section 6.19 of the Merger Agreement is hereby amended by deleting
the provisions of clause (ii) thereof and by inserting therefor the following:
"(ii) all material Taxes of Fairchild and its subsidiaries in respect
of the pre-Merger period (including but not limited to Taxes
attributable to the Fairchild Reorganization) 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;"
1.3 The first sentence of ss.8.1(c) of the Merger Agreement is hereby
deleted in its entirety.
<PAGE>
1.4 The last sentence of ss.8.2(a) of the Merger Agreement is hereby
deleted in its entirety and replaced with the following:
"Shared Technologies shall cause Shared Technologies Cellular, Inc.
("STCI") to enter into an agreement preventing STCI from competing in
the telecommunications systems and service business."
1.5 Section 9.1(f) shall be amended to state "43.5" in place of "47.5".
1.6 Section 9.1 shall be amended to replace the references to
"Recapitalization" with "Reorganization."
1.7 Section 9.2(d) of the Merger Agreement and Schedule 9.2(d) of the
Merger Agreement shall be deleted in their entirety.
1.8 Schedule 9.2(e) shall be amended by adding to the end thereof the
following:
"(h) Article III, Section 20 shall be amended to include the following
language at the end of such section:
'; provided that in no event shall the board authorize or permit to be
issued any preferred or special class of shares which are entitled to
more than one vote per share or authorize or permit to be issued any
additional shares of the Corporation's Series C Preferred Stock, in
each case without the affirmative vote of 80% of the directors.' "
1.9 Section 9.2(i) is hereby deleted in its entirety and replaced with
the following:
"STCI shall have executed a non-competition agreement with Shared
Technologies in form and substance satisfactory to Fairchild."
1.10 The "and" at the end of ss.9.3(d) of the Merger Agreement shall be
deleted.
1.11 The following is added as new ss.9.3(e) of the Merger Agreement
and existing Section 9.3(e) of the Merger Agreement is renumbered as ss.9.3(f):
"(e) TFC and RHI shall have entered into a Tax Sharing
Agreement with Shared Technologies in the form of Exhibit E hereto; and
1.12 The reference to the entities "D-M-E, Inc." and B-3 and "Fairchild
Fasteners, Inc." in ss.9.3(f) (formerly ss.9.3(e)) of the Merger Agreement shall
be deleted and replaced with the entity "Fairchild Holding Corp." and the
reference to "B-1, B-2 and B-3" shall be replaced by "B-1 and B-2."
1.13 Section 10.1(c) shall be deleted in its entirety and replaced with
the following:
"by either Fairchild or Shared Technologies if the Effective Time has
not occurred on or prior to March 8, 1996 or such other date, if any,
as Fairchild or 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."
-2-
<PAGE>
ARTICLE II
AMENDMENTS TO INDEMNIFICATION AGREEMENTS
(EXHIBITS B-1 through B-3)
2.1 The first sentence of Section 1 of the Indemnification Agreement
set forth as Exhibit B-1 to the Merger Agreement is hereby amended by adding the
clause "and including all Taxes (including but not limited to Taxes related to
the Fairchild Reorganization)" after the first reference to "Merger Agreement"
therein.
2.2 The first sentence of Section 1 of the Indemnification Agreement
set forth as Exhibit B-2 to the Merger Agreement is hereby amended by adding the
clause "and including all Taxes (including but not limited to Taxes related to
the Fairchild Reorganization)" after the reference to "Merger Agreement"
therein.
2.3 All references to "Fairchild Recapitalization" in the
Indemnification Agreements set forth as Exhibits B-1 and B-2 to the Merger
Agreement are hereby deleted and replaced with the defined term "Fairchild
Reorganization."
2.4 All references to the entity "Fairchild Fasteners, Inc." in the
Indemnification Agreement set forth as Exhibit B-2 to the Merger Agreement are
hereby deleted and replaced with the entity "Fairchild Holding Corp." and all
references to the defined term "Fasteners" in the Indemnification Agreement set
forth as Exhibit B-2 to the Merger Agreement are hereby deleted and replaced
with the defined term "FHC".
2.5 All references to "Shared Technologies" in ss.1 of the
Indemnification Agreements set forth as Exhibits B-1 and B-2 shall include, and
shall be deemed to include for all purposes set forth in ss.1, all subsidiaries
of Shared Techologies Inc.
2.6 Exhibit B-3 shall be deleted in its entirety.
ARTICLE III
AMENDMENTS TO PLEDGE AGREEMENT
(EXHIBIT C)
3.1 The Pledge Agreement as set forth as Exhibit C to the Merger
Agreement is amended by deleting all references to "D-M-E Inc." and "Fairchild
Fasteners, Inc." and substituting therefor "Fairchild Holding Corp."
ARTICLE IV
AMENDMENTS TO TAX SHARING AGREEMENT
(EXHIBIT E)
4.1 The Tax Sharing Agreement as set forth as Exhibit E to the Merger
Agreement is hereby deleted and the Tax Sharing Agreement as attached hereto as
Exhibit E (Restated) is substituted therefor.
ARTICLE V
PROVISIONS OF GENERAL APPLICATION
5.1 Except as otherwise expressly provided by this First Amendment, all
of the terms, conditions and provisions to the Merger Agreement remain
unaltered. The Merger Agreement and this First Amendment shall be read and
construed as one agreement.
-3-
<PAGE>
5.2 If any of the terms of this First Amendment shall conflict in any
respect with any of the terms of the Merger Agreement, the terms of this First
Amendment shall be controlling.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their duly authorized officers all as of the day and year
first above written.
SHARED TECHNOLOGIES INC. THE FAIRCHILD CORPORATION
By:/s/ Vincent DiVincenzo By:/s/ Donald E. Miller
---------------------- --------------------
Vincent DiVincenzo Donald E. Miller
Senior Vice President- Senior Vice President
Finance and Administration,
Treasurer and Chief Financial
Officer
FAIRCHILD INDUSTRIES, INC. RHI HOLDINGS, INC.
By:/s/ Donald E. Miller By:/s/ Donald E. Miller
-------------------- --------------------
Donald E. Miller Donald E. Miller
Vice President Vice President
ACCEPTED AND AGREED TO BY:
FAIRCHILD HOLDING CORP.
By:/s/ Donald E. Miller
--------------------
Donald E. Miller
Vice President
-4-
EXHIBIT 2.3
SECOND AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER dated as of February
23, 1996 ("Second Amendment"), is made 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"), amending
certain provisions of the Agreement and Plan of Merger dated as of November 9,
1995, as amended by the First Amendment to the Agreement and Plan of Merger
dated as of February 2, 1996, including the exhibits and schedules thereto (the
"Merger Agreement") by and among Fairchild, RHI, TFC and Shared Technologies.
Terms not otherwise defined herein which are defined in the Merger Agreement
shall have the same respective meanings herein as therein.
WHEREAS, Fairchild, RHI, TFC and Shared Technologies have agreed to modify
certain terms and conditions of the Merger Agreement as specifically set forth
in this Second Amendment.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
AMENDMENTS TO MERGER AGREEMENT
1.1 The following shall be added as a new final paragraph to Schedule
3.1(b) to the Merger Agreement, "Summary of Terms of Special Preferred Stock":
"The terms of the Special Preferred Stock will provide, or Fairchild,
RHI and Shared Technologies shall enter into an agreement giving,
Shared Technologies the option to extend the final maturity of the
Special Preferred Stock from March 31, 2007, to March 31, 2008. If such
option is exercised, Shared Technologies will pay a dividend to the
holders of the Special Preferred Stock at the same rate payable on the
Senior Discount Notes due 2006 to be issued by a subsidiary of the
Surviving Corporation in connection with the Merger, calculated on the
outstanding liquidation preference of the Special Preferred Stock. Such
dividend shall accrue from
<PAGE>
March 31, 2007, and be payable quarterly beginning June 30, 2007."
1.2 Section 6.7(a) of the Merger Agreement is amended by adding "(the
'Closing Date Balance Sheet')," after the words "Effective Date" on the last
line of such section, such that such line reads as follows:
"......gies on the Effective Date (the "Closing Date Balance Sheet"), is at
least $80,000,000);........ ."
1.3 Section 6.7(b) of the Merger Agreement is amended in its entirety to
read as follows:
"(b) except as contemplated by Schedule 9.1 and except for the assignment
to RHI by Fairchild of Fairchild's receivables (the "Permitted
Receivables Assignment"), in an amount of $9,000,000, 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; provided that the
Permitted Receivables Assignment shall not reduce the net worth of
Fairchild to less than $80,000,000. Notwithstanding the foregoing,
if the Effective Time shall not have occurred on or prior to March
15, 1996, the amount of the Permitted Receivables Assignment shall
be increased to the maximum amount which would not cause the net
worth of Fairchild, as evidenced by the Closing Date Balance Sheet,
to be less than $80,000,000. Within 90 days of the Closing Date,
Arthur Andersen, L.L.P. will prepare and deliver to the parties an
audited balance sheet of Fairchild as of the Closing Date (the
"Audited Balance Sheet"). In the event that the net worth of
Fairchild, as shown on the Audited Balance Sheet, (x) is less than
$80,000,000, Fairchild shall pay to Shared Technologies an amount in
cash equal to such difference or (y) is more than $80,000,000,
Shared Technologies shall pay to Fairchild an amount in cash equal
to such difference; provided that no such cash payment, when taken
together with the amount of receivables assigned to RHI by Fairchild
pursuant to this paragraph, shall be required in an amount greater
than the amount of the Permitted Receivables Assignment."
1.4 The following shall be added as a new Section 8.12 of the Merger
Agreement:
2
<PAGE>
"8.12 Post-Merger Sale of Shared Technologies Cellular, Inc. RHI agrees
that if, within 150 days of the Effective Time, the Surviving Corporation
shall receive cash proceeds from the sale of its interest, as of this date,
in STCI, then RHI shall contribute to the Surviving Corporation, a sum
equal to 40% of such cash proceeds received by the Surviving Corporation,
up to a maximum contribution of $1,600,000."
1.5 Section 10.1(c) of the Merger Agreement is hereby amended by deleting
the date "March 8, 1996," and inserting the date "March 15, 1996," in lieu
thereof.
1.6 Section 10.1(d) shall be amended by deleting the words "..., at the
Special Meeting of (including any adjournment thereof)," and adding at the end
of such section the words "on or before March 4, 1996".
ARTICLE II
AMENDMENTS TO THE TAX SHARING AGREEMENT
(EXHIBIT E)
2.1 The parties hereto agree to amend The Tax Sharing Agreement as set
forth as Exhibit E to the Merger Agreement to provide for the following
language:
(i) Notwithstanding any other representation in the Merger Agreement or in
the Tax Sharing Agreement, TFC and RHI make no representation or warranty as to
(i) the amount of any net operating loss and tax credits of the TFC Group
allocable to FII or VSI at the Effective Date as a result of the operations of
FII and VSI prior to the Effective Date; and (ii) the amount of any reduction in
tax payable by Shared Technologies due to utilization of any net operating loss
or tax credit of the TFC Group allocable to FII and VSI as a result of the
operations of FII and VSI prior to the Effective Date.
(ii) Notwithstanding any other provision of the Tax Sharing Agreement,
Shared Technologies shall not share with TFC and RHI any reduction in the tax
payment of Shared Technologies as a result of Shared Technologies utilizing any
net operating losses or tax credits of the TFC Group allocable to FII or VSI at
the Effective Date or as a result of operations of FII and VSI prior to the
Effective Date.
ARTICLE III
PROVISIONS OF GENERAL APPLICATION
3.1 Except as otherwise expressly provided by this Second Amendment, all of
the terms, conditions and provisions to the Merger Agreement remain unaltered.
3
<PAGE>
The Merger Agreement and this Second Amendment shall be read and construed as
one agreement.
3.2 If any of the terms of this Second Amendment shall conflict in any
respect with any of the terms of the Merger Agreement, the terms of this Second
Amendment shall be controlling.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be executed by their duly authorized officers, all as of the day and year first
above written.
SHARED TECHNOLOGIES INC. THE FAIRCHILD CORPORATION
By:/s/Anthony D. Autorino By:/s/Donald E. Miller
Anthony D. Autorino Donald E. Miller
Chief Executive Officer Senior Vice President
FAIRCHILD INDUSTRIES, INC. RHI HOLDINGS, INC.
By:/s/Donald E. Miller By:/s/Donald E. Miller
Donald E. Miller Donald E. Miller
Vice President Vice President
ACCEPTED AND AGREED TO BY:
FAIRCHILD HOLDING CORP.
By:/s/Donald E. Miller
Donald E. Miller
Vice President
4
EXHIBIT 2.4
THIRD AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This THIRD AMENDMENT TO AGREEMENT AND PLAN OF MERGER dated as of March 1,
1996 ("Third Amendment"), is made by and among Fairchild Industries, Inc., a
Delaware corporation ("Fairchild"), RHI Holdings, Inc., a a Delaware corporation
("RHI"), The Fairchild Corporation, a Delaware corporation ("TFC"), and Shared
Technologies Inc., a Delaware corporation ("Shared Technologies"), amending
certain provisions of the Agreement and Plan of Merger dated as of November 9,
1995, as amended by the First Amendment to Agreement and Plan of Merger dated as
of February 2, 1996 (the "First Amendment"), as further amended by the Second
Amendment to Agreement and Plan of Merger dated as of February 23, 1996 (the
"Second Amendment"), including the exhibits and schedules thereto (the Agreement
and Plan of Merger, as amended by the First Amendment and the Second Amendment,
are referred to collectively herein as the "Merger Agreement") by and among
Fairchild, RHI, TFC and Shared Technologies. Terms not otherwise defined herein
which are defined in the Merger Agreement shall have the same respective
meanings herein as therein.
WHEREAS, Fairchild, RHI, TFC and Shared Technologies have agreed to modify
certain terms and conditions of the Merger Agreement as specifically set forth
in this Third Amendment.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
AMENDMENTS TO MERGER AGREEMENT
1.1 The Merger Agreement hereby is amended by deleting therefrom in its
entirety Section 1.1 of the Second Amendment.
<PAGE>
1.2 Section 10.1(d) of the Merger Agreement (as amended by Section 1.6 of
the Second Amendment) hereby is amended by deleting the words "on or before
March 4, 1996", and adding the words "on or before March 13, 1996" at the end of
such section.
1.3 Section 6.7(b) of the Merger Agreement (as amended by Section 1.3 of
the Second Amendment) hereby is amended by deleting clauses (x) and (y)
therefrom in their entirety (but not deleting the proviso following such
clauses), and substituting therefor the following: "(x) is less than
$80,000,000, TFC shall pay to Shared Technologies an amount in cash equal to
such difference or (y) is more than $80,000,000 Shared Technologies shall pay to
TFC an amount in cash equal to such difference;".
ARTICLE II
PROVISIONS OF GENERAL APPLICATION
2.1 Except as otherwise expressly provided by this Third Amendment, all of
the terms, conditions and provisions to the Merger Agreement remain unaltered.
The Merger Agreement and this Third Amendment shall be read and construed as one
agreement.
2.2 If any of the terms of this Third Amendment shall conflict in any
respect with any of the terms of the Merger Agreement, the terms of this Third
Amendment shall be controlling.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be executed by their duly authorized officers, all as of the day and year first
above written.
SHARED TECHNOLOGIES INC. THE FAIRCHILD CORPORATION
By: /s/ Anthony D. Autorino By: /s/ Donald E. Miller
----------------------- --------------------
Chief Executive Officer Senior Vice President
2
<PAGE>
FAIRCHILD INDUSTRIES, INC. RHI HOLDINGS, INC.
By: /s/ Donald E. Miller By: /s/ Donald E. Miller
-------------------- --------------------
Vice President Vice President
ACCEPTED AND AGREED TO BY:
FAIRCHILD HOLDING CORP.
By: /s/ Donald E. Miller
--------------------
Vice President
3
EXHIBIT 3(i).1
RESTATED CERTIFICATE OF INCORPORATION
OF
SHARED TECHNOLOGIES INC.
INTRODUCTION. SHARED TECHNOLOGIES INC. was originally incorporated under
the name of Balcon, Inc. by Certificate of Incorporation filed on September 23,
1987. By a Plan and Agreement of Merger dated March 8, 1988, Balcon, Inc. merged
with Shared Technologies Inc., survived the merger, and changed its name to
Shared Technologies Inc. This restatement only restates and integrates, and does
not further amend, the provisions of the Corporation's Restated Certificate of
Incorporation as heretofore amended or supplemented, and there is no discrepancy
between the provisions thereof and of this Restated Certificate of
Incorporation. This Restated Certificate of Incorporation was duly adopted
pursuant to Section 245 of the Delaware General Corporation Law by the Board of
Directors.
FIRST. The name of this corporation shall be:
SHARED TECHNOLOGIES INC.
SECOND. Its registered office in the State of Delaware is to be located at
1013 Centre Road, in the City of Wilmington, County of New Castle 19805, and its
registered agent at such address is CORPORATION SERVICE COMPANY.
THIRD. The purpose of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law.
FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is (i) 20,000,000 shares of Common
Stock, $.004 par value per share ("Common Stock"), and (ii) 10,000,000 shares of
Preferred Stock, $.01 par value per share.
A. Common Stock. Shares of Common Stock shall have the following voting
powers, rights and preferences:
1. Voting Rights. Except as otherwise required by Statute or as otherwise
provided in this Restated Certificate of Incorporation, the holders of shares of
Common Stock shall be entitled to vote on all matters at all meetings of the
stockholders of the Corporation, and shall be entitled to one vote for each
share of Common Stock entitled to vote at such meeting, voting together, as one
class, with the holders of any shares of Preferred Stock who
<PAGE>
are entitled to vote, except to the extent that a class vote for any class or
series of stock is required by statute.
2. Dividends. Subject to any preferential dividend rights applicable to
shares of Preferred Stock, the holders of shares of Common Stock shall be
entitled to receive such dividends as may be declared by the Board of Directors.
3. Liquidation. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, after distribution in full of the
preferential amounts to be distributed to the holders of shares of Preferred
Stock, the holders of shares of Common Stock shall be entitled to receive all of
the remaining assets of the Corporation available for distribution to the
holders of Common Stock, ratably in proportion to the number of shares of Common
Stock held by them.
B. Preferred Stock. Shares of Preferred Stock shall have the following
voting powers, rights and preferences.
Preferred Stock may be issued from time to time in one or more series, each
of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of any
series of Preferred Stock which may be redeemed, purchased or acquired by the
Corporation may be reissued as shares of the same series or as shares of one or
more other series of Preferred Stock except as otherwise provided by law.
Different series of Preferred Stock shall not be construed to constitute
different classes of shares for the purpose of voting by classes unless
expressly provided.
Authority is hereby expressly granted to the Board of Directors from time
to time to issue the Preferred Stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing for
the issue of the shares thereof, to determine and fix such voting powers, full
or limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the Delaware General Corporation Law. Without limiting
the generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series to the extent
permitted by law.
2
<PAGE>
DESIGNATION OF SERIES C PREFERRED STOCK
1. Designation; Rank. The series of Preferred Stock designated and known as
"Series C Preferred Stock" shall consist of 5,000,000 shares, par value $.01 per
share. Shares of the Series C Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank senior and
prior to the Common Stock, par value $.004 per share (the "Common Stock") of the
Corporation and to any other class or series of capital stock of the Corporation
hereafter issued (all of such equity securities of the Corporation to which the
Series C Preferred Stock ranks prior, including all classes of Common Stock, are
at times collectively referred to herein as the "Junior Securities").
2. Dividends.
(a) The holders of the Series C Preferred Stock shall be entitled to
receive, out of any funds legally available therefor, dividends in cash at the
annual rate of $.32 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations or other similar recapitalizations
affecting such shares), and no more, in equal quarterly payments in arrears on
March 31, June 30, September 30 and December 31 in each year (each such date is
referred to as a "Dividend Payment Date") commencing on September 30, 1992,
payable in preference and priority to any payment of any cash dividend on Common
Stock or any other shares of capital stock of this Corporation. Such dividends
shall be paid to the holders of record at the close of business on the date
specified by the Board of Directors of the Corporation at the time such dividend
is declared. If the Dividend Payment Date is not a business day, the Dividend
Payment Date shall be the next succeeding business day.
(b) Each of such quarterly dividends shall be fully cumulative and shall
accrue, whether or not earned or declared, without interest, from the first day
of the quarter in which such dividend may be payable as herein provided, except
that with respect to the first quarterly dividend, such dividend shall accrue
from September 15, 1992.
(c) No dividends shall be declared or paid or set apart for payment on the
Junior Securities, or on the Preferred Stock of any series ranking, as to
dividends, junior to the Series C Preferred Stock, for any period unless full
cumulative dividends have been or contemporaneously are declared and paid (or
declared and a sum sufficient for the payment thereof set apart for such
payment) on the Series C Preferred Stock for all dividend payment periods ending
on or prior to the date of payment of
3
<PAGE>
such full cumulative dividends. Unless full cumulative dividends on the Series C
Preferred Stock have been paid, no other distribution shall be made upon the
Junior Securities or upon any other such series of Preferred Stock.
(d) In the event that the Corporation shall have cumulative, accrued and
unpaid dividends outstanding immediately prior to, and in the event of a
conversion of any shares of Series C Preferred Stock as provided in Section 5
hereof, the Corporation shall, at the option of the holder of such shares, pay
in cash to such holder the full amount of any such dividends or allow such
dividends to be converted into Common Stock in accordance with, and pursuant to
the terms specified in, Section 5 hereof, except that the Conversion Price (as
that term is defined in Section 5(a)) for such purpose shall be the then fair
market value of the Common Stock as determined by the Board of Directors of the
Corporation.
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of shares of Series C Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, after and subject to
the payment in full of all amounts required to be distributed to the holders of
any other class or series of stock of the Corporation ranking on liquidation
prior and in preference to the Series C Preferred Stock (collectively referred
to as "Senior Preferred Stock"), but before any payment shall be made to the
holders of any Junior Securities by reason of their ownership thereof, an amount
equal to $4 per share (subject to appropriate adjustment in the event of any
stock dividend, stock split, combination or other similar recapitalization
affecting such shares). If upon any such liquidation, dissolution or winding up
of the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of Series C Preferred Stock the full amount to which they shall be
entitled, the holders of Series C Preferred Stock shall share ratably in any
distribution of the remaining assets and funds of the Corporation in proportion
to the respective amounts which would otherwise be payable in respect of the
shares held by them upon such distribution if all amounts payable on or with
respect to such shares were paid in full.
(b) After the payment of all preferential amounts required to be paid to
the holders of Senior Preferred Stock and Series C Preferred Stock upon the
dissolution, liquidation or winding up of the Corporation, the holders of shares
of Junior Securities then outstanding shall be
4
<PAGE>
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
(c) Written notice of such liquidation, dissolution or winding up, stating
a payment date and the place where said payments shall be made, shall be given
by mail, postage prepaid, or by telex to non-U.S. residents, not less than 20
days prior to the payment date stated therein, to the holders of record of the
Series C Preferred Stock, such notice to be addressed to each such holder at its
address as shown by the records of the Corporation.
(d) Whenever the distribution provided for in this Section 3 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
other corporations shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange
or transfer shall be in connection with a plan of liquidation, dissolution or
winding up of the business of the Corporation.
4. Voting
(a) Except as may be otherwise provided in these terms of the Series C
Preferred Stock or by law, the Series C Preferred Stock shall not be entitled to
vote.
(b) The Corporation shall not amend, alter or repeal the preferences,
special rights or other powers of the Series C Preferred Stock so as to affect
adversely the Series C Preferred Stock, without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
Series C Preferred Stock, given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a class. For this purpose, without
limiting the generality of the foregoing, the authorization or issuance of any
series of Series Preferred Stock with preference or priority over the Series C
Preferred Stock as to the right to receive either dividends or amounts
distributable
5
<PAGE>
upon liquidation, dissolution or winding up of the Corporation shall be deemed
to affect adversely the Series C Preferred Stock, and the authorization or
issuance of any series of Series Preferred Stock on a parity with Series C
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall not be deemed to affect adversely the Series C Preferred Stock. The number
of authorized shares of Series C Preferred Stock may be increased or decreased
(but not below the number of shares then outstanding) by the affirmative vote of
the holders of a majority of the then outstanding shares of the Common Stock,
Series C Preferred Stock and all other classes or series of stock of the
Corporation entitled to vote thereon, voting as a single class.
5. Optional Conversion. The holders of the Series C Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series C Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time to
time, into such number of fully paid and nonassessable shares of Common Stock as
is determined by dividing $4.00 by the Conversion Price (as defined below) in
effect at the time of conversion. The conversion price at which shares of Common
Stock shall be deliverable upon conversion of Series C Preferred Stock without
the payment of additional consideration by the holder thereof (the "Conversion
Price") shall initially be $8.00. Such initial Conversion Price, and the rate at
which shares of Series C Preferred Stock may be converted into shares of Common
Stock, shall be subject to adjustment as provided below.
In the event of a notice of redemption of any shares of Series C Preferred
Stock pursuant to Section 6 hereof, the Conversion Rights of the shares
designated for redemption shall terminate at the close of business on the fifth
full day preceding the date fixed for redemption, unless the redemption price is
not paid when due, in which case the Conversion Rights for such shares shall
continue until such price is paid in full. In the event of a liquidation of the
Corporation, the Conversion Rights shall terminate at the close of business on
the first full day preceding the date fixed for the payment of any amounts
distributable on liquidation to the holders of Series C Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of the Series C Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Corporation shall
pay cash equal to such fraction multiplied by the then effective Conversion
Price.
(c) Mechanics of Conversion.
(i) In order for a holder of Series C Preferred Stock to convert shares
of Series C Preferred Stock
6
<PAGE>
into shares of Common Stock, such holder shall surrender the
certificate or certificates for such shares of Series C Preferred Stock
at the office of the transfer agent for the Series C Preferred Stock
(or at the principal office of the Corporation if the Corporation
serves as its own transfer agent), together with written notice that
such holder elects to convert all or any number of the shares of the
Series C Preferred Stock represented by such certificate or
certificates. Such notice shall state such holder's name or the names
of the nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. If required by
the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by a written instrument or instruments of
transfer, in a form satisfactory to the Corporation, duly executed by
the registered holder or his or its attorney duly authorized in
writing. The date of receipt of such certificates and notice by the
transfer agent (or by the Corporation if the Corporation serves as its
own transfer agent) shall be the conversion date ("Conversion Date").
The Corporation shall, as soon as practicable after the Conversion
Date, issue and deliver at such office to such holder of Series C
Preferred Stock, or to his or its nominees, a certificate or
certificates for the number of shares of Common Stock to which such
holder shall be entitled, together with cash in lieu of any fraction of
a share.
(ii) The Corporation shall at all times when the Series C
Preferred Stock shall be outstanding, reserve and keep available out of
its authorized but unissued stock, for the purpose of effecting the
conversion of the Series C Preferred Stock, such number of its duly
authorized shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Series C
Preferred Stock. Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value of
the shares of Common Stock issuable upon conversion of the Series C
Preferred Stock, the Corporation will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and nonassessable
shares of Common Stock at such adjusted Conversion Price.
(iii) Upon any such conversion, no adjustment to the
Conversion Price shall be made for any accrued and unpaid dividends on
the Series C Preferred Stock surrendered for conversion or on the
Common Stock delivered upon conversion.
7
<PAGE>
(iv) All shares of Series C Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares,
including the rights, if any, to receive notices and to vote, shall
immediately cease and terminate on the Conversion Date, except only the
right of the holders thereof to receive shares of Common Stock in
exchange therefor and payment of any accrued and unpaid dividends
thereon. Any shares of Series C Preferred Stock so converted shall be
retired and canceled and shall not be reissued, and the Corporation may
from time to time take such appropriate action as may be necessary to
reduce the authorized Series C Preferred Stock accordingly.
(d) Adjustments to Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this Subsection
5(d), the following definitions shall apply:
(A) "Option" shall mean rights, options or warrants
to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities, excluding options granted to employees or
consultants of the Corporation pursuant to an option plan adopted by
the Board of Directors (subject to appropriate adjustment for any stock
dividend, stock split, combination or other similar recapitalization
affecting such shares).
(B) "Original Issue Date" shall mean the date on
which a share of Series C Preferred Stock was first issued.
(C) "Convertible Securities" shall mean any evidences
of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(D) "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued (or, pursuant to Subsection 5(d)(iii)
below, deemed to be issued) by the Corporation after the Original Issue
Date, other than shares of Common Stock issued or issuable:
(I) upon conversion of shares of Series C
Preferred Stock outstanding on the Original Issue Date;
(II) as a dividend or distribution on Series
C Preferred Stock;
8
<PAGE>
(III) by reason of a dividend, stock split,
split-up or other distribution on shares of Common Stock
excluded from the definition of Additional Shares of Common
Stock by the foregoing clauses (I) and (II) or this clause
(III); or
(IV) upon the exercise of options excluded
from the definition of "Option" in Subsection 5(d)(i)(A).
(ii) No Adjustment of Conversion Price. No adjustment in the
number of shares of Common Stock into which the Series C Preferred
Stock is convertible shall be made by adjustment in the applicable
Conversion Price thereof: (a) unless the consideration per share
(determined pursuant to Subsection 5(d)(v)) for an Additional Share of
Common Stock issued or deemed to be issued by the Corporation is less
than the applicable Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares, or (b) if
prior to such issuance, the Corporation receives written notice from
the holders of at least a majority of the then outstanding shares of
Series C Preferred Stock agreeing that no such adjustment shall be made
as the result of the issuance of Additional Shares of Common Stock.
(iii) Issue of Securities Deemed Issue of Additional Shares of
Common Stock. If the Corporation at any time or from time to time after
the Original Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of holders
of any class of securities entitled to receive any such Options or
Convertible Securities, then the maximum number of shares of Common
Stock (as set forth in the instrument relating thereto without regard
to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares
of Common Stock issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business on such
record date, provided that Additional Shares of Common Stock shall not
be deemed to have been issued unless the consideration per share
(determined pursuant to Subsection 5(d)(v) hereof) of such Additional
Shares of Common Stock would be less than the applicable Conversion
Price in effect on the date of and immediately prior to such issue, or
such record date, as the case may be, and provided further that in any
9
<PAGE>
such case in which Additional Shares of Common Stock are deemed to be
issued:
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion
or exchange of such Convertible Securities;
(B) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any
increase in the consideration payable to the Corporation, or decrease
in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or
the rights of conversion or exchange under such Convertible Securities;
(C) no readjustment pursuant to clause (B) above
shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the Conversion Price on the original
adjustment date, or (ii) the Conversion Price that would have resulted
from any issuance of Additional Shares of Common Stock between the
original adjustment date and such readjustment date;
(D) upon the expiration or termination of any
unexercised Option, the Conversion Price shall not be readjusted, but
the Additional Shares of Common Stock deemed issued as the result of
the original issue of such Option shall not be deemed issued for the
purposes of any subsequent adjustment of the Conversion Price; and
(E) in the event of any change in the number of
shares of Common Stock issuable upon the exercise, conversion or
exchange of any Option or Convertible Security, including, but not
limited to, a change resulting from the antidilution provisions
thereof, the Conversion Price then in effect shall forthwith be
readjusted to such Conversion Price as would have been obtained had the
adjustment which was made upon the issuance of such Option or
Convertible Security not exercised or converted prior to such change
been made upon the basis of such change, but no further adjustment
shall be made for the actual issuance of
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<PAGE>
Common Stock upon the exercise or conversion of any such Option or
Convertible Security.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock. In the event the Corporation shall
at any time after the Original Issue Date issue Additional Shares of
Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to Subsection 5(d)(iii), but excluding shares issued as
a dividend or distribution as provided in Subsection 5(f) or upon a
stock split or combination as provided in Subsection 5(e)), without
consideration or for a consideration per share less than the applicable
Conversion Price in effect on the date of and immediately prior to such
issue, then, and in such event, such Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying such Conversion Price by a fraction,
(A) the numerator of which shall be (1) the number of shares of Common
Stock outstanding immediately prior to such issue plus (2) the number
of shares of Common Stock which the aggregate consideration received by
the Corporation for the total number of Additional Shares of Common
Stock so issued would purchase at such Conversion Price; and (B) the
denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock so issued; provided that, for the
purpose of this Subsection 5(d)(iv), all shares of Common Stock
issuable upon conversion of shares of Series C Preferred Stock
outstanding immediately prior to such issue shall be deemed to be
outstanding, and immediately after any Additional Shares of Common
Stock are deemed issued pursuant to Subsection 5(d)(iii) (other than
shares excluded from the definition of "Additional Shares of Common
Stock" by virtue of clause (IV) of Subsection 5(d)(i)(D)), such
Additional Shares of Common Stock shall be deemed to be outstanding.
Notwithstanding the foregoing, the applicable Conversion Price
shall not be so reduced at such time if the amount of such reduction
would be an amount less than $.05, but any such amount shall be carried
forward and reduction with respect thereto made at the time of and
together with any subsequent reduction which, together with such amount
and any other amount or amounts so carried forward, shall aggregate
$.05 or more.
(v) Determination of Consideration. For purposes of this
Subsection 5(d), the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as
follows:
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(A) Cash and Property: Such consideration shall:
(I) insofar as it consists of cash, be
computed at the aggregate of cash received by the Corporation,
excluding amounts paid or payable for accrued interest or
accrued dividends;
(II) insofar as it consists of property
other than cash, be computed at the fair market value thereof
at the time of such issue, as determined in good faith by the
Board of Directors; and
(III) in the event Additional Shares of
Common Stock are issued together with other shares or
securities or other assets of the Corporation for
consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (I)
and (II) above, as determined in good faith by the Board of
Directors.
(B) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional
Shares of Common Stock deemed to have been issued pursuant to
Subsection 5(d)(iii) relating to Options and Convertible Securities
shall be determined by dividing (x) the total amount, if any, received
or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the Corporation
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and
the conversion or exchange of such Convertible Securities, by (y) the
maximum number of shares of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities.
(e) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the Original Issue Date for a
series of Preferred Stock effect a subdivision of the outstanding Common Stock,
the Conversion Price then in effect immediately before that
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<PAGE>
subdivision shall be proportionately decreased. If the Corporation shall at any
time or from time to time after the Original Issue Date for a series of the
Preferred Stock combine the outstanding shares of Common Stock, the Conversion
Price then in effect immediately before the combination shall be proportionately
increased. Any adjustment under this paragraph shall become effective at the
close of business on the date the subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Issue Date
for a series of Preferred Stock shall make or issue, or fix a record date for
the determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event the Conversion Price for such series of Preferred Stock then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date shall have been fixed, as of the close of business on such record
date, by multiplying the Conversion Price for such series of Preferred Stock
then in effect by a fraction:
(i) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price for such series of Preferred Stock shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Price for such series of Preferred Stock
shall be adjusted pursuant to this paragraph as of the time of actual
payment of such dividends or distributions.
(g) Adjustments for Other Dividends and Distributions. In the event the
Corporation at any time or from time to time after the Original Issue Date for a
series of Preferred Stock shall
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make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of such series of
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Preferred Stock been
converted into Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period
giving application to all adjustments called for during such period, under this
paragraph with respect to the rights of the holders of the Preferred Stock.
(h) Adjustment for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon the conversion of the Preferred Stock shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification, or otherwise (other
than a subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation, or sale of assets provided
for below), then and in each such event the holder of each such share of
Preferred Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification, or other change, by holders of the
number of shares of Common Stock into which such shares of Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(i) Adjustment for Merger or Reorganization, etc. In case of any
consolidation or merger of the Corporation with or into another corporation or
the sale of all or substantially all of the assets of the Corporation to another
corporation (other than a consolidation, merger or sale which is treated as a
liquidation pursuant to Subsection 3(a)), each share of Series C Preferred Stock
shall thereafter be convertible into the kind and amount of shares of stock or
other securities or property to which a holder of the number of shares of Common
Stock of the Corporation deliverable upon conversion of such Series C Preferred
Stock would have been entitled upon such consolidation, merger or sale; and, in
such case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions in this Section 5
set forth with respect to the rights and interest thereafter of the holders of
the Series C Preferred Stock, to the end that the provisions set forth in this
Section 5 (including provisions with respect to changes in and other adjustments
of the Conversion Price) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any shares of stock or other property
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<PAGE>
thereafter deliverable upon the conversion of the Series C Preferred Stock.
(j) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series C Preferred Stock against impairment.
(k) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series C Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series C Preferred Stock, furnish or cause to be furnished
to such holder a similar certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price then in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which then
would be received upon the conversion of Series C Preferred Stock.
(1) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other
securities of the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock distribution
thereon), or of any consolidation or merger of the Corporation into or
with another corporation, or of the sale of all or substantially all of
the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation
or winding up of the Corporation;
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<PAGE>
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series C Preferred Stock, and shall cause to
be mailed to the holders of the Series C Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the record date specified in (A) below or twenty days before the
date specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, subdivision or combination are to be
determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale,
dissolution or winding up.
6. Optional Redemption.
(a) At any time and from time to time after June 30, 1993, the Corporation
may, at the option of its Board of Directors, redeem the Series C Preferred
Stock, in whole or in part, by paying $6 per share (subject to appropriate
adjustment for stock splits, stock dividends, combinations or other similar
recapitalization affecting such shares) in cash for each share of Series C
Preferred Stock then redeemed (hereinafter referred to as the "Redemption
Price").
(b) In the event of any redemption of only a part of the then outstanding
Series C Preferred Stock, the Corporation shall effect such redemption pro rata
among the holders thereof based on the number of shares of Series C Preferred
Stock held by such holders on the date of the Redemption Notice (as defined
below).
(c) `At least 30 days prior to the date fixed for any redemption of Series
C Preferred Stock (hereinafter referred to as the "Redemption Date"), written
notice shall be mailed, by first class or registered mail, postage prepaid, to
each holder of record of Series C Preferred Stock to be redeemed, at his or its
address last shown on the records of the transfer agent of the Series C
Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent), notifying such holder of the election of the Corporation to
redeem such shares, specifying the Redemption
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<PAGE>
Date and the date on which such holder's Conversion Rights (pursuant to Section
5 hereof) as to such shares terminate and calling upon such holder to surrender
to the Corporation, in the manner and at the place designated, his, her or its
certificate or certificates representing the shares to be redeemed (such notice
is hereinafter referred to as the "Redemption Notice"). On or prior to the
Redemption Date, each holder of Series C Preferred Stock to be redeemed shall
surrender his, her or its certificate or certificates representing such shares
to the Corporation, in the manner and at the place designated in the Redemption
Notice, and thereupon the Redemption Price of such shares shall be payable to
the order of the person whose name appears on such certificate or certificates
as the owner thereof and each surrendered certificate shall be canceled. In the
event less than all the shares represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares. From and
after the Redemption Date, unless there shall has been a default in payment of
the Redemption Price, all rights of the holders of the Series C Preferred Stock
designated for redemption in the Redemption Notice as holders of Series C
Preferred Stock of the Corporation (except the right to receive the Redemption
Price without interest upon surrender of their certificate or certificates)
shall cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever.
(d) Subject to the provisions hereof, the Board of Directors of the
Corporation shall have authority to prescribe the manner in which Series C
Preferred Stock shall be redeemed from time to time. Any shares of Series C
Preferred Stock so redeemed shall permanently be retired, shall no longer be
deemed outstanding and shall not under any circumstances be reissued, and the
Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Series C Preferred Stock accordingly. Nothing
herein contained shall prevent or restrict the purchase by the Corporation, from
time to time either at public or private sale, of the whole or any part of the
Series C Preferred Stock at such price or prices as the Corporation may
determine, subject to the provisions of applicable law.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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DESIGNATION OF SERIES D PREFERRED STOCK
1. Designation; Rank. The series of Preferred Stock designated and
known as "Series D Preferred Stock" shall consist of 1,000,000 shares, par value
$.01 per share. Shares of the Series D Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
senior and prior to the Common Stock, par value $.004 per share (the "Common
Stock") of the Corporation and junior to the Series C Preferred Stock.
2. Dividends.
(a) The holders of the Series D Preferred Stock shall be entitled to
receive, when declared by the Directors out of any funds legally available
therefor, dividends in cash at the annual rate of $0.2375 per share (subject to
appropriate adjustment for stock splits, stock dividends, combinations or other
similar recapitalizations affecting such shares), and no more, in equal
quarterly payments in arrears on March 31, June 30, September 30 and December 31
in each year (each such date is referred to as a "Dividend Payment Date")
commencing on March 31, 1994, payable in preference and priority to any payment
of any cash dividend on Common Stock and junior in preference and priority to
any payment of any cash dividend to the holders of Series C Preferred Stock.
Such dividends shall be paid to the holders of record at the close of business
on the date specified by the Board of Directors of the Corporation at the time
such dividend is declared; provided, however, that the amount payable to
shareholders for the first such dividend due on March 31, 1994, shall be
pro-rated on a daily basis from the date of issue. If the Dividend Payment Date
is not a business day, the Dividend Payment Date shall be the next succeeding
business day.
(b) Each of such quarterly dividends shall be fully cumulative and
shall accrue, whether or not earned or declared, without interest, from the date
of issue of the Series D Preferred Stock.
(c) No dividends shall be declared or paid or set apart for payment on
the Common Stock, or on the Preferred Stock of any series ranking, as to
dividends, junior to the Series D Preferred Stock, for any period unless full
cumulative dividends have been or contemporaneously are declared and paid (or
declared and a sum sufficient for the payment thereof set apart for such
payment) on the Series D Preferred Stock for all dividend payment periods ending
on or prior to the date of payment of such full cumulative dividends. (The
Common Stock and any such series of Preferred Stock are referred to hereinafter
as "Junior Securities".) Unless full cumulative dividends on the Series D
Preferred Stock have been paid, no other
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<PAGE>
distribution shall be made upon or in respect of the Junior Securities.
(d) In the event that the Corporation shall have cumulative, accrued and
unpaid dividends outstanding immediately prior to, and in the event of a
conversion of any shares of Series D Preferred Stock as provided in Section 5
hereof, the Corporation shall, at its option, pay in cash to such holder the
full amount of any such dividends or allow such dividends to be converted into
Common Stock and the conversion price for such purpose shall be the then fair
market value of the Common Stock as determined by the Board of Directors of the
Corporation.
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of shares of Series D Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, after and subject to
the payment in full of all amounts required to be distributed to the holders of
any other class or series of stock of the Corporation ranking on liquidation
prior and in preference to the Series D Preferred Stock, (collectively referred
to as "Senior Preferred Stock") but before any payment shall be made to the
holders of any Junior Securities by reason of their ownership thereof, an amount
equal to $4.75 per share (subject to appropriate adjustment in the event of any
stock dividend, stock split, combination or other similar recapitalization
affecting such shares). If upon any such liquidation, dissolution or winding up
of the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of Series D Preferred Stock the full amount to which they shall be
entitled, the holders of Series D Preferred Stock shall share ratably in any
distribution of the remaining assets and funds of the Corporation in proportion
to the respective amounts which would otherwise be payable in respect of the
shares held by them upon such distribution if all amounts payable on or with
respect to such shares were paid in full.
(b) After the payment of all preferential amounts required to be paid to
the holders of Senior Preferred Stock and Series D Preferred Stock upon the
dissolution, liquidation or winding up of the Corporation, the holders of shares
of Junior Securities then outstanding shall be entitled to receive the remaining
assets and funds of the Corporation available for distribution to its
stockholders.
(c) Written notice of such liquidation, dissolution or winding up, stating
a payment date and the place where said
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<PAGE>
payments shall be made, shall be given by mail, postage prepaid, or by
telecopier to non-U.S. residents, not less than 20 days prior to the payment
date stated therein, to the holders of record of the Series D Preferred Stock,
such notice to be addressed to each such holder at its address as shown by the
records of the Corporation.
(d) Whenever the distribution provided for in this Section 3 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary sale,
conveyance, exchange or transfer (for case, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
other corporations shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange
or transfer shall be in connection with a plan of liquidation, dissolution or
winding up of the business of the Corporation.
4. Voting.
(a) Except as may be otherwise provided in these terms of the Series D
Preferred Stock or by law, the Series D Preferred Stock shall not be entitled to
vote.
(b) The Corporation shall not amend, alter or repeal the preferences,
special rights or other powers of the Series D Preferred Stock so as to affect
adversely the Series D Preferred Stock, without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
Series D Preferred Stock, given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a class. For this purpose, without
limiting the generality of the foregoing, the authorization or issuance of any
series of Preferred Stock with preference or priority over the Series D
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed to affect adversely the Series D Preferred Stock, and the
authorization or issuance of any series of Preferred Stock on a parity with
Series D Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed not to affect adversely the Series D Preferred Stock. The number
of authorized shares of Series D Preferred Stock may be increased or decreased
(but not below the number of shares then outstanding) by the affirmative vote of
the holders of
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<PAGE>
a majority of the then outstanding shares of the Common Stock, Series D
Preferred Stock and all other classes or series of stock of the Corporation
entitled to vote thereon, voting as a single class.
5. Optional Conversion. The holders of the Series D Preferred
Stock shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series D Preferred Stock shall be
convertible, at the option of the holder thereof, at any time, into one share of
fully paid and nonassessable Common Stock (subject to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares).
In the event of a notice of redemption of any shares of Series D
Preferred Stock pursuant to Section 6 hereof, the Conversion Rights of the
shares designated for redemption shall terminate at the close of business on the
fifth full day preceding the date fixed for redemption, unless the redemption
price is not paid when due, in which case the Conversion Rights for such shares
shall continue until such price is paid in full. In the event of a liquidation
of the Corporation, the Conversion Rights shall terminate at the close of
business on the first full day preceding the date fixed for the payment of any
amounts distributable on liquidation to the holders of Series D Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series D Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
(c) Mechanics of Conversion.
(i) In order for a holder of Series D Preferred Stock to
convert shares of Series D Preferred Stock into shares of Common Stock,
such holder shall surrender the certificate or certificates for such
shares of Series D Preferred Stock at the office of the transfer agent
for the Series D Preferred Stock (or at the principal office of the
Corporation if the Corporation serves as its own transfer agent),
together with written notice that such holder elects to convert all or
any number of the shares of the Series D Preferred Stock represented by
such certificate or certificates for shares of Common stock to be
issued, provided however, that the holder shall pay any transfer taxes
arising from the issuance of the Common Stock to any person or entity
other than the holder.
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If required by the Corporation, certificates surrendered for conversion
shall be endorsed or accompanied by a written instrument or instruments
of transfer, in a form satisfactory to the Corporation, duly executed
by the registered holder or his or its attorney duly authorized in
writing. The date of receipt of such certificates and notice by the
transfer agent (or by the Corporation if the Corporation serves as its
own transfer agent) shall be the conversion date ("Conversion Date").
The Corporation shall, as soon as practicable after the Conversion
Date, issue and deliver at such office to such holder of Series D
Preferred Stock, or to his or its nominees, a certificate or
certificates for the number of shares of Common Stock to which such
holder shall be entitled, together with cash in lieu of any fraction of
a share.
(ii) The Corporation shall at all times when the Series D
Preferred Stock shall be outstanding, reserve and keep available out of
is authorized but unissued stock, for the purpose of effecting the
conversion of the Series D Preferred Stock, such number of its duly
authorized shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Series D
Preferred Stock.
(iii) All shares of Series D Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares,
including the rights, if any, to receive notices and to vote, shall
immediately cease and terminate on the Conversion Date, except only the
right of the holders thereof to receive shares of Common Stock in
exchange therefor and payment of any accrued and unpaid dividends
thereon. Any shares of Series D Preferred Stock so converted shall be
retired and canceled and shall not be reissued, and the Corporation may
from time to time take such appropriate action as may be necessary to
reduce the authorized Series D Preferred Stock accordingly.
(d) Adjustment for Reclassification, Exchange, or Substitution. If the
Common Stock issuable upon the conversion of the Series D Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for above in section 5(a) hereof, or a reorganization, merger, consolidation, or
sale of assets provided for below in Section 5(e) hereof), then and in each
event the holder of each such share of Series D Preferred Stock shall have the
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<PAGE>
right thereafter to convert such share of Series D Preferred Stock into the kind
and amount of shares of stock and other securities receivable upon such
reorganization, reclassification, or other change by a holder of the number of
shares of Common Stock into which such shares of Series D Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(e) Adjustment for Merger or Reorganization, etc. In case of any
consolidation or merger of the Corporation with or into another corporation or
the sale of all or substantially all of the assets of the Corporation to another
corporation (other than a consolidation, merger or sale which is treated as a
liquidation pursuant to Subsection 3(a)), each share of Series D Preferred Stock
shall thereafter be convertible into the kind and amount of shares of stock or
other securities or property to which a holder of the number of shares of Common
Stock of the Corporation deliverable upon conversion of such Series D Preferred
Stock would have been entitled upon such consolidation, merger or sale; and, in
such case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions in this Section 5
with respect to the rights and interest thereafter of the holders of the Series
D Preferred Stock, to the end that the provisions set forth in this Section 5
shall thereafter be applicable, as nearly as reasonably may be, in relation to
any shares of stock or other property thereafter deliverable upon the conversion
of the Series D Preferred Stock.
(f) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series D Preferred Stock against impairment.
(g) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other
securities of the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
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<PAGE>
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock distribution
thereon), or of any consolidation or merger of the Corporation into or
with another corporation, or of the sale of all or substantially all of
the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation
or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series D Preferred Stock, and shall cause to
be mailed to the holders of the Series D Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the record date specified in (A) below or twenty days before the
date specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, subdivision or combination are to be
determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale,
dissolution or winding up.
6. Optional Redemption.
(a) At any time and from time to time, the Corporation may, at the
option of its Board of Directors, redeem the Series D Preferred Stock, in whole
or in part, by paying $7 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations or other similar recapitalizations
affecting such shares) in cash for each share of Series D Preferred Stock then
redeemed (hereinafter referred to as the "Redemption Price").
(b) In the event of any redemption of only a part of the then
outstanding Series D Preferred Stock, the Corporation shall effect such
redemption pro rata among the holders thereof based on the number of shares of
Series D Preferred Stock held of record by such holders on the date of the
Redemption Notice (as defined below).
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(c) At least 30 days prior to the date fixed for any redemption of
Series D Preferred Stock (hereinafter referred to as the "Redemption Date"),
written notice shall be mailed, by first class mail, postage prepaid, to each
holder of record of Series D Preferred Stock to be redeemed, at his or its
address last shown on the records of the transfer agent of the Series D
Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent), notifying such holder of the election of the Corporation to
redeem such shares specifying the Redemption Date and the date on which such
holder's Conversion Rights (pursuant to Section 5 hereof) as to such shares
terminate and calling upon such holder to surrender to the Corporation, in the
manner and at the place designated, his, her or its certificate or certificates
representing the shares to be redeemed (such notice is hereinafter referred to
as the "Redemption Notice"). On or prior to the Redemption Date, each holder of
Series D Preferred Stock to be redeemed shall surrender his, her or its
certificate or certificates representing such shares to the Corporation, in the
manner and at the place designated in the Redemption Notice, and thereupon the
Redemption Price of such shares shall be payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof and
each surrendered certificate shall be canceled. In the event less than all the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares. From and after the Redemption
Date, unless there shall have been a default in payment of the Redemption Price,
all rights of the holders of the Series D Preferred Stock designated for
redemption in the Redemption Notice as holders of Series D Preferred Stock of
the Corporation (except the right to receive the Redemption Price without
interest upon surrender of their certificate or certificates) shall cease with
respect to such shares, and such shares shall not thereafter be transferred on
the books of the Corporation or be deemed to be outstanding for any purpose
whatsoever.
(d) Subject to the provisions hereof, the Board of Directors of the
Corporation shall have authority to prescribe the manner in which Series D
Preferred Stock shall be redeemed from time to time. Any shares of Series D
Preferred Stock so redeemed shall permanently be retired, shall no longer be
deemed outstanding and shall not under any circumstances be reissued, and the
Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Series D Preferred Stock accordingly. Nothing
herein contained shall prevent or restrict the purchase by the Corporation, from
time to time either at public or private sale, of the whole or any part of the
Series D Preferred Stock at such price or prices as the Corporation may
determine, subject to the provisions of applicable law.
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DESIGNATION OF SERIES E PREFERRED STOCK
1. Designation; Rank. The series of Preferred Stock designated and
known as "Series E Preferred Stock" shall consist of 400,000 shares, par value
$.01 per share. Shares of the Series E Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
senior and prior to the Common Stock, par value $.004 per share (the "Common
Stock") of the Corporation, junior to the Series C Preferred Stock and on a
parity with the Series D Preferred Stock and Series F Preferred Stock.
2. Dividends.
(a) The holders of the Series E Preferred Stock shall be entitled to
receive, when declared by the Directors out of any funds legally available
therefor, dividends in cash or, at the Corporation's option, in Common Stock, at
the annual rate of $0.30 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations or other similar recapitalizations
affecting such shares), and no more, on the earlier to occur of (i) the
Conversion Date (as hereinafter defined) and (ii) the Redemption Date (as
hereinafter defined) (the "Dividend Payment Date"), payable in preference and
priority to any payment of any cash dividend on Common Stock, junior in
preference and priority to any dividend payment to the holders of Series C
Preferred Stock and on a parity with any dividend payment to the holders of
Series D Preferred Stock and Series F Preferred Stock. Such dividends shall be
paid to the holders of record at the close of business on the Dividend Payment
Date. If the Dividend Payment Date is not a business day, the Dividend Payment
Date shall be the next succeeding business day. If the Corporation elects to pay
such dividends in Common Stock, the conversion price per share (the "Conversion
Price") shall be the lesser of (i) $3.75 and (ii) the closing price per share of
the Common Stock on the principal national securities exchange on which the
Common Stock is then listed or admitted to trading or, if not then listed or
admitted to trading on any such exchange, on the NASDAQ National Market System,
or if not then listed or traded on any such exchange or system, the bid price
per share on the NASDAQ Small-Cap Market, averaged over the 30 trading days
immediately preceding the Conversion Date (subject to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares).
(b) Dividends shall be fully cumulative and shall accrue, whether or
not earned or declared, without interest, from the date of issue of the Series E
Preferred Stock.
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(c) No dividends shall be declared or paid or set apart for payment on
the Common Stock, or on the Preferred Stock of any series ranking, as to
dividends, junior to or on a parity with the Series E Preferred Stock, for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid (or declared and a sum sufficient for the payment thereof set
apart for such payment) on the Series E Preferred Stock for all dividend payment
periods ending on or prior to the date of payment of such full cumulative
dividends. (The Common Stock and any such series of Preferred Stock are referred
to hereinafter as "Junior Securities".) Unless full cumulative dividends on the
Series E Preferred Stock have been paid, no other distribution shall be made
upon or in respect of the Junior Securities.
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series E
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series E Preferred Stock,
(collectively referred to as "Senior Preferred Stock") but before any payment
shall be made to the holders of any Junior Securities by reason of their
ownership thereof, and on a parity with any dividend payment to the holders of
Series D Preferred Stock and Series F Preferred Stock, an amount equal to $3.75
per share (subject to appropriate adjustment in the event of any stock dividend,
stock split, combination or other similar recapitalization affecting such
shares). If upon any such liquidation, dissolution or winding up of the
Corporation the remaining assets of the Corporation available for distribution
to its stockholders shall be insufficient to pay the holders of shares of Series
E Preferred Stock the full amount to which they shall be entitled, the holders
of Series E Preferred Stock shall share ratably in any distribution of the
remaining assets and funds of the Corporation in proportion to the respective
amounts which would otherwise be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to such shares
were paid in full.
(b) After the payment of all preferential amounts required to be paid
to the holders of Senior Preferred Stock and Series E Preferred Stock upon the
dissolution, liquidation or winding up of the Corporation, the holders of shares
of Junior Securities then outstanding shall be
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<PAGE>
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
(c) Written notice of such liquidation, dissolution or winding up,
stating a payment date and the place where said payments shall be made, shall be
given by mail, postage prepaid, or by telecopier to non-U.S. residents, not less
than 20 days prior to the payment date stated therein, to the holders of record
of the Series E Preferred Stock, such notice to be addressed to each such holder
at its address as shown by the records of the Corporation.
(d) Whenever the distribution provided for in this Section 3 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary sale,
conveyance, exchange or transfer (for case, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
other corporations shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange
or transfer shall be in connection with a plan of liquidation, dissolution or
winding up of the business of the Corporation.
4. Voting.
(a) Except as may be otherwise provided in these terms of the Series E
Preferred Stock or by law, the Series E Preferred Stock shall not be entitled to
vote.
(b) The Corporation shall not amend, alter or repeal the preferences,
special rights or other powers of the Series E Preferred Stock so as to affect
adversely the Series E Preferred Stock, without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
Series E Preferred Stock, given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a class. For this purpose, without
limiting the generality of the foregoing, the authorization or issuance of any
series of Preferred Stock with preference or priority over the Series E
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed to affect adversely the Series E Preferred Stock, and the
authorization or issuance of any series of Preferred Stock on a parity with
Series E Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or
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<PAGE>
winding up of the Corporation shall be deemed not to affect adversely the Series
E Preferred Stock. The number of authorized shares of Series E Preferred Stock
may be increased or decreased (but not below the number of shares then
outstanding) by the affirmative vote of the holders of a majority of the then
outstanding shares of the Common Stock, Series E Preferred Stock and all other
classes or series of stock of the Corporation entitled to vote thereon, voting
as a single class.
5. Conversion.
(a) Mandatory Conversion. On January 1, 1995 (the "Conversion Date"),
each share of Series E Preferred Stock shall automatically and without further
action on the part of any holder of Series E Preferred Stock be converted into
the number of shares of fully paid and nonassessable Common Stock derived by
dividing $3.75 by the Conversion Price. Upon such conversion, each share of
Series E Preferred Stock shall be cancelled and not subject to reissuance. On or
before September 30, 1994, the Corporation shall provide written notice (the
"Conversion Notice") to the holders hereof of the Corporation's intention not to
exercise the redemption option provided for in Section 6 hereof and to allow the
Series E Preferred Stock to automatically convert pursuant to this Section 5(a).
The immediately preceding sentence notwithstanding, the Corporation shall not be
deemed to have waived its right to redeem the Series E Preferred Stock pursuant
to Section 6 hereof by virtue of the issuance of the Conversion Notice."
(b) Delivery of Stock Certificates. The holder of any shares of Series
E Preferred Stock converted pursuant to Section 5(a) hereof, shall deliver to
the Corporation during regular business hours at the office of the transfer
agent of the Corporation for the Series E Preferred Stock, or at such other
place as may be designated by the Corporation, the certificate or certificates
for the shares so converted, duly endorsed or assigned in blank to the
Corporation. As promptly as practicable thereafter, the Corporation shall issue
and deliver to such holder, at the place designated by such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled. The person in whose name the certificate for such
Common Stock is to be issued shall be deemed to have become a stockholder of
record on the Conversion Date unless the transfer books of the Corporation are
closed on that date, in which event he shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer books
are open.
(c) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series E Preferred Stock. In lieu of any
fractional shares to which
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<PAGE>
the holder would otherwise be entitled, the Corporation shall pay cash equal to
such fraction multiplied by the Conversion Price.
(d) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the date on which a share of Series
E Preferred Stock was first issued ("Original Issue Date") effect a subdivision
of the outstanding Common Stock, the Conversion Price then in effect immediately
before that subdivision shall be proportionately decreased. If the Corporation
shall at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock, the Conversion Price then in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this paragraph shall become effective at the close of business
on the date the subdivision or combination becomes effective.
(e) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Conversion
Price for the Series E Preferred Stock then in effect shall be decreased as of
the time of such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, by multiplying the
Conversion Price for the Series E Preferred Stock then in effect by a fraction:
(i) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price for the Series E Preferred Stock shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Price for the Series E Preferred Stock shall
be adjusted pursuant to this paragraph as of the time of actual payment
of such dividends or distributions.
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(f) Adjustments for Other Dividends and Distributions. In the event the
Corporation at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of the Series E
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Preferred Stock been
converted into Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period
giving application to all adjustments called for during such period, under this
paragraph with respect to the rights of the holders of the Preferred Stock.
(g) Adjustment for Reclassification, Exchange, or Substitution. If the
Common Stock issuable upon the conversion of the Series E Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for in Sections 5(d), (e) and (f) hereof, or a reorganization, merger,
consolidation, or sale of assets provided for in Section 5(h) hereof), then and
in each event the holder of each such share of Series E Preferred Stock shall
have the right thereafter to convert such share of Series E Preferred Stock into
the kind and amount of shares of stock and other securities receivable upon such
reorganization, reclassification, or other change by a holder of the number of
shares of Common Stock into which such shares of Series E Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(h) Adjustment for Merger or Reorganization, etc. In case of any
consolidation or merger of the Corporation with or into another corporation or
the sale of all or substantially all of the assets of the Corporation to another
corporation (other than a consolidation, merger or sale which is treated as a
liquidation pursuant to Subsection 3(a)), each share of Series E Preferred Stock
shall thereafter be convertible into the kind and amount of shares of stock or
other securities or property to which a holder of the number of shares of Common
Stock of the Corporation deliverable upon conversion of such Series E Preferred
Stock would have been entitled upon such consolidation, merger or sale; and, in
such case, appropriate adjustment (as determined in good faith by the
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<PAGE>
Board of Directors) shall be made in the application of the provisions in this
Section 5 with respect to the rights and interest thereafter of the holders of
the Series E Preferred Stock, to the end that the provisions set forth in this
Section 5 shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the conversion of the Series E Preferred Stock.
(i) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the holders of the Series E Preferred Stock
against impairment of their conversion rights.
(j) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other
securities of the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock distribution
thereon), or of any consolidation or merger of the Corporation into or
with another corporation, or of the sale of all or substantially all of
the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation
or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series E Preferred Stock, and shall cause to
be mailed to the holders of the Series E Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
(10) days prior to the record date specified in (A) below or twenty (20) days
before the date specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the
date as of which the
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holders of Common Stock of record to be entitled to such dividend,
distribution, subdivision or combination are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale,
dissolution or winding up.
(k) Optional Conversion. Except as set forth in Section 5(a)
hereof, the holders of the Series E Preferred Stock shall not have the right to
convert their shares of Series E Preferred Stock into Common Stock.
6. Optional Redemption.
(a) At any time and from time to time on or before December 31, 1994,
the Corporation may, at the option of its Board of Directors, redeem the Series
E Preferred Stock, in whole or in part, by paying $3.75 per share (subject to
appropriate adjustment for stock splits, stock dividends, combinations or other
similar recapitalizations affecting such shares) in cash for each share of
Series E Preferred Stock then redeemed (hereinafter referred to as the
"Redemption Price").
(b) In the event of any redemption of only a part of the then
outstanding Series E Preferred Stock, the Corporation shall effect such
redemption pro rata among the holders thereof based on the number of shares of
Series E Preferred Stock held of record by such holders on the date of the
Redemption Notice (as defined below).
(c) At least ten (10) days prior to the date fixed for any redemption
of Series E Preferred Stock (hereinafter referred to as the "Redemption Date"),
written notice shall be mailed, by first class mail, postage prepaid, to each
holder of record of Series E Preferred Stock to be redeemed, at his or its
address last shown on the records of the transfer agent of the Series E
Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent), notifying such holder of the election of the Corporation to
redeem such shares specifying the Redemption Date and calling upon such holder
to surrender to the Corporation, in the manner and at the place designated, his,
her or its certificate or certificates representing the shares to be redeemed
(such notice is hereinafter referred to as the "Redemption Notice"). On or prior
to the Redemption Date, each holder of Series E Preferred Stock to be redeemed
shall surrender his, her or its certificate or
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<PAGE>
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and thereupon the Redemption
Price of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares. From and after the Redemption Date,
unless there shall have been a default in payment of the Redemption Price, all
rights of the holders of the Series E Preferred Stock designated for redemption
in the Redemption Notice as holders of Series E Preferred Stock of the
Corporation (except the right to receive the Redemption Price without interest
upon surrender of their certificate or certificates) shall cease with respect to
such shares, and such shares shall not thereafter be transferred on the books of
the Corporation or be deemed to be outstanding for any purpose whatsoever.
(d) Subject to the provisions hereof, the Board of Directors of the
Corporation shall have authority to prescribe the manner in which Series E
Preferred Stock shall be redeemed from time to time. Any shares of Series E
Preferred Stock so redeemed shall permanently be retired, shall no longer be
deemed outstanding and shall not under any circumstances be reissued, and the
Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Series E Preferred Stock accordingly. Nothing
herein contained shall prevent or restrict the purchase by the Corporation, from
time to time either at public or private sale, of the whole or any part of the
Series E Preferred Stock at such price or prices as the Corporation may
determine, subject to the provisions of applicable law.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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DESIGNATION OF SERIES F PREFERRED STOCK
1. Designation; Rank. The series of Preferred Stock designated and
known as "Series F Preferred Stock" shall consist of 700,000 shares, par value
$.01 per share. Shares of the Series F Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
senior and prior to the Common Stock, par value $.004 per share (the "Common
Stock") of the Corporation, junior to the Series C Preferred Stock and on a
parity with the Series D Preferred Stock and Series E Preferred Stock.
2. Dividends. The holders of the Series F Preferred Stock shall
not be entitled to receive dividends.
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series F
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series F Preferred Stock,
(collectively referred to as "Senior Preferred Stock") but before any payment
shall be made to the holders of Common Stock and any series of Preferred Stock
ranking on liquidation junior to the Series F Preferred Stock ("Junior
Securities") by reason of their ownership thereof, and on a parity with any
dividend payment to the holders of Series D Preferred Stock and Series E
Preferred Stock, an amount equal to $5.00 per share (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization affecting such shares). If upon any such liquidation,
dissolution or winding up of the Corporation the remaining assets of the
Corporation available for distribution to its stockholders shall be insufficient
to pay the holders of shares of Series F Preferred Stock the full amount to
which they shall be entitled, the holders of Series F Preferred Stock shall
share ratably in any distribution of the remaining assets and funds of the
Corporation in proportion to the respective amounts which would otherwise be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
(b) After the payment of all preferential amounts required to be paid
to the holders of Senior Preferred Stock and Series F Preferred Stock upon the
dissolution,
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<PAGE>
liquidation or winding up of the Corporation, the holders of shares of Junior
Securities then outstanding shall be entitled to receive the remaining assets
and funds of the Corporation available for distribution to its stockholders.
(c) Written notice of such liquidation, dissolution or winding up,
stating a payment date and the place where said payments shall be made, shall be
given by mail, postage prepaid, or by telecopier to non-U.S. residents, not less
than 20 days prior to the payment date stated therein, to the holders of record
of the Series F Preferred Stock, such notice to be addressed to each such holder
at its address as shown by the records of the Corporation.
(d) Whenever the distribution provided for in this Section 3 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary sale,
conveyance, exchange or transfer (for case, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
other corporations shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange
or transfer shall be in connection with a plan of liquidation, dissolution or
winding up of the business of the Corporation.
4. Voting.
(a) Except as may be otherwise provided in these terms of the Series F
Preferred Stock or by law, the Series F Preferred Stock shall not be entitled to
vote.
(b) The Corporation shall not amend, alter or repeal the preferences,
special rights or other powers of the Series F Preferred Stock so as to affect
adversely the Series F Preferred Stock, without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
Series F Preferred Stock, given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a class. For this purpose, without
limiting the generality of the foregoing, the authorization or issuance of any
series of Preferred Stock with preference or priority over the Series F
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed to affect adversely the Series F Preferred Stock, and the
authorization or issuance of any series of Preferred Stock on a parity with
Series F
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<PAGE>
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed not to affect adversely the Series F Preferred Stock. The number
of authorized shares of Series F Preferred Stock may be increased or decreased
(but not below the number of shares then outstanding) by the affirmative vote of
the holders of a majority of the then outstanding shares of the Common Stock,
Series F Preferred Stock and all other classes or series of stock of the
Corporation entitled to vote thereon, voting as a single class.
5. Conversion.
(a) Mandatory Conversion. On July 1, 1995 (the "Conversion Date"), each
share of Series F Preferred Stock shall automatically and without further action
on the part of any holder of Series F Preferred Stock be converted into the
number of shares of fully paid and nonassessable Common Stock derived by
dividing the number 1 by a fraction, the denominator of which is $5.00 and the
numerator of which is ninety percent (90%) of the closing price per share of the
Common Stock on the principal national securities exchange on which the Common
Stock is then listed or admitted to trading or, if not then listed or admitted
to trading on any such exchange, on the NASDAQ National Market System, or if not
then listed or traded on any such exchange or system, the bid price per share on
the NASDAQ Small-Cap Market, averaged over the 30 trading days immediately
preceding the Conversion Date. Upon such conversion, each share of Series F
Preferred Stock shall be cancelled and not subject to reissuance."
(b) Delivery of Stock Certificates. The holder of any shares of Series
F Preferred Stock converted pursuant to Section 5(a) hereof, shall deliver to
the Corporation during regular business hours at the office of the transfer
agent of the Corporation for the Series F Preferred Stock, or at such other
place as may be designated by the Corporation, the certificate or certificates
for the shares so converted, duly endorsed or assigned in blank to the
Corporation. As promptly as practicable thereafter, the Corporation shall issue
and deliver to such holder, at the place designated by such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled. The person in whose name the certificate for such
Common Stock is to be issued shall be deemed to have become a stockholder of
record on the Conversion Date unless the transfer books of the Corporation are
closed on that date, in which event he shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer books
are open.
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<PAGE>
(c) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series F Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by $5.00.
(d) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the date on which a share of Series
F Preferred Stock was first issued ("Original Issue Date") effect a subdivision
of the outstanding Common Stock, the Conversion Price then in effect immediately
before that subdivision shall be proportionately decreased. If the Corporation
shall at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock, the Conversion Price then in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this paragraph shall become effective at the close of business
on the date the subdivision or combination becomes effective.
(e) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Conversion
Price for the Series F Preferred Stock then in effect shall be decreased as of
the time of such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, by multiplying the
Conversion Price for the Series F Preferred Stock then in effect by a fraction:
(i) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price for the Series F Preferred Stock shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Price for the Series F Preferred Stock shall
be adjusted pursuant to this
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<PAGE>
paragraph as of the time of actual payment of such dividends or
distributions.
(f) Adjustments for Other Dividends and Distributions. In the event the
Corporation at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of the Series F
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Preferred Stock been
converted into Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period
giving application to all adjustments called for during such period, under this
paragraph with respect to the rights of the holders of the Preferred Stock.
(g) Adjustment for Reclassification, Exchange, or Substitution. If the
Common Stock issuable upon the conversion of the Series F Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for in Sections 5(d), (e) and (f) hereof, or a reorganization, merger,
consolidation, or sale of assets provided for in Section 5(h) hereof), then and
in each event the holder of each such share of Series F Preferred Stock shall
have the right thereafter to convert such share of Series F Preferred Stock into
the kind and amount of shares of stock and other securities receivable upon such
reorganization, reclassification, or other change by a holder of the number of
shares of Common Stock into which such shares of Series F Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(h) Adjustment for Merger or Reorganization, etc. In case of any
consolidation or merger of the Corporation with or into another corporation or
the sale of all or substantially all of the assets of the Corporation to another
corporation (other than a consolidation, merger or sale which is treated as a
liquidation pursuant to Subsection 3(a)), each share of Series F Preferred Stock
shall thereafter be convertible into the kind and amount of shares of stock or
other securities or property to which a holder of the number of shares of Common
Stock of the Corporation deliverable upon conversion of such Series F
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<PAGE>
Preferred Stock would have been entitled upon such consolidation, merger or
sale; and, in such case, appropriate adjustment (as determined in good faith by
the Board of Directors) shall be made in the application of the provisions in
this Section 5 with respect to the rights and interest thereafter of the holders
of the Series F Preferred Stock, to the end that the provisions set forth in
this Section 5 shall thereafter be applicable, as nearly as reasonably may be,
in relation to any shares of stock or other property thereafter deliverable upon
the conversion of the Series F Preferred Stock.
(i) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the holders of the Series F Preferred Stock
against impairment of their conversion rights.
(j) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other
securities of the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock distribution
thereon), or of any consolidation or merger of the Corporation into or
with another corporation, or of the sale of all or substantially all of
the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation
or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series F Preferred Stock, and shall cause to
be mailed to the holders of the Series F Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
(10) days prior to the record date specified in (A) below or twenty (20) days
before the date specified in (B) below, a notice stating
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<PAGE>
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, subdivision or combination are to be
determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale,
dissolution or winding up.
(k) Optional Conversion. Except as set forth in Section 5(a)
hereof, the holders of the Series F Preferred Stock shall not have the right to
convert their shares of Series F Preferred Stock into Common Stock.
6. Redemption. The Corporation shall not have any right to redeem the
Series F Preferred Stock.
FIFTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
SIXTH. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article Sixth shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
SEVENTH. The number of directors constituting the entire Board of
Directors shall be as set forth in or pursuant to the by-laws of the
Corporation. The Board of Directors shall be divided into three classes,
designated Classes I, II and III, which shall be as nearly equal in number as
possible. Initially, directors of Class I shall be elected to hold office for a
term expiring at the annual meeting of stockholders in 1995, directors of Class
II shall be elected to hold office for a term expiring at the annual meeting of
stockholders in 1996 and directors of Class III
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shall be elected to hold office for a term expiring at the annual meeting of
stockholders in 1997. At each annual meeting of stockholders following such
initial classification and election, the respective successors of each class
shall be elected for three-year terms.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Restated Certificate of Incorporation to be signed by
its President and attested by its Secretary this day of June, 1994.
SHARED TECHNOLOGIES INC.
ATTEST
/s/ Kenneth M. Dorros By:/s/ Anthony D. Autorino
Kenneth M. Dorros, Secretary Anthony D. Autorino
President
[Corporate Seal]
EXHIBIT 3(i).2
CERTIFICATE OF MERGER
OF
FAIRCHILD INDUSTRIES, INC.
INTO
SHARED TECHNOLOGIES INC.
The undersigned corporation, organized and existing under and by virtue of
the General Corporation Law of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the constituent
corporations of the merger is as follows:
NAME STATE OF INCORPORATION
Fairchild Industries, Inc. Delaware
Shared Technologies Inc. Delaware
SECOND: That an Agreement of Plan of Merger, as amended, between the
parties to the merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with the
requirements of section 251 of the General Corporation Law of Delaware.
THIRD: That the name of the surviving corporation of the merger is Shared
Technologies Inc., which shall herewith be changed to Shared Technologies
Fairchild Inc.
FOURTH: That the amendment in the Restated Certificate of Incorporation of
Shared Technologies Inc., a Delaware corporation, which is the surviving
corporation, that is to be effected by the merger is as follows:
To amend Article First of the Corporation's Restated Certificate of
Incorporation to read in its entirety as follows:
<PAGE>
"FIRST. The name of this corporation shall be:
SHARED TECHNOLOGIES FAIRCHILD INC."
To amend the first paragraph of Article Fourth of the Corporation's
Restated Certificate of Incorporation to read in its entirety as
follows:
"FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is (i) 50,000,000
shares of Common Stock, $.004 par value per share (the
"Common Stock"), and (ii) 25,000,000 shares of Preferred
Stock, $.01 par value per share (the "Preferred Stock"), of
which 5,000,000 shares have been designated Series C
Preferred Stock (the "Series C Preferred Stock"), 1,000,000
shares have been designated Series D Preferred Stock (the
"Series D Preferred Stock"), 250,000 shares have been
designated Series G 6% Cumulative Convertible Preferred
Stock (the "Series G Preferred Stock"), 200,000 shares have
been designated Series H Special Preferred Stock (the
"Series H Preferred Stock"), 250,000 shares have been
designated Series I 6% Cumulative Convertible Preferred
Stock (the "Series I Preferred Stock") and 200,000 shares
have been designated Series J Special Preferred Stock (the
"Series J Preferred Stock")"
As so amended, the Restated Certificate of Incorporation of Shared
Technologies Inc. shall be the Restated Certificate of Incorporation of the
surviving corporation.
FIFTH: That the executed Agreement of Plan of Merger, as amended, is on
file at the principal place of business of the surviving corporation, the
address of which is 100 Great Meadow Road, Suite 104, Wethersfield, CT 06109.
SIXTH: That a copy of the Agreement of Plan of Merger, as amended, will be
furnished by the surviving corporation, on request and without cost, to any
stockholder of any constituent corporation.
Dated: March 13, 1996
SHARED TECHNOLOGIES INC.
By: /s/ Kenneth M. Dorros
Kenneth M. Dorros,
Senior Vice President
2
EXHIBIT 3(i).3
CERTIFICATE OF INCORPORATION
OF
SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP.
FIRST. The name of this corporation shall be:
SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP.
SECOND. The address of its registered office in the State of Delaware
is 1209 Orange Street, Wilmington, DE 19801, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
THIRD. The purpose of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law.
FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 3,000 shares of Common Stock, $.004
par value per share (the "Common Stock").
A. Common Stock. Shares of Common Stock shall have the following voting
powers, rights and preferences:
1. Voting Rights. Except as otherwise required by Statute or as
otherwise provided in this Certificate of Incorporation, the holders of shares
of Common Stock shall be entitled to vote on all matters at all meetings of the
stockholders of the Corporation, and shall be entitled to one vote for each
share of Common Stock entitled to vote at such meeting.
2. Dividends. The holders of shares of Common Stock shall be entitled
to receive such dividends as may be declared by the Board of Directors.
3. Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of shares
of Common Stock shall be entitled to receive all of the remaining assets of the
Corporation available for distribution to the holders of Common Stock, ratably
in proportion to the number of shares of Common Stock held by them.
<PAGE>
FIFTH.
A. The name and mailing address of the sole incorporator is as
follows:
NAME MAILING ADDRESS
Steven M. Shishko c/o Gadsby & Hannah
125 Summer Street
Boston, MA 02110
B. The name and mailing address of each person who is to serve as
director until the first annual meeting of the stockholders or until successors
are elected and qualified, are as follows:
NAME MAILING ADDRESS
Anthony D. Autorino c/o Shared Technologies Fairchild
Communications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
Mel D. Borer c/o Shared Technologies Fairchild
Communications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
Vincent DiVencenzo c/o Shared Technologies Fairchild
Commuications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
Jeffrey J. Steiner c/o Shared Technologies Fairchild
Communications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
Donald E. Miller c/o Shared Technologies Fairchild
Communications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
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<PAGE>
Thomas H. Decker c/o Shared Technologies Fairchild
Communications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
William A. DiBella c/o Shared Technologies Fairchild
Communications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
Ajit G. Hutheesing c/o Shared Technologies Fairchild
Communications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
Edward J. McCormack, Jr. c/o Shared Technologies Fairchild
Communications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
Jo McKenzie c/o Shared Technologies Fairchild
Communications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
Herbert L. Oakes, Jr. c/o Shared Technologies Fairchild
Communications Corp.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
SEVENTH. No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article Seventh
shall apply to or have any effect on he liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
EIGHTH. The number of directors constituting the entire Board of
Directors shall be as set forth in or pursuant to the by-laws of the
Corporation. The Board of Directors shall be divided into three classes,
designated Classes I, II and III, which shall
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<PAGE>
be as nearly equal in number as possible. Initially, directors of Class I shall
be elected to hold office for a term expiring at the annual meeting of
stockholders in 1997, directors of Class II shall be elected to hold office for
a term expiring at the annual meeting of stockholders in 1998 and directors of
Class III shall be elected to hold office for a term expiring at the annual
meeting of stockholders in 1999. At each annual meeting of stockholders
following such initial classification and election, the respective successors of
each class shall be elected for three-year terms.
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, does make this certificate, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 6th day of March, 1996.
/s/ Steven M. Shishko
Steven M. Shishko
Sole Incorporator
EXHIBIT 3(ii).1
AMENDED AND RESTATED BYLAWS
OF
SHARED TECHNOLOGIES INC.
(Effective as of June 15, 1994)
ARTICLE I
Identification
Section 1. Name. The name of the corporation is SHARED TECHNOLOGIES
INC. (the "Corporation").
Section 2. Principal Office and Place of Business. The principal office
of the Corporation shall be located at such location, within or without the
State of Delaware, as the board of directors shall designate from time to time.
The board of directors shall have the power and authority to establish and
maintain branch or subordinate offices at any other locations within or without
the State of Delaware. The registered office of the Corporation shall be 1013
Centre Road in Wilmington, Delaware. The registered agent in Delaware shall be
the Corporation Service Company.
ARTICLE II
Shareholders
Section 1. Place of Meetings. Annual and special meetings shall be held
at the principal office of the Corporation or at such other place within or
without the State of Delaware, as may be determined by the board of directors
and designated in the notice of the meeting. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any other place as the
place for holding such meeting.
Section 2. Annual Meeting. The annual meeting for the election of
directors, and for the transaction of such other business of the shareholders as
may properly be brought before the meeting, shall be held on the third Tuesday
in May at such place and at such time as may be designated by the board of
directors. If the annual meeting of the shareholders is not held as herein
prescribed, the existing slate of directors shall remain in office and the
election of directors may be held at any meeting thereafter called pursuant to
these bylaws or otherwise lawfully held.
Section 3. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by law, may be called at
any time by the
<PAGE>
Chairman of the board of directors. The Chairman shall call a special meeting of
the shareholders upon written request of the shareholders entitled to cast not
less than ten percent (10%) of all the issued and outstanding shares of the
Corporation entitled to vote for the purposes specified in such request. If the
Chairman does not within fifteen (15) days after the receipt of such
shareholders request call such meeting, the shareholders may call the same. The
general purpose or purposes for which a special meeting is called shall be
stated in the notice thereof and no other business shall be transacted at the
meeting, unless all shareholders entitled to vote are present and consent
thereto.
Section 4. Notice of Meeting. Written or printed notice stating the
place, day, and hour of any shareholders' meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten (10) nor more than sixty (60) days before the date
of the meeting, unless a greater period of notice is required by law in a
particular case, either personally or by mail, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the shareholder
at his address as it appears on the stock transfer books of the Corporation,
with postage thereon prepaid; provided, however, that in the case of
shareholders who are employees of the Corporation delivery at the office address
of such employee shall be sufficient. Any matter relating to the affairs of the
Corporation may be brought up for action at the annual meeting of shareholders,
whether or not stated in the notice of the meeting; provided, however, that
unless stated in the notice of the meeting, no bylaw may be brought up for
adoption, amendment or repeal and no matter, other than the election of
directors, may be brought up which expressly requires the vote of shareholders.
Section 5. Waiver of Notice. Notice of any shareholders' meeting may be
waived in writing by any shareholder either before or after the time stated
therein and, if any person present at a shareholders' meeting does not protest,
prior to or at the commencement of the meeting, the lack of proper notice, such
person shall be deemed to have waived notice of such meeting.
Section 6. Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders, or any
adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of such shareholders for any other
proper purpose, the directors of the Corporation shall fix in advance a date as
the record date for any such determination of shareholders, which date shall not
be more than sixty (60) nor less than ten (10) days before the date of such
meeting of shareholders, nor more than sixty (60) days prior to any other
action. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a distribution, the date on which notice of the
meeting is mailed or the date on which the resolution of the directors declaring
such distribution is adopted, shall be the record date for such determination of
shareholders. The record date is effective as of the close of business on such
date. When a determination of shareholders entitled to vote at
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<PAGE>
any meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof which is thirty (30) days
or less.
Section 7. Voting Lists and Inspection. The officer of the Corporation
having responsibility for the share transfer books shall make, or cause to be
made, at least ten (10) days before each meeting of shareholders, a complete
list or other equivalent record of the shareholders entitled to vote at such
meeting, arranged in alphabetical order, with the address of, and the number and
class of shares held by, each. Such list or other equivalent record shall, for a
period of ten (10) days prior to such meeting, be kept on file at the principal
office of the Corporation and shall be subject to inspection by any shareholders
during usual business hours for any proper purpose in the interest of the
shareholder or of the Corporation. Such list or equivalent record shall also be
produced and kept open to such inspection during the whole time of the meeting.
The original share transfer book shall be prima facie evidence as to the
shareholders entitled to inspect such list or other equivalent record.
Section 8. Quorum and Adjournment of Shareholders' Meetings. At any
meeting of shareholders at least one-third of the outstanding shares of the
Corporation entitled to vote at such meeting, and represented in person or by
proxy, shall constitute a quorum of the shareholders, unless the representation
of a larger number shall be required by law, and, in that case, the
representation of the number so required shall constitute a quorum. If a larger
number shall be required by law and less than said number of the outstanding
shares are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice until a quorum is
present or represented, at which time any business may be transacted which might
have been transacted at the meeting as originally notified; provided, however,
that the adjournment does not exceed thirty (30) days. The shareholders present
at a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of any shareholders, unless the absence of a
quorum is specifically noted, by the chairman of the meeting.
Section 9. Voting. At each meeting of the shareholders, every
shareholder entitled to vote shall have one vote for each share of stock
registered in his or her name as of the record date for said meeting. Upon the
demand of any shareholder, the vote upon any question before the meeting shall
be by written ballot; provided, however, that the election of the board of
directors shall not be by written ballot. All questions shall be decided by
majority vote except as otherwise provided by these bylaws, the certificate of
incorporation, or laws of the State of Delaware.
Section 10. Proxies. Each shareholder entitled to vote at a meeting of
shareholders may authorize another person or persons to act for him by proxy.
All proxies shall be in writing and shall be filed with the Secretary of the
Corporation before being voted. A proxy shall not be voted or acted upon after
three (3) years from its date of execution unless it specifies a longer length
of time for which it is to continue in force or limits its use to a particular
meeting not yet held.
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<PAGE>
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be irrevocable
regardless of whether the interest with which it is coupled is an interest in
the stock itself or an interest in the Corporation generally.
Section 11. Shareholders' Action Without Meeting. Any action which is
required or permitted to be taken at any meeting of shareholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which all shares entitled to vote
thereon were present and voted. Prompt notice of the taking of corporate action
without a meeting by less than unanimous written consent shall be given to those
shareholders who have not consented in writing to such action.
The Secretary of the Corporation shall file such consent or consents, or
certify the tabulations of such consents and file such certificate with the
minutes of the shareholders.
Section 12. Irregular Shareholders' Meetings. Actions taken at any meeting of
shareholders, however called and with whatever notice, if any, are as valid as
though taken at a meeting duly called and held with notice if:
(a) all shareholders entitled to vote were present in person or by
proxy and no objection to holding the meeting was made by any shareholder; or
(b) a quorum was present, either in person or by proxy, and no objection
to holding the meeting was made by any shareholder entitled to vote and not
present, and if, either before or after the meeting, each of the persons
entitled to vote, not present in person or by proxy, signs a written waiver of
notice, or a consent to the holding of the meeting, or an approval of the action
taken as shown by the minutes thereof. All such waivers, consents or approval
shall be filed with the corporate records or be made a part of the minutes. The
absence from the minutes of any indication that a shareholder objected to
holding the meeting shall prima facie establish that no such objection was made.
Section 13. Order of Business. The order of business at the annual
meeting of the shareholders and, insofar as practical, at all other meetings of
shareholders, shall be established by the Chairman.
4
<PAGE>
ARTICLE III
Board of Directors
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by the board of directors. The board of directors shall be
divided into three classes, designated Classes I, II and III, which shall be as
nearly equal in number as possible. The initial directors of Class I shall be
elected to hold office for a term expiring at the annual meeting of stockholders
in 1995, the initial directors of Class II shall be elected to hold office for a
term expiring at the annual meeting of stockholders in 1996, and the initial
directors of Class III shall be elected to hold office for a term expiring at
the annual meeting of stockholders in 1997. At each annual meeting of
stockholders following such initial classification and election, the respective
successors of each class shall be elected for three-year terms.
Section 2. Number, Election and Term of Office. The number of directors
shall be fixed from time to time by resolution of the board of directors, but
shall not be less than three (3) nor more than eleven (11). In case of any
increase in the number of directors in advance of an annual meeting of
stockholders, each additional director shall be elected by the directors then in
office, although less than a quorum, to hold office until the next election of
the class for which such director shall have been chosen, and until his
successor shall have been duly elected and qualified (subject to Section 3 of
this Article III). No decrease in the number of directors shall shorten the term
of any incumbent director. Any newly-created or eliminated directorships
resulting from an increase or decrease shall be apportioned by the board of
directors among the three classes of directors so as to maintain such classes as
nearly equal as possible. It shall not be a qualification of office that the
directors be residents of the State of Delaware or stockholders of the
Corporation.
Section 3. Vacancies. In case of any vacancy in the board of directors
through death, resignation, retirement, removal, disqualification or other
cause, the remaining directors, by vote of a majority thereof, shall elect a
successor to hold office for the unexpired portion of the term of office of the
class for which such vacancy occurs, and until the election of his successor.
Any director elected by the remaining board of directors to fill a vacancy
created by any of the foregoing reasons or by an increase in the number of
directors constituting the entire board of directors must subsequently be
approved or confirmed by the holders of a majority of the shares of common stock
of the Corporation present in person, or represented by proxy, and entitled to
vote at the next annual meeting of stockholders. If the director elected to fill
such vacancy by the board of directors is not subsequently approved by the
stockholders, and if another candidate is not elected at the annual meeting of
stockholders in accordance with federal securities laws and these bylaws, then
the number of directors constituting the entire board of directors will
automatically be reduced and, if necessary, the number of directors serving in
each class will be reapportioned so that the number of directors serving in each
class will be as nearly equal as possible.
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<PAGE>
Section 4. Meetings. The board of directors shall meet each year
following the annual meeting of the shareholders and shall hold regular meetings
on the third Tuesday of January, March, May, July, September and November.
Meetings of the board of directors, regular or special, may be held either
within or without the State of Delaware. Regular meetings may be held with or
without notice. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting need be specified in the notice or waiver of
notice, unless otherwise provided by law, the certificate of incorporation or
these bylaws.
One or more directors, or a member of a committee of the board of
directors, may participate in a meeting of the board of directors or such
committee by means of a conference telephone or similar communications equipment
enabling all directors participating in the meeting to hear one another, and
such participation in a meeting shall constitute presence in person at such
meeting.
Section 5. Special Meetings. Special meetings of the board of directors
may be called by or at the request of the Chairman or any three (3) directors.
At least two (2) days' written or oral notice of special meetings of the
directors shall be given to each director.
Section 6. Notice and Waiver. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except when a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
Section 7. Quorum and Voting. A majority of the authorized number of
directors shall constitute a quorum for the transaction of business. If, at any
meeting of the board of directors, less than a quorum is present, a majority of
those directors present may adjourn the meeting from time to time without
further notice. The act of a majority of the directors present at a duly called
meeting at which a quorum is present at the time of the act shall be the act of
the board of directors. The affirmative vote of the directors holding a majority
of the directorships shall be required for action by the board of directors on
any matter whatsoever.
Section 8. Action Without Meeting. Any action which is required or
permitted to be taken at any meeting of the board of directors, or a committee
thereof, may be taken without such a meeting; provided, however, that all of the
directors or all of the members of a committee thereof, as the case may be,
severally or collectively consent in writing to such action before or after the
time such action is taken. The Secretary of the Corporation shall file such
consents with the minutes of the meeting of the board of directors.
Section 9. Presumption of Assent. A director of the Corporation who is
present at a meeting of the directors at which action on any corporate matter is
taken shall be
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<PAGE>
presumed to have assented to the action taken unless a dissent shall be entered
in the minutes of the meeting or unless he shall file a written dissent to such
action with the person acting as the clerk of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the Secretary of the
Corporation within five days after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 10. Executive Committee. The board of directors shall designate
three (3) directors to constitute an executive committee. The executive
committee shall have and may exercise all of the authority of the board of
directors subject, however, to any limitations the board of directors may place
on such authority from time to time by resolution.
Section 11. Audit Committee. The board of directors shall designate
three (3) directors to constitute an audit committee. The audit committee shall
have and may exercise such authority and perform such acts as the board of
directors may from time to time direct by resolution and/or as required by
applicable law.
Section 12. Compensation Committee. The board of directors shall
designate four (4) directors to constitute a compensation committee. The
compensation committee shall set the compensation of the President and review,
from time to time, the compensation policies and procedures of the Corporation.
The compensation committee shall have and may exercise such other authority and
perform such other acts as the board of directors may, from time to time, direct
by resolution.
Section 13. Ad Hoc Committees. The board of directors may designate one
(1) or more directors to constitute such ad hoc committees as the board of
directors shall deem necessary or appropriate. Each such committee shall have
and may exercise all such authority of the board of directors as shall be
provided in the resolution establishing such committee, subject to the
provisions of the certificate of incorporation.
Section 14. Committee Minutes. Each committee shall keep minutes of its
proceedings, copies of which shall be provided to each and every member of the
board of directors.
Section 15. Alternate Committee Members. The board of directors may
designate one (1) or more directors to serve as alternate members of any
committee. An alternate may replace any disqualified or absent member of the
committee with respect to which he was designated to serve as an alternate
member; provided, however, that in the event of the death or resignation of any
permanent committee member the board of directors must designate a replacement
and the alternate may not act in such member's place.
Section 16. Compensation of Directors. The board of directors shall
determine the compensation, if any, to be paid to the directors for their
services as directors, including reasonable allowance for expenses actually
incurred in connection with their duties.
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Nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation thereof
when properly authorized.
Section 17. [Intentionally Omitted.]
Section 18. Resignation. A director may resign at any time by giving
written notice to the board of directors, the Chairman, or the Secretary of the
Corporation. Unless otherwise specified in the notice, the resignation shall be
effective immediately upon receipt thereof by the Corporation, and the
acceptance of the resignation shall not be necessary to make it effective.
Section 19. Interested Directors. A contract or other transaction
between the Corporation and a director or a member of his immediate family or
between the Corporation and any other corporation, firm, association or entity
in which a director of the Corporation and members of his immediate family have
an interest shall not be either void or voidable and such director shall not
incur any liability, merely because such director is a party thereto or because
of such family relationship or interest if: (i) such family relationship or such
interest, if it is a substantial interest, is fully disclosed and the contract
or transaction is not unfair as to the Corporation and is authorized by (a)
directors or other persons who have no substantial interest in such contract or
transaction in such manner as to be effective without the vote, assent or
presence of the director concerned or (b) the written consent of all the
directors who have no substantial interest in such contract or transaction,
whether or not such directors constitute a quorum of the Board of directors; or
(ii) such family relationship or such interest, if it is a substantial interest,
is fully disclosed and the contract or transaction is approved by the
affirmative vote of the holders of a majority of the voting power of the shares
entitled to vote; or (iii) the contract or transaction is not with the director
or a member of his immediate family and any such interest is not substantial or
(iv) the contract or transaction is fair as to the Corporation. A contract or
other transaction between a director or a member of his immediate family with a
third party which might otherwise have been entered into by the Corporation and
such third party shall be deemed authorized if effected in compliance with this
section.
In the absence of fraud (without giving effect to the meaning of that
term under the applicable Federal or state securities law), no director engaging
in a transaction authorized under the provisions hereof shall be liable to the
Corporation or to any shareholder or creditor thereof, or to any other person
for any loss incurred by it under or by reason of such contract or transaction,
nor shall any such director be accountable for any gains or profits realized
therefrom.
Section 20. Determination of Terms and Conditions of Additional Classes
of Stock. The board of directors is authorized to fix and determine terms,
limitations and relative rights and preferences of any preferred or special
class of shares.
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ARTICLE IV
Officers
Section 1. Officers. The Board of Directors shall appoint as officers of
the Corporation a President, a Secretary, a Treasurer and any number of Vice
Presidents. The board of directors may elect a Chairman of the board of
directors and may, in its discretion, appoint such other officers and assistant
officers as the business of the Corporation may require. Any individual may hold
more than one office; provided, however, that no one individual may hold the
offices of President and Secretary.
Section 2. Election and Term of Office. The officers of the Corporation
shall be appointed or elected by the board of directors in such manner as they
may prescribe. Each officer shall hold office for a term of one (1) year and
until a successor is elected and qualified, or until the death, resignation or
removal of such officer.
Section 3. Removal. Any officer or agent may be removed by the board of
directors at any time, with or without cause and with or without notice or
hearing. Such removal shall be without prejudice to the contract rights, if any,
of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal or otherwise, may be filled by the board of directors for
the unexpired portion of the term.
Section 5. Chairman. The Chairman shall preside at all meetings of
shareholders and directors and shall have such powers as may be conferred from
time to time by the board of directors. He shall be a member of all committees
of the board of directors.
Section 6. President. The President shall be the chief executive officer
of the Corporation; he shall have general and active management of the business
of the Corporation, shall see that all orders and resolutions of the board of
directors 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. He shall execute bonds, mortgages and other contracts requiring a
seal under the seal of the Corporation. He shall be an EX-OFFICIO member of all
committees of the Board of Directors except when the office of Chairman and
President are held by the same individual, and shall have the general power and
duties of supervision and management usually vested in the office of President
of a corporation.
Section 7. Vice Presidents. In the absence of the President or in the
event of the inability or refusal to act of the President, the Vice-President,
if one is appointed, or if there shall be more than one Vice-President, the Vice
Presidents in the order designated by the directors (or if there be no such
designation, then in the order of their election)
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shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. The
Vice Presidents shall perform such other duties and have such other powers as
the board of directors may from time to time prescribe.
Section 8. Secretary. The Secretary shall attend all meetings of the
board of directors and all meetings of the shareholders and act as clerk
thereof, and record all votes of the directors and shareholders and the minutes
of all proceedings of the directors and shareholders in a book to be kept for
that purpose and shall perform like duties for the committees of the board of
directors when required. The Secretary shall give, or cause to be given, all
notices required by law or these bylaws, and shall perform such other duties as
may be prescribed by the board of directors or President, under whose
supervision he shall be. The Secretary shall have custody of the corporate seal
of the Corporation and he, or an Assistant Secretary, shall have authority to
affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of an Assistant Secretary. The
board of directors may give general authority to any other officer to affix the
corporate seal of the Corporation and to attest to the affixing by his
signature.
Section 9. Assistant Secretary. The Assistant Secretary, if one shall be
appointed, or if there be more than one, the Assistant Secretaries in the order
determined by the board of directors (or if there be no such determination, then
in the order of their election) shall, in the absence of the Secretary or in the
event of his inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
Section 10. Treasurer. The Treasurer shall have charge and custody of
and be responsible for all funds and securities of the Corporation, keep full
and accurate accounts of receipts and disbursements and other customary
financial records of the Corporation, deposit all monies and valuable effects in
the name and to the credit of the Corporation in depositories designated by the
board of directors, disburse the funds of the Corporation as may be ordered by
the board of directors or the President, taking proper vouchers for such
disbursements, render to the board of directors or the President whenever they
request an accounting of all of his transactions as Treasurer or of the
financial condition of the Corporation and, in general, perform such other
duties as may from time to time be assigned to him by the board of directors or
by the President or as are incident to the office of Treasurer.
Section 11. Assistant Treasurer. The Assistant Treasurer, if one shall
be appointed, or if there shall be more than one, the Assistant Treasurers in
the order determined by the board of directors (or if there be no such
determination, then in the order of their election) shall, in the absence of the
Treasurer or in the event of his inability or refusal to act, perform the duties
and exercise the powers of the Treasurer and
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shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
Section 12. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the Corporation and of any person hereby
authorized to act in his place during his absence or disability, the board of
directors may by resolution delegate the powers and duties of such officer to
any other officer, or to any director, or to any other person whom it may
select.
ARTICLE V
Issue and Transfer of Stock
Section 1. Certificate for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors. All certificates for shares of each class shall be consecutively
numbered or otherwise identified and sealed with the seal of the Corporation.
The names and addresses of the shareholders, the number of shares, and dates of
issue shall be entered on the stock transfer books of the Corporation.
If the Corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements, there may be set forth on the
face or back of the certificate which the Corporation shall issue to represent
such class or series of stock, a statement that the Corporation will furnish
without charge to each shareholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the Corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General
Corporation Law of Delaware or a statement that the corporation will furnish
without charge to each shareholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
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Any or all of the signatures on a certificate may be facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall cease to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
Section 2. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the Corporation may proceed to collect the
amount due in the same manner as any debt due the Corporation; provided,
however, that such subscription is in writing and signed by the subscriber.
Section 3. Issuance of Stock. The board of directors is hereby
authorized and empowered to issue from time to time all or any part of the
shares of its unissued authorized capital stock, as then constituted, for such
consideration, in money or other property, as the board of directors may deem
advisable; and all shares of the capital stock of this Corporation when issued
shall be deemed fully paid and nonassessable and the holders of such shares
shall not be liable thereunder to this Corporation or its creditors.
Section 4. Transfer of Shares.
a. Upon surrender to the Corporation or the transfer agent(s) of the
Corporation, if any, of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the Corporation or the transfer agent(s) of the Corporation, if any,
to issue a new certificate to the person entitled thereto, and cancel the old
certificate; every such transfer shall be entered on the transfer book of the
Corporation which shall be kept at its principal office or the office of its
transfer agent.
b. All certificates surrendered to the Corporation for transfer shall be
cancelled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and cancelled.
c. The Corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by law.
Section 5. Lost, Destroyed and Stolen Certificates. Unless otherwise
restricted by law, the Corporation may refuse to issue a certificate in place of
any certificate alleged to
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have been lost, destroyed, stolen, or mutilated except on production of such
terms and indemnification to the Corporation as the directors may prescribe.
ARTICLE VI
Fiscal Year
The fiscal year of the Corporation shall be designated by the board of
directors.
ARTICLE VII
Seal
The corporate seal of this Corporation shall be a circular seal and
shall have inscribed thereon the Corporation's name and state of incorporation.
ARTICLE VIII
Amendments
Section 1. 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 a majority of the directors; provided,
however, that the notice of such meeting shall state that such alteration,
amendment or repeal will be proposed.
Section 2. Record of Changes. Whenever a bylaw is amended or repealed or
a new bylaw is adopted, such action and the date on which it was taken shall be
noted on the original bylaws in the appropriate place or a new set of bylaws
shall be prepared incorporating such changes.
Section 3. Inconsistencies with Certificate of Incorporation. If any
provisions of these bylaws shall be found to be inconsistent with any provisions
of the certificate of incorporation, as presently existing, or as from time to
time amended, the latter shall constitute the controlling authority.
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<PAGE>
ARTICLE IX
Miscellaneous
Section 1. Inspection of Corporate Records. The Corporation shall keep
correct and complete books and records of account and shall also keep minutes of
all meetings of shareholders and directors. Additionally, a record shall be kept
at the principal executive office of the Corporation, giving the names and
addresses of all shareholders, and the number and class or classes of shares
held by each. The original or a copy of the certificate of incorporation and
bylaws of the Corporation, as amended, or otherwise altered to date, and
certified by the Secretary of the Corporation, shall at all times be kept at the
principal office of the Corporation and shall be open to inspection by all
shareholders of record or holders of voting trust certificates at all reasonable
times during the business hours of the Corporation.
At intervals of not more than twelve (12) months, the Corporation shall
prepare a balance sheet showing the financial condition of the Corporation as of
a date not more than four (4) months prior thereto and a profit and loss
statements respecting its operation for the twelve months preceding such date.
The balance sheet and a profit and loss statement shall be deposited at the
principal office of the Corporation and kept for at least ten years from such
date.
Any shareholder of record shall, upon written request under oath to the
Corporation stating the purpose thereof, have the right to conduct an
examination in person, or by agent or attorney, at any reasonable time, for a
specified, reasonable and proper purpose, of the Corporation's stock transfer
books, a list of its shareholders and the board of directors, these bylaws, its
minutes of the meetings of shareholders and the board of directors, and its
other books and records, and to make copies and extracts thereof. A specified,
reasonable and proper purpose shall mean a purpose reasonably related to such
person's interest as a shareholder. In every instance, where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
shareholder.
Section 2. Notices. Whenever, under the provisions of applicable law,
the certificate of incorporation or these bylaws, notice is required to be given
to any director or shareholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or shareholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail;
provided, however, that in the case of shareholders which are employees of the
Corporation delivery at the office address of such employee shall be sufficient.
Notice to directors may also be given by telegram, and, where specifically
provided for herein, orally.
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Section 3. Waiver of Notice. Unless otherwise provided by law, whenever
any notice is required to be given to any shareholder or director of the
Corporation under the provisions of these bylaws or under the provisions of the
certificate of incorporation, a waiver thereof in writing, signed by the person
or persons entitled to such notice shall be deemed equivalent to the giving of
such notice. Attendance in person at any meeting shall constitute waiver of
notice unless such attendance is for the purpose of contesting proper notice of
the meeting.
ARTICLE X
Certification
These amended and restated bylaws have been prepared pursuant to a
resolution duly adopted by the board of directors and the stockholders dated
June 8, 1994, and are the true and correct bylaws of the Corporation as of the
effective date.
In Witness Whereof, the undersigned, Kenneth M. Dorros, Secretary of
the Corporation has set his hand and seal of the Corporation as of the 15th day
of June, 1994.
/s/Kenneth M. Dorros
Kenneth M. Dorros
Secretary
EXHIBIT 3(ii).2
AMENDMENT TO
AMENDED AND RESTATED BYLAWS
OF
SHARED TECHNOLOGIES INC.
(Amendment to Amended and Restated Bylaws dated June 15, 1994)
Effective Date of Amendment: March 13, 1996
Pursuant to a resolution duly adopted by the Board of Directors of
Shared Technologies Inc. (the "Corporation"), the Amended and Restated Bylaws of
the Corporation dated as of June 15, 1994 (the "Bylaws") are hereby amended as
follows:
1. Article I, Section 1 of the Bylaws is deleted in its entirety and is
replaced by the following paragraph:
"Section 1. Name. The name of the Corporation is SHARED TECHNOLOGIES
FAIRCHILD INC. (the "Corporation")."
2. Article II, Section 11 of the Bylaws is deleted in its entirety and
is replaced by the following paragraph:
"Section 11. Shareholders' Action Without Meeting. No action requiring
shareholder approval may be taken without a meeting of the shareholders
entitled to vote thereon."
3. 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 March 13, 1996 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
<PAGE>
such party pays cash for such option or right, unless such transaction
is approved by a majority of the shareholders."
4. Article III, Section 10 of the Bylaws shall be deleted in its
entirety and replaced with the following paragraph:
"Section 10. 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 March 13, 1996
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."
5. 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."
6. 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."
7. Article IV, Section 6 shall be deleted in its entirety and replaced
with the following paragraph:
"Section 6. 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 Corporation 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.
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8. Article VIII, Section 1 shall be deleted in its entirety and
replaced with the following paragraph:
"Section 1. By Directors or Shareholders. The bylaws of the
Corporation may be altered, amended or repeated 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."
In all other respects, the Bylaws shall remain in full force and
effect.
IN WITNESS WHEREOF, the undersigned, Kenneth M. Dorros, Secretary of
the Corporation has set his hand and seal of the Corporation to this Amendment
as of the 13th day of March, 1996.
/s/ Kenneth M. Dorros
Kenneth M. Dorros, Secretary
3
EXHIBIT 3(ii).3
BYLAWS
OF
SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP.
ARTICLE I
Identification
Section 1. Name. The name of the corporation is SHARED TECHNOLOGIES
FAIRCHILD COMMUNICATIONS CORP. (the "Corporation").
Section 2. Principal Office and Place of Business. The principal office
of the Corporation shall be located at such location, within or without the
State of Delaware, as the board of directors shall designate from time to time.
The board of directors shall have the power and authority to establish and
maintain branch or subordinate offices at any other locations within or without
the State of Delaware. The registered office of the Corporation shall be 1209
Orange Street, Wilmington, Delaware 19801. The registered agent in Delaware
shall be the The Corporation Trust Company.
ARTICLE II
Shareholders
Section 1. Place of Meetings. Annual and special meetings shall be held
at the principal office of the Corporation or at such other place within or
without the State of Delaware, as may be determined by the board of directors
and designated in the notice of the meeting. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any other place as the
place for holding such meeting.
Section 2. Annual Meeting. The annual meeting for the election of
directors, and for the transaction of such other business of the shareholders as
may properly be brought before the meeting, shall be held on the third Tuesday
in May at such place and at such time as may be designated by the board of
directors. If the annual meeting of the shareholders is not held as herein
prescribed, the existing slate of directors shall remain in office and the
election of directors may be held at any meeting thereafter called pursuant to
these bylaws or otherwise lawfully held.
Section 3. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by law, may be called at
any time by the Chairman of the board of directors. The Chairman shall call a
special meeting of the shareholders upon written request of the shareholders
entitled to cast not less than ten percent (10%) of all the
<PAGE>
issued and outstanding shares of the Corporation entitled to vote for the
purposes specified in such request. If the Chairman does not within fifteen (15)
days after the receipt of such shareholders request call such meeting, the
shareholders may call the same. The general purpose or purposes for which a
special meeting is called shall be stated in the notice thereof and no other
business shall be transacted at the meeting, unless all shareholders entitled to
vote are present and consent thereto.
Section 4. Notice of Meeting. Written or printed notice stating the
place, day, and hour of any shareholders' meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten (10) nor more than sixty (60) days before the date
of the meeting, unless a greater period of notice is required by law in a
particular case, either personally or by mail, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the shareholder
at his address as it appears on the stock transfer books of the Corporation,
with postage thereon prepaid; provided, however, that in the case of
shareholders who are employees of the Corporation delivery at the office address
of such employee shall be sufficient. Any matter relating to the affairs of the
Corporation may be brought up for action at the annual meeting of shareholders,
whether or not stated in the notice of the meeting; provided, however, that
unless stated in the notice of the meeting, no bylaw may be brought up for
adoption, amendment or repeal and no matter, other than the election of
directors, may be brought up which expressly requires the vote of shareholders.
Section 5. Waiver of Notice. Notice of any shareholders' meeting may be
waived in writing by any shareholder either before or after the time stated
therein and, if any person present at a shareholders' meeting does not protest,
prior to or at the commencement of the meeting, the lack of proper notice, such
person shall be deemed to have waived notice of such meeting.
Section 6. Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders, or any
adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of such shareholders for any other
proper purpose, the directors of the Corporation shall fix in advance a date as
the record date for any such determination of shareholders, which date shall not
be more than sixty (60) nor less than ten (10) days before the date of such
meeting of shareholders, nor more than sixty (60) days prior to any other
action. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a distribution, the date on which notice of the
meeting is mailed or the date on which the resolution of the directors declaring
such distribution is adopted, shall be the record date for such determination of
shareholders. The record date is effective as of the close of business on such
date. When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof which is thirty (30) days or less.
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Section 7. Voting Lists and Inspection. The officer of the Corporation
having responsibility for the share transfer books shall make, or cause to be
made, at least ten (10) days before each meeting of shareholders, a complete
list or other equivalent record of the shareholders entitled to vote at such
meeting, arranged in alphabetical order, with the address of, and the number and
class of shares held by, each. Such list or other equivalent record shall, for a
period of ten (10) days prior to such meeting, be kept on file at the principal
office of the Corporation and shall be subject to inspection by any shareholders
during usual business hours for any proper purpose in the interest of the
shareholder or of the Corporation. Such list or equivalent record shall also be
produced and kept open to such inspection during the whole time of the meeting.
The original share transfer book shall be prima facie evidence as to the
shareholders entitled to inspect such list or other equivalent record.
Section 8. Quorum and Adjournment of Shareholders' Meetings. At any
meeting of shareholders at least one-third of the outstanding shares of the
Corporation entitled to vote at such meeting, and represented in person or by
proxy, shall constitute a quorum of the shareholders, unless the representation
of a larger number shall be required by law, and, in that case, the
representation of the number so required shall constitute a quorum. If a larger
number shall be required by law and less than said number of the outstanding
shares are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice until a quorum is
present or represented, at which time any business may be transacted which might
have been transacted at the meeting as originally notified; provided, however,
that the adjournment does not exceed thirty (30) days. The shareholders present
at a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of any shareholders, unless the absence of a
quorum is specifically noted, by the chairman of the meeting.
Section 9. Voting. At each meeting of the shareholders, every
shareholder entitled to vote shall have one vote for each share of stock
registered in his or her name as of the record date for said meeting. Upon the
demand of any shareholder, the vote upon any question before the meeting shall
be by written ballot; provided, however, that the election of the board of
directors shall not be by written ballot. All questions shall be decided by
majority vote except as otherwise provided by these bylaws, the certificate of
incorporation, or laws of the State of Delaware.
Section 10. Proxies. Each shareholder entitled to vote at a meeting of
shareholders may authorize another person or persons to act for him by proxy.
All proxies shall be in writing and shall be filed with the Secretary of the
Corporation before being voted. A proxy shall not be voted or acted upon after
three (3) years from its date of execution unless it specifies a longer length
of time for which it is to continue in force or limits its use to a particular
meeting not yet held.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be irrevocable
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regardless of whether the interest with which it is coupled is an interest in
the stock itself or an interest in the Corporation generally.
Section 11. Shareholders' Action Without Meeting. No action requiring
shareholder approval may be taken without a meeting of the shareholders entitled
to vote thereon.
The Secretary of the Corporation shall file such consent or consents, or
certify the tabulations of such consents and file such certificate with the
minutes of the shareholders.
Section 12. Irregular Shareholders' Meetings. Actions taken at any meeting of
shareholders, however called and with whatever notice, if any, are as valid as
though taken at a meeting duly called and held with notice if:
(a) all shareholders entitled to vote were present in person or by proxy
and no objection to holding the meeting was made by any shareholder; or
(b) a quorum was present, either in person or by proxy, and no objection
to holding the meeting was made by any shareholder entitled to vote and not
present, and if, either before or after the meeting, each of the persons
entitled to vote, not present in person or by proxy, signs a written waiver of
notice, or a consent to the holding of the meeting, or an approval of the action
taken as shown by the minutes thereof. All such waivers, consents or approval
shall be filed with the corporate records or be made a part of the minutes. The
absence from the minutes of any indication that a shareholder objected to
holding the meeting shall prima facie establish that no such objection was made.
Section 13. Order of Business. The order of business at the annual
meeting of the shareholders and, insofar as practical, at all other meetings of
shareholders, shall be established by the Chairman.
ARTICLE III
Board of Directors
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by the board of directors. The board of directors shall be
divided into three classes, designated Classes I, II and III, which shall be as
nearly equal in number as possible. The initial directors of Class I shall be
elected to hold office for a term expiring at the annual meeting of stockholders
in 1997, the initial directors of Class II shall be elected to hold office for a
term expiring at the annual meeting of stockholders in 1997, and the initial
directors of Class III shall be elected to hold office for a term expiring at
the annual meeting of stockholders in 1998. At each annual meeting of
stockholders following such initial classification and election, the respective
successors of each class shall be elected for three-year terms.
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So long as The Fairchild Corporation and its affiliates (collectively,
"TFC") owns 25% or more of the common stock of Shared Technologies Fairchild
Inc. that TFC owned on March 13, 1996, 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.
Section 2. Number, Election and Term of Office. The number of directors
shall be fixed from time to time by resolution of the board of directors, but
shall not be less than three (3) nor more than eleven (11). In case of any
increase in the number of directors in advance of an annual meeting of
stockholders, each additional director shall be elected by the directors then in
office, although less than a quorum, to hold office until the next election of
the class for which such director shall have been chosen, and until his
successor shall have been duly elected and qualified (subject to Section 3 of
this Article III). No decrease in the number of directors shall shorten the term
of any incumbent director. Any newly-created or eliminated directorships
resulting from an increase or decrease shall be apportioned by the board of
directors among the three classes of directors so as to maintain such classes as
nearly equal as possible. It shall not be a qualification of office that the
directors be residents of the State of Delaware or stockholders of the
Corporation.
Section 3. Vacancies. In case of any vacancy in the board of directors
through death, resignation, retirement, removal, disqualification or other
cause, the remaining directors, by vote of a majority thereof, shall elect a
successor to hold office for the unexpired portion of the term of office of the
class for which such vacancy occurs, and until the election of his successor.
Any director elected by the remaining board of directors to fill a vacancy
created by any of the foregoing reasons or by an increase in the number of
directors constituting the entire board of directors must subsequently be
approved or confirmed by the holders of a majority of the shares of common stock
of the Corporation present in person, or represented by proxy, and entitled to
vote at the next annual meeting of stockholders. If the director elected to fill
such vacancy by the board of directors is not subsequently approved by the
stockholders, and if another candidate is not elected at the annual meeting of
stockholders in accordance with federal securities laws and these bylaws, then
the number of directors constituting the entire board of directors will
automatically be reduced and, if necessary, the number of directors serving in
each class will be reapportioned so that the number of directors serving in each
class will be as nearly equal as possible.
Section 4. Meetings. The board of directors shall meet each year
following the annual meeting of the shareholders and shall hold regular meetings
on the third Tuesday of January, March, May, July, September and November.
Meetings of the board of directors, regular or special, may be held either
within or without the State of Delaware. Regular meetings may be held with or
without notice. Neither the business to be transacted at, nor
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the purpose of, any regular or spe]cial meeting need be specified in the notice
or waiver of notice, unless otherwise provided by law, the certificate of
incorporation or these bylaws.
One or more directors, or a member of a committee of the board of
directors, may participate in a meeting of the board of directors or such
committee by means of a conference telephone or similar communications equipment
enabling all directors participating in the meeting to hear one another, and
such participation in a meeting shall constitute presence in person at such
meeting.
Section 5. Special Meetings. Special meetings of the board of directors
may be called by or at the request of the Chairman or any three (3) directors.
At least two (2) days' written or oral notice of special meetings of the
directors shall be given to each director.
Section 6. Notice and Waiver. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except when a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
Section 7. Quorum and Voting. A majority of the authorized number of
directors shall constitute a quorum for the transaction of business. If, at any
meeting of the board of directors, less than a quorum is present, a majority of
those directors present may adjourn the meeting from time to time without
further notice. The act of a majority of the directors present at a duly called
meeting at which a quorum is present at the time of the act shall be the act of
the board of directors. The affirmative vote of the directors holding a majority
of the directorships shall be required for action by the board of directors on
any matter whatsoever.
Section 8. Action Without Meeting. Any action which is required or
permitted to be taken at any meeting of the board of directors, or a committee
thereof, may be taken without such a meeting; provided, however, that all of the
directors or all of the members of a committee thereof, as the case may be,
severally or collectively consent in writing to such action before or after the
time such action is taken. The Secretary of the Corporation shall file such
consents with the minutes of the meeting of the board of directors.
Section 9. Presumption of Assent. A director of the Corporation who is
present at a meeting of the directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless a dissent
shall be entered in the minutes of the meeting or unless he shall file a written
dissent to such action with the person acting as the clerk of the meeting before
the adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation within five days after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
Section 10. Executive Committee. The Board of Directors of the
Corporation shall have an executive committee consisting of the President, a
director appointed by TFC as
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long as TFC owns at least 25% of the common stock of the Corporation that TFC
owned on March 13, 1996 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.
Section 11. Audit Committee. The board of directors shall designate
three (3) directors to constitute an audit committee. 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. The audit committee shall have and may
exercise such authority and perform such acts as the board of directors may from
time to time direct by resolution and/or as required by applicable law.
Section 12. Compensation Committee. The board of directors shall
designate four (4) directors to constitute a compensation committee. 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. The compensation committee
shall set the compensation of the President and review, from time to time, the
compensation policies and procedures of the Corporation. The compensation
committee shall have and may exercise such other authority and perform such
other acts as the board of directors may, from time to time, direct by
resolution.
Section 13. Ad Hoc Committees. The board of directors may designate one
(1) or more directors to constitute such ad hoc committees as the board of
directors shall deem necessary or appropriate. 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. Each such committee shall have and may exercise all
such authority of the board of directors as shall be provided in the resolution
establishing such committee, subject to the provisions of the certificate of
incorporation.
Section 14. Committee Minutes. Each committee shall keep minutes of its
proceedings, copies of which shall be provided to each and every member of the
board of directors.
Section 15. Alternate Committee Members. The board of directors may
designate one (1) or more directors to serve as alternate members of any
committee. An alternate may replace any disqualified or absent member of the
committee with respect to which he was designated to serve as an alternate
member; provided, however, that in the event of the death or resignation of any
permanent committee member the board of directors must designate a replacement
and the alternate may not act in such member's place.
Section 16. Compensation of Directors. The board of directors shall
determine the compensation, if any, to be paid to the directors for their
services as directors, including reasonable allowance for expenses actually
incurred in connection with their duties. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation thereof when properly authorized.
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Section 17. [Intentionally Omitted.]
Section 18. Resignation. A director may resign at any time by giving
written notice to the board of directors, the Chairman, or the Secretary of the
Corporation. Unless otherwise specified in the notice, the resignation shall be
effective immediately upon receipt thereof by the Corporation, and the
acceptance of the resignation shall not be necessary to make it effective.
Section 19. Interested Directors. A contract or other transaction
between the Corporation and a director or a member of his immediate family or
between the Corporation and any other corporation, firm, association or entity
in which a director of the Corporation and members of his immediate family have
an interest shall not be either void or voidable and such director shall not
incur any liability, merely because such director is a party thereto or because
of such family relationship or interest if: (i) such family relationship or such
interest, if it is a substantial interest, is fully disclosed and the contract
or transaction is not unfair as to the Corporation and is authorized by (a)
directors or other persons who have no substantial interest in such contract or
transaction in such manner as to be effective without the vote, assent or
presence of the director concerned or (b) the written consent of all the
directors who have no substantial interest in such contract or transaction,
whether or not such directors constitute a quorum of the Board of directors; or
(ii) such family relationship or such interest, if it is a substantial interest,
is fully disclosed and the contract or transaction is approved by the
affirmative vote of the holders of a majority of the voting power of the shares
entitled to vote; or (iii) the contract or transaction is not with the director
or a member of his immediate family and any such interest is not substantial or
(iv) the contract or transaction is fair as to the Corporation. A contract or
other transaction between a director or a member of his immediate family with a
third party which might otherwise have been entered into by the Corporation and
such third party shall be deemed authorized if effected in compliance with this
section.
In the absence of fraud (without giving effect to the meaning of that
term under the applicable Federal or state securities law), no director engaging
in a transaction authorized under the provisions hereof shall be liable to the
Corporation or to any shareholder or creditor thereof, or to any other person
for any loss incurred by it under or by reason of such contract or transaction,
nor shall any such director be accountable for any gains or profits realized
therefrom.
Section 20. Determination of Terms and Conditions of Additional Classes
of Stock. The board of directors is authorized to fix and determine terms,
limitations and relative rights and preferences of any preferred or special
class of shares.
ARTICLE IV
Officers
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Section 1. Officers. The Board of Directors shall appoint as officers of
the Corporation a President, a Secretary, a Treasurer and any number of Vice
Presidents. The board of directors may elect a Chairman of the board of
directors and may, in its discretion, appoint such other officers and assistant
officers as the business of the Corporation may require. Any individual may hold
more than one office; provided, however, that no one individual may hold the
offices of President and Secretary.
Section 2. Election and Term of Office. The officers of the Corporation
shall be appointed or elected by the board of directors in such manner as they
may prescribe. Each officer shall hold office for a term of one (1) year and
until a successor is elected and qualified, or until the death, resignation or
removal of such officer.
Section 3. Removal. Any officer or agent may be removed by the board of
directors at any time, with or without cause and with or without notice or
hearing. Such removal shall be without prejudice to the contract rights, if any,
of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal or otherwise, may be filled by the board of directors for
the unexpired portion of the term.
Section 5. Chairman. The Chairman shall preside at all meetings of
shareholders and directors and shall have such powers as may be conferred from
time to time by the board of directors. He shall be a member of all committees
of the board of directors. 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.
Section 6. 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 Corporation 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.
Section 7. Vice Presidents. In the absence of the President or in the
event of the inability or refusal to act of the President, the Vice-President,
if one is appointed, or if there shall be more than one Vice-President, the Vice
Presidents in the order designated by the directors (or if there be no such
designation, then in the order of their election) shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to
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all the restrictions upon the President. The Vice Presidents shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
Section 8. Secretary. The Secretary shall attend all meetings of the
board of directors and all meetings of the shareholders and act as clerk
thereof, and record all votes of the directors and shareholders and the minutes
of all proceedings of the directors and shareholders in a book to be kept for
that purpose and shall perform like duties for the committees of the board of
directors when required. The Secretary shall give, or cause to be given, all
notices required by law or these bylaws, and shall perform such other duties as
may be prescribed by the board of directors or President, under whose
supervision he shall be. The Secretary shall have custody of the corporate seal
of the Corporation and he, or an Assistant Secretary, shall have authority to
affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of an Assistant Secretary. The
board of directors may give general authority to any other officer to affix the
corporate seal of the Corporation and to attest to the affixing by his
signature.
Section 9. Assistant Secretary. The Assistant Secretary, if one shall be
appointed, or if there be more than one, the Assistant Secretaries in the order
determined by the board of directors (or if there be no such determination, then
in the order of their election) shall, in the absence of the Secretary or in the
event of his inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
Section 10. Treasurer. The Treasurer shall have charge and custody of
and be responsible for all funds and securities of the Corporation, keep full
and accurate accounts of receipts and disbursements and other customary
financial records of the Corporation, deposit all monies and valuable effects in
the name and to the credit of the Corporation in depositories designated by the
board of directors, disburse the funds of the Corporation as may be ordered by
the board of directors or the President, taking proper vouchers for such
disbursements, render to the board of directors or the President whenever they
request an accounting of all of his transactions as Treasurer or of the
financial condition of the Corporation and, in general, perform such other
duties as may from time to time be assigned to him by the board of directors or
by the President or as are incident to the office of Treasurer.
Section 11. Assistant Treasurer. The Assistant Treasurer, if one shall
be appointed, or if there shall be more than one, the Assistant Treasurers in
the order determined by the board of directors (or if there be no such
determination, then in the order of their election) shall, in the absence of the
Treasurer or in the event of his inability or refusal to act, perform the duties
and exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
Section 12. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the Corporation and of any person hereby
authorized to act in his place during his absence or disability, the board of
directors may by resolution delegate the
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powers and duties of such officer to any other officer, or to any director, or
to any other person whom it may select.
ARTICLE V
Issue and Transfer of Stock
Section 1. Certificate for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors. All certificates for shares of each class shall be consecutively
numbered or otherwise identified and sealed with the seal of the Corporation.
The names and addresses of the shareholders, the number of shares, and dates of
issue shall be entered on the stock transfer books of the Corporation.
If the Corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements, there may be set forth on the
face or back of the certificate which the Corporation shall issue to represent
such class or series of stock, a statement that the Corporation will furnish
without charge to each shareholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the Corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General
Corporation Law of Delaware or a statement that the corporation will furnish
without charge to each shareholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Any or all of the signatures on a certificate may be facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall cease to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
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Section 2. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the Corporation may proceed to collect the
amount due in the same manner as any debt due the Corporation; provided,
however, that such subscription is in writing and signed by the subscriber.
Section 3. Issuance of Stock. The board of directors is hereby
authorized and empowered to issue from time to time all or any part of the
shares of its unissued authorized capital stock, as then constituted, for such
consideration, in money or other property, as the board of directors may deem
advisable; and all shares of the capital stock of this Corporation when issued
shall be deemed fully paid and nonassessable and the holders of such shares
shall not be liable thereunder to this Corporation or its creditors.
Section 4. Transfer of Shares.
a. Upon surrender to the Corporation or the transfer agent(s) of the
Corporation, if any, of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the Corporation or the transfer agent(s) of the Corporation, if any,
to issue a new certificate to the person entitled thereto, and cancel the old
certificate; every such transfer shall be entered on the transfer book of the
Corporation which shall be kept at its principal office or the office of its
transfer agent.
b. All certificates surrendered to the Corporation for transfer shall be
cancelled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and cancelled.
c. The Corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by law.
Section 5. Lost, Destroyed and Stolen Certificates. Unless otherwise
restricted by law, the Corporation may refuse to issue a certificate in place of
any certificate alleged to have been lost, destroyed, stolen, or mutilated
except on production of such terms and indemnification to the Corporation as the
directors may prescribe.
ARTICLE VI
Fiscal Year
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The fiscal year of the Corporation shall be designated by the board of
directors.
ARTICLE VII
Seal
The corporate seal of this Corporation shall be a circular seal and
shall have inscribed thereon the Corporation's name and state of incorporation.
ARTICLE VIII
Amendments
Section 1. 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 a majority of the directors; provided,
however, that the notice of such meeting shall state that such alteration,
amendment or repeal will be proposed.
Section 1. 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.
Section 2. Record of Changes. Whenever a bylaw is amended or repealed or
a new bylaw is adopted, such action and the date on which it was taken shall be
noted on the original bylaws in the appropriate place or a new set of bylaws
shall be prepared incorporating such changes.
Section 3. Inconsistencies with Certificate of Incorporation. If any
provisions of these bylaws shall be found to be inconsistent with any provisions
of the certificate of incorporation, as presently existing, or as from time to
time amended, the latter shall constitute the controlling authority.
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ARTICLE IX
Miscellaneous
Section 1. Inspection of Corporate Records. The Corporation shall keep
correct and complete books and records of account and shall also keep minutes of
all meetings of shareholders and directors. Additionally, a record shall be kept
at the principal executive office of the Corporation, giving the names and
addresses of all shareholders, and the number and class or classes of shares
held by each. The original or a copy of the certificate of incorporation and
bylaws of the Corporation, as amended, or otherwise altered to date, and
certified by the Secretary of the Corporation, shall at all times be kept at the
principal office of the Corporation and shall be open to inspection by all
shareholders of record or holders of voting trust certificates at all reasonable
times during the business hours of the Corporation.
At intervals of not more than twelve (12) months, the Corporation shall
prepare a balance sheet showing the financial condition of the Corporation as of
a date not more than four (4) months prior thereto and a profit and loss
statements respecting its operation for the twelve months preceding such date.
The balance sheet and a profit and loss statement shall be deposited at the
principal office of the Corporation and kept for at least ten years from such
date.
Any shareholder of record shall, upon written request under oath to the
Corporation stating the purpose thereof, have the right to conduct an
examination in person, or by agent or attorney, at any reasonable time, for a
specified, reasonable and proper purpose, of the Corporation's stock transfer
books, a list of its shareholders and the board of directors, these bylaws, its
minutes of the meetings of shareholders and the board of directors, and its
other books and records, and to make copies and extracts thereof. A specified,
reasonable and proper purpose shall mean a purpose reasonably related to such
person's interest as a shareholder. In every instance, where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
shareholder.
Section 2. Notices. Whenever, under the provisions of applicable law,
the certificate of incorporation or these bylaws, notice is required to be given
to any director or shareholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or shareholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail;
provided, however, that in the case of shareholders which are employees of the
Corporation delivery at the office address of such employee shall be sufficient.
Notice to directors may also be given by telegram, and, where specifically
provided for herein, orally.
14
<PAGE>
Section 3. Waiver of Notice. Unless otherwise provided by law, whenever
any notice is required to be given to any shareholder or director of the
Corporation under the provisions of these bylaws or under the provisions of the
certificate of incorporation, a waiver thereof in writing, signed by the person
or persons entitled to such notice shall be deemed equivalent to the giving of
such notice. Attendance in person at any meeting shall constitute waiver of
notice unless such attendance is for the purpose of contesting proper notice of
the meeting.
15
EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS
SERIES G 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
SERIES H SPECIAL PREFERRED STOCK
SERIES I 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
SERIES J SPECIAL PREFERRED STOCK
OF
SHARED TECHNOLOGIES INC.
SHARED TECHNOLOGIES INC., a Delaware corporation, certifies that
pursuant to the authority expressly granted to the Board of Directors in Article
FOURTH of the Corporation's Restated Certificate of Incorporation, the Board of
Directors of the Corporation duly adopted the following resolution creating four
series of Preferred Stock designated as Series G 6% Cumulative Convertible
Preferred Stock, Series H Special Preferred Stock, Series I 6% Cumulative
Convertible Preferred Stock and Series J Special Preferred Stock:
RESOLVED: That this Corporation create and authorize 250,000
shares of Series G 6% Cumulative Convertible
Preferred Stock and 200,000 shares of Series H
Special Preferred Stock, each with the terms, rights
and preferences as set forth in the Designation of
Rights and Preferences, attached hereto as Exhibit A
and Exhibit B, respectively, and made a part of these
resolutions, and to be issued in accordance with the
provisions of the Merger Agreement;
RESOLVED: That this Corporation create and authorize up to
250,000 shares of Series I 6% Cumulative Convertible
Preferred Stock and 200,000 shares of Series J
Special Preferred Stock, each with the terms, rights
and preferences as set forth in the Designation of
Rights and Preferences, attached hereto as Exhibit C
and Exhibit D, respectively, and made a part of these
resolutions, and to be issued in accordance with the
provisions of the Exchange Agreement;
RESOLVED: That in connection with the foregoing resolutions,
each of the Chief Executive Officer and President,
the Chief Financial Officer, Treasurer, any Vice
President and Secretary of this Corporation be, and
each hereby is, authorized and directed, for and on
behalf of this Corporation, to file such documents,
including, but not limited to, the Designation of
Rights and Preferences annexed hereto as
<PAGE>
Exhibits A, B, C and D as are necessary with the
Secretary of State of Delaware.
IN WITNESS WHEREOF, said SHARED TECHNOLOGIES INC. has caused this
Certificate of Designations of its Series G 6% Cumulative Convertible Preferred
Stock, Series H Special Preferred Stock, Series I 6% Cumulative Convertible
Preferred Stock and Series J Special Preferred Stock to be duly executed by its
Senior Vice President and attested to by its Secretary and has caused its
corporation seal to be affixed hereto as of the 8th day of March, 1996.
SHARED TECHNOLOGIES INC.
By:/s/ Vincent DiVincenzo
Vincent DiVincenzo,
Senior Vice President
(Corporation Seal)
ATTEST:
/s/ Kenneth M. Dorros
Kenneth M. Dorros, Secretary
2
<PAGE>
Designation of Series G 6% Cumulative Convertible
Preferred Stock
- -------------------------------------------------
1. Designation; Rank. The series of Preferred Stock designated
and known as "Series G 6% Cumulative Convertible Preferred Stock" shall consist
of 250,000 shares, par value $.01 per share. Shares of the Cumulative
Convertible Preferred Stock shall, with respect to dividend rights and rights on
liquidation, winding up and dissolution, rank senior to all classes of common
stock of the Corporation (including, without limitation, the Common Stock, par
value $.004 per share (the "Common Stock")), and each other class of capital
stock or series of preferred stock hereafter created which does not expressly
provide that it ranks on a parity with the Cumulative Convertible Preferred
Stock as to dividend rights and rights on liquidation, winding up and
dissolution ("Junior Stock"), on a parity with the Series D Preferred Stock,
Special Preferred Stock and each other class of capital stock or series of
preferred stock hereafter created which expressly provides that it ranks on a
parity with the Cumulative Convertible Preferred Stock as to dividend rights and
rights on liquidation, winding up and dissolution ("Parity Stock"), and, junior
to the Series C Preferred Stock and each other class of capital stock or series
of preferred stock hereafter created which has been approved by the holders of
the Cumulative Convertible Preferred Stock in accordance with Section 4 and
which expressly provides that it ranks senior to the Cumulative Convertible
Preferred Stock as to dividend rights and rights on liquidation, winding up and
dissolution ("Senior Stock").
2. Dividends.
(a) The holders of the Cumulative Convertible Preferred Stock
shall be entitled to receive, out of any funds legally available therefor,
dividends in cash at the annual rate of 6% of the Liquidation Preference (as
hereinafter defined) thereof, in equal quarterly payments in arrears on March
31, June 30, September 30 and December 31 in each year (each such date is
referred to as a "Dividend Payment Date") commencing on March 31, 1996, payable
in preference and priority to any payment of any cash dividend on any Junior
Stock, junior in preference and priority to any payment of any cash dividend on
any Senior Stock and on a parity with any payment of any cash dividend on any
Parity Stock. Such dividends shall be paid to the holders of record at the close
of business on the date specified by the Board of Directors of the Corporation
at the time such dividend is declared. If the Dividend Payment Date is not a
business day, the Dividend Payment Date shall be the next succeeding business
day.
<PAGE>
-2-
(b) Each of such quarterly dividends shall be fully
cumulative, whether or not earned or declared, and shall accrue without
interest, from the first day of the quarter in which such dividend may be
payable as herein provided until the applicable Dividend Payment Date with
respect thereto (except that with respect to the first quarterly dividend, such
dividend shall accrue from March 13, 1996). In addition, if not fully paid in
cash on such Dividend Payment Date, each such dividend shall accrue interest at
an annual rate of 12% thereof from such Dividend Payment Date until the date
fully paid in cash.
(c) In the event that the Corporation shall have cumulative,
accrued and unpaid dividends outstanding (including any interest accruing
thereon as herein provided) immediately prior to and in the event of a
conversion of any shares of Cumulative Convertible Preferred Stock as provided
in Section 5 hereof, the Corporation shall, at the option of the holder of such
shares, pay in cash to such holder the full amount of any such dividends
(including any interest accruing thereon as herein provided) or allow such
dividends (including any interest accruing thereon as herein provided) to be
converted into Common Stock in accordance with, and pursuant to the terms
specified in, Section 5 hereof.
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of
Cumulative Convertible Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders, after and subject to the payment in full of all amounts required
to be distributed to the holders of any Senior Stock but before any payment
shall be made to the holders of any Junior Stock, and on a parity with any
payment to the holders of Parity Stock, an amount equal to $100 per share
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization affecting such shares) (the
"Liquidation Preference") plus with respect to any date, an additional amount
(the "Additional Amount") equal to the total amount of dividends a holder of
such share of Cumulative Convertible Preferred Stock would have received from
the original issue date of such share of Cumulative Convertible Preferred Stock
until such date, if dividends were paid quarterly in cash as herein provided at
the rate of 10% per annum minus the total amount of cash dividends actually paid
on such share of Cumulative Convertible Preferred Stock without giving effect to
any accrued and paid interest on such dividends as herein provided. If upon any
such liquidation, dissolution or winding up of the Corporation the remaining
assets
<PAGE>
-3-
of the Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Cumulative Convertible Preferred
Stock the full amount to which they shall be entitled, the holders of Cumulative
Convertible Preferred Stock shall share ratably in any distribution of the
remaining assets and funds of the Corporation in proportion to the respective
amounts which would otherwise be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to such shares
were paid in full.
(b) After the payment of all preferential amounts required to
be paid to the holders of Senior Stock, Parity Stock and Cumulative Convertible
Preferred Stock upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of Junior Stock then outstanding shall be
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
(c) Written notice of such liquidation, dissolution or winding
up, stating a payment date and the place where said payment shall be made, shall
be given by mail, postage prepaid, or by telecopier, not less than 20 days prior
to the payment date stated therein, to the holders of record of the Cumulative
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
(d) Whenever the distribution provided for in this Section 3
shall be payable in property other than cash, the value of such distribution
shall be the fair market value of such property as determined in good faith by
the Board of Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation nor the consolidation or merger of the Corporation with one or
more other corporations shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, unless such voluntary sale, conveyance,
exchange or transfer shall be in connection with a plan of liquidation,
dissolution or winding up of the business of the Corporation.
4. Voting.
(a) Except as may be otherwise provided in these terms
of the Cumulative Convertible Preferred Stock or by law, the
<PAGE>
-4-
Cumulative Convertible Preferred Stock shall not be entitled to vote.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Cumulative Convertible
Preferred Stock so as to affect adversely the Cumulative Convertible Preferred
Stock, without the written consent or affirmative vote of the holders of at
least two-thirds of the then outstanding shares of Cumulative Convertible
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a class. For this purpose, without limiting
the generality of the foregoing, the authorization or issuance of any series of
Preferred Stock with preference or priority over the Cumulative Convertible
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed to affect adversely the Cumulative Convertible Preferred Stock,
and the authorization or issuance of any series of Preferred Stock on a parity
with the Cumulative Convertible Preferred Stock as to the right to receive
either dividends or amounts distributable upon liquidation, dissolution or
winding up of the Corporation shall be deemed not to affect adversely the
Cumulative Convertible Preferred Stock.
(c) In the event that the Corporation shall fail to declare
and pay in full dividends on the Cumulative Convertible Preferred Stock as set
forth in Section 2(a) hereof on four consecutive Dividend Payment Dates then the
number of directors constituting the Board of Directors shall be increased by
one director and the holders of shares of the Cumulative Convertible Preferred
Stock, in addition to any other rights that they may otherwise have, shall have
the exclusive right, voting separately as a class, to elect such one director of
the Corporation.
(d) In addition to the rights specified in the foregoing
Section 4(c), in the event that the Corporation shall fail to declare and pay in
full dividends on the Cumulative Convertible Preferred Stock as set forth in
Section 2(a) hereof on eight consecutive Dividend Payment Dates, then the number
of directors constituting the Board of Directors shall be increased by an
additional one director and the holders of shares of the Cumulative Convertible
Preferred Stock, in addition to any other rights that they may otherwise have,
shall have the exclusive right, voting separately as a class, to elect such
additional one director of the Corporation (in addition to the additional
director elected pursuant to Section 4(c)).
<PAGE>
-5-
(e) Any voting right pursuant to Section 4(c) or (d) may be
exercised initially either by written consent or at a special meeting of the
holders of the Cumulative Convertible Preferred Stock, called as hereinafter
provided, or at any annual meeting of stockholders held for the purpose of
electing directors, and thereafter at each such annual meeting until such time
as all dividends accumulated on the shares of the Cumulative Convertible
Preferred Stock shall have been paid in full, at which time such voting right
and the term of any director elected pursuant to this Section 4 shall terminate
and the number of directors constituting the full Board of Directors shall be
reduced accordingly.
(f) At any time when the voting right specified in either
Section 4(c) or (d) shall have vested in holders of shares of the Cumulative
Convertible Preferred Stock as described in such Section 4(c) or (d), as the
case may be, and if such right shall not already have been exercised by written
consent, a proper officer of the Corporation may call, and, upon the written
request, addressed to the Secretary of the Corporation, of the record holders of
shares representing twenty-five percent (25%) or more of the then outstanding
shares of Cumulative Convertible Preferred Stock, shall call, a special meeting
of the holders of the Cumulative Convertible Preferred Stock. Such meeting shall
be held at the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings of
stockholders of the Corporation, or, if none, at a place in New York City
designated by the Board of Directors.
(g) At any meeting held for the purpose of electing directors
at which the holders of shares of Cumulative Convertible Preferred Stock shall
have the right to elect a director as provided herein, the presence in person or
by proxy of the holders of shares representing more than fifty percent (50%) of
the then outstanding shares of Cumulative Convertible Preferred Stock shall be
required and shall be sufficient to constitute a quorum of such class for the
election of directors by such class.
(h) Any director elected by holders of Cumulative Convertible
Preferred Stock pursuant to the voting right created under this Section 4 shall
hold office until the next annual meeting of stockholders (unless such term has
previously terminated pursuant to Section 4(e)) and any vacancy in respect of
any such director shall be filled only by vote of the holders of such Cumulative
Convertible Preferred Stock entitled to elect such director by written consent
or at a special meeting called in accordance with the procedures set forth in
Section 4(f), or, if no such special meeting is called or written consent
executed, at the next annual meeting of stockholders. Upon any termination of
such
<PAGE>
-6-
voting right, subject to applicable law, the term of office of the director
elected by holders of Cumulative Convertible Preferred Stock voting separately
as a class pursuant to this Section 4 shall terminate.
(i) In exercising the voting rights set forth in this
Section 4, each share of Cumulative Convertible Preferred Stock
shall have one vote.
5. Optional Conversion. The holders of the Cumulative
Convertible Preferred Stock shall have conversion rights as follows
(the "Conversion Rights"):
(a) Right to Convert. Each share of Cumulative Convertible
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time and from time to time, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing (A) the sum of (x) the
Liquidation Preference thereof and (y) the Additional Amount thereof by (B) the
Conversion Price (as defined below) in effect at the time of conversion;
provided, that the Company may, at its option, elect to pay the Additional
Amount in cash in lieu of shares of Common Stock at the time of conversion. The
conversion price at which shares of Common Stock shall be deliverable upon
conversion of Cumulative Convertible Preferred Stock without the payment of
additional consideration by the holder thereof (the "Conversion Price") shall
initially be $6.3750. Such initial Conversion Price, and the rate at which
shares of Cumulative Convertible Preferred Stock may be converted into shares of
Common Stock, shall be subject to adjustment as provided below.
In the event of a notice of redemption of any shares of
Cumulative Convertible Preferred Stock pursuant to Section 6 hereof, the
Conversion Rights of the shares designated for redemption shall terminate at the
close of business on the fifth full day preceding the date fixed for redemption,
unless the redemption price is not paid when due, in which case the Conversion
Rights for such shares shall continue until such price is paid in full. In the
event of a liquidation of the Corporation, the Conversion Rights shall terminate
at the close of business on the first full day preceding the date fixed for the
payment of any amounts distributable on liquidation to the holders of Cumulative
Convertible Preferred Stock.
(b) Fractional Shares. No fractional shares of Common
Stock shall be issued upon conversion of the Cumulative Convertible Preferred
Stock. In lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash
<PAGE>
-7-
equal to such fraction multiplied by the then effective Conversion
Price.
(c) Mechanics of Conversion.
(i) In order for a holder of Cumulative Convertible
Preferred Stock to convert shares of Cumulative Convertible Preferred
Stock into shares of Common Stock, such holder shall surrender the
certificate or certificates for such shares of Cumulative Convertible
Preferred Stock at the office of the transfer agent for the Cumulative
Convertible Preferred Stock (or at the principal office of the
Corporation if the Corporation serves as its own transfer agent),
together with written notice that such holder elects to convert all or
any number of the shares of the Cumulative Convertible Preferred Stock
represented by such certificate or certificates. Such notice shall
state such holder's name or the names of the nominees in which such
holder wishes the certificate or certificates for shares of Common
Stock to be issued. If required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by a
written instrument or instruments of transfer, in a form satisfactory
to the Corporation, duly executed by the registered holder or his or
its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if
the Corporation serves as its own transfer agent) shall be the
conversion date ("Conversion Date"). The Corporation shall, as soon as
practicable after the Conversion Date, issue and deliver at such office
to such holder of Cumulative Convertible Preferred Stock, or to his or
its nominees, a certificate or certificates for the number of shares of
Common Stock to which such holder shall be entitled, together with cash
in lieu of any fraction of a share, and in the case of the conversion
of less than all of the shares of the Cumulative Convertible Preferred
Stock represented by a certificate, a new certificate for the number of
shares of Cumulative Convertible Preferred Stock not so converted.
(ii) The Corporation shall at all times when the Cumulative
Convertible Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued stock, for the purpose of
effecting the conversion of the Cumulative Convertible Preferred Stock,
such number of its duly authorized shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding
Cumulative Convertible Preferred Stock. Before taking any action which
would cause an adjustment reducing the Conversion Price below the then
par value of the shares of Common Stock
<PAGE>
-8-
issuable upon conversion of the Cumulative Convertible Preferred Stock,
the Corporation will take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of Common
Stock at such adjusted Conversion Price.
(iii) All shares of Cumulative Convertible Preferred Stock
which shall have been surrendered for conversion as herein provided
shall no longer be deemed to be outstanding and all rights with respect
to such shares, including the rights, if any, to receive notices and to
vote, shall immediately cease and terminate on the Conversion Date,
except only the right of the holders thereof to receive shares of
Common Stock in exchange therefor and payment of any accrued and unpaid
dividends thereon. Any shares of Cumulative Convertible Preferred Stock
so converted shall be retired and cancelled and shall not be reissued,
and the Corporation may from time to time take such appropriate action
as may be necessary to reduce the authorized Cumulative Convertible
Preferred Stock accordingly.
(d) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the Original Issue Date
effect a subdivision of the outstanding Common Stock, the Conversion Price then
in effect immediately before that subdivision shall be proportionately
decreased. If the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock, the
Conversion Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(e) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time, or from time to time, after the Original
Issue Date shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such event the
Conversion Price for the Cumulative Convertible Preferred Stock then in effect
shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying the Conversion Price then in effect by a fraction:
(i) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately
<PAGE>
-9-
prior to the time of such issuance or the close of business on
such record date; and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price shall be recomputed accordingly as of the close of
business on such record date and thereafter the Conversion Price shall
be adjusted pursuant to this paragraph as of the time of actual payment
of such dividends or distributions.
(f) Adjustments for Other Dividends and Distributions. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in
property of the Corporation or securities of the Corporation other than shares
of Common Stock, then and in each such event provision shall be made so that the
holders of the Cumulative Convertible Preferred Stock shall receive upon
conversion thereof in addition to the number of shares of Common Stock
receivable thereupon, the amount and type of such property and securities of the
Corporation that they would have received had their Cumulative Convertible
Preferred Stock been converted into Common Stock on the date of such event and,
with respect to any such securities receivable by them as aforesaid, had
thereafter, during the period from the date of such event to and including the
conversion date, retained such securities during such period giving application
to all adjustments called for during such period under this paragraph with
respect to the rights of the holders of the Cumulative Convertible Preferred
Stock.
(g) Adjustment for Reclassification, Exchange or Substitution.
If the Common Stock issuable upon the conversion of the Cumulative Convertible
Preferred Stock shall be changed into the same or a different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or stock dividend provided for above, or a reorganization, merger,
consolidation, or sale of assets provided for below), then and in each such
event the holder of each such share of Cumulative Convertible Preferred Stock
shall have the right thereafter to convert such share into the kind and amount
of shares of stock and
<PAGE>
-10-
other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of Common
Stock into which such shares of Cumulative Convertible Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(h) Adjustment for Merger or Reorganization, etc. In case of
any consolidation or merger of the Corporation with or into another corporation
or the sale of all or substantially all of the assets of the Corporation to
another corporation (other than a consolidation, merger or sale which is treated
as as a liquidation pursuant to Section 3(a)), each share of Cumulative
Convertible Preferred Stock shall thereafter be convertible into the kind and
amount of shares of stock or other securities or property to which a holder of
the number of shares of Common Stock of the Corporation deliverable upon
conversion of such Cumulative Convertible Preferred Stock would have been
entitled upon such consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Board of Directors) shall be made
in the application of the provisions in this Section 5 set forth with respect to
the rights and interests thereafter of the holders of the Cumulative Convertible
Preferred Stock, to the end that the provisions set forth in this Section 5
(including provisions with respect to changes in and other adjustments of the
Conversion Price) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other property thereafter deliverable
upon the conversion of the Cumulative Convertible Preferred Stock.
(i) No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Cumulative Convertible Preferred Stock against impairment.
(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Cumulative Convertible Preferred Stock a certificate setting forth such
adjustment or
<PAGE>
-11-
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Cumulative Convertible Preferred Stock, furnish or cause
to be furnished to such holder a similar certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Price then in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which then would be received upon the conversion of Cumulative
Convertible Preferred Stock.
(k) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other
securities of the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock distribution
thereon), or of any consolidation or merger of the Corporation into or
with another corporation, or of the sale of all or substantially all of
the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation,
then the Corporation shall cause to be filed at its principal office or
at the office of the transfer agent of the Cumulative Convertible
Preferred Stock, and shall cause to be mailed to the holders of the
Cumulative Convertible Preferred Stock at their last addresses as shown
on the records of the Corporation or such transfer agent, at least ten
days prior to the record date specified in (A) below or twenty days
before the date specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, subdivision or
combination are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or
winding up is expected to become effective, and the date
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as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or
winding up.
6. Redemption.
(a) At any time and from time to time after March 31, 1999,
the Corporation may, at the option of its Board of Directors, redeem the
Cumulative Convertible Preferred Stock in the manner provided below, in whole or
in part, at a redemption price (the "Optional Redemption Price") equal to 100%
of the Liquidation Preference thereof plus the Additional Amount on the
Redemption Date (as defined below); provided that the Corporation shall not
redeem any shares of Cumulative Convertible Preferred Stock unless and until all
accrued and unpaid dividends (including any interest accruing thereon as herein
provided) on the Cumulative Convertible Preferred Stock through the Redemption
Date have been paid in full in cash.
(b) The Corporation shall redeem all outstanding shares of
Cumulative Convertible Preferred Stock on March 31, 2008 in the manner provided
below at a redemption price equal to the Liquidation Preference thereof plus the
Additional Amount on the Redemption Date (the "Mandatory Redemption Price").
(c) At least 30 days prior to the date fixed for any
redemption of Cumulative Convertible Preferred Stock (hereinafter referred to as
the "Redemption Date"), written notice (the "Redemption Notice") shall be
mailed, by first class or registered mail, postage prepaid, to each holder of
record of Cumulative Convertible Preferred Stock to be redeemed, at its address
last shown on the records of the transfer agent of the Cumulative Convertible
Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent). The Redemption Notice shall state:
(1) whether the redemption is pursuant to Section (6)(a) or
(6)(b) hereof;
(2) the Optional Redemption Price or Mandatory Redemption
Price, as the case may be;
(3) whether all or less than all the outstanding shares of the
Cumulative Convertible Preferred Stock redeemable thereunder are to be
redeemed and the total number of shares of such Cumulative Convertible
Preferred Stock being redeemed;
<PAGE>
-13-
(4) the number of shares of Cumulative Convertible Preferred
Stock held, as of the appropriate record date, by the holder that the
Corporation intends to redeem;
(5) the date fixed for redemption (the "Redemption Date");
(6) that the holder is to surrender to the Corporation, at the
place or places where certificates for shares of Cumulative Convertible
Preferred Stock are to be surrendered for redemption, in the manner and
at the price designated, his certificate or certificates representing
the shares of Cumulative Convertible Preferred Stock to be redeemed;
and
(7) that dividends on the shares of the Cumulative Convertible
Preferred Stock to be redeemed shall cease to accumulate on such
Redemption Date unless the Corporation defaults in the payment of the
Optional Redemption Price or the Mandatory Redemption Price, as the
case may be.
(d) Each Holder of Cumulative Convertible Preferred Stock
shall surrender the certificate or certificates representing such shares of
Cumulative Convertible Preferred Stock to the Corporation, duly endorsed, in the
manner and at the place designated in the Redemption Notice, and on the
Redemption Date the full Optional Redemption Price or Mandatory Redemption
Price, as the case may be, for such shares shall be payable in cash to the
Person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered certificate shall be canceled and retired and
shall not under any circumstances be reissued. In the event that less than all
of the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(e) Unless the Corporation defaults in the payment in full of
the redemption price, dividends on the Cumulative Convertible Preferred Stock
called for redemption shall cease to accumulate on the Redemption Date, and the
holders of such redeemed shares shall cease to have any further rights with
respect thereto on the Redemption Date, other than the right to receive the
Optional Redemption Price or Mandatory Redemption Price, as the case may be,
without interest.
(f) In the event of any redemption of only a part of the then
outstanding Cumulative Convertible Preferred Stock, the Corporation shall effect
such redemption pro rata among the holders thereof based on the number of shares
of Cumulative Convertible
<PAGE>
-14-
Preferred Stock held by such holders on the date of the Redemption Notice.
7. Certain Restrictions.
(a) No dividends or other distributions shall be declared or
paid, set apart for payment or otherwise made on any Junior Stock or Parity
Stock for any period and no shares of any Junior Stock or Parity Stock shall be
redeemed or otherwise repurchased unless (i) full cumulative dividends
(including any interest accruing thereon as herein provided) have been or
contemporaneously are declared and paid (or declared and a sum sufficient for
the payment thereof set apart for such payment) on the Cumulative Convertible
Preferred Stock for all dividend payment periods ending on or prior to the date
such dividend or other distribution shall be declared or paid, set apart for
payment or otherwise made or the date of such redemption or repurchase, as the
case may be, (ii) on the date such dividend shall be declared, paid, set apart
for payment or otherwise made or the date of such redemption or repurchase, as
the case may be, the Corporation shall have made all payments required to be
made by it pursuant to Section 6 and otherwise be in compliance with all of its
obligations hereunder.
(b) The Corporation shall not create or permit to exist any
contractual restriction which would restrict in any way the Corporation's
ability to make required payments on the Cumulative Convertible Preferred Stock
or the Series C Preferred Stock.
EXHIBIT 4.2
CERTIFICATE OF DESIGNATIONS
SERIES G 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
SERIES H SPECIAL PREFERRED STOCK
SERIES I 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
SERIES J SPECIAL PREFERRED STOCK
OF
SHARED TECHNOLOGIES INC.
SHARED TECHNOLOGIES INC., a Delaware corporation, certifies that
pursuant to the authority expressly granted to the Board of Directors in Article
FOURTH of the Corporation's Restated Certificate of Incorporation, the Board of
Directors of the Corporation duly adopted the following resolution creating four
series of Preferred Stock designated as Series G 6% Cumulative Convertible
Preferred Stock, Series H Special Preferred Stock, Series I 6% Cumulative
Convertible Preferred Stock and Series J Special Preferred Stock:
RESOLVED: That this Corporation create and authorize 250,000
shares of Series G 6% Cumulative Convertible
Preferred Stock and 200,000 shares of Series H
Special Preferred Stock, each with the terms, rights
and preferences as set forth in the Designation of
Rights and Preferences, attached hereto as Exhibit A
and Exhibit B, respectively, and made a part of these
resolutions, and to be issued in accordance with the
provisions of the Merger Agreement;
RESOLVED: That this Corporation create and authorize up to
250,000 shares of Series I 6% Cumulative Convertible
Preferred Stock and 200,000 shares of Series J
Special Preferred Stock, each with the terms, rights
and preferences as set forth in the Designation of
Rights and Preferences, attached hereto as Exhibit C
and Exhibit D, respectively, and made a part of these
resolutions, and to be issued in accordance with the
provisions of the Exchange Agreement;
RESOLVED: That in connection with the foregoing resolutions,
each of the Chief Executive Officer and President,
the Chief Financial Officer, Treasurer, any Vice
President and Secretary of this Corporation be, and
each hereby is, authorized and directed, for and on
behalf of this Corporation, to file such documents,
including, but not limited to, the Designation of
Rights and Preferences annexed hereto as
<PAGE>
Exhibits A, B, C and D as are necessary with the
Secretary of State of Delaware.
IN WITNESS WHEREOF, said SHARED TECHNOLOGIES INC. has caused this
Certificate of Designations of its Series G 6% Cumulative Convertible Preferred
Stock, Series H Special Preferred Stock, Series I 6% Cumulative Convertible
Preferred Stock and Series J Special Preferred Stock to be duly executed by its
Senior Vice President and attested to by its Secretary and has caused its
corporation seal to be affixed hereto as of the 8th day of March, 1996.
SHARED TECHNOLOGIES INC.
By:/s/ Vincent DiVincenzo
Vincent DiVincenzo,
Senior Vice President
(Corporation Seal)
ATTEST:
/s/ Kenneth M. Dorros
Kenneth M. Dorros, Secretary
2
<PAGE>
Designation of Series H Special Preferred Stock
1. Designation; Rank. The series of Preferred Stock designated
and known as "Series H Special Preferred Stock" shall consist of 200,000 shares,
par value $.01 per share. Shares of the Special Preferred Stock shall, with
respect to rights on liquidation, winding up and dissolution, rank senior to all
classes of common stock of the Corporation (including, without limitation, the
Common Stock, par value $.004 per share (the "Common Stock")), and each other
class of capital stock or series of preferred stock hereafter created which does
not expressly provide that it ranks on a parity with the Special Preferred Stock
as to rights on liquidation, winding up and dissolution ("Junior Stock"), on a
parity with the Series D Preferred Stock, Cumulative Convertible Preferred Stock
and each other class of capital stock or series of preferred stock hereafter
created which expressly provides that it ranks on a parity with the Special
Preferred Stock as to rights on liquidation, winding up and dissolution ("Parity
Stock"), and, junior to the Series C Preferred Stock and each other class of
capital stock or series of preferred stock hereafter created which has been
approved by the holders of the Special Preferred Stock in accordance with
Section 4 and which expressly provides that it ranks senior to the Special
Preferred Stock as to rights on liquidation, winding up and dissolution ("Senior
Stock").
2. Dividends.
(a) The holders of the Special Preferred Stock shall not
be entitled to receive any dividends.
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Special
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any Senior Stock but before any payment shall be made to the holders
of any Junior Stock, and on a parity with any payment to the holders of Parity
Stock, an amount equal to $100 per share (subject to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares) (the "Original Liquidation Preference")
plus with respect to any date after December 31, 1996, an amount (which amount,
collectively with the Original Liquidation Preference, is hereinafter referred
to as
<PAGE>
-2-
the "Liquidation Preference") equal to 5% per annum of the Original Liquidation
Preference thereof calculated on a daily basis from January 1, 1996 to such
date; provided that the maximum Liquidation Preference shall not exceed
$30,000,000. If upon any such liquidation, dissolution or winding up of the
Corporation the remaining assets of the Corporation available for distribution
to its stockholders shall be insufficient to pay the holders of shares of
Special Preferred Stock the full amount to which they shall be entitled, the
holders of Special Preferred Stock shall share ratably in any distribution of
the remaining assets and funds of the Corporation in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to
such shares were paid in full.
(b) After the payment of all preferential amounts required to
be paid to the holders of Senior Stock, Parity Stock and Special Preferred Stock
upon the dissolution, liquidation or winding up of the Corporation, the holders
of shares of Junior Stock then outstanding shall be entitled to receive the
remaining assets and funds of the Corporation available for distribution to its
stockholders.
(c) Written notice of such liquidation, dissolution or winding
up, stating a payment date and the place where said payment shall be made, shall
be given by mail, postage prepaid, or by telecopier, not less than 20 days prior
to the payment date stated therein, to the holders of record of the Special
Preferred Stock, such notice to be addressed to each such holder at its address
as shown by the records of the Corporation.
(d) Whenever the distribution provided for in this Section 3
shall be payable in property other than cash, the value of such distribution
shall be the fair market value of such property as determined in good faith by
the Board of Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation nor the consolidation or merger of the Corporation with one or
more other corporations shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, unless such voluntary sale, conveyance,
exchange or transfer shall be in connection with a plan of liquidation,
dissolution or winding up of the business of the Corporation.
<PAGE>
-3-
4. Voting.
(a) Except as may be otherwise provided in these terms of
the Special Preferred Stock or by law, the Special Preferred Stock shall not be
entitled to vote.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Special Preferred Stock so as
to affect adversely the Special Preferred Stock, without the written consent or
affirmative vote of the holders of at least two-thirds of the then outstanding
shares of Special Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class. For this
purpose, without limiting the generality of the foregoing, the authorization or
issuance of any series of Preferred Stock with preference or priority over the
Special Preferred Stock as to the right to receive amounts distribut-able upon
liquidation, dissolution or winding up of the Corporation shall be deemed to
affect adversely the Special Preferred Stock, and the authorization or issuance
of any series of Preferred Stock on a parity with the Special Preferred Stock as
to the right to receive amounts distributable upon liquidation, dissolution or
winding up of the Corporation shall be deemed not to affect adversely the
Special Preferred Stock.
5. Redemption.
(a) At any time and from time to time the Corporation may, at
the option of its Board of Directors, redeem the Special Preferred Stock in the
manner provided below, in whole or in part, at a redemption price equal to 100%
of the Liquidation Preference thereof on the Redemption Date (as defined below).
(b) The Corporation shall redeem all outstanding shares of
Special Preferred Stock on (x) the date which is 35 days after the occurrence of
a Change of Control (as defined below) and, in any event, on (z) March 31, 2007
in each such case in the manner provided below at a redemption price equal to
100% of the Liquidation Preference thereof on the Redemption Date.
(c) On March 31 of each year, commencing with March 31, 1997,
the Corporation shall redeem at a redemption price equal to 100% of the
Liquidation Preference thereof on such Redemption Date an amount (the "Required
Redemption Amount") of Special Preferred Stock equal to 50% of the amount, if
any, by which the consolidated EBITDA (as defined below) of the Corporation and
its subsidiaries exceeds the Threshold Amount set forth below for the
immediately preceding year ended on
<PAGE>
-4-
December 31. To the extent the Required Redemption Amount exceeds 50% of the sum
(the "Income Limitation") of (i) the consolidated net income of the Corporation
and its subsidiaries for the immediately preceding year ended on December 31
(without deducting therefrom any amounts on account of dividends paid or payable
on any preferred stock or redemptions of any preferred stock of the Corporation,
including, without limitation, the Convertible Preferred Stock, Special
Preferred Stock and Series C and D classes of Preferred Stock of the
Corporation) plus (ii) amounts attributable to the amortization of goodwill of
the Corporation and its subsidiaries 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:
<TABLE>
<CAPTION>
Year Ended Threshold
December 31, Amount
<S> <C>
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 and thereafter.......................... 81.5 million
</TABLE>
"EBITDA" means net income plus income taxes, interest expense, depreciation and
amoritization. In the event that the Corporation or any subsidiary sells or
disposes of any material asset or business ("material" meaning having a value of
$250,000 or more), the Threshold Amount for each year thereafter as set forth
above 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. All accounting terms used in this paragraph (c) shall be determined
in accordance with generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
(d) At least 30 days prior to the date fixed for any
redemption of Special Preferred Stock (hereinafter referred to as the
"Redemption Date"), written notice (the "Redemption Notice")
<PAGE>
-5-
shall be mailed, by first class or registered mail, postage prepaid, to each
holder of record of Special Preferred Stock to be redeemed, at its address last
shown on the records of the transfer agent of the Special Preferred Stock (or
the records of the Corporation, if it serves as its own transfer agent). The
Redemption Notice shall state:
(1) whether the redemption is pursuant to Section (5)(a),
(5)(b)(x), (5)(b)(z) or 5(c) hereof;
(2) the redemption price thereof;
(3) whether all or less than all the outstanding shares of the
Special Preferred Stock redeemable thereunder are to be redeemed and
the total number of shares of such Special Preferred Stock being
redeemed;
(4) the number of shares of Special Preferred Stock held, as
of the appropriate record date, by the holder that the Corporation
intends to redeem;
(5) the date fixed for redemption (the "Redemption Date"); and
(6) that the holder is to surrender to the Corporation, at the
place or places where certificates for shares of Special Preferred
Stock are to be surrendered for redemption, in the manner and at the
price designated, his certificate or certificates representing the
shares of Special Preferred Stock to be redeemed.
(e) Each Holder of Special Preferred Stock shall surrender the
certificate or certificates representing such shares of Special Preferred Stock
to the Corporation, duly endorsed, in the manner and at the place designated in
the Redemption Notice, and on the Redemption Date the full redemption price for
such shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired and shall not under any circumstances
be reissued. In the event that less than all of the shares represented by any
such certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares.
(f) Unless the Corporation defaults in the payment in full of
the redemption price the holders of such redeemed shares shall cease to have any
further rights with respect thereto on
<PAGE>
-6-
the Redemption Date, other than the right to receive the redemption price with
respect thereto, without interest.
(g) In the event of any redemption of only a part of the then
outstanding Special Preferred Stock, the Corporation shall effect such
redemption pro rata among the holders thereof based on the number of shares of
Special Preferred Stock held by such holders on the date of the Redemption
Notice.
(h) The occurrence of any of the following events will
constitute a "Change of Control" for purposes of this Section 5:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than one or more Permitted Holders (as defined below), is
or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act except that for purposes of this clause (i) such
person shall be deemed to have "beneficial ownership" of all shares
that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 30% of the total voting power of the Voting
Stock (as defined below) of the Corporation; provided, however, that
the Permitted Holders beneficially own (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, in the aggregate
a lesser percentage of the total voting power of the Voting Stock of
the Corporation than such other person and do not have the right or
ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors of the Corporation
(for the purposes of this clause (i), a person shall be deemed to
beneficially own any Voting Stock of a specified corporation held by
another corporation (the "parent corporation"), if such other person is
the beneficial owner (as defined in this clause (i) above), directly or
indirectly, of more than 30% of the voting power of the Voting Stock of
such parent corporation and the Permitted Holders beneficially own (as
defined in this clause (i) above), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock
of such parent corporation and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election
a majority of the board of directors of such parent corporation);
(ii) during any two consecutive 365-day periods, individuals
who at the beginning of such period constituted
<PAGE>
-7-
the Board of Directors of the Corporation (together with any new
directors whose election by the Board of Directors of the Corporation
or whose nomination for election by the shareholders of the Corporation
was approved by a vote of 66-2/3% of the directors of the Corporation
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Corporation then in office; or
(iii) the merger or consolidation of the Corporation with or
into another Person or the merger of another Person with or into the
Corporation, or the sale of all or substantially all the assets of the
Corporation to another Person (other than a Person that is controlled
by the Permitted Holders), and, in the case of any such merger or
consolidation, the securities of the Corporation that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of the Corporation are
changed into or exchanged for cash, securities or property, unless
pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of
the surviving corporation that represent immediately after such
transaction, at least a majority of the aggregate voting power of the
Voting Stock of the surviving corporation and have the immediate right
to appoint a majority of the Board of Directors of the surviving
corporation.
"Permitted Holders" means Jeffrey J. Steiner and his
respective "associates" (as defined in Rule 12b-2 under the Exchange Act as in
effect on March 13, 1996, except that a person shall not be an "associate" for
purposes of this definition solely because such person comes within the
definition of such term in clause (a) of such Rule) or their respective
Affiliates.
"Affiliate" of any specified person or entity means any other
person or entity, directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified person or entity. For the
purposes of this definition, "control" when used with respect to any person or
entity means the power to direct the management and policies of such person or
entity, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
<PAGE>
-8-
"Voting Stock" means, with respect to any person, securities
of any class or classes of capital stock in such person entitling the holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to vote in the election of members of
the Board of Directors or other governing body of such person.
6. Certain Restrictions.
(a) No dividends or other distributions shall be declared or
paid, set apart for payment or otherwise made on any Junior Stock or Parity
Stock for any period and no shares of any Junior Stock or Parity Stock shall be
redeemed or otherwise repurchased unless on the date such dividend shall be
declared, paid, set apart for payment or otherwise made or the date of such
redemption or repurchase, as the case may be, the Corporation shall have made
all payments required to be made by it pursuant to Section 5 and otherwise be in
compliance with all of its obligations hereunder.
(b) The Corporation shall not create or permit to exist any
contractual restriction which would restrict in any way the Corporation's
ability to make required payments on the Special Preferred Stock or the Series C
Preferred Stock.
EXHIBIT 4.3
CERTIFICATE OF DESIGNATIONS
SERIES G 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
SERIES H SPECIAL PREFERRED STOCK
SERIES I 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
SERIES J SPECIAL PREFERRED STOCK
OF
SHARED TECHNOLOGIES INC.
SHARED TECHNOLOGIES INC., a Delaware corporation, certifies that
pursuant to the authority expressly granted to the Board of Directors in Article
FOURTH of the Corporation's Restated Certificate of Incorporation, the Board of
Directors of the Corporation duly adopted the following resolution creating four
series of Preferred Stock designated as Series G 6% Cumulative Convertible
Preferred Stock, Series H Special Preferred Stock, Series I 6% Cumulative
Convertible Preferred Stock and Series J Special Preferred Stock:
RESOLVED: That this Corporation create and authorize 250,000
shares of Series G 6% Cumulative Convertible
Preferred Stock and 200,000 shares of Series H
Special Preferred Stock, each with the terms, rights
and preferences as set forth in the Designation of
Rights and Preferences, attached hereto as Exhibit A
and Exhibit B, respectively, and made a part of these
resolutions, and to be issued in accordance with the
provisions of the Merger Agreement;
RESOLVED: That this Corporation create and authorize up to
250,000 shares of Series I 6% Cumulative Convertible
Preferred Stock and 200,000 shares of Series J
Special Preferred Stock, each with the terms, rights
and preferences as set forth in the Designation of
Rights and Preferences, attached hereto as Exhibit C
and Exhibit D, respectively, and made a part of these
resolutions, and to be issued in accordance with the
provisions of the Exchange Agreement;
RESOLVED: That in connection with the foregoing resolutions,
each of the Chief Executive Officer and President,
the Chief Financial Officer, Treasurer, any Vice
President and Secretary of this Corporation be, and
each hereby is, authorized and directed, for and on
behalf of this Corporation, to file such documents,
including, but not limited to, the Designation of
Rights and Preferences annexed hereto as
<PAGE>
Exhibits A, B, C and D as are necessary with the
Secretary of State of Delaware.
IN WITNESS WHEREOF, said SHARED TECHNOLOGIES INC. has caused this
Certificate of Designations of its Series G 6% Cumulative Convertible Preferred
Stock, Series H Special Preferred Stock, Series I 6% Cumulative Convertible
Preferred Stock and Series J Special Preferred Stock to be duly executed by its
Senior Vice President and attested to by its Secretary and has caused its
corporation seal to be affixed hereto as of the 8th day of March, 1996.
SHARED TECHNOLOGIES INC.
By:/s/ Vincent DiVincenzo
Vincent DiVincenzo,
Senior Vice President
(Corporation Seal)
ATTEST:
/s/ Kenneth M. Dorros
Kenneth M. Dorros, Secretary
2
<PAGE>
New Preferred
Designation of Series I 6% Cumulative Convertible
Preferred Stock
1. Designation; Rank. The series of Preferred Stock designated
and known as "Cumulative Series I 6% Convertible Preferred Stock" shall consist
of 250,000 shares, par value $.01 per share and shall herein be referred to as
the "Cumulative Convertible Preferred Stock". Shares of the Cumulative
Convertible Preferred Stock shall, with respect to dividend rights and rights on
liquidation, winding up and dissolution, rank senior to all classes of common
stock of the Corporation (including, without limitation, the Common Stock, par
value $.004 per share (the "Common Stock")), and each other class of capital
stock or series of preferred stock hereafter created which does not expressly
provide that it ranks on a parity with the Cumulative Convertible Preferred
Stock as to dividend rights and rights on liquidation, winding up and
dissolution ("Junior Stock"), on a parity with the Series D Preferred Stock,
Special Preferred Stock and each other class of capital stock or series of
preferred stock hereafter created which expressly provides that it ranks on a
parity with the Cumulative Convertible Preferred Stock as to dividend rights and
rights on liquidation, winding up and dissolution ("Parity Stock"), and, junior
to the Series C Preferred Stock and each other class of capital stock or series
of preferred stock hereafter created which has been approved by the holders of
the Cumulative Convertible Preferred Stock in accordance with Section 4 and
which expressly provides that it ranks senior to the Cumulative Convertible
Preferred Stock as to dividend rights and rights on liquidation, winding up and
dissolution ("Senior Stock").
2. Dividends.
(a) The holders of the Cumulative Convertible Preferred Stock
shall be entitled to receive, out of any funds legally available therefor,
dividends in cash at the annual rate of 6% of the Liquidation Preference (as
hereinafter defined) thereof, in equal quarterly payments in arrears on March
31, June 30, September 30 and December 31 in each year (each such date is
referred to as a "Dividend Payment Date") commencing on March 31, 1996, payable
in preference and priority to any payment of any cash dividend on any Junior
Stock, junior in preference and priority to any payment of any cash dividend on
any Senior Stock and on a parity with any payment of any cash dividend on any
Parity Stock. Such dividends shall be paid to the holders of record at the close
of business on the date specified by the Board of Directors of the Corporation
at the time such dividend is declared. If the Dividend Payment
<PAGE>
-2-
Date is not a business day, the Dividend Payment Date shall be the next
succeeding business day.
(b) Each of such quarterly dividends shall be fully
cumulative, whether or not earned or declared, and shall accrue without
interest, from the first day of the quarter in which such dividend may be
payable as herein provided until the applicable Dividend Payment Date with
respect thereto (except that with respect to the first quarterly dividend, such
dividend shall accrue from March 13, 1996). In addition, if not fully paid in
cash on such Dividend Payment Date, each such dividend shall accrue interest at
an annual rate of 12% thereof from such Dividend Payment Date until the date
fully paid in cash.
(c) In the event that the Corporation shall have cumulative,
accrued and unpaid dividends outstanding (including any interest accruing
thereon as herein provided) immediately prior to and in the event of a
conversion of any shares of Cumulative Convertible Preferred Stock as provided
in Section 5 hereof, the Corporation shall, at the option of the holder of such
shares, pay in cash to such holder the full amount of any such dividends
(including any interest accruing thereon as herein provided) or allow such
dividends (including any interest accruing thereon as herein provided) to be
converted into Common Stock in accordance with, and pursuant to the terms
specified in, Section 5 hereof.
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of
Cumulative Convertible Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders, after and subject to the payment in full of all amounts required
to be distributed to the holders of any Senior Stock but before any payment
shall be made to the holders of any Junior Stock, and on a parity with any
payment to the holders of Parity Stock, an amount equal to $100 per share
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization affecting such shares) (the
"Liquidation Preference") plus with respect to any date, an additional amount
(the "Additional Amount") equal to the total amount of dividends a holder of
such share of Cumulative Convertible Preferred Stock would have received from
the original issue date of such share of Cumulative Convertible Preferred Stock
until such date, if dividends were paid quarterly in cash as herein provided at
the rate of 10% per annum minus the total amount of cash dividends actually paid
on such share of Cumulative Convertible Preferred
<PAGE>
-3-
Stock without giving effect to any accrued and paid interest on such dividends
as herein provided. If upon any such liquidation, dissolution or winding up of
the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of Cumulative Convertible Preferred Stock the full amount to which they
shall be entitled, the holders of Cumulative Convertible Preferred Stock shall
share ratably in any distribution of the remaining assets and funds of the
Corporation in proportion to the respective amounts which would otherwise be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
(b) After the payment of all preferential amounts required to
be paid to the holders of Senior Stock, Parity Stock and Cumulative Convertible
Preferred Stock upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of Junior Stock then outstanding shall be
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
(c) Written notice of such liquidation, dissolution or winding
up, stating a payment date and the place where said payment shall be made, shall
be given by mail, postage prepaid, or by telecopier, not less than 20 days prior
to the payment date stated therein, to the holders of record of the Cumulative
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
(d) Whenever the distribution provided for in this Section 3
shall be payable in property other than cash, the value of such distribution
shall be the fair market value of such property as determined in good faith by
the Board of Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation nor the consolidation or merger of the Corporation with one or
more other corporations shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, unless such voluntary sale, conveyance,
exchange or transfer shall be in connection with a plan of liquidation,
dissolution or winding up of the business of the Corporation.
<PAGE>
-4-
4. Voting.
(a) Except as may be otherwise provided in these terms of the
Cumulative Convertible Preferred Stock or by law, the Cumulative Convertible
Preferred Stock shall not be entitled to vote.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Cumulative Convertible
Preferred Stock so as to affect adversely the Cumulative Convertible Preferred
Stock, without the written consent or affirmative vote of the holders of at
least two-thirds of the then outstanding shares of Cumulative Convertible
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a class. For this purpose, without limiting
the generality of the foregoing, the authorization or issuance of any series of
Preferred Stock with preference or priority over the Cumulative Convertible
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed to affect adversely the Cumulative Convertible Preferred Stock,
and the authorization or issuance of any series of Preferred Stock on a parity
with the Cumulative Convertible Preferred Stock as to the right to receive
either dividends or amounts distributable upon liquidation, dissolution or
winding up of the Corporation shall be deemed not to affect adversely the
Cumulative Convertible Preferred Stock.
(c) In the event that the Corporation shall fail to declare
and pay in full dividends on the Cumulative Convertible Preferred Stock as set
forth in Section 2(a) hereof on four consecutive Dividend Payment Dates then the
number of directors constituting the Board of Directors shall be increased by
one director and the holders of shares of the Cumulative Convertible Preferred
Stock, in addition to any other rights that they may otherwise have, shall have
the exclusive right, voting separately as a class, to elect such one director of
the Corporation.
(d) In addition to the rights specified in the foregoing
Section 4(c), in the event that the Corporation shall fail to declare and pay in
full dividends on the Cumulative Convertible Preferred Stock as set forth in
Section 2(a) hereof on eight consecutive Dividend Payment Dates, then the number
of directors constituting the Board of Directors shall be increased by an
additional one director and the holders of shares of the Cumulative Convertible
Preferred Stock, in addition to any other rights that they may otherwise have,
shall have the exclusive right, voting separately as a class, to elect such
additional one director of
<PAGE>
-5-
the Corporation (in addition to the additional director elected pursuant to
Section 4(c)).
(e) Any voting right pursuant to Section 4(c) or (d) may be
exercised initially either by written consent or at a special meeting of the
holders of the Cumulative Convertible Preferred Stock, called as hereinafter
provided, or at any annual meeting of stockholders held for the purpose of
electing directors, and thereafter at each such annual meeting until such time
as all dividends accumulated on the shares of the Cumulative Convertible
Preferred Stock shall have been paid in full, at which time such voting right
and the term of any director elected pursuant to this Section 4 shall terminate
and the number of directors constituting the full Board of Directors shall be
reduced accordingly.
(f) At any time when the voting right specified in either
Section 4(c) or (d) shall have vested in holders of shares of the Cumulative
Convertible Preferred Stock as described in such Section 4(c) or (d), as the
case may be, and if such right shall not already have been exercised by written
consent, a proper officer of the Corporation may call, and, upon the written
request, addressed to the Secretary of the Corporation, of the record holders of
shares representing twenty-five percent (25%) or more of the then outstanding
shares of Cumulative Convertible Preferred Stock, shall call, a special meeting
of the holders of the Cumulative Convertible Preferred Stock. Such meeting shall
be held at the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings of
stockholders of the Corporation, or, if none, at a place in New York City
designated by the Board of Directors.
(g) At any meeting held for the purpose of electing directors
at which the holders of shares of Cumulative Convertible Preferred Stock shall
have the right to elect a director as provided herein, the presence in person or
by proxy of the holders of shares representing more than fifty percent (50%) of
the then outstanding shares of Cumulative Convertible Preferred Stock shall be
required and shall be sufficient to constitute a quorum of such class for the
election of directors by such class.
(h) Any director elected by holders of Cumulative Convertible
Preferred Stock pursuant to the voting right created under this Section 4 shall
hold office until the next annual meeting of stockholders (unless such term has
previously terminated pursuant to Section 4(e)) and any vacancy in respect of
any such director shall be filled only by vote of the holders of such Cumulative
Convertible Preferred Stock entitled to elect such director by written consent
or at a special meeting called in
<PAGE>
-6-
accordance with the procedures set forth in Section 4(f), or, if no such special
meeting is called or written consent executed, at the next annual meeting of
stockholders. Upon any termination of such voting right, subject to applicable
law, the term of office of the director elected by holders of Cumulative
Convertible Preferred Stock voting separately as a class pursuant to this
Section 4 shall terminate.
(i) In exercising the voting rights set forth in this
Section 4, each share of Cumulative Convertible Preferred Stock
shall have one vote.
5. Optional Conversion. The holders of the Cumulative
Convertible Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Cumulative Convertible
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time and from time to time, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing (A) the sum of (x) the
Liquidation Preference thereof and (y) the Additional Amount thereof by (B) the
Conversion Price (as defined below) in effect at the time of conversion;
provided, that the Company may, at its option, elect to pay the Additional
Amount in cash in lieu of shares of Common Stock at the time of conversion. The
conversion price at which shares of Common Stock shall be deliverable upon
conversion of Cumulative Convertible Preferred Stock without the payment of
additional consideration by the holder thereof (the "Conversion Price") shall
initially be $6.3750. Such initial Conversion Price, and the rate at which
shares of Cumulative Convertible Preferred Stock may be converted into shares of
Common Stock, shall be subject to adjustment as provided below.
In the event of a notice of redemption of any shares of
Cumulative Convertible Preferred Stock pursuant to Section 6 hereof, the
Conversion Rights of the shares designated for redemption shall terminate at the
close of business on the fifth full day preceding the date fixed for redemption,
unless the redemption price is not paid when due, in which case the Conversion
Rights for such shares shall continue until such price is paid in full. In the
event of a liquidation of the Corporation, the Conversion Rights shall terminate
at the close of business on the first full day preceding the date fixed for the
payment of any amounts distributable on liquidation to the holders of Cumulative
Convertible Preferred Stock.
<PAGE>
-7-
(b) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of the Cumulative Convertible Preferred Stock.
In lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the then effective Conversion Price.
(c) Mechanics of Conversion.
(i) In order for a holder of Cumulative Convertible
Preferred Stock to convert shares of Cumulative Convertible Preferred
Stock into shares of Common Stock, such holder shall surrender the
certificate or certificates for such shares of Cumulative Convertible
Preferred Stock at the office of the transfer agent for the Cumulative
Convertible Preferred Stock (or at the principal office of the
Corporation if the Corporation serves as its own transfer agent),
together with written notice that such holder elects to convert all or
any number of the shares of the Cumulative Convertible Preferred Stock
represented by such certificate or certificates. Such notice shall
state such holder's name or the names of the nominees in which such
holder wishes the certificate or certificates for shares of Common
Stock to be issued. If required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by a
written instrument or instruments of transfer, in a form satisfactory
to the Corporation, duly executed by the registered holder or his or
its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if
the Corporation serves as its own transfer agent) shall be the
conversion date ("Conversion Date"). The Corporation shall, as soon as
practicable after the Conversion Date, issue and deliver at such office
to such holder of Cumulative Convertible Preferred Stock, or to his or
its nominees, a certificate or certificates for the number of shares of
Common Stock to which such holder shall be entitled, together with cash
in lieu of any fraction of a share, and in the case of the conversion
of less than all of the shares of the Cumulative Convertible Preferred
Stock represented by a certificate, a new certificate for the number of
shares of Cumulative Convertible Preferred Stock not so converted.
(ii) The Corporation shall at all times when the Cumulative
Convertible Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued stock, for the purpose of
effecting the conversion of the Cumulative Convertible Preferred Stock,
such number of its duly authorized shares of Common Stock as shall from
time to
<PAGE>
-8-
time be sufficient to effect the conversion of all outstanding
Cumulative Convertible Preferred Stock. Before taking any action which
would cause an adjustment reducing the Conversion Price below the then
par value of the shares of Common Stock issuable upon conversion of the
Cumulative Convertible Preferred Stock, the Corporation will take any
corporate action which may, in the opinion of its counsel, be necessary
in order that the Corporation may validly and legally issue fully paid
and nonassessable shares of Common Stock at such adjusted Conversion
Price.
(iii) All shares of Cumulative Convertible Preferred Stock
which shall have been surrendered for conversion as herein provided
shall no longer be deemed to be outstanding and all rights with respect
to such shares, including the rights, if any, to receive notices and to
vote, shall immediately cease and terminate on the Conversion Date,
except only the right of the holders thereof to receive shares of
Common Stock in exchange therefor and payment of any accrued and unpaid
dividends thereon. Any shares of Cumulative Convertible Preferred Stock
so converted shall be retired and cancelled and shall not be reissued,
and the Corporation may from time to time take such appropriate action
as may be necessary to reduce the authorized Cumulative Convertible
Preferred Stock accordingly.
(d) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the Original Issue Date
effect a subdivision of the outstanding Common Stock, the Conversion Price then
in effect immediately before that subdivision shall be proportionately
decreased. If the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock, the
Conversion Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(e) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time, or from time to time, after the Original
Issue Date shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such event the
Conversion Price for the Cumulative Convertible Preferred Stock then in effect
shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of
<PAGE>
-9-
business on such record date, by multiplying the Conversion Price then in effect
by a fraction:
(i) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price shall be recomputed accordingly as of the close of
business on such record date and thereafter the Conversion Price shall
be adjusted pursuant to this paragraph as of the time of actual payment
of such dividends or distributions.
(f) Adjustments for Other Dividends and Distributions. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in
property of the Corporation or securities of the Corporation other than shares
of Common Stock, then and in each such event provision shall be made so that the
holders of the Cumulative Convertible Preferred Stock shall receive upon
conversion thereof in addition to the number of shares of Common Stock
receivable thereupon, the amount and type of such property and securities of the
Corporation that they would have received had their Cumulative Convertible
Preferred Stock been converted into Common Stock on the date of such event and,
with respect to any such securities receivable by them as aforesaid, had
thereafter, during the period from the date of such event to and including the
conversion date, retained such securities during such period giving application
to all adjustments called for during such period under this paragraph with
respect to the rights of the holders of the Cumulative Convertible Preferred
Stock.
(g) Adjustment for Reclassification, Exchange or Substitution.
If the Common Stock issuable upon the conversion of the Cumulative Convertible
Preferred Stock shall be changed into the same or a different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or
<PAGE>
-10-
stock dividend provided for above, or a reorganization, merger, consolidation,
or sale of assets provided for below), then and in each such event the holder of
each such share of Cumulative Convertible Preferred Stock shall have the right
thereafter to convert such share into the kind and amount of shares of stock and
other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of Common
Stock into which such shares of Cumulative Convertible Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(h) Adjustment for Merger or Reorganization, etc. In case of
any consolidation or merger of the Corporation with or into another corporation
or the sale of all or substantially all of the assets of the Corporation to
another corporation (other than a consolidation, merger or sale which is treated
as as a liquidation pursuant to Section 3(a)), each share of Cumulative
Convertible Preferred Stock shall thereafter be convertible into the kind and
amount of shares of stock or other securities or property to which a holder of
the number of shares of Common Stock of the Corporation deliverable upon
conversion of such Cumulative Convertible Preferred Stock would have been
entitled upon such consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Board of Directors) shall be made
in the application of the provisions in this Section 5 set forth with respect to
the rights and interests thereafter of the holders of the Cumulative Convertible
Preferred Stock, to the end that the provisions set forth in this Section 5
(including provisions with respect to changes in and other adjustments of the
Conversion Price) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other property thereafter deliverable
upon the conversion of the Cumulative Convertible Preferred Stock.
(i) No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Cumulative Convertible Preferred Stock against impairment.
<PAGE>
-11-
(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Cumulative Convertible Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Cumulative Convertible Preferred Stock,
furnish or cause to be furnished to such holder a similar certificate setting
forth (i) such adjustments and readjustments, (ii) the Conversion Price then in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which then would be received upon the conversion of Cumulative
Convertible Preferred Stock.
(k) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other
securities of the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock distribution
thereon), or of any consolidation or merger of the Corporation into or
with another corporation, or of the sale of all or substantially all of
the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation,
then the Corporation shall cause to be filed at its principal office or
at the office of the transfer agent of the Cumulative Convertible
Preferred Stock, and shall cause to be mailed to the holders of the
Cumulative Convertible Preferred Stock at their last addresses as shown
on the records of the Corporation or such transfer agent, at least ten
days prior to the record date specified in (A) below or twenty days
before the date specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination or, if a record is not to be taken,
the date as of which the holders of Common Stock
<PAGE>
-12-
of record to be entitled to such dividend, distribution,
subdivision or combination are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or
winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or
winding up.
6. Redemption.
(a) At any time and from time to time after March 31, 1999,
the Corporation may, at the option of its Board of Directors, redeem the
Cumulative Convertible Preferred Stock in the manner provided below, in whole or
in part, at a redemption price (the "Optional Redemption Price") equal to 100%
of the Liquidation Preference thereof plus the Additional Amount on the
Redemption Date (as defined below); provided that the Corporation shall not
redeem any shares of Cumulative Convertible Preferred Stock unless and until all
accrued and unpaid dividends (including any interest accruing thereon as herein
provided) on the Cumulative Convertible Preferred Stock through the Redemption
Date have been paid in full in cash.
(b) The Corporation shall redeem all outstanding shares of
Cumulative Convertible Preferred Stock on March 31, 2008 in the manner provided
below at a redemption price equal to the Liquidation Preference thereof plus the
Additional Amount on the Redemption Date (the "Mandatory Redemption Price").
(c) At least 30 days prior to the date fixed for any
redemption of Cumulative Convertible Preferred Stock (hereinafter referred to as
the "Redemption Date"), written notice (the "Redemption Notice") shall be
mailed, by first class or registered mail, postage prepaid, to each holder of
record of Cumulative Convertible Preferred Stock to be redeemed, at its address
last shown on the records of the transfer agent of the Cumulative Convertible
Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent). The Redemption Notice shall state:
(1) whether the redemption is pursuant to Section (6)(a)
or (6)(b) hereof;
<PAGE>
-13-
(2) the Optional Redemption Price or Mandatory Redemption
Price, as the case may be;
(3) whether all or less than all the outstanding shares of the
Cumulative Convertible Preferred Stock redeemable thereunder are to be
redeemed and the total number of shares of such Cumulative Convertible
Preferred Stock being redeemed;
(4) the number of shares of Cumulative Convertible Preferred
Stock held, as of the appropriate record date, by the holder that the
Corporation intends to redeem;
(5) the date fixed for redemption (the "Redemption Date");
(6) that the holder is to surrender to the Corporation, at the
place or places where certificates for shares of Cumulative Convertible
Preferred Stock are to be surrendered for redemption, in the manner and
at the price designated, his certificate or certificates representing
the shares of Cumulative Convertible Preferred Stock to be redeemed;
and
(7) that dividends on the shares of the Cumulative Convertible
Preferred Stock to be redeemed shall cease to accumulate on such
Redemption Date unless the Corporation defaults in the payment of the
Optional Redemption Price or the Mandatory Redemption Price, as the
case may be.
(d) Each Holder of Cumulative Convertible Preferred Stock
shall surrender the certificate or certificates representing such shares of
Cumulative Convertible Preferred Stock to the Corporation, duly endorsed, in the
manner and at the place designated in the Redemption Notice, and on the
Redemption Date the full Optional Redemption Price or Mandatory Redemption
Price, as the case may be, for such shares shall be payable in cash to the
Person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered certificate shall be canceled and retired and
shall not under any circumstances be reissued. In the event that less than all
of the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(e) Unless the Corporation defaults in the payment in full of
the redemption price, dividends on the Cumulative Convertible Preferred Stock
called for redemption shall cease to accumulate on the Redemption Date, and the
holders of such redeemed shares shall cease to have any further rights with
respect thereto on the Redemption Date, other than the right to receive the
<PAGE>
-14-
Optional Redemption Price or Mandatory Redemption Price, as the case may be,
without interest.
(f) In the event of any redemption of only a part of the then
outstanding Cumulative Convertible Preferred Stock, the Corporation shall effect
such redemption pro rata among the holders thereof based on the number of shares
of Cumulative Convertible Preferred Stock held by such holders on the date of
the Redemption
Notice.
7. Certain Restrictions.
(a) No dividends or other distributions shall be declared or
paid, set apart for payment or otherwise made on any Junior Stock or Parity
Stock for any period and no shares of any Junior Stock or Parity Stock shall be
redeemed or otherwise repurchased unless (i) full cumulative dividends
(including any interest accruing thereon as herein provided) have been or
contemporaneously are declared and paid (or declared and a sum sufficient for
the payment thereof set apart for such payment) on the Cumulative Convertible
Preferred Stock for all dividend payment periods ending on or prior to the date
such dividend or other distribution shall be declared or paid, set apart for
payment or otherwise made or the date of such redemption or repurchase, as the
case may be, (ii) on the date such dividend shall be declared, paid, set apart
for payment or otherwise made or the date of such redemption or repurchase, as
the case may be, the Corporation shall have made all payments required to be
made by it pursuant to Section 6 and otherwise be in compliance with all of its
obligations hereunder.
(b) The Corporation shall not create or permit to exist any
contractual restriction which would restrict in any way the Corporation's
ability to make required payments on the Cumulative Convertible Preferred Stock
or the Series C Preferred Stock, except: (1) for such contractual restrictions
consented to in writing by a majority of the holders of the Cumulative
Convertible Preferred Stock before or after the Corporation enters into such
contractual restrictions (the "Approved Contracts"), and (2) any subsequent
amendments, modifications, supplements, or restatements of the Approved
Contracts (including such contractual restrictions entered into in connection
with any refinancings of any debt instruments issued by or borrowings of the
Corporation) (the "Subsequent Contracts"); provided that, any such Subsequent
Contracts will not be permitted to contain restrictions on the Corporation's
payment obligations with respect to the Cumulative Convertible Preferred Stock
or Series C Preferred Stock of the Corporation which are more restrictive than,
or more adverse to the
<PAGE>
-15-
holders of the Cumulative Convertible Preferred Stock or Series C Preferred
Stock of the Corporation, in each such case, in any material respect as set
forth in any such Approved Contracts.
EXHIBIT 4.4
CERTIFICATE OF DESIGNATIONS
SERIES G 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
SERIES H SPECIAL PREFERRED STOCK
SERIES I 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
SERIES J SPECIAL PREFERRED STOCK
OF
SHARED TECHNOLOGIES INC.
SHARED TECHNOLOGIES INC., a Delaware corporation, certifies that
pursuant to the authority expressly granted to the Board of Directors in Article
FOURTH of the Corporation's Restated Certificate of Incorporation, the Board of
Directors of the Corporation duly adopted the following resolution creating four
series of Preferred Stock designated as Series G 6% Cumulative Convertible
Preferred Stock, Series H Special Preferred Stock, Series I 6% Cumulative
Convertible Preferred Stock and Series J Special Preferred Stock:
RESOLVED: That this Corporation create and authorize 250,000
shares of Series G 6% Cumulative Convertible
Preferred Stock and 200,000 shares of Series H
Special Preferred Stock, each with the terms, rights
and preferences as set forth in the Designation of
Rights and Preferences, attached hereto as Exhibit A
and Exhibit B, respectively, and made a part of these
resolutions, and to be issued in accordance with the
provisions of the Merger Agreement;
RESOLVED: That this Corporation create and authorize up to
250,000 shares of Series I 6% Cumulative Convertible
Preferred Stock and 200,000 shares of Series J
Special Preferred Stock, each with the terms, rights
and preferences as set forth in the Designation of
Rights and Preferences, attached hereto as Exhibit C
and Exhibit D, respectively, and made a part of these
resolutions, and to be issued in accordance with the
provisions of the Exchange Agreement;
RESOLVED: That in connection with the foregoing resolutions,
each of the Chief Executive Officer and President,
the Chief Financial Officer, Treasurer, any Vice
President and Secretary of this Corporation be, and
each hereby is, authorized and directed, for and on
behalf of this Corporation, to file such documents,
including, but not limited to, the Designation of
Rights and Preferences annexed hereto as
<PAGE>
Exhibits A, B, C and D as are necessary with the
Secretary of State of Delaware.
IN WITNESS WHEREOF, said SHARED TECHNOLOGIES INC. has caused this
Certificate of Designations of its Series G 6% Cumulative Convertible Preferred
Stock, Series H Special Preferred Stock, Series I 6% Cumulative Convertible
Preferred Stock and Series J Special Preferred Stock to be duly executed by its
Senior Vice President and attested to by its Secretary and has caused its
corporation seal to be affixed hereto as of the 8th day of March, 1996.
SHARED TECHNOLOGIES INC.
By:/s/ Vincent DiVincenzo
Vincent DiVincenzo,
Senior Vice President
(Corporation Seal)
ATTEST:
/s/ Kenneth M. Dorros
Kenneth M. Dorros, Secretary
2
<PAGE>
New Preferred
Designation of Series J Special Preferred Stock
1. Designation; Rank. The series of Preferred Stock designated
and known as "Series J Special Preferred Stock" shall consist of 200,000 shares,
par value $.01 per share, and shall herein be referred to as the "Special
Preferred Stock". Shares of the Special Preferred Stock shall, with respect to
rights on liquidation, winding up and dissolution, rank senior to all classes of
common stock of the Corporation (including, without limitation, the Common
Stock, par value $.004 per share (the "Common Stock")), and each other class of
capital stock or series of preferred stock hereafter created which does not
expressly provide that it ranks on a parity with the Special Preferred Stock as
to rights on liquidation, winding up and dissolution ("Junior Stock"), on a
parity with the Series D Preferred Stock, Cumulative Convertible Preferred Stock
and each other class of capital stock or series of preferred stock hereafter
created which expressly provides that it ranks on a parity with the Special
Preferred Stock as to rights on liquidation, winding up and dissolution ("Parity
Stock"), and, junior to the Series C Preferred Stock and each other class of
capital stock or series of preferred stock hereafter created which has been
approved by the holders of the Special Preferred Stock in accordance with
Section 4 and which expressly provides that it ranks senior to the Special
Preferred Stock as to rights on liquidation, winding up and dissolution ("Senior
Stock").
2. Dividends.
(a) Prior to March 31, 2007, the holders of the Special
Preferred Stock shall not be entitled to receive any dividends. On and after
March 31, 2007, the holders of the Special Preferred Stock shall be entitled to
receive, out of any funds legally available therefor, dividends in cash at the
annual rate of 12 1/4% of the Liquidation Preference (as hereinafter defined)
thereof, in equal quarterly payments in arrears on March 31, June 30, September
30 and December 31 in each year (each such date is referred to as a "Dividend
Payment Date") commencing on June 30, 2007, payable in preference and priority
to any payment of any cash dividend on any Junior Stock, junior in preference
and priority to any payment of any cash dividend on any Senior Stock and on a
parity with any payment of any cash dividend on any Parity Stock. Such dividends
shall be paid to the holders of record at the close of business on the date
specified by the Board of Directors of the Corporation at the time such dividend
is declared. If the Dividend Payment Date is not a business day, the Dividend
Payment Date shall be the next succeeding business day.
<PAGE>
-2-
(b) Each of such quarterly dividends shall be fully
cumulative, whether or not earned or declared, and shall accrue without
interest, from the first day of the quarter in which such dividend may be
payable as herein provided until the applicable Dividend Payment Date with
respect thereto (except that with respect to the first quarterly dividend, such
dividend shall accrue from April 1, 2007). In addition, if not fully paid in
cash on such Dividend Payment Date, each such dividend shall accrue interest at
an annual rate of 12 1/4% thereof from such Dividend Payment Date until the date
fully paid in cash.
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Special
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any Senior Stock but before any payment shall be made to the holders
of any Junior Stock, and on a parity with any payment to the holders of Parity
Stock, an amount equal to $100 per share (subject to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares) (the "Original Liquidation Preference")
plus with respect to any date after December 31, 1996, an amount (which amount,
collectively with the Original Liquidation Preference, is hereinafter referred
to as the "Liquidation Preference") equal to 5% per annum of the Original
Liquidation Preference thereof calculated on a daily basis from January 1, 1996
to such date; provided that the maximum Liquidation Preference shall not exceed
$30,000,000. If upon any such liquidation, dissolution or winding up of the
Corporation the remaining assets of the Corporation available for distribution
to its stockholders shall be insufficient to pay the holders of shares of
Special Preferred Stock the full amount to which they shall be entitled, the
holders of Special Preferred Stock shall share ratably in any distribution of
the remaining assets and funds of the Corporation in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to
such shares were paid in full.
(b) After the payment of all preferential amounts required to
be paid to the holders of Senior Stock, Parity Stock and Special Preferred Stock
upon the dissolution, liquidation or winding up of the Corporation, the holders
of shares of Junior Stock then outstanding shall be entitled to receive the
remaining
<PAGE>
-3-
assets and funds of the Corporation available for distribution to its
stockholders.
(c) Written notice of such liquidation, dissolution or winding
up, stating a payment date and the place where said payment shall be made, shall
be given by mail, postage prepaid, or by telecopier, not less than 20 days prior
to the payment date stated therein, to the holders of record of the Special
Preferred Stock, such notice to be addressed to each such holder at its address
as shown by the records of the Corporation.
(d) Whenever the distribution provided for in this Section 3
shall be payable in property other than cash, the value of such distribution
shall be the fair market value of such property as determined in good faith by
the Board of Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation nor the consolidation or merger of the Corporation with one or
more other corporations shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, unless such voluntary sale, conveyance,
exchange or transfer shall be in connection with a plan of liquidation,
dissolution or winding up of the business of the Corporation.
4. Voting.
(a) Except as may be otherwise provided in these terms of the
Special Preferred Stock or by law, the Special Preferred Stock shall not be
entitled to vote.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Special Preferred Stock so as
to affect adversely the Special Preferred Stock, without the written consent or
affirmative vote of the holders of at least two-thirds of the then outstanding
shares of Special Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class. For this
purpose, without limiting the generality of the foregoing, the authorization or
issuance of any series of Preferred Stock with preference or priority over the
Special Preferred Stock as to the right to receive amounts distribut-able upon
liquidation, dissolution or winding up of the Corporation shall be deemed to
affect adversely the Special Preferred Stock, and the authorization or issuance
of any series of Preferred Stock on a parity with the
<PAGE>
-4-
Special Preferred Stock as to the right to receive amounts distributable upon
liquidation, dissolution or winding up of the Corporation shall be deemed not to
affect adversely the Special Preferred Stock.
5. Redemption.
(a) At any time and from time to time the Corporation may, at
the option of its Board of Directors, redeem the Special Preferred Stock in the
manner provided below, in whole or in part, at a redemption price equal to 100%
of the Liquidation Preference thereof on the Redemption Date (as defined below).
(b) The Corporation shall redeem all outstanding shares of
Special Preferred Stock on (x) the date which is 35 days after the occurrence of
a Change of Control (as defined below) and, in any event, on (z) March 31, 2008
in each such case in the manner provided below at a redemption price equal to
100% of the Liquidation Preference thereof on the Redemption Date.
(c) On March 31 of each year, commencing with March 31, 1997,
the Corporation shall redeem at a redemption price equal to 100% of the
Liquidation Preference thereof on such Redemption Date an amount (the "Required
Redemption Amount") of Special Preferred Stock equal to 50% of the amount, if
any, by which the consolidated EBITDA (as defined below) of the Corporation and
its subsidiaries exceeds the Threshold Amount set forth below for the
immediately preceding year ended on December 31. To the extent the Required
Redemption Amount exceeds 50% of the sum (the "Income Limitation") of (i) the
consolidated net income of the Corporation and its subsidiaries for the
immediately preceding year ended on December 31 (without deducting therefrom any
amounts on account of dividends paid or payable on any preferred stock or
redemptions of any preferred stock of the Corporation, including, without
limitation, the Convertible Preferred Stock, Special Preferred Stock and Series
C and D classes of Preferred Stock of the Corporation) plus (ii) amounts
attributable to the amortization of goodwill of the Corporation and its
subsidiaries 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.
<PAGE>
-5-
The Threshold Amount for each year shall be as follows:
<TABLE>
<CAPTION>
Year Ended Threshold
December 31, Amount
<S> <C>
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 and thereafter............................ 81.5 million
</TABLE>
"EBITDA" means net income plus income taxes, interest expense, depreciation and
amoritization. In the event that the Corporation or any subsidiary sells or
disposes of any material asset or business ("material" meaning having a value of
$250,000 or more), the Threshold Amount for each year thereafter as set forth
above 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. All accounting terms used in this paragraph (c) shall be determined
in accordance with generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
(d) At least 30 days prior to the date fixed for any
redemption of Special Preferred Stock (hereinafter referred to as the
"Redemption Date"), written notice (the "Redemption Notice") shall be mailed, by
first class or registered mail, postage prepaid, to each holder of record of
Special Preferred Stock to be redeemed, at its address last shown on the records
of the transfer agent of the Special Preferred Stock (or the records of the
Corporation, if it serves as its own transfer agent). The Redemption Notice
shall state:
(1) whether the redemption is pursuant to Section (5)(a),
(5)(b)(x), (5)(b)(z) or 5(c) hereof;
(2) the redemption price thereof;
(3) whether all or less than all the outstanding shares of the
Special Preferred Stock redeemable thereunder are to be redeemed and
the total number of shares of such Special Preferred Stock being
redeemed;
<PAGE>
-6-
(4) the number of shares of Special Preferred Stock held, as
of the appropriate record date, by the holder that the Corporation
intends to redeem;
(5) the date fixed for redemption (the "Redemption Date"); and
(6) that the holder is to surrender to the Corporation, at the
place or places where certificates for shares of Special Preferred
Stock are to be surrendered for redemption, in the manner and at the
price designated, his certificate or certificates representing the
shares of Special Preferred Stock to be redeemed.
(e) Each Holder of Special Preferred Stock shall surrender the
certificate or certificates representing such shares of Special Preferred Stock
to the Corporation, duly endorsed, in the manner and at the place designated in
the Redemption Notice, and on the Redemption Date the full redemption price for
such shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired and shall not under any circumstances
be reissued. In the event that less than all of the shares represented by any
such certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares.
(f) Unless the Corporation defaults in the payment in full of
the redemption price the holders of such redeemed shares shall cease to have any
further rights with respect thereto on the Redemption Date, other than the right
to receive the redemption price with respect thereto, without interest.
(g) In the event of any redemption of only a part of the then
outstanding Special Preferred Stock, the Corporation shall effect such
redemption pro rata among the holders thereof based on the number of shares of
Special Preferred Stock held by such holders on the date of the Redemption
Notice.
(h) The occurrence of any of the following events will
constitute a "Change of Control" for purposes of this Section 5:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than one or more Permitted Holders (as defined below), is
or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act except that for purposes of this clause (i) such
person shall be
<PAGE>
-7-
deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly,
of more than 30% of the total voting power of the Voting Stock (as
defined below) of the Corporation; provided, however, that the
Permitted Holders beneficially own (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the Voting Stock of the
Corporation than such other person and do not have the right or ability
by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Corporation (for
the purposes of this clause (i), a person shall be deemed to
beneficially own any Voting Stock of a specified corporation held by
another corporation (the "parent corporation"), if such other person is
the beneficial owner (as defined in this clause (i) above), directly or
indirectly, of more than 30% of the voting power of the Voting Stock of
such parent corporation and the Permitted Holders beneficially own (as
defined in this clause (i) above), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock
of such parent corporation and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election
a majority of the board of directors of such parent corporation);
(ii) during any two consecutive 365-day periods, individuals
who at the beginning of such period constituted the Board of Directors
of the Corporation (together with any new directors whose election by
the Board of Directors of the Corporation or whose nomination for
election by the shareholders of the Corporation was approved by a vote
of 66- 2/3% of the directors of the Corporation then still in office
who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of
the Corporation then in office; or
(iii) the merger or consolidation of the Corporation with or
into another Person or the merger of another Person with or into the
Corporation, or the sale of all or substantially all the assets of the
Corporation to another Person (other than a Person that is controlled
by the Permitted Holders), and, in the case of any such merger or
consolidation, the securities of the Corporation that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of the Corporation are
<PAGE>
-8-
changed into or exchanged for cash, securities or property, unless
pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of
the surviving corporation that represent immediately after such
transaction, at least a majority of the aggregate voting power of the
Voting Stock of the surviving corporation and have the immediate right
to appoint a majority of the Board of Directors of the surviving
corporation.
"Permitted Holders" means Jeffrey J. Steiner and his
respective "associates" (as defined in Rule 12b-2 under the Exchange Act as in
effect on March 13, 1996, except that a person shall not be an "associate" for
purposes of this definition solely because such person comes within the
definition of such term in clause (a) of such Rule) or their respective
Affiliates.
"Affiliate" of any specified person or entity means any other
person or entity, directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified person or entity. For the
purposes of this definition, "control" when used with respect to any person or
entity means the power to direct the management and policies of such person or
entity, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Voting Stock" means, with respect to any person, securities
of any class or classes of capital stock in such person entitling the holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to vote in the election of members of
the Board of Directors or other governing body of such person.
6. Certain Restrictions.
(a) No dividends or other distributions shall be declared or
paid, set apart for payment or otherwise made on any Junior Stock or Parity
Stock for any period and no shares of any Junior Stock or Parity Stock shall be
redeemed or otherwise repurchased unless on the date such dividend shall be
declared, paid, set apart for payment or otherwise made or the date of such
redemption or repurchase, as the case may be, the Corporation shall have made
all payments required to be made by it pursuant to Section 5 and otherwise be in
compliance with all of its obligations hereunder.
<PAGE>
-9-
(b) The Corporation shall not create or permit to exist any
contractual restriction which would restrict in any way the Corporation's
ability to make required payments on the Special Preferred Stock or the Series C
Preferred Stock, except: (1) for such contractual restrictions consented to in
writing by a majority of the holders of the Special Preferred Stock before or
after the Corporation enters into such contractual restrictions (the "Approved
Contracts"), and (2) any subsequent amendments, modifications, supplements, or
restatements of the Approved Contracts (including such contractual restrictions
entered into in connection with any refinancings of any debt instruments issued
by or borrowings of the Corporation) (the "Subsequent Contracts"); provided
that, any such Subsequent Contracts will not be permitted to contain
restrictions on the Corporation's payment obligations with respect to the
Special Preferred Stock or Series C Preferred Stock of the Corporation which are
more restrictive than, or more adverse to the holders of the Special Preferred
Stock or Series C Preferred Stock of the Corporation, in each such case, in any
material respect as set forth in any such Approved Contracts.
EXHIBIT 4.5
INDENTURE dated as of March 1, 1996, among SHARED TECHNOLOGIES
FAIRCHILD COMMUNICATIONS CORP., a Delaware corporation (the
"Company"), SHARED TECHNOLOGIES INC., to be renamed SHARED
TECHNOLOGIES FAIRCHILD INC. ("STFI"), various subsidiaries of
the Company listed on the signature page hereto (the
"Subsidiary Guarantors" and, with STFI, the "STFC Guarantors")
and UNITED STATES TRUST COMPANY OF NEW YORK, a New York
corporation (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
12-1/4% Senior Subordinated Discount Notes Due 2006 (the "Initial Notes") and,
if and when issued pursuant to a registered exchange for Initial Notes, the
Company's 12-1/4% Senior Subordinated Discount Notes Due 2006 (the "Exchange
Notes") and, if and when issued pursuant to a private exchange for Initial
Notes, the Company's 12-1/4% Senior Subordinated Discount Notes Due 2006 (the
"Private Exchange Notes" and, together with the Exchange Notes and the Initial
Notes, the "Notes"):
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Accreted Value" as of any date (the "Specified Date") means,
with respect to each $1,000 principal amount at maturity of Notes:
(i) if the Specified Date is one of the following dates (each
a "Semi-Annual Accrual Date"), the amount set forth opposite such date
below:
<TABLE>
<CAPTION>
SEMI-ANNUAL ACCRUAL DATE ACCRETED
VALUE
<S> <C>
March 13, 1996 $ 702.77
September 1, 1996 742.87
March 1, 1997 788.37
September 1, 1997 836.66
March 1, 1998 887.90
September 1, 1988 942.29
March 1, 1999 1,000.00
</TABLE>
(ii) if the Specified Date occurs between two Semi-Annual
Accrual Dates, the sum of (A) the Accreted Value for the Semi-Annual
Accrual Date immediately preceding the Specified Date and (B) an amount
equal to the product of (i) the Accreted Value for the immediately
<PAGE>
following Semi-Annual Accrual Date less the Accreted Value for the
immediately preceding Semi-Annual Accrual Date and (ii) a fraction, the
numerator of which is the number of days from the immediately preceding
Semi-Annual Accrual Date to the Specified Date, using a 360-day year of
twelve 30-day months, and the denominator of which is 180 (or, if the
Semi-Annual Accrual Date immediately preceding the Specified Date is
March 13, 1996, the denominator of which is 169); and
(iii) if the Specified Date occurs after the last Semi-Annual
Accrual Date, $1,000.
"Acquisition" means the merger of Fairchild Industries Inc.
with and into Shared Technologies Inc.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Related Business; (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary; provided, however, that any
such Restricted Subsidiary described in clause (ii) or (iii) above is primarily
engaged in a Related Business.
"Adjusted Consolidated Net Income" means, for any period, the
Consolidated Net Income for such period plus, to the extent deducted therefrom,
the consolidated amortization of goodwill of the Company and its consolidated
Subsidiaries for such period related to the Acquisition.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of SectionsE4.05, 4.07 and 4.08 only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 5% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger,
2
<PAGE>
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of (i) any shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares or shares
required by applicable law to be held by a Person other than the Company or a
Restricted Subsidiary), (ii) all or substantially all the assets of any division
or line of business of the Company or any Restricted Subsidiary or (iii) any
other assets of the Company or any Restricted Subsidiary outside of the ordinary
course of business of the Company or such Restricted Subsidiary (other than, in
the case of (i), (ii) and (iii) above, (y) a disposition by a Restricted
Subsidiary to the Company or by the Company or a Restricted Subsidiary to a
Wholly Owned Subsidiary and (z) for purposes of Section 4.07 only, a disposition
that constitutes a Restricted Payment permitted by Section 4.05).
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at an
interest rate which would be applicable to Capital Lease Obligations with a like
term in accordance with GAAP) of the total obligations of the lessee for rental
payments during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of all
such payments.
"Bank Indebtedness" means any and all amounts payable by the
Company or any STFC Guarantor under or in respect of the Credit Facility, or any
facility that refinances or replaces the Credit Facility, in each case as
amended, refinanced or replaced from time to time, including principal, premium
(if any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, Guarantees and all other amounts
payable thereunder or in respect thereof.
"Banks" has the meaning specified in the Credit Facility.
3
<PAGE>
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) any "person" (as such term is used in SectionsE13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders or
STFI, is or becomes the beneficial owner (as defined in RulesE13d-3 and
13d-5 under the Exchange Act except that for purposes of this
clauseE(i) such person shall be deemed to have "beneficial ownership"
of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 30% of the total voting
power of the Voting Stock of the Company; provided, however, that the
Permitted Holders beneficially own (as defined in RulesE13d-3 and 13d-5
under the Exchange Act), directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the Voting Stock of the
Company than such other person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election
a majority of the Board of Directors (for the purposes of this
clauseE(i), a person shall be deemed beneficially to own any Voting
Stock of a specific corporation held by a another corporation (the
"parent corporation"), if such other person is the beneficial owner (as
defined in this clauseE(i)), directly or indirectly, of more than 30%
of the voting power of the Voting Stock of such parent corporation and
the Permitted Holders beneficially own (as defined in this clauseE(i)
above), directly or indirectly, in the aggregate a
4
<PAGE>
lesser percentage of the voting power of the Voting Stock of such
parent corporation and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the board of directors of such parent corporation);
(ii) one or more Permitted Holders collectively own
beneficially, directly or indirectly, shares representing more than 49%
of the total voting power of the outstanding Voting Stock of the
Company or STFI; provided, however, a Person shall be deemed to
beneficially own any Voting Stock of a specified corporation or other
entity held by another corporation or other entity (the "parent
entity") if such person owns beneficially more than 49% of the total
voting power of the Voting Stock of such parent entity;
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholder of the
Company was approved by a vote of 60% of the directors of the Company
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office; or
(iv) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the
Company, or the sale of all or substantially all the assets of the
Company to another Person (other than a Person that is controlled by
the Permitted Holders) and, in the case of any such merger or
consolidation, the securities of the Company that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of the Company are changed
into or exchanged for cash, securities or property, unless pursuant to
such transaction such securities are changed into or exchanged for, in
addition to any other consideration, securities of the surviving
corporation that represent immediately after such transaction, at least
a majority of the aggregate voting power of the Voting Stock of the
surviving corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
5
<PAGE>
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (ii) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that (1) if the Company or any Restricted
Subsidiary has Incurred any Indebtedness since the beginning of such period that
remains outstanding or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness has been Incurred on the first day of such period and the discharge
of any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period, (2) if since the beginning of such period the
Company or any Restricted Subsidiary shall have made any Asset Disposition, the
EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal to the EBITDA
(if negative), directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such period (or, if
the Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of
such Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after such
sale), (3) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any person which becomes a Restricted Subsidiary) or
an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any Indebtedness)
as if such Investment or acquisition occurred on the first day of such period
and (4) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning or such period) shall have made any
Asset Disposition, any Investment or
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acquisition of assets that would have required an adjustment pursuant to
clauseE(2) or (3) above if made by the Company or a Restricted Subsidiary during
such period, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset Disposition,
Investment or acquisition occurred on the first day of such period. For purposes
of this definition, whenever pro forma effect is to be given to an acquisition
of assets, the amount of income or earnings relating thereto, and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting Officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest of such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12Emonths).
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such total interest expense,
and to the extent incurred by the Company or its Restricted Subsidiaries,
(i) interest expense attributable to capital leases and one-third of the rental
expense attributable to operating leases, (ii) amortization of debt discount and
debt issuance cost, (iii) capitalized interest, (iv) non-cash interest expenses,
(v) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing, (vi) net costs associated
with Hedging Obligations (including amortization of fees), (vii) Preferred Stock
dividends in respect of all Preferred Stock held by Persons other than the
Company or a Wholly Owned Subsidiary, (viii) interest incurred in connection
with Investments in discontinued operations, (ix) interest accruing on any
Indebtedness of any other Person to the extent such Indebtedness is Guaranteed
by the Company or any Restricted Subsidiary and (x) the cash contributions to
any employee stock ownership plan or similar trust to the extent such
contributions are used by such plan or trust to pay interest or fees to any
Person (other than the Company) in connection with Indebtedness Incurred by such
plan or trust.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:
(i) any net income of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the
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exclusion contained in clauseE(iv) below, the Company's equity in the
net income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution paid to a Restricted
Subsidiary, to the limitations contained in clauseE(iii) below) and
(B) the Company's equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net Income;
(ii) any net income (or loss) of any Person acquired by the
Company or a Subsidiary in a pooling of interests transactions for any
period prior to the date of such acquisition;
(iii) any net income of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions
by such Restricted Subsidiary, directly or indirectly, to the Company,
except that (A) subject to the exclusion contained in clauseE(iv)
below, the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution paid to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net
Income;
(iv) any gain (but not loss) realized upon the sale or other
disposition of any assets of the Company or its consolidated
Subsidiaries (including pursuant to any sale-and-leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain (but not loss) realized upon the sale or other
disposition of any Capital Stock of any Person;
(v) extraordinary gains or losses; and
(vi) the cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purposes of Section 4.05 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiary to
the Company or a Restricted Subsidiary to the extent such
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<PAGE>
dividends, repayments or transfers increase the amount of Restricted Payments
permitted under Section 4.05 pursuant to clauseE(a)(3)(D) thereof.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Company ending at least 45Edays prior to the
taking of any action for the purpose of which the determination is being made,
as (i) the par or stated value of all outstanding Capital Stock of the Company
plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any accumulated deficit
and (B) any amounts attributable to Disqualified Stock.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement to which
such Person is a party or a beneficiary.
"Credit Facility" means the Credit Agreement dated as of
March 12, 1996, as amended from time to time, among the Company, STFI, the
Lenders referred to therein and the Banks referred to therein, Credit Suisse, as
Administrative Agent and Collateral Agent, Citicorp USA, Inc. and NationsBank,
N.A., as Documentation Agent.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Preferred Stock" means the 6% Cumulative
Convertible Preferred Stock issued by STFI in connection with the Acquisition.
"Designated Senior Indebtedness" means (i) the Bank
Indebtedness and (ii) any other Senior Indebtedness of the Company which, at the
date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $10 million and is specifically designated by the Company
in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or
9
<PAGE>
(iii) is redeemable at the option of the holder thereof, in whole or in part, in
each case on or prior to the first anniversary of the Stated Maturity of the
Notes; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for the provisions thereof giving holders thereof the
right to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions in Section 4.07 and Section 4.12.
"EBITDA" for any period means the sum of Consolidated Net
Income plus the following to the extent deducted in calculating such
Consolidated Net Income: (a) all income tax expense of the Company,
(b) Consolidated Interest Expense, (c) depreciation expense, (d) amortization
expense and (e) all other non-cash items reducing such Consolidated Net Income
(excluding any non-cash item to the extent it represents an accrual of, or
reserve for, cash disbursement for any subsequent period) less all non-cash
items increasing such Consolidated Net Income (such amount calculated pursuant
to this clauseE(e) not to be less than zero), in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization of, and other non-cash items
with respect to, a Subsidiary of the Company shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that
the net income of such Subsidiary was included in calculating Consolidated Net
Income and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statuses, rules and
governmental regulations applicable to such Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth (i) in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) in such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro
10
<PAGE>
forma financial statements) in periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the accounting staff of
the SEC.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such Person
(whether arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to take-or-pay or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The term "Guarantor" shall mean any Person Guaranteeing
any obligation.
"Guaranty" means the Guarantee of the Notes by STFI and the
Subsidiary Guarantors pursuant to this Indenture.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Subsidiary at the time it becomes Subsidiary. The term "Incurrence" when
used as a noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall be deemed the Incurrence
of Indebtedness.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(i) the principal of and premium (if any) in respect of
(A) indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or
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<PAGE>
other similar instruments for the payment of which such Person is
responsible or liable;
(ii) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered
into by such Person;
(iii) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
(iv) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than the obligations with respect to letters
of credit securing obligations (other than obligations described in
(i) through (iii) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third Business Day following receipt by
such Person of a demand for reimbursement following payment on the
letter of credit);
(v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary of such Person, any Preferred
Stock (but excluding, in each case, any accrued dividends);
(vi) all obligations of the type referred to in clausesE(i)
through (v) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, Guarantor or otherwise, including
by means of any Guarantee;
(vii) all obligations of the type referred to in clausesE(i)
through (vi) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured; and
(viii) to the extent not otherwise included in this
definition, Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum
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<PAGE>
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Restricted Subsidiary against
fluctuations in interest rates.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of such
Person) or other extensions of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by such Person. For purposes of the
definition of "Unrestricted Subsidiary", the definition of "Restricted Payment"
and Section 4.05, (i) "Investment" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair market value of
the net assets of any Subsidiary of the Company at the time that such Subsidiary
is designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Issue Date" means the date on which the Notes are originally
issued.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise, but only as and
13
<PAGE>
when received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to such properties or assets or received in any other noncash form) in each case
net of all legal, title and recording tax expenses, commissions and other fees
and expenses incurred, and all Federal, state, provincial, foreign and local
taxes required to be accrued as a liability under GAAP, as a consequence of such
Asset Disposition, and in each case net of all payments made on any Indebtedness
which is secured by any assets subject to such Asset Disposition, in accordance
with the terms of any Lien upon or other security agreement of any kind with
respect to such assets, or which must by its terms, or in order to obtain a
necessary consent to such Asset Disposition, or by applicable law be, repaid out
of the proceeds from such Asset Disposition, and net of all distributions and
other payments required to be made to minority interest holders in Subsidiaries
or joint ventures as a result of such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holders" means JeffreyEJ. Steiner and his
"associates" (as defined in Rule 12b-2 under the Exchange Act as in effect on
the Issue Date, except that a person shall not be an "associate" for purposes of
this Indenture solely because such person comes within the definition of such
term in clauseE(a) of such Rule) and his Affiliates.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (i) a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a Related
Business; (ii) another Person if as a result of such
14
<PAGE>
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary business is
a Related Business; (iii) Temporary Cash Investments; (iv) receivables owing to
the Company or any Restricted Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include such
consessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; (v) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vi) loans or advances to employees made in the ordinary
course of business consistent with past practices of the Company or such
Restricted Subsidiary; and (vii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Note means the principal of the Note plus the
premium, if any, payable on the Note which is due or overdue or is to become due
at the relevant time.
"Public Equity Offering" means an underwritten primary public
offering of common stock of STFI pursuant to an effective registration statement
under the Securities Act.
"Public Market" means any time after (x) a Public Equity
Offering has been consummated and (y) at least 15% of the total issued and
outstanding common stock of STFI has been distributed by means of an effective
registration statement under the Securities Act or sales pursuant to Rule 144
under the Securities Act.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem,
15
<PAGE>
defease or retire, or to issue other Indebtedness in exchange or replacement
for, such Indebtedness. "Refinanced" and "Refinancing" shall have correlative
meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Company or any Restricted Subsidiary existing on the
Issue Date or Incurred in compliance with the Indenture including Indebtedness
that Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; provided further,
however, that Refinancing Indebtedness shall not includeE(x) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Company orE(y) Indebtedness of
the Company or a Restricted Subsidiary that refinances Indebtedness of an
Unrestricted Subsidiary.
"Related Business" means any business related, ancillary or
complementary to the business of the Company and the Restricted Subsidiaries on
the Issue Date.
"Representative" means any trustee, agent or representative
(if any) for an issue of Senior Indebtedness of the Company.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the direct
or indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to the Company or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company held by any Person
or of any Capital stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of any
option
16
<PAGE>
to exchange any Capital Stock (other than into Capital Stock of the Company that
is not Disqualified Stock), (iii) the purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment of any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of acquisition) or (iv) the making of any
Investment in any Person (other than a Permitted Investment).
"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"Revolving Credit Provisions" means the provisions in the
Credit Facility pursuant to which the lenders have committed to make available
to the Company a revolving credit facility in a maximum principal amount of
$25.0 million.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien.
"Senior Indebtedness" with respect to any Person means (i) the
Bank Indebtedness, (ii) Indebtedness of such Person, whether outstanding on the
Issue Date or thereafter Incurred and (iii) accrued and unpaid interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to such Person whether or not
post-filing interest is allowed in such proceeding) in respect of
(A) indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such Person is responsible or liable unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligations are subordinate in right of payment to the
Notes or the applicable Guaranty, as the case may be; provided, however, that
Senior Indebtedness shall not include (1) any obligation of such Person to any
Subsidiary of such Person, (2) any liability for Federal, state, local or other
taxes owed or owing by such Person, (3) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
guarantees thereof or
17
<PAGE>
instruments evidencing such liabilities), (4) any Indebtedness of such Person
(and any accrued and unpaid interest in respect thereof) which by its terms is
subordinate or junior in any respect to any other Indebtedness or other
obligation of such Person or (5) that portion of any Indebtedness which at the
time of Incurrence is Incurred in violation of this Indenture, it being
understood that, for purposes of this clauseE(5), all Bank Indebtedness shall at
all times constitute Senior Indebtedness.
"Senior Subordinated Indebtedness" with respect to any Person
means the Notes (in the case of the Company) or the Guaranty of such Person (in
the case of an STFC Guarantor) and, in each case, any other Indebtedness of such
Person that specifically provides that such Indebtedness is to rank pari passu
with the Notes or such Guaranty, as the case may be, in right of payment and is
not subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company or such STFC Guarantor, respectively, which is not
Senior Indebtedness of such Person.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"STFC Guarantors" means each of STFI and the Subsidiary
Guarantors.
"STFI" means Shared Technologies Fairchild Inc., a Delaware
corporation.
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Notes pursuant to a written
agreement to the effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers,
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or trustees thereof is at the time owned or controlled, directly or indirectly,
by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person
or (iii) one or more Subsidiaries of such Person.
"Subsidiary Guarantor" means each Subsidiary of the Company
that Guarantees any Indebtedness of the Company.
"Subsidiary Guaranty" means the Guaranty by a Subsidiary
Guarantor of the Company's obligations with respect to the Notes.
"Temporary Cash Investments" means any of the following:
(i) any investment in direct obligations of the United States of America or any
agency thereof or obligations guaranteed by the United States of America or any
agency thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $50,000,000 (or
the foreign currency equivalent thereof) and has outstanding debt which is rated
"A" (or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by any registered broker
dealer or mutual fund distributor, (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in clause
(i) above entered into with a bank meeting the qualifications described in
clause (ii) above, (iv) investments in commercial paper, maturing not more than
90 days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to Moody's Investors Service, Inc., or "A-1" (or
higher) according to Standard and Poor's Ratings Group and (v) investments in
securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc.
"Term Loan Provisions" means the provisions in the Credit
Facility pursuant to which the lenders commit to make available to the Company
$120.0 million of credit facilities
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in the form of either amortizing term loans or letters of credit.
"TIA" means the Trust Indenture Act of 1939 (15EU.S.C.
ss.ss.E77aaa-77bbbb) as in effect on the date of this Indenture.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of
its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; provided, however, that
either (A) the Subsidiary to be so designated has total assets of $1,000 or less
or (B) if such Subsidiary has assets greater than $1,000, such designation would
be permitted under Section 4.05. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (x) the Company could Incur
$1.00 of additional Indebtedness under Section 4.03(a) and (y) no Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be by the Company to the Trustee by promptly filing with the Trustee a
copy of the Board resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
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"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares and shares
held by other Persons to the extent such shares are required by applicable law
to be held by a Person other than the Company or a Restricted Subsidiary) is
owned by the Company or one of more Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
Defined in
Term Section
"Affiliate Transaction" ................ 4.08
"Bankruptcy Law" ....................... 6.01
"Blockage Notice" ...................... 10.03
"covenant defeasance option" ........... 8.01(b)
"Custodian" ............................ 6.01
"Default Amount"........................ 6.02
"Event of Default" ..................... 6.01
"legal defeasance option" .............. 8.01(b)
"Legal Holiday" ........................ 12.08
"Offer" ................................ 4.07
"Offer Amount" ......................... 4.07
"Offer Period" ......................... 4.07
"pay the Notes" ........................ 10.03
"Paying Agent" ......................... 2.03
"Payment Blockage Period" .............. 10.03
"Purchase Date" ........................ 4.07
"Registrar"............................. 2.03
"Restricted Payment" ................... 4.05
"Successor Company" .................... 5.01
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes and the Guaranties.
"indenture security holder" means a Noteholder.
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"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, STFI,
the Subsidiary Guarantors and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be
(i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater; and
(9) all references to the date the Notes were originally
issued shall refer to the date the Initial Notes were originally
issued.
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ARTICLE 2
The Notes
SECTION 2.01. Form and Dating. Provisions relating to the
Initial Notes, the Private Exchange Notes and the Exchange Notes are set forth
in Appendix 1, which is hereby incorporated in and expressly made part of this
Indenture. The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of ExhibitEA which is hereby incorporated in
and expressly made a part of this Indenture. The Exchange Notes, the Private
Exchange Notes and the Trustee's certificate of authentication shall be
substantially in the form of ExhibitEB, which is hereby incorporated in and
expressly made a part of this Indenture. The Notes may have notations, legends
or endorsements required by law, stock exchange rule, agreements to which the
Company is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). Each Note shall be dated
the date of its authentication. The terms of the Notes set forth in Exhibit A
and ExhibitEB are part of the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall
sign the Notes for the Company by manual or facsimile signature. The Company's
seal shall be impressed, affixed, imprinted or reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time the Trustee authenticates the Note, the Note shall be
valid nevertheless.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Notes. Unless limited by the terms
of such appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Notes may be presented for registration of
transfer or for exchange (the
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"Registrar") and an office or agency where Notes may be presented for payment
(the "Paying Agent"). The Registrar shall keep a register of the Notes and of
their transfer and exchange. The Company may have one or more co-registrars and
one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Notes.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Note, the Company shall
deposit with the Paying Agent a sum in immediately available funds sufficient to
pay such principal and interest when so becoming due. The Company shall require
each Paying Agent (other than the Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Noteholders or the Trustee all
money held by the Paying Agent for the payment of principal of or interest on
the Notes and shall notify the Trustee in writing of any default by the Company
in making any such payment. If the Company or a Subsidiary of the Company acts
as Paying Agent, it shall segregate the money held by it as Paying Agent and
hold it as a separate trust fund. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon complying with this Section, the Paying
Agent shall have no further liability for the money delivered to the Trustee.
SECTION 2.05. Noteholder Lists. The Trustee shall preserve in
as current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Noteholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Noteholders.
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SECTION 2.06. Replacement Notes. If a mutilated Note is
surrendered to the Registrar or if the Holder of a Note claims that the Note has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Note if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Note is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company.
SECTION 2.07. Outstanding Notes. Notes outstanding at any time
are all Notes authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation and those described in this Section as
not outstanding. A Note does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.06, it ceases to
be outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Note is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Notes (or portions thereof) to be redeemed or maturing, as the case may
be, and the Paying Agent is not prohibited from paying such money to the
Noteholders on that date pursuant to the terms of this Indenture, then on and
after that date such Notes (or portions thereof) cease to be outstanding and
interest on them ceases to accrue.
SECTION 2.08. Temporary Notes. Until definitive Notes are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Company considers appropriate
for temporary Notes. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate definitive Notes and deliver them in exchange for
temporary Notes.
SECTION 2.09. Cancellation. The Company at any time may
deliver Notes to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee
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any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel and destroy (subject to the record
retention requirements of the Exchange Act) all Notes surrendered for
registration of transfer, exchange, payment or cancellation and deliver a
certificate of such destruction to the Company unless the Company directs the
Trustee to deliver canceled Notes to the Company. The Company may not issue new
Notes to replace Notes it has redeemed, paid or delivered to the Trustee for
cancellation.
SECTION 2.10. Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, the Company shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
The Company shall pay the defaulted interest to the persons who are Noteholders
on a subsequent special record date. The Company shall fix or cause to be fixed
any such special record date and payment date which special record date shall be
10 days before such payment date and shall promptly mail to each Noteholder a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.11.EECUSIP Numbers.EEThe Company in issuing the
Notes may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such redemption
shall not be affected by any defect in or omission of such numbers.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Notes pursuant to paragraphE5 of the Notes, it shall notify the Trustee
in writing of the redemption date, the principal amount of Notes to be redeemed
and the paragraph of the Notes pursuant to which the redemption will occur.
The Company shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the
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effect that such redemption will comply with the conditions herein.
SECTION 3.02. Selection of Notes To Be Redeemed. If fewer than
all the Notes are to be redeemed, the Trustee shall select the Notes to be
redeemed pro rata or by lot or by a method that complies with applicable legal
and securities exchange requirements, if any, and that the Trustee considers
fair and appropriate and in accordance with methods generally used at the time
of selection by fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Notes not previously called for redemption. The
Trustee may select for redemption portions of the principal of Notes that have
denominations larger than $1,000. Notes and portions of them the Trustee selects
shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions of this
Indenture that apply to Notes called for redemption also apply to portions of
Notes called for redemption. The Trustee shall notify the Company promptly of
the Notes or portions of Notes to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Notes, the Company shall mail
a notice of redemption by first-class mail to each Holder of Notes to be
redeemed.
The notice shall identify the Notes to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Notes are to be
redeemed, the identification and principal amounts of the particular
Notes to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Notes (or
portion thereof) called for redemption ceases to accrue on and after
the redemption date and the Accreted Value of the Notes (or portions)
thereof called for redemption cease to increase on or after the
redemption date; and
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(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes called for redemption become due and payable on the
redemption date and at the redemption price stated in the notice. On the
redemption date, such Notes shall be paid at the redemption price stated in the
notice, plus accrued interest to the redemption date. Failure to give notice or
any defect in the notice to any Holder shall not affect the validity of the
notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary of the Company is the Paying Agent, shall segregate and
hold in trust) money, in immediately available funds, sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date other than Notes or portions of Notes called for redemption which have been
delivered by the Company to the Trustee for cancellation.
SECTION 3.06. Notes Redeemed in Part. Upon surrender of a Note
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder (at the Company's expense) a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Notes. The Company shall promptly pay
the principal of and interest on the Notes on the dates and in the manner
provided in the Notes and in this Indenture. Principal and interest (including
any redemption price in connection with any redemption pursuant to ArticleE3)
shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest (or in the case of any such redemption, such redemption
price) then due and the Trustee or the Paying Agent, as the case may be, is not
prohibited from paying such money to the
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Noteholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal (including
any redemption price) at the rate specified therefor in the Notes, and it shall
pay interest on overdue installments of interest at the same rate to the extent
lawful.
SECTION 4.02.EESEC Reports. Notwithstanding that the Company
may not be required to remain subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC and
provide the Trustee and Noteholders with such annual reports and such
information, documents and other reports as are specified in SectionsE13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections, such information, documents and other reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections.
SECTION 4.03. Limitation on Indebtedness. (a) The Company
shall not Incur, directly or indirectly, any Indebtedness unless, on the date of
such Incurrence, the Consolidated Coverage Ratio would be equal to or greater
than 2.0 to 1.0 if such Indebtedness is Incurred prior to March 1, 1998 or 2.25
to 1.0 if such Indebtedness is Incurred thereafter.
(b) Notwithstanding Section 4.03(a), the Company may Incur
any or all of the following Indebtedness:
(1) Indebtedness Incurred pursuant to the Revolving Credit
Provisions of the Credit Facility or any other revolving credit
facility in a principal amount which, when taken together with the
principal amount of all other Indebtedness Incurred pursuant to this
Section 4.03(b)(1) and then outstanding, does not exceed $25.0 million;
(2) Indebtedness Incurred pursuant to the Term Loan
Provisions of the Credit Facility or any other credit or loan agreement
or indenture in an aggregate principal amount which, when taken
together with the principal amount of all other Indebtedness Incurred
pursuant to this Section 4.03(b)(2) and then outstanding, does not
exceed (A) $120.0 million less (B) the aggregate amount of all
principal repayments of any such Indebtedness made after the Issue Date
(other than any such principal repayments made as a result of the
Refinancing of any such Indebtedness);
(3) Indebtedness owed to and held by a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer
of any Capital Stock which results in any such Wholly
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Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of such Indebtedness (other than to another Wholly
Owned Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the Company;
(4) the Notes;
(5) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in SectionsE4.03(b)(1), (2), (3) or (4));
(6) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to Section 4.03(a) or pursuant to SectionsE4.03(b)(4)
or (5) or this Section 4.03(b)(6);
(7) Hedging Obligations consisting of Interest Rate Agreements
directly related to Indebtedness permitted to be Incurred by the
Company pursuant to this Indenture; and
(8) Indebtedness in an aggregate principal amount which,
together with all other Indebtedness of the Company outstanding on the
date of such Incurrence (other than Indebtedness permitted by
SectionsE4.03(b)(1) through (7) above or Section 4.03(a)), when
aggregated with all Indebtedness then outstanding pursuant to
Section 4.04(a)(v), does not exceed $5.0 million.
(c) Notwithstanding the foregoing, the Company shall not
Incur any Indebtedness pursuant to Section 4.03(b) if the proceeds thereof are
used, directly or indirectly, to Refinance any Subordinated Obligations unless
such Indebtedness shall be subordinated to the Notes to at least the same extent
as such Subordinated Obligations.
(d) Notwithstanding Section 4.03(a) and Section 4.03(b)
above, (i) the Company shall not Incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Senior Indebtedness
unless such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness and
(ii) the Company shall not Incur any Secured Indebtedness which is not Senior
Indebtedness unless contemporaneously therewith effective provision is made to
secure the Notes equally and ratably with such Secured Indebtedness for so long
as such Secured Indebtedness is secured by a Lien.
(e) For purposes of determining compliance with this
Section 4.03, (i) in the event that an item of Indebtedness meets the criteria
of more than one of the types of Indebtedness described above, the Company, in
its sole discretion, will classify such item of Indebtedness and only
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be required to include the amount and type of such Indebtedness in one of the
above clauses and (ii) an item of Indebtedness may be divided and classified in
more than one of the types of Indebtedness described above.
SECTION 4.04. Limitation on Indebtedness and Preferred Stock
of Restricted Subsidiaries. (a) The Company shall not permit any Restricted
Subsidiary to Incur, directly or indirectly, any Indebtedness or Preferred Stock
except:
(i) Indebtedness or Preferred Stock issued to and held by the
Company or a Wholly Owned Subsidiary; provided, however, that any
subsequent issuance or transfer of any Capital Stock which results in
any such Wholly Owned Subsidiary ceasing to be a Wholly Owned
Subsidiary or any subsequent transfer of such Indebtedness or Preferred
Stock (other than to the Company or a Wholly Owned Subsidiary) shall be
deemed, in each case, to constitute the Incurrence of such Indebtedness
or Preferred Stock by the issuer thereof;
(ii) Indebtedness or Preferred Stock of a Subsidiary Incurred and
outstanding on or prior to the date on which such Subsidiary was
acquired by the Company (other than Indebtedness or Preferred Stock
Incurred in connection with, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Subsidiary became
a Subsidiary or was acquired by the Company) and Refinancing
Indebtedness Incurred in respect thereof; provided, however, that such
Refinancing Indebtedness shall only be permitted under this
Section 4.04(a)(ii) to the extent Incurred by the Subsidiary that
originally Incurred such Indebtedness;
(iii) in the case of a Subsidiary Guarantor, (A) any Guarantee of
Indebtedness of the Company and (B) any Indebtedness consisting of
Liens securing any Guarantee permitted pursuant to this clauseE(iii);
(iv) Indebtedness or Preferred Stock outstanding on the Issue
Date (other than Indebtedness described in Section 4.04(a)(i)
orESection 4.04(a)(ii));
(v) Indebtedness represented by Capital Lease Obligations
Incurred for the purpose of financing all or any part of the purchase
price of equipment used in a Related Business or Incurred to Refinance
any such purchase price; provided, however, that the amount of
Indebtedness outstanding at any time pursuant to this
Section 4.04(a)(v), when aggregated with all Indebtedness then
outstanding pursuant to Section 4.03(b)(8), shall not exceed
$5.0 million; and
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(vi) Refinancing Indebtedness Incurred in respect of Indebtedness
or Preferred Stock referred to in Section 4.04(a)(iv) or this
Section 4.04(a)(vi).
(b) Notwithstanding the foregoing, the Company shall not permit
any Subsidiary Guarantor to Incur any Indebtedness pursuant to Section 4.04(a)
if the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations of such Subsidiary Guarantor unless such Indebtedness
shall be subordinated to the Subsidiary Guaranty of such Subsidiary Guarantor to
at least the same extent as such Subordinated Obligations.
(c) For purposes of determining compliance with this
Section 4.04, (i) in the event that an item of Indebtedness meets the criteria
of more than one of the types of Indebtedness described above, the Company, in
its sole discretion, will classify such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in one of the above
clauses and (ii) an item of Indebtedness may be divided and classified in more
than one of the types of Indebtedness described above.
(d) Notwithstanding Section 4.04(a) and Section 4.04(b), the
Company shall not permit any Subsidiary Guarantor to Incur (i) any Indebtedness
if such Indebtedness is subordinate or junior in ranking in any respect to any
Senior Indebtedness of such Subsidiary Guarantor, unless such Indebtedness is
Senior Subordinated Indebtedness of such Subsidiary Guarantor or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness of such
Subsidiary Guarantor or (ii) any Secured Indebtedness that is not Senior
Indebtedness of such Subsidiary Guarantor unless contemporaneously therewith
effective provision is made to secure such Subsidiary Guarantor's Guarantee of
the Notes equally and ratably with such Secured Indebtedness for so long as such
Secured Indebtedness is secured by a Lien.
SECTION 4.05. Limitation on Restricted Payments. (a) The Company
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have
occurred and be continuing (or would result therefrom); or (2) the Company is
not able to Incur an additional $1.00 of Indebtedness pursuant to
Section 4.03(a); or (3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of: (A) 50%
of the Adjusted Consolidated Net Income accrued during the period (treated as
one accounting period) from the beginning of the fiscal quarter immediately
following the Issue Date to the end of the most recent fiscal quarter ending at
least 45 days prior to the date of such Restricted Payment (or, in case
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such Adjusted Consolidated Net Income shall be a deficit, minus 100% of such
deficit); (B) the aggregate Net Cash Proceeds received by the Company from the
issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent
to the Issue Date (other than an issuance or sale to a Subsidiary of the Company
and other than an issuance or sale to an employee stock ownership plan or to a
trust established by the Company or any of its Subsidiaries for the benefit of
their employees) plus the aggregate cash capital contributions received by the
Company subsequent to the Issue Date; (C) the amount by which Indebtedness of
the Company is reduced on the Company's balance sheet upon the conversion or
exchange (other than by a Subsidiary of the Company) subsequent of the Issue
Date, of any Indebtedness of the Company convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of the Company (less the amount of any
cash, or the fair value of any other property, distributed by the Company upon
such conversion or exchange); and (D) an amount equal to the sum of (i) the net
reduction in Investments in Unrestricted Subsidiaries resulting from dividends,
repayments of loans or advances or other transfers of assets, in each case to
the Company or any Restricted Subsidiary from Unrestricted Subsidiaries, and
(ii) the portion (proportionate to the Company's equity interest in such
Subsidiary) of the fair market value of the net assets of an Unrestricted
Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted
Subsidiary; provided, however, that the foregoing sum shall not exceed, in the
case of any Unrestricted Subsidiary, the amount of Investments previously made
(and treated as a Restricted Payment) by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary.
(b) The provisions of Section 4.05(a) shall not prohibit: (i) any
purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of or cash capital contribution in respect of Capital Stock of
the Company (other than Disqualified Stock and other than Capital Stock issued
or sold to a Subsidiary of the Company or an employee stock ownership plan or to
a trust established by the Company or any of its Subsidiaries for the benefit of
their employees); provided, however, that (A) such purchase or redemption shall
be excluded in the calculation of the amount of Restricted Payments and (B) the
Net Cash Proceeds from such sale and any such cash capital contribution shall be
excluded from the calculation of amounts under Section 4.05(a)(3)(B) above;
(ii) any purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Obligations of the Company made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Indebtedness of the Company which is permitted to be Incurred pursuant to
Section 4.03; provided, however, that such purchase, repurchase, redemption,
defeasance or other acquisition or
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retirement for value shall be excluded in the calculation of the amount of
Restricted Payments; (iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would have
complied with this covenant; provided, however, that, at the time of payment of
such dividend, no other Default shall have occurred and be continuing (or result
therefrom), provided further, however, that such dividend shall be included in
the calculation of the amount of Restricted Payments; (iv) the declaration and
payment of a dividend or other distribution by the Company to STFI the proceeds
of which are to be used promptly by STFI for (A) the payment of cash dividends
on the Designated Preferred Stock at a rate not in excess of 6% per annum of the
liquidation preference of the Designated Preferred Stock or (B) the payment of
cash dividends on the STFI's SeriesEC Preferred Stock and SeriesED Preferred
Stock; provided, however, that the maximum amount of cash dividends on such
SeriesEC Preferred Stock and SeriesED Preferred Stock in any calendar year shall
not exceed $0.5Emillion; provided further, however, that the payments of all
such dividends and distributions made pursuant to this clauseE(iv) shall be
included in the calculation of the amount of Restricted Payments; or (v) the
declaration and payment of a dividend or other distribution by the Company to
STFI the proceeds of which are to be used for (A) legal, accounting and other
professional fees incurred by STFI and any fees and expenses payable by STFI
that are associated with registration statements and periodic reports filed with
the SEC or (B) the dividends, redemptions and other payments to be made by STFI
on the Issue Date in connection with the Acquisition; provided, however, that
the payments of all such dividends and distributions made pursuant to this
clauseE(v) shall be excluded in the calculation of the amount of Restricted
Payments.
SECTION 4.06. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.EEThe Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary (a) to pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) to make any loans or advances to the
Company or (c) to transfer any of its property or assets to the Company, except:
(i) any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the Issue Date; (ii) any encumbrance or restriction with respect
to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness
Incurred by such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Company (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the
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funds or credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company) and outstanding on such
date; (iii) any encumbrance or restriction pursuant to an agreement effecting a
Refinancing of Indebtedness Incurred pursuant to an agreement referred to in
clause (i) or (ii) of this Section 4.06 or this clause (iii) or contained in any
amendment to an agreement referred to in clause (i) or (ii) of this Section 4.06
or this clause (iii); provided, however, that the encumbrances and restrictions
with respect to such Restricted Subsidiary contained in any such refinancing
agreement or amendment are no less favorable to the Noteholders than
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in such agreements; (iv) any such encumbrance or restriction
consisting of customary nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the lease or
the property leased thereunder; (v) in the case of clause (c) of this
Section 4.06, restrictions contained in security agreements or mortgages
securing Indebtedness of a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such security agreements or
mortgages; and (vi) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or disposition of all
or substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition.
SECTION 4.07. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Disposition unless (i) the Company
or such Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value (including as to the value
of all noncash consideration), as determined in good faith by the Board of
Directors, of the shares and assets subject to such Asset Disposition and at
least 85% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents and (ii) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be)
(A) first, to the extent the Company elects (or is required by the terms of any
Senior Indebtedness of the Company), to prepay, repay, redeem or repurchase
Senior Indebtedness of the Company or Indebtedness (other than any Disqualified
Stock or, in the case of a Subsidiary Guarantor, any Subordinated Obligations)
of a Wholly Owned Subsidiary (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company) within one year from the later of the
date of such Asset Disposition or the receipt of such Net Available Cash;
(B) second, to the extent of the balance of such Net Available Cash after
application in accordance with clause (A), to the extent the Company elects, to
invest in Additional Assets within one year from the later of the date of such
Asset Disposition or the receipt of such Net
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Available Cash; (C) third, to the extent of the balance of such Net Available
Cash in excess of $250,000 in any fiscal year after application in accordance
with clausesE(A) and (B), to make an offer to the holders of the Notes (and to
holders of other Senior Subordinated Indebtedness of the Company designated by
the Company) to purchase Notes (and such other Senior Subordinated Indebtedness)
pursuant to and subject to Section 4.07(b); and (D) fourth, to the extent of the
balance of such Net Available Cash after application in accordance with clauses
(A), (B) and (C) to (x) the acquisition by the Company or any Wholly Owned
Subsidiary of Additional Assets or (y) the prepayment, repayment or purchase of
Indebtedness (other than any Disqualified Stock) of the Company (other than
Indebtedness owned to an Affiliate of the Company) or Indebtedness of any
Subsidiary (other than Indebtedness owed to the Company or an Affiliate of the
Company), in each case within one year from the later of the receipt of such Net
Available Cash and the date the offer described in Section 4.07(b) is
consummated, provided, however, that, in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to clause (A), (C) or (D) above,
the Company or such Restricted Subsidiary shall retire such Indebtedness and
shall cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this paragraph, the Company and the
Restricted Subsidiaries shall not be required to apply any Net Available Cash in
accordance with this paragraph except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which is not applied in accordance
with this paragraph exceeds $5.0 million. Pending application of Net Available
Cash pursuant to this covenant, such Net Available Cash shall be invested in
Permitted Investments.
For the purposes of this Section 4.07, the following are deemed
to be cash or cash equivalents: (x) the assumption of Indebtedness of the
Company or any Restricted Subsidiary and the release of the Company or such
Restricted Subsidiary from all liability on such Indebtedness in connection with
such Asset Disposition and (y) securities received by the Company or any
Restricted Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
purchase of the Notes (and other Senior Subordinated Indebtedness) pursuant to
clause (ii)(C) of
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Section 4.07(a), the Company will be required to purchase Notes tendered
pursuant to an offer by the Company for the Notes (and other Senior Subordinated
Indebtedness) (the "Offer") at a purchase price of 100% of their Accreted Value
plus accrued but unpaid interest (or, in respect of such other Senior
Subordinated Indebtedness, such lesser price, if any, as may be provided for by
the terms of such Senior Subordinated Indebtedness) in accordance with the
procedures (including prorating in the event of oversubscription) set forth in
Section 4.07(c). If the aggregate purchase price of Notes (and any other Senior
Subordinated Indebtedness) tendered pursuant to the Offer is less than the Net
Available Cash allotted to the purchase thereof, the Company will be required to
apply the remaining Net Available Cash in accordance with
Section 4.07(a)(ii)(D). The Company shall not be required to make such an offer
to purchase Notes (and other Senior Subordinated Indebtedness) pursuant to this
Section 4.07 if the Net Available Cash available therefor (after application of
the proceeds as provided in clauses (A) and (B) of Section 4.07(a)(ii)) is less
than $5.0 million (which lesser amount shall be carried forward for purposes of
determining whether such an offer is required with respect to any subsequent
Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a written
notice stating that the Holder may elect to have his Notes purchased by the
Company either in whole or in part (subject to prorationing as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum will
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), (ii) a description of material
developments in the Company's business subsequent to the date of the latest of
such Reports, and (iii) if material, appropriate pro forma financial information
and all instructions and materials necessary to tender Notes pursuant to the
Offer, together with the information contained in clause (3).
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(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall deliver
to the Trustee an Officers' Certificate as to (i) the amount of the Offer (the
"Offer Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.07(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) in Temporary Cash Investments, maturing on the day prior to the Purchase
Date or on the Purchase Date if funds are immediately available by open of
business an amount equal to the Offer Amount to be held for payment in
accordance with the provisions of this Section. Upon the expiration of the
period for which the Offer remains open (the "Offer Period"), the Company shall
deliver to the Trustee for cancellation the Notes or portions thereof which have
been properly tendered to and are to be accepted by the Company. The Trustee
shall, on the Purchase Date, mail or deliver payment to each tendering Holder in
the amount of the purchase price. In the event that the aggregate purchase price
of the Notes delivered by the Company to the Trustee is less than the Offer
Amount, the Trustee shall deliver the excess to the Company immediately after
the expiration of the Offer Period for application in accordance with this
Section.
(3) Holders electing to have a Note purchased will be required
to surrender the Note, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
Purchase Date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
Purchase Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the Accreted Value of the Note which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Note purchased. If at the expiration of the Offer Period
the aggregate Accreted Value of Notes surrendered by Holders exceeds the Offer
Amount, the Company shall select the Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Notes are purchased only in part will be issued new
Notes equal in Accreted Value to the unpurchased portion of the Notes
surrendered.
(4) At the time the Company delivers Notes to the Trustee which
are to be accepted for purchase, the Company will also deliver an Officers'
Certificate stating that such Notes are to be accepted by the Company pursuant
to and in
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accordance with the terms of this Section. A Note shall be deemed to have been
accepted for purchase at the time the Trustee, directly or through an agent,
mails or delivers payment therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTIONE4.08.EELimitation on Affiliate Transactions. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property, employee compensation arrangements or the rendering of
any service) with any Affiliate of the Company (an "Affiliate Transaction")
unless the terms thereof (1) are no less favorable to the Company or such
restricted Subsidiary than those that could be obtained at the time of such
transaction in arm's-length dealings with a Person who is not such an Affiliate,
(2) if such Affiliate Transaction involves an amount in excess of $1.0 million,
(i) are set forth in writing and (ii) have been approved by a majority of the
members of the Board of Directors having no personal stake in such Affiliate
Transaction and (3) if such Affiliate Transaction involves an amount in excess
of $5.0 million, have been determined by nationally recognized investment
banking firm to be fair, from a financial standpoint, to the Company and its
Restricted Subsidiaries.
(b) The provisions of Section 4.08(a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to Section 4.05; (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors; (iii) the
grant of stock options or similar rights to employees and directors of the
Company pursuant to plans approved by the Board of Directors; (iv) loans or
advances to employees in the ordinary course of business in accordance with the
past practices of the Company or its Restricted Subsidiaries, but in any event
not to exceed $1.0 million in the aggregate outstanding at any one time; (v) the
payment of reasonable fees to directors of the Company and its Restricted
Subsidiaries who are not employees of the Company or its Restricted
Subsidiaries; and (vi) any Affiliate Transaction between the Company and a
Wholly Subsidiary or between Wholly Owned Subsidiaries.
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SECTION 4.09. Limitation on the Sale or Issuance of Capital Stock
of Restricted Subsidiaries. The Company shall not sell or otherwise dispose of
any shares of Capital Stock of a Restricted Subsidiary, and shall not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise
dispose of any shares of its Capital Stock except (i) to the Company or a Wholly
Owned Subsidiary or (ii) if, immediately after giving effect to such issuance,
sale or other disposition, such Restricted Subsidiary would no longer constitute
a Restricted Subsidiary.
SECTION 4.10. Unrestricted Subsidiaries. The Company shall not
permit any Unrestricted Subsidiary to engage in the business of shared
telecommunications services in commercial office buildings.
SECTION 4.11. Future Guarantors. The Company shall cause each
Person that Guarantees any Indebtedness of the Company to become an STFC
Guarantor under this Indenture and thereby Guarantee the Notes on the terms and
conditions set forth in this Indenture.
SECTION 4.12. Change of Control. (a) Upon a Change of Control,
each Holder shall have the right to require that the Company repurchase such
Holder's Notes at a purchase price in cash equal to 101% of the Accreted Value
thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on a record date to receive interest
on the relevant interest payment date), in accordance with the terms
contemplated in Section 4.12(b). In the event that at the time of such Change of
Control the terms of the Bank Indebtedness restrict or prohibit the repurchase
of Notes pursuant to this Section, then prior to the mailing of the notice to
Holders provided for in Section 4.12(b) but in any event within 30 days
following any Change of Control, the Company shall (i) repay in full all Bank
Indebtedness or to offer to repay in full all Bank Indebtedness and repay the
Bank Indebtedness of each lender who has accepted such offer or (ii) obtain the
requisite consent under the agreements governing the Bank Indebtedness to permit
the repurchase of the Notes as provided for in Section 4.12(b).
(b) Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's Notes at
a purchase price in cash equal to 101% of the Accreted Value thereof
plus accrued and unpaid interest, if any, to the date of purchase
(subject to the
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right of Holders of record on a record date to receive interest on the
relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma historical
income, cash flow and capitalization after giving effect to such Change
of Control);
(3) the repurchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with
this Section, that a Holder must follow in order to have its Notes
purchased.
(c) Holders electing to have a Note purchased will be required to
surrender the Note, with an appropriate form duly completed, to the Company at
the address specified in the notice at least three Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than three Business Days prior to the
purchase date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Note which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Note purchased.
(d) On the purchase date, all Notes purchased by the Company
under this Section shall be delivered by the Trustee for cancellation, and the
Company shall pay the purchase price plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.13. Compliance Certificate. The Company shall deliver
to the Trustee within 120 days after the end of each fiscal year of the Company
an Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with
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respect thereto. The Company also shall comply with TIA ss.E314(a)(4).
SECTION 4.14. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets.
(a) The Company shall not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all its assets to, any Person, unless:E
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall expressly
assume, by an indenture supplemental thereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the obligations
of the Company under the Notes and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary as a result of such transaction as having
been Incurred by such Successor Company or such Subsidiary at the time
of such transaction), no Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a);
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount that
is not less than the Consolidated Net Worth of the Company prior to
such transaction; and
(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with the Indenture.
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The Successor Company shall be the successor to the Company and
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under the Indenture, but the predecessor Company in the case of
a conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Notes.
Notwithstanding the foregoing clausesE(ii), (iii) and (iv), any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company.
(b) STFI shall not, and the Company will not permit any
Subsidiary Guarantor to, consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all of its assets to any Person unless:E(i) in the case of STFI,
such Person is not the Company or any Restricted Subsidiary; (ii) the resulting,
surviving or transferee Person (if not STFI or such Subsidiary, as the case may
be) shall be a Person organized and existing under the laws of the jurisdiction
under which STFI or such Subsidiary, as applicable, was organized or under the
laws of the United States of America, or any State thereof or the District of
Columbia, and such Person shall expressly assume, by an amendment to the
Indenture, in a form satisfactory to the Trustee, all the obligations of STFI or
such Subsidiary (as applicable) under its Guaranty; and (iii) immediately after
giving effect to such transaction or transactions on a pro forma basis (and
treating any Indebtedness which becomes an obligation of the resulting,
surviving or transferee Person as a result of such transaction as having been
issued by such Person at the time of such transaction), no Default shall have
occurred and be continuing.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any Note
when the same becomes due and payable, whether or not such payment
shall be prohibited by Article 10, and such default continues for a
period of 30 days;
(2) the Company (i) defaults in the payment of the principal (or
Accreted Value) of any Note when the same becomes due and payable at
its Stated Maturity, upon redemption, upon declaration or otherwise,
whether or not such
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payment shall be prohibited by Article 10 or (ii) fails to redeem or
purchase Notes when required pursuant to this Indenture or the Notes,
whether or not such redemption or purchase shall be prohibited by
ArticleE10;
(3) the Company or STFI fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 or 4.12 (other than a failure
to purchase Notes when required under Section 4.07 or 4.12) and such
failure continues for 30 days after the notice specified below;
(5) the Company or any STFC Guarantor fails to comply with any of
its agreements in the Notes or this Indenture (other than those
referred to in (1), (2), (3) or (4) above) and such failure continues
for 60 days after the notice specified below;
(6) Indebtedness of the Company, STFI or any Significant
Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default
and the total amount of such Indebtedness unpaid or accelerated exceeds
$5.0 million or its foreign currency equivalent at the time;
(7) the Company, STFI or any Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company, STFI or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company, STFI or any
Significant Subsidiary or for any substantial part of its
property; or
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(C) orders the winding up or liquidation of the
Company, STFI or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the
order or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess of
$5.0 million or its foreign currency equivalent at the time is entered
against the Company, STFI or any Significant Subsidiary, remains
outstanding for a period of 60 days following the entry of such
judgment or decree and is not discharged, waived or the execution
thereof stayed within 10 days after the notice specified below; or
(10) a Guaranty ceases to be in full force and effect (other than
in accordance with the terms of such Guaranty) or an STFC Guarantor
denies or disaffirms its obligations under its Guaranty.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means TitleE11, United States Code, or
any similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4), (5) or (9) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
Notes notify the Company of the Default and the Company does not cure such
Default within the time specified after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clauseE(6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clauseE(4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing,
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the Trustee by written notice to the Company, or the Holders of at least 25% in
principal amount of the Notes by written notice to the Company and the Trustee,
may declare the Accreted Value of and accrued but unpaid interest on all the
Notes to be due and payable (collectively, the "Default Amount"). Upon such a
declaration, the Default Amount shall be due and payable immediately. If an
Event of Default specified in Section 6.01(7) or (8) with respect to the Company
occurs, the Default Amount on all the Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Noteholders. The Holders of a majority in principal amount of
the Notes by written notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority
in principal amount of the Notes by written notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Note or (ii) a Default in respect of a provision
that under Section 9.02 cannot be amended without the consent of each Noteholder
affected. When a Default is waived, it is deemed cured, but no such waiver shall
extend to any subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee
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determines is unduly prejudicial to the rights of other Noteholders or would
involve the Trustee in personal liability; provided, however, that the Trustee
may take any other action deemed proper by the Trustee that is not inconsistent
with such direction. Prior to taking any action hereunder, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Noteholder may not pursue
any remedy with respect to this Indenture or the Notes unless:
(1) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Notes
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity;
and
(5) the Holders of a majority in principal amount of the Notes do
not give the Trustee a direction inconsistent with the request during
such 60-day period.
A Noteholder may not use this Indenture to prejudice the rights
of another Noteholder or to obtain a preference or priority over another
Noteholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Notes held by such
Holder, on or after the respective due dates expressed in the Notes, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
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SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Noteholders allowed
in any judicial proceedings relative to the Company, its creditors or its
property and, unless prohibited by law or applicable regulations, may vote on
behalf of the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial proceeding
is hereby authorized by each Holder to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent required
by ArticleE10;
THIRD: to Noteholders for amounts due and unpaid on the Notes for
principal (or Accreted Value) and interest, ratably, without preference
or priority of any kind, according to the amounts due and payable on
the Notes for principal (or Accreted Value) and interest, respectively;
and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15Edays before such
record date, the Company shall mail or cause to be mailed to each Noteholder and
the Trustee a notice that states the record date, the payment date and amount to
be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to
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Section 6.07 or a suit by Holders of more than 10% in principal amount of the
Notes.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to
the extent it may lawfully do so) shall not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraphE(b) of
this Section;
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(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphsE(a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
Notwithstanding anything to the contrary contained herein, the
Trustee shall not be charged with knowledge of any default or Event of Default
(other than those under SectionsE6.01 and 6.02) unless and until a Trust Officer
receives written notice of or has actual knowledge of any such default or Event
of Default.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
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(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes, and it shall not be responsible for any
statement of the Company in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Noteholder notice of the Default within 90 days after it occurs. Except in the
case of a Default in payment of principal (or Accreted Value) of or interest on
any Note, the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Noteholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each MayE15 beginning with the MayE15 following the date of
this Indenture, and in any event prior to JulyE15 in each year, the Trustee
shall mail to each Noteholder a brief report dated as of MayE15 that complies
with TIA ss.E313(a). The Trustee also shall comply with TIA ss.E313(b).
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A copy of each report at the time of its mailing to Noteholders
shall be filed with the SEC and each stock exchange (if any) on which the Notes
are listed. The Company agrees to notify promptly the Trustee whenever the Notes
become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company or the STFC
Guarantors if the Company fails to do so shall pay to the Trustee from time to
time reasonable compensation for its services. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust. The
Company or the STFC Guarantors if the Company fails to do so shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company and each STFC Guarantors shall, jointly and severally,
indemnify the Trustee against any and all loss, liability or expense (including
attorneys' fees) incurred by it in connection with the administration of this
trust and the performance of its duties hereunder. The Trustee shall notify the
Company and the STF Guarantors promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company and the STFC Guarantors shall
defend the claim and the Trustee may retain separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company and the
STFC Guarantors need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee through the Trustee's own wilful
misconduct, negligence or bad faith.
To secure the Company's and the STFC Guarantors' payment
obligations in this Section, the Trustee shall have a lien prior to the Notes on
all money or property held or collected by the Trustee other than money or
property held in trust to pay principal (or Accreted Value) of and interest on
particular Notes.
The Company's and the STFC Guarantors' payment obligations
pursuant to this Section shall survive the discharge of this Indenture. When the
Trustee incurs expenses after the occurrence of a Default specified in
Section 6.01(7) or (8) with respect to the Company or any STFC Guarantor, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company. The
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Holders of a majority in principal amount of the Notes may remove the Trustee by
so notifying the Trustee and may appoint a successor Trustee. The Company shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Notes and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture and the retiring Trustee shall have no further rights
powers or duties under the Indenture. The successor Trustee shall mail a notice
of its succession to Noteholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the Holders
of 10% in principal amount of the Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust
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business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss.E310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss.E310(b); provided, however, that there shall be excluded from the operation
of TIAEss.E310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in
TIAEss.E310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims AgainstECompany.
The Trustee shall comply with TIA ss.E311(a), excluding any creditor
relationship listed in TIA ss.E311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss.E311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Notes; Defeasance.
(a) When (i) the Company delivers to the Trustee all outstanding Notes (other
than Notes replaced pursuant to Section 2.06) for cancellation or (ii) all
outstanding Notes have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to ArticleE3 hereof and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Notes, including interest thereon to
maturity or such redemption date (other than Notes replaced pursuant to
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Section 2.06), and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Sections
8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all its obligations under the Notes and this Indenture
("legal defeasance option") or (ii) its obligations under SectionsE4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 and 4.12 and the operation of
Sections 6.01(4), 6.01(6), 6.01(7) (but only with respect to Significant
Subsidiaries) and 6.01(9) ("covenant defeasance option"). The Company may
exercise its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option.
If the Company exercises its legal defeasance option, payment of
the Notes may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Notes may not be
accelerated because of an Event of Default specified in SectionsE6.01(4),
6.01(6), 6.01(7) (but only with respect to Significant Subsidiaries) or 6.01(9)
or because of the failure of the Company to comply with SectionsE5.01(a)(iii)
and (iv) or Section 5.01(b)(iii). If the Company exercises its legal defeasance
option or its covenant defeasance option, each STFC Guarantor will be released
from all of its obligations under its Guaranty.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clausesE(a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Notes have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise
its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money orEU.S. Government Obligations for the payment of principal of
and interest on the Notes to maturity or redemption, as the case may
be;
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(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the depositedEU.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Notes to maturity or redemption, as the case may
be;
(3) 123Edays pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Noteholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Noteholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
to the defeasance and discharge of the Notes as contemplated by this
Article 8 have been complied with.
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Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Notes at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold
in trust money orEU.S. Government Obligations deposited with it pursuant to this
ArticleE8. It shall apply the deposited money and the money fromEU.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Notes. Money and securities so
held in trust are not subject to Article 10.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal or interest that remains unclaimed for two years,
and, thereafter, Noteholders entitled to the money must look to the Company for
payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against depositedEU.S. Government Obligations or the
principal and interest received on suchEU.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money orEU.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to this Article 8 until such time as the Trustee or Paying
Agent is permitted to apply all such money orEU.S. Government Obligations in
accordance with this ArticleE8; provided, however, that, if the Company has made
any payment of interest on or principal of any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
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ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the STFC
Guarantors and the Trustee may amend this Indenture or the Notes without notice
to or consent of any Noteholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Notes in addition to or in
place of certificated Notes; provided, however, that the uncertificated
Notes are issued in registered form for purposes of Section 163(f) of
the Code or in a manner such that the uncertificated Notes are
described in Section 163(f)(2)(B) of the Code;
(4) to make any change in ArticleE10 that would limit or
terminate the benefits available to any holder of Senior Indebtedness
(or Representatives therefor) under ArticleE10;
(5) to add guarantees with respect to the Notes, including any
new Subsidiary Guaranties, or to secure the Notes;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of this Indenture under
the TIA; or
(8) to make any change that does not adversely affect the rights
of any Noteholder.
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section becomes effective, the
Company shall mail to Noteholders a notice briefly describing such amendment.
The failure to give such notice to all Noteholders, or any defect therein, shall
not
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impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company, the STFC
Guarantors and the Trustee may amend this Indenture or the Notes without notice
to any Noteholder but with the written consent of the Holders of at least a
majority in principal amount of the Notes. However, without the consent of each
Noteholder affected, an amendment may not:
(1) reduce the amount of Notes whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest
on any Note;
(3) reduce the principal or Accreted Value of or extend the
Stated Maturity of any Note;
(4) reduce the premium payable upon the redemption of any Note or
change the time at which any Note may be redeemed in accordance with
ArticleE3;
(5) make any Note payable in money other than that stated in the
Note;
(6) make any change in Article 10 or ArticleE12 that adversely
affects the rights of any Noteholder under ArticleE10 or ArticleE12;
(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section; or
(8) make any change in any Guaranty that would adversely affect
the Noteholders.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section becomes effective, the
Company shall mail to Noteholders a notice briefly describing such amendment.
The failure to give such notice to all Noteholders, or any defect therein, shall
not
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impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Notes shall comply with the TIA as then in
effect.
SECTION 9.04. Revocation and Effect of Consents
and Waivers. A consent to an amendment or a waiver by a Holder of a Note shall
bind the Holder and every subsequent Holder of that Note or portion of the Note
that evidences the same debt as the consenting Holder's Note, even if notation
of the consent or waiver is not made on the Note. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Note or
portion of the Note if the Trustee receives the notice of revocation before the
date the amendment or waiver becomes effective. After an amendment or waiver
becomes effective, it shall bind every Noteholder. An amendment or waiver
becomes effective upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Noteholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Noteholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Notes. If an amendment
changes the terms of a Note, the Trustee may require the Holder of the Note to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Note regarding the changed terms and return it to the Holder. Alternatively, if
the Company or the Trustee so determines, the Company in exchange for the Note
shall issue and the Trustee shall authenticate a new Note that reflects the
changed terms. Failure to make the appropriate notation or to issue a new Note
shall not affect the validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign
any amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive
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indemnity reasonably satisfactory to it and to receive, and (subject to Section
7.01) shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture and that such amendment constitutes the legal, valid and binding
obligation of the Company and each STFC Guarantor subject to the customary
exceptions.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Notes unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Subordination of the Notes
SECTION 10.01. Agreement To Subordinate. The Company agrees, and
each Noteholder by accepting a Note agrees, that the Indebtedness evidenced by
the Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article 10, to the prior payment of all Senior Indebtedness of
the Company and that the subordination is for the benefit of and enforceable by
the holders of such Senior Indebtedness. The Notes shall in all respects rank
pari passu with all other Senior Subordinated Indebtedness of the Company and
only Indebtedness of the Company which is Senior Indebtedness shall rank senior
to the Notes in accordance with the provisions set forth herein. All provisions
of this ArticleE10 shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full of such Senior Indebtedness in cash
or cash equivalents before Noteholders shall be entitled to receive any
payment of principal of or interest on the Notes; and
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(2) until such Senior Indebtedness is paid in full in cash or
cash equivalents, any distribution to which Noteholders would be
entitled but for this Article 10 shall be made to holders of such
Senior Indebtedness as their interests may appear, except that
Noteholders may receive shares of stock and any debt securities that
are subordinated to such Senior Indebtedness, and to any debt
securities received by holders of such Senior Indebtedness, to at least
the same extent as the Notes are subordinated to Senior Indebtedness of
the Company.
SECTION 10.03. Default on Senior Indebtedness of the Company. The
Company may not pay the principal of or premium, if any, or interest on the
Notes or make any deposit pursuant to Section 8.01 and may not repurchase,
redeem or otherwise retire or defease any Notes (collectively, "pay the Notes")
if (i) any Designated Senior Indebtedness is not paid when due or (ii) any other
default on Designated Senior Indebtedness occurs and the maturity of such
Designated Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Designated Senior Indebtedness has
been paid in full; provided, however, that the Company may pay the Notes without
regard to the foregoing if the Company and the Trustee receive written notice
approving such payment from the Representatives of the Designated Senior
Indebtedness. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Notes for a period (a "Payment Blockage
Period") commencing upon the receipt by the Company and the Trustee of written
notice (a "Blockage Notice") of such default from the Representative of such
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179Edays thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) by
repayment in full of such Designated Senior Indebtedness or (iii) because the
default giving rise to such Blockage Notice is no longer continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the first sentence of this Section),
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders shall have accelerated the maturity of such Designated Senior
Indebtedness, the Company may resume payments on the Notes after such Payment
Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day
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period, irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period; provided, however, that if any Blockage Notice
within such 360-day period is given by or on behalf of any holders of Designated
Senior Indebtedness (other than the Bank Indebtedness), the Representative of
the Bank Indebtedness may give another Blockage Notice within such period;
provided further, however, that in no event may the total number of days during
which any Payment Blockage Period or Periods is in effect exceed 179Edays in the
aggregate during any 360 consecutive day period. For purposes of this Section,
no default or event of default which existed or was continuing on the date of
the commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
SECTION 10.04. Acceleration of Payment of Notes. If payment of
the Notes is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the Representative for the holders of the
Designated Senior Indebtedness by written notice to the address set forth in
Section 13.02 hereof or at any other address specified in writing to the Trustee
from time to time.
SECTION 10.05. When Distribution Must Be Paid Over. If a
distribution is made to Noteholders that because of this Article 10 should not
have been made to them, the Noteholders who receive the distribution shall hold
it in trust for holders of Senior Indebtedness of the Company and pay it over to
them or their Representatives as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of the
Company is paid in full and until the Notes are paid in full, Noteholders shall
be subrogated to the rights of holders of such Senior Indebtedness to receive
distributions applicable to such Senior Indebtedness. A distribution made under
this Article 10 to holders of such Senior Indebtedness which otherwise would
have been made to Noteholders is not, as between the Company and Noteholders, a
payment by the Company on such Senior Indebtedness.
SECTION 10.07. Relative Rights. This Article 10 defines the
relative rights of Noteholders and holders of Senior Indebtedness of the
Company. Nothing in this Indenture shall:
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(1) impair, as between the Company and Noteholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
or
(2) prevent the Trustee or any Noteholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of the Company to receive distributions otherwise
payable to Noteholders.
SECTION 10.08. Subordination May Not Be Impaired by Company. No
right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or by its failure to comply with this
Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make
payments on the Notes and shall not be charged with knowledge of the existence
of facts that would prohibit the making of any such payments unless, not less
than two Business Days prior to the date of such payment, a Trust Officer of the
Trustee receives written notice satisfactory to it that payments may not be made
under this Article 10. The Company, the Registrar or co-registrar, the Paying
Agent, a Representative or a holder of Senior Indebtedness of the Company may
give the notice; provided, however, that, if an issue of Senior Indebtedness of
the Company has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 10 with respect to any such Senior Indebtedness which may at any
time be held by it, to the same extent as any other holder of such Senior
Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 10 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative. Whenever
a distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. ArticleE10 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the Notes
by reason of any provision in
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this Article 10 shall not be construed as preventing the occurrence of a
Default. Nothing in this Article 10 shall have any effect on the right of the
Noteholders or the Trustee to accelerate the maturity of the Notes.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
ofEU.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Notes shall not be subordinated
to the prior payment of any Senior Indebtedness of the Company or subject to the
restrictions set forth in this Article 10, and none of the Noteholders shall be
obligated to pay over any such amount to the Company or any holder of Senior
Indebtedness of the Company or any other creditor of the Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Noteholders shall
be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Noteholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article 10, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
ArticleE10, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Noteholder by accepting a Note authorizes and directs the Trustee on his behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination
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between the Noteholders and the holders of Senior Indebtedness of the Company as
provided in this Article 10 and appoints the Trustee as attorney-in-fact for any
and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Noteholders or the
Company or any other Person, money or assets to which any holders of such Senior
Indebtedness shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Noteholder by accepting a Note acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness and such holder of such Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
ARTICLE 11
Guaranties
SECTION 11.01. Guaranties. Each STFC Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal or Accreted Value of and interest on the Notes
when due, whether at maturity, by acceleration, by redemption or otherwise, and
all other monetary obligations of the Company under this Indenture and the Notes
and (b) the full and punctual performance within applicable grace periods of all
other obligations of the Company under this Indenture and the Notes (all the
foregoing being hereinafter collectively called the "Obligations"). Each STFC
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such STFC Guarantor and
that such STFC Guarantor will remain bound under this ArticleE11 notwithstanding
any extension or renewal of any Obligation.
Each STFC Guarantor waives presentation to, demand of, payment
from and protest to the Company of any of the Obligations and also waives notice
of protest for nonpayment. Each STFC Guarantor waives notice of any default
under the
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Notes or the Obligations. The obligations of each STFC Guarantor hereunder shall
not be affected by (a) the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any right or remedy against the Company or any
other Person under this Indenture, the Notes or any other agreement or
otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Notes or any other agreement; (d) the release of any security
held by any Holder or the Trustee for the Obligations or any of them; (e) the
failure of any Holder or Trustee to exercise any right or remedy against any
other guarantor of the Obligations; or (f) any change in the ownership of such
STFC Guarantor.
Each STFC Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Holder or the Trustee to any security held for payment of the
Obligations.
Each Guaranty is, to the extent and in the manner set forth in
ArticleE12, subordinated and subject in right of payment to the prior payment in
full of the principal of and premium, if any, and interest on all Senior
Indebtedness of the STFC Guarantor giving such Guaranty and each Guaranty is
made subject to such provisions of this Indenture.
Except as expressly set forth in SectionsE8.01(b), 11.02 and
11.06, the obligations of each STFC Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each STFC Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under this Indenture, the Notes or any
other agreement, by any waiver or modification of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the obligations,
or by any other act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of such STFC
Guarantor or would otherwise operate as a discharge of such STFC Guarantor as a
matter of law or equity.
Each STFC Guarantor further agrees that its Guarantee herein
shall continue to be effective or be
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reinstated, as the case may be, if at any time payment, or any part thereof, of
principal or Accreted Value of or interest on any Obligation is rescinded or
must otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
STFC Guarantor by virtue hereof, upon the failure of the Company to pay the
principal or Accreted Value of or interest on any Obligation when and as the
same shall become due, whether at maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other Obligation, each STFC
Guarantor hereby promises to and will, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the
Trustee an amount equal to the sum of (i) the unpaid amount of such Obligations,
(ii) accrued and unpaid interest on such Obligations (but only to the extent not
prohibited by law) and (iii) all other monetary Obligations of the Company to
the Holders and the Trustee.
Each STFC Guarantor agrees that it shall not be entitled to any
right of subrogation in respect of any Obligations guaranteed hereby until
payment in full of all Obligations and all obligations to which the Obligations
are subordinated as provided in ArticleE12. Each STFC Guarantor further agrees
that, as between it, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Obligations Guaranteed hereby may be
accelerated as provided in Article 6 for the purposes of such STFC Guarantor's
Guarantee herein, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed hereby,
and (y) in the event of any declaration of acceleration of such obligations as
provided in ArticleE6, such Obligations (whether or not due and payable) shall
forthwith become due and payable by such STFC Guarantor for the purposes of this
Section.
Each STFC Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.
SECTION 11.02. Limitation on Liability. Any term or provision of
this Indenture to the contrary notwithstanding, the maximum, aggregate amount of
the obligations guaranteed hereunder by any Subsidiary Guarantor shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or
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similar laws affecting the rights of creditors generally (taking into account,
for purposes of such determination, the full amount, without any reduction, of
such STFC Guarantor's liability under its guarantee of Bank Indebtedness or any
other guarantee of Senior Indebtedness).
SECTION 11.03. Successors and Assigns. This ArticleE11 shall be
binding upon each STFC Guarantor and its successors and assigns and shall enure
to the benefit of the successors and assigns of the Trustee and the Holders and,
in the event of any transfer or assignment of rights by any Holder or the
Trustee, the rights and privileges conferred upon that party in this Indenture
and in the Notes shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions of this Indenture.
SECTION 11.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 11 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article 11
at law, in equity, by statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or waiver
of any provision of this ArticleE11, nor the consent to any departure by any
STFC Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Trustee, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice to or demand on any STFC Guarantor in any case shall entitle such STFC
Guarantor to any other or further notice or demand in the same, similar or other
circumstances.
SECTION 11.06. Release of Subsidiary Guarantor. Upon the sale
(including any sale pursuant to any exercise of remedies by a holder of Senior
Indebtedness) or other disposition (including by way of consolidation or merger)
of a Subsidiary Guarantor, or the sale or disposition of all or substantially
all the assets of such Subsidiary Guarantor (in each case other than to the
Company or an Affiliate of the Company), such Subsidiary Guarantor shall be
deemed released from all obligations under this ArticleE11 without any further
action required on the part of the Trustee or any Holder. At the request of the
Company, the Trustee shall execute and deliver an appropriate instrument
evidencing such release.
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ARTICLE 12
Subordination of STFC Guaranties
SECTION 12.01. Agreement To Subordinate. Each STFC Guarantor
agrees, and each Noteholder by accepting a Note agrees, that the Obligations of
such STFC Guarantor are subordinated in right of payment, to the extent and in
the manner provided in this Article 12, to the prior payment of all Senior
Indebtedness of such STFC Guarantor and that the subordination is for the
benefit of and enforceable by the holders of such Senior Indebtedness. The
Obligations of an STFC Guarantor shall in all respects rank pari passu with all
other Senior Subordinated Indebtedness of such STFC Guarantor and only Senior
Indebtedness of such STFC Guarantor (including such STFC Guarantor's Guarantee
of Senior Indebtedness of the Company) shall rank senior to the Obligations of
such STFC Guarantor in accordance with the provisions set forth herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of any STFC Guarantor to creditors upon a
total or partial liquidation or a total or partial dissolution of such STFC
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to such STFC Guarantor or its property:
(1) holders of Senior Indebtedness of such STFC Guarantor shall
be entitled to receive payment in full of such Senior Indebtedness in
cash or cash equivalents before Noteholders shall be entitled to
receive any payment pursuant to any Obligations of such STFC Guarantor;
and
(2) until the Senior Indebtedness of any STFC Guarantor is paid
in full in cash or cash equivalents, any distribution to which
Noteholders would be entitled but for this Article 12 shall be made to
holders of such Senior Indebtedness as their interests may appear,
except that Noteholders may receive shares of stock and any debt
securities of such STFC Guarantor that are subordinated to Senior
Indebtedness, and to any debt securities received by holders of Senior
Indebtedness, of such STFC Guarantor to at least the same extent as the
Obligations of such STFC Guarantor are subordinated to Senior
Indebtedness of such STFC Guarantor.
SECTION 12.03. Default on Senior Indebtedness of STFC Guarantor.
No STFC Guarantor may make any payment pursuant to any of its Obligations or
repurchase, redeem or otherwise retire or defease any Notes or other Obligations
(collectively, "pay its Guaranty") if (i) any Designated Senior Indebtedness of
the Company is not paid when due or (ii) any other default on Designated Senior
Indebtedness of
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the Company occurs and the maturity of such Designated Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, (x) the default
has been cured or waived and any such acceleration has been rescinded or
(y) such Designated Senior Indebtedness has been paid in full; provided,
however, that any STFC Guarantor may pay its Guaranty without regard to the
foregoing if such STFC Guarantor and the Trustee receive written notice
approving such payment from the Representatives of the Designated Senior
Indebtedness. No STFC Guarantor may pay its Guaranty during the continuance of
any Payment Blockage Period after receipt by the Company and the Trustee of a
Payment Notice under Section 10.03. Notwithstanding the provisions described in
the immediately preceding sentence (but subject to the provisions contained in
the first sentence of this Section), unless the holders of Designated Senior
Indebtedness giving such Payment Notice or the Representative of such holders
shall have accelerated the maturity of such Designated Senior Indebtedness, any
STFC Guarantor may resume payments pursuant to its Obligations after such
Payment Blockage Period.
SECTION 12.04. Demand for Payment. If a demand for payment is
made on an STFC Guarantor pursuant to ArticleE11, the Trustee shall promptly
notify the holders of the Designated Senior Indebtedness (or their
Representatives) of such demand.
SECTION 12.05. When Distribution Must Be Paid Over. If a
distribution is made to Noteholders that because of this Article 12 should not
have been made to them, the Noteholders who receive the distribution shall hold
it in trust for holders of the relevant Senior Indebtedness and pay it over to
them or their Representatives as their interests may appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness of an
STFC Guarantor is paid in full and until the Notes are paid in full, Noteholders
shall be subrogated to the rights of holders of such Senior Indebtedness to
receive distributions applicable to Senior Indebtedness. A distribution made
under this Article 12 to holders of such Senior Indebtedness which otherwise
would have been made to Noteholders is not, as between the relevant STFC
Guarantor and Noteholders, a payment by such STFC Guarantor on such Senior
Indebtedness.
SECTION 12.07. Relative Rights. This Article 12 defines the
relative rights of Noteholders and holders of Senior Indebtedness of an STFC
Guarantor. Nothing in this Indenture shall:
(1) impair, as between an STFC Guarantor and Noteholders, the
obligation of such STFC Guarantor, which is
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<PAGE>
absolute and unconditional, to pay its Obligations to the extent set
forth in ArticleE11 or the relevant Guaranty; or
(2) prevent the Trustee or any Noteholder from exercising its
available remedies upon a default by such STFC Guarantor under its
Obligations, subject to the rights of holders of Senior Indebtedness of
such STFC Guarantor to receive distributions otherwise payable to
Noteholders.
SECTION 12.08. Subordination May Not Be Impaired by Company. No
right of any holder of Senior Indebtedness of any STFC Guarantor to enforce the
subordination of the Obligations of such STFC Guarantor shall be impaired by any
act or failure to act by such STFC Guarantor or by its failure to comply with
this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 12.03, the Trustee or Paying Agent may continue to make
payments on any Guaranty and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives written notice satisfactory to it that payments
may not be made under this Article 12. The Company, the relevant STFC Guarantor,
the Registrar or co-registrar, the Paying Agent, a Representative or a holder of
Senior Indebtedness of any STFC Guarantor may give the notice; provided,
however, that, if an issue of Senior Indebtedness of any STFC Guarantor has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 12 with respect to any Senior Indebtedness of any STFC Guarantor which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 12 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative. Whenever
a distribution is to be made or a notice given to holders of Senior Indebtedness
of any STFC Guarantor, the distribution may be made and the notice given to
their Representative (if any).
SECTION 12.11. ArticleE12 Not To Prevent Defaults Under a
Guaranty or Limit Right To Demand Payment. The failure to make a payment
pursuant to a Guaranty by reason of
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<PAGE>
any provision in this Article 12 shall not be construed as preventing the
occurrence of a default under such Guaranty. Nothing in this Article 12 shall
have any effect on the right of the Noteholders or the Trustee to make a demand
for payment on any STFC Guarantor pursuant to ArticleE11 or the relevant
Guaranty.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Noteholders shall
be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Noteholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of any STFC Guarantor for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Senior Indebtedness and other indebtedness of such STFC Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 12. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness of any STFC Guarantor
to participate in any payment or distribution pursuant to this Article 12, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of such STFC
Guarantor held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this ArticleE12, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article 12.
SECTION 12.13. Trustee To Effectuate Subordination. Each
Noteholder by accepting a Note authorizes and directs the Trustee on his behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Noteholders and the holders of Senior
Indebtedness of any STFC Guarantor as provided in this Article 12 and appoints
the Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of STFC Guarantor. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of any STFC Guarantor and
shall not be liable to
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<PAGE>
any such holders if it shall mistakenly pay over or distribute to Noteholders or
the Company or any other Person, money or assets to which any holders of such
Senior Indebtedness shall be entitled by virtue of this Article 12 or otherwise.
SECTION 12.15. Reliance by Holders of Senior Guarantor Debt on
Subordination Provisions. Each Noteholder by accepting a Note acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
any STFC Guarantor, whether such Senior Indebtedness was created or acquired
before or after the issuance of the Notes, to acquire and continue to hold, or
to continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company or any STFC Guarantor:
Shared Technologies Fairchild Corp.
100 Great Meadow Road
Wethersfield, Connecticut 06109
Attention: KennethEM. Dorros
Senior Vice President, General
Counsel and Secretary
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: RobertEF. Lee
Corporate Trust Administration
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<PAGE>
if to the Representative of the Designated Senior Indebtedness:
Credit Suisse
Tower 49
12EEast 49th Street
New York, New York 10017
Attention: Lisa Perrotto
Agency Group
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be
mailed to the Noteholder at the Noteholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.03. Communication by Holders with Other Holders.
Noteholders may communicate pursuant to TIA ss. 312(b) with other Noteholders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
SECTION 13.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
75
<PAGE>
SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Notes Disregarded. In determining whether the
Holders of the required principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which the Trustee receives an Officer's Certificate certifying that such
Notes are so owned shall be so disregarded. Also, subject to the foregoing, only
Notes outstanding at the time shall be considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Noteholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 13.09. Governing Law. This Indenture and the Notes shall
be governed by, and construed in accordance with, the laws of the State of
New York but without giving
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<PAGE>
effect to applicable principles of conflicts of law to the extent that the
application of the laws of another jurisdiction would be required thereby.
SECTION 13.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company or any STFC Guarantor shall not
have any liability for any obligations of the Company under the Notes or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Note, each Noteholder shall waive
and release all such liability. The waiver and release shall be part of the
consideration for the issue of the Notes.
SECTION 13.11. Successors. All agreements of the Company and the
STFC Guarantors in this Indenture and the Notes and Guaranties shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 13.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 13.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONSECORP.,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
SHARED TECHNOLOGIES INC.,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
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<PAGE>
MULTI-TENANT SERVICES, INC.,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
BOSTON TELECOMMUNICATIONS
GROUP, INC.,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
OFFICE TELEPHONE MANAGEMENT,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
STI INTERNATIONAL, INC.,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
UNITED STATES TRUST COMPANY OF
NEW YORK,
by: /s/ Gerard V. Ganey
------------------------
Name: Gerard V. Ganey
Title: Senior Vice President
EXHIBIT 4.6
EXECUTION COPY
SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP.,
Company
SHARED TECHNOLOGIES FAIRCHILD, INC.
VARIOUS SUBSIDIARIES
FINANCIAL PLACE COMMUNICATIONS COMPANY
VSI CORPORATION
Guarantors
12-1/4% Senior Subordinated Discount Notes Due 2006
First Supplemental Indenture
Dated as of March 13, 1996
to
Indenture Dated as of March 1, 1996
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
<PAGE>
FIRST SUPPLEMENTAL INDENTURE dated as of March 13, 1996 by and among SHARED
TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP., a Delaware corporation (the
"Company"), SHARED TECHNOLOGIES FAIRCHILD INC., a Delaware corporation ("STFI"),
various subsidiaries of the Company listed on the signature page hereto (the
"Subsidiary Guarantors" and, with STFI, the "STFC Guarantors"), VSI CORPORATION,
a Delaware Corporation ("VSI"), FINANCIAL PLACE COMMUNICATIONS COMPANY, an
Illinois general partnership ("FPCC") and UNITED STATES TRUST COMPANY (the
"Trustee"). Capitalized terms used herein but not defined herein shall have the
meaning ascribed thereto in the Indenture.
WHEREAS, the Company, the Subsidiary Guarantors, STFI and the Trustee
entered into an Indenture (the "Original Indenture") dated as of March 1, 1996
for the benefit of the other parties and for the equal and ratable benefit of
the Holders of the Company's 12-1/4% Senior Subordinated Discount Notes Due 2006
(the "Initial Notes") and, if and when issued pursuant to a registered exchange
for Initial Notes, the Company's 12-1/4% Senior Subordinated Discount Notes Due
2006 (the "Exchange Notes") and, if and when issued pursuant to a private
exchange for Initial Notes, the Company's 12-1/4% Senior Subordinated Discount
Notes Due 2006 (the "Private Exchange Notes" and, together with the Exchange
Notes and the Initial Notes, the "Notes"). The Original Indenture as
supplemented by this First Supplemental Indenture is hereinafter referred to as
the "Indenture".
WHEREAS, Section 9.01 of the Original Indenture provides that the Company,
the STFC Guarantors and the Trustee may amend the Original Indenture without
notice to or consent of any Noteholder (as defined in Section 1.01 of the
Indenture).
WHEREAS, VSI, FPCC, the Company, STFI and the Subsidiary Guarantors have
agreed that VSI will become a Subsidiary Guarantor and FPCC will become an STFC
Guarantor under the Indenture.
WHEREAS, all things necessary to make this First Supplemental Indenture a
valid indenture supplemental to the Original Indenture have been done.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and for other good and valuable consideration, the receipt of
which are hereby acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE I
SECTION 1.1 Agreement to be Bound. VSI hereby agrees to be bound as a
Subsidiary Guarantor, and FPCC agrees to be bound as an STFC Guarantor, by the
terms and provisions of the Original Indenture, including without limitation the
terms and provisions contained in Article 11 thereof.
SECTION 1.2 STFC Guarantors. VSI shall for all purposes be a Subsidiary
Guarantor under the Indenture and shall exercise every right and power of the
other Subsidiary Guarantors with the same effect as if it had been named as a
Subsidiary Guarantor under the Original Indenture and FPCC shall for all
purposed be an STFC Guarantor under the Indenture and shall exercise every right
and power of the other STFC Guarantors with the same effect as if it had been
named as an STFC Guarantor under the Original Indenture. Except as specifically
modified herein, the Original Indenture is in all respect ratified and confirmed
and shall remain in full force and effect in accordance with its terms.
SECTION 1.3 Execution of Supplemental Indenture. This First Supplemental
Indenture is executed and shall be construed as an indenture supplemental to the
Original Indenture and, as provided in the Original Indenture, this First
Supplemental Indenture forms a part thereof. The Original Indenture, as
supplemented and amended by this First Supplemental Indenture, is in all
respects hereby adopted, ratified and confirmed. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in accordance
with the definitions, uses and constructions contained in the Indenture.
ARTICLE II
Miscellaneous
SECTION 2.1 Governing Law. This First Supplemental Indenture and the Notes
shall be governed by, and construed in accordance with, the laws of the State of
New York but without giving effect to applicable principles of conflicts of law
to the extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 2.2 Successors. All agreements of the Company and the STFC
Guarantors in the Indenture and the Notes and Guaranties shall bind their
respective successors. All agreements of the Trustee in the Indenture shall bind
its successors.
SECTION 2.3 Multiple Originals. The parties may sign any number of copies
of this First Supplemental Indenture. Each signed copy shall be an original, but
all of
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<PAGE>
them together represent the same agreement. One signed copy is enough to prove
this First Supplemental Indenture.
SECTION 2.4 Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this First
Supplemental Indenture have been inserted for convenience of reference only, are
not intended to be considered a part hereof and shall not modify or restrict any
of the terms or provisions hereof.
SECTION 2.5. Responsibility for Recitals, etc. The recitals herein shall be
taken as the statements of VSI, the Company, STFI and the Subsidiary Guarantors,
and the Trustee assumes no responsibility for the correctness thereof. The
Trustee makes no representations as to the validity or sufficiency of this First
Supplemental Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, all as of the date first written above.
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONSECORP.,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
SHARED TECHNOLOGIES FAIRCHILD INC.,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
MULTI-TENANT SERVICES, INC.,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
VSI CORPORATION,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
3
<PAGE>
BOSTON TELECOMMUNICATIONS
GROUP, INC.,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
OFFICE TELEPHONE MANAGEMENT,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
STI INTERNATIONAL, INC.,
as Guarantor,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
FINANCIAL PLACE COMMUNICATIONS
COMPANY,
as Guarantor,
by SHARED TECHNOLOGIES
FAIRCHILD INC.,
General Partner,
by: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: Treasurer
UNITED STATES TRUST COMPANY OF
NEW YORK,
by: /s/ Gerard V. Ganey
------------------------
Name: Gerard V. Ganey
Title: Senior Vice President
4
EXHIBIT 10.1
SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP.
$163,637,000 12 1/4% Senior Subordinated Discount Notes
Due 2006
REGISTRATION RIGHTS AGREEMENT
March 8, 1996
CS First Boston Corporation
Citicorp Securities, Inc.
c/o CS First Boston Corporation
Park Avenue Plaza
New York, New York 10055
Ladies and Gentlemen:
Shared Technologies Fairchild Communications Corp., a Delaware
corporation (the "Issuer"), proposes to issue and sell to CSEFirst Boston
Corporation and Citicorp Securities Inc. (collectively, the "Initial
Purchasers"), upon the terms set forth in a purchase agreement of even date
herewith (the "Purchase Agreement"), $163,637,000 aggregate principal amount of
its 12 1/4% Senior Subordinated Discount Notes Due 2006 (the "Notes") to be
unconditionally guaranteed on a senior subordinated basis (the "Guaranties") by
Shared Technologies Inc. to be renamed Shared Technologies Fairchild Inc.
("STFI") and by each subsidiary of the Issuer listed on the signature page
hereto (with STFI, the "Guarantors" and together with the Issuer, the
"Company"). The Notes will be issued pursuant to an Indenture, dated as of
March 1, 1996, (the "Indenture") among the Issuer, the Guarantors named therein
and the United States Trust Company of New York (the "Trustee"). As an
inducement to the Initial Purchasers, the Company agrees with the Initial
Purchasers, for the benefit of the holders of the Notes (including, without
limitation, the Initial Purchasers), the Exchange Notes (as defined below) and
the Private Exchange Notes (as defined below) (collectively the "Holders"), as
follows:
1. Registered Exchange Offer. The Company shall, at its cost,
prepare and, not later than 45Edays after (or if the 45thEday is not a business
day, the first business day thereafter) the issue date of the Notes (the "Issue
Date"), file with the Securities and Exchange Commission (the "Commission") a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"),
<PAGE>
with respect to a proposed offer (the "Registered Exchange Offer") to the
Holders of Transfer Restricted Notes (as defined in Section 6 hereof), who are
not prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer, to issue and deliver to such Holders, in exchange for
the Notes, a like aggregate principal amount of debt securities (the "Exchange
Notes") of the Company issued under the Indenture and identical in all material
respects to the Notes (except for the transfer restrictions relating to the
Notes) that would be registered under the Securities Act. The Company shall use
its best efforts to cause such Exchange Offer Registration Statement to become
effective under the Securities Act within 120 days (or if the 120thEday is not a
business day, the first business day thereafter) after the Issue Date of the
Notes and shall keep the Exchange Offer Registration Statement effective for not
less than 30 days (or longer, if required by applicable law) after the date
notice of the Registered Exchange Offer is mailed to the Holders (such period
being called the "Exchange Offer Registration Period").
If the Company effects the Registered Exchange Offer, the Company
will be entitled to close the Registered Exchange Offer 30 days after the
commencement thereof provided that the Company has accepted all the Notes
theretofore validly tendered in accordance with the terms of the Registered
Exchange Offer.
Following the declaration of the effectiveness of the Exchange
Offer Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of Transfer Restricted Notes electing to exchange the Notes
for Exchange Notes (assuming that such Holder is not an affiliate of the Company
within the meaning of the Securities Act, acquires the Exchange Notes in the
ordinary course of such Holder's business and has no arrangements with any
person to participate in the distribution of the Exchange Notes and is not
prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer) to trade such Exchange Notes from and after their
receipt without any limitations or restrictions under the Securities Act and
without material restrictions under the securities laws of the several states of
the United States.
The Company acknowledges that, pursuant to current
interpretations by the Commission's staff of Section 5 of the Securities Act, in
the absence of an applicable exemption therefrom, (i) each Holder which is a
broker-dealer electing to exchange Notes, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Notes (an "Exchanging Dealer"), is required to deliver a prospectus containing
the information set forth in Annex A hereto on the cover, in Annex B hereto in
the
2
<PAGE>
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section, and in Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Notes received by such
Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial
Purchaser that elects to sell Exchange Notes acquired in exchange for Notes
constituting any portion of an unsold allotment is required to deliver a
prospectus containing the information required by ItemsE507 or 508 of
Regulation S-K under the Securities Act, as applicable, in connection with such
sale.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the prospectus
contained therein, in order to permit such prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Notes; provided, however, that (i) in the case
where such prospectus and any amendment or supplement thereto must be delivered
by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser
of 180 days and the date on which all Exchanging Dealers and the Initial
Purchasers have sold all Exchange Notes held by them (unless such period is
extended pursuant to Section 3(j) below) and (ii) the Company shall make such
prospectus and any amendment or supplement thereto, available to any
broker-dealer for use in connection with any resale of any Exchange Notes for a
period not less than 90 days after the consummation of the Registered Exchange
Offer.
If, upon consummation of the Registered Exchange Offer, any
Initial Purchaser holds Notes acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Notes pursuant to the Registered Exchange Offer, shall issue and deliver to such
Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "Private Exchange") for the Notes held by such Initial Purchaser,
a like principal amount of debt securities of the Company issued under the
Indenture and identical in all material respects (including the existence of
restrictions on transfer under the Securities Act and the securities laws of the
several states of the United States) to the Notes (the "Private Exchange
Notes"). The Notes, the Exchange Notes and the Private Exchange Notes are herein
collectively called the "Securities".
In connection with the Registered Exchange Offer, the Company
shall:
(a) mail to each Holder a copy of the prospectus forming part of
the Exchange Offer Registration Statement,
3
<PAGE>
together with an appropriate letter of transmittal and related
documents;
(b) keep the Registered Exchange Offer open for not less than
30 days (or longer, if required by applicable law) after the date
notice thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Notes at any time prior
to the close of business, New York time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all material respects with all
applicable laws.
As soon as practicable after the close of the Registered Exchange
Offer or the Private Exchange, as the case may be, the Company shall:
(i) accept for exchange all the Notes validly tendered
and not withdrawn pursuant to the Registered Exchange Offer and the
Private Exchange;
(ii) deliver to the Trustee for cancellation all the
Notes so accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver
promptly to each Holder of the Notes, Exchange Notes or Private
Exchange Notes, as the case may be, equal in principal amount to the
Notes of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Notes will
not be subject to the transfer restrictions set forth in the Indenture and that
all the Securities will vote and consent together on all matters as one class
and that none of the Securities will have the right to vote or consent as a
class separate from one another on any matter.
Interest on each Exchange Note and Private Exchange Note
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or, if no interest has been paid on
the Notes, from the date of original issue of the Notes.
Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer
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(i) any Exchange Notes received by such Holder will be acquired in the ordinary
course of business, (ii) such Holder will have no arrangements or understanding
with any person to participate in the distribution of the Notes or the Exchange
Notes within the meaning of the Securities Act, (iii) such Holder is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Company or if
it is an affiliate, such Holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (iv) if
such Holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of the Exchange Notes and (v) if such
Holder is a broker-dealer, that it will receive Exchange Notes for its own
account in exchange for Notes that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes.
Notwithstanding any other provisions hereof, the Company
will ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain 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 and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that in no such case shall the Company be responsible for information concerning
or supplied in writing by any Initial Purchaser of the Securities included in
the Exchange Offer Registration Statement, the prospectus contained therein, or
any amendment or supplement thereto, as the case may be.
2. Shelf Registration. If, (i) because of any change in
law or in applicable interpretations thereof by the staff of the Commission, the
Company is not permitted to effect a Registered Exchange Offer, as contemplated
by Section 1 hereof, (ii) the Registered Exchange Offer is not consummated
within 150 days of the Issue Date, (iii) any Initial Purchaser so requests with
respect to the Notes (or the Private Exchange Notes) not eligible to be
exchanged for Exchange Notes in the Registered Exchange Offer and held by it
following consummation of the Registered Exchange Offer or (iv) any Holder
(other than an Exchanging Dealer) is not eligible to participate in the
Registered Exchange Offer or,
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in the case of any Holder (other than an Exchanging Dealer) that participates in
the Registered Exchange Offer, such Holder does not receive freely tradeable
Exchange Notes on the date of the exchange, the Company shall take the following
actions:
(a) The Company shall, at its cost, as promptly as
practicable (but in no event more than the later of (i) 45Edays after
the Issue Date and (ii) 30 days after so required or requested pursuant
to this Section 2) file with the Commission and thereafter shall use
its best efforts to cause to be declared effective a registration
statement (the "Shelf Registration Statement" and, together with the
Exchange Offer Registration Statement, a "Registration Statement") on
an appropriate form under the Securities Act relating to the offer and
sale of the Transfer Restricted Notes by the Holders thereof from time
to time in accordance with the methods of distribution set forth in the
Shelf Registration Statement and Rule 415 under the Securities Act
(hereinafter, the "Shelf Registration"); provided, however, that no
Holder (other than an Initial Purchaser) shall be entitled to have the
Securities held by it covered by such Shelf Registration Statement
unless such Holder agrees in writing to be bound by all the provisions
of this Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the
Shelf Registration Statement continuously effective in order to permit
the prospectus included therein to be lawfully delivered by the Holders
of the relevant Securities, for a period of three years (or for such
longer period if extended pursuant to Section 3(j) below) from the date
of its effectiveness or such shorter period that will terminate when
all the Securities covered by the Shelf Registration Statement have
been sold pursuant thereto. The Company shall be deemed not to have
used its best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any
action that would result in Holders of Securities covered thereby not
being able to offer and sell such Securities during that period, unless
such action is required by applicable law; provided, however, that the
Company shall not be deemed to have voluntarily taken any such action
if it enters, in good faith, into negotiations concerning, or executes
and delivers any agreement or other document relating to, any business
combination, acquisition or disposition.
(c) Notwithstanding any other provisions of this
Agreement to the contrary, the Company shall cause the Shelf
Registration Statement and the related prospectus and any amendment or
supplement thereto, as of the effective date of the Shelf Registration
Statement, amendment or supplement, (i) to comply in all material
respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (ii) not to contain any
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<PAGE>
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
3. Registration Procedures. In connection with any Shelf
Registration contemplated by Section 2 hereof and, to the extent applicable, any
Registered Exchange Offer contemplated by Section 1 hereof, the following
provisions shall apply:
(a) The Company shall (i) furnish to each Initial
Purchaser, prior to the filing thereof with the Commission, a copy of
the Registration Statement and each amendment thereof and each
supplement, if any, to the prospectus included therein and, in the
event that an Initial Purchaser (with respect to any portion of an
unsold allotment from the original offering) is participating in the
Registered Exchange Offer or the Shelf Registration Statement, shall
use its best efforts to reflect in each such document, when so filed
with the Commission, such comments as such Initial Purchaser reasonably
may propose; (ii) include the information set forth in Annex A hereto
on the cover, in Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section and in Annex C
hereto in the "Plan of Distribution" section of the prospectus forming
a part of the Exchange Offer Registration Statement and include the
information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; (iii) if requested
by an Initial Purchaser, include the information required by ItemsE507
or 508 of Regulation S-K under the Securities Act, as applicable, in
the prospectus forming a part of the Exchange Offer Registration
Statement; (iv) include within the prospectus contained in the Exchange
Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a
summary statement of the positions taken or policies made by the staff
of the Commission with respect to the potential "underwriter" status of
any broker-dealer that is the beneficial owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of Exchange Notes received by such broker-dealer in
the Registered Exchange Offer (a "Participating Broker-Dealer"),
whether such positions or policies have been publicly disseminated by
the staff of the Commission or such positions or policies, in the
reasonable judgment of the Initial Purchasers based upon advice of
counsel (which may be in-house counsel), represent the prevailing views
of the staff of the Commission; and (v) in the case of a Shelf
Registration Statement, include the names of the Holders, who propose
to sell Securities pursuant to the Shelf Registration Statement, as
selling securityholders.
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<PAGE>
(b) The Company shall give written notice to the Initial
Purchasers, the Holders of the Securities and any Participating
Broker-Dealer from whom the Company has received prior written notice
that it will be a Participating Broker-Dealer in the Registered
Exchange Offer (which notice pursuant to clausesE(ii)-(v) hereof shall
be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made):
(i) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of
any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such
purpose; and
(v) of the happening of any event that requires the
Company to make changes in the Registration Statement or the
prospectus in order that the Registration Statement or the
prospectus do not contain an untrue statement of a material
fact nor omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the
case of the prospectus, in light of the circumstances under
which they were made) not misleading.
(c) The Company shall make every reasonable effort to
obtain the withdrawal at the earliest possible time of any order
suspending the effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of
Securities included within the coverage of the Shelf Registration,
without charge, at least one copy of the Shelf Registration Statement
and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing,
all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company shall deliver to each Exchanging Dealer
and each Initial Purchaser, and to any other Holder who so requests,
without charge, at least one copy of the Exchange
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<PAGE>
Offer Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if any Initial
Purchaser or any such Holder requests, all exhibits thereto (including
those incorporated by reference).
(f) The Company shall, during the Shelf Registration
Period, deliver to each Holder of Securities included within the
coverage of the Shelf Registration, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in the
Shelf Registration Statement and any amendment or supplement thereto as
such person may reasonably request. The Company consents, subject to
the provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto by each of the selling Holders of the
Securities in connection with the offering and sale of the Securities
covered by the prospectus, or any amendment or supplement thereto,
included in the Shelf Registration Statement.
(g) The Company shall deliver to each Initial Purchaser,
any Exchanging Dealer, any Participating Broker-Dealer and such other
persons required to deliver a prospectus following the Registered
Exchange Offer, without charge, as many copies of the final prospectus
included in the Exchange Offer Registration Statement and any amendment
or supplement thereto as such persons may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the
use of the prospectus or any amendment or supplement thereto by any
Initial Purchaser, if necessary, any Participating Broker-Dealer and
such other persons required to deliver a prospectus following the
Registered Exchange Offer in connection with the offering and sale of
the Exchange Notes covered by the prospectus, or any amendment or
supplement thereto, included in such Exchange Offer Registration
Statement.
(h) Prior to any public offering of the Securities,
pursuant to any Registration Statement, the Company shall register or
qualify or cooperate with the Holders of the Securities included
therein and their respective counsel in connection with the
registration or qualification of the Securities for offer and sale
under the securities or "blue sky" laws of such states of the United
States as any Holder of the Securities reasonably requests in writing
and do any and all other acts or things necessary or advisable to
enable the offer and sale in such jurisdictions of the Securities
covered by such Registration Statement; provided, however, that the
Company shall not be required to (i) qualify generally to do business
in any jurisdiction where it is not then so qualified or (ii) take any
action which would subject it to general service of process or to
taxation in any jurisdiction where it is not then so subject.
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<PAGE>
(i) The Company shall cooperate with the Holders of the
Securities to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders may request a
reasonable period of time prior to sales of the Securities pursuant to
such Registration Statement.
(j) Upon the occurrence of any event contemplated by
paragraphsE(ii) through (v) of Section 3(b) above during the period for
which the Company is required to maintain an effective Registration
Statement, the Company shall promptly prepare and file a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus and any other required document so that, as thereafter
delivered to Holders of the Notes or purchasers of Securities, the
prospectus will not contain an 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 were made, not misleading. If the Company notifies the
Initial Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer in accordance with paragraphsE(ii) through
(v) of Section 3(b) above to suspend the use of the prospectus until
the requisite changes to the prospectus have been made, then the
Initial Purchasers, the Holders of the Securities and any such
Participating Broker-Dealers shall suspend use of such prospectus, and
the period of effectiveness of the Shelf Registration Statement
provided for in Section 2(b) above and the Exchange Offer Registration
Statement provided for in Section 1 above shall each be extended by the
number of days from and including the date of the giving of such notice
to and including the date when the Initial Purchasers, the Holders of
the Securities and any known Participating Broker-Dealer shall have
received such amended or supplemented prospectus pursuant to this
Section 3(j).
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Notes, the Exchange Notes or the Private Exchange Notes, as the case
may be, and provide the applicable trustee with printed certificates
for the Notes, the Exchange Notes or the Private Exchange Notes, as the
case may be, in a form eligible for deposit with The Depository Trust
Company.
(l) The Company will comply with all rules and
regulations of the Commission to the extent and so long as they are
applicable to the Registered Exchange Offer or the Shelf Registration
and will make generally available to its security holders (or otherwise
provide in accordance with Section 11(a) of the Securities
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<PAGE>
Act) an earnings statement satisfying the provisions of Section 11(a)
of the Securities Act, no later than 45Edays after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning
with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which statement
shall cover such 12-month period.
(m) The Company shall cause the Indenture to be qualified
under the Trust Indenture Act of 1939, as amended, in a timely manner
and containing such changes, if any, as shall be necessary for such
qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall
appoint a new trustee thereunder pursuant to the applicable provisions
of the Indenture.
(n) The Company may require each Holder of Securities to
be sold pursuant to the Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of
the Securities as the Company may from time to time reasonably require
for inclusion in the Shelf Registration Statement, and the Company may
exclude from such registration the Securities of any Holder that
unreasonably fails to furnish such information within a reasonable time
after receiving such request.
(o) The Company shall enter into such customary
agreements (including if requested an underwriting agreement in
customary form) and take all such other action, if any, as any Holder
of the Securities shall reasonably request in order to facilitate the
disposition of the Securities pursuant to any Shelf Registration.
(p) In the case of any Shelf Registration, the Company
shall (i) make reasonably available for inspection by the Holders of
the Securities, any underwriter participating in any disposition
pursuant to the Shelf Registration Statement and any attorney,
accountant or other agent retained by the Holders of the Securities or
any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and
(ii) cause the Company's officers, directors, employees, accountants
and auditors to supply all relevant information reasonably requested by
the Holders of the Securities or any such underwriter, attorney,
accountant or agent in connection with the Shelf Registration
Statement, in each case, as shall be reasonably necessary to enable
such persons, to conduct a reasonable investigation within the meaning
of Section 11 of the Securities Act; provided, however, that the
foregoing inspection and information gathering shall be coordinated on
behalf of the Initial Purchasers by you and on behalf of the other
parties, by one counsel designated by and on behalf of such other
parties as described in Section 4 hereof.
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(q) In the case of any Shelf Registration, the Company,
if requested by any Holder of Securities covered thereby, shall cause
(i) its counsel to deliver an opinion and updates thereof relating to
the Securities in customary form addressed to such Holders and the
managing underwriters, if any, thereof and dated, in the case of the
initial opinion, the effective date of such Shelf Registration
Statement (it being agreed that the matters to be covered by such
opinion shall be subject to customary qualifications and exceptions and
shall include, without limitation, the due incorporation and good
standing of the Company and its subsidiaries; the qualification of the
Company and its subsidiaries to transact business as foreign
corporations; the due authorization, execution and delivery of the
relevant agreement of the type referred to in Section 3(o) hereof; the
due authorization, execution, authentication and issuance, and the
validity and enforceability, of the applicable Securities; the absence
of material legal or governmental proceedings involving the Company;
the absence of governmental approvals required to be obtained in
connection with the Shelf Registration Statement, the offering and sale
of the applicable Securities, or any agreement of the type referred to
in Section 3(o) hereof; the compliance as to form of such Shelf
Registration Statement and any documents incorporated by reference
therein and of the Indenture with the requirements of the Securities
Act and the Trust Indenture Act, respectively; and, as of the date of
the opinion and as of the effective date of the Shelf Registration
Statement or most recent post-effective amendment thereto, as the case
may be, the absence from such Shelf Registration Statement and the
prospectus included therein, as then amended or supplemented, and from
any documents incorporated by reference therein of an untrue statement
of a material fact or the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading (in the case of any such documents, in the light
of the circumstances existing at the time that such documents were
filed with the Commission under the Exchange Act); (ii) its officers to
execute and deliver all documents and certificates and updates thereof
in customary form reasonably requested by any underwriters of the
applicable Securities and (iii) its independent public accountants to
provide to the selling Holders of the applicable Securities and any
underwriter therefor a comfort letter in customary form and covering
matters of the type customarily covered in comfort letters in
connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by
Statement of Auditing Standards No.E72.
(r) In the case of the Registered Exchange Offer, if
requested by any Initial Purchaser or any known Participating
Broker-Dealer, the Company shall cause (i) its counsel to deliver to
such Initial Purchaser or such Participating Broker-Dealer a signed
opinion in the form set
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forth in Section 6(f)-(g) of the Purchase Agreement with such changes
as are customary in connection with the preparation of a Registration
Statement and (ii) its independent public accountants to deliver to
such Initial Purchaser or such Participating Broker-Dealer a comfort
letter, in customary form, meeting the requirements as to the substance
thereof as set forth in Section 6(a) of the Purchase Agreement, with
appropriate date changes.
(s) If a Registered Exchange Offer or a Private Exchange
is to be consummated, upon delivery of the Notes by Holders to the
Company (or to such other Person as directed by the Company) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Company shall mark, or caused to be marked, on the
Notes so exchanged that such Notes are being cancelled in exchange for
the Exchange Notes or the Private Exchange Notes, as the case may be;
in no event shall the Notes be marked as paid or otherwise satisfied.
(t) The Company will use its best efforts to cause the
Securities covered by a Registration Statement to be rated (or to have
any existing rating confirmed) with the appropriate rating agencies, if
so requested by Holders of a majority in aggregate principal amount of
Securities covered by such Registration Statement, or by the managing
underwriters, if any.
(u) In the event that any broker-dealer registered under
the Exchange Act shall underwrite any Securities or participate as a
member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the
By-Laws of the National Association of Securities Dealers, Inc.
("NASD")) thereof, whether as a Holder of such Securities or as an
underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, assist such broker-dealer in complying
with the requirements of such Rules and By-Laws, including, without
limitation, by (A) if such Rules or By-Laws, including Schedule E
thereto, shall so require, engaging a "qualified independent
underwriter" (as defined in such Schedule) to participate in the
preparation of the Registration Statement relating to such Securities,
to exercise usual standards of due diligence in respect thereto and, if
any portion of the offering contemplated by such Registration Statement
is an underwritten offering or is made through a placement or sales
agent, to recommend the yield of such Securities, (B) indemnifying any
such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 5 hereof and
(C) providing such information to such broker-dealer as may be required
in order for such broker-dealer to comply with the requirements of the
Rules of Fair Practice of the NASD.
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(v) The Company shall use its best efforts to take all
other steps necessary to effect the registration of the Securities
covered by a Registration Statement contemplated hereby.
4. Registration Expenses. The Company shall bear all fees
and expenses incurred in connection with the performance of its obligations
under Sections 1 through 3 hereof (including the reasonable fees and expenses,
if any, of Cravath, Swaine & Moore, counsel for the Initial Purchasers, incurred
in connection with the Registered Exchange Offer), whether or not the Registered
Exchange Offer or a Shelf Registration is filed or becomes effective, and, in
the event of a Shelf Registration, shall bear or reimburse the Holders of the
Securities covered thereby for the reasonable fees and disbursements of one firm
of counsel designated by the Holders of a majority in principal amount of the
Securities covered thereby to act as counsel for the Holders of the Securities
in connection therewith.
5. Indemnification. (a) The Company agrees to indemnify
and hold harmless each Holder of the Securities, any Participating Broker-Dealer
and each person, if any, who controls such Holder or such Participating
Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each
Holder, any Participating Broker-Dealer and such controlling persons are
referred to collectively as the "Indemnified Parties") from and against any
losses, claims, damages or liabilities, joint or several, or any actions in
respect thereof (including, but not limited to, any losses, claims, damages,
liabilities or actions relating to purchases and sales of the Securities) to
which each Indemnified Party may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement or prospectus
or in any amendment or supplement thereto, or arise out of, or are based upon,
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
shall reimburse, as incurred, the Indemnified Parties for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action in respect thereof;
provided, however, that (i) the Company shall not be liable in any such case to
the extent that such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in a Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to a Shelf
Registration in reliance upon and in conformity with written information
pertaining to such Holder and furnished to the Company by or on behalf of such
Holder
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specifically for inclusion therein and (ii) with respect to any untrue statement
or omission or alleged untrue statement or omission made in any preliminary
prospectus relating to a Shelf Registration Statement, the indemnity agreement
contained in this subsectionE(a) shall not inure to the benefit of any Holder or
Participating Broker-Dealer from whom the person asserting any such losses,
claims, damages or liabilities purchased the Securities concerned, to the extent
that a prospectus relating to such Securities was required to be delivered by
such Holder or Participating Broker-Dealer under the Securities Act in
connection with such purchase and any such loss, claim, damage or liability of
such Holder or Participating Broker-Dealer results from the fact that there was
not sent or given to such person, at or prior to the written confirmation of the
sale of such Securities to such person, a copy of the final prospectus if the
Company had previously furnished copies thereof to such Holder or Participating
Broker-Dealer; provided further, however, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.
(b) Each Holder of the Securities, severally and not
jointly, will indemnify and hold harmless the Company and each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act from and against any losses, claims, damages or liabilities or any
actions in respect thereof, to which the Company or any such controlling person
may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to a Shelf
Registration, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse, as incurred, the Company for any legal
or other expenses reasonably incurred by the Company or any such controlling
person in connection with investigating or defending any loss, claim, damage,
liability or action in respect thereof. This indemnity agreement will be in
addition
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to any liability which such Holder may otherwise have to the Company or any of
its controlling persons.
(c) Promptly after receipt by an indemnified party under
this Section 5 of notice of the commencement of any action or proceeding
(including a governmental investigation), such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 5, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above, except to the
extent that the indemnifying party is prejudiced by failure to give such notice.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, which
consent shall not be unreasonably withheld, be counsel to the indemnifying party
if such representation of both the indemnifying and the indemnified party would
be inappropriate due to an actual or potential conflict of interest between
them), and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof the indemnifying party will not be
liable to such indemnified party under this Section 5 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action. No indemnifying party shall be
liable for any amounts paid in Settlement of any action or claim without its
written consent.
(d) If the indemnification provided for in this Section 5
is unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the exchange of
16
<PAGE>
the Notes, pursuant to the Registered Exchange Offer, or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Holder or such other indemnified person, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding any other provision of this
Section 5(d), the Holders of the Securities shall not be required to contribute
any amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Securities pursuant to a Registration Statement
exceeds the amount of damages which such Holders have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls such indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall
survive the sale of the Securities pursuant to a Registration Statement and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
indemnified party.
6. Additional Interest Under Certain Circumstances. (a)
Additional interest (the "Additional Interest") with respect to the Securities
shall be assessed as follows if any
17
<PAGE>
of the following events occur (each such event in clausesE(i) through (iii)
below a "Registration Default":
(i) If by AprilE27, 1996, neither the Exchange Offer
Registration Statement nor a Shelf Registration Statement has been
filed with the Commission;
(ii) If by AugustE10, 1996, neither the Registered
Exchange Offer is consummated nor, if required in lieu thereof, the
Shelf Registration Statement is declared effective by the Commission;
or
(iii) If after either the Exchange Offer Registration
Statement or the Shelf Registration Statement is declared effective
(A) such Registration Statement thereafter ceases to be effective; or
(B) such Registration Statement or the related prospectus ceases to be
usable (except as permitted in paragraphE(b)) in connection with
resales of Transfer Restricted Notes during the periods specified
herein because either (1) any event occurs as a result of which the
related prospectus forming part of such Registration Statement would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or (2) it
shall be necessary to amend such Registration Statement or supplement
the related prospectus, to comply with the Securities Act or the
Exchange Act or the respective rules thereunder.
Additional Interest shall accrue on the Notes over and above the interest set
forth in the title of the Notes from and including the date on which any such
Registration Default shall occur to but excluding the date on which all such
Registration Defaults have been cured, at a rate of 0.50% per annum.
(b) A Registration Default referred to in
Section 6(a)(iii)(B) shall be deemed not to have occurred and be continuing in
relation to a Shelf Registration Statement or the related prospectus if (i) such
Registration Default has occurred solely as a result of (x) the filing of a
post-effective amendment to such Shelf Registration Statement to incorporate
annual audited financial information with respect to the Company where such
post-effective amendment is not yet effective and needs to be declared effective
to permit Holders to use the related prospectus or (y) other material events,
with respect to the Company that would need to be described in such Shelf
Registration Statement or the related prospectus and (ii) in the case of
clauseE(y), the Company is proceeding promptly and in good faith to amend or
supplement such Shelf Registration Statement and related prospectus to describe
such events; provided, however, that in any case if such Registration Default
occurs for a continuous period in excess of 45Edays, Additional Interest shall
be payable in accordance
18
<PAGE>
with the above paragraph from the day following such 45Eday period until the
date on which such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to
clause (a)(i), (a)(ii) or (a)(iii) of Section 6 above will be payable in cash on
the regular interest payment dates with respect to the Notes. The amount of
Additional Interest will be determined by multiplying the applicable Additional
Interest rate by the principal amount of the Notes, multiplied by a fraction,
the numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.
(d) "Transfer Restricted Notes" means each Security until
(i) the date on which such Transfer Restricted Note has been exchanged by a
person other than a broker-dealer for a freely transferrable Exchange Note in
the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in
the Registered Exchange Offer of a Transfer Restricted Note for an Exchange
Note, the date on which such Exchange Note is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Transfer Restricted Note has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Transfer Restricted Note
is distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act.
7. Rules 144 and 144A. The Company shall use its best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the request of any Holder of
Transfer Restricted Notes, make publicly available other information so long as
necessary to permit sales of their securities pursuant to RulesE144 and 144A.
The Company covenants that it will take such further action as any Holder of
Transfer Restricted Notes may reasonably request, all to the extent required
from time to time to enable such Holder to sell Transfer Restricted Notes
without registration under the Securities Act within the limitation of the
exemptions provided by RulesE144 and 144A (including the requirements of
Rule 144A(d)(4)). The Company will provide a copy of this Agreement to
prospective purchasers of Notes identified to the Company by the Initial
Purchasers upon request. Upon the request of any Holder of Transfer Restricted
Notes, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 7 shall
19
<PAGE>
be deemed to require the Company to register any of its securities pursuant to
the Exchange Act.
8. Underwritten Registrations.If any of the Transfer
Restricted Notes covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering ("Managing Underwriters") will be
selected by the Holders of a majority in aggregate principal amount of such
Transfer Restricted Notes to be included in such offering.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Notes on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, except by the Company
and the written consent of the Holders of a majority in principal amount of the
Securities affected by such amendment, modification, supplement, waiver or
consents.
(b) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand delivery,
first-class mail, facsimile transmission, or air courier which guarantees
overnight delivery:
(1) if to a Holder of the Securities, at the most current
address given by such Holder to the Company in accordance with the
provisions of this Section 9(b), which address initially is, with
respect to each Holder, the address of such Holder to which
confirmation of the sale of the Notes to such Holder was first sent by
the Initial Purchasers, with a copy in like manner to you as follows:
CS First Boston Corporation
Park Avenue Plaza
New York, NY 10055
Fax No.: (212) 318-0532
Attention: Transactions Advisory Group
20
<PAGE>
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Fax No.: (212) 474-3700
Attention: Kris F. Heinzelman
(2) if to the Initial Purchasers, at the addresses
specified in Section 9(b)(1);
(3) if to the Company, at its address as follows:
Shared Technologies Fairchild Corp.
100 Great Meadow Road
Wethersfield, Connecticut
Fax No:
Attention:
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged by recipient's facsimile machine operator, if sent
by facsimile transmission; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Company
(i) acknowledges that it has, by separate written instrument, irrevocably
designated and appointed CT Corporation System (and any successor entity), as
its authorized agent upon which process may be served in any suit or proceeding
arising out of or relating to this Agreement that may be instituted in any
federal or state court in the State of New York or brought under federal or
state securities laws, and acknowledges that CT Corporation System has accepted
such designation, (ii) submits to the nonexclusive jurisdiction of any such
court in any such suit or proceeding, and (iii) agrees that service of process
upon CTECorporation System and written notice of said service to the Company
shall be deemed in every respect effective service of process upon it in any
such suit or proceeding. The Company further agrees to take any and all action,
including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment of
CT Corporation System in full force and effect so long as any of the Notes shall
be outstanding. To the extent that the Company may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service of
notice, attachment prior to judgment,
21
<PAGE>
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of this
Agreement, to the fullest extent permitted by law.
(d) No Inconsistent Agreements.EEThe Company has not, as of
the date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
(e) Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. 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.
(i) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Securities Held by the Company.EEWhenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
is required hereunder, Securities held by the Company or its affiliates (other
than subsequent Holders of Securities if such subsequent Holders are deemed to
be affiliates solely by reason of their holdings of such Securities) shall not
be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
22
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Issuer a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the several Initial Purchasers, the Issuer and the Guarantors in
accordance with its terms.
Very truly yours,
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.
by: /s/ Vincent DiVincenzo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
SHARED TECHNOLOGIES INC.
as Guarantor
by: /s/ Vincent DiVincnezo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
MULTI-TENANT SERVICES, INC.,
as Guarantor
by: /s/ Vincent DiVincenzo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
BOSTON TELECOMMUNICATIONS GROUP,
INC.,
as Guarantor
by: /s/ Vincent DiVincenzo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
OFFICE TELEPHONE MANAGEMENT,
as Guarantor
by: /s/ Vincent DiVincenzo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
STI INTERNATIONAL, INC.,
as Guarantor
by: /s/ Vincent DiVincenzo
-----------------------
Name: Vincent DiVincenzo
Title: Treasurer
23
<PAGE>
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
CS FIRST BOSTON CORPORATION
CITICORP SECURITIES, INC.
by: CS FIRST BOSTON CORPORATION
By: /s/ Richard H. Ivers
---------------------------
Name: Richard H. Ivers
Title: Managing Director
24
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Notes where such Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 180 days
after the Expiration Date (as defined herein), it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
25
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Notes for its own
account in exchange for Notes, where such Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution."
26
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Existing Notes where such Existing Notes were acquired as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until March 13, 1999, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a prospectus.*
The Company will not receive any proceeds from any sale of
Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Notes. Any broker-dealer that resells Exchange Notes that were received by it
for its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commission or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
- --------
*In addition, the legend required by Item 502(e) of Regulation S-K will appear
on the back cover page of the Exchange Offer prospectus.
27
<PAGE>
For a period of 180 days after the Expiration Date the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Notes) other than commissions or concessions of any brokers or
dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
28
<PAGE>
ANNEX D
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ____________________________________________
Address: _________________________________________
-----------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
29
EXHIBIT 10.2
================================================================================
REGISTRATION RIGHTS AGREEMENT
between
RHI HOLDINGS, INC.
THE FAIRCHILD CORPORATION
and
SHARED TECHNOLOGIES INC.
Dated March 13, 1996
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT dated as of March 13, 1996,
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 9, 1995, as amended (the "Merger Agreement"), among the Company,
TFC, RHI and Fairchild Industries, Inc. ("Fairchild"), RHI has obtained
6,000,000 shares of Common Stock shares of the Company, par value $.004 (the
"Common Stock").
WHEREAS, pursuant to the Agreement to Exchange 6% Cumulative
Convertible Preferred Stock and Special Preferred Stock dated as of March 1,
1996 (the "Exchange Agreement") among the Company, TFC, RHI, Fairchild and
Fairchild Holding Company, RHI has obtained (i) 250,000 shares of Series I 6%
Cumulative Convertible Preferred Stock par value $.01 (the "Convertible
Preferred Stock"), of the Company and (ii) 200,000 shares of Series J Special
Preferred Stock, par value $.01 (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.
<PAGE>
-2-
"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.
"Exchange Agreement" is defined in the Recitals.
"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 $.01, issued pursuant to
the Exchange Agreement and (ii) the Special Preferred Stock of the Company, par
value $.01, issued pursuant to the Exchange 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 Exchange Agreement. As to any
particular Registrable Preferred Securities, once issued such securities shall
cease to be Registrable Preferred Securities
<PAGE>
-3-
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
<PAGE>
-4-
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
<PAGE>
-5-
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
<PAGE>
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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
<PAGE>
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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
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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
<PAGE>
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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
<PAGE>
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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
<PAGE>
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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
<PAGE>
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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
<PAGE>
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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,
<PAGE>
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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
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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
<PAGE>
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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
<PAGE>
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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.
<PAGE>
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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.
<PAGE>
-19-
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
<PAGE>
-20-
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.
<PAGE>
-21-
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: /s/ Vincent DiVincenzo
---------------------------
Name: Vincent DiVincenzo
Title:
RHI HOLDINGS, INC.
By: /s/ John Flynn
---------------------------
Name: John Flynn
Title:
THE FAIRCHILD CORPORATION
By: /s/ John Flynn
---------------------------
Name: John Flynn
Title:
EXHIBIT 10.3
================================================================================
CREDIT AGREEMENT
Dated as of March 12, 1996,
Among
SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP.,
SHARED TECHNOLOGIES INC.,
THE LENDERS REFERRED TO HEREIN,
THE FRONTING BANKS REFERRED TO HEREIN,
CREDIT SUISSE,
as Arranger, Administrative Agent
and Collateral Agent
CITICORP USA, INC.
as Documentation Agent
and
NATIONSBANK, N.A.
as Documentation Agent
================================================================================
[CS&M Ref. No. 5874-122]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
Definitions
<S> <C> <C>
SECTION 1.01. Defined Terms...............................................................1
SECTION 1.02. Terms Generally.............................................................22
ARTICLE II
The Credits
SECTION 2.01. Commitments.................................................................22
SECTION 2.02. Loans.......................................................................22
SECTION 2.03. Borrowing Procedure.........................................................24
SECTION 2.04. Evidence of Debt; Repayment of Loans........................................25
SECTION 2.05. Fees........................................................................25
SECTION 2.06. Interest on Loans...........................................................26
SECTION 2.07. Default Interest............................................................27
SECTION 2.08. Alternate Rate of Interest..................................................27
SECTION 2.09. Termination and Reduction of Commitments....................................27
SECTION 2.10. Conversion and Continuation of Term Borrowings..............................28
SECTION 2.11. Repayment of Term Borrowings................................................29
SECTION 2.12. Optional Prepayments........................................................30
SECTION 2.13. Mandatory Prepayments.......................................................30
SECTION 2.14. Reserve Requirements; Change in Circumstances...............................32
SECTION 2.15 Change in Legality..........................................................33
SECTION 2.16. Indemnity...................................................................34
SECTION 2.17. Pro Rata Treatment..........................................................34
SECTION 2.18. Sharing of Setoffs..........................................................34
SECTION 2.19. Payments....................................................................35
SECTION 2.20. Taxes.......................................................................35
SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to
Mitigate....................................................................37
SECTION 2.22. Letters of Credit...........................................................38
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers........................................................42
SECTION 3.02. Authorization...............................................................42
SECTION 3.03. Enforceability..............................................................43
<PAGE>
SECTION 3.04. Governmental Approvals......................................................43
SECTION 3.05. Financial Statements........................................................43
SECTION 3.06. No Material Adverse Change..................................................44
SECTION 3.07. Title to Properties; Possession Under Leases................................44
SECTION 3.08. Subsidiaries................................................................44
SECTION 3.09. Litigation; Compliance with Laws............................................44
SECTION 3.10. Agreements..................................................................44
SECTION 3.11. Federal Reserve Regulations.................................................45
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act..................45
SECTION 3.13. Use of Proceeds.............................................................45
SECTION 3.14. Tax Returns.................................................................45
SECTION 3.15. No Material Misstatements...................................................45
SECTION 3.16. Employee Benefit Plans......................................................46
SECTION 3.17. Environmental Matters.......................................................46
SECTION 3.18. Insurance...................................................................46
SECTION 3.19. Security Documents..........................................................47
SECTION 3.20. Location of Real Property and Leased Premises...............................47
SECTION 3.21. Labor Matters...............................................................47
SECTION 3.22. Solvency....................................................................48
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events...........................................................48
SECTION 4.02. First Credit Event..........................................................49
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties........................................52
SECTION 5.02. Insurance...................................................................52
SECTION 5.03. Obligations and Taxes.......................................................53
SECTION 5.04. Financial Statements, Reports, etc..........................................53
SECTION 5.05. Litigation and Other Notices................................................55
SECTION 5.06. Employee Benefits...........................................................55
SECTION 5.07. Maintaining Records; Access to Properties and Inspections...................55
SECTION 5.08. Use of Proceeds.............................................................55
SECTION 5.09. Compliance with Environmental Laws..........................................55
SECTION 5.10. Preparation of Environmental Reports........................................56
SECTION 5.11. Further Assurances..........................................................56
SECTION 5.12. Fiscal Year.................................................................57
SECTION 5.13. Interest Rate Protection Agreements.........................................57
SECTION 5.14. Corporate Identity..........................................................57
<PAGE>
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness................................................................57
SECTION 6.02. Liens.......................................................................58
SECTION 6.03. Sale and Lease-Back Transactions............................................59
SECTION 6.04. Investments, Loans and Advances.............................................59
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions...................60
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of Subsidiaries
to Pay Dividends............................................................61
SECTION 6.07. Transactions with Affiliates................................................62
SECTION 6.08. Business of STFI, the Borrower and the Subsidiaries.........................62
SECTION 6.09. Other Indebtedness and Agreements...........................................62
SECTION 6.10. Capital Expenditures........................................................63
SECTION 6.11. Minimum EBITDA..............................................................64
SECTION 6.12. Fixed Charge Coverage Ratio.................................................64
SECTION 6.13. Leverage Ratio..............................................................64
SECTION 6.14 Interest Expense Coverage Ratio.............................................64
SECTION 6.15 Minimum Net Worth...........................................................64
ARTICLE VII
Events of Default
Events of Default...........................................................64
ARTICLE VIII
The Agents
The Agents..................................................................66
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices.....................................................................68
SECTION 9.02. Survival of Agreement.......................................................69
SECTION 9.03. Binding Effect..............................................................69
SECTION 9.04. Successors and Assigns......................................................69
SECTION 9.05. Expenses; Indemnity.........................................................72
SECTION 9.06. Right of Setoff.............................................................73
SECTION 9.07. Applicable Law..............................................................73
SECTION 9.08. Waivers; Amendment..........................................................73
<PAGE>
SECTION 9.09. Interest Rate Limitation....................................................74
SECTION 9.10. Entire Agreement............................................................74
SECTION 9.11. Waiver of Jury Trial........................................................74
SECTION 9.12. Severability................................................................75
SECTION 9.13. Counterparts................................................................75
SECTION 9.14. Headings....................................................................75
SECTION 9.15. Jurisdiction; Consent to Service of Process.................................75
SECTION 9.16. Confidentiality ............................................................76
</TABLE>
Exhibits and Schedules
<TABLE>
<S> <C>
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Indemnity, Subrogation and Contribution Agreement
Exhibit E Form of Parent Guarantee Agreement
Exhibit F Form of Pledge Agreement
Exhibit G Form of Security Agreement
Exhibit H Form of Subsidiary Guarantee Agreement
Exhibit I-1 Form of Opinion of Gadsby & Hannah, counsel for STFI and the Borrower
Exhibit I-2 Form of Opinions of other counsel
Schedule 2.01 Lenders
Schedule 2.20 Fronting Banks
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.20(b) Leased Premises
Schedule 4.02(a) Counsel
Schedule 4.02(q) Existing Indebtedness
Schedule 6.01(a) Indebtedness
Schedule 6.02 Liens
Schedule 6.04 Investments
Schedule 6.11 Minimum EBITDA
Schedule 6.13 Leverage Ratio
Schedule 6.14 Interest Expense Coverage Ratio
</TABLE>
<PAGE>
CONFORMED COPY
CREDIT AGREEMENT dated as of March 12, 1996,
among SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS
CORP., a Delaware corporation (the "Borrower"),
SHARED TECHNOLOGIES INC., a Delaware corporation
("STFI", which term shall, after the Merger referred
to herein, include the surviving corporation in such
Merger), the financial institutions from time to time
party hereto, initially consisting of those financial
institutions listed on Schedule 2.01 (the "Lenders"),
CREDIT SUISSE, a bank organized under the laws of
Switzerland, acting through its New York branch, as
administrative agent (in such capacity, the
"Administrative Agent") and as collateral agent (in
such capacity, the "Collateral Agent") for the
Lenders, the fronting banks listed on Schedule 2.20
(the "Fronting Banks"), and each of CITICORP USA,
INC. and NATIONSBANK, N.A., as documentation agent
(individually and collectively in such capacity, the
"Documentation Agent").
The Borrower has requested the Lenders to extend credit in the
form of (a) Tranche A Term Loans (such term and each other capitalized term used
but not defined herein having the meaning assigned thereto in Article I) on the
Closing Date, in an aggregate principal amount not in excess of $50,000,000, (b)
Tranche B Term Loans on the Closing Date, in an aggregate principal amount not
in excess of $70,000,000, (c) Revolving Loans at any time and from time to time
prior to the Revolving Credit Maturity Date, in an aggregate principal amount at
any time outstanding not in excess of the difference between $25,000,000 and the
L/C Exposure at such time and (d) Letters of Credit at any time and from time to
time prior to the Revolving Credit Maturity Date, in an aggregate stated amount
at any time outstanding not in excess of $5,000,000. The proceeds of Term Loans
will be used, on the Closing Date, together with a portion of the proceeds of
the Discount Notes, to discharge in full the Specified Liabilities. Letters of
Credit and the proceeds of Revolving Loans will be used for general corporate
purposes.
The Lenders are willing to extend such credit to the Borrower
and the Fronting Banks are willing to issue Letters of Credit for the account of
the Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR
Term Loans.
<PAGE>
"ABR Term Loan" shall mean any Term Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Accreted Value" shall have the meaning assigned to such term
in Section 1.01 of the Discount Note Indenture.
"Acquired Business" shall mean the telecommunications business
of FII.
"Acquisition Documents" shall mean all documentation effecting
or entered into in connection with (a) the FII Reorganization, including the
transfer of assets and the assumption of liabilities not included in the
Acquired Business from FII to RHI or other persons, or (b) the Merger, the
Section 351 Exchange and the other Acquisition Transactions.
"Acquisition Transactions" shall mean the acquisition by STFI
of the Acquired Business in the series of transactions described in the Offering
Circular, pursuant to which (a) FII and its Affiliates will consummate the FII
Reorganization; (b) the Borrower will issue the Discount Notes and will receive
gross proceeds of not less than $100,000,000 therefrom; (c) STFI will adopt the
Amendments to Charter and Bylaws; (d) the Merger will be consummated; (e) STFI
will issue to RHI, the holder of all the issued and outstanding common stock of
FII, as consideration in respect of the cancellation of all such common stock in
the Merger (i) the Cumulative Convertible Preferred Stock, (ii) the Special
Preferred Stock and (iii) 6,000,000 shares of common stock of STFI and,
immediately upon the effectiveness of the Merger, the transactions set forth in
the Exchange Agreement shall be consummated; (f) RHI will cancel all preferred
stock of FII held by it and the holders of all the preferred stock of FII not
held by RHI will receive the Preferred Consideration in respect thereof in an
aggregate amount equal to approximately $39,600,000; (g) STFI and the Borrower
will consummate the Section 351 Exchange; (h) STFI will assume the Existing
Indebtedness and the FII Senior Notes in an aggregate principal amount of
$125,000,000, all of which will be prepaid upon the consummation of the Merger;
and (i) the Borrower will in consideration of the Section 351 Exchange pay an
amount to STFI sufficient to enable it to consummate the Acquisition
Transactions to be consummated by it.
"Adjusted LIBO Rate" shall mean, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the product of
(a) the LIBO Rate in effect for such Interest Period and (b) Statutory Reserves.
"Administrative Agent Fees" shall have the meaning assigned to
such term in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with the
person specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate
amount of the Lenders' Revolving Credit Exposures.
2
<PAGE>
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the preceding sentence until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Amendments to Charter and Bylaws" shall mean the amendments
to charter and bylaws of STFI described in the Proxy Statement.
"ANSI" shall mean Access Network Services Inc., a wholly owned
Subsidiary of ATG.
"Applicable Percentage" of any Revolving Credit Lender at any
time shall mean the percentage of the Total Revolving Credit Commitment
represented by such Lender's Revolving Credit Commitment. In the event the
Revolving Credit Commitments shall have expired or been terminated, the
Applicable Percentages shall be determined on the basis of the Revolving Credit
Commitments most recently in effect, but giving effect to any subsequent
assignments pursuant to Section 9.04.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Administrative Agent, in the form of Exhibit B or such other form as shall be
approved by the Administrative Agent.
"ATG" shall mean Access Telecommunication Group, L.P., a
wholly owned Subsidiary of the Borrower.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrowing" shall mean a group of Loans of a single Type made
by the Lenders on a single date and as to which a single Interest Period is in
effect.
"Borrowing Request" shall mean a request by the Borrower in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C.
"Business Day" shall mean any day other than a Saturday,
Sunday or day on which banks in New York City are authorized or required by law
to close; provided, however, that when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" shall mean, for any person in respect
of any period, the sum of (a) the aggregate of all expenditures incurred by such
person during such period that, in accordance with GAAP, are or should be
included in "additions to property, plant or equipment" or similar items
3
<PAGE>
reflected in the statement of cash flows of such person and (b) to the extent
not covered by clause (a) above, the aggregate of all expenditures by such
person to acquire by purchase or otherwise the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of, any other
person; provided, however, that Capital Expenditures shall not include
expenditures of proceeds of insurance settlements in respect of lost, destroyed
or damaged assets, equipment or other property to the extent such expenditures
are made to replace or repair such lost, destroyed or damaged assets, equipment
or other property within 12 months of such destruction or damage.
"Capital Lease Obligations" of any person shall mean the
obligations of such person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" of any person shall mean any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such person,
including any preferred stock, any limited or general partnership interest and
any limited liability company membership interest, but excluding any debt
securities convertible into such equity.
"Certificates of Designation" shall mean the respective
certificates of designation establishing the Cumulative Convertible Preferred
Stock and the Special Preferred Stock, in each case in substantially the form
delivered to the Lenders under cover of a letter dated March 9, 1996, with no
changes therefrom adverse to the Borrower or the Lenders, as amended from time
to time in accordance with Section 6.09.
A "Change in Control" shall be deemed to have occurred if
(a) STFI shall fail to own directly, beneficially and of
record, free and clear of any and all Liens (other than Liens in favor
of the Collateral Agent pursuant to the Pledge Agreement), 100% of the
issued and outstanding Capital Stock of the Borrower;
(b) RHI and the Management Investors (collectively, the
"Designated Persons") or any combination of Designated Persons shall
cease to own beneficially, directly or indirectly, in the aggregate
shares representing at least 30% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of STFI;
(c) any person or group (within the meaning of Rule 13d-5 of
the Securities Exchange Act of 1934 as in effect on the date hereof)
other than the Designated Persons shall own beneficially, directly or
indirectly, shares representing more than 25% of the aggregate ordinary
voting power represented by the issued and outstanding Capital Stock of
STFI;
(d) a majority of the seats (excluding vacant seats) on the
board of directors of STFI shall at any time after the Closing Date
have been occupied by persons who were neither (i) nominated by any one
or more Designated Persons or by a majority of the board of directors
of STFI nor (ii) appointed by directors so nominated;
4
<PAGE>
(e) RHI shall fail to own at any time directly, beneficially
and of record, free and clear of any and all Liens, all the Special
Preferred Stock outstanding at such time;
(f) The Fairchild Corporation shall fail to own, directly or
indirectly, beneficially and of record, free and clear of any and all
Liens, at least 51% of the issued and outstanding Capital Stock of RHI
or shall otherwise fail to Control RHI;
(g) Jeffrey J. Steiner, The Fairchild Corporation, RHI and
their Affiliates collectively shall own beneficially, directly or
indirectly, shares representing more than 49% of the aggregate ordinary
voting power represented by the issued and outstanding Capital Stock of
STFI; or
(h) a change in control with respect to STFI or the Borrower
(or similar event, however denominated) shall occur under and as
defined in any Certificate of Designation or in any indenture or
agreement in respect of Indebtedness in an aggregate outstanding
principal amount in excess of $1,000,000 to which STFI, the Borrower or
any Subsidiary is party.
"Closing Date" shall mean a single date (which shall in no
event be later than April 15, 1996) on which the initial Credit Event occurs
hereunder.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to ---- time.
"Collateral" shall mean all the "Collateral" as defined in any
Security Document.
"Commitment Fee" shall have the meaning assigned to such term
in Section 2.05(a).
"Commitments" shall mean, with respect to any Lender, such
Lender's Revolving
Credit Commitment and Term Loan Commitment.
"Confidential Information Memorandum" shall mean the
Confidential Information Memorandum of the Borrower dated February, 1996.
"Consolidated Cash Interest Expense" shall mean, with respect
to STFI, the Borrower and the Subsidiaries on a consolidated basis for any
period, Consolidated Interest Expense for such period less the sum of (a)
pay-in-kind or accreted Consolidated Interest Expense not involving any payment
of cash, (b) to the extent included in Consolidated Interest Expense, the
amortization of fees paid by STFI, the Borrower or any Subsidiary on or prior to
the Closing Date in connection with the Acquisition Transactions or in
connection with the incurrence of any Indebtedness incurred after the Closing
Date and (c) the amortization of debt discounts, if any, or fees in respect of
Interest Rate Protection Agreements.
"Consolidated Current Assets" shall mean, with respect to
STFI, the Borrower and the Subsidiaries on a consolidated basis at any date of
determination, all assets (other than cash and Permitted Investments or other
cash equivalents) that would, in accordance with GAAP, be classified on a
consolidated balance sheet of STFI, the Borrower and the Subsidiaries as current
assets at such date of determination.
5
<PAGE>
"Consolidated Current Liabilities" shall mean, with respect to
STFI, the Borrower and the Subsidiaries on a consolidated basis at any date of
determination, all liabilities that would, in accordance with GAAP, be
classified on a consolidated balance sheet of STFI, the Borrower and the
Subsidiaries as current liabilities at such date of determination, other than
(a) the current portion of long-term Indebtedness, (b) accruals of Consolidated
Interest Expense (excluding Consolidated Interest Expense that is due and
unpaid), (c) Revolving Loans classified as current and (d) accruals of
transaction costs resulting from the Acquisition Transactions.
"Consolidated Interest Expense" shall mean, with respect to
STFI, the Borrower and the Subsidiaries on a consolidated basis for any period,
interest and fees accrued, accreted or paid by STFI, the Borrower and the
Subsidiaries during such period in respect of the Indebtedness of STFI, the
Borrower and the Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Working Capital" shall mean, with respect to
STFI, the Borrower and the Subsidiaries on a consolidated basis at any date of
determination, Consolidated Current Assets at such date of determination minus
Consolidated Current Liabilities at such date of determination.
"Control" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Credit Event" shall have the meaning assigned to such term in
Section 4.01.
"Cumulative Convertible Preferred Stock" shall mean the
cumulative convertible preferred stock of STFI with an initial liquidation
preference of $25,000,000 to be issued to RHI on the Closing Date pursuant to
the Exchange Agreement.
"Debt Service" shall mean, with respect to STFI, the Borrower
and the Subsidiaries on a consolidated basis for any period, the sum of (a)
Consolidated Cash Interest Expense of STFI, the Borrower and the Subsidiaries
for such period plus (b) scheduled principal amortization of Total Debt for such
period (whether or not such payments are made).
"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
"Discount Exchange Notes" shall mean senior subordinated
discount notes of the Borrower issued in exchange for Discount Notes on terms
substantially identical to the terms of the Discount Notes.
"Discount Note Guarantees" shall mean the senior subordinated
Guarantees of the Discount Notes by the Guarantors given on the Closing Date on
terms satisfactory to the Lenders and any subsequent senior subordinated
Guarantees by the Guarantors on terms no less favorable to the Guarantors and
the Lenders of the Indebtedness of the Borrower under the Discount Notes or the
Discount Exchange Notes.
"Discount Note Indenture" shall mean the indenture pursuant to
which the Discount Notes are issued, in substantially the form of the draft of
March 8, 1996, thereof, delivered to the
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Lenders under cover of a letter dated March 9, 1996, with no changes therefrom
adverse to the Borrower or the Lenders, as amended from time to time in
accordance with Section 6.09.
"Discount Note Value" shall mean at any time the Accreted
Value at such time of the Discount Notes issued on the Closing Date (assuming
such Discount Notes remained outstanding at such time) minus the aggregate
amount at such time of the Accreted Value of Discount Notes and Discount
Exchange Notes repaid or prepaid on or prior to such time (calculated assuming
the applicable original Discount Notes remained outstanding until such time.)
"Discount Notes" shall mean the Senior Subordinated Discount
Notes of the Borrower issued pursuant to the Discount Note Indenture.
"dollars" or "$" shall mean lawful money of the United States
of America.
"EBITDA" shall mean, with respect to STFI, the Borrower and
the Subsidiaries on a consolidated basis for any period, the net income of STFI,
the Borrower and the Subsidiaries on a consolidated basis for such period plus,
to the extent deducted in computing such consolidated net income, without
duplication, the sum of (a) income tax expense, (b) interest expense, (c)
depreciation and amortization expense, (d) any extraordinary or non-recurring
losses and (e) other noncash items reducing consolidated net income, minus, to
the extent added in computing such consolidated net income, without duplication,
the sum of (i) interest income, (ii) any extraordinary or non-recurring gains
and (iii) other noncash items increasing consolidated net income, determined on
a consolidated basis in accordance with GAAP.
"ECF Percentage" shall mean 75%, except that if the Leverage
Ratio as of the December 31 immediately preceding any date on which a prepayment
is to be made pursuant to Section 2.13(c) shall be less than 4.00, the "ECF
Percentage" applicable to such prepayment shall be 50%.
"environment" shall mean ambient air, surface water and
groundwater (including potable water, navigable water and wetlands), the land
surface or subsurface strata, the workplace or as otherwise defined in any
Environmental Law.
"Environmental Claim" shall mean any written accusation,
allegation, notice of violation, claim, demand, order, directive, cost recovery
action or other cause of action by, or on behalf of, any Governmental Authority
or any person for damages, injunctive or equitable relief, personal injury
(including sickness, disease or death), Remedial Action costs, tangible or
intangible property damage, natural resource damages, nuisance, pollution, any
adverse effect on the environment caused by any Hazardous Material, or for
fines, penalties or restrictions, resulting from or based upon: (a) the
existence, or the continuation of the existence, of a Release (including sudden
or non-sudden, accidental or non-accidental Releases); (b) exposure to any
Hazardous Material; (c) the presence, use, handling, transportation, storage,
treatment or disposal of any Hazardous Material; or (d) the violation or alleged
violation of any Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present
and future treaties, laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to
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the environment, preservation or reclamation of natural resources, the
management, Release or threatened Release of any Hazardous Material or to health
and safety matters.
"Environmental Permit" shall mean any permit, approval,
authorization, certificate, license, variance, filing or permission required by
or from any Governmental Authority pursuant to any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code, or solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued thereunder, with
respect to a Plan; (b) the adoption of any amendment to a Plan that would
require the provision of security pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA; (c) the existence with respect to any Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section
412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan; (e) the incurrence of any
liability under Title IV of ERISA with respect to the termination of any Plan or
the withdrawal or partial withdrawal of the Borrower or any of its ERISA
Affiliates from any Plan or Multiemployer Plan; (f) the receipt by the Borrower
or any ERISA Affiliate from the PBGC or a plan administrator of any notice
relating to the intention to terminate any Plan or Plans or to appoint a trustee
to administer any Plan; (g) the receipt by the Borrower or any ERISA Affiliate
of any notice concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA; (h) the occurrence
of a "prohibited transaction" with respect to which the Borrower or any of its
Subsidiaries is a "disqualified person" (within the meaning of Section 4975 of
the Code) or with respect to which the Borrower or any such Subsidiary could
otherwise be liable; and (i) any other event or condition with respect to a Plan
or Multiemployer Plan that could reasonably be expected to result in liability
of the Borrower.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or
Eurodollar Term Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan
bearing interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Term Borrowing" shall mean a Borrowing comprised
of Eurodollar Term Loans.
"Eurodollar Term Loan" shall mean any Term Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
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"Event of Default" shall have the meaning assigned to such
term in Article VII.
"Excess Cash Flow" shall mean, with respect to STFI, the
Borrower and the Subsidiaries on a consolidated basis for any fiscal year,
EBITDA of STFI, the Borrower and the Subsidiaries on a consolidated basis for
such fiscal year, minus, without duplication, (a) Debt Service of STFI, the
Borrower and the Subsidiaries for such fiscal year, (b) Capital Expenditures by
STFI, the Borrower and the Subsidiaries on a consolidated basis during such
fiscal year that are paid in cash, (c) all taxes paid in cash by STFI, the
Borrower and the Subsidiaries on a consolidated basis during such fiscal year,
(d) an amount equal to any increase in Consolidated Working Capital of STFI, the
Borrower and the Subsidiaries during such fiscal year, (e) dividends paid by
STFI (i) on the Cumulative Convertible Preferred Stock during such fiscal year
in an aggregate amount not in excess of $1,500,000 and (ii) on the Series C
Preferred Stock of STFI and the Series D Preferred Stock of STFI during such
fiscal year in an aggregate amount not in excess of $400,000, (f) cash
expenditures made in respect of Interest Rate Protection Agreements during such
fiscal year, to the extent not reflected in the computation of EBITDA, (g)
amounts paid in cash during such fiscal year on account of items that were
accounted for as noncash reductions of consolidated net income of STFI, the
Borrower and the Subsidiaries in the current or a prior period, (h) any
extraordinary or non-recurring loss paid in cash during such fiscal year and (i)
to the extent added in determining EBITDA, all items that did not result from a
cash payment to STFI, the Borrower and the Subsidiaries on a consolidated basis
during such fiscal year plus, without duplication, (i) an amount equal to any
decrease in Consolidated Working Capital during such fiscal year, (ii) all
proceeds received during such fiscal year of Capital Lease Obligations, purchase
money Indebtedness and any other Indebtedness to the extent used to finance any
Capital Expenditure (other than Indebtedness under this Agreement to the extent
there is no corresponding deduction to Excess Cash Flow above in respect of the
use of such Borrowings for such fiscal year or any prior period), (iii) all
amounts referred to in clause (b) above to the extent funded with the proceeds
of the issuance of Capital Stock of STFI after the Closing Date or any amount
that would have constituted Net Proceeds under clause (a) of the definition of
"Net Proceeds" if not so spent, in each case to the extent there is a
corresponding deduction to Excess Cash Flow above for such fiscal year or any
prior period, (iv) cash payments received in respect of Interest Rate Protection
Agreements during such fiscal year to the extent not included in EBITDA, (v) any
extraordinary or non-recurring gain realized in cash during such fiscal year
(except to the extent such gain is subject to Section 2.13(b)), (vi) to the
extent subtracted in the computation of EBITDA, interest income, (vii) to the
extent subtracted in determining EBITDA, all items that did not result from a
cash payment by STFI, the Borrower and the Subsidiaries on a consolidated basis
during such fiscal year and (viii) any cash dividends or any other cash
distributions paid or made by, and received from, any Unrestricted Subsidiary or
any STFI Unrestricted Subsidiary.
"Exchange Agreement" shall mean the Agreement to Exchange 6%
Cumulative Convertible Preferred Stock and Special Preferred Stock dated as of
March 1, 1996, among FII, RHI, The Fairchild Corporation and STFI.
"Existing Indebtedness" shall mean the existing bank and other
Indebtedness of FII set forth on Schedule 4.02(q) in an aggregate principal
amount not in excess of $58,000,000.
"Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the
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<PAGE>
quotations for the day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
"Fee Letter" shall mean the Fee Letter dated February 15,
1996, between STFI and the Administrative Agent.
"Fees" shall mean the Commitment Fees, the Administrative
Agent Fees, the L/C Participation Fees and the Fronting Bank Fees.
"Financial Officer" of any person shall mean the chief
financial officer, principal accounting officer, Treasurer or Controller of such
person.
"FII" shall mean Fairchild Industries, Inc., a Delaware
Corporation.
"FII Reorganization" shall mean the restructuring of FII
pursuant to which FII will divest all its non-telecommunications assets, as
contemplated by the Offering Circular.
"FII Senior Notes" shall mean the 12 1/4% Senior Secured Notes
due 1999 of FII.
"Fixed Charge Coverage Ratio" shall mean, as of the last day
of any fiscal quarter, the ratio of (a) EBITDA of STFI, the Borrower and the
Subsidiaries for the four-quarter period ended on such date, minus the sum for
such four-quarter period of (i) Capital Expenditures, (ii) taxes paid in cash
and (iii) dividends paid in cash in respect of the Cumulative Convertible
Preferred Stock, to (b) Debt Service for such four-quarter period, all
determined on a consolidated basis in accordance with GAAP; provided, however,
that the Fixed Charge Coverage Ratio as of June 30, 1996, September 30, 1996,
and December 30, 1996, shall be determined by multiplying the items referred to
in clauses (a) and (b) above for the period commencing April 1, 1996, and ending
as of such date by (A) 4, in the case of the quarter ending June 30, 1996, (B)
2, in the case of the two-quarter period ending September 30, 1996, and (C) 4/3,
in the case of the three-quarter period ending December 31, 1996.
"Fronting Bank Fees" shall have the meaning assigned to such
term in Section 2.05(c).
"GAAP" shall mean generally accepted accounting principles
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantee" of or by any person shall mean any obligation,
contingent or otherwise, of such person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase or lease property, securities
or services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or any other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such
10
<PAGE>
Indebtedness; provided, however, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Guarantee Agreements" shall mean the Parent Guarantee
Agreement and the Subsidiary Guarantee Agreement.
"Guarantors" shall mean STFI and the Subsidiary Guarantors.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, urea formaldelyde, infectious
or medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Indebtedness" of any person shall mean, without duplication,
(a) all obligations of such person for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
person upon which interest charges are customarily paid, (d) all obligations of
such person under conditional sale or other title retention agreements relating
to property or assets purchased by such person, (e) all obligations of such
person issued or assumed as the deferred purchase price of property or services
(excluding trade accounts payable and accrued obligations incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
person, whether or not the obligations secured thereby have been assumed, (g)
all Guarantees by such person of Indebtedness of others, (h) all Capital Lease
Obligations of such person, (i) all obligations of such person in respect of
interest rate protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements and (j) all obligations of
such person as an account party in respect of letters of credit and bankers'
acceptances. The Indebtedness of any person shall include the Indebtedness of
any partnership in which such person is a general partner.
"Indemnity, Subrogation and Contribution Agreement" shall mean
the Indemnity, Subrogation and Contribution Agreement, substantially in the form
of Exhibit D, among STFI, the Borrower, the Subsidiary Guarantors and the
Collateral Agent.
"Installment Date" shall have the meaning assigned to such
term in Section 2.11.
"Interest Expense Coverage Ratio" shall mean, as of the last
day of any fiscal quarter, the ratio of (a) EBITDA of STFI, the Borrower and the
Subsidiaries for the four-quarter period ended on such date to (b) Consolidated
Cash Interest Expense for the four-quarter period ended on such date, all
determined on a consolidated basis in accordance with GAAP; provided, however,
that the Interest Expense Coverage Ratio as of June 30, 1996, September 30,
1996, and December 31, 1996, shall be determined by multiplying the items
referred to in clauses (a) and (b) above for the period commencing April 1,
1996, and ending as of such date by (i) 4, in the case of the period ending June
30, 1996, (ii) 2, in the case of the two-quarter period ending September 30,
1996, and (iii) 4/3, in the case of the three-quarter period ending December 31,
1996.
"Interest Payment Date" shall mean, with respect to any Loan,
the last day of the Interest Period applicable to the Borrowing of which such
Loan is a part and, in the case of a
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<PAGE>
Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day that would have been an Interest Payment Date had successive
Interest Periods of three months' duration been applicable to such Borrowing,
and, in addition, the date of any prepayment of such Borrowing or refinancing or
conversion of such Borrowing with or to a Borrowing of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing (or, in the case
of a Term Borrowing, the last day of the preceding Interest Period applicable
thereto) and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3 or 6 months thereafter, as the Borrower may elect and (b) as to any ABR
Borrowing, the period commencing on the date of such Borrowing (or, in the case
of a Term Borrowing, the last day of the preceding Interest Period applicable
thereto) and ending on the earliest of (i) the last Business Day of the next
succeeding March, June, September or December, (ii) the Revolving Credit
Maturity Date, the Tranche A Maturity Date or the Tranche B Maturity Date, as
applicable, and (iii) the date such Borrowing is converted to a Borrowing of a
different Type in accordance with Section 2.10 or repaid or prepaid in
accordance with Section 2.11, 2.12 or 2.13; provided, however, that if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurodollar Borrowing only, such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day. Interest shall accrue from and including the first
day of an Interest Period to but excluding the last day of such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest
rate cap agreement or other agreement or arrangement satisfactory to the
Administrative Agent entered into by the Borrower designed to protect the
Borrower against fluctuations in interest rates.
"L/C Commitment" shall mean, with respect to any Fronting
Bank, the commitment of such Fronting Bank to issue Letters of Credit pursuant
to Section 2.22.
"L/C Disbursement" shall mean a payment or disbursement made
by a Fronting Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(b) the aggregate principal amount of all L/C Disbursements that have not yet
been reimbursed at such time. The L/C Exposure of any Revolving Credit Lender at
any time shall mean its Applicable Percentage of the aggregate L/C Exposure at
such time.
"L/C Participation Fee" shall have the meaning assigned to
such term in Section 2.05(c).
"Letter of Credit" shall mean any letter of credit issued
pursuant to Section 2.22.
"Leverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of (a) Total Debt as of such date to (b) EBITDA of STFI, the
Borrower and the Subsidiaries for the four-quarter period ended on such date,
all determined on a consolidated basis in accordance with GAAP; provided
however, that the Leverage Ratio as of September 30, 1996, and December 31,
1996, shall be determined by multiplying EBITDA for the period commencing April
1, 1996, and ending as of such
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date by (i) 2, in the case of the two-quarter period ending September 30, 1996,
and (ii) 4/3, in the case of the three-quarter period ending December 31, 1996.
"LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, the rate (rounded upwards, if necessary, to
the next 1/16 of 1%) at which deposits in dollars for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent to first class banks in the London interbank market in
immediately available funds at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest
in or on such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" shall mean this Agreement, the Letters of
Credit, the Guarantee Agreements, the Security Documents and the Indemnity,
Subrogation and Contribution Agreement.
"Loan Parties" shall mean the Borrower and the Guarantors.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Management Investors" shall mean members of management of
STFI, the Borrower and the Subsidiaries holding directly voting stock of STFI,
or options to acquire such stock, on the Closing Date.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse
effect on the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole, or of STFI
or, on or prior to the Closing Date, of the Acquired Business, (b) any material
impairment of the ability of the Borrower or any other Loan Party to perform any
of its obligations under any Loan Document to which it is or will be a party or
(c) any material impairment of the rights of or benefits available to the
Lenders under any Loan Document.
"Merger" shall mean the merger of FII with and into STFI,
following which STFI shall be the surviving corporation and shall change its
name to Shared Technologies Fairchild Inc.
"Merger Agreement" shall mean the Agreement and Plan of Merger
among FII, RHI, The Fairchild Corporation and STFI dated as of November 9, 1995,
as amended by the First Amendment thereto dated as of February 2, 1996, the
Second Amendment thereto dated as of February 23, 1996, and the Third Amendment
thereto dated as of March 1, 1996.
"Minimum Net Worth" shall mean, as of the last day of any
fiscal quarter, $75,000,000 plus (a) 75% of consolidated net income of STFI, the
Borrower and the Subsidiaries (to the extent such net income is positive) for
such fiscal quarter and 75% of such consolidated net income
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for each other prior completed fiscal quarter included in the period commencing
April 1, 1996 (to the extent net income for such quarter is positive) plus (b)
the aggregate amount of proceeds received by STFI in respect of the issuance of
Capital Stock of STFI after the Closing Date minus (c) the aggregate amount of
payments in respect of the Cumulative Convertible Preferred Stock, the Series C
Preferred Stock of STFI and the Series D Preferred Stock of STFI and redemptions
of Special Preferred Stock made after the Closing Date in accordance with
Section 6.06(a)(ii)(A), (C) and (D), provided that in making the foregoing
calculation for any quarter in respect of which the Leverage Ratio as of the
last day of such quarter shall be less than 4.00, the percentage used in clause
(a) shall be 50% rather than 75%.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean (a) 100% of the cash proceeds
actually received by STFI, the Borrower or any Subsidiary (including cash
proceeds subsequently received in respect of noncash consideration initially
received and including all insurance settlements and condemnation awards in any
fiscal year of the Borrower but only as and when received), net of selling
expenses (including reasonable broker's fees or commissions, transfer and
similar taxes and the Borrower's good faith estimate of income taxes incurred in
connection with the receipt of such cash proceeds) from any loss, damage,
destruction or condemnation of, or any sale, transfer or other disposition
(other than the sale of inventory in the ordinary course) to any person in any
transaction or related series of transactions of any asset or assets of STFI,
the Borrower or any Subsidiary, provided that, with respect to proceeds that
would otherwise constitute Net Proceeds in an aggregate amount for any fiscal
year not in excess of $250,000, such proceeds shall not constitute Net Proceeds,
and provided further that proceeds from any sale, transfer or other disposition
of any equity interest in STC that would otherwise constitute Net Proceeds shall
not constitute Net Proceeds (i) to the extent such proceeds are in excess of
$2,000,000 or (ii) in the case of the first $2,000,000 of such proceeds, to the
extent such proceeds are applied to reduce outstanding Revolving Loans, (b) 100%
of the cash proceeds from the incurrence, issuance or sale by STFI, the Borrower
or any Subsidiary of any Indebtedness of STFI, the Borrower or any Subsidiary
(other than Indebtedness permitted under Section 6.01), net of all taxes and
customary fees, commissions, costs and other expenses incurred in connection
with such issuance or sale or (c) 100% (or, if the Leverage Ratio as of the last
day of the fiscal quarter most recently preceding the applicable date of
determination shall be less than 4.00, 50%) of the cash proceeds from the
issuance or sale by STFI, the Borrower or any Subsidiary (other than the
issuance or sale to STFI, the Borrower or any Subsidiary) of any equity security
of STFI, the Borrower or any Subsidiary (other than sales of Capital Stock of
STFI to directors, officers or employees of the Subsidiaries, the Unrestricted
Subsidiaries or the STFI Unrestricted Subsidiaries in connection with permitted
employee compensation and incentive arrangements), net of all taxes and
customary fees, commissions, costs and other expenses incurred in connection
with such issuance or sale.
"Net Worth" shall mean, as of any date, with respect to STFI,
the Borrower and the Subsidiaries, stockholders' equity of STFI, the Borrower
and the Subsidiaries as of such date plus the aggregate amount of the
liquidation preference of the Cumulative Convertible Preferred Stock and the
Special Preferred Stock issued on the Closing Date minus the aggregate amount as
of such date of the liquidation preference of all Cumulative Convertible
Preferred Stock and Special Preferred Stock redeemed, cancelled or otherwise
discharged after the Closing Date, all determined on a consolidated basis in
accordance with GAAP.
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"Obligations" shall mean all obligations defined as
"Obligations" in the Guarantee Agreements and the Security Documents.
"Offering Circular" shall mean the Confidential Offering
Circular dated February 17, 1996, in respect of the Discount Notes, as amended
through March [ ], 1996, with no changes therefrom adverse to the Borrower or
the Lenders.
"Parent Guarantee Agreement" shall mean the Parent Guarantee
Agreement, substantially in the form of Exhibit E, made by STFI in favor of the
Collateral Agent for the benefit of the Secured Parties.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"Permitted Business Acquisition" shall mean any acquisition of
all or substantially all the assets of, or all the shares or other equity
interests in, a person or division or line of business of a person (or any
subsequent investment made in a previously acquired Permitted Business
Acquisition) if immediately after giving effect thereto: (a) no Default or Event
of Default shall have occurred and be continuing or would result therefrom, (b)
all transactions related thereto shall be consummated in accordance with
applicable laws, (c) all the Capital Stock of any acquired or newly formed
person shall be owned directly by the Borrower or a wholly owned Subsidiary (or,
in the case of a Permitted Business Acquisition funded as contemplated by
Section 6.04(j), STFI) and all actions required to be taken, if any, with
respect to such acquired or newly formed person under Section 5.11 shall have
been taken, (d) any acquired assets shall be located in the United States and
any acquired or newly formed person shall be incorporated or organized under the
laws of the United States, any State thereof or the District of Columbia and
substantially all the activities of such person shall be conducted in the United
States, (e) any acquired assets shall be used in, and any acquired or newly
formed person shall be engaged in the business currently conducted by STFI and
its subsidiaries or by the Acquired Business and business activities reasonably
incidental thereto and (f)(i) the Borrower shall be in compliance, on a pro
forma basis after giving effect to such acquisition or formation, with the
covenants contained in Sections 6.11, 6.12, 6.13, 6.14 and 6.15 (A) recomputed
as at the last day of the most recently ended fiscal quarter of the Borrower as
if such acquisition had occurred on the first day of each relevant period for
testing such compliance and (B) computed for each relevant period during the
remaining term of this Agreement (based, in the case of such projected periods,
upon reasonable assumptions as to costs to be incurred and revenues to be
realized from such acquisition or formation), and the Borrower shall have
delivered to the Administrative Agent a certificate of a Responsible Officer to
such effect, together with all relevant financial information for such
subsidiary or assets and calculations demonstrating such compliance, and (ii)
any acquired or newly formed subsidiary shall not be liable for any Indebtedness
(except for Indebtedness permitted by Section 6.01).
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"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within 90 days from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 90 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Ratings Group or from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 90 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any Lender or by any
domestic office of any commercial bank organized under the laws of the
United States of America or any State thereof, in each case which has a
combined capital and surplus and undivided profits of not less than
$500,000,000 and whose short-term debt has, at such date of
acquisition, a rating of A or better from Standard & Poor's Ratings
Group or a rating of A or better from Moody's Investors Service, Inc.
(or, if either shall change the basis on which it establishes ratings,
the equivalent rating after such change); and
(d) other investment instruments approved in writing by the
Required Lenders and offered by financial institutions which have a
combined capital and surplus and undivided profits of not less than
$250,000,000.
"person" shall mean any natural person, corporation, business
trust, joint venture, association, company, partnership or government, or any
agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 307 of ERISA, and in respect of which the
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement,
substantially in the form of Exhibit F, among STFI, the Borrower, each
Subsidiary having any subsidiary and the Collateral Agent for the benefit of the
Secured Parties.
"Preferred Consideration" shall mean cash consideration in an
aggregate amount of approximately $39,600,000 to be paid by STFI to the holders
of preferred stock of FII other than RHI, which represents the liquidation value
of the respective series of such preferred stock plus dividends accrued to the
effective time of the Merger.
"Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Administrative Agent as its prime
rate in effect at its branch office in New York City; each change in the Prime
Rate shall be effective on the date such change is publicly announced as being
effective.
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"Proxy Statement" shall mean the proxy statement of STFI dated
February 12, 1996, as amended through March 2, 1996, with no changes therefrom
adverse to the Borrower or the Lenders.
"Register" shall have the meaning given such term in Section
9.04(d).
"Regulation G" shall mean Regulation G of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation U" shall mean Regulation U of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation X" shall mean Regulation X of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, depositing, dispersing, emanating or migrating of any Hazardous
Material in, into, onto or through the environment.
"Remedial Action" means any and all actions required by any
Governmental Authority or voluntarily undertaken to: (i) investigate, study,
cleanup, remove, treat, abate or in any other way address any Hazardous Material
in the environment; or (ii) prevent the Release or threat of Release, or
minimize the further Release of any Hazardous Material in the environment.
"Required Lenders" shall mean, at any time, Lenders having
Loans, L/C Exposures and, without duplication, unused Commitments representing
at least 50.01% of the sum of all Loans outstanding, L/C Exposures and, without
duplication, unused Commitments at such time.
"Responsible Officer" of any person shall mean any executive
officer or Financial Officer of such person and any other officer or similar
official thereof responsible for the administration of the obligations of such
person in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised
of Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Revolving Loans hereunder as set
forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which
such Lender assumed its Revolving Credit Commitment, as applicable, as the same
may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any
Lender at any time, the aggregate principal amount at such time of all
outstanding Revolving Loans of such Lender, plus the amount at such time of such
Lender's L/C Exposure.
"Revolving Credit Lender" shall mean a Lender with a Revolving
Credit Commitment.
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"Revolving Credit Maturity Date" shall mean March 30, 2001.
"Revolving Loans" shall mean the revolving loans made by the
Lenders to the Borrower pursuant to clause (c) of Section 2.01. Each Revolving
Loan shall be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"RHI" shall mean RHI Holdings, Inc., a Delaware Corporation.
"Section 351 Exchange" shall mean the transfer of
substantially all the assets of STFI, including the Acquired Business, to the
Borrower in exchange for all the Capital Stock of the Borrower.
"Secured Parties" shall have the meaning assigned to such term
in the Security Agreement.
"Security Agreement" shall mean the Security Agreement,
substantially in the form of Exhibit G, among STFI, the Borrower, the
Subsidiaries and the Collateral Agent for the benefit of the Secured Parties,
provided that ATG, ANSI and their subsidiaries shall not be party thereto except
as set forth in Section 5.11.
"Security Documents" shall mean the Security Agreement, the
Pledge Agreement and each of the security agreements, mortgages and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.11.
"Special Preferred Stock" shall mean the special preferred
stock of STFI with an initial liquidation preference of $20,000,000 to be issued
to RHI on the Closing Date pursuant to the Exchange Agreement.
"Specified Liabilities" shall mean the Existing Indebtedness
and the FII Senior Notes.
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the highest maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board and any other banking authority, domestic
or foreign, to which the Administrative Agent or any Lender (including any
branch, Affiliate, or other fronting office making or holding a Loan) is subject
with respect to Eurocurrency Liabilities (as defined in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"STC" shall mean Shared Technologies Cellular, Inc., a
Delaware corporation.
"STFI" shall mean Shared Technologies Inc., a Delaware
corporation, the name of which will be changed to Shared Technologies Fairchild
Inc. after the consummation of the Merger.
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"STFI Unrestricted Subsidiary" shall mean any subsidiary of
STFI (other than STC) or any other direct or indirect investment by STFI in the
Capital Stock of any other person (other than STFI) so long as at the time such
subsidiary is acquired or created or such investment is made (a) no Default or
Event of Default shall have occurred and be continuing or would result
therefrom, (b) the Borrower shall have notified the Administrative Agent of the
acquisition or creation of such subsidiary or such other investment and STFI's
ownership interest therein and its designation thereof as an STFI unrestricted
subsidiary concurrently with such acquisition, creation or investment and the
intended purposes of such subsidiary or investment, (c) all transactions related
thereto shall be consummated in accordance with applicable laws, (d) the
Borrower shall be in compliance, on a pro forma basis after giving effect to
such acquisition, creation or investment, with covenants contained in Sections
6.11, 6.12, 6.13, 6.14 and 6.15 (i) recomputed as at the last day of the most
recently ended fiscal quarter of the Borrower as if such acquisition had
occurred on the first day of each relevant period for testing such compliance
and (ii) computed for each relevant period during the remaining term of this
Agreement (based, in the case of such projected periods, upon reasonable
assumptions as to costs to be incurred and revenues to be realized from such
investment or subsidiary), and the Borrower shall have delivered to the
Administrative Agent a certificate of a Responsible Officer to such effect,
together with all relevant financial information for such subsidiary or
investment and calculations demonstrating such compliance, (e) none of STFI, the
Borrower or any of their subsidiaries shall have any contingent liability in
respect thereof (other than any contingent tax liabilities in respect of which
there shall exist a tax sharing agreement with the other owners of such STFI
Unrestricted Subsidiary providing for an allocation of tax liabilities and
benefits customary in similar circumstances), (f) any management or service
provided by STFI, the Borrower or any Subsidiary to such investment or
subsidiary shall be provided in consideration of cash remuneration in an amount
not less than could have been obtained from a third party on an arm's length
basis and (g) such investment or subsidiary shall be capitalized solely from the
following sources: (i) investments by persons other than STFI, the Borrower or
any Subsidiary, (ii) the proceeds of Indebtedness of persons other than STFI,
the Borrower, the Subsidiaries, any Unrestricted Subsidiary or any STFI
Unrestricted Subsidiary or (iii) in the case of any acquisition, creation or
investment in any fiscal year, (A) the portion of the proceeds received in such
fiscal year from any issuance or sale of any equity securities of STFI (other
than sales of Capital Stock of STFI to directors, officers or employees of the
Subsidiaries, the Unrestricted Subsidiaries or the STFI Subsidiaries in
connection with permitted employee compensation and incentive arrangements) that
does not constitute Net Proceeds, (B) the portion of Excess Cash Flow for the
immediately preceding fiscal year not subject to prepayment under Section
2.13(c) and (C) any proceeds received in such year in respect of any sale,
transfer or other disposition of any equity interest in STC that would
constitute Net Proceeds but for clause (i) of the further proviso contained in
clause (c) of the definition of "Net Proceeds" (in each case to the extent not
previously used to prepay Indebtedness (other than Revolving Loans), pay any
amount in respect of any Capital Stock of STFI, make any investment or Capital
Expenditure or otherwise for any purpose resulting in a deduction to Excess Cash
Flow in any fiscal year).
"subsidiary" shall mean, with respect to any person (herein
referred to as the "parent"), any corporation, company, partnership, association
or other business entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or more than 50% of the general partnership interests are, at the time any
determination is being made, owned, Controlled or held, or (b) that is, at the
time any determination is made, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.
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"Subsidiary" shall mean each subsidiary of STFI, the Borrower
or any of their subsidiaries other than the Unrestricted Subsidiaries and the
STFI Unrestricted Subsidiaries, provided that each reference to Subsidiary
contained in Article III shall include the STFI Unrestricted Subsidiaries.
"Subsidiary Guarantee Agreement" shall mean the Subsidiary
Guarantee Agreement, substantially in the form of Exhibit H, made by the
Subsidiary Guarantors in favor of the Collateral Agent for the benefit of the
Secured Parties, provided that ATG, ANSI and their subsidiaries shall not be
party thereto except as set forth in Section 5.11.
"Subsidiary Guarantor" shall mean each Subsidiary that is or
becomes a party to a Subsidiary Guarantee Agreement.
"Tender Offer" shall mean the tender offer and consent
solicitation conducted by FII for the FII Senior Notes, as contemplated by the
Offering Circular.
"Term Borrowing" shall mean a Borrowing comprised of Tranche A
Term Loans or Tranche B Term Loans.
"Term Loan Commitments" shall mean the Tranche A Commitments
and the Tranche B Commitments.
"Term Loans" shall mean the Tranche A Term Loans and the
Tranche B Term Loans.
"Total Debt" shall mean, with respect to STFI, the Borrower
and the Subsidiaries on a consolidated basis at any time, all Indebtedness
(other than Indebtedness described in clause (i) of the definition of
"Indebtedness") of STFI, the Borrower and the Subsidiaries at such time,
determined on a consolidated basis in accordance with GAAP.
"Total Revolving Credit Commitment" shall mean, at any time,
the aggregate amount of the Revolving Credit Commitments, as in effect at such
time.
"Tranche A Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Tranche A Term Loans hereunder as
set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which
such Lender assumed its Tranche A Commitment, as applicable, as the same may be
(a) reduced from time to time pursuant to Section 2.09 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.
"Tranche A Maturity Date" shall mean March 30, 2001.
"Tranche A Term Loans" shall mean the term loans made by the
Lenders to the Borrower pursuant to clause (a) of Section 2.01. Each Tranche A
Term Loan shall be either a Eurodollar Term Loan or an ABR Term Loan.
"Tranche B Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Tranche B Term Loans hereunder as
set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which
such Lender assumed its Tranche B Commitment, as
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applicable, as the same may be (a) reduced from time to time pursuant to Section
2.09 and (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.04.
"Tranche B Maturity Date" shall mean March 31, 2003.
"Tranche B Term Loans" shall mean the term loans made by the
Lenders to the Borrower pursuant to clause (b) of Section 2.01. Each Tranche B
Term Loan shall be either a Eurodollar Term Loan or an ABR Term Loan.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, the term "Rate"
shall include the Adjusted LIBO Rate and the Alternate Base Rate.
"Unrestricted Subsidiary" shall mean (a) STC and (b) any
subsidiary of the Borrower or any Subsidiary or any other direct or indirect
investment by the Borrower or any Subsidiary in the Capital Stock of any other
person (other than STFI) so long as at the time such subsidiary is acquired or
created or such investment is made (i) no Default or Event of Default shall have
occurred and be continuing or would result therefrom, (ii) the Borrower shall
have notified the Administrative Agent of its acquisition or creation of such
subsidiary or such other investment and its ownership interest therein and its
designation thereof as an unrestricted subsidiary concurrently with such
acquisition, creation or investment and the intended purposes of such subsidiary
or investment, (iii) all transactions related thereto shall be consummated in
accordance with applicable laws, (iv) the Borrower shall be in compliance, on a
pro forma basis after giving effect to such acquisition, creation or investment,
with covenants contained in Sections 6.11, 6.12, 6.13, 6.14 and 6.15 (A)
recomputed as at the last day of the most recently ended fiscal quarter of the
Borrower as if such acquisition had occurred on the first day of each relevant
period for testing such compliance and (B) computed for each relevant period
during the remaining term of this Agreement (based, in the case of such
projected periods, upon reasonable assumptions as to costs to be incurred and
revenues to be realized from such investment or subsidiary), and the Borrower
shall have delivered to the Administrative Agent a certificate of a Responsible
Officer to such effect, together with all relevant financial information for
such subsidiary or investment and calculations demonstrating such compliance,
(v) none of STFI, the Borrower or any of their subsidiaries shall have any
contingent liability in respect thereof (other than any contingent tax
liabilities in respect of which there shall exist a tax sharing agreement with
the other owners of such Unrestricted Subsidiary providing for an allocation of
tax liabilities and benefits customary in similar circumstances), (vi) any
management or service provided by STFI, the Borrower or any Subsidiary to such
investment or subsidiary shall be provided in consideration of cash remuneration
in an amount not less than could have been obtained from a third party on an
arm's length basis and (vii) such investment or subsidiary shall be capitalized
solely from the following sources: (A) investments by persons other than STFI,
the Borrower or any Subsidiary or (B) the proceeds of Indebtedness of persons
other than STFI, the Borrower, the Subsidiaries, any Unrestricted Subsidiary or
any STFI Unrestricted Subsidiary.
"wholly owned Subsidiary" shall mean a Subsidiary 100% of the
Capital Stock of which (except for directors' qualifying shares) is, at the time
any determination is being made, owned,
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controlled or held by the Borrower or one or more wholly owned Subsidiaries of
or by the Borrower and one or more wholly owned Subsidiaries.
"Withdrawal Liability" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that if within 30 days after delivery of the
first financial statements delivered pursuant to Section 5.04 after the
effectiveness of any change in GAAP occurring after the date of this Agreement
the Borrower notifies the Administrative Agent that the Borrower wishes to amend
any covenant in Article VI or any related definition to eliminate the effect of
such change on the operation of such covenant (or if the Administrative Agent
notifies the Borrower that the Required Lenders wish to amend Article VI or any
related definition for such purpose), then (i) the Borrower and the
Administrative Agent shall negotiate in good faith to agree upon an appropriate
amendment to such covenant and (ii) until such covenant is amended in a manner
satisfactory to the Borrower and the Required Lenders, the Borrower's compliance
with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective.
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. On the terms and subject to the
conditions and relying upon the representations and warranties herein set forth,
each Lender agrees, severally and not jointly, (a) to make a Tranche A Term Loan
to the Borrower on the Closing Date in a principal amount not to exceed its
Tranche A Commitment, (b) to make a Tranche B Term Loan to the Borrower on the
Closing Date in a principal amount not to exceed its Tranche B Commitment, and
(c) to make Revolving Loans to the Borrower, at any time and from time to time
on or after the date hereof, and until the earlier of the Revolving Credit
Maturity Date and the termination of the Revolving Credit Commitment of such
Lender in accordance with the terms hereof, in an aggregate principal amount at
any time outstanding that will not result in such Lender's Revolving Credit
Exposure exceeding such Lender's Revolving Credit Commitment. Within the limits
set forth in clause (c) of the preceding sentence and subject to the terms,
conditions and limitations set forth herein, the Borrower may borrow, pay or
prepay and reborrow Revolving Loans. Amounts paid or prepaid in respect of Term
Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their applicable Commitments; provided, however, that the failure of any Lender
to make any Loan shall not in itself relieve any other
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Lender of its obligation to lend hereunder (it being understood, however, that
no Lender shall be responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender). The Term Loans must be drawn in
a single drawing in their entire amount on the Closing Date. Except for Loans
deemed made pursuant to Section 2.02(g), the Revolving Loans comprising any
Borrowing shall be in an aggregate principal amount that is (i) an integral
multiple of $1,000,000 and not less than $5,000,000 or (ii) equal to the
remaining available balance of the Total Revolving Credit Commitment.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the same
time; provided, however, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than six Eurodollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.
(c) Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds to such account in New York City as the Administrative Agent may designate
not later than 11:00 a.m., New York City time, and the Administrative Agent
shall promptly upon receipt credit the amounts so received as designated by the
Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur
on such date because any condition precedent herein specified shall not have
been met, return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, for the first day, the Federal Funds Effective
Rate and, for each day thereafter, the Alternate Base Rate. If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(e) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Revolving Credit Borrowing if the
Interest Period requested with respect thereto would end after the Revolving
Credit Maturity Date.
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(f) The Borrower may refinance all or any part of a Revolving
Credit Borrowing with another Revolving Credit Borrowing, subject to the
conditions and limitations set forth in this Agreement. Any Revolving Credit
Borrowing or part thereof so refinanced shall be deemed to be repaid or prepaid
in accordance with the applicable provisions of this Agreement with the proceeds
of the new Revolving Credit Borrowing, and the proceeds of such new Revolving
Credit Borrowing, to the extent they do not exceed the principal amount of the
Revolving Credit Borrowing being refinanced, shall not be paid by the Lenders to
the Administrative Agent or by the Administrative Agent to the Borrower pursuant
to paragraph (c) above.
(g) If a Fronting Bank shall not have received from the
Borrower a payment required to be made by Section 2.22(e) within the time
specified in such Section, such Fronting Bank will promptly notify the
Administrative Agent of the L/C Disbursement and the Administrative Agent will
promptly notify each Revolving Credit Lender of such L/C Disbursement and its
Applicable Percentage thereof. Each Revolving Credit Lender shall pay by wire
transfer of immediately available funds to the Administrative Agent not later
than 2:00 p.m., New York City time, on such date (or, if such Revolving Credit
Lender shall have received such notice later than 12:00 noon, New York City
time, on any day, not later than 10:00 a.m., New York City time, on the
immediately following Business Day), an amount equal to such Lender's Applicable
Percentage of such L/C Disbursement (it being understood that such amount shall
be deemed to constitute an ABR Revolving Loan of such Lender and such payment
shall be deemed to have reduced the L/C Exposure), and the Administrative Agent
will promptly pay to the applicable Fronting Bank amounts so received by it from
the Revolving Credit Lenders. The Administrative Agent will promptly pay to the
applicable Fronting Bank any amounts received by it from the Borrower pursuant
to Section 2.22(e) prior to the time that any Revolving Credit Lender makes any
payment pursuant to this paragraph (g); any such amounts received by the
Administrative Agent thereafter will be promptly remitted by the Administrative
Agent to the Revolving Credit Lenders that shall have made such payments and to
the applicable Fronting Bank, as their interests may appear. If any Revolving
Credit Lender shall not have made its Applicable Percentage of such L/C
Disbursement available to the Administrative Agent as provided above, such
Lender and the Borrower severally agree to pay interest on such amount, for each
day from and including the date such amount is required to be paid in accordance
with this paragraph to but excluding the date such amount is paid, to the
Administrative Agent at (i) in the case of the Borrower, a rate per annum equal
to the interest rate applicable to ABR Revolving Loans pursuant to Section 2.06,
and (ii) in the case of such Lender, for the first such day, the Federal Funds
Effective Rate, and for each day thereafter, the Alternate Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a
Borrowing (other than a deemed Borrowing pursuant to Section 2.02(g), as to
which this Section 2.03 shall not apply), the Borrower shall hand deliver or
telecopy to the Administrative Agent a duly completed Borrowing Request (a) in
the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City
time, three Business Days before a proposed Borrowing, and (b) in the case of an
ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day
before a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall
be signed by or on behalf of the Borrower and shall specify the following
information: (i) whether the Borrowing then being requested is to be a Borrowing
of Tranche A Term Loans, a Borrowing of Tranche B Term Loans or a Revolving
Credit Borrowing, and whether such Borrowing is to be a Eurodollar Borrowing or
an ABR Borrowing; (ii) the date of such Borrowing (which shall be a Business
Day), (iii) the number and location of the account to which funds are to be
disbursed (which shall be an account that complies with the requirements of
Section 2.02(c)); (iv) the amount of such Borrowing; and (v) if such Borrowing
is to
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be a Eurodollar Borrowing, the Interest Period with respect thereto; provided,
however, that, notwithstanding any contrary specification in any Borrowing
Request, each requested Borrowing shall comply with the requirements set forth
in Section 2.02. If no election as to the Type of Borrowing is specified in any
such notice, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing is specified in any
such notice, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. The Administrative Agent shall promptly advise
the applicable Lenders of any notice given pursuant to this Section 2.03 (and
the contents thereof), and of each Lender's portion of the requested Borrowing.
If the Borrower shall not have delivered a Borrowing Request
in accordance with this Section 2.03 prior to the end of the Interest Period
then in effect for any Revolving Credit Borrowing and requesting that such
Borrowing be refinanced, then the Borrower shall (unless the Borrower has
notified the Administrative Agent, not less than three Business Days prior to
the end of such Interest Period, that such Borrowing is to be repaid at the end
of such Interest Period) be deemed to have delivered a Borrowing Request
requesting that such Borrowing be refinanced with a new Borrowing of equivalent
amount, and such new Borrowing shall be an ABR Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender (i) the principal amount of each Term Loan of such
Lender as provided in Section 2.11 and (ii) the principal amount of each
Revolving Loan outstanding on the last day of the Interest Period applicable
thereto.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender from time to time,
including the amounts of principal and interest payable and paid such Lender
from time to time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which
it will record (i) the amount of each Loan made hereunder, the Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder from the Borrower or any Guarantor and each Lender's share
thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) above shall be prima facie evidence of the existence and
amounts of the obligations therein recorded absent manifest error; provided,
however, that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the
obligations of the Borrower to repay the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in
the event any Lender shall request a promissory note payable to such Lender and
its registered assigns, the Borrower shall deliver such a note and the interests
represented by such note shall at all times after receipt of such note
(including after any assignment of all or part of such interests pursuant to
Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each
Lender, through the Administrative Agent, on the Closing Date and on the last
Business Day of March, June, September and December in each year and on each
date on which any Commitment of such Lender shall expire or
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<PAGE>
be terminated as provided herein, a commitment fee (a "Commitment Fee") of 0.50%
per annum on the average daily unused amount of the Commitments of such Lender
during the preceding quarter (or other period commencing with the date hereof or
ending with the Revolving Credit Maturity Date or the date on which the
Commitments of all the Lenders shall expire or be terminated). All Commitment
Fees shall be computed on the basis of the actual number of days elapsed in a
year of 360 days. The Commitment Fee due to each Lender shall commence to accrue
on the date hereof and shall cease to accrue on the date on which all the
Commitments of such Lender shall have been terminated as provided herein.
(b) The Borrower agrees to pay to the Administrative Agent,
for its own account, the fees set forth in the Fee Letter at the times and in
the amounts specified therein (the "Administrative Agent Fees").
(c) The Borrower agrees to pay (i) to each Revolving Credit
Lender, through the Administrative Agent, on the last Business Day of March,
June, September and December of each year and on the date on which the Revolving
Credit Commitments of all the Lenders shall be terminated as provided herein, a
fee (an "L/C Participation Fee") calculated on such Lender's Applicable
Percentage of the average daily aggregate L/C Exposure (excluding the portion
thereof attributable to unreimbursed L/C Disbursements) during the preceding
quarter (or shorter period commencing with the date hereof or ending with the
Revolving Credit Maturity Date or the date on which all Letters of Credit shall
have been canceled or have expired and the Revolving Credit Commitments of all
the Lenders shall have been terminated) at a rate equal to 2.75% per annum and
(ii) to each Fronting Bank, the fees separately agreed upon by STFI or the
Borrower and such Fronting Bank, plus, with respect to each Letter of Credit,
the customary fronting, issuance, amending and drawing fees specified from time
to time by such Fronting Bank (the "Fronting Bank Fees"). All L/C Participation
Fees and Fronting Bank Fees shall be computed on the basis of the actual number
of days elapsed in a year of 360 days.
(d) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders, except that the Fronting Bank Fees shall be paid
directly to the applicable Fronting Bank. Once paid, none of the Fees shall be
refundable under any circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions
of Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when the Alternate Base Rate is determined by
reference to the Prime Rate and over a year of 360 days at all other times) at a
rate per annum equal to the Alternate Base Rate plus, in the case of (i)
Revolving Loans, 1.75%, (ii) Tranche A Term Loans, 1.75%, and (iii) Tranche B
Term Loans 2.50%.
(b) Subject to the provisions of Section 2.07, the Loans
comprising each Eurodollar Borrowing shall bear interest (computed on the basis
of the actual number of days elapsed over a year of 360 days) at a rate per
annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus, in the case of (i) Revolving Loans, 2.75%, (ii) Tranche A Term
Loans, 2.75%, and (iii) Tranche B Term Loans, 3.50%.
(c) Interest on each Loan shall be payable on the Interest
Payment Dates applicable to such Loan except as otherwise provided in this
Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each
Interest Period or day within an Interest Period, as the case may be, shall
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be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default
in the payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, by acceleration or otherwise, or under any other Loan
Document, the Borrower shall on demand from time to time pay interest, to the
extent (and only to such extent) permitted by law, on such defaulted amount to
but excluding the date of actual payment (after as well as before judgment) (a)
in the case of overdue principal, at the rate otherwise applicable to such Loan
pursuant to Section 2.06 plus 2.00% per annum and (b) in all other cases, at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be, when determined by reference to
the Prime Rate and over a year of 360 days at all other times) equal to the sum
of the Alternate Base Rate plus 3.75%.
SECTION 2.08. Alternate Rate of Interest. In the event, and on
each occasion, that on the day two Business Days prior to the commencement of
any Interest Period for a Eurodollar Borrowing the Administrative Agent shall
have determined that dollar deposits in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London interbank
market, or that the rates at which such dollar deposits are being offered will
not adequately and fairly reflect the cost to any Lender of making or
maintaining its Eurodollar Loan during such Interest Period, or that reasonable
means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative
Agent shall, as soon as practicable thereafter, give written or telecopy notice
of such determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a)
The Term Loan Commitments shall automatically terminate at 5:00 p.m., New York
City time, on the Closing Date. The Revolving Credit Commitments and the L/C
Commitments shall automatically terminate on the Revolving Credit Maturity Date.
Notwithstanding the foregoing, all the Commitments and L/C Commitments shall
automatically terminate at 5:00 p.m., New York City time, on April 15, 1996, if
the initial Credit Event shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable
written or telecopy notice to the Administrative Agent, the Borrower may at any
time in whole permanently terminate, or from time to time in part permanently
reduce, the Term Loan Commitments or the Revolving Credit Commitments; provided,
however, that (i) each partial reduction of the Term Loan Commitments or the
Revolving Credit Commitments shall be in an integral multiple of $1,000,000 and
in a minimum amount of $5,000,000 (or, if less, the remaining amount of the
Revolving Credit Commitments) and (ii) the Total Revolving Credit Commitment
shall not be reduced at any time to an amount that is less than the Aggregate
Revolving Credit Exposure at such time.
(c) The Revolving Credit Commitments shall be automatically
and permanently reduced by an amount equal to any amount applied under paragraph
(b) or (c) of Section 2.13 to prepay Revolving Credit Borrowings (or that would
have been required to be so applied if Revolving Credit Borrowings equal to such
amount had been outstanding).
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<PAGE>
(d) Each reduction in the Term Loan Commitments or the
Revolving Credit Commitments hereunder shall be made ratably among the Lenders
in accordance with their respective applicable Commitments. The Borrower shall
pay to the Administrative Agent for the account of the applicable Lenders, on
the date of each termination or reduction, the Commitment Fees on the amount of
the Commitments so terminated or reduced accrued to but excluding the date of
such termination or reduction.
SECTION 2.10. Conversion and Continuation of Term Borrowings.
The Borrower shall have the right at any time upon prior irrevocable notice to
the Administrative Agent (a) not later than 12:00 noon, New York City time, one
Business Day prior to conversion, to convert any Eurodollar Term Borrowing into
an ABR Term Borrowing, (b) not later than 12:00 noon, New York City time, three
Business Days prior to conversion or continuation, to convert any ABR Term
Borrowing into a Eurodollar Term Borrowing or to continue any Eurodollar Term
Borrowing as a Eurodollar Term Borrowing for an additional Interest Period, and
(c) not later than 12:00 noon, New York City time, three Business Days prior to
conversion, to convert the Interest Period with respect to any Eurodollar Term
Borrowing to another permissible Interest Period, subject in each case to the
following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Term Borrowing;
(ii) if less than all the outstanding principal amount of any
Term Borrowing shall be converted or continued, then each resulting
Term Borrowing shall satisfy the limitations specified in Sections
2.02(a) and 2.02(b) regarding the principal amount and maximum number
of Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the
new Term Loan of such Lender resulting from such conversion and
reducing the Term Loan (or portion thereof) of such Lender being
converted by an equivalent principal amount; accrued interest on any
Eurodollar Term Loan (or portion thereof) being converted shall be paid
by the Borrower at the time of conversion;
(iv) if any Eurodollar Term Borrowing is converted at a time
other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 2.16;
(v) any portion of a Term Borrowing maturing or required to
be repaid in less than one month may not be converted into or continued
as a Eurodollar Term Borrowing;
(vi) any portion of a Term Borrowing that cannot be converted
into or continued as a Eurodollar Term Borrowing by reason of the
immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Term Borrowing;
(vii) no Interest Period may be selected for any Eurodollar
Term Borrowing that would end later than an Installment Date occurring
on or after the first day of such Interest Period and applicable to
such Borrowing if, after giving effect to such selection, the aggregate
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<PAGE>
outstanding amount of (A) the Eurodollar Term Borrowings to which such
Installment Date applies with Interest Periods ending on or prior to
such Installment Date and (B) the ABR Term Borrowings to which such
Installment Date applies would not be at least equal to the principal
amount of Term Borrowings to be paid on such Installment Date; and
(viii) after the occurrence and during the continuance of a
Default or Event of Default, no outstanding Loan may be converted into,
or continued as, a Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable
and shall refer to this Agreement and specify (i) the identity and amount of the
Term Borrowing that the Borrower requests be converted or continued, (ii)
whether such Term Borrowing is to be converted to or continued as a Eurodollar
Term Borrowing or an ABR Term Borrowing, (iii) if such notice requests a
conversion or continuation, the date of such conversion (which shall be a
Business Day) and (iv) if such Term Borrowing is to be converted to or continued
as a Eurodollar Term Borrowing, the Interest Period with respect thereto. If no
Interest Period is specified in any such notice with respect to any conversion
to or continuation as a Eurodollar Term Borrowing, the Borrower shall be deemed
to have selected an Interest Period of one month's duration. The Administrative
Agent shall advise the Lenders of any notice given pursuant to this Section 2.10
and of each Lender's portion of any converted or continued Term Borrowing. If
the Borrower shall not have given notice in accordance with this Section 2.10 to
continue any Term Borrowing into a subsequent Interest Period (and shall not
otherwise have given notice in accordance with this Section 2.10 to convert such
Term Borrowing), such Term Borrowing shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms hereof), automatically
be continued into a new Interest Period as an ABR Term Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) The Term
Borrowings shall be payable as to principal in the aggregate amounts set forth
below in consecutive quarterly installments on the last Business Day of each
March, June, September and December (each an "Installment Date"), commencing on
June 28, 1996, with 25% of the amount set forth below for each applicable
four-quarter period being paid on each Installment Date occurring during such
four-quarter period:
<TABLE>
<CAPTION>
Four-Quarter Tranche A Tranche B
Period Ending Term Loan Amount Term Loan Amount
<S> <C> <C>
March 31, 1997 $ 7,000,000 $ 2,000,000
March 31, 1998 12,000,000 2,000,000
March 31, 1999 15,000,000 2,000,000
March 31, 2000 8,000,000 2,000,000
March 30, 2001 8,000,000 2,000,000
March 29, 2002 25,000,000
March 31, 2003 35,000,000
</TABLE>
(b) Except as set forth in paragraph (c) below, (i) each
prepayment of principal of Term Borrowings pursuant to Section 2.12 shall be
applied to the Tranche A Term Loans and the Tranche B Term Loans ratably in
accordance with the respective outstanding principal amounts thereof and shall
reduce scheduled payments required under paragraph (a) above after the date of
such prepayments in the scheduled order of maturity, unless and until deemed
made under Section 2.13(c) as contemplated thereby (at which time the
application of such prepayments (and any subsequent payments under Section
2.11(a) and prepayments under Section 2.13(a) or (b)) shall be retroactively
adjusted as if
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<PAGE>
such prepayments had originally been made under Section 2.13(c)), and (ii) each
prepayment of principal of the Term Borrowings made or deemed made pursuant to
Section 2.13 shall be applied to the Tranche A Term Loans and the Tranche B Term
Loans ratably in accordance with the respective outstanding principal amounts
thereof and shall reduce the scheduled payments required under paragraph (a)
above after the date of such prepayment on a pro rata basis. To the extent not
previously paid or reduced, all Tranche A Term Loans shall be due and payable on
the Tranche A Maturity Date and all Tranche B Term Loans shall be due and
payable on the Tranche B Maturity Date. All repayments pursuant to this Section
2.11 shall be subject to Section 2.16, but shall otherwise be without premium or
penalty. Each payment of Borrowings pursuant to this Section 2.11 shall be
accompanied by accrued interest on the principal amount paid to but excluding
the date of such payment.
(c) Any Lender holding Tranche B Term Loans may, to the extent
Tranche A Term Loans are outstanding, elect on not less than two Business Days'
prior written or telecopy notice (or telephone notice promptly confirmed by
written or telecopy notice) to the Administrative Agent with respect to any
optional prepayment made pursuant to Section 2.12(a) or any mandatory prepayment
made pursuant to Section 2.13 not to have such prepayment applied to such
Lender's Tranche B Term Loans until all Tranche A Term Loans shall have been
paid in full, in which case the amount not so applied shall be applied to prepay
(i) Tranche A Term Loans and (ii) Tranche B Term Loans of Lenders holding
Tranche B Term Loans which did not elect to reject the initial applicable
prepayment on a pro rata basis based upon the aggregate outstanding principal
amount of the Tranche A Term Loans and the Tranche B Term Loans of the Lenders
referred to in clause (ii).
SECTION 2.12. Optional Prepayments. (a) The Borrower shall
have the right at any time and from time to time to prepay any Borrowing, in
whole or in part, upon at least three Business Days' prior written or telecopy
notice (or telephone notice promptly confirmed by written or telecopy notice) to
the Administrative Agent before 11:00 a.m., New York City time; provided,
however, that each partial prepayment shall be in an amount that is an integral
multiple of $1,000,000 and not less than $5,000,000 (or, if less, the remaining
amount outstanding under the applicable Tranche).
(b) Each notice of prepayment shall specify the prepayment
date and the principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Borrowing by the amount stated therein on the date stated therein. All
prepayments under this Section 2.12 shall be subject to Section 2.16 but
otherwise without premium or penalty and shall be accompanied by accrued
interest on the principal amount being prepaid to but excluding the date of
payment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of the
termination of all the Revolving Credit Commitments, the Borrower shall repay or
prepay all its outstanding Revolving Credit Borrowings on the date of such
termination. In the event of any partial reduction of the Revolving Credit
Commitments, then (i) at or prior to the effective date of such reduction, the
Administrative Agent shall notify the Borrower and the Revolving Credit Lenders
of the Aggregate Revolving Credit Exposure after giving effect thereto and (ii)
if the Aggregate Revolving Credit Exposure would exceed the Total Revolving
Credit Commitment after giving effect to such reduction or termination, then the
Borrower shall, on the date of such reduction or termination, repay or prepay
Revolving Credit Borrowings in an amount sufficient to eliminate such excess.
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<PAGE>
(b) Not later than the fifth Business Day following the
receipt by STFI, the Borrower or any Subsidiary of any Net Proceeds, all such
Net Proceeds shall be applied to prepay Term Loans (and after the Term Loans
have been paid in full, to prepay Revolving Loans).
(c) Not later than the earlier of (i) 100 days after the end
of each fiscal year of the Borrower, commencing with the fiscal year ending on
December 31, 1996, and (ii) ten days after the date on which the financial
statements with respect to such fiscal year are delivered pursuant to Section
5.04(a), the Borrower shall calculate Excess Cash Flow for such fiscal year and
prepay outstanding Term Loans (and after the Term Loans have been paid in full,
prepay Revolving Loans) in an aggregate principal amount equal to the ECF
Percentage of such Excess Cash Flow; provided, however, that, with respect to
the period ended on December 31, 1996, Excess Cash Flow shall, notwithstanding
anything to the contrary herein, be determined with respect to the period
beginning on the Closing Date and ending on December 31, 1996. In the event the
Borrower shall have prepaid Term Borrowings under Section 2.12(a) during any
fiscal year in an aggregate amount in excess of Debt Service for such fiscal
year, the Borrower may in the certificate delivered pursuant to paragraph (e)
below in respect of the prepayment to be made pursuant to this paragraph (c) in
respect of such fiscal year designate all or any portion of such excess over
Debt Service as a payment in respect of the payment required under this
paragraph (c) in respect of such fiscal year and such amount shall thereafter be
deemed to have been paid under this paragraph (c).
(d) The Borrower shall repay or prepay outstanding Revolving
Loans and shall refrain from making additional Revolving Credit Borrowings to
the extent necessary in order that there shall be a period of at least 30
consecutive days in each fiscal year during which the aggregate principal amount
of outstanding Revolving Loans shall not exceed $5,000,000.
(e) The Borrower shall deliver to the Administrative Agent not
later than three Business Days prior to each prepayment required under this
Section 2.13 a certificate signed by a Financial Officer of the Borrower setting
forth in reasonable detail the calculation of the amount of such prepayment.
Each notice of prepayment shall specify the prepayment date, the Type of each
Loan being prepaid and the principal amount of each Loan (or portion thereof) to
be prepaid. All pre- payments under this Section 2.13 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty and shall be
accompanied by accrued interest on the principal amount being prepaid to but
excluding the date of payment.
(f) Amounts to be applied pursuant to this Section 2.13 to the
prepayment of Term Loans and Revolving Loans shall be applied, as applicable,
first to reduce outstanding ABR Borrowings. Any amounts remaining after each
such application shall, at the option of the Borrower, be applied to prepay
Eurodollar Borrowings immediately or shall be deposited in the Prepayment
Account (as defined below) for a period of up to 30 days. The Administrative
Agent shall apply any cash deposited in the Prepayment Account allocable to Term
Loans to prepay Eurodollar Term Loans and allocable to Revolving Loans to prepay
Eurodollar Revolving Loans (i) prior to the 30th day following the deposit of
such amounts in such account, in each case on the last day of their respective
Interest Periods (or, at the direction of the Borrower, on any earlier date) and
(ii) on the 30th day following the deposit of such amounts in such account, in
each case to prepay Loans in the order of the maturity of the Interest Periods
of such Loans, in each case until all outstanding Term Loans or Revolving Loans,
as the case may be, have been prepaid or until all the allocable cash on deposit
with respect to such Loans has been exhausted. For purposes of this Agreement,
the term "Prepayment Account" shall mean an account established by the Borrower
with the Administrative Agent and over
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<PAGE>
which the Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal for application in accordance with
this paragraph (f). The Administrative Agent will, at the request of the
Borrower, invest amounts on deposit in the Prepayment Account in overnight
investments that are Permitted Investments; provided, however, that (i) the
Administrative Agent shall not be required to make any investment that, in its
sole judgment, would require or cause the Administrative Agent to be in, or
would result in any, violation of any law, statute, rule or regulation and (ii)
the Administrative Agent shall have no obligation to invest amounts on deposit
in the Prepayment Account if a Default or Event of Default shall have occurred
and be continuing. The Borrower shall indemnify the Administrative Agent for any
losses relating to the investments so that the amount available to prepay
Eurodollar Borrowings on the last day of the applicable Interest Period is not
less than the amount that would have been available had no investments been made
pursuant thereto. Other than any interest earned on such investments, the
Prepayment Account shall not bear interest. Interest or profits, if any, on such
investments shall be deposited in the Prepayment Account and reinvested and
disbursed as specified above. If the maturity of the Loans has been accelerated
pursuant to Article VII, the Administrative Agent may, in its sole discretion,
apply all amounts on deposit in the Prepayment Account to satisfy any of the
Obligations in a manner consistent with the terms thereof. The Borrower hereby
grants to the Administrative Agent, for its benefit and the benefit of the
Fronting Banks and the Lenders, a security interest in the Prepayment Account to
secure the Obligations.
SECTION 2.14. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision of this Agreement, if after the date of
this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender or
any Fronting Bank of the principal of or interest on any Eurodollar Loan made by
such Lender or any Fees or other amounts payable hereunder (other than changes
in respect of taxes imposed on the overall net income of such Lender or Fronting
Bank by the jurisdiction in which such Lender or Fronting Bank has its principal
office or by any political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by any Lender or such Fronting Bank (except any such reserve
requirement which is reflected in the Adjusted LIBO Rate) or shall impose on
such Lender or such Fronting Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or
any Letter of Credit or participation therein, and the result of any of the
foregoing shall be to increase the cost to such Lender or such Fronting Bank of
making or maintaining any Eurodollar Loan or increase the cost to any Lender of
issuing or maintaining any Letter of Credit or purchasing or maintaining a
participation therein or to reduce the amount of any sum received or receivable
by such Lender or such Fronting Bank hereunder (whether of principal, interest
or otherwise) by an amount deemed by such Lender or such Fronting Bank to be
material, then the Borrower will pay to such Lender or such Fronting Bank, as
the case may be, upon demand such additional amount or amounts as will
compensate such Lender or Fronting Bank, as the case may be, for such additional
costs incurred or reduction suffered.
(b) If any Lender or Fronting Bank shall have determined that
the adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration
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<PAGE>
thereof, or compliance by any Lender (or any lending office of such Lender) or
any Fronting Bank or any Lender's or Fronting Bank's holding company (or other
person Controlling such Lender or Fronting Bank (a "holding company")) with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any Governmental Authority has or would have the effect of reducing
the rate of return on such Lender's or Fronting Bank's capital or on the capital
of such Lender's or Fronting Bank's holding company, if any, as a consequence of
this Agreement or the Loans made or participations in Letters of Credit
purchased by such Lender pursuant hereto or the Letters of Credit issued by such
Fronting Bank pursuant hereto to a level below that which such Lender or
Fronting Bank or such Lender's or Fronting Bank's holding company could have
achieved but for such applicability, adoption, change or compliance (taking into
consideration such Lender's or Fronting Bank's policies and the policies of such
Lender's or Fronting Bank's holding company with respect to capital adequacy) by
an amount deemed by such Lender or Fronting Bank to be material, then from time
to time the Borrower shall pay to such Lender or Fronting Bank, as the case may
be, such additional amount or amounts as will compensate such Lender or Fronting
Bank or such Lender's or Fronting Bank's holding company for any such reduction
suffered.
(c) A certificate of a Lender or Fronting Bank setting forth
the amount or amounts necessary to compensate such Lender or Fronting Bank or
its holding company, as applicable, as specified in paragraph (a) or (b) above
shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender or Fronting Bank the amount shown as
due on any such certificate delivered by it within 10 days after its receipt of
the same.
(d) Failure or delay on the part of any Lender or any Fronting
Bank to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital shall not constitute a
waiver of such Lender's or Fronting Bank's right to demand such compensation.
The protection of this Section 2.14 shall be available to each Lender and
Fronting Bank regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, agreement, guideline or other
change or condition that shall have occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any
other provision of this Agreement, if, after the date hereof, any change in any
law or regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to
such Lender only, be deemed a request for an ABR Loan (or a request to
continue an ABR Loan as such for an additional Interest Period or to
convert a Eurodollar Loan into an ABR Loan, as the case may be), unless
such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically con-
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verted to ABR Loans as of the effective date of such notice as provided
in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the
Borrower by any Lender shall be effective as to each Eurodollar Loan made by
such Lender, if lawful, on the last day of the Interest Period currently
applicable to such Eurodollar Loan; in all other cases such notice shall be
effective on the date of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each
Lender against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause (a) being called a "Breakage Event") or
(b) any default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and to the Administrative Agent and shall be
conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as required under
Section 2.15, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the Commitment
Fees and the L/C Participation Fees, each reduction of the Term Loan Commitments
or the Revolving Credit Commitments and each refinancing of any Borrowing with,
conversion of any Borrowing to or continuation of any Borrowing as a Borrowing
of any Type shall be allocated pro rata among the Lenders in accordance with
their respective applicable Commitments (or, if such Commitments shall have
expired or been terminated, in accordance with the respective principal amounts
of their applicable outstanding Loans).
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Borrower or any other Loan Party, or pursuant to a
secured claim under Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured claim, received
by such Lender under any applicable bankruptcy, insolvency or other similar law
or otherwise, or by any other means, obtain
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payment (voluntary or involuntary) in respect of any Loan or Loans or L/C
Disbursement as a result of which the unpaid principal portion of its Tranche A
Term Loans, Tranche B Term Loans, Revolving Loans or participations in L/C
Disbursements shall be proportionately less than the unpaid principal portion of
the Tranche A Term Loans, Tranche B Term Loans, Revolving Loans or
participations in L/C Disbursements, respectively, of any other Lender, it shall
be deemed simultaneously to have purchased from such other Lender at face value,
and shall promptly pay to such other Lender the purchase price for, a
participation in the Tranche A Term Loans, Tranche B Term Loans, Revolving Loans
or L/C Exposure, as the case may be of such other Lender, so that the aggregate
unpaid principal amount of the Tranche A Term Loans, Tranche B Term Loans,
Revolving Loans or L/C Exposure and participations in Tranche A Term Loans,
Tranche B Term Loans, Revolving Loans or L/C Exposure held by each Lender shall
be in the same proportion to the aggregate unpaid principal amount of all
Tranche A Term Loans, Tranche B Term Loans, Revolving Loans or L/C Exposure then
outstanding as the principal amount of its Tranche A Term Loans, Tranche B Term
Loans, Revolving Loans or L/C Exposure prior to such exercise of banker's lien,
setoff or counterclaim or other event was to the principal amount of all Tranche
A Term Loans, Tranche B Term Loans, Revolving Loans or L/C Exposure outstanding
prior to such exercise of banker's lien, setoff or counterclaim or other event;
provided, however, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower and STFI expressly consent to
the foregoing arrangements and agree that any Lender holding a participation in
a Term Loan or Revolving Loan or L/C Disbursement deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower and STFI
to such Lender by reason thereof as fully as if such Lender had made a Loan
directly to the Borrower in the amount of such participation.
SECTION 2.19. Payments. (a) The Borrower shall make each
payment (including principal of or interest on any Borrowing or any L/C
Disbursement or any Fees or other amounts) hereunder and under any other Loan
Document not later than 12:00 noon, New York City time, on the date when due in
immediately available dollars, without setoff, defense or counterclaim. Each
such payment (other than Fronting Bank Fees, which shall be paid directly to the
applicable Fronting Bank) shall be made to the Administrative Agent at its
offices at 12 East 49th Street, New York, New York. The Administrative Agent
shall distribute such funds promptly after receipt to the Lenders and the
Fronting Banks, as applicable.
(b) Whenever any payment (including principal of or interest
on any Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by or on behalf
of the Borrower or any Loan Party hereunder and under any other Loan Document
shall be made, in accordance with Section 2.19, free and clear of and without
deduction for any and all current or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding (i)
income taxes imposed on the net income of the Administrative Agent, any Lender
or any Fronting Bank (or any transferee or assignee thereof, including a
participation holder (any such entity a "Transferee")) and (ii) franchise taxes
imposed on the net income of the Administrative Agent, any
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Lender or any Fronting Bank (or Transferee), in each case by the jurisdiction
under the laws of which the Administrative Agent, such Lender or such Fronting
Bank (or Transferee) is organized or any political subdivision thereof (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively or individually, being called "Taxes"). If the
Borrower or any Loan Party shall be required to deduct any Taxes from or in
respect of any sum payable hereunder or under any other Loan Document to the
Administrative Agent, any Lender or any Fronting Bank (or any Transferee), (i)
the sum payable shall be increased by the amount (an "additional amount")
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.20) the
Administrative Agent, such Lender or such Fronting Bank (or Transferee), as the
case may be, shall receive an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower or such Loan Party shall make
such deductions and (iii) the Borrower or such Loan Party shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies (including, without limitation, mortgage recording taxes and
similar fees) that arise from any payment made hereunder or under any other Loan
Document or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Document ("Other Taxes").
(c) The Borrower will indemnify the Administrative Agent, each
Lender and each Fronting Bank (or Transferee) for the full amount of Taxes and
Other Taxes paid by the Administrative Agent, such Lender or such Fronting Bank
(or Transferee), as the case may be, and any liability (including penalties,
interest and expenses (including reasonable attorney's fees and expenses))
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability prepared by the
Administrative Agent, a Lender or a Fronting Bank (or Transferee), or the
Administrative Agent on its behalf, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be made
within 30 days after the date the Administrative Agent, any Lender or any
Fronting Bank (or Transferee), as the case may be, makes written demand
therefor.
(d) As soon as practicable after the date of any payment of
Taxes or Other Taxes by the Borrower or any other Loan Party to the relevant
Governmental Authority, the Borrower or such other Loan Party will deliver to
the Administrative Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing payment thereof.
(e) Each Lender and Fronting Bank (or Transferee) that is
organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a "Non- U.S. Lender") shall deliver
to the Borrower and the Administrative Agent two copies of either United States
Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S.
Lender or Fronting Bank claiming exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest", a Form W-8, or any subsequent versions thereof or
successors thereto (and, if such Non-U.S. Lender or Fronting Bank delivers a
Form W-8, a certificate representing that such Non-U.S. Lender or Fronting Bank
is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrower and is not a controlled foreign corporation related to the Borrower
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(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Non-U.S. Lender or Fronting Bank claiming complete
exemption from, or reduced rate of, U.S. Federal withholding tax on payments by
the Borrower under this Agreement and the other Loan Documents. Such forms shall
be delivered by each Non-U.S. Lender or Fronting Bank on or before the date it
becomes a party to this Agreement (or, in the case of a Transferee that is a
participation holder, on or before the date such participation holder becomes a
Transferee hereunder) and on or before the date, if any, such Non-U.S. Lender or
Fronting Bank changes its applicable lending office by designating a different
lending office (a "New Lending Office"). In addition, each Non-U.S. Lender or
Fronting Bank shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender or Fronting
Bank. Notwithstanding any other provision of this Section 2.20(e), a Non-U.S.
Lender or Fronting Bank shall not be required to deliver any form pursuant to
this Section 2.20(e) that such Non-U.S. Lender or Fronting Bank is not legally
able to deliver.
(f) The Borrower shall not be required to indemnify any
Non-U.S. Lender or Fronting Bank or to pay any additional amounts to any
Non-U.S. Lender or Fronting Bank, in respect of United States Federal
withholding tax pursuant to paragraph (a) or (c) above to the extent that (i)
the obligation to withhold amounts with respect to United States Federal
withholding tax existed on the date such Non-U.S. Lender or Fronting Bank became
a party to this Agreement (or, in the case of a Transferee that is a
participation holder, on the date such participation holder became a Transferee
hereunder) or, with respect to payments to a New Lending Office, the date such
Non-U.S. Lender or Fronting Bank designated such New Lending Office with respect
to a Loan or a Letter of Credit; provided, however, that this paragraph (f)
shall not apply (x) to any Transferee or New Lending Office that becomes a
Transferee or New Lending Office as a result of an assignment, participation,
transfer or designation made at the request of the Borrower and (y) to the
extent the indemnity payment or additional amounts any Transferee, or any Lender
or Fronting Bank (or Transferee), acting through a New Lending Office, would be
entitled to receive (without regard to this paragraph (f)) do not exceed the
indemnity payment or additional amounts that the person making the assignment,
participation or transfer to such Transferee, or Lender or Fronting Bank (or
Transferee) making the designation of such New Lending Office, would have been
entitled to receive in the absence of such assignment, participation, transfer
or designation or (ii) the obligation to pay such additional amounts would not
have arisen but for a failure by such Non-U.S. Lender or Fronting Bank to comply
with the provisions of paragraph (e) above.
(g) Nothing contained in this Section 2.20 shall require any
Lender or Fronting Bank (or any Transferee) or the Administrative Agent to make
available any of its tax returns (or any other information that it deems to be
confidential or proprietary).
SECTION 2.21. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate. (a) In the event (i) any Lender or Fronting
Bank delivers a certificate requesting compensation pursuant to Section 2.14,
(ii) any Lender or Fronting Bank delivers a notice described in Section 2.15 or
(iii) the Borrower is required to pay any additional amount to any Lender or
Fronting Bank or any Governmental Authority on account of any Lender or Fronting
Bank pursuant to Section 2.20, the Borrower may, at its sole expense and effort
(including with respect to the processing and recordation fee referred to in
Section 9.04(b)), upon notice to such Lender or Fronting Bank and the
Administrative Agent, require such Lender or Fronting Bank to transfer and
assign, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all of its interests, rights and obligations under
this Agreement to an assignee that shall assume such assigned
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obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (x) such assignment shall not conflict with any law,
rule or regulation or order of any court or other Governmental Authority having
jurisdiction, (y) the Borrower shall have received the prior written consent of
the Administrative Agent (and, if a Revolving Credit Commitment is being
assigned, of the Fronting Banks), which consents shall not unreasonably be
withheld, and (z) the Borrower or such assignee shall have paid to the affected
Lender or Fronting Bank in immediately available funds an amount equal to the
sum of the principal of and interest accrued to the date of such payment on the
outstanding Loans or L/C Disbursements of such Lender or Fronting Bank,
respectively, plus all Fees and other amounts accrued for the account of such
Lender or Fronting Bank hereunder (including any amounts under Section 2.14 and
Section 2.16).
(b) If (i) any Lender or Fronting Bank shall request
compensation under Section 2.14, (ii) any Lender or Fronting Bank delivers a
notice described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or Fronting Bank or any Governmental Authority
on account of any Lender or Fronting Bank, pursuant to Section 2.20, then such
Lender or Fronting Bank shall use reasonable efforts (which shall not require
such Lender or Fronting Bank to incur an unreimbursed loss or unreimbursed cost
or expense or otherwise take any action inconsistent with its internal policies
or legal or regulatory restrictions or suffer any disadvantage or burden deemed
by it to be significant) (x) to file any certificate or document reasonably
requested in writing by the Borrower or (y) to assign its rights and delegate
and transfer its obligations hereunder to another of its offices, branches or
affiliates, if such filing or assignment would reduce its claims for
compensation under Section 2.14 or enable it to withdraw its notice pursuant to
Section 2.15 or would reduce amounts payable pursuant to Section 2.20, as the
case may be, in the future. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender or Fronting Bank in connection with
any such filing or assignment, delegation and transfer.
SECTION 2.22. Letters of Credit. (a) General. The Borrower may
request the issuance of a Letter of Credit, in a form reasonably acceptable to
the Administrative Agent and the applicable Fronting Bank, appropriately
completed, for the account of the Borrower, at any time and from time to time
while the Revolving Credit Commitments remain in effect. This Section shall not
be construed to impose an obligation upon any Fronting Bank to issue any Letter
of Credit that is inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), the Borrower shall give written
or telecopy notice (or telephone notice promptly confirmed by written or
telecopy notice) to the applicable Fronting Bank and the Administrative Agent
(not less than 5 Business Days in advance of the requested date of issuance,
amendment, renewal or extension) requesting the issuance of a Letter of Credit,
or identifying the Letter of Credit to be amended, renewed or extended, the date
of issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) below), the amount of
such Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare such Letter of Credit.
Following receipt of such notice and prior to the issuance of the requested
Letter of Credit or the applicable amendment, renewal or extension, the
Administrative Agent shall, if the conditions set forth in the penultimate
sentence of this paragraph would not be satisfied, notify the Borrower and the
applicable Fronting Bank of the amount of the Aggregate Revolving Credit
Exposure after giving effect to (i) the issuance, amendment, renewal or
extension of such Letter of Credit, (ii) the issuance or expiration of any other
Letter of Credit that is to be issued or
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will expire prior to the requested date of issuance of such Letter of Credit and
(iii) the borrowing or repayment of any Revolving Credit Loans that (based upon
notices delivered to the Administrative Agent by the Borrower) are to be
borrowed or repaid prior to the requested date of issuance of such Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only
if, and upon issuance, amendment, renewal or extension of each Letter of Credit
the Borrower shall be deemed to represent and warrant that, after giving effect
to such issuance, amendment, renewal or extension (A) the L/C Exposure shall not
exceed $5,000,000 and (B) the Aggregate Revolving Credit Exposure shall not
exceed the Total Revolving Credit Commitment. Promptly upon the issuance,
amendment, renewal or extension of any Letter of Credit, the applicable Fronting
Bank shall notify the Administrative Agent thereof.
(c) Expiration Date. Each Letter of Credit shall expire at the
close of business on the earlier of the date one year after the date of the
issuance of such Letter of Credit and the date that is five Business Days prior
to the Revolving Credit Maturity Date, unless such Letter of Credit expires by
its terms on an earlier date.
(d) Participations. By the issuance of a Letter of Credit and
without any further action on the part of the applicable Fronting Bank or the
Revolving Credit Lenders, the applicable Fronting Bank hereby grants to each
Revolving Credit Lender, and each such Lender hereby acquires from the
applicable Fronting Bank, a participation in such Letter of Credit equal to such
Lender's Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit, effective upon the issuance of such Letter of
Credit. In consideration and in furtherance of the foregoing, each Revolving
Credit Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of the applicable Fronting Bank, such
Lender's Applicable Percentage of each L/C Disbursement made by such Fronting
Bank and not reimbursed by the Borrower (or, if applicable, another party
pursuant to its obligations under any other Loan Document) forthwith on the date
due as provided in Section 2.02(g). Each Revolving Credit Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
paragraph in respect of Letters of Credit is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If a Fronting Bank shall make any L/C
Disbursement in respect of a Letter of Credit, the Borrower shall pay to the
applicable Fronting Bank an amount equal to such L/C Disbursement not later than
two hours after the Borrower shall have received notice from such Fronting Bank
that payment of such draft will be made, or, if the Borrower shall have received
such notice later than 10:00 a.m., New York City time, on any Business Day, not
later than 10:00 a.m., New York City time, on the immediately following Business
Day.
(f) Obligations Absolute. The Borrower's obligations to
reimburse L/C Disbursements as provided in paragraph (e) above shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under any and all circumstances
whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
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(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other
right that the Borrower, any other party guaranteeing, or otherwise
obligated with, the Borrower, any Subsidiary or other Affiliate thereof
or any other person may at any time have against the beneficiary under
any Letter of Credit, any Fronting Bank, the Administrative Agent or
any Lender or any other person, whether in connection with this
Agreement, any other Loan Document or any other related or unrelated
agreement or transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by the applicable Fronting Bank under a Letter of
Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of
any Fronting Bank, any Lender, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is
expressly understood and agreed that the absolute and unconditional obligation
of the Borrower hereunder to reimburse L/C Disbursements will not be excused by
the gross negligence or wilful misconduct of any Fronting Bank. However, the
foregoing shall not be construed to excuse such Fronting Bank from liability to
the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
such Fronting Bank's gross negligence or wilful misconduct in determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof; it is understood that the Fronting Banks may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
and, in making any payment under any Letter of Credit (i) any Fronting Bank's
exclusive reliance on the documents presented to it under such Letter of Credit
as to any and all matters set forth therein, including reliance on the amount of
any draft presented under such Letter of Credit, whether or not the amount due
to the beneficiary thereunder equals the amount of such draft and whether or not
any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (ii) any noncompliance in any immaterial respect of the documents presented
under such Letter of Credit with the terms thereof shall, in each case, be
deemed not to constitute wilful misconduct or gross negligence of such Fronting
Bank.
(g) Disbursement Procedures. The applicable Fronting Bank
shall, promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. Such Fronting Bank
shall as promptly as possible give telephonic notification,
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confirmed by telecopy, to the Administrative Agent and the Borrower of such
demand for payment and whether such Fronting Bank has made or will make an L/C
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse such
Fronting Bank and the Revolving Credit Lenders with respect to any such L/C
Disbursement.
(h) Interim Interest. If a Fronting Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of such Fronting Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of the
date of payment by the Borrower or the date on which interest shall commence to
accrue thereon as provided in Section 2.02(g), at the rate per annum that would
apply to such amount if such amount were an ABR Loan.
(i) Resignation or Removal of a Fronting Bank. A Fronting Bank
may resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to (a) Fronting Bank, the Administrative Agent
and the Lenders. Subject to the next succeeding paragraph, upon the acceptance
of any appointment as (a) Fronting Bank hereunder by a Lender that shall agree
to serve as successor Fronting Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Fronting
Bank and the retiring Fronting Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, the Borrower shall pay all accrued and
unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any appointment
as a Fronting Bank hereunder by a successor Lender shall be evidenced by an
agreement entered into by such successor, in a form satisfactory to the Borrower
and the Administrative Agent, and, from and after the effective date of such
agreement, (i) such successor Lender shall have all the rights and obligations
of the previous Fronting Bank under this Agreement and the other Loan Documents
and (ii) references herein and in the other Loan Documents to the term "Fronting
Bank" shall be deemed to refer to such successor or to any previous Fronting
Bank, or to such successor and all previous Fronting Banks, as the context shall
require. After the resignation or removal of a Fronting Bank hereunder, the
retiring Fronting Bank shall remain a party hereto and shall continue to have
all the rights and obligations of a Fronting Bank under this Agreement and the
other Loan Documents with respect to Letters of Credit issued by it prior to
such resignation or removal, but shall not be required to issue additional
Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall
occur and be continuing, the Borrower shall, on the Business Day it receives
notice from the Administrative Agent or the Required Lenders (or, if the
maturity of the Loans has been accelerated, Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 50% of
the aggregate undrawn amount of all outstanding Letters of Credit) thereof and
of the amount to be deposited, deposit in an account with the Collateral Agent,
for the benefit of the Revolving Credit Lenders, an amount in cash equal to the
L/C Exposure as of such date. Such deposit shall be held by the Collateral Agent
as collateral for the payment and performance of the Obligations. The Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Permitted Investments, which investments shall be
made at the option and sole discretion of the Collateral Agent, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i) automatically be
applied by the Administrative Agent to reimburse the Fronting
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Banks for L/C Disbursements for which they have not been reimbursed, (ii) be
held for the satisfaction of the reimbursement obligations of the Borrower for
the L/C Exposure at such time and (iii) if the maturity of the Loans has been
accelerated (but subject to the consent of Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 50% of
the aggregate undrawn amount of all outstanding Letters of Credit), be applied
to satisfy the Obligations. If the Borrower is required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Events of Default have been cured
or waived.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Each of STFI and the Borrower represents and warrants to the
Administrative Agent, the Collateral Agent, the Fronting Banks and each of the
Lenders that:
SECTION 3.01. Organization; Powers. Each of STFI, the Borrower
and each of the Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (c) is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect, and (d) has the
corporate or partnership power, as the case may be, and authority to execute,
deliver and perform its obligations under each of the Loan Documents, the
Acquisition Documents and each other agreement or instrument contemplated hereby
to which it is or will be a party and, in the case of the Borrower, to borrow
hereunder.
SECTION 3.02. Authorization. The execution, delivery and
performance by each Loan Party of each of the Loan Documents and the Acquisition
Documents, the borrowings hereunder, the Acquisition Transactions and the other
transactions contemplated hereby (collectively, the "Transactions") (a) have
been duly authorized by all requisite corporate and, if required, stockholder
action and (b) will not (i) violate (A) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of RHI, FII, STFI, the Borrower or any
Subsidiary, (B) any order of any Governmental Authority or (C) any provision of
any indenture, agreement or other instrument to which RHI, FII, STFI, the
Borrower or any Subsidiary is a party or by which any of them or any of their
property is or may be bound, except for any such violations of agreements not
involving borrowed money or other extensions of credit that could not reasonably
be expected individually or in the aggregate to have any material effect on the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries, taken as a whole, or of STFI, or on or prior
to the Closing Date, of the Acquired Business, or on the rights or interests of
the Lenders, (ii) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under, or give rise to
any right to accelerate or to require the prepayment, repurchase or redemption
of any obligation under any such indenture, agreement or other instrument,
except, in the case of any agreement not involving borrowed money or any other
extension of credit, such conflicts as could not reasonably be expected
individually or in the aggregate to have any material effect on the business,
assets, operations, prospects or condition, financial or otherwise, of the
Borrower and the Subsidiaries, taken as a whole, or of STFI, or on or prior to
the Closing Date, of the Acquired Business, or on the rights or interests of the
Lenders, or (iii) result in or require the creation or imposition of any Lien
upon or with respect to any property or assets now
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owned by RHI or FII or now owned or hereafter acquired by STFI, the Borrower or
any Subsidiary (other than any Lien created under the Security Documents).
SECTION 3.03. Enforceability. This Agreement has been duly
executed and delivered by STFI and the Borrower and constitutes, and each other
Loan Document when executed and delivered by each Loan Party party thereto will
constitute, a legal, valid and binding obligation of such Loan Party enforceable
against such Loan Party in accordance with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings with
the United States Patent and Trademark Office and the United States Copyright
Office and (b) such as have been made or obtained and are in full force and
effect and a state regulatory approval in Indiana the failure to obtain which
could not result in a Material Adverse Effect.
SECTION 3.05. Financial Statements. (a) STFI has heretofore
furnished to the Lenders its consolidated balance sheets and statements of
operations, stockholders' equity and cash flows (a) as of and for the fiscal
years ended December 31, 1994 and December 31, 1993, audited by and accompanied
by the opinions of Rothstein, Kass & Company, P.C., and Arthur Andersen LLP,
independent public accountants, and (b) as of and for the fiscal quarters and
the portion of the fiscal years ended September 30, 1995 and September 30, 1994.
The Borrower has heretofore furnished to the Lenders the consolidated balance
sheets and statements of earnings, stockholders' equity and cash flows of FII
(a) as of and for the fiscal years ended June 30, 1995, and June 30, 1994,
audited and accompanied by the opinion of Arthur Andersen LLP, and (b) as of and
for the fiscal quarters and the portion of the fiscal years ended October 1,
1995, and October 2, 1994. Such financial statements present fairly the
financial condition and results of operations and cash flows of the STFI and FII
and their respective consolidated Subsidiaries as of such dates and for such
periods. Such balance sheets and the notes thereto disclose all material
liabilities, direct or contingent, of the STFI and FII and their respective
consolidated subsidiaries as of the dates thereof. Such financial statements
were prepared in accordance with GAAP applied on a consistent basis.
(b) The Borrower has heretofore delivered to the Lenders the
unaudited pro forma combined balance sheet of STFI dated as of September 30,
1995, giving effect to the Acquisition Transactions as if they had occurred on
such date. Such pro forma balance sheet has been prepared in good faith by the
Borrower, based on the assumptions used to prepare the pro forma financial
information contained in the Confidential Information Memorandum (which
assumptions are believed by STFI and the Borrower on the date hereof and on the
Closing Date to be reasonable), is based on the best information available to
the Borrower as of the date of delivery thereof, accurately reflects all
adjustments required to be made to give effect to the Acquisition Transactions
and presents fairly on a pro forma basis the estimated consolidated financial
position of STFI, the Borrower and their subsidiaries as of September 30, 1995,
assuming that the Acquisition Transactions had actually occurred at September
30, 1995.
(c) The Borrower has delivered to the Lenders complete and
correct copies of the Offering Circular and all amendments, modifications and
supplements thereto.
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SECTION 3.06. No Material Adverse Change. There has been no
material adverse change in the business, assets, operations, prospects,
condition, financial or otherwise, or material agreements of STFI, the Borrower
and the Subsidiaries, taken as a whole, since June 30, 1995 with respect to the
Acquired Business and since December 31, 1994 with respect to STFI,
respectively.
SECTION 3.07. Title to Properties; Possession Under Leases.
(a) Each of STFI, the Borrower and the Subsidiaries has good and marketable
title to, or valid leasehold interests in, all its material properties and
assets, except for minor defects in title that do not interfere with its ability
to conduct its business as currently conducted or to utilize such properties and
assets for their intended purposes. All such material properties and assets are
free and clear of Liens, other than Liens expressly permitted by Section 6.02.
(b) Each of STFI, the Borrower and the Subsidiaries has
complied with all obligations under all material leases to which it is a party
and all such leases are in full force and effect, except for noncompliance which
could not reasonably be expected individually or in the aggregate to have any
material effect on the business, assets, operations, prospects or condition,
financial or otherwise, of the Borrower and the Subsidiaries, taken as a whole,
or of STFI, or on or prior to the Closing Date, of the Acquired Business, or on
the rights or interests of the Lenders. Each of STFI, the Borrower and the
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the
Closing Date a list of all Subsidiaries and the percentage ownership interest of
the Borrower therein after giving effect to the Acquisition Transactions that
shall occur prior to or simultaneously with the initial Credit Event hereunder.
The shares of capital stock or other ownership interests so indicated on
Schedule 3.08 are fully paid and non-assessable and are owned by the Borrower,
directly or indirectly, free and clear of all Liens.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as
set forth on Schedule 3.09, there are not any actions, suits or proceedings at
law or in equity or by or before any Governmental Authority now pending or, to
the knowledge of STFI or the Borrower, threatened against or affecting STFI or
the Borrower or any Subsidiary or any business, property or rights of any such
person (i) that involve any Loan Document or the Transactions or (ii) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(b) None of STFI, the Borrower or any of the Subsidiaries or
any of their respective material properties or assets is in violation of, nor
will the continued operation of their material properties and assets as
currently conducted violate, any law, rule or regulation (including any zoning,
building, Environmental Law, ordinance, code or approval or any building
permits) or any restrictions of record or agreements affecting any of its real
property, or is in default with respect to any judgment, writ, injunction,
decree or order of any Governmental Authority, where such violation or default
could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. Agreements. (a) None of STFI, the Borrower or
any of the Subsidiaries is a party to any agreement or instrument or subject to
any corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect. No tenant service
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contract to which STFI, the Borrower or any Subsidiary is party contains any
restriction on assignment, and each such contract is under applicable law freely
assignable by STFI, the Borrower and the Subsidiaries, as applicable.
(b) None of STFI, the Borrower or any of the Subsidiaries is
in default in any manner under any provision of any indenture or other agreement
or instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) None of STFI,
the Borrower or any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of
Credit will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, for any purpose that entails a violation of, or that
is inconsistent with, the provisions of the Regulations of the Board, including
Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act. None of STFI, the Borrower or any Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrower will use the
proceeds of the Loans and will request the issuance of Letters of Credit only
for the purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of STFI, the Borrower and the
Subsidiaries has filed or caused to be filed all Federal, state, local and
foreign tax returns or materials required to have been filed by it and has paid
or caused to be paid all taxes due and payable by it and all assessments
received by it, except taxes that are being contested in good faith by
appropriate proceedings and for which STFI, the Borrower or such Subsidiary, as
applicable, shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP and such contest operates to suspend collection
of the contested obligation, tax, assessment or charge and enforcement of a
Lien.
SECTION 3.15. No Material Misstatements. None of the
Confidential Information Memorandum, the Offering Circular or any other
information, report, financial statement, exhibit or schedule furnished by or on
behalf of STFI or the Borrower to the Administrative Agent or any Lender in
connection with the negotiation of any Loan Document or included therein or
delivered pursuant thereto contained, contains or will contain any material
misstatement of fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not misleading; provided that to the
extent any such information, report, financial statement, exhibit or schedule
was based upon or constitutes a forecast or projection, each of STFI and the
Borrower represents only that it acted in good faith and utilized reasonable
assumptions and due care in the preparation of such information, report,
financial statement, exhibit or schedule.
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SECTION 3.16. Employee Benefit Plans. Each of the Borrower and
its ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in material liability of the Borrower or
any of its ERISA Affiliates. The present value of all benefit liabilities under
each Plan (based on those assumptions used to fund such Plan) did not, as of the
last annual valuation date applicable thereto, exceed by more than $500,000 the
fair market value of the assets of such Plan, and the present value of all
benefit liabilities of all underfunded Plans (based on those assumptions used to
fund each such Plan) did not, as of the last annual valuation dates applicable
thereto, exceed by more than $1,000,000 the fair market value of the assets of
all such underfunded Plans.
SECTION 3.17. Environmental Matters. Except as set forth in
Schedule 3.17:
(a) The properties owned or operated by STFI, the Borrower and
the Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or constituted a violation of,
or (ii) could give rise to liability under, Environmental Laws, which violations
and liabilities, in the aggregate, could result in a Material Adverse Effect.
(b) The Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and in the last ten years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such
noncompliance or failure to obtain any necessary permits, in the aggregate,
could not result in a Material Adverse Effect.
(c) There have been no Releases or threatened Releases at,
from, under or proximate to the Properties or otherwise in connection with the
operations of the Borrower or the Subsidiaries, which Releases or threatened
Releases, in the aggregate, could result in a Material Adverse Effect.
(d) None of STFI, the Borrower or any of the Subsidiaries has
received any notice of an Environmental Claim in connection with the Properties
or the operations of the Borrower or the Subsidiaries or with regard to any
person whose liabilities for environmental matters STFI, the Borrower or the
Subsidiaries has retained or assumed, in whole or in part, contractually, by
operation of law or otherwise, which, in the aggregate, could result in a
Material Adverse Effect, nor do STFI, the Borrower or the Subsidiaries have
reason to believe that any such notice will be received or is being threatened.
(e) None of STFI, the Borrower or the Subsidiaries retained or
assumed any liability, contractually, by operation of law or otherwise, with
respect to the generation, treatment, storage or disposal (including off-site
disposal) of Hazardous Materials, which transportation, generation, treatment,
storage or disposal, or retained or assumed liabilities, in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true,
complete and correct description of all insurance maintained by the Borrower, by
the Borrower for its Subsidiaries or by the Subsidiaries as of the date hereof
and the Closing Date. As of each such date, such insurance is in full force and
effect and all premiums have been duly paid. The Borrower and its Subsidiaries
have
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insurance in such amounts and covering such risks and liabilities as are in
accordance with normal industry practice.
SECTION 3.19. Security Documents. (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgors thereunder in such Collateral, in each case prior and
superior in right to any other person.
(b) The Security Agreement is effective to create in favor of
the Collateral Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral (as defined in the
Security Agreement) and, when financing statements in appropriate form are filed
in the offices specified on Schedule 6 to the Perfection Certificate, the
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in such
Collateral to the extent that a Lien may be perfected by filing such financing
statements (other than the Intellectual Property, as defined in the Security
Agreement), in each case prior and superior in right to any other person, other
than with respect to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in the Intellectual
Property (as defined in the Security Agreement), in each case prior and superior
in right to any other person (it being understood that subsequent recordings in
the United States Patent and Trademark Office and the United States Copyright
Office may be necessary to perfect a Lien on registered trademarks, trademark
applications and copyrights acquired by the grantors after the date hereof),
other than with respect to Liens expressly permitted by Section 6.02.
SECTION 3.20. Location of Real Property and Leased Premises.
(a) As of the Closing Date, after giving effect to the Acquisition Transactions,
the Borrower and the Subsidiaries do not own any real property.
(b) Schedule 3.20(b) lists completely and correctly as of the
Closing Date all real property leased by the Borrower and the Subsidiaries under
leases having annual rental payments in excess of $35,000 and the locations
thereof. The Borrower and the Subsidiaries have valid leases in all the real
property set forth on Schedule 3.20(b).
SECTION 3.21. Labor Matters. There are no strikes, lockouts or
slowdowns against the Acquired Business, STFI, the Borrower or any Subsidiary
pending or, to the knowledge of STFI or the Borrower, threatened, other than any
strikes which, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. The hours worked by and
payments made to employees of STFI, the Borrower and the Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters. All payments due
from STFI, the Borrower or any Subsidiary, or for which any claim may be made
against STFI, the Borrower or any Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of STFI, the Borrower or such Subsidiary. The
consummation of the Acquisition Transactions will not give rise to
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any right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which RHI, FII, STFI, the Borrower
or any Subsidiary is bound.
SECTION 3.22. Solvency. Immediately after the consummation of
the Transactions to occur on the Closing Date and immediately following the
making of each Loan made on the Closing Date and after giving effect to the
application of the proceeds of such Loans, (i) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (ii) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (iii) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Closing Date.
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans and of the
Fronting Banks to issue Letters of Credit hereunder are subject to the
satisfaction of the following conditions:
SECTION 4.01. All Credit Events. On the date of each
Borrowing, including each Borrowing in which Loans are refinanced with new Loans
as contemplated by Section 2.02(f) and on the date of each issuance of a Letter
of Credit (each such event being called a "Credit Event"):
(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.03 (or such notice shall have
been deemed given in accordance with Section 2.03) or, in the case of
the issuance of a Letter of Credit, the applicable Fronting Bank and
the Administrative Agent shall have received a notice requesting the
issuance of such Letter of Credit as required by Section 2.22(b).
(b) The representations and warranties set forth in each Loan
Document shall be true and correct in all material respects on and as
of the date of such Credit Event with the same effect as though made on
and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(c) The Borrower and each other Loan Party shall be in
compliance with all the terms and provisions set forth herein and in
each other Loan Document on its part to be observed or performed, and
at the time of and immediately after such Credit Event, no Event of
Default or Default shall have occurred and be continuing.
Each Credit Event shall be deemed to constitute a representation and warranty by
the Borrower on the date of such Credit Event as to the matters specified in
paragraphs (b) and (c) of this Section 4.01.
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SECTION 4.02. First Credit Event. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of
itself, the Lenders and the Fronting Banks, a favorable written opinion
of (i) Gadsby & Hannah, counsel for STFI and the Borrower,
substantially to the effect set forth in Exhibit I-1 and (ii) each
other opinion listed on Schedule 4.02(a), substantially to the effect
set forth in Exhibit I-2, in each case (A) dated the Closing Date, (B)
addressed to the Administrative Agent, the Lenders and the Fronting
Banks, and (C) covering such other matters relating to the Loan
Documents and the Transactions as the Administrative Agent shall
reasonably request, and STFI and the Borrower hereby request such
counsel to deliver such opinions.
(b) All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Loan
Documents shall be satisfactory to the Lenders, the Fronting Banks and
Cravath, Swaine & Moore, counsel for the Administrative Agent.
(c) The Administrative Agent shall have received (i) a copy of
the certificate or articles of incorporation, including all amendments
thereto, of each Loan Party, certified as of a recent date by the
Secretary of State of the state of its organization, and a certificate
as to the good standing of each Loan Party as of a recent date, from
such Secretary of State; (ii) a certificate of the Secretary or
Assistant Secretary of each Loan Party dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of the
by-laws of such Loan Party as in effect on the Closing Date and at all
times since a date prior to the date of the resolutions described in
clause (B) below, (B) that attached thereto is a true and complete copy
of resolutions duly adopted by the Board of Directors of such Loan
Party authorizing the execution, delivery and performance of the Loan
Documents to which such person is a party and, in the case of the
Borrower, the borrowings hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect,
(C) that the certificate or articles of incorporation of such Loan
Party have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen signature
of each officer executing any Loan Document or any other document
delivered in connection herewith on behalf of such Loan Party; (iii) a
certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (ii) above; and (iv) such other documents as
the Lenders, the Fronting Banks or Cravath, Swaine & Moore, counsel for
the Administrative Agent, may reasonably request.
(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Financial Officer
of the Borrower, confirming compliance with the conditions precedent
set forth in paragraphs (b) and (c) of Section 4.01.
(e) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document.
(f) The Pledge Agreement shall have been duly executed by the
parties thereto and delivered to the Collateral Agent and shall be in
full force and effect, and all the outstanding Capital Stock of the
Borrower and the Subsidiaries other than ATG, ANSI and their
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subsidiaries shall have been duly and validly pledged thereunder to the
Collateral Agent for the ratable benefit of the Secured Parties and
certificates representing such shares, accompanied by instruments of
transfer and stock powers endorsed in blank, shall be in the actual
possession of the Collateral Agent.
(g) The Security Agreement shall have been duly executed by
the Loan Parties party thereto and shall have been delivered to the
Collateral Agent and shall be in full force and effect on such date and
each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to
create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid, legal and perfected first-priority security interest
in and lien on the Collateral described in such agreement (subject to
any Lien expressly permitted by Section 6.02) shall have been delivered
to the Collateral Agent.
(h) The Collateral Agent shall have received the results of a
search of the Uniform Commercial Code filings (or equivalent filings)
made with respect to the Loan Parties in the states (or other
jurisdictions) in which the chief executive office of each such person
is located and the other jurisdictions in which Uniform Commercial Code
filings (or equivalent filings) are to be made pursuant to the
preceding paragraph, together with copies of the financing statements
(or similar documents) disclosed by such search, and accompanied by
evidence satisfactory to the Collateral Agent that the Liens indicated
in any such financing statement (or similar document) would be
permitted under Section 6.02 or have been released, except as
contemplated by Section 6.09(k). The Administrative Agent shall have
received duly executed documentation evidencing the termination of (i)
all the security interests granted in the Pledged Stock (as defined in
the Pledge Agreement) and in any other Collateral in connection with
any of the Specified Liabilities or any existing Indebtedness of STFI
and (ii) the credit facility of STFI with State Street Bank and Trust
Company.
(i) The Collateral Agent shall have received a Perfection
Certificate with respect to the Loan Parties dated the Closing Date and
duly executed by a Responsible Officer of the Borrower.
(j) Each of the Parent Guarantee Agreement and the Subsidiary
Guarantee Agreement shall have been duly executed by the parties
thereto, respectively, shall have been delivered to the Collateral
Agent and shall be in full force and effect.
(k) The Indemnity, Subrogation and Contribution Agreement
shall have been duly executed by the parties thereto, shall have been
delivered to the Collateral Agent and shall be in full force and
effect.
(l) The Administrative Agent shall have received a copy of, or
a certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents,
each of which policies shall be endorsed or otherwise amended to
include a "standard" or "New York" lender's loss payable endorsement
and to name the Collateral Agent as additional insured, in form and
substance satisfactory to the Administrative Agent.
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(m) All requisite Governmental Authorities and material third
parties shall have approved or consented to the Acquisition
Transactions and the other Transactions to the extent required other
than a state regulatory approval required in Indiana the failure to
obtain which could not result in a Material Adverse Effect, all
applicable appeal periods shall have expired and there shall be no
governmental or judicial action, actual or threatened, that has or
could have a reasonable likelihood of restraining, preventing or
imposing burdensome conditions on the Acquisition Transactions or the
consummation of the other Transactions.
(n) The FII Reorganization, the Merger, the Section 351
Exchange and the other Acquisition Transactions shall have been
consummated prior to or simultaneously with the initial Credit Event
hereunder in accordance with applicable law, the Merger Agreement and
the Exchange Agreement (including the cancellation of preferred stock
contemplated thereby immediately upon the issuance of the Cumulative
Convertible Preferred Stock and the Special Preferred Stock) and as
contemplated by the Offering Circular without any changes not approved
by the Lenders, and otherwise on terms satisfactory to the Lenders.
Each Acquisition Document shall be in form and substance satisfactory
to the Lenders and the Lenders shall be satisfied with all arrangements
for the transfer of employees and services from, or the provision of
services by, STFI to the Subsidiaries.
(o) The Amendments to Charter and Bylaws shall have become
effective prior to or simultaneously with the initial Credit Event
hereunder, and prior to or simultaneously with the initial Credit Event
hereunder STFI shall have issued to RHI (i) the Cumulative Convertible
Preferred Stock with a liquidation preference not in excess of
$25,000,000, (ii) the Special Preferred Stock with an initial
liquidation preference not in excess of $20,000,000 and (iii) not more
than 6,000,000 shares of common stock of STFI, in each case on terms
satisfactory in all respects to the Lenders.
(p) The Discount Notes shall have been issued prior to or
simultaneously with the initial Credit Event hereunder and shall have
an interest rate not in excess of 14% and a maturity not sooner than
the tenth anniversary of the Closing Date and otherwise be on the terms
set forth in the Discount Note Indenture, and the Borrower shall have
received gross proceeds of not less than $115,000,000 therefrom.
(q) The proceeds of the Term Loans and, to the extent
thereafter required, the net proceeds of Discount Notes shall be
applied simultaneously with the initial Credit Event hereunder to
discharge in full all the Specified Liabilities and, immediately after
giving effect to the Acquisition Transactions (i) STFI, the Borrower
and the Subsidiaries shall have outstanding no Indebtedness other than
the Loans, the Discount Notes and the Indebtedness of STFI for borrowed
money as set forth on Schedule 6.01(a) in an aggregate principal amount
not in excess of $4,000,000, (ii) STFI shall not have outstanding any
equity interests other than common stock of STFI existing on the date
hereof and the Capital Stock of STFI issued to RHI in the Acquisition
Transactions, as contemplated by paragraph (o) above, and (iii) the
Borrower shall not have outstanding any equity interests other than
common stock owned by STFI and pledged to secure the Obligations.
(r) The Tender Offer shall have been consummated prior to or
simultaneously with the initial Credit Event hereunder and all the FII
Senior Notes shall have been tendered and repaid in accordance with the
terms thereof.
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(s) The Lenders shall have received a satisfactory pro forma
consolidated balance sheet of STFI as of September 30, 1995, together
with a certificate of a Financial Officer of the Borrower to the effect
that such pro forma balance sheet fairly presents the pro forma
financial position of STFI, the Borrower, the Subsidiaries and the
Acquired Business in accordance with GAAP, and the Lenders shall be
satisfied that such balance sheet and the Acquisition Transactions and
the financing arrangements contemplated hereby are consistent with the
sources and uses shown in the Confidential Information Memorandum and
are not materially inconsistent with the information or projections and
the financial model contained in the Confidential Information
Memorandum.
(t) The Lenders shall have received a solvency letter from
Corporate Valuation Advisors Inc. in form and substance satisfactory to
the Lenders, as to the solvency of STFI, the Borrower, the Subsidiaries
and the Acquired Business on a consolidated basis after giving effect
to the Acquisition Transactions and the consummation of the other
Transactions contemplated hereby.
ARTICLE V. AFFIRMATIVE COVENANTS
Each of STFI and the Borrower covenants and agrees with each
Lender that so long as this Agreement shall remain in effect and until the
Commitments have been terminated and the principal of and interest on each Loan,
all Fees and all other expenses or amounts payable under any Loan Document shall
have been paid in full and all Letters of Credit have been canceled or have
expired and all amounts drawn thereunder have been reimbursed in full, unless
the Required Lenders shall otherwise consent in writing, each of STFI and the
Borrower will, and will cause each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence, except as otherwise expressly permitted under
Section 6.05.
(b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names material to the conduct of its business; maintain and operate such
business in substantially the manner in which it is presently conducted and
operated; comply in all material respects with all applicable laws, rules,
regulations (including any zoning, building, Environmental and Safety Law,
ordinance, code or approval or any building permits or any restrictions of
record or agreements affecting any of its real property) and decrees and orders
of any Governmental Authority, whether now in effect or hereafter enacted; and
at all times maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and condition and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
SECTION 5.02. Insurance. Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers;
maintain such other insurance, to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is customary with
companies in the same or similar businesses operating in the same or similar
locations, including
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public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and
other obligations promptly and in accordance with their terms and pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise that, if unpaid,
might give rise to a Lien upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required with respect to
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the Borrower shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP and such contest operates to suspend collection
of the contested obligation, tax, assessment or charge and enforcement of a
Lien.
SECTION 5.04. Financial Statements, Reports, etc. Furnish to
the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year,
consolidated and consolidating balance sheets and related statements of
operations, stockholders' equity and cash flows showing the financial
condition of STFI, the Borrower and the Subsidiaries as of the close of
such fiscal year and the results of operations of STFI, the Borrower
and the Subsidiaries during such year, all audited by a big six
accounting firm or other independent public accountants of recognized
national standing acceptable to the Required Lenders and accompanied by
an opinion of such accountants (which shall not be qualified in any
material respect) to the effect that such consolidated financial
statements fairly present the financial condition and results of
operations of STFI, the Borrower and the Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, consolidated and consolidating
balance sheets and related statements of operations, stockholders'
equity and cash flows showing the financial condition STFI, the
Borrower and the Subsidiaries as of the close of such fiscal quarter
and the results of operations of STFI, the Borrower and the
Subsidiaries during such fiscal quarter and the then elapsed portion of
the fiscal year, all certified by a Financial Officer of STFI or the
Borrower as fairly presenting the financial condition and results of
operations of STFI, the Borrower and the Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments;
(c) (i) concurrently with any delivery of financial statements
under paragraph (a) or (b) above (but no later than the date on which
such statements are due), a certificate of the accounting firm or
Financial Officer opining on or certifying such statements (which
certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal
interpretations) (A) certifying that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto and (B) setting
forth computations in reasonable detail satisfactory to the
Administrative
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Agent demonstrating compliance with the covenants contained in Sections
6.11, 6.12, 6.13, 6.14 and 6.15 and (ii) within 45 days after the end
of each fiscal year, a certificate of a Financial Officer certifying as
to the matters set forth in clauses (A) and (B) above;
(d) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by STFI, the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of such Commission, or with any national
securities exchange, or distributed to its shareholders, as the case
may be;
(e) concurrently with the delivery of financial statements
under paragraph (a) or (b) above, a balance sheet and related
statements of operations, stockholders' equity and cash flows for each
Unrestricted Subsidiary and each STFI Unrestricted Subsidiary for the
applicable period;
(f) within 45 days after the end of each month, a certificate
of a Financial Officer of the Borrower reporting revenues and EBITDA
for such month and containing statements of operations and cash flows
for such month and a comparison of actual results with planned results
for such month;
(g) upon the earlier of (i) 90 days after the end of each
fiscal year of the Borrower and (ii) the date on which the financial
statements in respect of such period are delivered pursuant to
paragraph (a) above, a certificate of a Financial Officer of the
Borrower (A) setting forth, in reasonable detail, an operating and
capital expenditure budget for the succeeding fiscal year and (B)
setting forth the insurance policies of STFI, the Borrower and the
Subsidiaries and evidencing compliance with Section 5.02 and the
applicable provisions of the Security Documents;
(h) promptly following the creation or acquisition of any
Subsidiary, a certificate from a Responsible Officer of STFI or the
Borrower, identifying such new Subsidiary and the ownership interest of
the Borrower or any Subsidiary therein;
(i) promptly, a copy of all reports submitted in connection
with any material interim or special audit made by independent
accountants of the books of STFI, the Borrower or any Subsidiary; and
(j) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
STFI, the Borrower and the Subsidiaries, or compliance with the terms
of any Loan Document, or such consolidating financial statements, or
such financial statements showing the results of operations of any
Unrestricted Subsidiary or any STFI Unrestricted Subsidiary, as in each
case the Administrative Agent or any Lender may reasonably request.
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SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent, the Fronting Banks and each Lender prompt written notice
of the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to
be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Affiliate thereof
that could reasonably be expected to result in a Material Adverse
Effect;
(c) the loss, suspension or other material impairment of any
material FCC license or any other material approval, certification or
authorization of any Governmental Authority; and
(d) any development that has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect.
SECTION 5.06. Employee Benefits. (a) Comply in all material
respects with the applicable provisions of ERISA and the Code and (b) furnish to
the Administrative Agent (i) as soon as possible after, and in any event within
10 days after any Responsible Officer of the Borrower or any ERISA Affiliate
knows or has reason to know that, any ERISA Event has occurred that, alone or
together with any other ERISA Event could reasonably be expected to result in
liability of the Borrower in an aggregate amount exceeding $1,000,000 or
requiring payments exceeding $500,000 in any year, a statement of a Financial
Officer of the Borrower setting forth details as to such ERISA Event and the
action, if any, that the Borrower proposes to take with respect thereto.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made of
all dealings and transactions in relation to its business and activities. Each
Loan Party will, and will cause each of its subsidiaries (except, other than
during the continuance of an Event of Default, in the case of the Borrower, the
Unrestricted Subsidiaries and, in the case of STFI, the STFI Unrestricted
Subsidiaries) to, permit any representatives designated by the Administrative
Agent or any Lender to visit and inspect the financial records and the
properties of STFI, the Borrower or any Subsidiary at reasonable times and as
often as reasonably requested and to make extracts from and copies of such
financial records, and permit any representatives designated by the
Administrative Agent or any Lender to discuss the affairs, finances and
condition of STFI, the Borrower or any Subsidiary with the officers thereof and
independent accountants therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans
and request the issuance of Letters of Credit only for the purposes set forth in
the preamble to this Agreement.
SECTION 5.09. Compliance with Environmental Laws. Comply, and
cause all lessees and other persons occupying its Properties to comply, in all
material respects with all Environmental Laws and Environmental Permits
applicable to their respective operations and Properties; obtain and renew all
material Environmental Permits necessary for their respective operations and
Properties; conduct any Remedial Action in accordance with Environmental Laws;
and provide the Administrative Agent with prompt written notice of any
Environmental Claim that could reasonably be expected to result in material
liability.
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SECTION 5.10. Preparation of Environmental Reports. If a
Default caused by reason of a breach of Section 3.17 or 5.09 shall have occurred
and be continuing, at the request of the Required Lenders through the
Administrative Agent, provide to the Lenders within 45 days after such request,
at the expense of the Borrower, an environmental site assessment report for the
Properties which are the subject of such default prepared by an environmental
consulting firm acceptable to the Administrative Agent and indicating the
presence or absence of Hazardous Materials and the estimated cost of any
compliance or Remedial Action in connection with such Properties.
SECTION 5.11. Further Assurances. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust) that may be required under applicable
law, or that the Required Lenders, the Administrative Agent or the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents. In addition, from time to
time, STFI, the Borrower and the Subsidiaries will, at their cost and expense,
on or promptly (but in any event within 10 Business Days) following the date of
acquisition or formation by STFI, the Borrower or any Subsidiary of any new
subsidiary (subject to the receipt of required consents from Governmental
Authorities and, in the case of Unrestricted Subsidiaries and STFI Unrestricted
Subsidiaries, consents of other third parties), promptly secure the Obligations
by causing the following to occur: (i) promptly upon creating or acquiring any
additional subsidiary, the Capital Stock of such subsidiary will (unless such
subsidiary is a subsidiary of an Unrestricted Subsidiary or a subsidiary of an
STFI Unrestricted Subsidiary) be pledged pursuant to the Pledge Agreement and
(ii) such subsidiary will (unless such subsidiary is an Unrestricted Subsidiary
or an STFI Unrestricted Subsidiary) become a party to the Security Agreement,
the Pledge Agreement (if such subsidiary owns Capital Stock of any subsidiary),
the Subsidiary Guarantee Agreement and the Indemnity, Subrogation and
Contribution Agreement as contemplated under each such agreement and will, if
such subsidiary owns any material real property, enter into and deliver to the
Collateral Agent a first mortgage in respect of such property in form reasonably
satisfactory to the Collateral Agent and pay all recording taxes, title
insurance costs, survey costs and other costs in connection with such mortgage.
STFI and the Borrower further agree that, upon receipt of notice from the
Administrative Agent requesting a first mortgage in respect of any real property
or leasehold interest of STFI, the Borrower or any Subsidiary, STFI and the
Borrower will, and will cause the Subsidiaries to, at their sole cost, promptly
deliver to the Collateral Agent each such mortgage in a form reasonably
satisfactory to the Collateral Agent and pay all recording taxes, title
insurance costs, survey costs and other costs in connection with each such
mortgage. All such security interests and Liens will be created under the
Security Documents and other instruments and documents in form and substance
reasonably satisfactory to the Collateral Agent, and STFI, the Borrower and the
Subsidiaries shall deliver or cause to be delivered to the Administrative Agent
all such instruments and documents (including legal opinions and lien searches)
as the Required Lenders shall reasonably request to evidence compliance with
this Section 5.11. STFI and the Borrower agree to provide, and to cause each
Subsidiary to provide, such evidence as the Collateral Agent shall reasonably
request as to the perfection and priority status of each such security interest
and Lien. STFI and Borrower will, and will cause their Subsidiaries to, use
their best efforts to take all actions and obtain all approvals required to
permit the pledge under the Pledge Agreement of all the equity interests in ATG,
ANSI and their subsidiaries and to permit ATG, ANSI and their subsidiaries to
become Guarantors, Grantors under the Security Agreement and Pledgors under the
Pledge Agreement, and immediately upon the taking of all required action and
receipt of all required approvals in respect of any of them, cause the equity
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interests in such person to be pledged under the Pledge Agreement and cause such
person to become a Guarantor, a Grantor under the Security Agreement and a
Pledgor under the Pledge Agreement.
SECTION 5.12. Fiscal Year. Cause its fiscal year to end on
December 31.
SECTION 5.13. Interest Rate Protection Agreements. In the case
of the Borrower, as promptly as practicable and in any event within 90 days
after the Closing Date, enter into, and thereafter maintain in effect, one or
more Interest Rate Protection Agreements with any of the Lenders or other
financial institutions reasonably satisfactory to the Administrative Agent, the
effect of which shall be to limit for the 3-year period commencing on the date
such Interest Rate Protection Agreements are entered into the interest payable
in connection with Indebtedness having an aggregate outstanding principal amount
equal to not less than 50% of the aggregate principal amount of the Term
Borrowings outstanding at the time such Interest Rate Protection Agreements are
entered into to a maximum rate and on terms and conditions otherwise reasonably
acceptable, taking into account then current market conditions, to the
Administrative Agent, and deliver evidence of the execution and delivery thereof
to the Administrative Agent.
SECTION 5.14. Corporate Identity. Do or cause to be done (or
refrain from doing or causing to be done, as the case may be) all things
necessary to ensure that the separate legal identity of the Borrower will at all
times be respected and that neither the Borrower nor any of the Subsidiaries
will be liable for any obligations, contractual or otherwise, of STFI or any
other entity in which STFI owns any equity interest, except as permitted under
Section 6.06 or Section 6.07 or pursuant to any Loan Document. Without limiting
the foregoing, the Borrower and STFI will (a) observe, and cause the
Subsidiaries to observe, all requirements, procedures and formalities necessary
or advisable in order that the Borrower will for all purposes be considered a
validly existing corporation separate and distinct from STFI and its other
subsidiaries, (b) not permit any commingling of the assets of STFI or any of its
other subsidiaries with assets of the Borrower or any Subsidiary which would
prevent the assets of STFI or any of its subsidiaries from being readily
distinguished from the assets of the Borrower and the Subsidiaries and (c) take
reasonable and customary actions to ensure that creditors of STFI and its other
subsidiaries are aware that each such person is an entity separate and distinct
from the Borrower and the Subsidiaries.
ARTICLE VI. NEGATIVE COVENANTS
Each of STFI and the Borrower covenants and agrees with each
Lender that, so long as this Agreement shall remain in effect and until the
Commitments have been terminated and the principal of and interest on each Loan,
all Fees and all other expenses or amounts payable under any Loan Document have
been paid in full and all Letters of Credit have been cancelled or have expired
and all amounts drawn thereunder have been reimbursed in full, unless the
Required Lenders shall otherwise consent in writing, neither STFI nor the
Borrower will, nor will they cause or permit any of the Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date
hereof and set forth in Schedule 6.01(a);
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(b) Indebtedness created hereunder;
(c) in the case of the Borrower, Discount Notes and Discount
Exchange Notes having an aggregate Accreted Value at any time not in
excess of the Discount Note Value at such time;
(d) in the case of the Guarantors, the guarantees under the
Guarantee Agreements and the Discount Note Guarantees;
(e) in the case of the Borrower, Indebtedness under the
Interest Rate Protection Agreements entered into in accordance with
Section 5.13;
(f) Capital Lease Obligations, mortgage financings and
purchase money Indebtedness in an aggregate principal amount
outstanding at any time not in excess of $2,000,000 incurred by the
Borrower or any Subsidiary prior to or within 270 days after a Capital
Expenditure in order to finance such Capital Expenditure and secured
only by the assets that are the subject of such Capital Expenditure,
and extensions, renewals and refinancings thereof if the interest rate
with respect thereto and other terms thereof are no less favorable to
the Borrower or such Subsidiary than the Indebtedness being refinanced
and the average life to maturity thereof is greater than or equal to
that of the Indebtedness being refinanced; provided, however, that such
refinancing Indebtedness shall not be (i) Indebtedness of an obligor
that was not an obligor with respect to the Indebtedness being
extended, renewed or refinanced, (ii) in a principal amount that
exceeds the Indebtedness being renewed, extended or refinanced or (iii)
incurred, created or assumed if any Default or Event of Default has
occurred and is continuing or would result therefrom;
(g)Indebtedness of the Borrower or any wholly owned Subsidiary
to any Subsidiary or the Borrower; and
(h) all premium (if any), interest, fees, expenses,
indemnities, charges and additional or contingent interest on
obligations described in clauses (a) through (g) above.
SECTION 6.02. Liens. Create, incur, assume or permit to exist
any Lien on any property or assets (including stock or other securities of any
person, including any Subsidiary) now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, or assign or
transfer any income or revenues or rights in respect thereof, except:
(a) Liens on property or assets of the Borrower and its
Subsidiaries existing on the date hereof and set forth in Schedule
6.02; provided that such Liens shall secure only those obligations
which they secure on the date hereof;
(b) any Lien created under the Loan Documents;
(c) Liens consisting of interests of lessors under capital
leases permitted by Section 6.01(f);
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(d) Liens for taxes not yet due or which are being contested
in compliance with Section 5.03;
(e) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations that are not due and payable or that
are being contested in compliance with Section 5.03;
(f) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(g) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital
Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(h) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and do not materially detract from the
value of the property subject thereto or interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries; and
(i) other Liens with respect to property or assets not
constituting collateral for the Obligations with an aggregate fair
market value of not more than $2,000,000 at any time.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred.
SECTION 6.04. Investments, Loans and Advances. Purchase, hold
or acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
(a) investments (i) by the Borrower existing on the date
hereof in the Capital Stock of the Subsidiaries and STC, or (ii) by
STFI in the Capital Stock of the Borrower;
(b) Permitted Investments and investments that were Permitted
Investments when made;
(c) in the case of the Borrower, Interest Rate Protection
Agreements entered into in accordance with Section 5.13;
(d)intercompany loans permitted to be incurred as Indebtedness
under Section 6.01(g);
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(e) (i) loans and advances to employees of STFI, the Borrower
or the Subsidiaries not to exceed $1,000,000 in the aggregate at any
time outstanding and (ii) advances of payroll payments and expenses to
employees in the ordinary course of business;
(f) (i) accounts receivable arising and trade credit granted
in the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof from financially troubled
account debtors to the extent reasonably necessary in order to prevent
or limit loss and (ii) prepayments and other credits to suppliers made
in the ordinary course of business consistent with the past practices
of the Acquired Business, STFI, the Borrower and the Subsidiaries;
(g) investments, other than investments listed in paragraphs
(a) through (f) of this Section, existing on the Closing Date and set
forth on Schedule 6.04;
(h) ownership interests in Unrestricted Subsidiaries, provided
that the capitalization requirement set forth in clause (vii) of the
definition of "Unrestricted Subsidiary" shall at all times be
satisfied;
(i) in the case of STFI, ownership interests in STFI
Unrestricted Subsidiaries, provided that the capitalization requirement
set forth in clause (g) of the definition of "STFI Unrestricted
Subsidiary" shall at all times be satisfied;
(j) investments in any fiscal year in Permitted Business
Acquisitions funded solely with funds described in clause (g)(iii) of
the definition of "STFI Unrestricted Subsidiary" and available in such
fiscal year as set forth in such clause (iii), subject to the
limitation set forth in the parenthetical set forth at the end of such
clause (iii); and
(k) other investments in Permitted Business Acquisitions,
provided that the aggregate amount of consideration (whether cash or
property, as valued at the time each such investment is made) for all
investments made in Permitted Business Acquisitions under this
paragraph (k) shall not exceed $3,500,000 for any fiscal year (of which
not more than $2,500,000 may be in the form of cash) and shall not
exceed $12,500,000 for the period following the Closing Date.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions. Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any substantial part of its assets (whether now owned or hereafter acquired),
other than assets of the Borrower constituting an Unrestricted Subsidiary, or
any Capital Stock of any Subsidiary or purchase, lease or otherwise acquire (in
one transaction or a series of transactions) all or any substantial part of the
assets of any other person, except that (a) the Borrower and any Subsidiary may
purchase and sell inventory in the ordinary course of business, (b) if at the
time thereof and immediately after giving effect thereto no Event of Default or
Default shall have occurred and be continuing any wholly owned Subsidiary may
merge into or consolidate with any other wholly owned Subsidiary in a
transaction in which the surviving entity is a wholly owned Subsidiary and no
person other than the Borrower or a wholly owned Subsidiary receives any
consideration, (c) the Borrower and the Subsidiaries may acquire Permitted
Business Acquisitions and other investments permitted by Section 6.04 and (d)
the Subsidiaries may sell, lease or otherwise dispose of property for cash
consideration equal to the fair market value of the asset sold, leased or
otherwise disposed of, provided that (i) the Net Proceeds
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thereof are applied in accordance with Section 2.13(b), (ii) the aggregate
consideration received in respect of all transactions under this clause (d)
shall not exceed $1,000,000 in any fiscal year and (iii) no sale may be made of
the Capital Stock (or any warrant, right, or option to purchase any and Capital
Stock or any security convertible into or exchangeable for any such Capital
Stock) of any Subsidiary.
SECTION 6.06. Dividends and Distributions; Restrictions on
Ability of Subsidiaries to Pay Dividends. (a) Declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination thereof,
with respect to any shares of its Capital Stock or directly or indirectly
redeem, purchase, retire or otherwise acquire for value (or permit any
Subsidiary to purchase or acquire) any shares of any class of its Capital Stock
or set aside any amount for any such purpose; provided, however, that (i) any
Subsidiary may declare and pay dividends or make other distributions to the
Borrower or to any wholly owned Subsidiary, and (ii) so long as immediately
after giving effect to such payment or distribution, no Event of Default or
Default shall have occurred and be continuing and the Borrower shall be in
compliance, on a pro forma basis, with the covenants contained in Sections 6.11,
6.12, 6.13, 6.14 and 6.15 recomputed as of the last day of the most recently
ended fiscal quarter of the Borrower as if such payment or distribution were
made on the first day of each relevant period for testing compliance, the
Borrower may declare and pay dividends or make other distributions to STFI (A)
in an aggregate amount not in excess of $1,500,000 in any fiscal year, to be
used by STFI to pay dividends on the Cumulative Convertible Preferred Stock, (B)
to fund the payment by STFI of tax liabilities, legal, accounting and other
professional fees and expenses, compensation, fees and expenses of the board of
directors of STFI and fees and expenses associated with registration statements
filed with the Securities and Exchange Commission and subsequent ongoing public
reporting requirements, in each case to the extent actually incurred by STFI in
connection with the business of its ownership of the Capital Stock of the
Borrower, (C) in an aggregate amount not in excess of $400,000 in any fiscal
year, to be used by STFI to pay dividends on its Series C Preferred Stock and on
its Series D Preferred Stock, (D) solely to the extent a portion of Excess Cash
Flow for the most recently ended fiscal year not subject to the mandatory
prepayments in accordance with Section 2.13(c) is available for such purpose, to
make mandatory redemptions required under Section 5(c) of the Certificate of
Designation in respect of the Special Preferred Stock and (E) solely to the
extent funds described in clauses (A) or (B) of clause (g)(iii) of the
definition of "STFI Unrestricted Subsidiary" are available in such fiscal year
as set forth in such clause (iii), subject to the limitation set forth in the
parenthetical set forth at the end of such clause (iii), to be used by STFI to
pay dividends on any of its Capital Stock; provided further, that no payment may
be made under clause (A) or clause (D) above at any time that there shall have
been outstanding for 30 days or more any amount due and payable by STFI in
excess of $100,000 in respect of any liability purported to have been assumed by
any person other than STFI in the Acquisition Transactions. This paragraph (a)
shall not constitute a restriction on the payment of dividends on any of the
preferred stock cancelled upon the exchange set forth in the Exchange Agreement,
all of which preferred stock shall have been cancelled on or prior to the
initial Credit Event hereunder as required under Section 4.02(n).
(b) Permit any subsidiary to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (i) pay any dividends or
make any other distributions on its Capital Stock or any other equity interest
or (ii) make or repay any loans or advances to the Borrower or the parent of
such Subsidiary.
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SECTION 6.07. Transactions with Affiliates. Sell or transfer
any property or assets to, or purchase or acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except that the Borrower or any Subsidiary may engage in any of the foregoing
transactions in the ordinary course of business at prices and on terms and
conditions not less favorable to the Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties, provided that
the foregoing shall not prohibit any issuance of securities of STFI or other
awards, payments or grants in cash, securities or otherwise pursuant to, or the
funding of, employment agreements, stock options and stock ownership plans
approved by the Board of Directors of STFI.
SECTION 6.08. Business of STFI, the Borrower and the
Subsidiaries. Engage at any time in any business or business activity other than
(a) in the case of STFI, the ownership of all the Capital Stock of the Borrower,
the ownership of STFI Unrestricted Subsidiaries, the ownership of Permitted
Business Acquisitions permitted under Section 6.04(j), the ownership of the
general partnership interest in Financial Place Communications Company owned by
STFI on the date hereof, the ownership of Capital Stock of STC and the ownership
of certain contracts of STFI owned on the Closing Date after giving effect to
the Acquisition Transactions, (b) in the case of the Borrower, being party to
tenant service contracts and the ownership of Capital Stock of the Subsidiaries
and the Unrestricted Subsidiaries and business activities reasonably incidental
thereto and (c) in the case of the Subsidiaries, the business currently
conducted by STFI and its subsidiaries or by the Acquired Business and business
activities reasonably incidental thereto.
SECTION 6.09. Other Indebtedness and Agreements. (a) Permit
any waiver, supplement, modification, amendment, termination or release of (i)
the Discount Notes, the Discount Note Indenture, the Discount Exchange Notes or
the Discount Note Guarantees, (ii) the Merger Agreement, (iii) the Charter and
Bylaws of STFI, as amended by the Amendments to Charter and Bylaws, (iv) the
Certificates of Designation, (v) any other instrument or agreement (other than
the Loan Documents) pursuant to which any other Indebtedness of STFI, the
Borrower or any Subsidiary is outstanding in an aggregate principal amount in
excess of $1,000,000 or (vi) any other material agreement of STFI, the Borrower
or any Subsidiary, including the other Acquisition Documents.
(b) Directly or indirectly, make any distribution or payment,
whether in cash, property, securities or a combination thereof, other than
scheduled payments of principal and interest as and when due (to the extent not
prohibited by applicable subordination provisions), in respect of, or pay, or
offer to commit to pay, or directly or indirectly redeem, repurchase, retire or
otherwise acquire for consideration (or set apart any sum for the aforesaid
purposes), or prepay or defease, any Indebtedness of STFI, the Borrower or any
of the Subsidiaries (other than Indebtedness under the Loan Documents) prior to
the stated maturity date of such Indebtedness, except in any fiscal year to the
extent funds described in clause (A) of clause (g)(iii) of the definition of
"STFI Unrestricted Subsidiary" are available in such fiscal year as set forth in
such clause (iii), subject to the limitation set forth in the parenthetical set
forth at the end of such clause (iii), such funds may be used to prepay Discount
Notes or Discount Exchange Notes.
(c) Permit any agreement of STFI, the Borrower or any of the
Subsidiaries to include any provision that would allow the counterparty to
offset against its obligations under such agreement the obligations owing by
such counterparty to STFI, the Borrower or any of the Subsidiaries under any
other agreement.
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(d) Permit any agreement of the Borrower or any Subsidiary to
include a restriction on the assignment of such agreement based on any change in
control or similar provisions.
(e) Make any cash payment on or in respect of the Discount
Notes or the Discount Exchange Notes at any time that a cash payment is not
required to be made.
(f) Permit the Borrower to issue any Capital Stock, or permit
any Subsidiary to issue any Capital Stock other than to the Borrower or a wholly
owned Subsidiary.
(g) Provide any management or service to any Unrestricted
Subsidiary or any STFI Unrestricted Subsidiary except in consideration of cash
remuneration in an amount not less than could have been obtained from a third
party on an arm's length basis.
(h) Designate any Indebtedness as "Designated Senior
Indebtedness" for purposes of the Discount Note Indenture or any Discount
Exchange Note Indenture.
(i) Permit ANSI to terminate any agency relationship with any
Guarantor or to modify the terms of any such agency in any manner that is less
favorable to such Guarantor than the terms in effect immediately prior to such
modification or permit ATG, ANSI or any of their subsidiaries at any time prior
to the date on which it shall become a Guarantor to enter into any transaction
with STFI, the Borrower or any Subsidiary that it would otherwise have been
permitted to enter into as a Subsidiary under this Article VI.
(j) Enter into any tenant service contract that would result
in a breach of Section 3.10.
(k) (i) fail to furnish to the Collateral Agent within two
weeks after the Closing Date the results of all the searches of Uniform
Commercial Code filings (or equivalent filings) contemplated by Section 4.02(h)
that were not delivered on the Closing Date or (ii) fail to deliver to the
Collateral Agent within four weeks after the Closing Date evidence satisfactory
to the Collateral Agent that the Liens indicated in any financing statement (or
similar document) disclosed in the results of any search furnished under clause
(i) would be permitted under Section 6.02 or have been released.
SECTION 6.10. Capital Expenditures. Permit the aggregate
amount of Capital Expenditures made by STFI, the Borrower and the Subsidiaries
taken as a whole in any fiscal year to exceed the amount set forth below
opposite such period:
Fiscal Period
Capital Expenditures
April 1, 1996 - March 31, 1997 $13,500,000
April 1, 1997 - March 31, 1998 14,000,000
April 1, 1998 - March 31, 1999 15,500,000
April 1, 1999 - March 31, 2000 16,000,000
April 1, 2000 - March 31, 2001 16,500,000
April 1, 2001 - March 31, 2002 17,500,000
April 1, 2002 - March 31, 2003 18,000,000;
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provided, however, that to the extent Capital Expenditures in any fiscal year
are less than the amount set forth above opposite such year, up to $2,000,000 of
such unused amount in any fiscal year may be carried forward to the next
succeeding fiscal year.
SECTION 6.11. Minimum EBITDA. Permit EBITDA of STFI, the
Borrower and the Subsidiaries at the end of any fiscal quarter to be less than
the amount set forth for such quarter on Schedule 6.11.
SECTION 6.12. Fixed Charge Coverage Ratio. Permit the Fixed
Charge Coverage Ratio as of the end of any fiscal quarter to be less than 1.00.
SECTION 6.13. Leverage Ratio. Permit the Leverage Ratio as of
the end of any fiscal quarter to be in excess of the ratio set forth for such
quarter on Schedule 6.13.
SECTION 6.14. Interest Expense Coverage Ratio. Permit the
Interest Expense Coverage Ratio as of the end of any fiscal quarter to be less
than that set forth for such quarter on Schedule 6.14.
SECTION 6.15. Minimum Net Worth. Permit Net Worth as of the
end of any fiscal quarter to be less than the Minimum Net Worth as of such date.
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following events
("Events of Default"):
(a) any representation or warranty made or deemed made in or
in connection with any Loan Document or the borrowings or issuances of
Letters of Credit hereunder, or any representation, warranty, statement
or information contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant
to any Loan Document, shall prove to have been false or misleading in
any material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan or the reimbursement with respect to any L/C Disbursement or
in the payment of any interest on any Loan or any Fee or L/C
Disbursement or any other amount (other than an amount referred to in
(a) above) due under any Loan Document, when and as the same shall
become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the due observance or performance
by STFI, the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a), 5.05 or 5.08 or in Article VI;
(d) default shall be made in the due observance or performance
by STFI, the Borrower or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those specified in
(b), or (c) above) and such default shall continue unremedied for a
period of 15 days after notice thereof from the Administrative Agent or
any Lender to the Borrower;
(e) there shall have occurred a Change in Control;
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(f) STFI, the Borrower or any Subsidiary shall (i) fail to pay
any principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $1,000,000, when and as
the same shall become due and payable, or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any such
Indebtedness if the effect of any failure referred to in this clause
(ii) is to cause, or to permit the holder or holders of such
Indebtedness or a trustee on its or their behalf (with or without the
giving of notice, the lapse of time or both) to cause, such
Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of STFI, the Borrower or any
Subsidiary, or of a substantial part of the property or assets of STFI,
the Borrower or any Subsidiary, under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for STFI, the Borrower or any
Subsidiary or for a substantial part of the property or assets of STFI,
the Borrower or a Subsidiary or (iii) the winding-up or liquidation of
STFI, the Borrower or any Subsidiary; and such proceeding or petition
shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
(h) STFI, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended,
or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in (g) above, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for STFI, the Borrower or
any Subsidiary or for a substantial part of the property or assets of
STFI, the Borrower or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any action for the
purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000 shall be rendered against
STFI, the Borrower, any Subsidiary or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to levy upon assets or
properties of STFI, the Borrower or any Subsidiary to enforce any such
judgment;
(j) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA
Events, could reasonably be expected to result in liability of the
Borrower and its ERISA Affiliates in an aggregate amount exceeding
$1,000,000 or requires payments exceeding $500,000 in any year;
(k) any security interest purported to be created by any
Security Document shall cease to be, or shall be asserted by the
Borrower or any other Loan Party not to be, a valid, perfected, first
priority (except as otherwise expressly provided in this Agreement or
such Security Document) security interest in the securities, assets or
properties covered thereby, except to the extent that any such loss of
perfection or priority results from the failure of the Collateral Agent
to maintain
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possession of certificates representing securities pledged under the
Pledge Agreement and except to the extent that such loss is covered by
a lender's title insurance policy and the related insurer promptly
after such loss shall have acknowledged in writing that such loss is
covered by such title insurance policy; or
(l) any Loan Document shall not be for any reason, or shall be
asserted by STFI, the Borrower or any Subsidiary not to be, in full
force and effect and enforceable in all material respects in accordance
with its terms;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments and (ii) declare the Loans then outstanding to be forthwith due
and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder
and under any other Loan Document, shall become forthwith due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower, anything contained herein or
in any other Loan Document to the contrary notwithstanding; and in any event
with respect to the Borrower described in paragraph (g) or (h) above, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder and under any other
Loan Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
ARTICLE VIII. THE AGENTS
In order to expedite the transactions contemplated by this
Agreement, Credit Suisse is hereby appointed to act as Administrative Agent and
Collateral Agent on behalf of the Lenders and the Fronting Banks (for purposes
of this Article VIII, the Administrative Agent and the Collateral Agent are
referred to collectively as the "Agents"). Each of the Lenders and each assignee
of any such Lender, hereby irrevocably authorizes the Agents to take such
actions on behalf of such Lender or assignee or Fronting Bank and to exercise
such powers as are specifically delegated to the Agents by the terms and
provisions hereof and of the other Loan Documents, together with such actions
and powers as are reasonably incidental thereto. The Administrative Agent is
hereby expressly authorized by the Lenders and the Fronting Banks, without
hereby limiting any implied authority, (a) to receive on behalf of the Lenders
and the Fronting Banks all payments of principal of and interest on the Loans,
all payments in respect of L/C Disbursements and all other amounts due to the
Lenders hereunder, and promptly to distribute to each Lender or Fronting Bank
its proper share of each payment so received; (b) to give notice on behalf of
each of the Lenders to the Borrower of any Event of Default specified in this
Agreement of which the Administrative Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to each Lender and
Fronting Bank copies of all notices, financial statements and other materials
delivered by the Borrower or any other Loan Party pursuant to this Agreement or
the other Loan Documents as received by the Administrative Agent (other than
such materials delivered pursuant to Section 5.04) and the Administrative Agent
shall promptly after receipt thereof deliver such notices and distribute such
copies to the Lenders and the Fronting Banks, as applicable. Without limiting
the generality of the foregoing, the Agents are hereby expressly authorized to
execute any and all documents (including releases) with respect to the
Collateral and the rights of the Secured Parties with respect
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thereto, as contemplated by and in accordance with the provisions of this
Agreement and the Security Documents. In the event that any party other than the
Lenders and the Agents shall participate in all or any portion of the Collateral
pursuant to the Security Documents, all rights and remedies in respect of such
Collateral shall be controlled by the Collateral Agent. Notwithstanding anything
herein to the contrary, no Lender identified herein as Documentation Agent shall
have any separate duties, responsibilities, obligations or authority as
Documentation Agent hereunder.
Neither the Agents nor any of their respective directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by any of them except for its or his own gross negligence or wilful
misconduct, or be responsible for any statement, warranty or representation
herein or the contents of any document delivered in connection herewith, or be
required to ascertain or to make any inquiry concerning the performance or
observance by the Borrower or any other Loan Party of any of the terms,
conditions, covenants or agreements contained in any Loan Document. The Agents
shall not be responsible to the Lenders for the due execution, genuineness,
validity, enforceability or effectiveness of this Agreement or any other Loan
Documents, instruments or agreements. The Agents shall in all cases be fully
protected in acting, or refraining from acting, in accordance with written
instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have been
signed or sent by the proper person or persons. Neither the Agents nor any of
their respective directors, officers, employees or agents shall have any
responsibility to the Borrower or any other Loan Party on account of the failure
of or delay in performance or breach by any Lender or Fronting Bank of any of
its obligations hereunder or to any Lender or Fronting Bank on account of the
failure of or delay in performance or breach by any other Lender or Fronting
Bank or the Borrower or any other Loan Party of any of their respective
obligations hereunder or under any other Loan Document or in connection herewith
or therewith. Each of the Agents may execute any and all duties hereunder by or
through agents or employees and each of the Agents shall be entitled to rely
upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be
under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent
as provided below, either Agent (which term includes, for the purposes of this
paragraph, the Documentation Agent) may resign at any time by notifying the
Lenders and the Borrower. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent
which shall be a bank with an office in New York, New York, having a combined
capital and surplus of at least $500,000,000 or an Affiliate of any such bank.
Upon the acceptance of any appointment as Agent hereunder by a successor bank,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations hereunder. After the Agent's
resignation hereunder, the provisions of this Article and Section 9.05 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
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With respect to the Loans made by it hereunder, any Agent
(which term includes, for the purposes of this paragraph, the Documentation
Agent) in its individual capacity and not as Agent shall have the same rights
and powers as any other Lender and may exercise the same as though it were not
an Agent, and the Agents and their Affiliates may accept deposits from, lend
money to and generally engage in any kind of business with STFI, the Borrower or
any Subsidiary or other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in
the amount of its pro rata share (based on its Commitments hereunder or, if such
Commitments have expired or been terminated, in accordance with the respective
principal amounts of their applicable outstanding Loans) of any expenses
incurred for the benefit of the Lenders by the Agents, including reasonable
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, that shall not have been reimbursed (but without
limiting any obligation of the Borrower or any Loan Party hereunder or under any
other Loan Document to reimburse the same) by the Borrower and (b) to indemnify
and hold harmless each Agent and any of its directors, officers, employees or
agents, on demand, in the amount of such pro rata share, from and against any
and all liabilities, taxes, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against it in its
capacity as Agent or any of them in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted by it or any
of them under this Agreement or any other Loan Document, to the extent the same
shall not have been reimbursed (but without limiting any obligation of the
Borrower or any Loan Party hereunder or under any other Loan Document to
reimburse the same) by the Borrower or any other Loan Party, provided that no
Lender shall be liable to an Agent or any such other indemnified person for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements that are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Agent or any of
its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and
without reliance upon the Agents or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
In its capacity as Administrative Agent hereunder, the
Administrative Agent will serve as Representative of the Bank Indebtedness under
the Discount Note Indenture and agrees to notify each Lender of any notice
received by it as such Representative.
ARTICLE IX. MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:
(a) if to the Borrower or STFI, to it at 100 Great Meadow
Road, Wethersfield, CT 06109, Attention of Chief Executive Officer
(Telecopy No. (203) 258-2455);
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(b) if to the Administrative Agent, to Credit Suisse, Tower
49, 12 East 49th Street, New York, New York 10017, Attention of Lisa
Perrotto, Agency Group (Telecopy No. (212) 238-5073), with a copy to
Credit Suisse, Attention of Jack Deutsch (Telecopy No. (212) 238-5838);
and
(c) if to a Lender, to it at its address (or telecopy number)
set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant
to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrower or STFI herein
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and the Fronting Banks and
shall survive the making by the Lenders of the Loans and the issuance of Letters
of Credit by the Fronting Banks, regardless of any investigation made by the
Lenders or the Fronting Banks or on their behalf, and shall continue in full
force and effect as long as the principal of or any accrued interest on any Loan
or any Fee or any other amount payable under this Agreement or any other Loan
Document is outstanding and unpaid or any Letter of Credit is outstanding and so
long as the Commitments have not been terminated. The provisions of Sections
2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent, the Documentation Agent, any Lender
or the Fronting Banks.
SECTION 9.03. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower, STFI and the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower, STFI, the
Administrative Agent, the Documentation Agent, the Fronting Banks or the Lenders
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns.
(b) Each Lender may assign to one or more financial
institutions all or a portion of its interests, rights and obligations under
this Agreement (including all or a portion of its Commitments and the Loans at
the time owing to it); provided, however, that (i) except in the case of an
assignment to a Lender or an Affiliate of such Lender, (x) the Administrative
Agent (and, in the case of any assignment of a Revolving Credit Commitment, the
Fronting Banks) must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld or delayed) and (y) the amount of the
Commitments and, without duplication, Loans of the assigning Lender subject to
each such assignment (determined as of the date the
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Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall be in integral multiples of $1,000,000 and in a
minimum principal amount of $5,000,000 (or, if less, the entire remaining amount
of the Commitments and Loans of such Lender) (ii) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with (other than in the case of an assignment by a
Lender to an Affiliate of such Lender) a processing and recordation fee of
$3,500 and (iii) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire and the documents required
pursuant to Section 2.20(e). Upon acceptance and recording pursuant to paragraph
(e) of this Section 9.04, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be (unless waived by the
Administrative Agent) at least five Business Days after the execution thereof,
(A) the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (B) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued
for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitment and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of,
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and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent, the Fronting Banks, the
Collateral Agent and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Fronting Banks, the Collateral
Agent, the Documentation Agent and any Lender, at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) above and, if required, the written consent of the Fronting
Bank and the Administrative Agent to such assignment, the Administrative Agent
shall (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Lenders and the Fronting Bank. No assignment shall be effective unless it has
been recorded in the Register as provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower, the
Fronting Banks or the Administrative Agent sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participating banks or other entities shall be entitled to the benefit
of the cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to
the same extent as if they were Lenders and (iv) the Borrower, the
Administrative Agent, the Fronting Banks and the Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Loans or L/C
Disbursements and to approve any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications or waivers
decreasing any fees payable hereunder or the amount of principal of or the rate
at which interest is payable on the Loans, extending any scheduled principal
payment date or date fixed for the payment of interest on the Loans or
increasing or extending the Commitments).
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 9.04, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.16.
(h) Any Lender may at any time assign all or any portion of
its rights under this Agreement to a Federal Reserve Bank to secure extensions
of credit by such Federal Reserve Bank to such Lender; provided that no such
assignment shall release a Lender from any of its obligations hereunder or
substitute any such Bank for such Lender as a party hereto. In order to
facilitate such an assignment to a Federal Reserve Bank, the Borrower shall, at
the request of the assigning Lender, duly execute and deliver to the assigning
Lender a promissory note or notes evidencing the Loans made to the Borrower by
the assigning Lender hereunder.
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(i) Neither STFI nor the Borrower shall assign or delegate any
of its rights or duties hereunder without the prior written consent of the
Administrative Agent, the Fronting Banks and each Lender, and any attempted
assignment without such consent shall be null and void.
(j) In the event that Standard & Poor's Ratings Group or
Moody's Investors Service, Inc. shall, after the date that any Lender becomes a
Revolving Credit Lender, downgrade the long-term credit ratings of such Lender,
and the resulting ratings shall be below BBB+ or Baa1, then any Fronting Bank
shall have the right, but not the obligation, at its own expense, upon notice to
such Lender and the Administrative Agent, to replace (or to request the Borrower
to use its reasonable efforts to replace) such Lender with an assignee (in
accordance with and subject to the restrictions contained in paragraph (b)
above), and such Lender hereby agrees to transfer and assign without recourse
(in accordance with and subject to the restrictions contained in paragraph (b)
above) all its interests, rights and obligations in respect of its Revolving
Credit Commitment to such assignee; provided, however, that (i) no such
assignment shall conflict with any law, rule and regulation or order of any
Governmental Authority and (ii) such Fronting Bank or such assignee, as the case
may be, shall pay to such Lender in immediately available funds on the date of
such assignment the principal of and interest accrued to the date of payment on
the Loans made by such Lender hereunder and all other amounts accrued for such
Lender's account or owed to it hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower and STFI
agree, jointly and severally, to pay all out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent, the Documentation Agent and the
Fronting Banks in connection with the syndication of the credit facilities
provided for herein and the preparation and administration of this Agreement and
the other Loan Documents or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
hereby or thereby contemplated shall be consummated) or incurred by the
Administrative Agent, the Collateral Agent, the Documentation Agent or any
Lender in connection with the enforcement or protection of its rights in
connection with this Agreement and the other Loan Documents or in connection
with the Loans made or Letters of Credit issued hereunder, including the fees,
charges and disbursements of Cravath, Swaine & Moore, counsel for the
Administrative Agent and the Collateral Agent, and, in connection with any such
enforcement or protection, the fees, charges and disbursements of any other
counsel for the Administrative Agent, the Collateral Agent, the Documentation
Agent or any Lender.
(b) The Borrower and STFI agree, jointly and severally, to
indemnify the Administrative Agent, the Collateral Agent, the Documentation
Agent, each Lender and each Fronting Bank, each Affiliate of any of the
foregoing persons and each of their respective directors, officers, employees
and agents (each such person being called an "Indemnitee") against, and to hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee arising out of, in
any way connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans or issuance of
Letters of Credit, (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto, or (iv) any actual or alleged presence or Release of Hazardous
Materials on any property owned or operated by the Borrower or any of the
Subsidiaries, or any Environmental Claim related in any way to the Borrower or
the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
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(c) The provisions of this Section 9.05 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, the Collateral Agent, the
Documentation Agent, any Lender or any Fronting Bank. All amounts due under this
Section 9.05 shall be payable on written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by such Lender and other indebtedness at any time owing
by such Lender to or for the credit or the account of the Borrower or STFI
against any of and all the obligations of the Borrower or STFI now or hereafter
existing under this Agreement and the other Loan Documents, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
such other Loan Document and although such obligations may be unmatured. The
rights of each Lender under this Section 9.06 are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS OTHERWISE EXPRESSLY SET
FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES
DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED,
THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION),
INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS")
AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of
the Administrative Agent, the Collateral Agent, the Documentation Agent, any
Lender or any Fronting Bank in exercising any power or right hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Collateral Agent, the Fronting
Banks, the Documentation Agent and the Lenders hereunder and under the other
Loan Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this Agreement or
any other Loan Document or consent to any departure by the Borrower or any other
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on the Borrower or STFI in any case shall entitle the Borrower
or STFI to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except pursuant
to an agreement or agreements in writing entered into by the Borrower, STFI and
the Required Lenders; provided, however, that no such agreement shall (i)
decrease the principal amount of, or extend the maturity of or any scheduled
principal payment date or date for the payment of any interest on any Loan or
any date for reimbursement of an L/C Disbursement,
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or waive or excuse any such payment or any part thereof, or decrease the rate of
interest on any Loan or L/C Disbursement, without the prior written consent of
each Lender affected thereby, (ii) increase or extend the Commitment or decrease
or extend the payment date of the Commitment Fees of any Lender without the
prior written consent of such Lender, (iii) advance any Installment Date or any
other date on which principal of the Term Loans is due without the prior written
consent of Lenders holding Term Loans and Revolving Credit Commitments
representing (A) at least 80% of the aggregate principal amount of the then
outstanding Tranche A Term Loans, (B) at least 80% of the aggregate principal
amount of the then outstanding Tranche B Term Loans and (C) at least 80% of the
aggregate principal amount of the then outstanding Revolving Credit Commitments,
(iv) effect any waiver, amendment or modification that by its terms adversely
affects the rights in respect of payments or collateral of the Revolving Credit
Lenders or Lenders participating in any Tranche differently from those of the
Revolving Credit Lenders or Lenders participating in other Tranches, as the case
may be, without the consent of a majority in interest of the Revolving Credit
Lenders, if adversely affected, or Lenders participating in the adversely
affected Tranche, as the case may be, or change the relative rights in respect
of payments or collateral of the Revolving Credit Lenders or Lenders
participating in different Tranches without the consent of a majority in
interest of the Revolving Credit Lenders, if adversely affected, or Lenders
participating in each adversely affected Tranche, as the case may be, or (v)
amend or modify the provisions of Section 2.17 or 9.04(i), the provisions of
this Section 9.08 or the definition of the term "Required Lenders" or release
any Guarantor or all or substantially all the Collateral, without the prior
written consent of each Lender; provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent, the Collateral Agent, any Fronting Bank or the Documentation Agent
hereunder or under any other Loan Document without the prior written consent of
the Administrative Agent, the Collateral Agent, such Fronting Bank or the
Documentation Agent.
SECTION 9.09. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan or participation in any L/C Disbursement, together with all fees,
charges and other amounts which are treated as interest on such Loan or
participation in such L/C Disbursement under applicable law (collectively the
"Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may
be contracted for, charged, taken, received or reserved by the Lender holding
such Loan or participation in accordance with applicable law, the rate of
interest payable in respect of such Loan or participation hereunder, together
with all Charges payable in respect thereof, shall be limited to the Maximum
Rate and, to the extent lawful, the interest and Charges that would have been
payable in respect of such Loan or participation but were not payable as a
result of the operation of this Section 9.09 shall be cumulated and the interest
and Charges payable to such Lender in respect of other Loans or participations
or periods shall be increased (but not above the Maximum Rate therefor) until
such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such
Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter
and the other Loan Documents constitute the entire contract between the parties
relative to the subject matter hereof. Any other previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement and the other Loan Documents. Nothing in this Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any party
other than the parties hereto and thereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
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OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of
the provisions contained in this Agreement or in any other Loan Document should
be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a)
Each of STFI and the Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent, the Collateral Agent, the
Documentation Agent, any Fronting Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or the other Loan Documents
against the Borrower, STFI or their respective properties in the courts of any
jurisdiction.
(b) Each of STFI and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
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(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.16. Confidentiality. The Administrative Agent, the
Collateral Agent, the Documentation Agent, each Fronting Bank and each Lender
agrees to keep confidential (and to use its best efforts to cause its respective
agents and representatives to keep confidential) the Information (as defined
below) and all copies thereof, extracts therefrom and analyses or other
materials based thereon, except that the Administrative Agent, the Collateral
Agent, the Documentation Agent, any Fronting Bank or any Lender shall be
permitted to disclose Information (a) to such of its respective officers,
directors, employees, agents, affiliates and representatives as need to know
such Information in connection with a business relationship with STFI, the
Borrower or any Subsidiary, (b) to the extent requested by any regulatory
authority, (c) to the extent otherwise required by applicable laws and
regulations or by any subpoena or similar legal process, (d) in connection with
any suit, action or proceeding relating to the enforcement of its rights
hereunder or under the other Loan Documents or (e) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 9.16 or (ii) becomes available to the Administrative Agent, the
Documentation Agent, any Fronting Bank, any Lender or the Collateral Agent on a
nonconfidential basis from a source other than the Borrower or STFI. For the
purposes of this Section, "Information" shall mean all financial statements,
certificates, reports, agreements and written information (including all
analyses, compilations and studies prepared by the Administrative Agent, the
Collateral Agent, the Documentation Agent, the Fronting Bank or any Lender based
on any of the foregoing) that are received from the Borrower or STFI and related
to the Borrower or STFI, any shareholder of the Borrower or STFI or any
employee, customer or supplier of the Borrower or STFI, other than any of the
foregoing that were available to the Administrative Agent, the Collateral Agent,
the Documentation Agent, any Fronting Bank or any Lender on a nonconfidential
basis prior to its disclosure thereto by the Borrower or STFI, and which are in
the case of Information provided after the date hereof, clearly identified at
the time of delivery as confidential. The provisions of this Section 9.16 shall
remain operative and in full force and effect regardless of the expiration and
term of this Agreement for a period of one year.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Treasurer
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SHARED TECHNOLOGIES INC.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Treasurer
CREDIT SUISSE, individually and as
Administrative Agent, Collateral Agent and
Fronting Bank,
by
/s/ Kathleen D. O'Brien
Name: Kathleen D. O'Brien
Title: Member of Senior Management
by
/s/ Jack Deutsch
Name: Jack Deutsch
Title: Associate
CITICORP USA INC., individually and as
Documentation Agent,
by
/s/ Marjorie Futornick
Name: Marjorie Futornick
Title: Vice President
NATIONSBANK, N.A., individually and as
Documentation Agent,
by
/s/ John D. Mindnich
Name: John D. Mindnich
Title: Senior Vice President
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CAISSE NATIONALE DE CREDIT AGRICOLE,
by
/s/ David Bouhl, F.V.P.
Name: David Bouhl, F.V.P.
Title: Head of Corporate Banking
Chicago
CHL HIGH YIELD LOAN PORTFOLIO,
(a unit of Chemical Bank)
by
/s/ Andrew D. Gordon
Name: Andrew D. Gordon
Title: Managing Director
FIRST SOURCE FINANCIAL LLP,
by FIRST SOURCE FINANCIAL, INC.,
its Agent/Manager
by
/s/ Gary L. Francis
Name: Gary L. Francis
Title: Senior Vice President
PILGRIM PRIME RATE TRUST,
by
/s/ Michael J. Bacevich
Name: Michael J. Bacevich
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL,
PRIME RATE INCOME TRUST,
by
/s/ Jeffrey W. Maillet
Name: Jeffrey W. Maillet
Title: Sr. Vice Pres. - Portfolio Mgr.
78
<PAGE>
SENIOR HIGH INCOME PORTFOLIO, INC.,
by
/s/ John W. Fraser
Name: John W. Fraser
Title: Authorized Signatory
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.,
by
/s/ John W. Fraser
Name: John W. Fraser
Title: Authorized Signatory
79
<PAGE>
EXHIBIT A
[Form of]
SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP.
ADMINISTRATIVE QUESTIONNAIRE
Please accurately complete the following information and return via Telecopy to
the attention of Lisa Perrotto at Credit Suisse, Agency Group as soon as
possible, at Telecopy No. (212) 238-5073.
- --------------------------------------------------------------------------------
LENDER LEGAL NAME TO APPEAR IN DOCUMENTATION:
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name:
Street Address:
City, State, Zip Code:
GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:
Institution Name:
Street Address:
City, State, Zip Code:
POST-CLOSING, ONGOING CREDIT CONTACTS/NOTIFICATION METHODS:
CREDIT CONTACTS:
Primary Contact:
Street Address:
City, State, Zip Code:
Phone Number:
Telecopy Number:
Backup Contact:
Street Address:
<PAGE>
City, State, Zip Code:
Phone Number:
Telecopy Number:
TAX WITHHOLDING:
Nonresident Alien Y* N
* Form 4224 Enclosed
Tax ID Number _________________________
POST-CLOSING, ONGOING ADMINISTRATIVE CONTACTS/NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, FEES, ETC.
Contact:
Street Address:
City, State, Zip Code:
Phone Number:
Telecopy Number:
PAYMENT INSTRUCTIONS:
Name of Bank to which funds are to be transferred:
Routing Transit/ABA number of Bank to which funds are to be transferred:
Name of Account, if applicable:
Account Number:
2
<PAGE>
Additional information:
MAILINGS:
Please specify the person to whom the Borrower should send financial and
compliance information received subsequent to the closing (if different from
primary credit contact):
Name:
Street Address:
City, State, Zip Code:
It is very important that all the above information be accurately completed and
that this questionnaire be returned to the person specified in the introductory
paragraph of this questionnaire as soon as possible. If there is someone other
than yourself who should receive this questionnaire, please notify us of that
person's name and telecopy number and we will telecopy a copy of the
questionnaire. If you have any questions about this form, please call Lisa
Perrotto at (212) 238-5056.
3
<PAGE>
EXHIBIT B
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of March
12, 1996 (the "Credit Agreement"), among Shared Technologies Fairchild
Communications Corp., a Delaware corporation (the "Borrower"), Shared
Technologies Inc., a Delaware corporation ("STFI", which term shall, after the
Merger referred to herein, include the surviving corporation in such Merger),
the financial institutions from time to time party hereto, initially consisting
of those financial institutions listed on Schedule 2.01 (the "Lenders"), CREDIT
SUISSE, a bank organized under the laws of Switzerland, acting through its New
York branch, as administrative agent (in such capacity, the "Administrative
Agent") and as collateral agent (in such capacity, the "Collateral Agent") for
the Lenders, the fronting banks listed on Schedule 2.20 (the "Fronting Banks"),
and each of Citicorp USA, Inc. and NationsBank, N.A., as documentation agent
(individually and collectively in such capacity, the "Documentation Agent").
Terms defined in the Credit Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to
the Assignee, and the Assignee hereby purchases and assumes, without recourse,
from the Assignor, effective as of the Effective Date set forth below (but not
prior to the registration of the information contained herein in the Register
pursuant to Section 9.04(e) of the Credit Agreement), the interests set forth
below (the "Assigned Interest") in the Assignor's rights and obligations under
the Credit Agreement and the other Loan Documents, including, without
limitation, the amounts and percentages set forth below of (i) the Commitments
of the Assignor on the Effective Date, (ii) the Loans owing to the Assignor
which are outstanding on the Effective Date and (iii) participations in Letters
of Credit and L/C Disbursements which are outstanding on the Effective Date.
Each of the Assignor and the Assignee hereby makes and agrees to be bound by all
the representations, warranties and agreements set forth in Section 9.04(c) of
the Credit Agreement, a copy of which has been received by each such party. From
and after the Effective Date (i) the Assignee shall be a party to and be bound
by the provisions of the Credit Agreement and, to the extent of the interests
assigned by this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to
the extent of the interests assigned by this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in Section
2.20(e) of the Credit Agreement, duly completed and executed by such Assignee,
(ii) if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form of Exhibit A to the Credit Agreement
and (iii) a processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
<PAGE>
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
<TABLE>
<CAPTION>
Percentage Assigned of
Applicable
Facility/Commitment (set
forth, to at least 8
decimals, as a percentage
of the Facility and the
Principal Amount aggregate Commitments of
Facility/Commitment Assigned all Lenders thereunder)
<S> <C> <C>
Revolving Credit
Commitment $ %
Tranche A Commitment $ %
Tranche A Term Loans $ %
Tranche B Commitment $ %
Tranche B Term Loans $ %
</TABLE>
The terms set forth above are
hereby agreed to: Accepted */
_________________, as Assignor CREDIT SUISSE,
as Administrative Agent
by:___________________________ by:________________________
Name: Name:
Title: Title:
by:________________________
Name:
Title:
_________________, as Assignee [Fronting Bank]
by:________________________
Name:
Title:
2
<PAGE>
*/ To be completed to the extent consents are required under
Section 9.04(b) of the Credit Agreement.
3
<PAGE>
EXHIBIT C
FORM OF BORROWING REQUEST
Credit Suisse, as Administrative Agent for
the Lenders referred to below,
Tower 49
12 East 49th Street
New York, NY 10017
Attention of [ ]
[Date]
Ladies and Gentlemen:
The undersigned, Shared Technologies Fairchild Communications
Corp. (the "Company"), refers to the Credit Agreement dated as of March 12, 1996
(the "Credit Agreement"), among the Company, Shared Technologies Inc., ("STFI",
which term shall, after the Merger referred to herein, include the surviving
corporation in such Merger), the financial institutions from time to time party
thereto (the "Lenders"), Credit Suisse, as administrative agent (in such
capacity, the "Administrative Agent") and as collateral agent (in such capacity,
the "Collateral Agent") for the Lenders, the fronting banks listed on Schedule
2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and NationsBank,
N.A., as documentation agent (individually and collectively in such capacity,
the "Documentation Agent"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement. The Company hereby gives you notice pursuant to Section 2.03 of the
Credit Agreement that it requests a Borrowing under the Credit Agreement, and in
that connection sets forth below the terms on which such Borrowing is requested
to be made:
(A) Date of Borrowing
(which is a Business Day ______________________
(B) Principal Amount of
Borrowing 1/ ______________________
- ---------------------
1/ Not less than $5,000,000 and in an integral multiple of $1,000,000,
but in any event not exceeding, as applicable, the available Total Revolving
Credit Commitment or the aggregate amount of the Term Loan Commitments available
at such time.
<PAGE>
(C) Interest rate basis ____________________
(D) Type of Borrowing Request 2/ ____________________
-
(E) Interest Period 3/ ____________________
(F) Funds are requested to be disbursed as follows:
Dollar Amount ____________________
Bank Name ____________________
Bank ABA # ____________________
Beneficiary Name ____________________
Beneficiary A/C # ____________________
REF ____________________
Upon acceptance of any or all of the Loans offered by the
Lenders in response to this request, the Company shall be deemed to have
represented and warranted that the conditions to lending specified in Sections
4.01(b) and (c) of the Credit Agreement have been satisfied.
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.,
by
______________________
Name:
Title: [Responsible Officer]
- ---------------------
2/ Specify (a) Borrowing of Tranche A Term Loans, Borrowing of Tranche
B Term Loans or Revolving Credit Borrowing and (b) Eurodollar Borrowing or ABR
Borrowing.
3/ Which shall be subject to the definition of "Interest Period" and
end not later than the Tranche A Maturity Date, the Tranche B Maturity Date or
the Revolving Credit Maturity Date (applicable only for Eurodollar Borrowings
only).
2
<PAGE>
EXHIBIT D
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of March 12, 1996, among SHARED
TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP., a
Delaware corporation (the "Borrower"), each
Subsidiary of the Borrower listed on Schedule I
hereto (the "Guarantors") and CREDIT SUISSE, a bank
organized under the laws of Switzerland, acting
through its New York branch ("Credit Suisse"), as
collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent") and (b) the Subsidiary Guarantee Agreement
dated as of March 12, 1996, among the Guarantors and the Collateral Agent (the
"Guarantee Agreement"). Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the
Fronting Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. The Guarantors have guaranteed such Loans
and the other Obligations (as defined in the Guarantee Agreement) of the
Borrower under the Credit Agreement pursuant to the Guarantee Agreement; certain
Guarantors have granted Liens on and security interests in certain of their
assets to secure such guarantees. The obligations of the Lenders to make Loans
and of the Fronting Banks to issue Letters of Credit are conditioned on, among
other things, the execution and delivery by the Borrower and the Guarantors of
an agreement in the form hereof.
Accordingly, the Borrower, each Guarantor and the Collateral
Agent agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to all such
rights of indemnity and subrogation as the Guarantors may have under applicable
law (but subject to Section 3), the Borrower agrees that (a) in the event a
payment shall be made by any Guarantor under the Guarantee Agreement, the
Borrower shall indemnify such Guarantor for the full amount of such payment and
such Guarantor shall be subrogated to the rights of the person to whom such
payment shall have been made to the extent of such payment and (b) in the event
any assets of any Guarantor shall be sold pursuant to any Security Document to
satisfy a claim of any Secured Party, the Borrower shall indemnify such
Guarantor in an amount equal to the greater of the book value or the fair market
value of the assets so sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a
"Contributing Guarantor") agrees (subject to Section 3) that, in the event a
payment shall be made by any other Guarantor under the Guarantee Agreement or
assets of any other Guarantor shall be sold pursuant to any Security Document to
satisfy a claim of any Secured Party and such other Guarantor (the "Claiming
Guarantor") shall not have been fully indemnified by the Borrower as provided in
Section 1, the Contributing Guarantor shall indemnify the Claiming Guarantor in
an amount equal to the amount of such payment or the greater of the book value
or the fair market value of such assets, as the case may be, in each case
multiplied by a fraction of which the numerator shall be the net worth of the
Contributing Guarantor on the date hereof and
<PAGE>
the denominator shall be the aggregate net worth of all the Guarantors on the
date hereof (or, in the case of any Guarantor becoming a party hereto pursuant
to Section 12, the date of the Supplement hereto executed and delivered by such
Guarantor). Any Contributing Guarantor making any payment to a Claiming
Guarantor pursuant to this Section 2 shall be subrogated to the rights of such
Claiming Guarantor under Section 1 to the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of
this Agreement to the contrary, all rights of the Guarantors under Sections 1
and 2 and all other rights of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full in cash of the Obligations. No failure on the part of the
Borrower or any Guarantor to make the payments required by Sections 1 and 2 (or
any other payments required under applicable law or otherwise) shall in any
respect limit the obligations and liabilities of any Guarantor with respect to
its obligations hereunder, and each Guarantor shall remain liable for the full
amount of the obligations of such Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and be in
full force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as the L/C Exposure has not been
reduced to zero or any of the Commitments under the Credit Agreement have not
been terminated, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Secured Party or any Guarantor
upon the bankruptcy or reorganization of the Borrower, any Guarantor or
otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. No Waiver; Amendment. (a) No failure on the part of
the Collateral Agent or any Guarantor to exercise, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. None of
the Collateral Agent and the Guarantors shall be deemed to have waived any
rights hereunder unless such waiver shall be in writing and signed by such
parties.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Borrower, the Guarantors and the Collateral Agent, with the prior
written consent of the Required Lenders (except as otherwise provided in the
Credit Agreement).
SECTION 7. Notices. All communications and notices hereunder
shall be in writing and given as provided in the Guarantee Agreement and
addressed as specified therein.
SECTION 8. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the parties that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Neither the Borrower nor any Guarantor may assign or
transfer any of its rights or obligations hereunder (and any such attempted
assignment or transfer shall be void) without the prior written consent of the
Required Lenders.
2
<PAGE>
Notwithstanding the foregoing, at the time any Guarantor is released from its
obligations under the Guarantee Agreement in accordance with such Guarantee
Agreement and the Credit Agreement, such Guarantor will cease to have any rights
or obligations under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a) All
covenants and agreements made by the Borrower and each Guarantor herein and in
the certificates or other instruments prepared or delivered in connection with
this Agreement or the other Loan Documents shall be considered to have been
relied upon by the Collateral Agent, the other Secured Parties and each
Guarantor and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Fronting Banks, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loans or any other fee or amount payable under the Credit Agreement or this
Agreement or under any of the other Loan Documents is outstanding and unpaid or
the L/C Exposure does not equal zero and as long as the Commitments have not
been terminated.
(b) In case any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any respect,
no party hereto shall be required to comply with such provision for so long as
such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 10. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall be effective with
respect to any Guarantor when a counterpart bearing the signature of such
Guarantor shall have been delivered to the Collateral Agent. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.
SECTION 11. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.
SECTION 12. Additional Guarantors. Pursuant to Section 5.11 of
the Credit Agreement, each Subsidiary of STFI, the Borrower or any Subsidiary
that was not in existence or not such a Subsidiary on the date of the Credit
Agreement is required to enter into the Guarantee Agreement as a Guarantor upon
becoming such a Subsidiary. Upon execution and delivery, after the date hereof,
by the Collateral Agent and such a Subsidiary of an instrument in the form of
Annex 1 hereto, such Subsidiary shall become a Guarantor hereunder with the same
force and effect as if originally named as a Guarantor hereunder. The execution
and delivery of any instrument adding an additional Guarantor as a party to this
Agreement shall not require the consent of any Guarantor hereunder. The rights
and obligations of each Guarantor
3
<PAGE>
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the date first
appearing above.
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.,
by
_____________________________
Name:
Title:
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE I HERETO, as a Guarantor,
by
_____________________________
Name:
Title: Authorized Officer
CREDIT SUISSE, as Collateral Agent,
by
_____________________________
Name:
Title:
by
_____________________________
Name:
Title:
4
<PAGE>
SCHEDULE I
GUARANTORS to the Indemnity Subrogation
and Contribution Agreement
Name Address
5
<PAGE>
Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. dated as of [ ], to the
Indemnity, Subrogation and Contribution Agreement
dated as of March 12, 1996 (as the same may be
amended, supplemented or otherwise modified from time
to time, the "Indemnity, Subrogation and Contribution
Agreement"), among SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP., a Delaware corporation (the
"Borrower") each Subsidiary of the Borrower listed on
Shedule I thereto (the "Guarantors"), and CREDIT
SUISSE, a bank organized under the laws of
Switzerland, acting through its New York branch
("Credit Suisse"), as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
A. Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent") and (b) the Subsidiary Guarantee Agreement
dated as of March 12, 1996, among the Guarantors and the Collateral Agent (the
"Guarantee Agreement").
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Indemnity,
Subrogation and Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the
Indemnity, Subrogation and Contribution Agreement in order to induce the Lenders
to make Loans and the Fronting Banks to issue Letters of Credit. Pursuant to
Section 5.11 of the Credit Agreement, each Subsidiary of STFI, the Borrower or
any Subsidiary that was not in existence or not such a Subsidiary on the date of
the Credit Agreement is required to enter into the Guarantee Agreement as a
Guarantor upon becoming a Subsidiary. Section 12 of the Indemnity, Subrogation
and Contribution Agreement provides that additional Subsidiaries of the Borrower
may become Guarantors under the Indemnity, Subrogation and Contribution
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary of the Borrower (the "New Guarantor") is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Guarantor under the Indemnity, Subrogation and
Contribution Agreement in order to induce the Lenders to make additional Loans
and the Fronting Banks to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit previously issued.
<PAGE>
Accordingly, the Collateral Agent and the New Guarantor agree
as follows:
SECTION 1. In accordance with Section 12 of the Indemnity,
Subrogation and Contribution Agreement, the New Guarantor by its signature below
becomes a Guarantor under the Indemnity, Subrogation and Contribution Agreement
with the same force and effect as if originally named therein as a Guarantor and
the New Guarantor hereby agrees to all the terms and provisions of the
Indemnity, Subrogation and Contribution Agreement applicable to it as a
Guarantor thereunder. Each reference to a "Guarantor" in the Indemnity,
Subrogation and Contribution Agreement shall be deemed to include the New
Guarantor. The Indemnity, Subrogation and Contribution Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the
Indemnity, Subrogation and Contribution Agreement shall remain in full force and
effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such provision
for so long as such provision is held to be invalid, illegal or unenforceable,
but the validity, legality and enforceability of the remaining provisions
contained herein and in the Indemnity, Subrogation and Contribution Agreement
shall not in any way be affected or impaired. The parties hereto shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
2
<PAGE>
SECTION 8. The New Guarantor agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in connection with
this Supplement, including the reasonable fees, other charges and disbursements
of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent
have duly executed this Supplement to the Indemnity, Subrogation and
Contribution Agreement as of the day and year first above written.
[Name Of New Guarantor],
by
____________________________
Name:
Title:
Address:
CREDIT SUISSE, as Collateral
Agent,
by
____________________________
Name:
Title:
by
____________________________
Name:
Title:
3
<PAGE>
SCHEDULE I
to Supplement No.___ to the Indemnity
Subrogation and Contribution Agreement
GUARANTORS
Name Address
<PAGE>
EXHIBIT E
PARENT GUARANTEE AGREEMENT dated as of March
12, 1996, between SHARED TECHNOLOGIES INC., a
Delaware corporation (the "Guarantor", which term
shall, after the Merger referred to in the Credit
Agreement referred to below, include the surviving
corporation in such Merger) and CREDIT SUISSE, a bank
organized under the laws of Switzerland, acting
through its New York branch, as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to the Credit Agreement dated as of March
12, 1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Shared Technologies Fairchild Communications Corp., a
Delaware corporation (the "Borrower"), the Guarantor, the lenders from time to
time party thereto (the "Lenders"), Credit Suisse, as administrative agent (in
such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower, and the
Fronting Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. As the owner of all of the issued and
outstanding capital stock of the Borrower, the Guarantor acknowledges that it
will derive substantial benefit from the making of the Loans by the Lenders and
the issuance of the Letters of Credit by the Fronting Banks. The obligations of
the Lenders to make Loans and of the Fronting Banks to issue Letters of Credit
are conditioned on, among other things, the execution and delivery by the
Guarantor of a Guarantee Agreement in the form hereof. As consideration therefor
and in order to induce the Lenders to make Loans and the Fronting Banks to issue
Letters of Credit, the Guarantor is willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. The Guarantor unconditionally
guarantees, as a primary obligor and not merely as a surety, (a) the due and
punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Loan Parties under or pursuant to
the Credit Agreement and the other Loan Documents and (c) unless otherwise
agreed upon in writing by the applicable Lender party thereto, all obligations
of the Borrower, monetary or otherwise, under each Interest Rate Protection
Agreement entered into with a counterparty that was a Lender at the time such
Interest Rate Protection Agreement was entered into (all the monetary and other
obligations
<PAGE>
referred to in the preceding clauses (a) through (c) being collectively called
the "Obligations"). The Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee notwithstanding any
extension or renewal of any Obligation. The Guarantor further agrees that (a)
the maturity of the Obligations guaranteed hereby may be accelerated as provided
in Article VII of the Credit Agreement for the purposes of the Guarantor's
guarantee herein, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed hereby,
and (b) in the event of any declaration of acceleration of such obligations as
provided in such Article VII, such Obligations (whether or not due and payable)
shall forthwith become due and payable by the Guarantor for the purposes of this
Section.
SECTION 2. Obligations Not Waived. To the fullest extent
permitted by applicable law, the Guarantor waives presentment to, demand of
payment from and protest to the Borrower of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of the Guarantor hereunder shall not be affected by (a) the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce or exercise any right or remedy against the Borrower or any other
guarantor of the Obligations under the provisions of the Credit Agreement, any
other Loan Document or otherwise, (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of this
Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any other guarantor of the Obligations or (c) the
failure to perfect any security interest in, or the release of, any of the
security held by or on behalf of the Collateral Agent or any other Secured
Party.
SECTION 3. Security. The Guarantor authorizes the Collateral
Agent and each of the other Secured Parties to (a) take and hold security for
the payment of this Guarantee and the Obligations and exchange, enforce, waive
and release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may determine and (c)
release or substitute any one or more endorsees, other guarantors or other
obligors.
SECTION 4. Guarantee of Payment. The Guarantor further agrees
that its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The
obligations of the Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of the Guarantor or that would otherwise operate as
a discharge of the Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the
2
<PAGE>
Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent
permitted by applicable law, the Guarantor waives any defense based on or
arising out of any defense of the Borrower or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower, other than the final and indefeasible payment
in full in cash of the Obligations. The Collateral Agent and the other Secured
Parties may, at their election, foreclose on any security held by one or more of
them by one or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of the Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly paid in cash. To the fullest extent
permitted by applicable law, the Guarantor waives any defense arising out of any
such election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of the Guarantor against the Borrower or any other guarantor, as the
case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of
the foregoing and not in limitation of any other right that the Collateral Agent
or any other Secured Party has at law or in equity against the Guarantor by
virtue hereof, upon the failure of the Borrower or any other Loan Party to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, the Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash the amount of such
unpaid Obligations. Upon payment by the Guarantor of any sums to the Collateral
Agent or any Secured Party as provided above, all rights of the Guarantor
against the Borrower arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by the Guarantor is hereby subordinated in right
of payment to the prior payment in full of the Obligations. If any amount shall
erroneously be paid to the Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of the Borrower, such amount shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. The Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
the Guarantor assumes and incurs hereunder, and agrees that none of the
Collateral Agent or the other Secured Parties will have any duty to advise the
Guarantor of information known to it or any of them regarding such circumstances
or risks.
SECTION 9. Termination. The Guarantee made hereunder (a) shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the L/C
Exposure has been reduced to zero and the Fronting Banks have no further
obligation to issue Letters of Credit under the Credit Agreement and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Secured Party or the Guarantor upon the bankruptcy or
reorganization of the Borrower, the Guarantor or otherwise.
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<PAGE>
SECTION 10. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantor that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
when a counterpart hereof executed on behalf of the Guarantor shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding upon
the Guarantor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of the Guarantor, the Collateral Agent
and the other Secured Parties, and their respective successors and assigns,
except that the Guarantor shall not have the right to assign its rights or
obligations hereunder or any interest herein (and any such attempted assignment
shall be void).
SECTION 11. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on the Guarantor in any case shall entitle the Guarantor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantor and the Collateral Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 13. Notices. All communications and notices hereunder
shall be in writing and given as provided in Section 9.01 of the Credit
Agreement. All communications and notices hereunder to the Guarantor shall be
given to it at 100 Great Meadow Road Wethersfield, CT 06109, Attention of Chief
Executive Officer.
SECTION 14. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Guarantors herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Fronting Banks regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or the L/C Exposure does not equal zero and as long as
the Commitments and the L/C Commitment have not been terminated.
SECTION 15. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract,
4
<PAGE>
and shall become effective as provided in Section 10. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 16. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SHARED TECHNOLOGIES INC., as
Guarantor,
by
____________________________
Name:
Title:
CREDIT SUISSE, as Collateral Agent,
by
____________________________
Name:
Title:
by
____________________________
Name:
Title:
<PAGE>
EXHIBIT F
PLEDGE AGREEMENT dated as of March 13, 1996,
among SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS
CORP., a Delaware corporation (the "Borrower"),
SHARED TECHNOLOGIES FAIRCHILD INC., a Delaware
corporation ("STFI", which term shall, after the
Merger referred to in the Credit Agreement referred
to below, include the surviving corporation in such
Merger), each Subsidiary of the Borrower listed on
Schedule I hereto (each such Subsidiary individually
a "Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; the Borrower, STFI and the
Subsidiary Pledgors are referred to collectively
herein as the "Pledgors") and CREDIT SUISSE, a bank
organized under the laws of Switzerland, acting
through its New York branch ("Credit Suisse"), as
collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent"), (b) the Parent Guarantee Agreement dated
as of March 12, 1996 (as amended, supplemented or otherwise modified from time
to time, the "Parent Guarantee Agreement"), between STFI and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of March 12, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"; and, collectively with the Parent Guarantee Agreement, the
"Guarantee Agreements") among the Subsidiary Pledgors and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower and the
Fronting Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. STFI and the Subsidiary Guarantors have
agreed to guarantee, among other things, all the obligations of the Borrower
under the Credit Agreement. The obligations of the Lenders to make Loans and of
the Fronting Banks to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Pledgors of a Pledge Agreement in the
form hereof to secure (a) the due and punctual payment by the Borrower of (i)
the principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrower to the Secured Parties
under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of STFI under or pursuant to
the Parent Guarantee Agreement or the other Loan Documents, (d) the due and
punctual payment and performance of all the covenants, agreements, obligations
and liabilities of each
<PAGE>
Subsidiary Pledgor under or pursuant to the Subsidiary Guarantee Agreement or
the other Loan Documents and (e) the due and punctual payment and performance of
all obligations of the Borrower under each Interest Rate Protection Agreement
entered into with any counterparty that was a Lender at the time such Interest
Rate Protection Agreement was entered into (all the monetary and other
obligations referred to in the preceding clauses (a) through (e) being referred
to collectively as the "Obligations"). Capitalized terms used herein and not
defined herein shall have meanings assigned to such terms in the Credit
Agreement.
Accordingly, the Pledgors and the Collateral Agent, on behalf
of itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
SECTION 1. Pledge. As security for the payment and
performance, as the case may be, in full of the Obligations, each Pledgor hereby
transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over
and delivers unto the Collateral Agent, its successors and assigns, and hereby
grants to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, a security interest in all of the Pledgor's
right, title and interest in, to and under (a) the shares of capital stock owned
by it and listed on Schedule II hereto and any shares of capital stock obtained
in the future by the Pledgor and the certificates representing all such shares
(the "Pledged Stock"); provided that the Pledged Stock shall not include, to the
extent that applicable law requires that a subsidiary of the Pledgor issue
directors' qualifying shares, such qualifying shares; (b)(i) the debt securities
listed opposite the name of the Pledgor on Schedule II hereto, (ii) any debt
securities in the future issued to the Pledgor and (iii) the promissory notes
and any other instruments evidencing such debt securities (the "Pledged Debt
Securities"); (c) all other property that may be delivered to and held by the
Collateral Agent pursuant to the terms hereof; (d) subject to Section 5, all
payments of principal or interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed, in
respect of, in exchange for or upon the conversion of the securities referred to
in clauses (a) and (b) above; (e) subject to Section 5, all rights and
privileges of the Pledgor with respect to the securities and other property
referred to in clauses (a), (b), (c) and (d) above; and (f) all proceeds of any
of the foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the "Collateral"). Upon delivery to the Collateral
Agent, (a) any stock certificates, notes or other securities now or hereafter
included in the Collateral (the "Pledged Securities") shall be accompanied by
undated stock powers duly executed in blank or other instruments of transfer
satisfactory to the Collateral Agent and by such other instruments and documents
as the Collateral Agent may reasonably request and (b) all other property
comprising part of the Collateral shall be accompanied by proper instruments of
assignment duly executed by the applicable Pledgor and such other instruments or
documents as the Collateral Agent may reasonably request. Each delivery of
Pledged Securities shall be accompanied by a schedule describing the securities
theretofore and then being pledged hereunder, which schedule shall be attached
hereto as Schedule II and made a part hereof. Each schedule so delivered shall
supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees
promptly to deliver or cause to be delivered to the Collateral Agent any and all
Pledged Securities, and any and all certificates or other instruments or
documents representing the Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed
money owed to the Pledgor by
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<PAGE>
any person to be evidenced by a duly executed promissory note that is pledged
and delivered to the Collateral Agent pursuant to the terms thereof.
SECTION 3. Representations, Warranties and Covenants. Each
Pledgor hereby represents, warrants and covenants, as to itself and the
Collateral pledged by it hereunder, to and with the Collateral Agent that:
(a) the Pledged Stock represents that percentage as set forth
on Schedule II of the issued and outstanding shares of each class of
the capital stock of the issuer with respect thereto;
(b) except for the security interest granted hereunder, the
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (ii) holds the same free and clear of all Liens, (iii)
will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on,
the Collateral, other than pursuant hereto, and (iv) subject to Section
5, will cause any and all Collateral, whether for value paid by the
Pledgor or otherwise, to be forthwith deposited with the Collateral
Agent and pledged or assigned hereunder;
(c) the Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will
defend its title or interest thereto or therein against any and all
Liens (other than the Lien created by this Agreement), however arising,
of all persons whomsoever;
(d) no consent of any other person (including stockholders or
creditors of any Pledgor) and no consent or approval of any
Governmental Authority or any securities exchange was or is necessary
to the validity of the pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors of
this Agreement, when the Pledged Securities, certificates or other
documents representing or evidencing the Collateral are delivered to
the Collateral Agent in accordance with this Agreement, the Collateral
Agent will obtain a valid and perfected first lien upon and security
interest in such Pledged Securities as security for the payment and
performance of the Obligations;
(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;
(g) all of the Pledged Stock has been duly authorized and
validly issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged
Stock is accurate and complete in all material respects as of the date
hereof; and
(i) the pledge of the Pledged Stock pursuant to this Agreement
does not violate Regulation G, T, U or X of the Federal Reserve Board
or any successor thereto as of the date hereof.
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<PAGE>
SECTION 4. Registration in Nominee Name; Denominations. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Pledged Securities in its own name as
pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the
Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent.
Each Pledgor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with respect to Pledged Securities
registered in the name of such Pledgor. The Collateral Agent shall at all times
have the right to exchange the certificates representing Pledged Securities for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a)
Unless and until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner of
Pledged Securities or any part thereof for any purpose consistent with
the terms of this Agreement, the Credit Agreement and the other Loan
Documents; provided, however, that such Pledgor will not be entitled to
exercise any such right if the result thereof could materially and
adversely affect the rights inuring to a holder of the Pledged
Securities or the rights and remedies of any of the Secured Parties
under this Agreement or the Credit Agreement or any other Loan Document
or the ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all
such proxies, powers of attorney and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and/or consensual rights and powers it is entitled
to exercise pursuant to subparagraph (i) above and to receive the cash
dividends it is entitled to receive pursuant to subparagraph (iii)
below.
(iii) Each Pledgor shall be entitled to receive and retain any and
all cash dividends, interest and principal paid on the Pledged
Securities to the extent and only to the extent that such cash
dividends, interest and principal are permitted by, and otherwise paid
in accordance with, the terms and conditions of the Credit Agreement,
the other Loan Documents and applicable laws. All noncash dividends,
interest and principal, and all dividends, interest and principal paid
or payable in cash or otherwise in connection with a partial or total
liquidation or dissolution, return of capital, capital surplus or
paid-in surplus, and all other distributions (other than distributions
referred to in the preceding sentence) made on or in respect of the
Pledged Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the issuer of any Pledged
Securities or received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by any Pledgor, shall not be commingled by
such Pledgor with any of its other funds or property but shall be held
separate and apart therefrom, shall be held in trust for the benefit of
the Collateral Agent and shall be forthwith delivered to the Collateral
Agent in the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event
of Default, all rights of any Pledgor to dividends, interest or principal that
such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to receive
and retain such dividends,
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<PAGE>
interest or principal. All dividends, interest or principal received by the
Pledgor contrary to the provisions of this Section 5 shall be held in trust for
the benefit of the Collateral Agent, shall be segregated from other property or
funds of such Pledgor and shall be forthwith delivered to the Collateral Agent
upon demand in the same form as so received (with any necessary endorsement).
Any and all money and other property paid over to or received by the Collateral
Agent pursuant to the provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 7. After all Events of Default have been cured or
waived, the Collateral Agent shall, within five Business Days after all such
Events of Default have been cured or waived, repay to each Pledgor all cash
dividends, interest or principal (without interest), that such Pledgor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii)
above and which remain in such account.
(c) Upon the occurrence and during the continuance of an Event
of Default, all rights of any Pledgor to exercise the voting and consensual
rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of
this Section 5, and the obligations of the Collateral Agent under paragraph
(a)(ii) of this Section 5, shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to exercise such voting and consensual rights and powers;
provided that, unless otherwise directed by the Required Lenders, the Collateral
Agent shall have the right from time to time following and during the
continuance of an Event of Default to permit the Pledgors to exercise such
rights; provided further that, notwithstanding the foregoing, all voting and
consensual rights and powers shall remain with the Pledgor pending receipt of
any necessary approval of the Federal Communications Commission ("FCC") of any
assignment of transfer of control of the FCC licenses held by the Borrower or
any Subsidiary. After all Events of Default have been cured or waived, such
Pledgor will have the right to exercise the voting and consensual rights and
powers that it would otherwise be entitled to exercise pursuant to the terms of
paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, subject to applicable regulatory
and legal requirements, the Collateral Agent may sell the Collateral, or any
part thereof, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of any Pledgor, and, to the extent permitted by
applicable law, the Pledgors hereby waive all rights of redemption, stay,
valuation and appraisal any Pledgor now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the Collateral
Agent's intention to make any sale of such Pledgor's Collateral. Such notice, in
the case of a public sale, shall state the time and place for such sale and, in
the case of a sale at a broker's board or on a securities exchange, shall state
the board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent
5
<PAGE>
may fix and state in the notice of such sale. At any such sale, the Collateral,
or portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Collateral Agent may (in its sole and absolute
discretion) determine. The Collateral Agent shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid in full by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
public (or, to the extent permitted by applicable law, private) sale made
pursuant to this Section 6, any Secured Party may bid for or purchase, free from
any right of redemption, stay or appraisal on the part of any Pledgor (all said
rights being also hereby waived and released), the Collateral or any part
thereof offered for sale and may make payment on account thereof by using any
claim then due and payable to it from such Pledgor as a credit against the
purchase price, and it may, upon compliance with the terms of sale, hold, retain
and dispose of such property without further accountability to such Pledgor
therefor. For purposes hereof, (a) a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof, (b) the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and (c) such Pledgor shall not be entitled to the return of the Collateral or
any portion thereof subject thereto, notwithstanding the fact that after the
Collateral Agent shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Collateral Agent may
proceed by a suit or suits at law or in equity to foreclose upon the Collateral
and to sell the Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction or pursuant to a
proceeding by a court-appointed receiver. Any sale pursuant to the provisions of
this Section 6 shall be deemed to conform to the commercially reasonable
standards as provided in Section 9-504(3) of the Uniform Commercial Code as in
effect in the State of New York or its equivalent in other jurisdictions.
SECTION 7. Application of Proceeds of Sale. The proceeds of
any sale of Collateral pursuant to Section 6, as well as any Collateral
consisting of cash, shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent in connection with such sale or otherwise in
connection with this Agreement, any other Loan Document or any of the
Obligations, including all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Loan Document
on behalf of any Pledgor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under
any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
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<PAGE>
The Collateral Agent shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in accordance with
this Agreement. Upon any sale of the Collateral by the Collateral Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the purchase money by the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor
agrees to pay upon demand to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees, other charges and
disbursements of its counsel and of any experts or agents, that the Collateral
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Collateral Agent hereunder or (iv) the failure by such
Pledgor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Pledgor agrees to indemnify the Collateral
Agent and the Indemnitees (as defined in Section 9.05 of the Credit Agreement)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
other charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby or (ii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 8 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document or any investigation made by or on behalf of the Collateral
Agent or any other Secured Party. All amounts due under this Section 8 shall be
payable on written demand therefor and shall bear interest at the rate specified
in Section 2.06 of the Credit Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each
Pledgor hereby appoints the Collateral Agent the attorney-in-fact of such
Pledgor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default, with full power of
substitution either in the Collateral Agent's name or in the name of such
Pledgor, to ask for, demand, sue for, collect, receive and give acquittance for
any and all moneys due or to become due under and by virtue of any Collateral,
to endorse checks, drafts, orders and other instruments for the payment of money
payable
7
<PAGE>
to the Pledgor representing any interest or dividend or other distribution
payable in respect of the Collateral or any part thereof or on account thereof
and to give full discharge for the same, to settle, compromise, prosecute or
defend any action, claim or proceeding with respect thereto, and to sell,
assign, endorse, pledge, transfer and to make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent, or to present or file any claim or notice, or
to take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby.
The Collateral Agent and the other Secured Parties shall be accountable only for
amounts actually received as a result of the exercise of the powers granted to
them herein, and neither they nor their officers, directors, employees or agents
shall be responsible to any Pledgor for any act or failure to act hereunder,
except for their own gross negligence or wilful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Collateral Agent and the Pledgor or Pledgors with respect to which
such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
SECTION 11. Securities Act, etc. In view of the position of
the Pledgors in relation to the Pledged Securities, or because of other current
or future circumstances, a question may arise under the Securities Act of 1933,
as now or hereafter in effect, or any similar statute hereafter enacted
analogous in purpose or effect (such Act and any such similar statute as from
time to time in effect being called the "Federal Securities Laws") with respect
to any disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Securities for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion, (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and
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<PAGE>
negotiate with a single potential purchaser to effect such sale. Each Pledgor
acknowledges and agrees that any such sale might result in prices and other
terms less favorable to the seller than if such sale were a public sale without
such restrictions. In the event of any such sale, the Collateral Agent shall
incur no responsibility or liability for selling all or any part of the Pledged
Securities at a price that the Collateral Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached. The provisions of this Section
11 will apply notwithstanding the existence of a public or private market upon
which the quotations or sales prices may exceed substantially the price at which
the Collateral Agent sells.
SECTION 12. Registration, etc. Each Pledgor agrees that, upon
the occurrence and during the continuance of an Event of Default hereunder, if
for any reason the Collateral Agent desires to sell any of the Pledged
Securities of the Borrower at a public sale, it will, at any time and from time
to time, upon the written request of the Collateral Agent, use its best efforts
to take or to cause the issuer of such Pledged Securities to take such action
and prepare, distribute and/or file such documents, as are required or advisable
in the reasonable opinion of counsel for the Collateral Agent to permit the
public sale of such Pledged Securities. Each Pledgor further agrees to
indemnify, defend and hold harmless the Collateral Agent, each other Secured
Party, any underwriter and their respective officers, directors, affiliates and
controlling persons from and against all loss, liability, expenses, costs of
counsel (including, without limitation, reasonable fees and expenses to the
Collateral Agent of legal counsel), and claims (including the costs of
investigation) that they may incur insofar as such loss, liability, expense or
claim arises out of or is based upon any alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or in
any notification or offering circular, or arises out of or is based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar
as the same may have been caused by any untrue statement or omission based upon
information furnished in writing to such Pledgor or the issuer of such Pledged
Securities by the Collateral Agent or any other Secured Party expressly for use
therein. Each Pledgor further agrees, upon such written request referred to
above, to use its best efforts to qualify, file or register, or cause the issuer
of such Pledged Securities to qualify, file or register, any of the Pledged
Securities under the Blue Sky or other securities laws of such states as may be
requested by the Collateral Agent and keep effective, or cause to be kept
effective, all such qualifications, filings or registrations. Each Pledgor will
bear all costs and expenses of carrying out its obligations under this Section
12. Each Pledgor acknowledges that there is no adequate remedy at law for
failure by it to comply with the provisions of this Section 12 and that such
failure would not be adequately compensable in damages, and therefore agrees
that its agreements contained in this Section 12 may be specifically enforced.
SECTION 13. Regulatory Approval. Notwithstanding anything to
the contrary contained herein, the Collateral Agent will not take any action
pursuant to this Pledge Agreement that would constitute or result in any
assignment of an FCC license or any change of control of the Borrower, any
Subsidiary, any Unrestricted Subsidiary or any STFI Unrestricted Subsidiary
subject to regulation by the FCC if such assignment of FCC license or change of
control would require under then existing law (including the written rules and
regulations promulgated by the FCC), the prior approval of the FCC, without
first obtaining such approval of the FCC. Each Pledgor agrees after the
occurrence of any Event of Default to take any action that the Collateral Agent
may reasonably request in order to obtain and enjoy the full rights and benefits
granted to the Collateral Agent by this Pledge Agreement and each other
agreement, instrument and document delivered to the Collateral Agent in
connection herewith or in any document evidencing or securing the collateral for
any of the Obligations, including specifically, at the Pledgor's own cost and
expense, the use of Pledgor's best efforts to assist in obtaining approval of
the FCC or any
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<PAGE>
applicable state regulatory authority for any action or transaction contemplated
by this Pledge Agreement that is then required by law, and specifically, without
limitation, upon request, to prepare, sign and file with the FCC or such state
regulatory authority the assignor's or transferor's portion of any application
or applications for consent to the assignment of license or transfer of control
necessary or appropriate under the FCC's or such state regulatory authority's
rules and regulations for approval of any Obligations secured hereby.
SECTION 14. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the grant of a security interest in the Collateral
and all obligations of each Pledgor hereunder, shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Credit Agreement, any other Loan Document, any agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the Obligations).
SECTION 15. Termination or Release. (a) This Agreement and the
security interests granted hereby shall terminate when all the Obligations have
been indefeasibly paid in full and the Lenders have no further commitment to
lend under the Credit Agreement, the L/C Exposure has been reduced to zero and
the Fronting Banks have no further obligation to issue Letters of Credit under
the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any
Collateral that is permitted under the Credit Agreement to any person that is
not a Pledgor, or, upon the effectiveness of any written consent to the release
of the security interest granted hereby in any Collateral pursuant to Section
9.08(b) of the Credit Agreement, the security interest in such Collateral shall
be automatically released.
(c) In connection with any termination or release pursuant to
paragraph (a) or (b), the Collateral Agent shall execute and deliver to any
Pledgor, at such Pledgor's expense, all documents that such Pledgor shall
reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 14 shall be without recourse to
or warranty by the Collateral Agent.
SECTION 16. Notices. All communications and notices hereunder
shall be in writing and given as provided in Section 9.01 of the Credit
Agreement. All communications and notices hereunder to any Subsidiary Pledgor
shall be given to it at the address for notices set forth on Schedule I, with a
copy to the Borrower.
SECTION 17. Further Assurances. Each Pledgor agrees to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder.
SECTION 18. Binding Effect; Several Agreement; Assignments.
Whenever in this
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<PAGE>
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Pledgor that are contained in
this Agreement shall bind and inure to the benefit of its successors and
assigns. This Agreement shall become effective as to any Pledgor when a
counterpart hereof executed on behalf of such Pledgor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon such
Pledgor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of such Pledgor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Pledgor shall have the right to assign its rights hereunder or any interest
herein or in the Collateral (and any such attempted assignment shall be void),
except as expressly contemplated by this Agreement or the other Loan Documents.
If all of the capital stock of a Pledgor is sold, transferred or otherwise
disposed of to a person that is not an Affiliate of the Borrower pursuant to a
transaction permitted by Section 6.05 of the Credit Agreement, such Pledgor
shall be released from its obligations under this Agreement without further
action. This Agreement shall be construed as a separate agreement with respect
to each Pledgor and may be amended, modified, supplemented, waived or released
with respect to any Pledgor without the approval of any other Pledgor and
without affecting the obligations of any other Pledgor hereunder
SECTION 19. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by each Pledgor
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Fronting Banks, regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero
and as long as the Commitments and the L/C Commitments have not been terminated.
(b) In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 20. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 21. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute a single contract, and shall become
effective as provided in Section 18. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 22. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement. Section headings used herein are for convenience
of reference only, are not part of this Agreement and are not to affect the
construction
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of, or to be taken into consideration in interpreting this Agreement.
SECTION 23. Jurisdiction; Consent to Service of Process. (a)
Each Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Pledgor or
its properties in the courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 15. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 24. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 25. Additional Pledgors. Pursuant to Section 5.11 of
the Credit Agreement, each Subsidiary of STFI, the Borrower or any Subsidiary
that was not in existence or not a Subsidiary on the date of the Credit
Agreement is required to enter in this Agreement as a Subsidiary Pledgor upon
becoming a Subsidiary if such Subsidiary owns or possesses property of a type
that would be considered Collateral hereunder. Upon execution and delivery by
the Collateral Agent and a Subsidiary of an instrument in the form of Annex 1,
such Subsidiary shall become a Subsidiary Pledgor hereunder with the same force
and effect as if originally named as a Subsidiary Pledgor herein. The execution
and delivery of such instrument shall not require the consent of any Pledgor
hereunder. The rights and obligations of each Pledgor hereunder shall remain in
full force and effect notwithstanding the addition of any new Subsidiary
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Pledgor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SHARED TECHNOLOGIES FAIRCHILD INC.,
by
-----------------------------
Name:
Title:
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.,
by
-----------------------------
Name:
Title: Authorized Officer
THE SUBSIDIARY PLEDGORS LISTED ON
SCHEDULE I HERETO,
by
-----------------------------
Name:
Title: Authorized Officer
CREDIT SUISSE, as Collateral Agent,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
13
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Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
Name Address
<PAGE>
Schedule II to the
Pledge Agreement
CAPITAL STOCK
Number of Registered Number and Class Percentage
Issuer Certificate Owner of Shares of Shares
DEBT SECURITIES
Principal Date of Maturity
Issuer Amount Note Date
<PAGE>
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the PLEDGE
AGREEMENT dated as of March 13, 1996, among SHARED
TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP., a
Delaware corporation (the "Borrower"), SHARED
TECHNOLOGIES FAIRCHILD INC., a Delaware corporation
("STFI", which term shall, after the Merger referred
to in the Credit Agreement referred to below, include
the surviving corporation in such Merger), each
Subsidiary of the Borrower listed on Schedule I
hereto (each such Subsidiary individually a
"Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; the Borrower, STFI and the
Subsidiary Pledgors are referred to collectively
herein as the "Pledgors") and CREDIT SUISSE, a bank
organized under the laws of Switzerland, acting
through its New York branch ("Credit Suisse"), as
collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
A. Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent"), (b) the Parent Guarantee Agreement dated
as of March 12, 1996 (as amended, supplemented or otherwise modified from time
to time, the "Parent Guarantee Agreement"), between STFI and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of March 12, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"; and, collectively with the Parent Guarantee Agreement, the
"Guarantee Agreements") among the Subsidiary Pledgors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in
order to induce the Lenders to make Loans and the Fronting Banks to issue
Letters of Credit. Pursuant to Section 5.11 of the Credit Agreement, each
Subsidiary of STFI, the Borrower or any Subsidiary that was not in existence or
not a Subsidiary on the date of the Credit Agreement is required to enter into
the Pledge Agreement as a Subsidiary Pledgor upon becoming a Subsidiary if such
Subsidiary owns or possesses property of a type that would be considered
Collateral under the Pledge Agreement. Section 25 of the Pledge Agreement
provides that such Subsidiaries may become Subsidiary Pledgors under the Pledge
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary (the "New Pledgor") is executing this
Supplement in accordance with the requirements of the Credit Agreement to become
a Subsidiary Pledgor under the Pledge Agreement in order to induce the Lenders
to make additional Loans and the Fronting Banks to issue additional Letters of
Credit and as consideration for Loans previously made and Letters of Credit
previously issued.
Accordingly, the Collateral Agent and the New Pledgor agree as
follows:
SECTION 1. In accordance with Section 25 of the Pledge
Agreement, the New Pledgor by its signature below becomes a Pledgor under the
Pledge Agreement with the same force and
<PAGE>
effect as if originally named therein as a Pledgor and the New Pledgor hereby
agrees (a) to all the terms and provisions of the Pledge Agreement applicable to
it as a Pledgor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Pledgor thereunder are true and
correct on and as of the date hereof. In furtherance of the foregoing, the New
Pledgor, as security for the payment and performance in full of the Obligations
(as defined in the Pledge Agreement), does hereby create and grant to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, their successors and assigns, a security interest in and lien on all of
the New Pledgor's right, title and interest in and to the Collateral (as defined
in the Pledge Agreement) of the New Pledgor. Each reference to a "Subsidiary
Pledgor" or a "Pledgor" in the Pledge Agreement shall be deemed to include the
New Pledgor. The Pledge Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Supplement shall become effective when
the Collateral Agent shall have received counterparts of this Supplement that,
when taken together, bear the signatures of the New Pledgor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that
set forth on Schedule I attached hereto is a true and correct schedule of all
its Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such provision
for so long as such provision is held to be invalid, illegal or unenforceable,
but the validity, legality and enforceability of the remaining provisions
contained herein and in the Pledge Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be
in writing and given as provided in Section 15 of the Pledge Agreement. All
communications and notices hereunder to the New Pledgor shall be given to it at
the address set forth under its signature hereto, with a copy to the Borrower.
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SECTION 9. The New Pledgor agrees to reimburse the Collateral
Agent for its reasonable out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, other charges and disbursements of
counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent
have duly executed this Supplement to the Pledge Agreement as of the day and
year first above written.
[Name of New Pledgor],
by
____________________________
Name:
Title:
Address:
CREDIT SUISSE, as Collateral Agent,
by
____________________________
Name:
Title:
by
____________________________
Name:
Title:
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Schedule I to
Supplement No.
to the Pledge Agreement
Pledged Securities of the New Pledgor
CAPITAL STOCK
Number of Registered Number and Class Percentage
Issuer Certificate Owner of Shares of Shares
DEBT SECURITIES
Principal Date of Maturity
Issuer Amount Note Date
<PAGE>
EXHIBIT G
SECURITY AGREEMENT dated as of March 13,
1996, among SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP., a Delaware corporation (the
"Borrower"), SHARED TECHNOLOGIES FAIRCHILD INC., a
Delaware corporation ("STFI", which term shall, after
the Merger referred to in the Credit Agreement
referred to below, include the surviving corporation
in such Merger), each subsidiary of the Borrower
listed on Schedule I hereto (each such subsidiary
individually a "Subsidiary Guarantor" and
collectively, the "Subsidiary Guarantors"; the
Subsidiary Guarantors, STFI and the Borrower are
referred to collectively herein as the "Grantors")
and CREDIT SUISSE, a bank organized under the laws of
Switzerland, acting through its New York branch
("Credit Suisse"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured
Parties (as defined herein).
Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent") and (b) the Parent Guarantee Agreement
dated as of March 12, 1996 (as amended, supplemented or otherwise modified from
time to time, the "Parent Guarantee Agreement"), between STFI and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of March 12, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"), among the Subsidiary Guarantors and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, and the
Fronting Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of STFI and the Subsidiary Guarantors
has agreed to guarantee, among other things, all the obligations of the Borrower
under the Credit Agreement. The obligations of the Lenders to make Loans and of
the Fronting Banks to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Grantors of an agreement in the form
hereof to secure (a) the due and punctual payment by the Borrower of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrower to the Secured Parties
under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Loan Party under or
pursuant to this
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Agreement and the other Loan Documents and (d) the due and punctual payment and
performance of all obligations of the Borrower under each Interest Rate
Protection Agreement entered into with any counterparty that was a Lender at the
time such Interest Rate Protection Agreement was entered into (all the monetary
and other obligations described in the preceding clauses (a) through (d) being
collectively called the "Obligations").
Accordingly, the Grantors and the Collateral Agent, on behalf
of itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the
context otherwise requires, all capitalized terms used but not defined herein
shall have the meanings set forth in the Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used
herein, the following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may
become obligated to any Grantor under, with respect to or on account of an
Account.
"Accounts" shall mean any and all right, title and interest of
any Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.
"Accounts Receivable" shall mean all Accounts and all right,
title and interest in any returned goods, together with all rights, titles,
securities and guarantees with respect thereto, including any rights to stoppage
in transit, replevin, reclamation and resales, and all related security
interests, liens and pledges, whether voluntary or involuntary, in each case
whether now existing or owned or hereafter arising or acquired.
"Collateral" shall mean all (a) Accounts Receivable, (b)
Documents, (c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash and
cash accounts and (g) Proceeds.
"Copyright License" shall mean any written agreement, now or
hereafter in effect, granting any right to any third party under any Copyright
now or hereafter owned by any Grantor or which such Grantor otherwise has the
right to license, or granting any right to such Grantor under any Copyright now
or hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all copyright rights in any work subject
to the copyright laws of the United States or any other country, whether as
author, assignee, transferee or otherwise, and (b) all registrations and
applications for registration of any such copyright in the United States or any
other country, including
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registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office, including those listed
on Schedule II.
"Credit Agreement" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger
sheets and documents covering or relating to any of the Collateral.
"Equipment" shall mean all equipment, furniture and
furnishings, and all tangible personal property similar to any of the foregoing,
including tools, parts and supplies of every kind and description, and all
improvements, accessions or appurtenances thereto, that are now or hereafter
owned by any Grantor. The term Equipment shall include Fixtures.
"Fixtures" shall mean all items of Equipment, whether now
owned or hereafter acquired, of any Grantor that become so related to particular
real estate that an interest in them arises under any real estate law applicable
thereto.
"General Intangibles" shall mean all choses in action and
causes of action and all other assignable intangible personal property of any
Grantor of every kind and nature (other than Accounts Receivable) now owned or
hereafter acquired by any Grantor, including corporate or other business
records, indemnification claims, contract rights (including rights under leases,
whether entered into as lessor or lessee, Interest Rate Protection Agreements
and other agreements), Intellectual Property, goodwill, registrations,
franchises, tax refund claims and any letter of credit, guarantee, claim,
security interest or other security held by or granted to any Grantor to secure
payment by an Account Debtor of any of the Accounts Receivable.
"Intellectual Property" shall mean all intellectual and
similar property of any Grantor of every kind and nature now owned or hereafter
acquired by any Grantor, including inventions, designs, Patents, Copyrights,
Licenses, Trademarks, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or information, software
and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements and
accessions to, and books and records describing or used in connection with, any
of the foregoing.
"Inventory" shall mean all goods of any Grantor, whether now
owned or hereafter acquired, held for sale or lease, or furnished or to be
furnished by any Grantor under contracts of service, or consumed in any
Grantor's business, including raw materials, intermediates, work in process,
packaging materials, finished goods, semi-finished inventory, scrap inventory,
manufacturing supplies and spare parts, and all such goods that have been
returned to or repossessed by or on behalf of any Grantor.
"License" shall mean any Patent License, Trademark License,
Copyright License or other license or sublicense to which any Grantor is a
party, including those listed on Schedule III (other than those license
agreements in existence on the date hereof and listed on Schedule III and those
license agreements entered into after the date hereof, which by their terms
prohibit assignment or a grant of a security interest by such Grantor as
licensee thereunder). The Secured Parties shall have a security interest in all
authorizations issued by the Federal Communications Commission ("FCC") or any
state or
3
<PAGE>
local regulatory agency to the maximum extent permitted by law, including,
without limitation, the right to receive all proceeds derived from or in
connection with the sale, assignment or transfer of such authorizations.
"Obligations" shall have the meaning assigned to such term in
the preliminary statement of this Agreement.
"Patent License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to make, use or sell
any invention on which a Patent, now or hereafter owned by any Grantor or which
any Grantor otherwise has the right to license, is in existence, or granting to
any Grantor any right to make, use or sell any invention on which a Patent, now
or hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.
"Patents" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all letters patent of the United States
or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and pending applications in the United
States Patent and Trademark Office or any similar offices in any other country,
including those listed on Schedule IV, and (b) all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, and the
inventions disclosed or claimed therein, including the right to make, use and/or
sell the inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate
substantially in the form of Annex 1 hereto, completed and supplemented with the
schedules and attachments contemplated thereby, and duly executed by a Financial
Officer and the chief legal officer of the Borrower.
"Proceeds" shall mean any consideration received from the
sale, exchange, license, lease or other disposition of any asset or property
that constitutes Collateral, any value received as a consequence of the
possession of any Collateral and any payment received from any insurer or other
person or entity as a result of the destruction, loss, theft, damage or other
involuntary conversion of whatever nature of any asset or property which
constitutes Collateral, and shall include, (a) any claim of any Grantor against
any third party for (and the right to sue and recover for and the rights to
damages or profits due or accrued arising out of or in connection with) (i)
past, present or future infringement of any Patent now or hereafter owned by any
Grantor, or licensed under a Patent License, (ii) past, present or future
infringement or dilution of any Trademark now or hereafter owned by any Grantor
or licensed under a Trademark License or injury to the goodwill associated with
or symbolized by any Trademark now or hereafter owned by any Grantor, (iii)
past, present or future breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any Grantor or licensed
under a Copyright License and (b) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the
Administrative Agent, (c) the Collateral Agent, (d) the Fronting Banks, (e) each
counterparty to an Interest Rate Protection Agreement entered into with the
Borrower if such counterparty was a Lender at the time the Interest Rate
Protection Agreement was entered into, (f) the beneficiaries of each
indemnification obligation undertaken by any Grantor under any Loan Document and
(g) the successors and assigns of each of the foregoing.
"Security Interest" shall have the meaning assigned to such
term in Section 2.01.
4
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"Trademark License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to use any Trademark
now or hereafter owned by any Grantor or which any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any Trademark now
or hereafter owned by any third party, and all rights of any Grantor under any
such agreement.
"Trademarks" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office, any State of the United States or any similar offices in any
other country or any political subdivision thereof, and all extensions or
renewals thereof, including those listed on Schedule V, (b) all goodwill
associated therewith or symbolized thereby and (c) all other assets, rights and
interests that uniquely reflect or embody such goodwill.
SECTION 1.03. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment
or performance, as the case may be, in full of the Obligations, each Grantor
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and assigns,
for the ratable benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in, all of such Grantor's right, title and
interest in, to and under the Collateral, whether now owned or any time
hereafter acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (the "Security
Interest"). Without limiting the foregoing, the Collateral Agent is hereby
authorized to file one or more financing statements (including fixture filings),
continuation statements, filings with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office or any similar
office in any other country) or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted by
each Grantor, without the signature of any Grantor, and naming any Grantor or
the Grantors as debtors and the Collateral Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security
Interest is granted as security only and shall not subject the Collateral Agent
or any other Secured Party to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral.
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ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to
the Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and
valid rights in and title to the Collateral with respect to which it has
purported to grant a Security Interest hereunder and has full power and
authority to grant to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other person other than any consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been
duly prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 6 to the Perfection Certificate,
which are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and Copyrights) that
are necessary to publish notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral in
which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(b) Each Grantor shall ensure and represents and warrants that
fully executed security agreements in the form hereof and containing a
description of all Collateral consisting of Intellectual Property shall have
been received and recorded within three months after the execution of this
Agreement with respect to United States Patents and United States registered
Trademarks (and Trademarks for which United States registration applications are
pending) and within one month after the execution of this Agreement with respect
to United States registered Copyrights for recording by the United States Patent
and Trademark Office and the United States Copyright Office pursuant to 35
U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and the regulations
thereunder, as applicable, and otherwise as may be required pursuant to the laws
of any other necessary jurisdiction, to protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral
consisting of Patents, Trademarks and Copyrights in which a security interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof) and its territories and possessions, or in
any other necessary jurisdiction, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with respect to
any Collateral consisting of Patents, Trademarks and Copyrights (or registration
or application for registration thereof) acquired or developed after the date
hereof).
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SECTION 3.03. Validity of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations, (b) subject
to the filings described in Section 3.02 above, a perfected security interest in
all Collateral in which a security interest may be perfected by filing,
recording or registering a financing statement or analogous document in the
United States (or any political subdivision thereof) and its territories and
possessions pursuant to the Uniform Commercial Code or other applicable law in
such jurisdictions and (c) a security interest that shall be perfected in all
Collateral in which a security interest may be perfected upon the receipt and
recording of this Agreement with the United States Patent and Trademark Office
and the United States Copyright Office, as applicable, within the three month
period (commencing as of the date hereof) pursuant to 35 U.S.C. ss. 261 or 15
U.S.C. ss. 1060 or the one month period (commencing as of the date hereof)
pursuant to 17 U.S.C. ss. 205 and otherwise as may be required pursuant to the
laws of any other necessary jurisdiction. The Security Interest is and shall be
prior to any other Lien on any of the Collateral, other than Liens expressly
permitted to be prior to the Security Interest pursuant to Section 6.02 of the
Credit Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is owned
by the Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed or
consented to the filing of (a) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Collateral, (b) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Collateral with the
United States Patent and Trademark Office or the United States Copyright Office
or (c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each case, for Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records;
Place of Business. (a) Each Grantor agrees promptly to notify the Collateral
Agent in writing of any change (i) in its corporate name or in any trade name
used to identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in its identity or corporate structure or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected first priority security interest in all the Collateral for
which perfection or priority, as the case may be, may be established by any such
filings. Each Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Collateral owned or held by such Grantor is damaged or
destroyed.
(b) Each Grantor agrees to maintain, at its own cost and
expense, such complete and accurate records with respect to the Collateral owned
by it as is consistent with its current practices and
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in accordance with such prudent and standard practices used in industries that
are the same as or similar to those in which such Grantor is engaged, but in any
event to include complete accounting records indicating all payments and
proceeds received with respect to any part of the Collateral, and, at such time
or times as the Collateral Agent may reasonably request, promptly to prepare and
deliver to the Collateral Agent a duly certified schedule or schedules in form
and detail satisfactory to the Collateral Agent showing the identity, amount and
location of any and all Collateral.
SECTION 4.02. Periodic Certification. Each year, at the time
of delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.04 of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
and the chief legal officer of the Borrower (a) setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming that
there has been no change in such information since the date of such certificate
or the date of the most recent certificate delivered pursuant to Section 4.02
and (b) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (a) above to the extent necessary to
protect and perfect the Security Interest for a period of not less than 18
months after the date of such certificate (except as noted therein with respect
to any continuation statements to be filed within such period). Each certificate
delivered pursuant to this Section 4.02 shall identify in the format of Schedule
II, III, IV or V, as applicable, all Intellectual Property of any Grantor in
existence on the date thereof and not then listed on such Schedules or
previously so identified to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at
its own cost and expense, take any and all actions necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees, at its
own expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Collateral Agent may from time to time request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection with
the execution and delivery of this Agreement, the granting of the Security
Interest and the filing of any financing statements (including fixture filings)
or other documents in connection herewith or therewith. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Collateral Agent, with prompt notice thereof to the
Grantors, to supplement this Agreement by supplementing Schedule II, III, IV or
V hereto or adding additional schedules hereto to specifically identify any
asset or item that may constitute Copyrights, Licenses, Patents or Trademarks;
provided, however, that any Grantor shall have the right, exercisable within 10
days after it has been notified by the Collateral Agent of the specific
identification of such Collateral, to advise the Collateral Agent in writing of
any inaccuracy of the representations and warranties made by such Grantor
hereunder with respect to such Collateral. Each Grantor agrees that it will use
its best efforts to take such action as
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shall be necessary in order that all representations and warranties hereunder
shall be true and correct with respect to such Collateral within 30 days after
the date it has been notified by the Collateral Agent of the specific
identification of such Collateral.
Each Grantor further agrees that if any authorization of such
Grantor excluded from the Collateral pursuant to the final sentence of the
definition of "License" could be included therein with the receipt of any
approval of, or the taking of any action by, any Governmental Authority, such
Grantor shall use its best efforts to obtain such approval or action as
expeditiously as possible.
SECTION 4.05. Inspection and Verification. The Collateral
Agent and such persons as the Collateral Agent may reasonably designate shall
have the right, at the Grantors' own cost and expense, to inspect the
Collateral, all records related thereto (and to make extracts and copies from
such records) and the premises upon which any of the Collateral is located, to
discuss the Grantors' affairs with the officers of the Grantors and their
independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, the Collateral, including, in the case of Accounts or Collateral in
the possession of any third person, by contacting Account Debtors or the third
person possessing such Collateral for the purpose of making such a verification.
The Collateral Agent shall have the absolute right to share any information it
gains from such inspection or verification with any Secured Party (it being
understood that any such information shall be deemed to be "Information" subject
to the provisions of Section 9.16 of the Credit Agreement).
SECTION 4.06. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past due taxes, assessments, charges, fees,
Liens, security interests or other encumbrances at any time levied or placed on
the Collateral and not permitted pursuant to Section 6.02 of the Credit
Agreement, and may pay for the maintenance and preservation of the Collateral to
the extent any Grantor fails to do so as required by the Credit Agreement or
this Agreement, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization; provided, however,
that nothing in this Section 4.06 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent or
any Secured Party to cure or perform, any covenants or other promises of any
Grantor with respect to taxes, assessments, charges, fees, liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any time
any Grantor shall take a security interest in any property of an Account Debtor
or any other person to secure payment and performance of an Account, such
Grantor shall promptly assign such security interest to the Collateral Agent.
Such assignment need not be filed of public record unless necessary to continue
the perfected status of the security interest against creditors of and
transferees from the Account Debtor or other person granting the security
interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and each Grantor jointly and severally agrees to indemnify
and hold harmless the Collateral Agent and the Secured Parties from and against
any and all liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. None of the
Grantors shall make
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or permit to be made an assignment, pledge or hypothecation of the Collateral or
shall grant any other Lien in respect of the Collateral, except as expressly
permitted by Section 6.02 of the Credit Agreement. None of the Grantors shall
make or permit to be made any transfer of the Collateral and each Grantor shall
remain at all times in possession of the Collateral owned by it, except that (a)
Inventory may be sold in the ordinary course of business and (b) unless and
until the Collateral Agent shall notify the Grantors that an Event of Default
shall have occurred and be continuing and that during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Collateral (which notice may be given by telephone if promptly
confirmed in writing), the Grantors may use and dispose of the Collateral in any
lawful manner not inconsistent with the provisions of this Agreement, the Credit
Agreement or any other Loan Document. Without limiting the generality of the
foregoing, each Grantor agrees that it shall not permit any Inventory to be in
the possession or control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in writing to hold the
Inventory subject to the Security Interest and the instructions of the
Collateral Agent and to waive and release any Lien held by it with respect to
such Inventory, whether arising by operation of law or otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None of
the Grantors will, without the Collateral Agent's prior written consent, grant
any extension of the time of payment of any of the Accounts Receivable,
compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any person liable for the payment thereof or allow
any credit or discount whatsoever thereon, other than extensions, credits,
discounts, compromises or settlements granted or made in the ordinary course of
business and consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged.
SECTION 4.11. Insurance. The Grantors, at their own expense,
shall maintain or cause to be maintained insurance covering physical loss or
damage to the Inventory and Equipment in accordance with Section 5.02 of the
Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent
deems advisable. All sums disbursed by the Collateral Agent in connection with
this Section 4.11, including reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by the
Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.
SECTION 4.12. Legend. Each Grantor shall legend, in form and
manner satisfactory to the Collateral Agent, its Accounts Receivable and its
books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and that
the Collateral Agent has a security interest therein.
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SECTION 4.13. Covenants Regarding Patent, Trademark and
Copyright Collateral. (a) Each Grantor agrees that it will not, nor will it
permit any of its licensees to, do any act, or omit to do any act, whereby any
Patent which is material to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees that it shall continue to
mark any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.
(b) Each Grantor (either itself or through its licensees or
its sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such Trademark
with notice of Federal or foreign registration to the extent necessary and
sufficient to establish and preserve its maximum rights under applicable law and
(iv) not knowingly use or knowingly permit the use of such Trademark in
violation of any third party rights.
(c) Each Grantor (either itself or through licensees) will,
for each work covered by a material Copyright, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary and sufficient to establish and preserve its maximum rights under
applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately
if it knows or has reason to know that any Patent, Trademark or Copyright
material to the conduct of its business may become abandoned, lost or dedicated
to the public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such Grantor's ownership
of any Patent, Trademark or Copyright, its right to register the same, or to
keep and maintain the same.
(e) In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, United States Copyright
Office or any office or agency in any political subdivision of the United States
or in any other country or any political subdivision thereof, unless it promptly
informs the Collateral Agent, and, upon request of the Collateral Agent,
executes and delivers any and all agreements, instruments, documents and papers
as the Collateral Agent may request to evidence the Collateral Agent's security
interest in such Patent, Trademark or Copyright, and each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
(f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
any Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.
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(g) In the event that any Grantor has reason to believe that
any Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.
(h) Upon and during the continuance of an Event of Default,
each Grantor shall use its best efforts to obtain all requisite consents or
approvals by the licensor of each Copyright License, Patent License or Trademark
License to effect the assignment of all of such Grantor's right, title and
interest thereunder to the Collateral Agent or its designee.
ARTICLE V
Power of Attorney
Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent and attorney-in-fact,
and in such capacity the Collateral Agent shall have the right, with power of
substitution for each Grantor and in each Grantor's name or otherwise, for the
use and benefit of the Collateral Agent and the Secured Parties, upon the
occurrence and during the continuance of an Event of Default (a) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any
part thereof; (b) to demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the Collateral; (c) to sign the
name of any Grantor on any invoice or bill of lading relating to any of the
Collateral; (d) to send verifications of Accounts Receivable to any Account
Debtor; (e) to commence and prosecute any and all suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in
respect of any Collateral; (f) to settle, compromise, compound, adjust or defend
any actions, suits or proceedings relating to all or any of the Collateral; (g)
to notify, or to require any Grantor to notify, Account Debtors to make payment
directly to the Collateral Agent; and (h) subject to the mandatory requirements
of applicable law, to use, sell, assign, transfer, pledge, make any agreement
with respect to or otherwise deal with all or any of the Collateral, and to do
all other acts and things necessary to carry out the purposes of this Agreement,
as fully and completely as though the Collateral Agent were the absolute owner
of the Collateral for all purposes, including assigning any contract to any
Subsidiary or any other person at any time during the continuance of any Event
of Default; provided, however, that nothing herein contained shall be construed
as requiring or obligating the Collateral Agent or any Secured Party to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent or any Secured Party, or to present or file any
claim or notice, or to take any action with respect to the Collateral or any
part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and no action taken or omitted to be taken by the
Collateral Agent or any Secured Party with respect to the Collateral or any part
thereof shall give rise to any defense, counterclaim or offset in favor of any
Grantor or to any claim or action against the Collateral Agent or any Secured
Party. It is understood and agreed that the appointment of
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the Collateral Agent as the agent and attorney-in-fact of the Grantors for the
purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Article V shall in no event relieve any Grantor of any of its
obligations hereunder or under any other Loan Document with respect to the
Collateral or any part thereof or impose any obligation on the Collateral Agent
or any Secured Party to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any Secured Party of any other or further right which it may
have on the date of this Agreement or hereafter, whether hereunder, under any
other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, each Grantor agrees to deliver
each item of Collateral to the Collateral Agent on demand, and it is agreed that
the Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the universe on such
terms and conditions and in such manner as the Collateral Agent shall determine
(other than in violation of any then-existing licensing arrangements to the
extent that waivers cannot be obtained), and (b) with or without legal process
and with or without prior notice or demand for performance, to take possession
of the Collateral and without liability for trespass to enter any premises where
the Collateral may be located for the purpose of taking possession of or
removing the Collateral and, generally, to exercise any and all rights afforded
to a secured party under the Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral,
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or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice (if any) of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Collateral Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent permitted
by law, private) sale made pursuant to this Section, any Secured Party may bid
for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to such Secured Party
from any Grantor as a credit against the purchase price, and such Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to any Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and no Grantor shall be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Collateral Agent may proceed by a suit or suits at law or in equity
to foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent
shall apply the proceeds of any collection or sale of the Collateral, as well as
any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Loan Document
on behalf of any Grantor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under
any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent
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jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property.
For the purpose of enabling the Collateral Agent to exercise rights and remedies
under this Article at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use, license or
sub-license any of the Collateral consisting of Intellectual Property now owned
or hereafter acquired by such Grantor, and wherever the same may be located, and
including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof. The use of such license
by the Collateral Agent shall be exercised, at the option of the Collateral
Agent, upon the occurrence and during the continuation of an Event of Default;
provided that any license, sub-license or other transaction entered into by the
Collateral Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices
hereunder shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Guarantor shall be given
to it at its address or telecopy number set forth on Schedule I, with a copy to
the Borrower.
SECTION 7.02. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest and all obligations of the
Grantors hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Grantor in respect of the
Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants,
agreements, representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or
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delivered in connection with or pursuant to this Agreement shall be considered
to have been relied upon by the Secured Parties and shall survive the making by
the Lenders of the Loans, and the execution and delivery to the Lenders of any
notes evidencing such Loans, regardless of any investigation made by the Lenders
or on their behalf, and shall continue in full force and effect until this
Agreement shall terminate.
SECTION 7.04. Binding Effect; Several Agreement. This
Agreement shall become effective as to any Grantor when a counterpart hereof
executed on behalf of such Grantor shall have been delivered to the Collateral
Agent and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such Grantor and the
Collateral Agent and their respective successors and assigns, and shall inure to
the benefit of such Grantor, the Collateral Agent and the other Secured Parties
and their respective successors and assigns, except that no Grantor shall have
the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer shall
be void) except as expressly contemplated by this Agreement or the Credit
Agreement. This Agreement shall be construed as a separate agreement with
respect to each Grantor and may be amended, modified, supplemented, waived or
released with respect to any Grantor without the approval of any other Grantor
and without affecting the obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Grantor or the Collateral Agent
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses;
Indemnification. (a) Each Grantor jointly and severally agrees to pay upon
demand to the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees, disbursements and other charges of its counsel
and of any experts or agents, which the Collateral Agent may incur in connection
with (i) the administration of this Agreement, (ii) the custody or preservation
of, or the sale of, collection from or other realization upon any of the
Collateral, (iii) the exercise, enforcement or protection of any of the rights
of the Collateral Agent hereunder or (iv) the failure of any Grantor to perform
or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Grantor jointly and severally agrees to
indemnify the Collateral Agent and the other Indemnitees against, and hold each
of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable fees, disbursements and other charges of
counsel, incurred by or asserted against any of them arising out of, in any way
connected with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating
hereto or to the Collateral, whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.06 shall remain
16
<PAGE>
operative and in full force and effect regardless of the termination of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Collateral Agent or
any Lender. All amounts due under this Section 7.06 shall be payable on written
demand therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK.
SECTION 7.08. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Fronting Banks, the Administrative Agent and
the Lenders under the other Loan Documents are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Collateral Agent and the Grantor or Grantors with
respect to which such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.08 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 7.09.
SECTION 7.10. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
17
<PAGE>
SECTION 7.11 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract (subject to Section
7.04), and shall become effective as provided in Section 7.04. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
SECTION 7.12. Headings. Article and Section headings used
herein are for the purpose of reference only, are not part of this Agreement and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 7.13. Jurisdiction; Consent to Service of Process. (a)
Each Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent, the Administrative Agent, the Fronting Banks or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Grantor or its properties in the courts of
any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 7.01. Nothing
in this Agreement will affected the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 7.14. Termination. This Agreement and the Security
Interest shall terminate when all the Obligations have been indefeasibly paid in
full, the Lenders have no further commitment to lend, the L/C Exposure has been
reduced to zero and the Fronting Banks have no further commitment to issue
Letters of Credit under the Credit Agreement, at which time the Collateral Agent
shall execute and deliver to the Grantors, at the Grantors' expense, all Uniform
Commercial Code termination statements and similar documents which the Grantors
shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section 7.14
shall be without recourse to or warranty by the Collateral Agent. A Subsidiary
Guarantor shall automatically be released from its obligations hereunder and the
Security Interest in the Collateral of such Subsidiary Guarantor shall be
automatically released in the event that all the capital stock of such
Subsidiary Guarantor shall be sold, transferred or otherwise disposed of to a
person that is not an Affiliate of the Borrower in accordance with the terms of
the Credit Agreement; provided that the Required Lenders shall have consented to
such sale, transfer or other disposition (to the extent required
18
<PAGE>
by the Credit Agreement) and the terms of such consent did not provide
otherwise.
SECTION 7.15. Additional Grantors. Upon execution and delivery
by the Collateral Agent and a Subsidiary of an instrument in the form of Annex 2
hereto, such Subsidiary shall become a Grantor hereunder with the same force and
effect as if originally named as a Grantor herein. The execution and delivery of
any such instrument shall not require the consent of any Grantor hereunder. The
rights and obligations of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor as a party to this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SHARED TECHNOLOGIES FAIRCHILD INC.,
by
--------------------------
Name:
Title:
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.,
by
--------------------------
Name:
Title: Authorized Officer
EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON SCHEDULE I HERETO,
by
--------------------------
Name:
Title: Authorized Officer
19
<PAGE>
CREDIT SUISSE, as Collateral Agent,
by
--------------------------
Name:
Title:
by
--------------------------
Name:
Title:
20
<PAGE>
SCHEDULE I
SUBSIDIARY GUARANTORS
<PAGE>
SCHEDULE II
COPYRIGHTS
22
<PAGE>
SCHEDULE III
LICENSES
23
<PAGE>
SCHEDULE IV
PATENTS
24
<PAGE>
SCHEDULE V
TRADEMARKS
25
<PAGE>
Annex 1 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, as documentation agent (individually and collectively in such
capacity, the "Documentation Agent"), (b) the Parent Guarantee Agreement dated
as of March 12, 1996 (as amended, supplemented or otherwise modified from time
to time, the "Parent Guarantee Agreement"), between STFI and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of March 12, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"), among the Subsidiary Guarantors and the Collateral Agent.
The undersigned, a Financial Officer and a Legal Officer,
respectively, of STFI, hereby certify to the Collateral Agent and each other
Secured Party as follows:
1. Names. (a) The exact corporate name of each Grantor, as
such name appears in its respective certificate of incorporation, is as follows:
(b) Set forth below is each other corporate name each Grantor
has had in the past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has
changed its identity or corporate structure in any way within the past five
years. Changes in identity or corporate structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature or
jurisdiction of corporate organization. If any such change has occurred, include
in Schedule 1 the information required by Sections 1 and 2 of this certificate
as to each acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including
trade names or similar appellations) used by each Grantor or any of its
divisions or other business units in connection with the conduct of its business
or the ownership of its properties at any time during the past five years:
(e) Set forth below is the Federal Taxpayer Identification
Number of each Grantor:
2. Current Locations. (a) The chief executive office of each Grantor
is located at the address set forth opposite its name below:
Grantor Mailing Address County State
<PAGE>
(b) Set forth below opposite the name of each Grantor are all locations
where such Grantor maintains any books or records relating to any Accounts
Receivable (with each location at which chattel paper, if any, is kept being
indicated by an "*"):
Grantor Mailing Address County State
(c) Set forth below opposite the name of each Grantor are all the
places of business of such Grantor not identified in paragraph (a) or (b) above:
Grantor Mailing Address County State
(d) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified above:
Grantor Mailing Address County State
(e) Set forth below opposite the name of each Grantor are the names and
addresses of all persons other than such Grantor that have possession of any of
the Collateral of such Grantor:
Grantor Mailing Address County State
3. Unusual Transactions. All Accounts Receivable have been originated
by the Grantors and all Inventory has been acquired by the Grantors in the
ordinary course of business.
4. File Search Reports. Attached hereto as Schedule 4(A) are true
copies of file search reports from the Uniform Commercial Code filing offices
where filings described in Section 3.19 of the Credit Agreement are to be made.
Attached hereto as Schedule 4(B) is a true copy of each financing statement or
other filing identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where a Grantor has
Collateral as identified in Section 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth, with respect to the filings described in Section 5 above, each
filing and the filing office in which such filing is to be made.
7. Filing Fees. All filing fees and taxes payable in connection with
the filings described in Section 5 above have been paid.
3
<PAGE>
8. Stock Ownership. Attached hereto as Schedule 8 is a true and correct
list of all the duly authorized, issued and outstanding stock of each Subsidiary
and the record and beneficial owners of such stock. Also set forth on Schedule 8
is each equity Investment of STFI and each Subsidiary that represents 50% or
less of the equity of the entity in which such investment was made.
9. Notes. Attached hereto as Schedule 9 is a true and correct list of
all notes held by STFI and each Subsidiary and all intercompany notes between
STFI and each Subsidiary of STFI and between each Subsidiary of STFI and each
other such Subsidiary.
10. Advances. Attached hereto as Schedule 10 is (a) a true and correct
list of all advances made by STFI to any Subsidiary of STFI or made by any
Subsidiary of STFI to STFI or any other Subsidiary of STFI, which advances will
be on and after the date hereof evidenced by one or more intercompany notes
pledged to the Collateral Agent under the Pledge Agreement, and (b) a true and
correct list of all unpaid intercompany transfers of goods sold and delivered by
or to STFI or any Subsidiary of STFI.
11. Mortgage Filings. Attached hereto as Schedule 11 is a schedule
setting forth, with respect to each Mortgaged Property, (i) the exact corporate
name of the corporation that owns such property as such name appears in its
certificate of incorporation, (ii) if different from the name identified
pursuant to clause (i), the exact name of the current record owner of such
property reflected in the records of the filing office for such property
identified pursuant to the following clause and (iii) the filing office in which
a Mortgage with respect to such property must be filed or recorded in order for
the Collateral Agent to obtain a perfected security interest therein.
IN WITNESS WHEREOF, the undersigned have duly executed this
certificate on this [ ] day of [ ].
SHARED TECHNOLOGIES INC.,
by
--------------------------
Name:
Title:[Financial Officer]
by
--------------------------
Name:
Title: [Legal Officer]
4
<PAGE>
Annex 2 to the
Security Agreement
SUPPLEMENT NO. __ dated as of , to the Security
Agreement dated as of March 12, 1996, among SHARED
TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP., a Delaware
corporation (the "Borrower"), SHARED TECHNOLOGIES INC., a
Delaware corporation ("STFI"), each subsidiary of the Borrower
listed on Schedule I thereto (each such subsidiary
individually a "Subsidiary Guarantor" and collectively, the
"Subsidiary Guarantors"; the Subsidiary Guarantors, STFI and
the Borrower are referred to collectively herein as the
"Grantors") and CREDIT SUISSE, a bank organized under the laws
of Switzerland, acting through its New York branch ("Credit
Suisse"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as defined
herein).
A. Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent") and (b) the Parent Guarantee Agreement
dated as of March 12, 1996 (as amended, supplemented or otherwise modified from
time to time, the "Parent Guarantee Agreement"), between STFI and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of March 12, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"), among the Subsidiary Guarantors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Security Agreement
and the Credit Agreement.
C. The Grantors have entered into the Security Agreement in
order to induce the Lenders to make Loans and the Fronting Banks to issue
Letters of Credit. Section 7.15 of Security Agreement provides that additional
Subsidiaries of STFI, the Borrower and the Subsidiaries may become Grantors
under the Security Agreement by execution and delivery of an instrument in the
form of this Supplement. The undersigned Subsidiary (the "New Grantor") is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Grantor under the Security Agreement in order to induce
the Lenders to make additional Loans and the Fronting Banks to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as
follows:
SECTION 1. In accordance with Section 7.15 of the Security
Agreement, the New Grantor by its signature below becomes a Grantor under the
Security Agreement with the same force and effect as if originally named therein
as a Grantor and the New Grantor hereby (a) agrees to all the terms and
provisions of the Security Agreement applicable to it as a Grantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of the Obligations (as defined in the Security Agreement),
does hereby create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns, a
security interest in and lien on all of the
<PAGE>
New Grantor's right, title and interest in and to the Collateral (as defined in
the Security Agreement) of the New Grantor. Each reference to a "Grantor" in the
Security Agreement shall be deemed to include the New Grantor. The Security
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Grantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that
(a) set forth on Schedule I attached hereto is a true and correct schedule of
the location of any and all Collateral of the New Grantor and (b) set forth
under its signature hereto, is the true and correct location of the chief
executive office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the
Security Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Security Agreement shall not in any way be affected
or impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be
in writing and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.
2
<PAGE>
SECTION 9. The New Grantor agrees to reimburse the Collateral
Agent for its reasonable out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, other charges and disbursements of
counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent
have duly executed this Supplement to the Security Agreement as of the day and
year first above written.
[Name Of New Grantor],
by
--------------------------
Name:
Title:
Address:
CREDIT SUISSE, as Collateral Agent,
by
--------------------------
Name:
Title:
by
--------------------------
Name:
Title:
3
<PAGE>
SCHEDULE I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
Description Location
<PAGE>
EXHIBIT H
SUBSIDIARY GUARANTEE AGREEMENT dated
as of March 13, 1996, among each of the subsidiaries
listed on Schedule I hereto (each such subsidiary
individually, a "Guarantor" and collectively, the
"Guarantors") of SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP., a Delaware corporation (the
"Borrower"), or SHARED TECHNOLOGIES FAIRCHILD INC., a
Delaware corporation ("STFI"), and CREDIT SUISSE, a
bank organized under the laws of Switzerland, acting
through its New York branch, as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to the Credit Agreement dated as of March
12, 1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, STFI, the lenders from time to time
party thereto (the "Lenders"), Credit Suisse, as administrative agent (in such
capacity, the "Administrative Agent") and as collateral agent (in such capacity,
the "Collateral Agent") for the Lenders, the fronting banks listed on Schedule
2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and NationsBank,
N.A., as documentation agent (individually and collectively in such capacity,
the "Documentation Agent"). Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the
Fronting Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of the Guarantors is a wholly owned
Subsidiary of the Borrower and acknowledges that it will derive substantial
benefit from the making of the Loans by the Lenders, and the issuance of the
Letters of Credit by the Fronting Banks. The obligations of the Lenders to make
Loans and of the Fronting Banks to issue Letters of Credit are conditioned on,
among other things, the execution and delivery by the Guarantors of a Guarantee
Agreement in the form hereof. As consideration therefor and in order to induce
the Lenders to make Loans and the Fronting Banks to issue Letters of Credit, the
Guarantors are willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally
guarantees, jointly with the other Guarantors and severally, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Loan Parties to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents and (c) unless otherwise agreed
<PAGE>
upon in writing by the applicable Lender party thereto, all obligations of the
Borrower, monetary or otherwise, under each Interest Rate Protection Agreement
entered into with a counterparty that was a Lender at the time such Interest
Rate Protection Agreement was entered into (all the monetary and other
obligations referred to in the preceding clauses (a) through (c) being
collectively called the "Obligations"). Each Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation. Each Guarantor
further agrees that (a) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article VII of the Credit Agreement for the purposes
of such Guarantor's guarantee herein, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in such Article VII, such Obligations (whether or
not due and payable) shall forthwith become due and payable by such Guarantor
for the purposes of this Section.
Anything contained in this Agreement to the contrary
notwithstanding, the obligations of each Guarantor hereunder shall be limited to
a maximum aggregate amount equal to the greatest amount that would not render
such Guarantor's obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any provisions of applicable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (a) in respect of intercompany indebtedness to the Borrower or
Affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to or offset by the amount paid by such Guarantor
hereunder and (b) under any Guarantee of senior unsecured indebtedness or
Indebtedness subordinated in right of payment to the Obligations which Guarantee
contains a limitation as to maximum amount similar to that set forth in this
paragraph, pursuant to which the liability of such Guarantor hereunder is
included in the liabilities taken into account in determining such maximum
amount) and after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, contribution, reimbursement, indemnity or similar rights of such
Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an
equitable allocation among such Guarantor and other Affiliates of the Borrower
of obligations arising under Guarantees by such parties (including the
Indemnity, Subrogation and Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent
permitted by applicable law, each Guarantor waives presentment to, demand of
payment from and protest to the Borrower of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of each Guarantor hereunder shall not be affected by (a) the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce or exercise any right or remedy against the Borrower or any other
Guarantor under the provisions of the Credit Agreement, any other Loan Document
or otherwise, (b) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of this Agreement, any other Loan
Document, any Guarantee or any other agreement, including with respect to any
other Guarantor under this Agreement or (c) the failure to perfect any security
interest in, or the release of, any of the security held by or on behalf of the
Collateral Agent or any other Secured Party.
SECTION 3. Security. Each of the Guarantors authorizes the
Collateral Agent and each of the other Secured Parties, to (a) take and hold
security for the payment of this Guarantee and the
2
<PAGE>
Obligations and exchange, enforce, waive and release any such security, (b)
apply such security and direct the order or manner of sale thereof as they in
their sole discretion may determine and (c) release or substitute any one or
more endorsees, other guarantors of other obligors.
SECTION 4. Guarantee of Payment. Each Guarantor further agrees
that its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of any Guarantor or that would otherwise operate as
a discharge of each Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent
permitted by applicable law, each of the Guarantors waives any defense based on
or arising out of any defense of the Borrower or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower, other than the final and indefeasible payment
in full in cash of the Obligations. The Collateral Agent and the other Secured
Parties may, at their election, foreclose on any security held by one or more of
them by one or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly paid in cash. Pursuant to applicable law,
each of the Guarantors waives any defense arising out of any such election even
though such election operates, pursuant to applicable law, to impair or to
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against the Borrower or any other Guarantor or guarantor, as the
case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of
the foregoing and not in limitation of any other right that the Collateral Agent
or any other Secured Party has at law or in equity against any Guarantor by
virtue hereof, upon the failure of the Borrower or any other Loan Party to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash the amount of such
unpaid Obligations. Upon payment by any Guarantor of any sums to the Collateral
3
<PAGE>
Agent or any Secured Party as provided above, all rights of such Guarantor
against the Borrower arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by any Guarantor is hereby subordinated in right
of payment to the prior payment in full of the Obligations. If any amount shall
erroneously be paid to any Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of the Borrower, such amount shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Guarantor assumes and incurs hereunder, and agrees that none of the
Collateral Agent or the other Secured Parties will have any duty to advise any
of the Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 9. Representations and Warranties. Each of the
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement are true and
correct.
SECTION 10. Termination. The Guarantees made hereunder (a)
shall terminate when all the Obligations have been indefeasibly paid in full and
the Lenders have no further commitment to lend under the Credit Agreement, the
L/C Exposure has been reduced to zero and the Fronting Banks have no further
obligation to issue Letters of Credit under the Credit Agreement and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Secured Party or any Guarantor upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Guarantors
that are contained in this Agreement shall bind and inure to the benefit of each
party hereto and their respective successors and assigns. This Agreement shall
become effective as to any Guarantor when a counterpart hereof executed on
behalf of such Guarantor shall have been delivered to the Collateral Agent, and
a counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (and any
such attempted assignment shall be void). If all of the capital stock of a
Guarantor is sold, transferred or otherwise disposed of pursuant to a
transaction permitted by Section 6.05 of the Credit Agreement, such Guarantor
shall be released from its obligations under this Agreement without further
action. This Agreement shall be construed as a separate agreement with respect
to each Guarantor and may be amended, modified, supplemented, waived or released
with respect to any Guarantor without the approval of any other Guarantor and
without affecting the obligations of any other Guarantor hereunder.
4
<PAGE>
SECTION 12. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Guarantors with respect to which such waiver, amendment or
modification relates and the Collateral Agent, with the prior written consent of
the Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 14. Notices. All communications and notices hereunder
shall be in writing and given as provided in Section 9.01 of the Credit
Agreement. All communications and notices hereunder to each Guarantor shall be
given to it at its address set forth in Schedule I with a copy to the Borrower.
SECTION 15. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by the Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Fronting Banks regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero
and as long as the Commitments and the L/C Commitment have not been terminated.
(b) In the event any one or more of the provisions contained
in this Agreement or in any other Loan Document should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single
5
<PAGE>
contract, and shall become effective as provided in Section 11. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process. (a)
Each Guarantor hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Guarantor or its properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 14. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Additional Guarantors. Pursuant to Section 5.11 of
the Credit Agreement, each Subsidiary of STFI, the Borrower or any Subsidiary
that was not in existence on the date of the Credit Agreement is required to
enter into this Agreement as a Guarantor upon becoming a
6
<PAGE>
Subsidiary. Upon execution and delivery after the date hereof by the Collateral
Agent and such a Subsidiary of an instrument in the form of Annex 1, such
Subsidiary shall become a Guarantor hereunder with the same force and effect as
if originally named as a Guarantor herein. The execution and delivery of any
instrument adding an additional Guarantor as a party to this Agreement shall not
require the consent of any other Guarantor hereunder. The rights and obligations
of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this Agreement.
SECTION 21. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Secured Party is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other Indebtedness at any time owing by such Secured
Party to or for the credit or the account of any Guarantor against any or all
the obligations of such Guarantor now or hereafter existing under this Agreement
and the other Loan Documents held by such Secured Party, irrespective of whether
or not such Secured Party shall have made any demand under this Agreement or any
other Loan Document and although such obligations may be unmatured. The rights
of each Secured Party under this Section 21 are in addition to other rights and
remedies (including other rights of setoff) which such Secured Party may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,
by
-----------------------
Name:
Title:
CREDIT SUISSE, as Collateral Agent,
by
-----------------------
Name:
Title:
by
-----------------------
Name:
Title:
7
<PAGE>
SCHEDULE I TO THE
GUARANTEE AGREEMENT
Guarantor Address
<PAGE>
Annex 1 to the
Subsidiary Guarantee Agreement
SUPPLEMENT NO. dated as of , to the
Subsidiary Guarantee Agreement dated as of March 12,
1996, among each of the subsidiaries listed on
Schedule I thereto (each such subsidiary
individually, a "Guarantor" and collectively, the
"Guarantors") of SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP., a Delaware corporation (the
"Borrower"), or SHARED TECHNOLOGIES FAIRCHILD INC.,
a Delaware corporation ("STFI"), and CREDIT SUISSE, a
bank organized under the laws of Switzerland, acting
through its New York branch, as collateral agent
(the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
A. Referance is made to the Credit Agreement dated as of March
12, 1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, STFI, the lenders from time to time
party thereto (the "Lenders"), Credit Suisse, as administrative agent (in such
capacity, the "Administrative Agent") and as collateral agent (in such capacity,
the "Collateral Agent") for the Lenders, the fronting banks listed on Schedule
2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and NationsBank,
N.A., as documentation agent (individually and collectively in such capacity,
the "Documentation Agent"). Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Guarantee Agreement
and the Credit Agreement.
C. The Guarantors have entered into the Guarantee Agreement in
order to induce the Lenders to make Loans and the Fronting Banks to issue
Letters of Credit. Pursuant to Section 5.11 of the Credit Agreement, each
Subsidiary of STFI, the Borrower or any Subsidiary that was not in existence or
not a Subsidiary on the date of the Credit Agreement is required to enter into
the Guarantee Agreement as a Guarantor upon becoming a Subsidiary. Section 20 of
the Guarantee Agreement provides that additional Subsidiaries of the Borrower
may become Guarantors under the Guarantee Agreement by execution and delivery of
an instrument in the form of this Supplement. The undersigned Subsidiary of the
Borrower (the "New Guarantor") is executing this Supplement in accordance with
the requirements of the Credit Agreement to become a Guarantor under the
Guarantee Agreement in order to induce the Lenders to make additional Loans and
the Fronting Banks to issue additional Letters of Credit and as consideration
for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree
as follows:
SECTION 1. In accordance with Section 20 of the Guarantee
Agreement, the New Guarantor by its signature below becomes a Guarantor under
the Guarantee Agreement with the same force and effect as if originally named
therein as a Guarantor and the New Guarantor hereby (a) agrees to all the terms
and provisions of the Guarantee Agreement applicable to it as a Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Guarantor thereunder are true and correct on and as
of the date hereof. Each reference to a "Guarantor" in the Guarantee Agreement
shall be deemed to include the New Guarantor. The Guarantee Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Collateral Agent
<PAGE>
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Supplement shall become effective when
the Collateral Agent shall have received counterparts of this Supplement that,
when taken together, bear the signatures of the New Guarantor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the
Guarantee Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Guarantee Agreement shall not in any way be affected
or impaired thereby (it being understood that the invalidity of a particular
provision hereof in a particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction). The parties hereto
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in Section 14 of the Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the Borrower.
2
<PAGE>
SECTION 8. The New Guarantor agrees to reimburse the
Collateral Agent for its out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, disbursements and other charges of
counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent
have duly executed this Supplement to the Guarantee Agreement as of the day and
year first above written.
[Name Of New Guarantor],
by
--------------------------
Name:
Title:
Address:
CREDIT SUISSE, as Collateral Agent,
by
--------------------------
Name:
Title:
by
--------------------------
Name:
Title:
3
<PAGE>
SCHEDULE 2.01
<TABLE>
<CAPTION>
Revolving Lenders'
Credit Tranche A Term Tranche B Term Aggregate
Lenders Commitments Loan Commitments Loan Commitments Commitments
<S> <C> <C> <C> <C>
Credit Suisse $5,555,555.56 $11,111,111.11 $30,000,000.00 $46,666,666.67
Citicorp USA, Inc. 5,555,555.56 11,111,111.11 0.00 16,666,666.67
NationsBank, N.A. 5,555,555.55 11,111,111.11 0.00 16,666,666.66
First Source
Financial, LLP 5,000,000.00 10,000,000.00 0.00 15,000,000.00
Caisse Nationale
de Credit
Agricole 3,333,333.33 6,666,666.67 0.00 10,000,000.00
CHL High Yield
Loan Portfolio 0.00 0.00 10,000,000.00 10,000,000.00
Pilgrim Prime Rate
Trust 0.00 0.00 10,000,000.00 10,000,000.00
VanKampen American
Capital, Prime
Rate Income
Trust 0.00 0.00 10,000,000.00 10,000,000.00
Merrill Lynch
Senior High
Income
Portfolio 0.00 0.00 5,000.000.00 5,000,000.00
Senior Floating
Rate Fund, Inc. 0.00 0.00 5,000,000.00 5,000,000.00
---------------------- ------------------------ ----------------------- -----------------------
........$25,000,000.00 $50,000,000.00 $70,000,000.00 $145,000,000.00
====================== ======================== ======================= =======================
</TABLE>
<PAGE>
Schedule 2.20
Fronting Banks
Credit Suisse
<PAGE>
Schedule 4.02(a)
1. Opinion of Cahill, Gordon & Reindel, counsel for The
Fairchild Corporation and RHI
2. Opinion of Swidler & Berlin, special regulatory counsel
for STFI and the Borrower
3. Opinion of Finn Dixon & Herling, Connecticut counsel
4. Opinion of Richards, Layton & Finger, counsel for STFI
5. Opinion of Stuart Meister, Vice President Law and
Administration of Fairchild Communications Services
Company
<PAGE>
SCHEDULE 6.11
<TABLE>
<CAPTION>
Minimum EBITDA
Period From April 1, 1996 Ending EBITDA
- -------------------------------- ------
<S> <C>
June 30, 1996 8,000,000
September 30, 1996 20,000,000
December 31, 1996 30,000,000
4 Quarter Period Ending
March 31, 1997 40,000,000
June 30, 1997 42,000,000
September 30, 1997 43,000,000
December 31, 1997 43,000,000
March 31, 1998 46,000,000
June 30, 1998 46,000,000
September 30, 1998 49,000,000
December 31, 1998 49,000,000
March 31, 1999 53,000,000
June 30, 1999 53,000,000
September 30, 1999 55,000,000
December 31, 1999 55,000,000
March 31, 2000 58,000,000
June 30, 2000 58,000,000
September 30, 2000 60,000,000
December 31, 2000 60,000,000
March 31, 2001 63,000,000
June 30, 2001 63,000,000
September 30, 2001 66,000,000
December 31, 2001 66,000,000
March 31, 2002 69,000,000
June 30, 2002 69,000,000
September 30, 2002 72,000,000
December 31, 2002 72,000,000
March 31, 2003 76,000,000
</TABLE>
<PAGE>
SCHEDULE 6.13
<TABLE>
<CAPTION>
Leverage Ratio
Period From April 1, 1996 Ending Ratio
- -------------------------------- -----
<S> <C>
September 30, 1996 6.10
December 31, 1996 6.00
4 Quarter Period Ending
March 31, 1997 6.00
June 30, 1997 5.70
September 30, 1997 5.50
December 31, 1997 5.50
March 31, 1998 5.00
June 30, 1998 5.00
September 30, 1998 4.65
December 31, 1998 4.65
March 31, 1999 4.25
June 30, 1999 4.25
September 30, 1999 4.25
December 31, 1999 4.25
March 31, 2000 3.75
June 30, 2000 3.75
September 30, 2000 3.75
December 31, 2000 3.75
March 31, 2001 3.25
June 30, 2001 3.25
September 30, 2001 3.25
December 31, 2001 3.25
March 31, 2002 3.00
June 30, 2002 3.00
September 30, 2002 3.00
December 31, 2002 3.00
March 31, 2003 3.00
</TABLE>
<PAGE>
SCHEDULE 6.14
<TABLE>
<CAPTION>
Interest Expense Coverage Ratio
Period From April 1, 1996 Ending Ratio
- -------------------------------- -----
<S> <C>
June 30, 1996 2.50
September 30, 1996 3.00
December 31, 1996 3.00
4 Quarter Period Ending
March 31, 1997 3.00
June 30, 1997 3.25
September 30, 1997 3.50
December 31, 1997 3.50
March 31, 1998 4.00
June 30, 1998 4.00
September 30, 1998 4.00
December 31, 1998 4.00
March 31, 1999 4.00
June 30, 1999 2.00
September 30, 1999 2.00
December 31, 1999 2.00
March 31, 2000 2.00
June 30, 2000 2.25
September 30, 2000 2.25
December 31, 2000 2.25
March 31, 2001 2.50
June 30, 2001 2.50
September 30, 2001 2.50
December 31, 2001 2.50
March 31, 2002 2.80
June 30, 2002 2.80
September 30, 2002 2.80
December 31, 2002 2.80
March 31, 2003 3.00
</TABLE>
EXHIBIT 10.4
SECURITY AGREEMENT dated as of March 13,
1996, among SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP., a Delaware corporation (the
"Borrower"), SHARED TECHNOLOGIES FAIRCHILD INC., a
Delaware corporation ("STFI", which term shall, after
the Merger referred to in the Credit Agreement
referred to below, include the surviving corporation
in such Merger), each subsidiary of the Borrower
listed on Schedule I hereto (each such subsidiary
individually a "Subsidiary Guarantor" and
collectively, the "Subsidiary Guarantors"; the
Subsidiary Guarantors, STFI and the Borrower are
referred to collectively herein as the "Grantors")
and CREDIT SUISSE, a bank organized under the laws of
Switzerland, acting through its New York branch
("Credit Suisse"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured
Parties (as defined herein).
Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent") and (b) the Parent Guarantee Agreement
dated as of March 12, 1996 (as amended, supplemented or otherwise modified from
time to time, the "Parent Guarantee Agreement"), between STFI and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of March 12, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"), among the Subsidiary Guarantors and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, and the
Fronting Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of STFI and the Subsidiary Guarantors
has agreed to guarantee, among other things, all the obligations of the Borrower
under the Credit Agreement. The obligations of the Lenders to make Loans and of
the Fronting Banks to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Grantors of an agreement in the form
hereof to secure (a) the due and punctual payment by the Borrower of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrower to the Secured Parties
under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Loan Party under or
pursuant to this
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Agreement and the other Loan Documents and (d) the due and punctual payment and
performance of all obligations of the Borrower under each Interest Rate
Protection Agreement entered into with any counterparty that was a Lender at the
time such Interest Rate Protection Agreement was entered into (all the monetary
and other obligations described in the preceding clauses (a) through (d) being
collectively called the "Obligations").
Accordingly, the Grantors and the Collateral Agent, on behalf
of itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the
context otherwise requires, all capitalized terms used but not defined herein
shall have the meanings set forth in the Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used
herein, the following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may
become obligated to any Grantor under, with respect to or on account of an
Account.
"Accounts" shall mean any and all right, title and interest of
any Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.
"Accounts Receivable" shall mean all Accounts and all right,
title and interest in any returned goods, together with all rights, titles,
securities and guarantees with respect thereto, including any rights to stoppage
in transit, replevin, reclamation and resales, and all related security
interests, liens and pledges, whether voluntary or involuntary, in each case
whether now existing or owned or hereafter arising or acquired.
"Collateral" shall mean all (a) Accounts Receivable,
(b) Documents, (c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash
and cash accounts and (g) Proceeds.
"Copyright License" shall mean any written agreement, now or
hereafter in effect, granting any right to any third party under any Copyright
now or hereafter owned by any Grantor or which such Grantor otherwise has the
right to license, or granting any right to such Grantor under any Copyright now
or hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all copyright rights in any work subject
to the copyright laws of the United States or any other country, whether as
author, assignee, transferee or otherwise, and (b) all registrations and
applications for registration of any such copyright in the United States or any
other country, including
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registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office, including those listed
on Schedule II.
"Credit Agreement" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger
sheets and documents covering or relating to any of the Collateral.
"Equipment" shall mean all equipment, furniture and
furnishings, and all tangible personal property similar to any of the foregoing,
including tools, parts and supplies of every kind and description, and all
improvements, accessions or appurtenances thereto, that are now or hereafter
owned by any Grantor. The term Equipment shall include Fixtures.
"Fixtures" shall mean all items of Equipment, whether now
owned or hereafter acquired, of any Grantor that become so related to particular
real estate that an interest in them arises under any real estate law applicable
thereto.
"General Intangibles" shall mean all choses in action and
causes of action and all other assignable intangible personal property of any
Grantor of every kind and nature (other than Accounts Receivable) now owned or
hereafter acquired by any Grantor, including corporate or other business
records, indemnification claims, contract rights (including rights under leases,
whether entered into as lessor or lessee, Interest Rate Protection Agreements
and other agreements), Intellectual Property, goodwill, registrations,
franchises, tax refund claims and any letter of credit, guarantee, claim,
security interest or other security held by or granted to any Grantor to secure
payment by an Account Debtor of any of the Accounts Receivable.
"Intellectual Property" shall mean all intellectual and
similar property of any Grantor of every kind and nature now owned or hereafter
acquired by any Grantor, including inventions, designs, Patents, Copyrights,
Licenses, Trademarks, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or information, software
and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements and
accessions to, and books and records describing or used in connection with, any
of the foregoing.
"Inventory" shall mean all goods of any Grantor, whether now
owned or hereafter acquired, held for sale or lease, or furnished or to be
furnished by any Grantor under contracts of service, or consumed in any
Grantor's business, including raw materials, intermediates, work in process,
packaging materials, finished goods, semi-finished inventory, scrap inventory,
manufacturing supplies and spare parts, and all such goods that have been
returned to or repossessed by or on behalf of any Grantor.
"License" shall mean any Patent License, Trademark License,
Copyright License or other license or sublicense to which any Grantor is a
party, including those listed on Schedule III (other than those license
agreements in existence on the date hereof and listed on Schedule III and those
license agreements entered into after the date hereof, which by their terms
prohibit assignment or a grant of a security interest by such Grantor as
licensee thereunder). The Secured Parties shall have a security interest in all
authorizations issued by the Federal Communications Commission ("FCC") or any
state or
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local regulatory agency to the maximum extent permitted by law,
including, without limitation, the right to receive all proceeds derived from or
in connection with the sale, assignment or transfer of such authorizations.
"Obligations" shall have the meaning assigned to such term in
the preliminary statement of this Agreement.
"Patent License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to make, use or sell
any invention on which a Patent, now or hereafter owned by any Grantor or which
any Grantor otherwise has the right to license, is in existence, or granting to
any Grantor any right to make, use or sell any invention on which a Patent, now
or hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.
"Patents" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all letters patent of the United States
or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and pending applications in the United
States Patent and Trademark Office or any similar offices in any other country,
including those listed on Schedule IV, and (b) all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, and the
inventions disclosed or claimed therein, including the right to make, use and/or
sell the inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate
substantially in the form of Annex 1 hereto, completed and supplemented with the
schedules and attachments contemplated thereby, and duly executed by a Financial
Officer and the chief legal officer of the Borrower.
"Proceeds" shall mean any consideration received from the
sale, exchange, license, lease or other disposition of any asset or property
that constitutes Collateral, any value received as a consequence of the
possession of any Collateral and any payment received from any insurer or other
person or entity as a result of the destruction, loss, theft, damage or other
involuntary conversion of whatever nature of any asset or property which
constitutes Collateral, and shall include, (a) any claim of any Grantor against
any third party for (and the right to sue and recover for and the rights to
damages or profits due or accrued arising out of or in connection with) (i)
past, present or future infringement of any Patent now or hereafter owned by any
Grantor, or licensed under a Patent License, (ii) past, present or future
infringement or dilution of any Trademark now or hereafter owned by any Grantor
or licensed under a Trademark License or injury to the goodwill associated with
or symbolized by any Trademark now or hereafter owned by any Grantor, (iii)
past, present or future breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any Grantor or licensed
under a Copyright License and (b) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the
Administrative Agent, (c) the Collateral Agent, (d) the Fronting Banks, (e) each
counterparty to an Interest Rate Protection Agreement entered into with the
Borrower if such counterparty was a Lender at the time the Interest Rate
Protection Agreement was entered into, (f) the beneficiaries of each
indemnification obligation undertaken by any Grantor under any Loan Document and
(g) the successors and assigns of each of the foregoing.
"Security Interest" shall have the meaning assigned to such
term in Section 2.01.
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"Trademark License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to use any Trademark
now or hereafter owned by any Grantor or which any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any Trademark now
or hereafter owned by any third party, and all rights of any Grantor under any
such agreement.
"Trademarks" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office, any State of the United States or any similar offices in any
other country or any political subdivision thereof, and all extensions or
renewals thereof, including those listed on Schedule V, (b) all goodwill
associated therewith or symbolized thereby and (c) all other assets, rights and
interests that uniquely reflect or embody such goodwill.
SECTION 1.03. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment
or performance, as the case may be, in full of the Obligations, each Grantor
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and assigns,
for the ratable benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in, all of such Grantor's right, title and
interest in, to and under the Collateral, whether now owned or any time
hereafter acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (the "Security
Interest"). Without limiting the foregoing, the Collateral Agent is hereby
authorized to file one or more financing statements (including fixture filings),
continuation statements, filings with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office or any similar
office in any other country) or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted by
each Grantor, without the signature of any Grantor, and naming any Grantor or
the Grantors as debtors and the Collateral Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security
Interest is granted as security only and shall not subject the Collateral Agent
or any other Secured Party to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral.
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ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to
the Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and
valid rights in and title to the Collateral with respect to which it has
purported to grant a Security Interest hereunder and has full power and
authority to grant to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other person other than any consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been
duly prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 6 to the Perfection Certificate,
which are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and Copyrights) that
are necessary to publish notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral in
which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(b) Each Grantor shall ensure and represents and warrants that
fully executed security agreements in the form hereof and containing a
description of all Collateral consisting of Intellectual Property shall have
been received and recorded within three months after the execution of this
Agreement with respect to United States Patents and United States registered
Trademarks (and Trademarks for which United States registration applications are
pending) and within one month after the execution of this Agreement with respect
to United States registered Copyrights for recording by the United States Patent
and Trademark Office and the United States Copyright Office pursuant to 35
U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and the regulations
thereunder, as applicable, and otherwise as may be required pursuant to the laws
of any other necessary jurisdiction, to protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral
consisting of Patents, Trademarks and Copyrights in which a security interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof) and its territories and possessions, or in
any other necessary jurisdiction, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with respect to
any Collateral consisting of Patents, Trademarks and Copyrights (or registration
or application for registration thereof) acquired or developed after the date
hereof).
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SECTION 3.03. Validity of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations, (b) subject
to the filings described in Section 3.02 above, a perfected security interest in
all Collateral in which a security interest may be perfected by filing,
recording or registering a financing statement or analogous document in the
United States (or any political subdivision thereof) and its territories and
possessions pursuant to the Uniform Commercial Code or other applicable law in
such jurisdictions and (c) a security interest that shall be perfected in all
Collateral in which a security interest may be perfected upon the receipt and
recording of this Agreement with the United States Patent and Trademark Office
and the United States Copyright Office, as applicable, within the three month
period (commencing as of the date hereof) pursuant to 35 U.S.C. ss. 261 or 15
U.S.C. ss. 1060 or the one month period (commencing as of the date hereof)
pursuant to 17 U.S.C. ss. 205 and otherwise as may be required pursuant to the
laws of any other necessary jurisdiction. The Security Interest is and shall be
prior to any other Lien on any of the Collateral, other than Liens expressly
permitted to be prior to the Security Interest pursuant to Section 6.02 of the
Credit Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is owned
by the Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed or
consented to the filing of (a) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Collateral, (b) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Collateral with the
United States Patent and Trademark Office or the United States Copyright Office
or (c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each case, for Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records;
Place of Business. (a) Each Grantor agrees promptly to notify the Collateral
Agent in writing of any change (i) in its corporate name or in any trade name
used to identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in its identity or corporate structure or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected first priority security interest in all the Collateral for
which perfection or priority, as the case may be, may be established by any such
filings. Each Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Collateral owned or held by such Grantor is damaged or
destroyed.
(b) Each Grantor agrees to maintain, at its own cost and
expense, such complete and accurate records with respect to the Collateral owned
by it as is consistent with its current practices and
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in accordance with such prudent and standard practices used in industries that
are the same as or similar to those in which such Grantor is engaged, but in any
event to include complete accounting records indicating all payments and
proceeds received with respect to any part of the Collateral, and, at such time
or times as the Collateral Agent may reasonably request, promptly to prepare and
deliver to the Collateral Agent a duly certified schedule or schedules in form
and detail satisfactory to the Collateral Agent showing the identity, amount and
location of any and all Collateral.
SECTION 4.02. Periodic Certification. Each year, at the time
of delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.04 of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
and the chief legal officer of the Borrower (a) setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming that
there has been no change in such information since the date of such certificate
or the date of the most recent certificate delivered pursuant to Section 4.02
and (b) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (a) above to the extent necessary to
protect and perfect the Security Interest for a period of not less than 18
months after the date of such certificate (except as noted therein with respect
to any continuation statements to be filed within such period). Each certificate
delivered pursuant to this Section 4.02 shall identify in the format of Schedule
II, III, IV or V, as applicable, all Intellectual Property of any Grantor in
existence on the date thereof and not then listed on such Schedules or
previously so identified to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at
its own cost and expense, take any and all actions necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees, at its
own expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Collateral Agent may from time to time request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection with
the execution and delivery of this Agreement, the granting of the Security
Interest and the filing of any financing statements (including fixture filings)
or other documents in connection herewith or therewith. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Collateral Agent, with prompt notice thereof to the
Grantors, to supplement this Agreement by supplementing Schedule II, III, IV or
V hereto or adding additional schedules hereto to specifically identify any
asset or item that may constitute Copyrights, Licenses, Patents or Trademarks;
provided, however, that any Grantor shall have the right, exercisable within 10
days after it has been notified by the Collateral Agent of the specific
identification of such Collateral, to advise the Collateral Agent in writing of
any inaccuracy of the representations and warranties made by such Grantor
hereunder with respect to such Collateral. Each Grantor agrees that it will use
its best efforts to take such action as
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shall be necessary in order that all representations and warranties hereunder
shall be true and correct with respect to such Collateral within 30 days after
the date it has been notified by the Collateral Agent of the specific
identification of such Collateral.
Each Grantor further agrees that if any authorization of such
Grantor excluded from the Collateral pursuant to the final sentence of the
definition of "License" could be included therein with the receipt of any
approval of, or the taking of any action by, any Governmental Authority, such
Grantor shall use its best efforts to obtain such approval or action as
expeditiously as possible.
SECTION 4.05. Inspection and Verification. The Collateral
Agent and such persons as the Collateral Agent may reasonably designate shall
have the right, at the Grantors' own cost and expense, to inspect the
Collateral, all records related thereto (and to make extracts and copies from
such records) and the premises upon which any of the Collateral is located, to
discuss the Grantors' affairs with the officers of the Grantors and their
independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, the Collateral, including, in the case of Accounts or Collateral in
the possession of any third person, by contacting Account Debtors or the third
person possessing such Collateral for the purpose of making such a verification.
The Collateral Agent shall have the absolute right to share any information it
gains from such inspection or verification with any Secured Party (it being
understood that any such information shall be deemed to be "Information" subject
to the provisions of Section 9.16 of the Credit Agreement).
SECTION 4.06. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past due taxes, assessments, charges, fees,
Liens, security interests or other encumbrances at any time levied or placed on
the Collateral and not permitted pursuant to Section 6.02 of the Credit
Agreement, and may pay for the maintenance and preservation of the Collateral to
the extent any Grantor fails to do so as required by the Credit Agreement or
this Agreement, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization; provided, however,
that nothing in this Section 4.06 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent or
any Secured Party to cure or perform, any covenants or other promises of any
Grantor with respect to taxes, assessments, charges, fees, liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any time
any Grantor shall take a security interest in any property of an Account Debtor
or any other person to secure payment and performance of an Account, such
Grantor shall promptly assign such security interest to the Collateral Agent.
Such assignment need not be filed of public record unless necessary to continue
the perfected status of the security interest against creditors of and
transferees from the Account Debtor or other person granting the security
interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and each Grantor jointly and severally agrees to indemnify
and hold harmless the Collateral Agent and the Secured Parties from and against
any and all liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. None of the
Grantors shall make
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or permit to be made an assignment, pledge or hypothecation of the Collateral or
shall grant any other Lien in respect of the Collateral, except as expressly
permitted by Section 6.02 of the Credit Agreement. None of the Grantors shall
make or permit to be made any transfer of the Collateral and each Grantor shall
remain at all times in possession of the Collateral owned by it, except that
(a) Inventory may be sold in the ordinary course of business and (b) unless and
until the Collateral Agent shall notify the Grantors that an Event of Default
shall have occurred and be continuing and that during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Collateral (which notice may be given by telephone if promptly
confirmed in writing), the Grantors may use and dispose of the Collateral in any
lawful manner not inconsistent with the provisions of this Agreement, the Credit
Agreement or any other Loan Document. Without limiting the generality of the
foregoing, each Grantor agrees that it shall not permit any Inventory to be in
the possession or control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in writing to hold the
Inventory subject to the Security Interest and the instructions of the
Collateral Agent and to waive and release any Lien held by it with respect to
such Inventory, whether arising by operation of law or otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None of
the Grantors will, without the Collateral Agent's prior written consent, grant
any extension of the time of payment of any of the Accounts Receivable,
compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any person liable for the payment thereof or allow
any credit or discount whatsoever thereon, other than extensions, credits,
discounts, compromises or settlements granted or made in the ordinary course of
business and consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged.
SECTION 4.11. Insurance. The Grantors, at their own expense,
shall maintain or cause to be maintained insurance covering physical loss or
damage to the Inventory and Equipment in accordance with Section 5.02 of the
Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent
deems advisable. All sums disbursed by the Collateral Agent in connection with
this Section 4.11, including reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by the
Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.
SECTION 4.12. Legend. Each Grantor shall legend, in form and
manner satisfactory to the Collateral Agent, its Accounts Receivable and its
books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and that
the Collateral Agent has a security interest therein.
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SECTION 4.13. Covenants Regarding Patent, Trademark and
Copyright Collateral. (a) Each Grantor agrees that it will not, nor will it
permit any of its licensees to, do any act, or omit to do any act, whereby any
Patent which is material to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees that it shall continue to
mark any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.
(b) Each Grantor (either itself or through its licensees or
its sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such Trademark
with notice of Federal or foreign registration to the extent necessary and
sufficient to establish and preserve its maximum rights under applicable law and
(iv) not knowingly use or knowingly permit the use of such Trademark in
violation of any third party rights.
(c) Each Grantor (either itself or through licensees) will,
for each work covered by a material Copyright, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary and sufficient to establish and preserve its maximum rights under
applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately
if it knows or has reason to know that any Patent, Trademark or Copyright
material to the conduct of its business may become abandoned, lost or dedicated
to the public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such Grantor's ownership
of any Patent, Trademark or Copyright, its right to register the same, or to
keep and maintain the same.
(e) In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, United States Copyright
Office or any office or agency in any political subdivision of the United States
or in any other country or any political subdivision thereof, unless it promptly
informs the Collateral Agent, and, upon request of the Collateral Agent,
executes and delivers any and all agreements, instruments, documents and papers
as the Collateral Agent may request to evidence the Collateral Agent's security
interest in such Patent, Trademark or Copyright, and each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
(f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
any Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.
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<PAGE>
(g) In the event that any Grantor has reason to believe that
any Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.
(h) Upon and during the continuance of an Event of Default,
each Grantor shall use its best efforts to obtain all requisite consents or
approvals by the licensor of each Copyright License, Patent License or Trademark
License to effect the assignment of all of such Grantor's right, title and
interest thereunder to the Collateral Agent or its designee.
ARTICLE V
Power of Attorney
Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent and attorney-in-fact,
and in such capacity the Collateral Agent shall have the right, with power of
substitution for each Grantor and in each Grantor's name or otherwise, for the
use and benefit of the Collateral Agent and the Secured Parties, upon the
occurrence and during the continuance of an Event of Default (a) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any
part thereof; (b) to demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the Collateral; (c) to sign the
name of any Grantor on any invoice or bill of lading relating to any of the
Collateral; (d) to send verifications of Accounts Receivable to any Account
Debtor; (e) to commence and prosecute any and all suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in
respect of any Collateral; (f) to settle, compromise, compound, adjust or defend
any actions, suits or proceedings relating to all or any of the Collateral;
(g) to notify, or to require any Grantor to notify, Account Debtors to make
payment directly to the Collateral Agent; and (h) subject to the mandatory
requirements of applicable law, to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral,
and to do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Collateral Agent were the
absolute owner of the Collateral for all purposes, including assigning any
contract to any Subsidiary or any other person at any time during the
continuance of any Event of Default; provided, however, that nothing herein
contained shall be construed as requiring or obligating the Collateral Agent or
any Secured Party to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any Secured Party with respect to
the Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of any Grantor or to any claim or action against the
Collateral Agent or any Secured Party. It is understood and agreed that the
appointment of
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the Collateral Agent as the agent and attorney-in-fact of the Grantors for the
purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Article V shall in no event relieve any Grantor of any of its
obligations hereunder or under any other Loan Document with respect to the
Collateral or any part thereof or impose any obligation on the Collateral Agent
or any Secured Party to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any Secured Party of any other or further right which it may
have on the date of this Agreement or hereafter, whether hereunder, under any
other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, each Grantor agrees to deliver
each item of Collateral to the Collateral Agent on demand, and it is agreed that
the Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the universe on such
terms and conditions and in such manner as the Collateral Agent shall determine
(other than in violation of any then-existing licensing arrangements to the
extent that waivers cannot be obtained), and (b) with or without legal process
and with or without prior notice or demand for performance, to take possession
of the Collateral and without liability for trespass to enter any premises where
the Collateral may be located for the purpose of taking possession of or
removing the Collateral and, generally, to exercise any and all rights afforded
to a secured party under the Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral,
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<PAGE>
or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice (if any) of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Collateral Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent permitted
by law, private) sale made pursuant to this Section, any Secured Party may bid
for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to such Secured Party
from any Grantor as a credit against the purchase price, and such Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to any Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and no Grantor shall be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Collateral Agent may proceed by a suit or suits at law or in equity
to foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent
shall apply the proceeds of any collection or sale of the Collateral, as well as
any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Loan Document
on behalf of any Grantor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under
any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent
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jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property.
For the purpose of enabling the Collateral Agent to exercise rights and remedies
under this Article at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use, license or
sub-license any of the Collateral consisting of Intellectual Property now owned
or hereafter acquired by such Grantor, and wherever the same may be located, and
including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof. The use of such license
by the Collateral Agent shall be exercised, at the option of the Collateral
Agent, upon the occurrence and during the continuation of an Event of Default;
provided that any license, sub-license or other transaction entered into by the
Collateral Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices
hereunder shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Guarantor shall be given
to it at its address or telecopy number set forth on Schedule I, with a copy to
the Borrower.
SECTION 7.02. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest and all obligations of the
Grantors hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Grantor in respect of the
Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants,
agreements, representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or
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delivered in connection with or pursuant to this Agreement shall be considered
to have been relied upon by the Secured Parties and shall survive the making by
the Lenders of the Loans, and the execution and delivery to the Lenders of any
notes evidencing such Loans, regardless of any investigation made by the Lenders
or on their behalf, and shall continue in full force and effect until this
Agreement shall terminate.
SECTION 7.04. Binding Effect; Several Agreement. This
Agreement shall become effective as to any Grantor when a counterpart hereof
executed on behalf of such Grantor shall have been delivered to the Collateral
Agent and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such Grantor and the
Collateral Agent and their respective successors and assigns, and shall inure to
the benefit of such Grantor, the Collateral Agent and the other Secured Parties
and their respective successors and assigns, except that no Grantor shall have
the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer shall
be void) except as expressly contemplated by this Agreement or the Credit
Agreement. This Agreement shall be construed as a separate agreement with
respect to each Grantor and may be amended, modified, supplemented, waived or
released with respect to any Grantor without the approval of any other Grantor
and without affecting the obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Grantor or the Collateral Agent
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses;
Indemnification. (a) Each Grantor jointly and severally agrees to pay upon
demand to the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees, disbursements and other charges of its counsel
and of any experts or agents, which the Collateral Agent may incur in connection
with (i) the administration of this Agreement, (ii) the custody or preservation
of, or the sale of, collection from or other realization upon any of the
Collateral, (iii) the exercise, enforcement or protection of any of the rights
of the Collateral Agent hereunder or (iv) the failure of any Grantor to perform
or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Grantor jointly and severally agrees to
indemnify the Collateral Agent and the other Indemnitees against, and hold each
of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable fees, disbursements and other charges of
counsel, incurred by or asserted against any of them arising out of, in any way
connected with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating
hereto or to the Collateral, whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.06 shall remain
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<PAGE>
operative and in full force and effect regardless of the termination of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Collateral Agent or
any Lender. All amounts due under this Section 7.06 shall be payable on written
demand therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Fronting Banks, the Administrative Agent and
the Lenders under the other Loan Documents are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Collateral Agent and the Grantor or Grantors with
respect to which such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.08 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 7.09.
SECTION 7.10. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
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SECTION 7.11 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract (subject to Section
7.04), and shall become effective as provided in Section 7.04. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
SECTION 7.12. Headings. Article and Section headings used
herein are for the purpose of reference only, are not part of this Agreement and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 7.13. Jurisdiction; Consent to Service of Process. (a)
Each Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent, the Administrative Agent, the Fronting Banks or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Grantor or its properties in the courts of
any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 7.01. Nothing
in this Agreement will affected the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 7.14. Termination. This Agreement and the Security
Interest shall terminate when all the Obligations have been indefeasibly paid in
full, the Lenders have no further commitment to lend, the L/C Exposure has been
reduced to zero and the Fronting Banks have no further commitment to issue
Letters of Credit under the Credit Agreement, at which time the Collateral Agent
shall execute and deliver to the Grantors, at the Grantors' expense, all Uniform
Commercial Code termination statements and similar documents which the Grantors
shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section 7.14
shall be without recourse to or warranty by the Collateral Agent. A Subsidiary
Guarantor shall automatically be released from its obligations hereunder and the
Security Interest in the Collateral of such Subsidiary Guarantor shall be
automatically released in the event that all the capital stock of such
Subsidiary Guarantor shall be sold, transferred or otherwise disposed of to a
person that is not an Affiliate of the Borrower in accordance with the terms of
the Credit Agreement; provided that the Required Lenders shall have consented to
such sale, transfer or other disposition (to the extent required
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<PAGE>
by the Credit Agreement) and the terms of such consent did not provide
otherwise.
SECTION 7.15. Additional Grantors. Upon execution and delivery
by the Collateral Agent and a Subsidiary of an instrument in the form of Annex 2
hereto, such Subsidiary shall become a Grantor hereunder with the same force and
effect as if originally named as a Grantor herein. The execution and delivery of
any such instrument shall not require the consent of any Grantor hereunder. The
rights and obligations of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor as a party to this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SHARED TECHNOLOGIES FAIRCHILD INC.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
MULTI-TENANT SERVICES, INC.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
BOSTON TELECOMMUNICATIONS GROUP,
INC., d/b/a BOSTON TELECOMMUNICATIONS
COMPANY,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
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<PAGE>
FINANCIAL PLACE COMMUNICATIONS
COMPANY,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer of Shared
Technologies Fairchild Inc., its
General Partner
STI INTERNATIONAL, INC.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
OFFICE TELEPHONE MANAGEMENT,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
VSI CORPORATION,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
CREDIT SUISSE, as Collateral Agent,
by
/s/ Kathleen D. O'Brien
Name: Kathleen D. O'Brien
Title: Member of Senior Management
by
/s/ Will Ziglar
Name: Will Ziglar
Title: Associate
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SCHEDULE I
SUBSIDIARY GUARANTORS
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SCHEDULE II
COPYRIGHTS
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SCHEDULE III
LICENSES
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SCHEDULE IV
PATENTS
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SCHEDULE V
TRADEMARKS
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Annex 1 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, as documentation agent (individually and collectively in such
capacity, the "Documentation Agent"), (b) the Parent Guarantee Agreement dated
as of March 12, 1996 (as amended, supplemented or otherwise modified from time
to time, the "Parent Guarantee Agreement"), between STFI and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of March 12, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"), among the Subsidiary Guarantors and the Collateral Agent.
The undersigned, a Financial Officer and a Legal Officer,
respectively, of STFI, hereby certify to the Collateral Agent and each other
Secured Party as follows:
1. Names. (a) The exact corporate name of each Grantor, as such name
appears in its respective certificate of incorporation, is as follows:
(b) Set forth below is each other corporate name each Grantor
has had in the past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has
changed its identity or corporate structure in any way within the past five
years. Changes in identity or corporate structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature or
jurisdiction of corporate organization. If any such change has occurred, include
in Schedule 1 the information required by Sections 1 and 2 of this certificate
as to each acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including
trade names or similar appellations) used by each Grantor or any of its
divisions or other business units in connection with the conduct of its business
or the ownership of its properties at any time during the past five years:
(e) Set forth below is the Federal Taxpayer Identification
Number of each Grantor:
2. Current Locations. (a) The chief executive office of each Grantor is
located at the address set forth opposite its name below:
Grantor Mailing Address County State
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(b) Set forth below opposite the name of each Grantor are all locations
where such Grantor maintains any books or records relating to any Accounts
Receivable (with each location at which chattel paper, if any, is kept being
indicated by an "*"):
Grantor Mailing Address County State
(c) Set forth below opposite the name of each Grantor are all the
places of business of such Grantor not identified in paragraph (a) or (b) above:
Grantor Mailing Address County State
(d) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified above:
Grantor Mailing Address County State
(e) Set forth below opposite the name of each Grantor are the names and
addresses of all persons other than such Grantor that have possession of any of
the Collateral of such Grantor:
Grantor Mailing Address County State
3. Unusual Transactions. All Accounts Receivable have been originated
by the Grantors and all Inventory has been acquired by the Grantors in the
ordinary course of business.
4. File Search Reports. Attached hereto as Schedule 4(A) are true
copies of file search reports from the Uniform Commercial Code filing offices
where filings described in Section 3.19 of the Credit Agreement are to be made.
Attached hereto as Schedule 4(B) is a true copy of each financing statement or
other filing identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where a Grantor has
Collateral as identified in Section 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth, with respect to the filings described in Section 5 above, each
filing and the filing office in which such filing is to be made.
7. Filing Fees. All filing fees and taxes payable in connection with
the filings described in Section 5 above have been paid.
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8. Stock Ownership. Attached hereto as Schedule 8 is a true and correct
list of all the duly authorized, issued and outstanding stock of each Subsidiary
and the record and beneficial owners of such stock. Also set forth on Schedule 8
is each equity Investment of STFI and each Subsidiary that represents 50% or
less of the equity of the entity in which such investment was made.
9. Notes. Attached hereto as Schedule 9 is a true and correct list of
all notes held by STFI and each Subsidiary and all intercompany notes between
STFI and each Subsidiary of STFI and between each Subsidiary of STFI and each
other such Subsidiary.
10. Advances. Attached hereto as Schedule 10 is (a) a true and correct
list of all advances made by STFI to any Subsidiary of STFI or made by any
Subsidiary of STFI to STFI or any other Subsidiary of STFI, which advances will
be on and after the date hereof evidenced by one or more intercompany notes
pledged to the Collateral Agent under the Pledge Agreement, and (b) a true and
correct list of all unpaid intercompany transfers of goods sold and delivered by
or to STFI or any Subsidiary of STFI.
11. Mortgage Filings. Attached hereto as Schedule 11 is a schedule
setting forth, with respect to each Mortgaged Property, (i) the exact corporate
name of the corporation that owns such property as such name appears in its
certificate of incorporation, (ii) if different from the name identified
pursuant to clause (i), the exact name of the current record owner of such
property reflected in the records of the filing office for such property
identified pursuant to the following clause and (iii) the filing office in which
a Mortgage with respect to such property must be filed or recorded in order for
the Collateral Agent to obtain a perfected security interest therein.
IN WITNESS WHEREOF, the undersigned have duly executed this
certificate on this [ ] day of [ ].
SHARED TECHNOLOGIES INC.,
by
Name:
Title: [Financial Officer]
by
Name:
Title: [Legal Officer]
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Annex 2 to the
Security Agreement
SUPPLEMENT NO. __ dated as of , to the Security
Agreement dated as of March 12, 1996, among SHARED
TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP., a Delaware
corporation (the "Borrower"), SHARED TECHNOLOGIES INC., a
Delaware corporation ("STFI"), each subsidiary of the Borrower
listed on Schedule I thereto (each such subsidiary
individually a "Subsidiary Guarantor" and collectively, the
"Subsidiary Guarantors"; the Subsidiary Guarantors, STFI and
the Borrower are referred to collectively herein as the
"Grantors") and CREDIT SUISSE, a bank organized under the laws
of Switzerland, acting through its New York branch ("Credit
Suisse"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as defined
herein).
A. Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent") and (b) the Parent Guarantee Agreement
dated as of March 12, 1996 (as amended, supplemented or otherwise modified from
time to time, the "Parent Guarantee Agreement"), between STFI and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of March 12, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"), among the Subsidiary Guarantors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Security Agreement
and the Credit Agreement.
C. The Grantors have entered into the Security Agreement in
order to induce the Lenders to make Loans and the Fronting Banks to issue
Letters of Credit. Section 7.15 of Security Agreement provides that additional
Subsidiaries of STFI, the Borrower and the Subsidiaries may become Grantors
under the Security Agreement by execution and delivery of an instrument in the
form of this Supplement. The undersigned Subsidiary (the "New Grantor") is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Grantor under the Security Agreement in order to induce
the Lenders to make additional Loans and the Fronting Banks to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as
follows:
SECTION 1. In accordance with Section 7.15 of the Security
Agreement, the New Grantor by its signature below becomes a Grantor under the
Security Agreement with the same force and effect as if originally named therein
as a Grantor and the New Grantor hereby (a) agrees to all the terms and
provisions of the Security Agreement applicable to it as a Grantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of the Obligations (as defined in the Security Agreement),
does hereby create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns, a
security interest in and lien on all of the
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New Grantor's right, title and interest in and to the Collateral (as defined in
the Security Agreement) of the New Grantor. Each reference to a "Grantor" in the
Security Agreement shall be deemed to include the New Grantor. The Security
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Grantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that
(a) set forth on Schedule I attached hereto is a true and correct schedule of
the location of any and all Collateral of the New Grantor and (b) set forth
under its signature hereto, is the true and correct location of the chief
executive office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the
Security Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Security Agreement shall not in any way be affected
or impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be
in writing and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.
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SECTION 9. The New Grantor agrees to reimburse the Collateral
Agent for its reasonable out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, other charges and disbursements of
counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent
have duly executed this Supplement to the Security Agreement as of the day and
year first above written.
[Name Of New Grantor],
by
Name:
Title:
Address:
CREDIT SUISSE, as Collateral Agent,
by
Name:
Title:
by
Name:
Title:
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SCHEDULE I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
Description Location
EXHIBIT 10.5
CONFORMED COPY
PLEDGE AGREEMENT dated as of March 13, 1996,
among SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS
CORP., a Delaware corporation (the "Borrower"),
SHARED TECHNOLOGIES FAIRCHILD INC., a Delaware
corporation ("STFI", which term shall, after the
Merger referred to in the Credit Agreement referred
to below, include the surviving corporation in such
Merger), each Subsidiary of the Borrower listed on
Schedule I hereto (each such Subsidiary individually
a "Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; the Borrower, STFI and the
Subsidiary Pledgors are referred to collectively
herein as the "Pledgors") and CREDIT SUISSE, a bank
organized under the laws of Switzerland, acting
through its New York branch ("Credit Suisse"), as
collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent"), (b) the Parent Guarantee Agreement dated
as of March 12, 1996 (as amended, supplemented or otherwise modified from time
to time, the "Parent Guarantee Agreement"), between STFI and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of March 12, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"; and, collectively with the Parent Guarantee Agreement, the
"Guarantee Agreements") among the Subsidiary Pledgors and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower and the
Fronting Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. STFI and the Subsidiary Guarantors have
agreed to guarantee, among other things, all the obligations of the Borrower
under the Credit Agreement. The obligations of the Lenders to make Loans and of
the Fronting Banks to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Pledgors of a Pledge Agreement in the
form hereof to secure (a) the due and punctual payment by the Borrower of (i)
the principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrower to the Secured Parties
under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all
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the covenants, agreements, obligations and liabilities of STFI under or pursuant
to the Parent Guarantee Agreement or the other Loan Documents, (d) the due and
punctual payment and performance of all the covenants, agreements, obligations
and liabilities of each Subsidiary Pledgor under or pursuant to the Subsidiary
Guarantee Agreement or the other Loan Documents and (e) the due and punctual
payment and performance of all obligations of the Borrower under each Interest
Rate Protection Agreement entered into with any counterparty that was a Lender
at the time such Interest Rate Protection Agreement was entered into (all the
monetary and other obligations referred to in the preceding clauses (a) through
(e) being referred to collectively as the "Obligations"). Capitalized terms used
herein and not defined herein shall have meanings assigned to such terms in the
Credit Agreement.
Accordingly, the Pledgors and the Collateral Agent, on behalf
of itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
SECTION 1. Pledge. As security for the payment and
performance, as the case may be, in full of the Obligations, each Pledgor hereby
transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over
and delivers unto the Collateral Agent, its successors and assigns, and hereby
grants to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, a security interest in all of the Pledgor's
right, title and interest in, to and under (a) the shares of capital stock owned
by it and listed on Schedule II hereto and any shares of capital stock obtained
in the future by the Pledgor and the certificates representing all such shares
(the "Pledged Stock"); provided that the Pledged Stock shall not include, to the
extent that applicable law requires that a subsidiary of the Pledgor issue
directors' qualifying shares, such qualifying shares; (b)(i) the debt securities
listed opposite the name of the Pledgor on Schedule II hereto, (ii) any debt
securities in the future issued to the Pledgor and (iii) the promissory notes
and any other instruments evidencing such debt securities (the "Pledged Debt
Securities"); (c) all other property that may be delivered to and held by the
Collateral Agent pursuant to the terms hereof; (d) subject to Section 5, all
payments of principal or interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed, in
respect of, in exchange for or upon the conversion of the securities referred to
in clauses (a) and (b) above; (e) subject to Section 5, all rights and
privileges of the Pledgor with respect to the securities and other property
referred to in clauses (a), (b), (c) and (d) above; and (f) all proceeds of any
of the foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the "Collateral"). Upon delivery to the Collateral
Agent, (a) any stock certificates, notes or other securities now or hereafter
included in the Collateral (the "Pledged Securities") shall be accompanied by
undated stock powers duly executed in blank or other instruments of transfer
satisfactory to the Collateral Agent and by such other instruments and documents
as the Collateral Agent may reasonably request and (b) all other property
comprising part of the Collateral shall be accompanied by proper instruments of
assignment duly executed by the applicable Pledgor and such other instruments or
documents as the Collateral Agent may reasonably request. Each delivery of
Pledged Securities shall be accompanied by a schedule describing the securities
theretofore and then being pledged hereunder, which schedule shall be attached
hereto as Schedule II and made a part hereof. Each schedule so delivered shall
supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees
promptly to deliver
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or cause to be delivered to the Collateral Agent any and all Pledged Securities,
and any and all certificates or other instruments or documents representing the
Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed
money owed to the Pledgor by any person to be evidenced by a duly executed
promissory note that is pledged and delivered to the Collateral Agent pursuant
to the terms thereof.
SECTION 3. Representations, Warranties and Covenants. Each
Pledgor hereby represents, warrants and covenants, as to itself and the
Collateral pledged by it hereunder, to and with the Collateral Agent that:
(a) the Pledged Stock represents that percentage as set forth
on Schedule II of the issued and outstanding shares of each class of
the capital stock of the issuer with respect thereto;
(b) except for the security interest granted hereunder, the
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (ii) holds the same free and clear of all Liens,
(iii) will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on,
the Collateral, other than pursuant hereto, and (iv) subject to
Section 5, will cause any and all Collateral, whether for value paid by
the Pledgor or otherwise, to be forthwith deposited with the Collateral
Agent and pledged or assigned hereunder;
(c) the Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will
defend its title or interest thereto or therein against any and all
Liens (other than the Lien created by this Agreement), however arising,
of all persons whomsoever;
(d) no consent of any other person (including stockholders or
creditors of any Pledgor) and no consent or approval of any
Governmental Authority or any securities exchange was or is necessary
to the validity of the pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors of
this Agreement, when the Pledged Securities, certificates or other
documents representing or evidencing the Collateral are delivered to
the Collateral Agent in accordance with this Agreement, the Collateral
Agent will obtain a valid and perfected first lien upon and security
interest in such Pledged Securities as security for the payment and
performance of the Obligations;
(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;
(g) all of the Pledged Stock has been duly authorized and
validly issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged
Stock is accurate and complete in all material respects as of the date
hereof; and
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(i) the pledge of the Pledged Stock pursuant to this Agreement
does not violate Regulation G, T, U or X of the Federal Reserve Board
or any successor thereto as of the date hereof.
SECTION 4. Registration in Nominee Name; Denominations. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Pledged Securities in its own name as
pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the
Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent.
Each Pledgor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with respect to Pledged Securities
registered in the name of such Pledgor. The Collateral Agent shall at all times
have the right to exchange the certificates representing Pledged Securities for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
SECTION 5. Voting Rights; Dividends and Interest,
etc. (a) Unless and until an Event of Default shall have occurred and be
continuing:
(i) Each Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner of
Pledged Securities or any part thereof for any purpose consistent with
the terms of this Agreement, the Credit Agreement and the other Loan
Documents; provided, however, that such Pledgor will not be entitled to
exercise any such right if the result thereof could materially and
adversely affect the rights inuring to a holder of the Pledged
Securities or the rights and remedies of any of the Secured Parties
under this Agreement or the Credit Agreement or any other Loan Document
or the ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all
such proxies, powers of attorney and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and/or consensual rights and powers it is entitled
to exercise pursuant to subparagraph (i) above and to receive the cash
dividends it is entitled to receive pursuant to subparagraph (iii)
below.
(iii) Each Pledgor shall be entitled to receive and retain any
and all cash dividends, interest and principal paid on the Pledged
Securities to the extent and only to the extent that such cash
dividends, interest and principal are permitted by, and otherwise paid
in accordance with, the terms and conditions of the Credit Agreement,
the other Loan Documents and applicable laws. All noncash dividends,
interest and principal, and all dividends, interest and principal paid
or payable in cash or otherwise in connection with a partial or total
liquidation or dissolution, return of capital, capital surplus or
paid-in surplus, and all other distributions (other than distributions
referred to in the preceding sentence) made on or in respect of the
Pledged Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the issuer of any Pledged
Securities or received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by any Pledgor, shall not be commingled by
such Pledgor with any of its other funds or property but shall be held
separate and apart therefrom, shall be held in trust for the benefit of
the Collateral
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Agent and shall be forthwith delivered to the Collateral Agent in the
same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event
of Default, all rights of any Pledgor to dividends, interest or principal that
such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to receive
and retain such dividends, interest or principal. All dividends, interest or
principal received by the Pledgor contrary to the provisions of this Section 5
shall be held in trust for the benefit of the Collateral Agent, shall be
segregated from other property or funds of such Pledgor and shall be forthwith
delivered to the Collateral Agent upon demand in the same form as so received
(with any necessary endorsement). Any and all money and other property paid over
to or received by the Collateral Agent pursuant to the provisions of this
paragraph (b) shall be retained by the Collateral Agent in an account to be
established by the Collateral Agent upon receipt of such money or other property
and shall be applied in accordance with the provisions of Section 7. After all
Events of Default have been cured or waived, the Collateral Agent shall, within
five Business Days after all such Events of Default have been cured or waived,
repay to each Pledgor all cash dividends, interest or principal (without
interest), that such Pledgor would otherwise be permitted to retain pursuant to
the terms of paragraph (a)(iii) above and which remain in such account.
(c) Upon the occurrence and during the continuance of an Event
of Default, all rights of any Pledgor to exercise the voting and consensual
rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of
this Section 5, and the obligations of the Collateral Agent under
paragraph (a)(ii) of this Section 5, shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall have the sole and
exclusive right and authority to exercise such voting and consensual rights and
powers; provided that, unless otherwise directed by the Required Lenders, the
Collateral Agent shall have the right from time to time following and during the
continuance of an Event of Default to permit the Pledgors to exercise such
rights; provided further that, notwithstanding the foregoing, all voting and
consensual rights and powers shall remain with the Pledgor pending receipt of
any necessary approval of the Federal Communications Commission ("FCC") of any
assignment of transfer of control of the FCC licenses held by the Borrower or
any Subsidiary. After all Events of Default have been cured or waived, such
Pledgor will have the right to exercise the voting and consensual rights and
powers that it would otherwise be entitled to exercise pursuant to the terms of
paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, subject to applicable regulatory
and legal requirements, the Collateral Agent may sell the Collateral, or any
part thereof, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of any Pledgor, and, to the extent permitted by
applicable law, the Pledgors hereby waive all rights of redemption, stay,
valuation and appraisal any Pledgor now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted.
5
<PAGE>
The Collateral Agent shall give a Pledgor 10 days' prior
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the Collateral
Agent's intention to make any sale of such Pledgor's Collateral. Such notice, in
the case of a public sale, shall state the time and place for such sale and, in
the case of a sale at a broker's board or on a securities exchange, shall state
the board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid in
full by the purchaser or purchasers thereof, but the Collateral Agent shall not
incur any liability in case any such purchaser or purchasers shall fail to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public (or, to the extent
permitted by applicable law, private) sale made pursuant to this Section 6, any
Secured Party may bid for or purchase, free from any right of redemption, stay
or appraisal on the part of any Pledgor (all said rights being also hereby
waived and released), the Collateral or any part thereof offered for sale and
may make payment on account thereof by using any claim then due and payable to
it from such Pledgor as a credit against the purchase price, and it may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to such Pledgor therefor. For purposes hereof,
(a) a written agreement to purchase the Collateral or any portion thereof shall
be treated as a sale thereof, (b) the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and (c) such Pledgor shall not be
entitled to the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the
Obligations paid in full. As an alternative to exercising the power of sale
herein conferred upon it, the Collateral Agent may proceed by a suit or suits at
law or in equity to foreclose upon the Collateral and to sell the Collateral or
any portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver. Any sale pursuant to the provisions of this Section 6 shall be deemed
to conform to the commercially reasonable standards as provided in
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions.
SECTION 7. Application of Proceeds of Sale. The proceeds of
any sale of Collateral pursuant to Section 6, as well as any Collateral
consisting of cash, shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent in connection with such sale or otherwise in
connection with this Agreement, any other Loan Document or any of the
Obligations, including all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Loan Document
on behalf of any Pledgor and any other
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<PAGE>
costs or expenses incurred in connection with the exercise of any right
or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in accordance with
this Agreement. Upon any sale of the Collateral by the Collateral Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the purchase money by the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) Each
Pledgor agrees to pay upon demand to the Collateral Agent the amount of any and
all reasonable expenses, including the reasonable fees, other charges and
disbursements of its counsel and of any experts or agents, that the Collateral
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Collateral Agent hereunder or (iv) the failure by such
Pledgor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Pledgor agrees to indemnify the Collateral
Agent and the Indemnitees (as defined in Section 9.05 of the Credit Agreement)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
other charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby or (ii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 8 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document or any investigation made by or on behalf of the Collateral
Agent or any other Secured Party.
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<PAGE>
All amounts due under this Section 8 shall be payable on written demand therefor
and shall bear interest at the rate specified in Section 2.06 of the Credit
Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each
Pledgor hereby appoints the Collateral Agent the attorney-in-fact of such
Pledgor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default, with full power of
substitution either in the Collateral Agent's name or in the name of such
Pledgor, to ask for, demand, sue for, collect, receive and give acquittance for
any and all moneys due or to become due under and by virtue of any Collateral,
to endorse checks, drafts, orders and other instruments for the payment of money
payable to the Pledgor representing any interest or dividend or other
distribution payable in respect of the Collateral or any part thereof or on
account thereof and to give full discharge for the same, to settle, compromise,
prosecute or defend any action, claim or proceeding with respect thereto, and to
sell, assign, endorse, pledge, transfer and to make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent, or to present or file any claim or notice, or
to take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby.
The Collateral Agent and the other Secured Parties shall be accountable only for
amounts actually received as a result of the exercise of the powers granted to
them herein, and neither they nor their officers, directors, employees or agents
shall be responsible to any Pledgor for any act or failure to act hereunder,
except for their own gross negligence or wilful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Collateral Agent and the Pledgor or Pledgors with respect to which
such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
SECTION 11. Securities Act, etc. In view of the position of
the Pledgors in relation to the Pledged Securities, or because of other current
or future circumstances, a question may arise under the Securities Act of 1933,
as now or hereafter in effect, or any similar statute hereafter enacted
analogous in purpose or effect (such Act and any such similar statute as from
time to time in effect
8
<PAGE>
being called the "Federal Securities Laws") with respect to any disposition of
the Pledged Securities permitted hereunder. Each Pledgor understands that
compliance with the Federal Securities Laws might very strictly limit the course
of conduct of the Collateral Agent if the Collateral Agent were to attempt to
dispose of all or any part of the Pledged Securities, and might also limit the
extent to which or the manner in which any subsequent transferee of any Pledged
Securities could dispose of the same. Similarly, there may be other legal
restrictions or limitations affecting the Collateral Agent in any attempt to
dispose of all or part of the Pledged Securities under applicable Blue Sky or
other state securities laws or similar laws analogous in purpose or effect. Each
Pledgor recognizes that in light of such restrictions and limitations the
Collateral Agent may, with respect to any sale of the Pledged Securities, limit
the purchasers to those who will agree, among other things, to acquire such
Pledged Securities for their own account, for investment, and not with a view to
the distribution or resale thereof. Each Pledgor acknowledges and agrees that in
light of such restrictions and limitations, the Collateral Agent, in its sole
and absolute discretion, (a) may proceed to make such a sale whether or not a
registration statement for the purpose of registering such Pledged Securities or
part thereof shall have been filed under the Federal Securities Laws and (b) may
approach and negotiate with a single potential purchaser to effect such sale.
Each Pledgor acknowledges and agrees that any such sale might result in prices
and other terms less favorable to the seller than if such sale were a public
sale without such restrictions. In the event of any such sale, the Collateral
Agent shall incur no responsibility or liability for selling all or any part of
the Pledged Securities at a price that the Collateral Agent, in its sole and
absolute discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached. The provisions of this Section
11 will apply notwithstanding the existence of a public or private market upon
which the quotations or sales prices may exceed substantially the price at which
the Collateral Agent sells.
SECTION 12. Registration, etc. Each Pledgor agrees that, upon
the occurrence and during the continuance of an Event of Default hereunder, if
for any reason the Collateral Agent desires to sell any of the Pledged
Securities of the Borrower at a public sale, it will, at any time and from time
to time, upon the written request of the Collateral Agent, use its best efforts
to take or to cause the issuer of such Pledged Securities to take such action
and prepare, distribute and/or file such documents, as are required or advisable
in the reasonable opinion of counsel for the Collateral Agent to permit the
public sale of such Pledged Securities. Each Pledgor further agrees to
indemnify, defend and hold harmless the Collateral Agent, each other Secured
Party, any underwriter and their respective officers, directors, affiliates and
controlling persons from and against all loss, liability, expenses, costs of
counsel (including, without limitation, reasonable fees and expenses to the
Collateral Agent of legal counsel), and claims (including the costs of
investigation) that they may incur insofar as such loss, liability, expense or
claim arises out of or is based upon any alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or in
any notification or offering circular, or arises out of or is based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar
as the same may have been caused by any untrue statement or omission based upon
information furnished in writing to such Pledgor or the issuer of such Pledged
Securities by the Collateral Agent or any other Secured Party expressly for use
therein. Each Pledgor further agrees, upon such written request referred to
above, to use its best efforts to qualify, file or register, or cause the issuer
of such Pledged Securities to qualify, file or register, any of the Pledged
Securities under the Blue Sky or other securities laws of such states as may be
requested by the Collateral Agent and keep effective, or cause to be kept
effective, all such qualifications, filings or registrations. Each Pledgor will
bear all costs and
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<PAGE>
expenses of carrying out its obligations under this Section 12. Each Pledgor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this Section 12 and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section 12 may be specifically enforced.
SECTION 13. Regulatory Approval. Notwithstanding anything to
the contrary contained herein, the Collateral Agent will not take any action
pursuant to this Pledge Agreement that would constitute or result in any
assignment of an FCC license or any change of control of the Borrower, any
Subsidiary, any Unrestricted Subsidiary or any STFI Unrestricted Subsidiary
subject to regulation by the FCC if such assignment of FCC license or change of
control would require under then existing law (including the written rules and
regulations promulgated by the FCC), the prior approval of the FCC, without
first obtaining such approval of the FCC. Each Pledgor agrees after the
occurrence of any Event of Default to take any action that the Collateral Agent
may reasonably request in order to obtain and enjoy the full rights and benefits
granted to the Collateral Agent by this Pledge Agreement and each other
agreement, instrument and document delivered to the Collateral Agent in
connection herewith or in any document evidencing or securing the collateral for
any of the Obligations, including specifically, at the Pledgor's own cost and
expense, the use of Pledgor's best efforts to assist in obtaining approval of
the FCC or any applicable state regulatory authority for any action or
transaction contemplated by this Pledge Agreement that is then required by law,
and specifically, without limitation, upon request, to prepare, sign and file
with the FCC or such state regulatory authority the assignor's or transferor's
portion of any application or applications for consent to the assignment of
license or transfer of control necessary or appropriate under the FCC's or such
state regulatory authority's rules and regulations for approval of any
Obligations secured hereby.
SECTION 14. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the grant of a security interest in the Collateral
and all obligations of each Pledgor hereunder, shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Credit Agreement, any other Loan Document, any agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the Obligations).
SECTION 15. Termination or Release. (a) This Agreement and
the security interests granted hereby shall terminate when all the Obligations
have been indefeasibly paid in full and the Lenders have no further commitment
to lend under the Credit Agreement, the L/C Exposure has been reduced to zero
and the Fronting Banks have no further obligation to issue Letters of Credit
under the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any
Collateral that is permitted under the Credit Agreement to any person that is
not a Pledgor, or, upon the effectiveness of any written consent to the release
of the security interest granted hereby in any Collateral pursuant to
Section 9.08(b) of the Credit Agreement, the security interest in such
Collateral shall be automatically
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<PAGE>
released.
(c) In connection with any termination or release pursuant to
paragraph (a) or (b), the Collateral Agent shall execute and deliver to any
Pledgor, at such Pledgor's expense, all documents that such Pledgor shall
reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 14 shall be without recourse to
or warranty by the Collateral Agent.
SECTION 16. Notices. All communications and notices hereunder
shall be in writing and given as provided in Section 9.01 of the Credit
Agreement. All communications and notices hereunder to any Subsidiary Pledgor
shall be given to it at the address for notices set forth on Schedule I, with a
copy to the Borrower.
SECTION 17. Further Assurances. Each Pledgor agrees to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder.
SECTION 18. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of any Pledgor that
are contained in this Agreement shall bind and inure to the benefit of its
successors and assigns. This Agreement shall become effective as to any Pledgor
when a counterpart hereof executed on behalf of such Pledgor shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding upon
such Pledgor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of such Pledgor, the Collateral Agent
and the other Secured Parties, and their respective successors and assigns,
except that no Pledgor shall have the right to assign its rights hereunder or
any interest herein or in the Collateral (and any such attempted assignment
shall be void), except as expressly contemplated by this Agreement or the other
Loan Documents. If all of the capital stock of a Pledgor is sold, transferred or
otherwise disposed of to a person that is not an Affiliate of the Borrower
pursuant to a transaction permitted by Section 6.05 of the Credit Agreement,
such Pledgor shall be released from its obligations under this Agreement without
further action. This Agreement shall be construed as a separate agreement with
respect to each Pledgor and may be amended, modified, supplemented, waived or
released with respect to any Pledgor without the approval of any other Pledgor
and without affecting the obligations of any other Pledgor hereunder
SECTION 19. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by each Pledgor
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Fronting Banks, regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero
and as long as the Commitments and the L/C Commitments have not been terminated.
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<PAGE>
(b) In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 20. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 21. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute a single contract, and shall become
effective as provided in Section 18. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 22. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement. Section headings used herein are for convenience
of reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting this
Agreement.
SECTION 23. Jurisdiction; Consent to Service of
Process. (a) Each Pledgor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that, to the extent permitted by
applicable law, all claims in respect of any such action or proceeding may be
heard and determined in such New York State or, to the extent permitted by law,
in such Federal court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that the Collateral Agent
or any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Pledgor or
its properties in the courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 15. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
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<PAGE>
SECTION 24. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 25. Additional Pledgors. Pursuant to Section 5.11 of
the Credit Agreement, each Subsidiary of STFI, the Borrower or any Subsidiary
that was not in existence or not a Subsidiary on the date of the Credit
Agreement is required to enter in this Agreement as a Subsidiary Pledgor upon
becoming a Subsidiary if such Subsidiary owns or possesses property of a type
that would be considered Collateral hereunder. Upon execution and delivery by
the Collateral Agent and a Subsidiary of an instrument in the form of Annex 1,
such Subsidiary shall become a Subsidiary Pledgor hereunder with the same force
and effect as if originally named as a Subsidiary Pledgor herein. The execution
and delivery of such instrument shall not require the consent of any Pledgor
hereunder. The rights and obligations of each Pledgor hereunder shall remain in
full force and effect notwithstanding the addition of any new Subsidiary Pledgor
as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SHARED TECHNOLOGIES FAIRCHILD INC.,
by____________________________
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.,
by___________________________
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
13
<PAGE>
MULTI-TENANT SERVICES, INC.,
by__________________________
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
BOSTON TELECOMMUNICATIONS
GROUP, INC.
d/b/a BOSTON TELECOMMUNICATIONS
COMPANY,
by__________________________
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
FINANCIAL PLACE COMMUNICATIONS
COMPANY,
by__________________________
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer of
Shared Technologies
Fairchild Inc., its
General Partner
STI INTERNATIONAL, INC.,
by__________________________
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
OFFICE TELEPHONE MANAGEMENT,
by__________________________
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
VSI CORPORATION,
by_________________________
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
14
<PAGE>
CREDIT SUISSE, as Collateral Agent,
by_________________________
/s/ Kathleen D. O'Brien
Name: Kathleen D. O'Brien
Title: Member of Senior
Management
by_________________________
/s/ Will Ziglar
Name: Will Ziglar
Title: Associate
15
<PAGE>
SUBSIDIARY PLEDGORS
Name Address
16
<PAGE>
CAPITAL STOCK Schedule II to the
Pledge Agreement
Number of Registered Number and Class Percentage
Issuer Certificate Owner of Shares of Shares
DEBT SECURITIES
Principal Date of Maturity
Issuer Amount Note Date
17
<PAGE>
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the PLEDGE
AGREEMENT dated as of March 13, 1996, among SHARED
TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP., a
Delaware corporation (the "Borrower"), SHARED
TECHNOLOGIES FAIRCHILD INC., a Delaware corporation
("STFI", which term shall, after the Merger referred
to in the Credit Agreement referred to below, include
the surviving corporation in such Merger), each
Subsidiary of the Borrower listed on Schedule I
hereto (each such Subsidiary individually a
"Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; the Borrower, STFI and the
Subsidiary Pledgors are referred to collectively
herein as the "Pledgors") and CREDIT SUISSE, a bank
organized under the laws of Switzerland, acting
through its New York branch ("Credit Suisse"), as
collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
A. Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent"), (b) the Parent Guarantee Agreement dated
as of March 12, 1996 (as amended, supplemented or otherwise modified from time
to time, the "Parent Guarantee Agreement"), between STFI and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of March 12, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"; and, collectively with the Parent Guarantee Agreement, the
"Guarantee Agreements") among the Subsidiary Pledgors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in
order to induce the Lenders to make Loans and the Fronting Banks to issue
Letters of Credit. Pursuant to Section 5.11 of the Credit Agreement, each
Subsidiary of STFI, the Borrower or any Subsidiary that was not in existence or
not a Subsidiary on the date of the Credit Agreement is required to enter into
the Pledge Agreement as a Subsidiary Pledgor upon becoming a Subsidiary if such
Subsidiary owns or possesses property of a type that would be considered
Collateral under the Pledge Agreement. Section 25 of the Pledge Agreement
provides that such Subsidiaries may become Subsidiary Pledgors under the Pledge
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary (the "New Pledgor") is executing this
Supplement in accordance with the requirements of the Credit Agreement to become
a Subsidiary Pledgor under the Pledge Agreement in order to induce the Lenders
to make additional Loans and the Fronting Banks to issue additional Letters of
Credit and as consideration for Loans previously made and Letters of Credit
previously issued.
Accordingly, the Collateral Agent and the New Pledgor agree as
follows:
SECTION 1. In accordance with Section 25 of the Pledge
Agreement, the New Pledgor by its signature below becomes a Pledgor under the
Pledge Agreement with the same force and
<PAGE>
effect as if originally named therein as a Pledgor and the New Pledgor hereby
agrees (a) to all the terms and provisions of the Pledge Agreement applicable to
it as a Pledgor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Pledgor thereunder are true and
correct on and as of the date hereof. In furtherance of the foregoing, the New
Pledgor, as security for the payment and performance in full of the Obligations
(as defined in the Pledge Agreement), does hereby create and grant to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, their successors and assigns, a security interest in and lien on all of
the New Pledgor's right, title and interest in and to the Collateral (as defined
in the Pledge Agreement) of the New Pledgor. Each reference to a "Subsidiary
Pledgor" or a "Pledgor" in the Pledge Agreement shall be deemed to include the
New Pledgor. The Pledge Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Supplement shall become effective when
the Collateral Agent shall have received counterparts of this Supplement that,
when taken together, bear the signatures of the New Pledgor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that
set forth on Schedule I attached hereto is a true and correct schedule of all
its Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such provision
for so long as such provision is held to be invalid, illegal or unenforceable,
but the validity, legality and enforceability of the remaining provisions
contained herein and in the Pledge Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be
in writing and given as provided in Section 15 of the Pledge Agreement. All
communications and notices hereunder to the New Pledgor shall be given to it at
the address set forth under its signature hereto, with a copy to the Borrower.
2
<PAGE>
SECTION 9. The New Pledgor agrees to reimburse the Collateral
Agent for its reasonable out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, other charges and disbursements of
counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent
have duly executed this Supplement to the Pledge Agreement as of the day and
year first above written.
[Name of New Pledgor],
by_____________________
Name:
Title:
Address:
CREDIT SUISSE, as Collateral Agent,
by_____________________
Name:
Title:
by_____________________
Name:
Title:
3
<PAGE>
Schedule I to
Supplement No.
to the Pledge Agreement
Pledged Securities of the New Pledgor
CAPITAL STOCK
Number of Registered Number and Class Percentage
Issuer Certificate Owner of Shares of Shares
DEBT SECURITIES
Principal Date of Maturity
Issuer Amount Note Date
EXHIBIT 10.6
PLEDGE AGREEMENT
PLEDGE AGREEMENT (the "Agreement"), dated as of March 13,
1996, made by RHI HOLDINGS, INC., a Delaware corporation ("Pledgor"), in favor
of Gadsby & Hannah (the "Pledgee").
R E C I T A L S :
A. Pursuant to the terms of an Agreement to Exchange 6%
Cumulative Convertible Preferred Stock and Special Preferred Stock dated as of
March 1, 1996 (the "Exchange 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 250,000 shares of
Series I 6% Cumulative Convertible Preferred Stock, par value $.01 per share
(the "Convertible Preferred Stock"), of Shared Technologies and 200,000 shares
of Series J Special Preferred Stock, par value $.01 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, and Fairchild Holding Corp. (collectively,
the "Indemnifying Parties").
A G R E E M E N T :
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
<PAGE>
-2-
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,
<PAGE>
-3-
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
<PAGE>
-4-
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
<PAGE>
-5-
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.
<PAGE>
-6-
SECTION 14. Pledgee. Shared Technologies hereby appoints
Gadsby & Hannah 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
<PAGE>
-7-
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 Gadsby & Hannah:
125 Summer Street
Boston, MA 02110
Facsimile No.: (617) 345-7050
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.
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.
<PAGE>
-8-
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: /s/ John Flynn
----------------------
Name:
Title:
GADSBY & HANNAH
as Pledgee
By: /s/ Marianne Gilleran
----------------------
Name:
Title:
SHARED TECHNOLOGIES INC.
By: /s/ Vincent DiVincenzo
----------------------
Name:
Title:
<PAGE>
SCHEDULE I
Pledged Shares
<TABLE>
<CAPTION>
CLASS PAR CERTIFICATE NUMBER
ISSUER OF STOCK VALUE NO(S). 0F SHARES
- ------ -------- ----- ------ ---------
<S> <C> <C> <C> <C>
Shared Technologies Series I 6% $.01 1 235,000
Fairchild Inc. Cumulative
Convertible
Preferred
Shared Technologies Series $.01 1 200,000
Fairchild Inc. Special
Preferred
</TABLE>
EXHIBIT 10.7
CONFORMED COPY
PARENT GUARANTEE AGREEMENT dated as of March
12, 1996, between SHARED TECHNOLOGIES INC., a
Delaware corporation (the "Guarantor", which term
shall, after the Merger referred to in the Credit
Agreement referred to below, include the surviving
corporation in such Merger) and CREDIT SUISSE, a bank
organized under the laws of Switzerland, acting
through its New York branch, as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to the Credit Agreement dated as of March
12, 1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Shared Technologies Fairchild Communications Corp., a
Delaware corporation (the "Borrower"), the Guarantor, the lenders from time to
time party thereto (the "Lenders"), Credit Suisse, as administrative agent (in
such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower, and the
Fronting Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. As the owner of all of the issued and
outstanding capital stock of the Borrower, the Guarantor acknowledges that it
will derive substantial benefit from the making of the Loans by the Lenders and
the issuance of the Letters of Credit by the Fronting Banks. The obligations of
the Lenders to make Loans and of the Fronting Banks to issue Letters of Credit
are conditioned on, among other things, the execution and delivery by the
Guarantor of a Guarantee Agreement in the form hereof. As consideration therefor
and in order to induce the Lenders to make Loans and the Fronting Banks to issue
Letters of Credit, the Guarantor is willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. The Guarantor unconditionally
guarantees, as a primary obligor and not merely as a surety, (a) the due and
punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Loan Parties under or pursuant to
the Credit Agreement and the other Loan Documents and (c) unless otherwise
agreed upon in writing by the
<PAGE>
applicable Lender party thereto, all obligations of the Borrower, monetary or
otherwise, under each Interest Rate Protection Agreement entered into with a
counterparty that was a Lender at the time such Interest Rate Protection
Agreement was entered into (all the monetary and other obligations referred to
in the preceding clauses (a) through (c) being collectively called the
"Obligations"). The Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee notwithstanding any
extension or renewal of any Obligation. The Guarantor further agrees that
(a) the maturity of the Obligations guaranteed hereby may be accelerated as
provided in Article VII of the Credit Agreement for the purposes of the
Guarantor's guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (b) in the event of any declaration of acceleration of
such obligations as provided in such Article VII, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantor for
the purposes of this Section.
SECTION 2. Obligations Not Waived. To the fullest extent
permitted by applicable law, the Guarantor waives presentment to, demand of
payment from and protest to the Borrower of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of the Guarantor hereunder shall not be affected by (a) the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce or exercise any right or remedy against the Borrower or any other
guarantor of the Obligations under the provisions of the Credit Agreement, any
other Loan Document or otherwise, (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of this
Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any other guarantor of the Obligations or (c) the
failure to perfect any security interest in, or the release of, any of the
security held by or on behalf of the Collateral Agent or any other Secured
Party.
SECTION 3. Security. The Guarantor authorizes the Collateral
Agent and each of the other Secured Parties to (a) take and hold security for
the payment of this Guarantee and the Obligations and exchange, enforce, waive
and release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may determine and
(c) release or substitute any one or more endorsees, other guarantors or other
obligors.
SECTION 4. Guarantee of Payment. The Guarantor further agrees
that its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The
obligations of the Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan Document or any
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other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of the Guarantor or that would otherwise operate as
a discharge of the Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent
permitted by applicable law, the Guarantor waives any defense based on or
arising out of any defense of the Borrower or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower, other than the final and indefeasible payment
in full in cash of the Obligations. The Collateral Agent and the other Secured
Parties may, at their election, foreclose on any security held by one or more of
them by one or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of the Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly paid in cash. To the fullest extent
permitted by applicable law, the Guarantor waives any defense arising out of any
such election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of the Guarantor against the Borrower or any other guarantor, as the
case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of
the foregoing and not in limitation of any other right that the Collateral Agent
or any other Secured Party has at law or in equity against the Guarantor by
virtue hereof, upon the failure of the Borrower or any other Loan Party to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, the Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash the amount of such
unpaid Obligations. Upon payment by the Guarantor of any sums to the Collateral
Agent or any Secured Party as provided above, all rights of the Guarantor
against the Borrower arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by the Guarantor is hereby subordinated in right
of payment to the prior payment in full of the Obligations. If any amount shall
erroneously be paid to the Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of the Borrower, such amount shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. The Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
the Guarantor assumes and incurs hereunder, and agrees that none of the
Collateral Agent or the other Secured Parties will have any duty to advise the
Guarantor of information known to it or any of them regarding such circumstances
or risks.
SECTION 9. Termination. The Guarantee made hereunder (a) shall
terminate when
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all the Obligations have been indefeasibly paid in full and the Lenders have no
further commitment to lend under the Credit Agreement, the L/C Exposure has been
reduced to zero and the Fronting Banks have no further obligation to issue
Letters of Credit under the Credit Agreement and (b) shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored by
any Secured Party or the Guarantor upon the bankruptcy or reorganization of the
Borrower, the Guarantor or otherwise.
SECTION 10. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantor that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
when a counterpart hereof executed on behalf of the Guarantor shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding upon
the Guarantor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of the Guarantor, the Collateral Agent
and the other Secured Parties, and their respective successors and assigns,
except that the Guarantor shall not have the right to assign its rights or
obligations hereunder or any interest herein (and any such attempted assignment
shall be void).
SECTION 11. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on the Guarantor in any case shall entitle the Guarantor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantor and the Collateral Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 13. Notices. All communications and notices hereunder
shall be in writing and given as provided in Section 9.01 of the Credit
Agreement. All communications and notices hereunder to the Guarantor shall be
given to it at 100 Great Meadow Road Wethersfield, CT 06109, Attention of Chief
Executive Officer.
SECTION 14. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Guarantors herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be
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considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Fronting Banks regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero
and as long as the Commitments and the L/C Commitment have not been terminated.
SECTION 15. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 10. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 16. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
<PAGE>
SHARED TECHNOLOGIES INC., as
Guarantor,
by_______________________
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
CREDIT SUISSE, as Collateral Agent,
by_______________________
/s/ Kathleen D. O'Brien
Name: Kathleen D. O'Brien
Title: Member of Senior Management
by_______________________
/s/ Will Ziglar
Name: Will Ziglar
Title: Associate
5
EXHIBIT 10.8
SUBSIDIARY GUARANTEE AGREEMENT dated
as of March 13, 1996, among each of the subsidiaries
listed on Schedule I hereto (each such subsidiary
individually, a "Guarantor" and collectively, the
"Guarantors") of SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP., a Delaware corporation (the
"Borrower"), or SHARED TECHNOLOGIES FAIRCHILD INC., a
Delaware corporation ("STFI"), and CREDIT SUISSE, a
bank organized under the laws of Switzerland, acting
through its New York branch, as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to the Credit Agreement dated as of March
12, 1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, STFI, the lenders from time to time
party thereto (the "Lenders"), Credit Suisse, as administrative agent (in such
capacity, the "Administrative Agent") and as collateral agent (in such capacity,
the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower, and the
Fronting Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of the Guarantors is a wholly owned
Subsidiary of the Borrower and acknowledges that it will derive substantial
benefit from the making of the Loans by the Lenders, and the issuance of the
Letters of Credit by the Fronting Banks. The obligations of the Lenders to make
Loans and of the Fronting Banks to issue Letters of Credit are conditioned on,
among other things, the execution and delivery by the Guarantors of a Guarantee
Agreement in the form hereof. As consideration therefor and in order to induce
the Lenders to make Loans and the Fronting Banks to issue Letters of Credit, the
Guarantors are willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally
guarantees, jointly with the other Guarantors and severally, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Loan Parties to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents and (c) unless otherwise agreed
<PAGE>
upon in writing by the applicable Lender party thereto, all obligations of the
Borrower, monetary or otherwise, under each Interest Rate Protection Agreement
entered into with a counterparty that was a Lender at the time such Interest
Rate Protection Agreement was entered into (all the monetary and other
obligations referred to in the preceding clauses (a) through (c) being
collectively called the "Obligations"). Each Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation. Each Guarantor
further agrees that (a) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article VII of the Credit Agreement for the purposes
of such Guarantor's guarantee herein, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in such Article VII, such Obligations (whether or
not due and payable) shall forthwith become due and payable by such Guarantor
for the purposes of this Section.
Anything contained in this Agreement to the contrary
notwithstanding, the obligations of each Guarantor hereunder shall be limited to
a maximum aggregate amount equal to the greatest amount that would not render
such Guarantor's obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any provisions of applicable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (a) in respect of intercompany indebtedness to the Borrower or
Affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to or offset by the amount paid by such Guarantor
hereunder and (b) under any Guarantee of senior unsecured indebtedness or
Indebtedness subordinated in right of payment to the Obligations which Guarantee
contains a limitation as to maximum amount similar to that set forth in this
paragraph, pursuant to which the liability of such Guarantor hereunder is
included in the liabilities taken into account in determining such maximum
amount) and after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, contribution, reimbursement, indemnity or similar rights of such
Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an
equitable allocation among such Guarantor and other Affiliates of the Borrower
of obligations arising under Guarantees by such parties (including the
Indemnity, Subrogation and Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent
permitted by applicable law, each Guarantor waives presentment to, demand of
payment from and protest to the Borrower of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of each Guarantor hereunder shall not be affected by (a) the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce or exercise any right or remedy against the Borrower or any other
Guarantor under the provisions of the Credit Agreement, any other Loan Document
or otherwise, (b) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of this Agreement, any other Loan
Document, any Guarantee or any other agreement, including with respect to any
other Guarantor under this Agreement or (c) the failure to perfect any security
interest in, or the release of, any of the security held by or on behalf of the
Collateral Agent or any other Secured Party.
SECTION 3. Security. Each of the Guarantors authorizes the
Collateral Agent and each of the other Secured Parties, to (a) take and hold
security for the payment of this Guarantee and the
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Obligations and exchange, enforce, waive and release any such security,
(b) apply such security and direct the order or manner of sale thereof as they
in their sole discretion may determine and (c) release or substitute any one or
more endorsees, other guarantors of other obligors.
SECTION 4. Guarantee of Payment. Each Guarantor further
agrees that its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of any Guarantor or that would otherwise operate as
a discharge of each Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent
permitted by applicable law, each of the Guarantors waives any defense based on
or arising out of any defense of the Borrower or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower, other than the final and indefeasible payment
in full in cash of the Obligations. The Collateral Agent and the other Secured
Parties may, at their election, foreclose on any security held by one or more of
them by one or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly paid in cash. Pursuant to applicable law,
each of the Guarantors waives any defense arising out of any such election even
though such election operates, pursuant to applicable law, to impair or to
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against the Borrower or any other Guarantor or guarantor, as the
case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of
the foregoing and not in limitation of any other right that the Collateral Agent
or any other Secured Party has at law or in equity against any Guarantor by
virtue hereof, upon the failure of the Borrower or any other Loan Party to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash the amount of such
unpaid Obligations. Upon payment by any Guarantor of any sums to the Collateral
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<PAGE>
Agent or any Secured Party as provided above, all rights of such Guarantor
against the Borrower arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by any Guarantor is hereby subordinated in right
of payment to the prior payment in full of the Obligations. If any amount shall
erroneously be paid to any Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of the Borrower, such amount shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Guarantor assumes and incurs hereunder, and agrees that none of the
Collateral Agent or the other Secured Parties will have any duty to advise any
of the Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 9. Representations and Warranties. Each of the
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement are true and
correct.
SECTION 10. Termination. The Guarantees made hereunder (a)
shall terminate when all the Obligations have been indefeasibly paid in full and
the Lenders have no further commitment to lend under the Credit Agreement, the
L/C Exposure has been reduced to zero and the Fronting Banks have no further
obligation to issue Letters of Credit under the Credit Agreement and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Secured Party or any Guarantor upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Guarantors
that are contained in this Agreement shall bind and inure to the benefit of each
party hereto and their respective successors and assigns. This Agreement shall
become effective as to any Guarantor when a counterpart hereof executed on
behalf of such Guarantor shall have been delivered to the Collateral Agent, and
a counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (and any
such attempted assignment shall be void). If all of the capital stock of a
Guarantor is sold, transferred or otherwise disposed of pursuant to a
transaction permitted by Section 6.05 of the Credit Agreement, such Guarantor
shall be released from its obligations under this Agreement without further
action. This Agreement shall be construed as a separate agreement with respect
to each Guarantor and may be amended, modified, supplemented, waived or released
with respect to any Guarantor without the approval of any other Guarantor and
without affecting the obligations of any other Guarantor hereunder.
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SECTION 12. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Guarantors with respect to which such waiver, amendment or
modification relates and the Collateral Agent, with the prior written consent of
the Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. Notices. All communications and notices hereunder
shall be in writing and given as provided in Section 9.01 of the Credit
Agreement. All communications and notices hereunder to each Guarantor shall be
given to it at its address set forth in Schedule I with a copy to the Borrower.
SECTION 15. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by the Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Fronting Banks regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero
and as long as the Commitments and the L/C Commitment have not been terminated.
(b) In the event any one or more of the provisions contained
in this Agreement or in any other Loan Document should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single
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contract, and shall become effective as provided in Section 11. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process.
(a) Each Guarantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Guarantor or its properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 14. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Additional Guarantors. Pursuant to Section 5.11
of the Credit Agreement, each Subsidiary of STFI, the Borrower or any Subsidiary
that was not in existence on the date of the Credit Agreement is required to
enter into this Agreement as a Guarantor upon becoming a
6
<PAGE>
Subsidiary. Upon execution and delivery after the date hereof by the Collateral
Agent and such a Subsidiary of an instrument in the form of Annex 1, such
Subsidiary shall become a Guarantor hereunder with the same force and effect as
if originally named as a Guarantor herein. The execution and delivery of any
instrument adding an additional Guarantor as a party to this Agreement shall not
require the consent of any other Guarantor hereunder. The rights and obligations
of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this Agreement.
SECTION 21. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Secured Party is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other Indebtedness at any time owing by such
Secured Party to or for the credit or the account of any Guarantor against any
or all the obligations of such Guarantor now or hereafter existing under this
Agreement and the other Loan Documents held by such Secured Party, irrespective
of whether or not such Secured Party shall have made any demand under this
Agreement or any other Loan Document and although such obligations may be
unmatured. The rights of each Secured Party under this Section 21 are in
addition to other rights and remedies (including other rights of setoff) which
such Secured Party may have.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
MULTI-TENANT SERVICES, INC.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
BOSTON TELECOMMUNICATIONS GROUP,
INC., d/b/a BOSTON TELECOMMUNICATIONS
COMPANY,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
FINANCIAL PLACE COMMUNICATIONS
COMPANY,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer of Shared
Technologies Fairchild Inc., its General
Partner
STI INTERNATIONAL, INC.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
8
<PAGE>
OFFICE TELEPHONE MANAGEMENT,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
VSI CORPORATION,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
CREDIT SUISSE, as Collateral Agent,
by
/s/ Kathleen D. O'Brien
Name: Kathleen D. O'Brien
Title: Member of Senior Management
by
/s/ Will Ziglar
Name: Will Ziglar
Title: Associate
9
<PAGE>
SCHEDULE I TO THE
GUARANTEE AGREEMENT
Guarantor Address
<PAGE>
Annex 1 to the
Subsidiary Guarantee Agreement
SUPPLEMENT NO. dated as of , to the
Subsidiary Guarantee Agreement dated as of March 12,
1996, among each of the subsidiaries listed on
Schedule I thereto (each such subsidiary
individually, a "Guarantor" and collectively, the
"Guarantors") of SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP., a Delaware corporation (the
"Borrower"), or SHARED TECHNOLOGIES FAIRCHILD INC., a
Delaware corporation ("STFI"), and CREDIT SUISSE, a
bank organized under the laws of Switzerland, acting
through its New York branch, as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
A. Reference is made to the Credit Agreement dated as of March
12, 1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, STFI, the lenders from time to time
party thereto (the "Lenders"), Credit Suisse, as administrative agent (in such
capacity, the "Administrative Agent") and as collateral agent (in such capacity,
the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Guarantee Agreement
and the Credit Agreement.
C. The Guarantors have entered into the Guarantee Agreement in
order to induce the Lenders to make Loans and the Fronting Banks to issue
Letters of Credit. Pursuant to Section 5.11 of the Credit Agreement, each
Subsidiary of STFI, the Borrower or any Subsidiary that was not in existence or
not a Subsidiary on the date of the Credit Agreement is required to enter into
the Guarantee Agreement as a Guarantor upon becoming a Subsidiary. Section 20 of
the Guarantee Agreement provides that additional Subsidiaries of the Borrower
may become Guarantors under the Guarantee Agreement by execution and delivery of
an instrument in the form of this Supplement. The undersigned Subsidiary of the
Borrower (the "New Guarantor") is executing this Supplement in accordance with
the requirements of the Credit Agreement to become a Guarantor under the
Guarantee Agreement in order to induce the Lenders to make additional Loans and
the Fronting Banks to issue additional Letters of Credit and as consideration
for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree
as follows:
SECTION 1. In accordance with Section 20 of the Guarantee
Agreement, the New Guarantor by its signature below becomes a Guarantor under
the Guarantee Agreement with the same force and effect as if originally named
therein as a Guarantor and the New Guarantor hereby (a) agrees to all the terms
and provisions of the Guarantee Agreement applicable to it as a Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Guarantor thereunder are true and correct on and as
of the date hereof. Each reference to a "Guarantor" in the Guarantee Agreement
shall be deemed to include the New Guarantor. The Guarantee Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Collateral Agent
<PAGE>
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Supplement shall become effective when
the Collateral Agent shall have received counterparts of this Supplement that,
when taken together, bear the signatures of the New Guarantor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the
Guarantee Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Guarantee Agreement shall not in any way be affected
or impaired thereby (it being understood that the invalidity of a particular
provision hereof in a particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction). The parties hereto
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in Section14 of the Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the Borrower.
<PAGE>
SECTION 8. The New Guarantor agrees to reimburse the
Collateral Agent for its out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, disbursements and other charges of
counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent
have duly executed this Supplement to the Guarantee Agreement as of the day and
year first above written.
[Name Of New Guarantor],
by
Name:
Title:
Address:
CREDIT SUISSE, as Collateral Agent,
by
Name:
Title:
by
Name:
Title:
EXHIBIT 10.9
AGREEMENT TO EXCHANGE
6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
AND SPECIAL PREFERRED STOCK
This AGREEMENT TO EXCHANGE SPECIAL PREFERRED STOCK dated as of March 1,
1996 ("Exchange Agreement"), is made 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"). Terms not
otherwise defined herein which are defined in that certain Agreement and Plan of
Merger dated as of November 9, 1995, as amended by the First Amendment to
Agreement and Plan of Merger dated as of February 2, 1996 (the "First
Amendment"), as further amended by the Second Amendment to Agreement and Plan of
Merger dated as of February 23, 1996 (the "Second Amendment"), as further
amended by the Third Amendment to Agreement and Plan of Merger dated as of
February 23, 1996 (the "Third Amendment"), including the exhibits and schedules
thereto (the Agreement and Plan of Merger, as amended by the First Amendment,
the Second Amendment and the Third Amendment, are referred to collectively
herein as the "Merger Agreement") by and among Fairchild, RHI, TFC and Shared
Technologies, shall have the same respective meanings herein as therein.
WHEREAS, Section 3.1 of the Merger Agreement provides that RHI will be
issued the 6% Cumulative Convertible Preferred Stock and the Special Preferred
Stock of the Surviving Corporation which stock has been authorized by Shared
Technologies' Board of Directors and designated as Series G and Series H
respectively (the "Series G and Series H Stock"); and
WHEREAS, the terms for such Series G and Series H Stock contain certain
provisions which would be inconsistent with certain financing arrangements
currently being negotiated by the Surviving Corporation; and
WHEREAS, RHI has agreed to exchange the Series G and Series H Stock to
be issued to it upon the consummation of the Merger for an equivalent number of
shares of 6% Cumulative Convertible Preferred Stock and Special Preferred Stock
which stock has also been authorized by Shared
<PAGE>
Technologies' Board of Directors and designated as Series I and Series J
respectively (the "Series I and Series J Stock") containing such powers,
designations, preferences and other rights, qualifications, restrictions and
limitations as described herein (the "Exchange").
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
POST-MERGER EXCHANGE OF PREFERRED STOCK
1.1 Immediately following the filing of the Certificate of Merger
contemplated by Section 1.2 of the Merger Agreement, RHI shall surrender to the
Surviving Corporation all of the shares of the Series G and Series H Stock
issued to it in connection with the Merger in exchange for an equivalent number
of shares of the Series I and Series J Stock. All shares of the Series G and
Series H Stock and the Special Preferred Stock surrendered to the Surviving
Corporation shall be canceled on the books and records of the Surviving
Corporation.
1.2 The powers, designations, preferences and other rights,
qualifications, restrictions and limitations of the Series I and Series J Stock
shall be as set forth in the Designations thereof appended hereto as Annexes A
and B.
1.3. Shared Technologies agrees that upon the Exchange, the
representations, warranties and indemnifications made by Shared Technologies
with respect to the Series G and Series H Stock in the Merger Agreement shall be
applicable to the Series I and Series J Stock and Fairchild and TFC hereby agree
that the Series I and Series J Stock will be substituted for the Series G and
Series H Stock pursuant to the Pledge Agreement and all references to the Series
G and Series H Stock in such Pledge Agreement, the Shareholders' Agreement and
Indemnification Agreements shall be deemed to refer to the Series I and Series J
Stock.
2
<PAGE>
ARTICLE II
PROVISIONS OF GENERAL APPLICATION
2.1 Any notice or communication to any party hereto shall be duly given
if sent in the form and manner prescribed in the Merger Agreement.
2.2 This Exchange 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.
2.3 This Exchange Agreement may be varied or amended only by written
action of all of the parties hereto. This Exchange Agreement shall be governed
by, and construed in accordance with laws of the State of Delaware without
regard to principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Exchange
Agreement to be executed by their duly authorized officers, all as of the day
and year first above written.
SHARED TECHNOLOGIES INC. THE FAIRCHILD CORPORATION
By: /s/ Vincent DiVincenzo By: /s/ Michael T. Alcox
---------------------- --------------------
FAIRCHILD INDUSTRIES, INC. RHI HOLDINGS, INC.
By: /s/ Michael T. Alcox By: /s/ Michael T. Alcox
-------------------- --------------------
ACCEPTED AND AGREED TO BY:
FAIRCHILD HOLDING CORP.
By: /s/ Michael T. Alcox
--------------------
3
EXHIBIT 10.10
================================================================================
SHAREHOLDERS' AGREEMENT
among
SHARED TECHNOLOGIES INC.
RHI HOLDINGS, INC.
and
ANTHONY D. AUTORINO
================================================================================
<PAGE>
SHAREHOLDERS' AGREEMENT
This SHAREHOLDERS' AGREEMENT (this "Agreement") is executed on
March 13, 1996, 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 9, 1995, as amended (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,
<PAGE>
-2-
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
<PAGE>
-3-
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
<PAGE>
-4-
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
<PAGE>
-5-
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.
<PAGE>
-6-
(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
<PAGE>
-7-
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
<PAGE>
-8-
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
<PAGE>
-9-
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
<PAGE>
-10-
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.
<PAGE>
-11-
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: /s/ Anthony D. Autorino
---------------------------
Name:
Title:
RHI HOLDINGS, INC.
By: /s/ John C. Flynn
---------------------------
Name:
Title:
/s/ Anthony D. Autorino
-------------------------------
Anthony D. Autorino
<PAGE>
SCHEDULE I
List of Shareholders
<TABLE>
<CAPTION>
Common
Shareholder and Address Stock
- ----------------------- -----
<S> <C>
RHI Holdings, Inc. 6,000,000
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Anthony D. Autorino 786,118
c/o Shared Technologies Inc.
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
Total 6,791,945
</TABLE>
EXHIBIT 10.11
TAX SHARING AGREEMENT
THIS AGREEMENT is made this 13th day of March, 1996 by and among The
Fairchild Corporation, a Delaware corporation ("TFC"), RHI Holdings, Inc., a
Delaware corporation ("RHI") and Shared Technologies Inc., a Delaware
corporation ("Shared Technologies").
WHEREAS, TFC currently owns all of the outstanding common stock of
RHI, 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 TFC, RHI, FII and VSI are presently
included in the consolidated Federal income tax return filed for an affiliated
group (within the meaning of ss. 1504 of the Internal Revenue Code of 1986, as
amended ("Code")) (the "TFC Group") of which TFC is the common parent;
WHEREAS, TFC, RHI, FII and Shared Technologies have signed an
Agreement and Plan of Merger on November 9, 1995, a First Amendment to Agreement
and Plan of Merger as of February 2, 1996, a Second Amendment to Agreement and
Plan of Merger as of February 23, 1996 and a Third Amendment to Agreement and
Plan of Merger as of March 1, 1996 (as so amended, the "Merger Agreement") under
which, inter alia, FII will merge into Shared Technologies;
WHEREAS, TFC, RHI and Shared Technologies desire to enter into an
agreement providing for payments among TFC, RHI and Shared Technologies with
respect to certain tax benefits and for indemnification 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) TFC and RHI, jointly and severally, 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 including any tax liability of FII and VSI resulting
from the Fairchild Reorganization as further described on Schedule 9.1 attached
to the Merger Agreement, 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 purposes 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). Such payment
shall be limited in all cases to the amount of the reduction in actual tax
otherwise payable by Shared Technologies and shall be paid when the reduction in
tax is recognized by Shared Technologies.
(3) Notwithstanding any other representation and warranty or other
provision in the Merger Agreement or this Agreement, 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 not result in any
payment by Shared Technologies to RHI of any 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 or this Agreement, TFC and RHI make no
representation or warranty as to (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 as a result of the operations of FII
and VSI prior to the Effective Date; (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 utilization of any net operating loss
and tax credit of the TFC Group allocable to FII and VSI as a result of the
operations of FII and VSI prior to the Effective Date.
(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 and TFC, jointly
and severally, 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 and TFC, jointly and severally,
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 ss. 338 of the Code
and Shared Technologies will not make any election under ss. 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 ss.
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 and Special 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.
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, including the results of the Fairchild
Reorganization as described in Schedule 9.1 to the Merger Agreement, 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, including the results of the Fairchild Reorganization
as described in Schedule 9.1 to the Merger Agreement, 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) The TFC Group, 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 TFC or
RHI hereunder (an "Indemnifiable Claim"), Shared Technologies shall promptly
notify TFC and 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 each of
TFC and 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 subparagraph (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 among TFC, 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 TFC or RHI to Shared Technologies or by
Shared Technologies to TFC or RHI pursuant to 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 the rate of interest as described in ss. 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 TFC, RHI, FII, VSI and the parties hereto 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.
or to The Fairchild Corporation
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 TFC, 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 unenforceability 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 specifically 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: /s/ Vincent DiVincenzo
Title
THE FAIRCHILD CORPORATION
By: /s/ John C. Flynn
Title
RHI HOLDINGS, INC.
By: /s/ John C. Flynn
Title
EXHIBIT 10.12
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made
and entered into this 13th day of March, 1996 by and between Shared
Technologies Inc. ("Shared Technologies"), a Delaware corporation,
and Fairchild Holding Corp. ("FHC"), a Delaware corporation.
W I T N E S S E T H :
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 9, 1995, as amended; and
WHEREAS, FHC 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 FHC.
FHC 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 FHC 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 FHC pursuant to
<PAGE>
-2-
the Fairchild Reorganization described in Schedule 9.1 to the Merger Agreement
and including all Taxes (including but not limited to Taxes related to the
Fairchild Reorganization). 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 FHC 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 FHC' obligations under this
Section 1 except to the extent it prejudiced or damaged FHC' ability to defend,
settle or compromise such claim or to pay any Losses resulting therefrom), and
FHC shall be entitled (but not obligated) to assume the defense thereof by
giving written notice thereof within 10 days after FHC 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 FHC 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 FHC in the event Shared Technologies fails to assume the
defense thereof). Notwithstanding the foregoing, in no event shall FHC be
entitled to indemnification for, and the term "STI Losses" shall not include,
any consequential damages or damages which are speculative, remote
<PAGE>
-3-
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 FHC by any third party, which action, proceeding or claim, if
determined adversely to the interests of FHC would entitle FHC to indemnity
pursuant to this Agreement, FHC shall promptly, but in no event later than 10
days from the date FHC 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 FHC to FHC 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 FHC 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
<PAGE>
-4-
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 Holding Corp.:
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
<PAGE>
-5-
(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 FHC 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.
<PAGE>
-6-
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: /s/ John C. Flynn
----------------------------
Name:
Title:
SHARED TECHNOLOGIES INC.
By: /s/ Vincent DiVincenzo
----------------------------
Name:
Title:
EXHIBIT 10.13
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made
and entered into this 13th day of March, 1996 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").
W I T N E S S E T H :
WHEREAS, Shared Technologies, TFC, RHI and Fairchild have
entered into an Agreement and Plan of Merger (the "Merger Agreement") dated as
of November9, 1996, as amended; 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 Reorganization described in Schedule 9.1 to the Merger Agreement
and including all Taxes (including but not limited to taxes related to the
Fairchild
<PAGE>
-2-
Reorganization) 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 Section1
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
<PAGE>
-3-
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 Section2 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.
<PAGE>
-4-
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
<PAGE>
-5-
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.
<PAGE>
-6-
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: /s/ John C. Flynn
-----------------------------
Name:
Title:
RHI HOLDINGS, INC.
By: /s/ John C. Flynn
-----------------------------
Name:
Title:
SHARED TECHNOLOGIES INC.
By: /s/ Vincent DiVincenzo
-----------------------------
Name:
Title:
EXHIBIT 10.14
CONFORMED COPY
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of March 12, 1996, among SHARED
TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP., a
Delaware corporation (the "Borrower"), each person
listed on Schedule I hereto (the "Guarantors") and
CREDIT SUISSE, a bank organized under the laws of
Switzerland, acting through its New York branch
("Credit Suisse"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred
to below).
Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent") and (b) the Subsidiary Guarantee Agreement
dated as of March 12, 1996, among the Guarantors and the Collateral Agent (the
"Guarantee Agreement"). Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the
Fronting Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. The Guarantors have guaranteed such Loans
and the other Obligations (as defined in the Guarantee Agreement) of the
Borrower under the Credit Agreement pursuant to the Guarantee Agreement; certain
Guarantors have granted Liens on and security interests in certain of their
assets to secure such guarantees. The obligations of the Lenders to make Loans
and of the Fronting Banks to issue Letters of Credit are conditioned on, among
other things, the execution and delivery by the Borrower and the Guarantors of
an agreement in the form hereof.
Accordingly, the Borrower, each Guarantor and the Collateral
Agent agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to all such
rights of indemnity and subrogation as the Guarantors may have under applicable
law (but subject to Section 3), the Borrower agrees that (a) in the event a
payment shall be made by any Guarantor under the Guarantee Agreement, the
Borrower shall indemnify such Guarantor for the full amount of such payment and
such Guarantor shall be subrogated to the rights of the person to whom such
payment shall have been made to the extent of such payment and (b) in the event
any assets of any Guarantor shall be sold pursuant to any Security Document to
satisfy a claim of any Secured Party, the Borrower shall indemnify such
Guarantor in an amount equal to the greater of the book value or the fair market
value of the assets so sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a
"Contributing Guarantor") agrees (subject to Section 3) that, in the event a
payment shall be made by any other Guarantor under the Guarantee Agreement or
assets of any other Guarantor shall be sold pursuant to any Security Document to
satisfy a claim of any Secured Party and such other Guarantor (the "Claiming
Guarantor") shall not have been fully indemnified by the Borrower as provided in
Section 1,
<PAGE>
the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount
equal to the amount of such payment or the greater of the book value or the fair
market value of such assets, as the case may be, in each case multiplied by a
fraction of which the numerator shall be the net worth of the Contributing
Guarantor on the date hereof and the denominator shall be the aggregate net
worth of all the Guarantors on the date hereof (or, in the case of any Guarantor
becoming a party hereto pursuant to Section 12, the date of the Supplement
hereto executed and delivered by such Guarantor). Any Contributing Guarantor
making any payment to a Claiming Guarantor pursuant to this Section 2 shall be
subrogated to the rights of such Claiming Guarantor under Section 1 to the
extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of
this Agreement to the contrary, all rights of the Guarantors under Sections 1
and 2 and all other rights of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full in cash of the Obligations. No failure on the part of the
Borrower or any Guarantor to make the payments required by Sections 1 and 2 (or
any other payments required under applicable law or otherwise) shall in any
respect limit the obligations and liabilities of any Guarantor with respect to
its obligations hereunder, and each Guarantor shall remain liable for the full
amount of the obligations of such Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and be in
full force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as the L/C Exposure has not been
reduced to zero or any of the Commitments under the Credit Agreement have not
been terminated, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Secured Party or any Guarantor
upon the bankruptcy or reorganization of the Borrower, any Guarantor or
otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. No Waiver; Amendment. (a) No failure on the part of
the Collateral Agent or any Guarantor to exercise, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. None of
the Collateral Agent and the Guarantors shall be deemed to have waived any
rights hereunder unless such waiver shall be in writing and signed by such
parties.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Borrower, the Guarantors and the Collateral Agent, with the prior
written consent of the Required Lenders (except as otherwise provided in the
Credit Agreement).
SECTION 7. Notices. All communications and notices hereunder
shall be in writing and given as provided in the Guarantee Agreement and
addressed as specified therein.
2
<PAGE>
SECTION 8. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the parties that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Neither the Borrower nor any Guarantor may assign or
transfer any of its rights or obligations hereunder (and any such attempted
assignment or transfer shall be void) without the prior written consent of the
Required Lenders. Notwithstanding the foregoing, at the time any Guarantor is
released from its obligations under the Guarantee Agreement in accordance with
such Guarantee Agreement and the Credit Agreement, such Guarantor will cease to
have any rights or obligations under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a) All
covenants and agreements made by the Borrower and each Guarantor herein and in
the certificates or other instruments prepared or delivered in connection with
this Agreement or the other Loan Documents shall be considered to have been
relied upon by the Collateral Agent, the other Secured Parties and each
Guarantor and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Fronting Banks, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loans or any other fee or amount payable under the Credit Agreement or this
Agreement or under any of the other Loan Documents is outstanding and unpaid or
the L/C Exposure does not equal zero and as long as the Commitments have not
been terminated.
(b) In case any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any respect,
no party hereto shall be required to comply with such provision for so long as
such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 10. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall be effective with
respect to any Guarantor when a counterpart bearing the signature of such
Guarantor shall have been delivered to the Collateral Agent. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.
SECTION 11. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.
SECTION 12. Additional Guarantors. Pursuant to Section 5.11 of
the Credit Agreement, each Subsidiary of STFI, the Borrower or any Subsidiary
that was not in existence or not such a Subsidiary on the date of the Credit
Agreement is required to enter into the Guarantee Agreement as a Guarantor upon
becoming such a Subsidiary. Upon execution and delivery, after the date hereof,
by the Collateral Agent and such a Subsidiary of an instrument in the form of
Annex 1 hereto, such Subsidiary shall become a Guarantor hereunder with the same
force and effect as if originally named as a Guarantor hereunder. The execution
and delivery of any instrument adding an additional Guarantor as a party to this
Agreement shall not require the consent of any Guarantor
3
<PAGE>
hereunder. The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a
party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the date first
appearing above.
SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
MULTI-TENANT SERVICES, INC.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
BOSTON TELECOMMUNICATIONS
GROUP, INC., d/b/a BOSTON
TELECOMMUNICATIONS COMPANY,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
FINANCIAL PLACE COMMUNICATIONS
COMPANY,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer of Shared
Technologies Fairchild Inc., its
General Partner
4
<PAGE>
STI INTERNATIONAL, INC.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
OFFICE TELEPHONE MANAGEMENT,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
VSI CORPORATION,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
CREDIT SUISSE, as Collateral Agent,
by
/s/ Kathleen D. O'Brien
Name: Kathleen D. O'Brien
Title: Member of Senior Management
by
/s/ Will Ziglar
Name: Will Ziglar
Title: Associate
SHARED TECHNOLOGIES INC.,
by
/s/ Vincent DiVincenzo
Name: Vincent DiVincenzo
Title: Authorized Officer
5
<PAGE>
SCHEDULE I
to the Indemnity Subrogation
and Contribution Agreement
GUARANTORS
Name Address
6
<PAGE>
Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. dated as of [ ], to the
Indemnity, Subrogation and Contribution Agreement
dated as of March 12, 1996 (as the same may be
amended, supplemented or otherwise modified from time
to time, the "Indemnity, Subrogation and Contribution
Agreement"), among SHARED TECHNOLOGIES FAIRCHILD
COMMUNICATIONS CORP., a Delaware corporation (the
"Borrower") each Subsidiary of the Borrower listed on
Schedule I thereto (the "Guarantors"), and CREDIT
SUISSE, a bank organized under the laws of
Switzerland, acting through its New York branch
("Credit Suisse"), as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
A. Reference is made to (a) the Credit Agreement dated as of
March 12, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, STFI, the lenders from time
to time party thereto (the "Lenders"), Credit Suisse, as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, the fronting banks listed on
Schedule 2.20 (the "Fronting Banks"), and each of Citicorp USA, Inc. and
NationsBank, N.A., as documentation agent (individually and collectively in such
capacity, the "Documentation Agent") and (b) the Subsidiary Guarantee Agreement
dated as of March 12, 1996, among the Guarantors and the Collateral Agent (the
"Guarantee Agreement").
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Indemnity,
Subrogation and Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the
Indemnity, Subrogation and Contribution Agreement in order to induce the Lenders
to make Loans and the Fronting Banks to issue Letters of Credit. Pursuant to
Section 5.11 of the Credit Agreement, each Subsidiary of STFI, the Borrower or
any Subsidiary that was not in existence or not such a Subsidiary on the date of
the Credit Agreement is required to enter into the Guarantee Agreement as a
Guarantor upon becoming a Subsidiary. Section 12 of the Indemnity, Subrogation
and Contribution Agreement provides that additional Subsidiaries of the Borrower
may become Guarantors under the Indemnity, Subrogation and Contribution
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary of the Borrower (the "New Guarantor") is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Guarantor under the Indemnity, Subrogation and
Contribution Agreement in order to induce the Lenders to make additional Loans
and the Fronting Banks to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree
as follows:
SECTION 1. In accordance with Section 12 of the Indemnity,
Subrogation and Contribution Agreement, the New Guarantor by its signature below
becomes a Guarantor under the Indemnity, Subrogation and Contribution Agreement
with the same force and effect as if originally named therein as a Guarantor and
the New Guarantor hereby agrees to all the terms and provisions of the
Indemnity, Subrogation and Contribution Agreement applicable to it as a
Guarantor thereunder. Each reference to a "Guarantor" in the Indemnity,
Subrogation and Contribution Agreement shall be
<PAGE>
deemed to include the New Guarantor. The Indemnity, Subrogation and Contribution
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the
Indemnity, Subrogation and Contribution Agreement shall remain in full force and
effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such provision
for so long as such provision is held to be invalid, illegal or unenforceable,
but the validity, legality and enforceability of the remaining provisions
contained herein and in the Indemnity, Subrogation and Contribution Agreement
shall not in any way be affected or impaired. The parties hereto shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
SECTION 8. The New Guarantor agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in connection with
this Supplement, including the reasonable fees, other charges and disbursements
of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent
have duly executed this Supplement to the Indemnity, Subrogation and
Contribution Agreement as of the day and year first above written.
3
<PAGE>
[Name Of New Guarantor],
by
Name:
Title:
Address:
CREDIT SUISSE, as Collateral
Agent,
by
Name:
Title:
by
Name:
Title:
4
<PAGE>
SCHEDULE I
to Supplement No.___ to the Indemnity
Subrogation and Contribution Agreement
GUARANTORS
Name Address
