UNITED STATES 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) July 31, 1997
SHARED TECHNOLOGIES FAIRCHILD INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-17366 87-0424558
(Commission (IRS Employer
File Number) Identification No.)
100 Great Meadow Road, Suite 104, Wethersfield, Connecticut 06109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (860) 258-2400
N.A.
(Former name or former address, if changed since last report)
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Item 5. Other Events
On July 31, 1997, Shared Technologies Fairchild Inc. (the "Company") was
served with a purported shareholder class action complaint in an action
commenced in the Delaware Chancery Court in New Castle County. The Company and
its directors are named as defendants. The complaint seeks injunctive relief,
costs and attorneys' fees with respect to the proposed merger of the Company and
Tel-Save Holdings, Inc. which was announced on July 17, 1997.
Copies of the press release and related complaint regarding this matter are
attached as exhibits to this Form 8-K and are incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(a) Exhibits
(1) Complaint filed by Bernard Zicherman dated July , 1997.
(2) Press Release dated August 1, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 4, 1997 SHARED TECHNOLOGIES
FAIRCHILD INC.
By: /s/ Vincent DiVincenzo
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Name: Vincent DiVincenzo
Title: CFO
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Exhibit Index
Exhibit No. Description
(1) Complaint filed by Bernard Zicherman dated July , 1997
(2) Press Release dated August 1, 1997
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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BERNARD ZICHERMAN, :
Plaintiff, :
VS. :
ANTHONY D. AUTORINO, MEL D. BORER, :
THOMAS H. DECKER, WILLIAM A. CIVIL ACTION NO. 15824-NC
DIBELLA, VINCENT DIVINCENZO, :
NATALIA HERCOT, AJIT G. HUTHEESING, SUMMONS PURSUANT
JO MCKENZIE, DONALD E. MILLER, : TO 10 DEL.C. Sec. 3114
JEFFREY J. STEINER, and SHARED
TECHNOLOGIES FAIRCHILD, INC., :
Defendants.:
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TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named individual defendants by service pursuant to 10
Del. C. Sec. 3114 upon Shared Technologies Fairchild, a Delaware corporation, by
serving its registered agent, The Corporation Trust Company, Inc., which is
designated for service of process in Delaware, so that within the time required
by law, such defendants shall serve upon James A. McShane, Esq., plaintiff's
attorney whose address is 1105 N. Market St. #1600, Wilmington, DE 19801 an
answer to the complaint.
To serve upon defendants a copy hereof, of the complaint, and of a
statement of plaintiff filed pursuant to Chancery Court Rule 4(dc)(1).
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TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within the time permitted by 10 Del. C. Sec.
3114,1 to serve on plaintiff's attorney named above an answer to the complaint,
judgment by default may be rendered against you for the relief demanded in the
complaint.
Dated: July 31, 1997 ____________________________
Register in Chancery
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1 The text of 10 Del. C. Sec. 3114 is set out on the reverse of this Summons.
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- - - - - - - - - - - - - - x Sec. 3114. Service of process on non-resident directors,
trustees or members of the governing body of Delaware
CIVIL ACTION NO. 15824-NC : corporations.
(a) Every non-resident of this State who after September,
BERNARD ZICHERMAN, : 1977, accepts Election or appointment as a director, trustee or
member of the governing body of a corporation organized under
Plaintiff, : the laws of this State or who after June 30, 1978, serves in
such capacity and every resident of this State who so accepts
vs. : election or appointment of service in such capacity and
thereafter removes his residence from this State shall, by such
ANTHONY D. AUTORINO, ET AL, : acceptance or by such service, be deemed thereby to have
consented to the appointment of the registered agent of such
Defendants. : corporation (or, if there is none, the Secretary of State) as
his agent upon whom service of process may be made in all civil
SUMMONS : actions or proceedings brought in this State, by or on behalf
of, or against such corporation, in which each director,
1. Anthony D. Autorino : trustee or member is a necessary or proper party, or in any
2. Mel D. Borer action or proceeding against such director, trustee or member
3. Thomas H. Decker : for violation of his duty in such capacity, whether or not he
4. William A. Dibella continues to serve as such director, trustee or member at the
5. Vincent Divincenzo : time suit is commenced. Such acceptance of service as such
6. Natalia Hercot director, trustee or member shall be a signification of the
7. Ajit G. Hutheesing : consent of such director, trustee or member that any process
8. Jo McKenzie which is served shall be of the same legal force and validity
9. Donald E. Miller : as if served upon such director, trustee or member within this
10. Jeffrey J. Steiner State and such appointment of the registered agent (or, if
by serving the registered agent for : there is none, the Secretary of State) shall be irrevocable.
Shared Technologies Fairchild, Inc.: (b) Service of process shall be effected by serving the
: registered agent (or, if there is none, the Secretary of State)
The Corporation Trust Company with 1 copy of such process in the manner provided by law for
1209 Orange Street : service of writs of summons. In addition, the Prothonotary or
Wilmington, DE 19801 the Register in Chancery of the court in which the civil action
: or proceedings is pending shall, within 7 days of such service,
pursuant to 10 Del. C.ss. 3114 deposit in the United States mails, by registered mail, postage
: prepaid, true and attested copies of the process, together with
a statement that service is being made pursuant to this action,
SERVICE TO BE COMPLETED BY SPECIAL PROCESS : addressed to such director, trustee or member at the
SERVER corporation's principal place of business and at his residence
: address as the same appears on the records of the Secretary of
State, or, if no such residence address appears, at his address
: last known to the party desiring to complete such service.
(c) In any action in which any such director, trustee or
: member has been served with process as hereinabove provided,
the time in which a defendant shall be required to appear and
: file a responsive pleading shall be computed from the date of mailing by
the Prothonotary or the Register to Chancery as provided in subsection (b)
of this section; however, the court in which such action has been commenced
may order such continuance or continuances as may be necessary to afford
such director, trustee or member reasonable opportunity to defend the
action.
(d) Nothing herein contained limits or affects the rights to
serve process in any other manner now or thereafter provided by law. This
section is an extension of and not a limitation upon the right otherwise
existing of service of legal process upon non-residents.
(e) The Court of Chancery and the Superior Court may make all
necessary rules respecting the form of process, the and return thereof and
such other rules which may be necessary to implement this section and are
not inconsistent with this section (61 Del. Laws c. 119 Sec. 1.).
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SUMMONS
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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BERNARD ZICHERMAN, :
Plaintiff, :
VS. :
ANTHONY D. AUTORINO, MEL D. BORER, :
THOMAS H. DECKER, WILLIAM A. CIVIL ACTION NO. 15824-NC
DIBELLA, VINCENT DIVINCENZO, :
NATALIA HERCOT, AJIT G. HUTHEESING, SUMMONS
JO MCKENZIE, DONALD E. MILLER, :
JEFFREY J. STEINER, and SHARED
TECHNOLOGIES FAIRCHILD, INC., :
Defendants.:
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TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named defendants so that, within 20 days after service
hereof upon defendants, exclusive of the day of service, defendants shall serve
upon James A. McShane, Esq., plaintiff's attorney whose address is 1105 N.
Market St. #1600, Wilmington, DE 19801 an answer to the complaint.
To serve upon defendants a copy hereof and of the complaint.
TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within 20 days after service hereof upon you,
exclusive of the day of service, to serve on plaintiff's attorney named above an
answer to the complaint, judgment by default will be rendered against you for
the relief demanded in the complaint.
Dated: July 31, 1997 _______________________________
Register in Chancery
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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BERNARD ZICHERMAN, :
Plaintiff, :
VS. :
ANTHONY D. AUTORINO, MEL D. BORER, :
THOMAS H. DECKER, WILLIAM A. C. A. NO. 15824-NC
DIBELLA, VINCENT DIVINCENZO, :
NATALIA HERCOT, AJIT G. HUTHEESING, CLASS ACTION COMPLAINT
JO MCKENZIE, DONALD E. MILLER, :
JEFFREY J. STEINER, and SHARED
TECHNOLOGIES FAIRCHILD, INC., :
Defendants.:
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Plaintiff, by his attorneys, alleges upon information and belief, except
for paragraph 2 which is alleged upon knowledge, as follows:
JURISDICTION
1. This Court has jurisdiction by virtue of the fact that Shared
Technologies Fairchild, Inc. ("STF" or the "Company") is incorporated in the
State of Delaware.
THE PARTIES
2. Plaintiff Bernard Zicherman is, and at all relevant times was, the owner
of shares of common stock of STF.
3. Defendant STF is a Delaware corporation with its principal offices at
100 Great Meadow Road, Suite 104,
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Wethersfield, Connecticut 06109. STF is the nation's largest provider of shared
telecommunications services and systems. Through its technical infrastructure
and 800 employees, STF acts as a single point of contact for business
telecommunications services at more than 465 buildings throughout the United
States and Canada.
4. The Company's Board of Directors consists of the following persons:
(a) Anthony D. Autorino is, and at all relevant times has been, Chairman of
the Board of Directors, Chief Executive Officer, and a Director of the Company;
(b) Mel D. Borer is, and at all relevant times has been, President, Chief
Operating Officer, and a Director of the Company;
(c) Thomas H. Decker is, and at all relevant times has been, a member of
the Board of Directors of the Company;
(d) William A. Dibella is, and at all relevant times has been, a director
of the Company;
(e) Vincent Divincenzo is, and at all relevant times has been, Senior Vice
President, Chief Financial Officer and a Director of the Company;
(f) Natalia Hercot is, and at all relevant times has been, a director of
the Company;
(g) Ajit G. Hutheesing is, and at all relevant times has been, a director
of the Company;
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(h) Jo McKenzie is, and at all relevant times has been, a director of the
Company;
(i) Donald E. Miller is, and at all relevant times has been, a director of
the Company;
(j) Jeffrey J. Steiner is, and at all relevant times has been, Vice
Chairman of the Board of Directors and a Director of the Company.
5. The persons named in paragraph 4 above shall be collectively
referred to herein as the "Individual Defendants."
6. The Individual Defendants, by reason of their corporate
directorships stand in a fiduciary position relative to the Company's
shareholders, which fiduciary relationship, at all times relevant herein,
required the Individual Defendants to exercise their best judgment, and to act
in a prudent manner, and in the best interests of the Company's shareholders.
They were and are required to use their ability to control and manage the
Company in a fair, just and equitable manner; to act in furtherance of the best
interests of the Company's shareholders; to refrain from abusing their positions
of control; and not to favor their own interests at the expense of the Company's
shareholders.
7. Each Individual Defendant herein is sued individually as an aider
and abettor, as well as in his or her capacity as an officer and/or director of
the Company, and the liability of each arises from the fact that he has engaged
in
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all or part of the unlawful acts, plans, schemes, or transactions complained
of herein.
CLASS ACTION ALLEGATIONS
8. Plaintiff brings this action on his own behalf and, pursuant to
Rule 23 of the Rules of the Court of Chancery of the State of Delaware, on
behalf of all stockholders of the Company (except the defendants herein and any
person, firm, trust, corporation, or other entity related to or affiliated with
any of the defendants) and their successors in interest, who are or will be
threatened with injury arising from defendants' actions as more fully described
herein.
9. Plaintiff seeks injunctive relief and to recover damages for
themselves and the other members of the class caused by the breach of fiduciary
duties owed by the Individual Defendants, in that plaintiff and the other
members of the Class will not receive their fair proportion of the value of
STF's assets and businesses, which is not fully reflected in the price to be
paid by Tel-Save Holdings Inc. ("Tel-Save") and which can only truly be
determined if the Individual Defendants create a level playing field for other
bidders to come in and bid for STF. Plaintiff and the other members of the class
are being prevented from obtaining a fair price for their shares of the
Company's common stock.
10. The Individual Defendants' decision to agree to the transaction
was given in breach of their fiduciary duties owed to Fairchild's stockholders
to take all necessary steps to
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ensure that the stockholders will receive the maximum value realizable for their
shares in any merger or acquisition of the Company. In the context of this
action, the Board of Directors of STF must take all reasonable steps to assure
the maximization of stockholder value, including the implementation of a bidding
mechanism to foster a fair action of the Company to the highest bidder or the
exploration of strategic alternatives which will return greater or equivalent
value to the plaintiffs and the class.
11. This action is properly maintainable as a class action.
12. The class is so numerous that joinder of all members is
impracticable. There was 15,819,987 shares of STF common stock issued and
outstanding as of May 15, 1997, which shares are traded on Nasdaq. While the
exact number of class members are unknown to plaintiffs at this time and can
only be ascertained through appropriate discovery, plaintiffs believe that there
are thousands of members of the class.
13. A class action is superior to other methods for the fair and
efficient adjudication of the claims herein asserted and no unusual difficulties
are likely to be encountered in the management of this class action. The
likelihood of individual class members prosecuting separate claims is remote.
14. There are questions of law and fact which are common to the class
and which predominate over questions
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affecting any individual class member. The common questions include, inter alia,
the following:
(a) whether defendants have breached their fiduciary duties by
engaging in concerted and continual action to entrench them in their lucrative
positions and to enrich them at the expense of STF's public stockholders;
(b) whether defendants are unlawfully impeding other possible merger
or takeover attempts at the expense of STF's public stockholders;
(c) whether defendants have failed to disclose all material facts
relating to the takeover including the potential and expected positive future
financial benefits which they expect to derive;
(d) whether defendants have failed and will fail to negotiate in good
faith with other prospective purchasers of the Company; and
(e) whether the plaintiff and other members of the class would be
irreparably damaged were the defendants not enjoined from the conduct described
herein below.
15. The prosecution of separate claims would create a risk of either
inconsistent or varying adjudications concerning individual members of the
class, which would establish incompatible standards of conduct for the party
opposing the class, and adjudications concerning individual members of the class
would, as a practical matter, be dispositive of the interests of other members
of the class who are not parties to the adjudications or substantially impair or
impede the ability of other members of the class who
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are not parties to the adjudications, to protect their interests. The defendants
have acted on grounds generally applicable to all members of the class, making
relief concerning the class as whole appropriate.
16. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of the
plaintiff are typical of the claims of other members of the class and the
plaintiff has the same interests as the other members of the class. Plaintiff is
an adequate representative of the class. A class action poses no management
problems and this case is ideally suited for class action certification.
SUBSTANTIVE ALLEGATIONS
17. On May 14, 1997, STF announced financial results for the quarter
ended May 31, 1997. Revenues for the quarter reached $46,630,000, with EBITDA
(earnings before interest, taxes, depreciation, and amortization) of
$11,767,000. Compared to the quarter ended March 31, 1996, in which revenues
totaled $18,182,000 and EBITDA was $2,721,000, these results represented
increases of 156 and 332 percent, respectively.
18. On July 14, 1997, STF announced that it is engaged in discussions
regarding a possible sale or merger of the Company. The Company issued this
press release in response to recent trading activity in its common stock.
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19. On July 17, 1997, STF announced that it has signed an agreement to
merge into Tel-Save. Pursuant to the agreement, the Company will merge into a
wholly-owned subsidiary of Tel-Save, and the Company's stockholders having a
value of $11.25 per share for each share of common stock of the Company, subject
to upward adjustments in certain circumstances based on the market price of
Tel-Save's stock at the time of the merger.
20. Despite STF's superb financial condition, the Individual
Defendants agreed to an offer that is unfair to STF's shareholders and does not
reflect the intrinsic value of STF's assets. It is the result of unfair dealing
by the Individual Defendants in an attempt to benefit themselves.
21. STF's excellent results of late, demonstrate that STF has shaken
off the problems of the past and stands poised for an extremely successful
future. At this critical juncture, when the Company has finally turned the
corner, defendants now propose the Merger, which is terribly unfair as the
consideration to be paid to STF's shareholders and does not recognize the
underlying value of the Company's stock.
22. In announcing the Merger, defendants have failed to disclose,
inter alia, the full extent of the future earnings potential of STF and its
expected increase in profitability.
23. The defendants' knowledge and economic power and that of the
investing public is unequal because the Individual Defendants are in possession
of material non-public information
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concerning the Company's assets, businesses, and future prospects and control
the business and corporate affairs of STF. This disparity makes it inherently
unfair for the merger of STF at such an unfair and grossly inadequate price.
24. The Individual Defendants have at all times been fiduciaries to
STF shareholders. As set forth herein, they have breached and are continuing to
breach their fiduciary duties to STF's shareholders in order to entrench
themselves in office and to continue receiving their compensation, fees and
emoluments of office by negotiating only with Tel-save.
25. The Individual Defendants have breached their fiduciary duties by
reason of the acts and transactions complained of herein, including their
failure to negotiate the possible acquisition of STF and to provide confidential
information to potential suitors on the same playing field that it created for
STF.
26. Unless enjoined by this Court, the Individual Defendants will
continue to breach their fiduciary duties owed to plaintiffs and the other
members of the class, and will entrench themselves in their corporate offices,
all to the irreparable harm of the class, as aforesaid.
27. The Individual Defendants' authorization to pursue the transaction
was given in breach of their fiduciary duties owed to STF's stockholders to take
all necessary steps to ensure that the stockholders will receive the maximum
value realizable for their shares in any merger of the company. In
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the context of this action, the Board of Directors of STF must take all
reasonable steps to assure the maximization of stockholder value, including the
implementation of a bidding mechanism to foster a fair auction of the Company to
the highest bidder or the exploration of strategic alternatives which will
return greater or equivalent value to the plaintiffs and the class.
28. Plaintiff and the other members of the class have been and will be
damaged in that they have not and will not receive their fair proportion of the
value of STF's assets and businesses, which is not fully reflected in the price
to be paid by STF and which can only truly be determined if the Individual
Defendants create a level playing field for other bidders to come in and bid for
STF. Plaintiff and the other members of the class have been and will be
prevented from obtaining a fair price for their shares of the Company's common
stock.
29. Plaintiff and the class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment, as follows:
A. Declaring this to be a proper class action;
B. Ordering the Individual Defendants to carry out their fiduciary
duties to plaintiffs and the other members of the class by announcing their
intention to:
1. cooperate fully with any person or entity, having a bona fide
interest in proposing any transaction which
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would maximize shareholder value, including, but not limited to, a buyout or
takeover of the Company;
2. invalidating any breakup fee agreed to by defendants if there is
one;
3. undertake an appropriate evaluation of STF's worth as a
merger/acquisition candidate;
4. take all appropriate steps to enhance STF's value and
attractiveness as a merger/acquisition candidate;
5. take all appropriate steps to effectively expose STF to the
marketplace in an effort to create an active auction for STF;
6. take proper action to maximize the price that STF shareholders will
receive for their shares.
7. act independently so that the interests of STF's public
stockholders will be protected; and
8. adequately ensure that no conflicts of interest exist between
Individual Defendants' own interests and their fiduciary obligations to maximize
stockholder value or, if such conflicts exist, to ensure that all conflicts are
resolved in the best interests of STF's public stockholders;
C. Ordering the Individual Defendants to carry out their fiduciary
duties to plaintiff and the class and requiring them to respond in good faith to
any bona fide potential acquirors of STF;
D. Temporarily and permanently enjoining the merger agreement entered
into with Tel-Save;
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E. Awarding plaintiff the costs and disbursements of the action,
including a reasonable allowance for plaintiffs' attorneys' and experts' fees;
and
F. Granting such other and further relief as may be just and proper.
Dated: July , 1997
MORRIS AND MORRIS
By:______________________
Karen Morris
Patrick F. Morris
Suite 1600
1105 North Market Street
Post Office Box 2166
Wilmington, DE 19899-2166
(302) 426-0400
Attorneys for Plaintiffs
Of Counsel:
STULL, STULL & BRODY
6 East 45th Street
New York, NY 10017
(212) 687-7230
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SHARED TECHNOLOGIES FAIRCHILD SERVED WITH SHAREHOLDER ACTION IN DELAWARE
WETHERSFIELD, CONNECTICUT, August 1, 1997--Shared Technologies Fairchild Inc.
announced that yesterday it was served with a purported shareholder class action
complaint in an action commenced in the Delaware Chancery Court in New Castle
County. Shared Technologies and its directors are named as defendants. The
complaint seeks injunctive relief, costs and attorneys' fees with respect to the
proposed merger of Shared Technologies and Tel-Save Holdings, Inc. which was
announced on July 17, 1997. Shared Technologies believes that the suit is
without merit and intends to defend it vigorously.
Company contact:
Anthony D. Autorino
Chairman and Chief Executive Officer
(860) 258-2400
