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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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SHARED TECHNOLOGIES FAIRCHILD INC.
(Name of Subject Company)
SHARED TECHNOLOGIES FAIRCHILD INC.
(Name of Person Filing Statement)
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COMMON STOCK, PAR VALUE $.004 PER SHARE
(Title of Class of Securities)
8189051011
(CUSIP Number of Class of Securities)
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KENNETH M. DORROS, ESQ.
SECRETARY
SHARED TECHNOLOGIES FAIRCHILD INC.
100 GREAT MEADOW ROAD, SUITE 104
WETHERSFIELD, CONNECTICUT 06109
(860) 258-2400
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications
on Behalf of the Person(s) Filing this Statement)
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COPY TO:
JAMES J. CLARK, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
(212) 701-3000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Shared Technologies Fairchild Inc., a
Delaware corporation (the "Company") or ("STF") and the address of the principal
executive office of the Company is 100 Great Meadow Road, Suite 104,
Wethersfield, CT 06109. The title of the class of equity securities to which
this statement relates is Common Stock, par value $.004 per share, of the
Company (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer (the "Offer") disclosed in a
Tender Offer Statement on Schedule 14D-1/13D, dated November 26, 1997 (the
"Schedule 14D-1"), of Moonlight Acquisition Corp., a Delaware corporation
("Purchaser") a wholly owned subsidiary of Intermedia Communications Inc., a
Delaware corporation ("Parent" or "Intermedia"), to purchase up to 4,000,000
Shares at a price of $15.00 per Share (such amount, or any greater amount paid
pursuant to the Offer, the "Per Share Amount"), net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated November 26, 1997 (the "Offer to Purchase"), and
the related Letter of Transmittal.
The Offer is being made pursuant to the Agreement and Plan of Merger among
Parent, Purchaser and the Company, dated as of November 20, 1997 (the "Merger
Agreement"). The Merger Agreement provides, among other things, that, upon the
terms and subject to the conditions contained therein, and in accordance with
the General Corporation Law of the State of Delaware ("DGCL"), as promptly as
practicable after the satisfaction or waiver of the conditions contained
therein, and the purchase of Shares pursuant to the Offer, Purchaser will be
merged with and into the Company (the "Merger").
According to the Schedule 14D-1, the address of the principal executive
office of Purchaser and of Parent is 3625 Queen Palm Drive, Tampa, FL 33619.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding
between the Company or its affiliates and (i) the Company, its executive
officers, directors or affiliates and (ii) the Purchaser, Parent, its
executive officers, directors or affiliates is described below.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
The summary is qualified in its entirety by reference to the full text thereof
which is incorporated herein by reference and a copy of which is filed hereto as
Exhibit 1.
THE OFFER. The Merger Agreement provides for the making of the Offer.
Without the prior written consent of the Company, Purchaser has agreed that it
will not (i) decrease or change the form of consideration payable in the Offer,
(ii) decrease the number of Shares sought pursuant to the Offer, (iii) impose
additional conditions to the Offer other than those set forth in "Conditions to
the Offer", or (iv) change the conditions of the Offer (provided that Parent or
Purchaser in its sole discretion may waive any such conditions). The obligation
of Purchaser to consummate the Offer and to accept for payment and to pay for
any Shares tendered pursuant to the Offer will be subject only to the conditions
set forth in "Conditions to the Offer". The Offer may not be extended for more
than 20 days beyond its original scheduled expiration date unless any of the
conditions to the Offer shall not have been satisfied, in which case the Offer
shall remain open until such time as all of the conditions to the Offer have
been satisfied; PROVIDED, HOWEVER, in no event will Purchaser be required to
extend the Offer beyond February 28, 1998.
CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer,
Purchaser shall not be required to accept for payment or pay for any Shares
tendered pursuant to the Offer, and may terminate or amend the Offer and may
postpone the acceptance for payment of and payment for Shares tendered, if (i)
any applicable waiting period under the Hart-Scott-Rodino Antitrust Act of 1976,
as amended (the "HSR
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Act") shall not have expired or not been terminated prior to the expiration of
the Offer or (ii) at any time on or after the date of the Merger Agreement, and
prior to the acceptance for payment of Shares, any of the following conditions
shall exist: (a) any judgment, order, decree, statute, law, ordinance, rule or
regulation entered, enacted, promulgated, enforced or issued by any court or
other governmental entity of competent jurisdiction or other legal restraint or
prohibition shall be in effect preventing the consummation of the Offer; (b) all
necessary consents and approvals of any federal, state or local governmental
authority or any other third party required for the consummation of the Offer
and the transactions contemplated by the Merger Agreement shall not 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 or a Parent Material Adverse Effect (as defined in the
Merger Agreement); (c) any of the representations and warranties of Company set
forth in the Merger Agreement shall not be true and correct as of July 16, 1997
or any of the representations and warranties set forth in Sections 3.2, 3.3,
3.4, 3.10, 3.14, 3.21, 3.22, 3.23 and 3.29 of the Merger Agreement shall not be
true as of the date Parent shall first accept Shares for payment, where the
failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or "material
adverse effect" set forth therein) has, or is likely to have, individually or in
the aggregate, a Company Material Adverse Effect (as defined in the Merger
Agreement) or cause any material increase in the consideration required to be
paid by Parent and Purchaser effectively to consummate the Offer or the Merger;
(d) the Company shall not have performed any obligation required to be performed
by it under the Merger Agreement as of the date Parent shall first accept Shares
for payment, where the non-performance of such obligation has, or is likely to
have, individually or in the aggregate, a Company Material Adverse Effect or
cause any material increase in the consideration required to be paid by Parent
and Purchaser effectively to consummate the Offer; (e) the Merger Agreement
shall have been terminated in accordance with its terms; or (f) Purchaser and
the Company shall have agreed that Purchaser shall terminate the Offer or
postpone the acceptance for payment of or payment for Shares thereunder; which,
in the reasonable judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser or Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
THE MERGER. The Merger Agreement provides that upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with relevant law,
Purchaser shall be merged with and into the Company as soon as practicable
following the satisfaction or waiver, if permissible, of the conditions to the
Merger. The Company shall be the Surviving Corporation and shall continue its
existence under the laws of Delaware, and the Certificate of Incorporation and
the Bylaws of Purchaser as in effect immediately prior to the Effective Time (as
defined in the Merger Agreement) shall be the Certificate of Incorporation and
Bylaws of the Surviving Corporation (except the name of the Surviving
Corporation shall be Shared Technologies Fairchild, Inc.). The directors of
Purchaser immediately prior to the Effective Time and the officers of the
Company immediately prior to the Effective Time shall be the directors and
officers, respectively, of the Surviving Corporation until their respective
successors are duly elected and qualified. Each share of the common stock of
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into and become one share of common stock of the Surviving
Corporation, which will thereupon become a direct wholly owned subsidiary of
Parent. The parties to the Merger Agreement shall cause the Merger to be
consummated by filing with the Secretary of State of the State of Delaware a
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duly executed and verified certificate of merger, as required by the DGCL. The
Merger will become effective upon such filing or at such time thereafter as is
provided under applicable law.
CONSIDERATION TO BE PAID IN THE MERGER. In the Merger, each Share issued
and outstanding immediately prior to the Effective Time (other than Shares held
by Purchaser, Parent or any subsidiary of Purchaser or Parent or in the treasury
of the Company, all of which shall be cancelled, and other than Dissenting
Shares (as defined in the Merger Agreement)) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive in cash an amount per Share (subject to any applicable
withholding tax) equal to $15.00, without interest.
Additionally, each share of the Series D Preferred Stock, par value $.01 per
share (the "Series D Preferred Stock"), Series I 6% Convertible Preferred Stock
(the "Convertible Preferred Stock") and Series J Special Preferred Stock, par
value $.01 per share (the "Special Preferred Stock") (collectively, the
"Preferred Shares") issued and outstanding immediately prior to the Effective
Time (other than the Preferred Shares held by Purchaser, Parent or any
subsidiary of Purchaser or Parent or in the treasury of the Company, all of
which shall be canceled, and other than Dissenting Shares (as defined in the
Merger Agreement)) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive in cash an
amount per Share (subject to any applicable withholding tax) equal to $15.00 per
share of Series D Preferred Stock, $251.21 per share of Convertible Preferred
Stock and $109.44 per share of Special Preferred Stock, without interest.
COMPANY STOCK OPTIONS AND WARRANTS. Prior to the Effective Time, the
Company shall take all actions necessary (and Parent and Purchaser consent to
the taking of such actions) so that all options and warrants outstanding
immediately prior to the Effective Time under any option plan or warrant
including, without limitation, the 1994 Director's Option Plan (with respect to
which the term of office of each director shall be deemed to have been
terminated on May 1, 1998), the 1996 Equity Incentive Plan and Shared
Technologies, Inc.'s 1987 Stock Option Plan (all such warrants and options
collectively, the ("Company Stock Option Plans") shall be cancelled and
terminated at the Effective Time and that each holder of such options and
warrants shall receive in the Merger a cash payment equal to the difference
between (A) the Merger Consideration (as defined in the Merger Agreement) times
the number of Shares subject to such outstanding options or warrants (to the
extent then exercisable at prices not in excess of the Merger Consideration) and
(B) the aggregate exercise price of all such outstanding options and warrants.
From and after the date hereof, no additional options or warrants shall be
granted under the Company Stock Option Plans.
STOCKHOLDER MEETING. The Merger Agreement provides that the Company will,
as soon as practicable following consummation of the Offer, duly call a meeting
of its stockholders for the purpose of adopting the plan of merger contained in
the Merger Agreement and the transactions contemplated thereby. The Merger
Agreement also provides that, subject to the fiduciary duties of its Board of
Directors under applicable law as set forth in a written opinion of outside
counsel, the Company shall recommend that stockholders of the Company vote in
favor of the adoption of the agreement of merger set forth in the Merger
Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to corporate
existence and good standing, capital structure, subsidiaries, corporate
authorization, absence of changes, Commission filings, consents and approvals,
no violations of other agreements, investment banking fees and opinions,
employee benefits, labor relations, litigation, taxes, compliance with
applicable laws, intellectual property, real property, insurance, material
contracts, related party transactions, liens, title to and condition of
properties, environmental matters, absence of undisclosed liabilities, pending
transactions, certain indemnification agreements and other matters.
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Purchaser and Parent have also made certain representations and warranties
with respect to corporate existence and good standing, corporate authorization,
Commission filings, consents and approvals, no violations of other agreements,
investment banking fees and other matters.
CONDUCT OF BUSINESS AND OTHER COVENANTS PENDING THE MERGER. Pursuant to the
Merger Agreement, the Company has agreed that during the period from the date of
the Merger Agreement until the Effective Time, except as otherwise consented to
in writing by Purchaser or Parent or as contemplated by the Merger Agreement, it
and each of its respective subsidiaries will carry on its business in the
ordinary course in substantially the same manner as previously conducted.
Specifically, the Company has agreed not to (a) amend its certificate of
incorporation or bylaws, (b) issue or sell any shares of capital stock or
securities convertible into shares of capital stock, subject to certain
exceptions, (c) effect a stock split or declare or make any dividends or other
distribution on any shares of its capital stock, (d) incur or assume any new
debt or make any loans or capital investments in any other person or entity in
excess of $1.0 million, (e) adopt or amend any employee benefit plan or
severance arrangement or increase the compensation of its directors or officers
or employees generally, subject to certain exceptions, (f) enter into, amend,
modify or relinquish any material rights under any material contract, (g) sell,
lease, mortgage, pledge or otherwise dispose of any assets or property other
than in the ordinary course of business, (h) make or commit to make any material
capital expenditure, (i) change its accounting methods, (j) settle any material
claim, (k) amend certain indemnfication agreements relating to the Merger
Agreement or (l) make any election under the Code that would have a material
adverse effect on the Company or the Merger.
Pursuant to the Merger Agreement, Parent will appoint a senior executive as
a management consultant (the "Consultant") to the Company. The Consultant will
liaise directly with the executive officers of the Company and shall be informed
of and participate in all management decisions. As more fully described in the
Merger Agreement, if the Company does not comply with the management decisions
and the recommendations of the Consultant, the Purchaser, under certain
circumstances, may have the right to terminate the Merger Agreement.
Pursuant to the Merger Agreement Parent, Purchaser and the Company have
agreed to use their respective best efforts to take all actions and to do all
things necessary, proper or advisable to consummate the transactions
contemplated by the Merger Agreement.
Parent, Purchaser and the Company have also entered into covenants regarding
the preparation of the Company's proxy statement, press releases, access to
information, notification if any of the representations and warranties are
materially untrue, the designation of the directors of the Company,
indemnification of directors and officers of the Company, fees and expenses
relating to the Merger and stockholder litigation.
NO SOLICITATION. Pursuant to the Merger Agreement, the Company has agreed
that it will not, and it will not permit any of its subsidiaries, officers,
directors, employees, representatives and agents to, directly or indirectly, (i)
solicit any Company Takeover Proposal (as defined below) or (ii) participate in
any discussions or negotiations regarding any Company Takeover Proposal;
PROVIDED, HOWEVER, that if at any time prior to the Company Meeting, the Company
Board determines in good faith, after consultation with outside counsel that it
is necessary to do so in order to comply with its fiduciary duties to the
Company stockholders under applicable law the Company may, in response to a
Company Takeover Proposal that was not solicited, furnish confidential
information with respect to the Company and participate in negotiations
regarding such Company Takeover Proposal. "Company Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 20% or more of the assets of the Company or its
subsidiaries or 20% or more of any class of equity securities of the Company or
any of its subsidiaries, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries, any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by the Merger Agreement, or any other
transaction the consummation of which
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would reasonably be expected to impede, interfere with, prevent or materially
delay the Merger or that would reasonably be expected to dilute materially the
benefits to Parent or Purchaser of the transactions contemplated by the Merger
Agreement.
In the event that prior to the Company Meeting (as defined in the Merger
Agreement) the Board of Directors determines in good faith, after consultation
with outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the Board
of Directors may (subject to this and the following sentences) (x) withdraw or
modify its approval or recommendation of the merger or (y) approve or recommend
a Superior Proposal (as defined below) or terminate the Merger Agreement (and
concurrently with or after such termination, if it so chooses, cause the Company
to enter into any acquisition agreement with respect to a Superior Proposal),
but in each of the cases set forth in this clause (y) until a time that is after
the fifth business day following the Parent's or Purchaser's receipt of written
notice advising Parent or Purchaser that the Company Board has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal, to the extent
that such identification of such person making such proposal does not breach the
fiduciary duties of the Company Board as advised by outside legal counsel. A
"Superior Proposal" means any bona fide proposal made by a third party to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the shares of the
Company's Common Stock and Company preferred stock then outstanding or all or
substantially all the assets of Company and otherwise on terms that the Board of
Directors determines in its good faith judgment to be more favorable to the
Company's stockholders than the Merger.
FEES AND EXPENSES. The Merger Agreement provides that all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement shall be paid by the party incurring such
expenses, except that the Company will be required to pay a termination fee and
reimburse certain expenses of Parent and Purchaser to Parent or Purchaser under
certain circumstances described in "Termination" below.
CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver, prior to the proposed Effective Time, of the following conditions:
(a) the Merger and the Merger Agreement shall have been validly approved and
adopted by the affirmative votes of the holders of a majority of the outstanding
Shares entitled to vote thereon; (b) the waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been terminated
or shall have expired; and (c) no judgment, order, decree, statute, law
ordinance, rule or regulation entered, enacted, promulgated, enforced or issued
by any court legal restraint or prohibition shall be in effect preventing the
consummation of the Offer or the Merger.
The obligations of Purchaser and Parent to effect the Merger are further
subject to the satisfaction or waiver, where permissible, on or prior to the
proposed Effective Time of the following conditions: (a) all of the
representations and warranties of the Company set forth in the Merger Agreement
shall be true and correct as of July 16, 1997, and the representations and
warranties set forth in Sections 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23 and
3.29 of the Merger Agreement shall be true and correct as of the date of the
Merger Agreement and the Closing Date (as defined in the Merger Agreement), as
if made at and as of such time, except where the failure of such representations
and warranties to be so true and correct (without giving effect to any
limitation as to "materiality" or "material adverse effect" set forth therein)
does not have, and is not likely to have, individually or in the aggregate, a
Company Material Adverse Effect or cause any material increase in the
consideration required to be paid by Parent and Purchaser effectively to
consummate the Merger; (b) the Company shall have performed in all material
respects all obligations required to be performed by it under the Merger
Agreement at or prior to the Closing Date; and (c) all necessary consents and
approvals of any federal, state or local governmental authority or any other
third party required for the consummation of the transactions contemplated by
the Merger 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 or a Parent Material
Adverse Effect.
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The obligations of the Company to effect the Merger are further subject to
the satisfaction or waiver, where permissible, on or prior to the proposed
Effective Time of the following conditions: (a) the representations and
warranties of Parent and Purchaser set forth herein shall be true and correct
both when made and at and as of the Closing Date, as if made at and as of such
date, except where the failure of such representations and warranties to be so
true and correct (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein) does not have, and is not likely to
have, individually or in the aggregate, a Parent Material Adverse Effect; and
(b) Parent and Purchaser shall have performed in all material respects all
obligations required to be performed by them under the Merger Agreement at or
prior to the Closing Date.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the stockholders of the
Company: (a) by consent of the Boards of Directors of the Company, Parent and
Purchaser; (b) by Parent and Purchaser upon notice to the Company if any
material default under or material breach of any covenant or agreement in the
Merger Agreement by the Company shall have occurred and shall not have been
cured within ten days after receipt of such notice, or any representation or
warranty contained herein on the part of the Company shall not have been true
and correct in any material respect at and as of the date made; (c) by the
Company upon notice to Parent and Purchaser if any material default under or
material breach of any covenant or agreement in the Merger Agreement by Parent
or Purchaser shall have occurred and shall not have been cured within ten days
after receipt of such notice, or any representation or warranty contained herein
on the part of Parent or Purchaser shall not have been true and correct in any
material respect at and as of the date made; (d) by Parent and Purchaser, on the
one hand, or the Company, on the other, upon notice to the other if the Merger
shall not have become effective on or before September 30, 1998, unless such
date is extended by the consent of the Boards of Directors of the Company,
Parent and Purchaser evidenced by appropriate resolutions; PROVIDED, HOWEVER,
that the right to terminate the Merger Agreement under Section 7.1(d) of the
Merger Agreement shall not be available to any party whose failure to fulfill
any obligation under the Merger Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date; (e) by any of
Parent Purchaser and the Company if the approval of the stockholders of the
Company required for consummation of the Merger shall not have been obtained by
reason of the failure to obtain the required vote at a duly held meeting of
stockholders or any adjournment thereof, (f) by Parent or Purchaser, if Section
5.5 of the Merger Agreement shall be breached by the Company or any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative of the Company, in any material
respect and the Company shall have failed promptly to terminate the activity
giving rise to such breach and use best efforts to cure such breach upon notice
thereof from Parent or Purchaser, or the Company shall breach Section 5.5 of the
Merger Agreement by failing to promptly notify Parent or Purchaser as required
thereunder; (g) by Parent or Purchaser if, at any time, (i) the Company shall
have withdrawn or modified in any manner adverse to Parent or Purchaser its
approval or recommendation of the Merger Agreement or the Merger or failed to
reconfirm its recommendation within 15 business days after a written request to
do so, or recommended any Company Takeover Proposal or (ii) the Board of
Directors of Company or any committee thereof shall have resolved to take any of
the foregoing actions; (h) by the Company if it elects to terminate the Merger
Agreement in accordance with Section 5.5(b) of the Merger Agreement; PROVIDED
that it has complied with all provisions thereof, including the notice
provisions therein, and that it complies with applicable requirements relating
to the payment (including the timing of the payment) of the termination fee
required by Section 7.3 of the Merger Agreement; or (i) by Parent or Purchaser
in accordance with the provisions of the last paragraph of Section 5.1 of the
Merger Agreement; provided that it has complied with all provisions thereof,
including the notice provisions therein.
EFFECT OF TERMINATION. In the event of the termination of the Merger
Agreement pursuant to the provisions of Section 7.1, the provisions of the
Merger Agreement (other than Sections 5.10, 7.2, 7.3 and 7.4 thereof) shall
become void and have no effect, with no liability on the part of any party
hereto or its stockholders or directors or officers in respect thereof, except
as set forth in Sections 7.3 and 7.4 of the Merger Agreement PROVIDED that
nothing contained herein shall be deemed to relieve any party of any liability
it may have to any other party with respect to a breach of its obligations under
the Merger Agreement.
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TERMINATION PAYMENT. As compensation for entering into the Merger
Agreement, taking action to consummate the transactions hereunder and incurring
the related costs and expenses related thereto and other losses and damages,
including the foregoing of other opportunities, Company and Parent have agreed
that the Company shall pay to Parent the sum of $10.0 million plus all
reasonably documented out-of-pocket expenses (including, but not limited to, the
reasonable fees and expenses of counsel and its other advisers) of Parent and
Purchaser incurred in connection with the transactions contemplated by the
Merger Agreement (including the preparation and negotiation of the Merger
Agreement) promptly after, but in no event later than two days following,
whichever of the following first occurs: (i) Parent or Purchaser shall have
exercised its right to terminate the Merger Agreement pursuant to (b), (f), (g)
or (i) of the "Termination" section above; or (ii) the Company shall have
exercised its right to terminate the Merger Agreement pursuant to (e) or (h) of
the "Termination" section above. The Company shall not be obligated to make any
such payment if at the time such payment becomes due Parent or Purchaser is in
material breach of its obligations under the Merger Agreement.
Pursuant to the Merger Agreement, Parent has paid to the Company $26,250,000
as a "Good Faith Deposit." The Company has paid from the proceeds of the Good
Faith Deposit an amount equal to $15,000,000 to Tel-Save Holdings, Inc.
("Tel-Save") to satisfy termination fees arising from Company's termination of
the Tel-Save Merger Agreement (the "Tel-Save Merger Agreement"). Company has
paid an amount equal to $11,250,000 to Tel-Save in exchange for the termination
of any options to purchase Company Common Stock held by Tel-Save under that
certain Option Agreement dated as of July 16, 1997 by and between Tel-Save and
Company. In the event that Parent or Purchaser terminates the Merger Agreement
pursuant to Section (a), (b), (f), (g) or (i) of the "Termination" section above
or Company terminates the Merger Agreement other than pursuant to Section (c) or
(d) of the "Termination" section above, then Company must repay all such amounts
to Purchaser.
PARTIES IN INTEREST. Nothing in the Merger Agreement is intended to confer
upon any person, other than the parties thereto, any rights or remedies.
TIMING. The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors. Although Parent has agreed to cause
the Merger to be consummated on the terms and subject to the conditions set
forth above, there can be no assurance as to the timing of the Merger.
PUBLIC ANNOUNCEMENTS. Parent and the Company agreed to consult with each
other before issuing any press release or otherwise making any public statements
with respect to the Merger Agreement or any transaction contemplated therein and
not to issue any such press release or make any such public statement prior to
such consultation, except as may be required by law.
NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. No
representations, warranties or agreements in the Merger Agreement or in any
instrument delivered by Parent, Purchaser or the Company pursuant to the Merger
Agreement will survive the Merger.
DELAWARE LAW. The Board of Directors of the Company has approved the Merger
Agreement and the transactions contemplated thereby, including the Offer, the
Stock Purchase Agreement and the Merger. Accordingly, the restrictions of
Section 203 of the DGCL do not apply to the transactions contemplated by the
Offer, the Stock Purchase Agreement and the Merger Agreement. Section 203 of the
DGCL prevents an "interested stockholder" (generally, a stockholder owning or
having the right to acquire 15% or more of a corporation's outstanding voting
stock or an affiliate or associate thereof) from engaging in a "business
combination" (defined to include a merger and certain other transactions) with a
Delaware corporation for a period of three years following the date on which
such stockholder became an interested stockholder unless (i) prior to such time,
the corporation's board of directors approved either the business combination or
the transaction which resulted in such stockholder becoming an interested
stockholder, (ii) upon consummation of the transaction which resulted in such
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the corporation's voting stock
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outstanding at the time the transaction commenced (excluding shares owned by
certain employee stock plans and persons who are directors and also officers of
the corporation) or (iii) at or subsequent to such time the business combination
is approved by the corporation's board of directors and authorized at an annual
or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock not owned
by the interested stockholder. As described above, the foregoing description of
Section 203 of the DGCL does not apply to the Offer, the Stock Purchase
Agreement or the Merger.
APPRAISAL RIGHTS. No appraisal rights are available to holders of Shares in
connection with the Offer. However, if the Merger is consummated, holders of
Shares will have certain rights under Section 262 of the DGCL to demand
appraisal of, and payment in cash for the fair value of, their Shares. Such
rights, if the statutory procedures are complied with, could lead to a judicial
determination of the fair value (excluding any element of value arising from
accomplishment or expectation of the Merger) required to be paid in cash to such
holders for their Shares. Any such judicial determination of the fair value of
Shares could be based upon considerations other than or in addition to the Offer
Price and the market value of the Shares, including asset values and the
investment value of the Shares. The value so determined could be more or less
than the Offer Price or the Merger Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses such stockholder's right to
appraisal, as provided in the DGCL, the Shares of such holder will be converted
into the Merger Consideration in accordance with the Merger Agreement. A
stockholder may withdraw such stockholder's demand for appraisal by delivery to
Purchaser of a written withdrawal of such stockholder's demand for appraisal and
acceptance of the Merger.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
STOCK PURCHASE AGREEMENT
In connection with the execution of the Merger Agreement, Parent, Purchaser
and Company entered into a stock purchase agreement (the "Stock Purchase
Agreement"). The following is a summary of the material terms of the Stock
Purchase Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is filed hereto as Exhibit 2.
Pursuant to the terms of the Stock Purchase Agreement, Parent purchased all
of the shares of the Convertible Preferred Stock owned by RHI Holdings, Inc.
("RHI") on November 25, 1997, consisting of 250,000 shares of the Convertible
Preferred Stock, for an aggregate purchase price of $62,833,815. The 250,000
shares of the Convertible Preferred Stock which were sold to Parent by RHI
constitute all of the issued and outstanding shares of the Convertible Preferred
Stock.
LOAN AGREEMENT
In connection with the execution of the Merger Agreement, Parent, Purchaser
and Company entered into a loan agreement (the "Loan Agreement"). The following
is a summary of the material terms of the Loan Agreement. This summary is not a
complete description of the terms and conditions thereof and is qualified in its
entirety by reference to the full text thereof which is filed hereto as Exhibit
3.
Pursuant to the terms of the Loan Agreement if the Company elects to redeem
the Special Preferred Stock, Parent will lend to the Company $21,918,000 in
accordance with the terms of the promissory note to be issued by the Company.
Payments of the principal amount on the promissory note shall be made at the
same time and on the same terms as payments of the liquidation preference were
required to be made under the terms of the Special Preferred Stock issued by the
Company. Interest on the promissory note shall accrue and be payable on the same
terms as dividends were payable under the terms of the Special
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Preferred Stock. In the event that the Company does not elect to redeem the
Special Preferred Stock pursuant to the terms of the Loan Agreement, then all
issued and outstanding shares of the Special Preferred Stock will be redeemed
for cash in the Merger pursuant to the terms of the Merger Agreement. On
November 24, 1997 the Company redeemed the Special Preferred Stock and the
Purchaser loaned the Company $21,899,455 in cash for such redemption.
STOCK OPTION AGREEMENT
Simultaneously with the execution of the Merger Agreement, Parent and
certain investors named therein (the "Investors") entered into a stock option
agreement (the "Stock Option Agreement") pursuant to which Intermedia was
granted irrevocable stock options to purchase from certain investors of the
Company their outstanding common stock of the Company, which together with
shares owned directly by Intermedia gives Intermedia control of approximately
50.7% of the Company's outstanding shares of common stock on a fully diluted
basis. The following is a summary of the material terms of the Stock Option
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is filed hereto as Exhibit 4.
OPTION. To induce Parent and Purchaser to enter into the Merger Agreement
and subject to the terms and conditions set forth in the Stock Option Agreement,
each of the Investors has granted Parent its respective Investor option to
purchase its respective Option Shares (as defined in the Stock Option Agreement)
at $15.00 per Share. Parent may assign to any subsidiary or affiliate of Parent
(including Purchaser) the right to exercise the Investor options. Each Investor
option may be exercised individually from each Investor, in whole or in part, at
any time or from time to time, on or after November 20, 1997 and prior to the
close of business on the earlier of (i) the second business day after the
termination of the Merger Agreement; (ii) the Effective Time; and (iii) the date
of the termination of the Stock Option Agreement (such earliest date, the
'Termination Date").
VOTING OF SHARES. Each Investor, until the Termination Date, shall cause
the Shares owned by such Investor to be voted at any meeting of the stockholders
of the Company or in any consent in lieu of such a meeting in favor of the
consummation of the transactions contemplated by the Merger Agreement, against
any transactions inconsistent therewith, and as otherwise reasonably requested
by Purchase in order to carry out the purposes of the Merger Agreement.
IRREVOCABLE PROXY. Each Investor has irrevocably appointed Parent, until
the Termination Date, as its attorney and proxy pursuant to the provisions of
Section 212 of the DGCL, with full power of substitution, to vote and take other
actions (by written consent or otherwise) in favor of the consummation of the
transactions contemplated by the Merger Agreement, against any transactions
inconsistent therewith, and as otherwise reasonably required in order to carry
out the purposes of the Merger Agreement with respect to the Option Shares (and
all other securities issued to such Investor in respect of the Shares) which
each Investor is entitled to vote at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed meeting)
or in respect of any consent in lieu of any such meeting or otherwise. This
proxy and power of attorney is irrevocable and coupled with an interest in favor
of Parent. Each Investor has revoked all other proxies and powers of attorney
with respect to the Option Shares (and all other securities issued to such
Investor in respect of the Option Shares) which it may have heretofore appointed
or granted. No subsequent proxy or power of attorney may be given or written
consent executed (and if given or executed, will not be effective) by the
Investors with respect thereto.
RESTRICTIONS ON TRANSFER. Each Investor has covenanted and agreed that,
until the expiration of the Investor options as provided in the Stock Option
Agreement, except as contemplated by the Stock Option Agreement, the Investor
shall not, and shall not offer or agree to, sell, transfer, tender, assign,
hypothecate or otherwise dispose of, or create or permit to exist any security
interest, lien, claim, pledge, option, right of first refusal, agreement,
limitation on the Investor's voting rights, charge or other encumbrance of any
nature whatsoever with respect to the Option Shares.
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NO SOLICITATION. Except as provided in the Stock Option Agreement, each
Investor shall not, directly or indirectly, through any agent or representative
or otherwise, (i) solicit, initiate or encourage the submission of any proposal
or offer from any individual, corporation, partnership, limited partnership,
syndicate, person (including, without limitation, a person" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government (collectively, other than Parent and any
affiliate of Parent, a "Person") relating to (a) any acquisition or purchase of
all or any of the Option Shares or (b) any acquisition or purchase of all or any
portion of the assets of, or any equity interest in, the Company or any
subsidiary of the Company or any business combination with the Company or any
subsidiary of the Company or (ii) participate in any negotiations regarding, or
furnish to any Person any information with respect to, or otherwise cooperate in
any way with, or assist or participate or facilitate or encourage, any effort or
attempt by any Person to do or seek any of the foregoing. Each Investor
immediately shall cease and cause to be terminated all existing discussions or
negotiations of the Investor and its agents or other representatives with any
Person conducted heretofore with respect to any of the foregoing. Each Investor
shall notify Parent promptly if any such proposal or offer, or any inquiry or
contact with any Person with respect thereto, is made and shall, in any such
notice to Parent, indicate in reasonable detail the identity of the Person
making such proposal, offer, inquiry or contact and the terms and conditions of
such proposal, offer, inquiry or contact.
SETTLEMENT AGREEMENT
In connection with entering into the Merger Agreement, the Company,
Intermedia, Purchaser, Tel-Save and a wholly owned subsidiary of Tel-Save, have
entered into a Settlement Agreement which provides, among other things, for (i)
a dismissal of the litigation commenced by Intermedia in Chancery Court of
Delaware, New Castle County seeking to enjoin the Tel-Save Merger; (ii) releases
and covenants not to sue in connection with the Merger Agreement and the
termination of the Tel-Save merger agreement; and (iii) an agreement by Tel-Save
that for a period of one year or the earlier termination of the Merger
Agreement, Tel-Save will not to acquire or make any attempts to acquire the
Company. This summary is not a complete description of the terms thereof and is
qualified in its entirety by reference to the full text thereof which is filed
hereto as Exhibit 5.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendations of the Board of Directors.
The Board of Directors has unanimously approved the Merger Agreement and the
transactions contemplated thereby and determined that each of the Offer and the
Merger is fair to, and in the best interests of, the stockholders of the
Company. The Board of Directors unanimously recommends that all holders of
Shares accept the Offer and tender their Shares pursuant to the Offer.
(b) Background: Reasons for the Recommendation.
Since the third quarter of 1996, STF has from time to time explored the
possibility of either a sale of STF or a strategic merger with a third party in
the telecommunications industry.
In the third quarter of 1996, Credit Suisse First Boston Corporation
("CSFB"), acting as financial advisor for STF, arranged for a meeting between
Mr. Autorino, Mr. Ruberg, the Chairman and Chief Executive Officer of Intermedia
and Intermedia's financial advisors, Bear Stearns & Co., to explore the
possibility of a merger transaction. Intermedia entered into a confidentiality
agreement, filed hereto as Exhibit 6 with STF on September 18, 1996 and visited
STF's facilities on a number of occasions.
In discussions with STF, Intermedia raised the possibility of a stock merger
at a ratio of approximately .4 shares of Intermedia common stock for every share
of STF Common Stock. Under the Intermedia proposal, the conversion ratio would
have resulted in an exchange of $12 of Intermedia stock (then trading
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at $30 per share) for every share of STF Common Stock, with, however, a right on
the part of Intermedia to terminate the transaction if the price of its stock
fell below $25 per share or rose above $35 per share. Given the lack of
substantial liquidity of Intermedia's common stock, Intermedia's highly
leveraged capital structure, and the need to obtain the prior approval of
Intermedia's bondholders, this proposal was deemed unacceptable by
representatives of STF.
On January 22, 1997, a meeting was held between Mr. Autorino and others on
behalf of STF and Mr. Ruberg and others on behalf of Intermedia. At the meeting,
Intermedia revised their proposal such that one-half of the consideration would
be in common stock of Intermedia and one-half in a form of preferred stock, with
the STF Special Preferred held by RHI to be acquired for $10 per share in cash.
Because the preferred stock of Intermedia to be paid to stockholders of STF was
not convertible into common stock, and because of continued concerns regarding
the liquidity of Intermedia's common stock and its highly leveraged capital
structure, the proposal was deemed to be unacceptable by STF.
In March 1997, a discussion took place between Mr. Steiner, Vice-Chairman of
the STF Board and Chairman and Chief Executive Officer of The Fairchild
Corporation ("TFC"), a holder of approximately 40% of the STF Common Stock, and
Mr. Ruberg in which Mr. Steiner invited Intermedia to make a further proposal.
None was made at the meeting or at any time prior to July 14, 1997.
The price of Intermedia's stock experienced volatility during the fourth
quarter of 1996 and the first quarter of 1997. During the fourth quarter of
1996, Intermedia's stock closed as high as $33 3/4 and as low as $21 1/2. During
the first quarter of 1997, it ranged from a high of $26 to a low of $13 7/8 the
price at which it closed on the last day of the quarter.
On January 8, 1997, Mr. Autorino met in Tulsa, Oklahoma with Keith E.
Bailey, Chairman and CEO of The Williams Companies, Inc., corporate parent of
WilTel Communications, LLC ("WilTel"). WilTel entered into a confidentiality
agreement with STF and commenced examination of STF's financial information. Mr.
Autorino indicated to Mr. Bailey that STF was looking for a price in excess of
$10 per share. WilTel made no proposal.
On February 13, 1997, Mr. Autorino met again with Mr. Bailey in Houston,
Texas. Representatives from SG Warburg were also in attendance. No agreement was
reached.
Providence Equity Partners ("Providence") entered into a confidentiality
agreement on June 13, 1997 in order to examine information relating to STF.
Thereafter, in a conversation with Mr. Donald Miller, a director of STF and a
Senior Vice President of TFC, a representative of Providence offered to pay $9
in cash for STF, which price was deemed to be inadequate.
On June 5, 1997, Mr. Daniel Borislow, Chairman and CEO of Tel-Save and Mr.
Edward B. Meyercord, III, Executive Vice President of Tel-Save, met with Mr.
Borer and Mr. Steiner to discuss possible synergies between STF and Tel-Save.
Mr. Borer visited the offices of Tel-Save in New Hope, Pennsylvania on June 9 to
discuss Tel-Save and its business. On June 10, in a conversation with Mr.
Steiner, Mr. Borislow indicated a willingness on the part of Tel-Save to
consider a merger of Tel-Save and STF at a price of $11 per share in Tel-Save
Common Stock. Mr. Steiner expressed his belief that STF might be willing to
consider favorably a transaction with Tel-Save in that price range. Mr. Borislow
indicated that he would contact STF when, and if, Tel-Save was prepared to enter
into further discussions.
On June 12, 1997, a meeting was held at TFC's offices, at which Mr. Steiner,
Mr. Autorino, various other executives and directors from STF and Salomon
Brothers Inc ("Salomon Brothers") discussed the interest of Tel-Save in merging
with STF and other strategic alternatives. Mr. Steiner and Mr. Autorino also
spoke with Mr. Borislow by telephone and discussed further the possibility of a
merger at a price of $11 per share in Tel-Save Common Stock. Mr. Borislow again
indicated that he would contact STF when, and if, Tel-Save was prepared to enter
into further discussions.
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On July 7, 1997, Tel-Save contacted STF indicating that Tel-Save was
prepared to pursue the earlier discussions. A conference call was held on July
8, 1997 between Mr. Borislow and Mr. Meyercord of Tel-Save and representatives
of STF, including certain executive officers of STF, STF's attorneys and STF's
financial advisor, Salomon Brothers, and certain officers of TFC, to discuss the
possible terms of a merger, but no agreement was reached. Tel-Save and STF
entered into a reciprocal confidentiality agreement on July 11, 1997 in order to
conduct due diligence investigations with respect to each other. discussions
between representatives of Tel-Save and STF continued between July 10 and July
13 on due diligence issues, the terms of a possible transaction and the language
of a possible merger agreement. On July 11, 1997, Mr. Vincent DiVincenzo, STF's
Chief Financial Officer, and Mr. Paul R. Barry, Jr., STF's Senior Vice President
of Business Development, met with Tel-Save employees and representatives from
Salomon Brothers, Deutsche Morgan Grenfell ("DMG"), BDO Seidman, LLP and Arthur
Andersen LLP at the offices of Tel-Save to pursue further due diligence
inquiries regarding Tel-Save and STF.
On the morning of July 14, 1997, in response to trading activity in STF's
common stock, STF publicly announced that it was engaged in discussions
regarding a possible sale or merger of STF. On the afternoon of July 14, Mr.
Autorino received a telephone call from Robert M. Manning, Senior Vice President
and Chief Financial Officer of Intermedia, expressing renewed interest on the
part of Intermedia in a transaction with STF at $12 per share payable in cash.
Mr. Autorino invited representatives of Intermedia to meet with him the next day
in STF's offices in Wethersfield, Connecticut.
On July 15, 1997, Mr. Manning and others from Intermedia met with
representatives of STF in STF's Wethersfield offices. At that time, the
representatives of Intermedia indicated that it would only pay one-half of the
purchase price in cash with the remainder in stock of Intermedia. They also
stated that Intermedia would pay cash for the Special Preferred Stock held by
RHI. Mr. Steiner spoke by telephone with Mr. David C. Ruberg, Chairman and CEO
of Intermedia, who did not attend the meeting in Wethersfield, and inquired
whether any proposal that Intermedia intended to make would be subject to
further due diligence or other conditions. Mr. Ruberg said he did not know but
would call back Mr. Steiner and list all conditions. Mr. Ruberg returned Mr.
Steiner's call, but was unable to state what conditions or contingencies would
be placed on any offer Intermedia might make. He also noted that he would be
unable to attend any meetings.
Later on the evening of July 15, 1997, in the offices of Intermedia's
financial advisor, representatives of Intermedia and STF met again. At that
meeting, Intermedia indicated that it would not pay any portion of the
acquisition price in cash and that the consideration for any merger would be
paid entirely in the stock of Intermedia, and that Intermedia was not willing to
enter into any definitive agreement with STF until the close of trading on July
18, 1997.
On the morning of July 16, 1997, Mr. Borislow telephoned Mr. Autorino and
advised him that the Board of Directors of Tel-Save had voted to approve a
transaction with STF and that he was flying to New York to conclude a deal with
STF. Mr. Borislow indicated that, if no deal were signed with STF on that day,
Tel-Save would terminate all further discussions.
Representatives of STF and Tel-Save met in New York on July 16. STF informed
Tel-Save that it had received an offer from Intermedia and asked Tel-Save to
improve its offer. Tel-Save reiterated its intention to terminate further
discussions if no merger agreement were signed that day. After further
discussion, including discussions with its financial advisor, Salomon Brothers,
Tel-Save indicated that it would pay a minimum price of $11.25 per share of
Tel-Save Common Stock for each share of STF, with a formula that would permit
the price paid to the stockholders of STF to rise by 30% of any amount above $20
at which the Tel-Save shares trade over fifteen consecutive trading days ending
on the trading day three trading days immediately prior to the time of the
merger, while still allowing STF to terminate the merger agreement if the price
of Tel-Save Common Stock fell below $10 per share for any period of twenty
consecutive trading days. The Tel-Save Common Stock closed at $21 per share on
July 16. Representatives of STF also advised Tel-Save that it would only sign an
agreement that contained a satisfactory provisions permitting the STF
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Board to terminate any merger agreement if it deemed it necessary to do so in
order to fulfill its fiduciary obligations to STF's stockholders. Tel-Save
stated that it would agree to such a provisions in the merger agreement, subject
to certain conditions.
In light of (i) STF's concerns that Intermedia would be unwilling or unable
to conclude a transaction, particularly in light of its inability to reach
agreement on a transaction earlier in the year, its failure to pursue actively a
transaction thereafter and its unwillingness to enter into a definitive
agreement prior to the evening of July 18, and the reasons therefor, (ii) the
continued volatility of Intermedia's stock price, (iii) Intermedia's highly
leveraged capital structure, (iv) the fact that Intermedia's proposal was
subject to uncertain conditions, (v) Tel-Save's stated intention to terminate
its offer if a definitive agreement was not signed on July 16, 1997, (vi) STF's
ability to terminate the merger agreement with Tel-Save if a superior proposal
were made and (vii) the unwillingness of RHI, STF's largest stockholder, to
approve a transaction that did not provide for cash payment of the STF Special
Preferred, STF determined to concentrate its efforts on a transaction with
Tel-Save.
On July 16, 1997, a Special Meeting of the Board of Directors of STF was
held at which recent developments were reviewed. A representative of Salomon
Brothers, in its capacity as a financial advisor to STF, compared the Tel-Save
offer with features of the proposal from Intermedia. Thereafter, representatives
of DMG made a presentation to the Board relating to the fairness of the Tel-Save
offer and the expected synergies from the proposed merger. DMG opined that, as
of that date, the Tel-Save offer was fair to the holders of the common stock of
STF from a financial point of view. At a meeting of the STF Board held on July
16, 1997, the STF Board approved the merger with Tel-Save and STF. On July 16,
1997, Tel-Save and a wholly owned subsidiary of Tel-Save entered into a merger
agreement with STF. STF and Tel-Save subsequently called for special meetings of
their respective shareholders to be held on December 1, 1997 to approve the
merger of STF into the Tel-Save subsidiary.
On Friday, November 14, 1997, Mr. Ruberg of Intermedia telephoned Mr.
DiVincenzo indicating a desire to speak to Mr. Autorino. On November 15, Mr.
Autorino called Mr. Ruberg who advised him of Intermedia's present interest in
acquiring STF. Mr. Autorino told Mr. Ruberg that, pursuant to the terms of the
Tel-Save merger agreement, he was not able to discuss such interest except in
the context of a written offer.
On Monday, November 17, 1997, Mr . Ruberg transmitted to Mr. Autorino a
written offer to acquire STF by means of a merger in which holders of common
stock of STF would receive $15.00 per share in cash, subject to certain terms
and conditions. By its terms, the offer was to expire on November 25 at 8 a.m.
(EST).
On the same day, Intermedia filed a lawsuit in Chancery Court, Delaware
against STF, its directors and Tel-Save, seeking, among other relief, to enjoin
steps to consummate a merger with Tel-Save, captioned INTERMEDIA COMMUNICATIONS,
INC., ET AL. v. SHARED TECHNOLOGIES FAIRCHILD, INC., ET AL., C.A. 10638.
Late in the day on November 17, 1997, the STF Board met with respect to the
Intermedia offer. Consistent with the terms of the Tel-Save merger agreement,
the Board voted to authorize discussions with representatives of Intermedia
concerning its offer and the furnishing of information to them as appropriate.
The Board directed CSFB, as its financial advisor, to explore the conditions to
the Intermedia offer. CSFB telephoned Mr. Ruberg and arranged to meet the next
day.
On November 18, 1997, CSFB and STF's counsel met with Mr. Ruberg and
Intermedia's financial advisor and counsel. Following such meeting, the STF
Board met to hear a report from CSFB and STF's counsel outlining the principal
terms of the Intermedia offer. At the meeting, Mr. Steiner read a letter
addressed to the STF Board from Mr. Borislow of Tel-Save in which Tel-Save
offered to lock in the exchange ratio in the Tel-Save merger agreement at a
fixed level of .575 Tel-Save shares for each STF share. At the then current
price of Tel-Save shares, the revised exchange ratio would result in STF
shareholders receiving $13.23 in Tel-Save stock for each share of STF. Mr.
Borislow also requested the STF
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Board to agree to amend the merger agreement to eliminate the STF Board's
ability to terminate the merger agreement. He further stated that Tel-Save was
giving the STF Board until the conclusion of its meeting to accept this offer.
Mr. Steiner spoke with both Mr. Ruberg and Mr. Borislow, after the
conclusion of the November 18 STF Board meeting, and arranged to meet with them
the next day. In addition, on the evening of November 18, Mr. Steiner and Donald
Miller, an executive of TFC and a director of STF, met with Mr. Ruberg and
discussed various aspects of the Intermedia proposal with him. On November 19,
1997, Mr. Steiner and Mr. Autorino met separately and jointly with Messrs.
Ruberg and Manning of Intermedia and Mr. Borislow and other representatives of
Tel-Save to explore various alternatives. In the course of these discussions,
Intermedia expressed a willingness to (a) reimburse certain expenses of STF
which would be due Tel-Save in the event of a termination of the Tel-Save merger
agreement; and (b) pay Tel-Save certain sums to purchase certain 12 1/4% Senior
Subordinated Discount Notes Due 2006 of STF held by Tel-Save and for Tel-Save to
agree to amend a Long Distance Agreement entered into by Tel-Save and STF on
November 13, 1997 to permit an early termination thereof without penalty to STF.
On the evening of November 19 and during the day on November 20, 1997,
representatives of Intermedia, STF and Tel-Save met to explore such proposals
and negotiate the terms thereof. On the evening of November 20, 1997, the STF
Board met and, after receiving the oral opinion of CSFB that the revised
Intermedia offer was fair from a financial point of view to the shareholders of
STF (other than Intermedia, TFC and RHI), voted to terminate the Tel-Save merger
agreement and approve the Intermedia merger agreement. The Board also approved
the vesting of certain director stock options; the redemption of the Special
Preferred Stock held by RHI (subject to bank approval) with the proceeds of a
loan made by Intermedia and the waiver of certain transfer restrictions in a
shareholder agreement with Mr. Autorino and a subsidiary of TFC. On the morning
of November 21, 1997, the merger agreement with Intermedia was publicly
announced and the Delaware litigation brought by Intermedia was dismissed with
prejudice.
In reaching its conclusion to approve the Intermedia merger agreement, the
STF Board considered the following material information and factors:
(1) the familiarity of the Board of Directors with STF's business,
financial condition, results of operations, properties and prospects as an
independent entity, and the nature of the industry in which it operates;
(2) the terms and structure of the transaction and the terms and
conditions of the Merger Agreement, particularly that Intermedia was
offering $15.00 in cash and would commence a tender offer almost immediately
for up to 4,000,000 shares of STF Common Stock and that there were fewer
conditions to closing than in the Tel-Save merger agreement;
(3) that the economic terms of the Intermedia proposal were superior to
those offered in the Tel-Save merger agreement and represented a significant
premium to STF's stock price prior to the Intermedia proposal;
(4) the oral opinion of CSFB to the STF Board that, based upon and
subject to certain factors and assumptions, as of such date, the
consideration to be received from Intermedia was fair from a financial point
of view to the holders of STF Common Stock (other than Intermedia, TFC and
RHI);
(5) the ability of STF to consummate the Offer and the Merger without
having to raise additional financing; and
(6) the willingness of TFC and Mr. Autorino to enter into the Stock
Option Agreement.
The foregoing discussion of the information and factors considered and given
weight by the STF Board is not intended to be exhaustive. In view of the wide
variety of factors considered in connection with its evaluation of the Merger,
the STF Board did not find it practicable to and did not attempt to rank or
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assign relative weights to these factors. In addition, individual members of the
STF Board may have given different weights to different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company has retained CSFB to act as its exclusive financial advisor in
connection with any proposed acquisition of the Company. Pursuant to the
engagement letter between the Company and CSFB, the Company has agreed to pay
CSFB a fee of $5,000,000 for CSFB's financial advisory services. The Company has
agreed to reimburse CSFB for all out-of-pocket expenses incurred by CSFB in
connection with its activities under such engagement letter, including fees and
expenses of CSFB's legal counsel. The Company has agreed to pay DMG $600,000 for
DMG's services in rendering the fairness opinion with respect to the Tel-Save
merger agreement. Salomon Brothers will receive $2,000,000 from the Company for
advisory work performed in connection with the sale of the Company.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any other person to make solicitations or
recommendations to security holders on its behalf concerning the Offer or the
Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, no transactions in the Shares
have been effected during the past 60 days by the Company or, to the best of the
Company's knowledge, by any executive officer, director, affiliate or subsidiary
of the Company.
(b) To the best of the Company's knowledge, except for shares the sale of
which may trigger liability for the holder(s) under Section 16 (b) of the
Securities Exchange Act of 1934, as amended, each executive officer, director
and affiliate of the Company currently intends to tender all Shares over which
he or she has sole dispositive power in the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth above in Items 3(b) and 4(b), no negotiation is
being undertaken or is underway by the Company in response to the Offer which
relates to or would result in (i) an extraordinary transaction, such as a merger
or reorganization, involving the Company or any subsidiary of the Company; (ii)
a purchase, sale or transfer of a material amount of assets by the Company or
any subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as set forth above or in Items 3(b) or 4(b) above, there are no
transactions, Board resolutions, agreements in principle or signed contracts in
response to the Offer that relate to or would result in one or more of the
events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
15
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of November 20, 1997 among the Company,
Purchaser and the Parent.
Exhibit 2 Stock Purchase Agreement dated as of November 24, 1997 among Parent, RHI
Holdings, Inc. and the Company.
Exhibit 3 Loan Agreement dated as of November 20, 1997 between Purchaser and Company.
Exhibit 4 Stock Option Agreement dated as of November 20, 1997 among Purchaser, Company
and certain Investors named therein.
Exhibit 5 Settlement Agreement dated as of November 20, 1997 among Parent, the Purchaser,
the Company and Tel-Save Holdings, Inc.
Exhibit 6 Confidentiality Agreement dated as of September 18, 1996 among the Parent and
the Company.
Exhibit 7 Fairness Opinion of Credit Suisse First Boston Corporation dated as of November
26, 1997 (included as Annex A hereto).
Exhibit 8 Offer to Purchase.*
Exhibit 9 Letter of Transmittal.*
</TABLE>
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* Included in the materials sent to stockholders of the Company
16
<PAGE>
ANNEX A
November 26, 1997
The Board of Directors
Shared Technologies Fairchild Inc.
100 Great Meadow Road
Wethersfield, CT 06109
Dear Sirs and Madam:
You have asked us to advise you with respect to the fairness to the stockholders
of Shared Technologies Fairchild Inc. (the "Company"), other than Intermedia
Communications Inc. (the "Acquiror") and The Fairchild Corporation and RHI
Holdings, Inc. (collectively, "Fairchild/RHI"), from a financial point of view,
of the consideration to be received by such stockholders pursuant to the terms
of the Agreement and Plan of Merger, dated as of November 20, 1997 (the "Merger
Agreement"), among the Company, the Acquiror, and Moonlight Acquisition Corp.
(the "Sub"). The Merger Agreement provides, among other things, that (i) the Sub
will commence, as soon as practicable, a cash tender offer to acquire 4,000,000
of the issued and outstanding shares of Company common stock, par value $0.004
per share (the "Common Shares") at a price of $15.00 per Common Share, net to
the seller (the "Offer"); (ii) promptly following the consummation of the Offer,
the Sub will be merged with and into the Company with the Company as the
surviving corporation (the "Merger"); (iii) the Company will become a wholly
owned subsidiary of the Acquiror as a result of the Merger; and (iv) each of the
then outstanding Common Shares will be converted into the right to receive
$15.00 cash.
Immediately prior to the execution of the Merger Agreement, the Acquiror entered
into a stock option agreement (the "Option Agreement") with certain stockholders
of the Company granting the Acquiror an exclusive and irrevocable option to (i)
purchase from Fairchild/RHI (x) 6,225,000 Common Shares at $15.00 net to the
seller in cash per share and (y) 250,000 shares of the Company's Convertible
Preferred Stock at $15.00 multiplied by the number of shares of Common Stock
into which such share of the Company's Convertible Preferred Stock is
convertible; (ii) purchase from Anthony D. Autorino 870,416 Common Shares and
options to purchase 296,667 Common Shares at $15.00 net to the seller in cash
per share; and (iii) purchase from Jeffrey J. Steiner up to 47,500 Common Shares
and options to purchase 116,667 Common Shares at $15.000 net to the seller in
cash per share. The Option Agreement also provides for each stockholder named in
the preceding sentence to irrevocably appoint the Acquiror its attorney and
proxy to, among other things, vote and take other actions in favor of the
consummation of the transactions contemplated by the Merger Agreement. The
shares to which the Acquiror was granted an irrevocable option to purchase under
the Option Agreement, together with the shares owned directly by the Acquiror,
will give the Acquiror control of slightly in excess of 50% of the Company's
common stock on a fully diluted basis.
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to the Company, as well as the Merger
Agreement. We have also reviewed certain other information, including financial
forecasts, provided to us by the Company and have met with the Company's
management to discuss the business and prospects of the Company.
We have also considered certain financial and stock market data of the Company,
and we have compared those data with similar data for other publicly held
companies in businesses similar to the Company and we have considered the
financial terms of certain other business combinations and other transactions
which have recently been effected. We also considered such other information,
financial studies, analyses and investigations and financial, economic and
market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects.
<PAGE>
With respect to the financial forecasts, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the Company's management as to the future financial performance
of the Company. In addition, we have not been requested to make, and have not
made, an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company, nor have we been furnished with any
such evaluations or appraisals. Our opinion is necessarily based upon financial,
economic, market and other conditions as they exist as of the date hereof and as
can be evaluated on the date hereof.
We have acted as financial advisor to the Company in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon the consummation of the Merger. We will also receive a fee for
rendering this opinion. In the past, we have performed certain investment
banking services for the Company and the Acquiror and have received customary
fees for such services.
In the ordinary course of our business, we and our affiliates may actively trade
the debt and equity securities of both the Company and the Acquiror for our and
such affiliates' own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Company in
connection with its consideration of the Offer and the Merger, does not
constitute a recommendation to any stockholder as to how such stockholder should
vote on the proposed Merger or whether such stockholder should tender shares
pursuant to the Offer and is not to be quoted or referred to, in whole or in
part, in any registration statement, prospectus or proxy statement, or in any
other document used in connection with the offering or sale of securities, nor
shall this letter be used for any other purposes, without our prior written
consent.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the consideration to be received by the stockholders of the Company in
the Offer and the Merger is fair to such stockholders, other than the Acquiror
and Fairchild/RHI, from a financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
<PAGE>
NOVEMBER 26, 1997
Dear Stockholders:
I am pleased to inform you that on November 20, 1997, Shared Technologies
Fairchild Inc. entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Intermedia Communications Inc. ("Parent") and Moonlight
Acquisition Corp. ("Purchaser"), a wholly owned subsidiary of Parent, pursuant
to which Purchaser commenced on November 26, 1997 a tender offer for up to
4,000,000 shares of Shared Technologies Common Stock for $15.00 per share in
cash.
Following the completion of the tender offer, upon the terms and subject to
conditions of the Merger Agreement, Purchaser will be merged into Shared
Technologies (the "Merger"), and each share of Shared Technologies Common Stock
will be converted into the right to receive $15.00 in cash, the same price per
share paid pursuant to the tender offer.
Your Board of Directors has unanimously approved the tender offer and the
Merger, has determined that the tender offer and the Merger are fair to, and in
the best interests of Shared Technologies and its stockholders, and recommends
that stockholders accept the tender offer and tender all their shares pursuant
to the offer.
In arriving at its decision, your Board of Directors gave careful
consideration to a number of factors. Among these was the written opinion of
Credit Suisse First Boston Corporation, financial advisor to Shared
Technologies, that, as of the date of such opinion and on the basis of and
subject to the matters set forth therein, the cash consideration to be received
by the holders of Shared Technologies Common Stock in the tender offer and the
Merger was fair, from a financial point of view, to such holders. The opinion of
Credit Suisse First Boston Corporation is attached hereto as Annex A.
Accompanying this letter is a copy of Shared Technologies' Solicitation
Recommendation on Schedule 14D-9, Purchaser's Offer to Purchase and related
materials, including a Letter of Transmittal for use in tendering shares. These
documents set forth the terms and conditions of the tender offer and provide
instructions as to how you may tender your shares. You are urged to read all the
materials carefully and consider all the factors set forth therein before making
a decision with respect to the tender offer.
Sincerely,
Anthony D. Autorino
Chairman and Chief Executive Officer
<PAGE>
EXHIBIT 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PRIVILEGED AND CONFIDENTIAL
AGREEMENT AND PLAN OF MERGER
Among
INTERMEDIA COMMUNICATIONS INC.,
MOONLIGHT ACQUISITION CORP.
and
SHARED TECHNOLOGIES FAIRCHILD INC.
Dated November 20, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
I. THE OFFER...............................................................1
I.1. The Offer.....................................................1
I.2. Company Action................................................2
I.3. Voting of Shares Acquired by Purchaser........................4
II. THE MERGER..............................................................4
II.1. Merger; Surviving Corporation.................................4
II.2. Certificate of Incorporation..................................4
II.3. Bylaws........................................................5
II.4. Directors and Officers........................................5
II.5. Effective Time................................................5
II.6. Conversion of Shares..........................................5
II.7. Purchaser Common Stock........................................7
II.8. Surrender of Shares...........................................7
II.9. Company Stock Options and Warrants............................9
II.10. Good Faith Deposit............................................9
II.11. Termination of the Pledge Agreement...........................9
III. REPRESENTATIONS AND WARRANTIES OF
COMPANY............................................................9
III.1. Organization and Qualification................................9
III.2. Capital Stock of Subsidiaries................................10
III.3. Capitalization...............................................10
III.4. Authority Relative to this Agreement.........................11
III.5. No Violations, Etc...........................................12
III.6. Commission Filings; Financial Statements.....................13
III.7. Absence of Changes or Events.................................13
III.8. Proxy Statement..............................................14
III.9. Litigation...................................................14
III.10.Title to and Condition of Properties.........................14
III.11.Contracts and Commitments....................................15
III.12.Labor Matters................................................15
III.13.Compliance with Law..........................................15
III.14.Board Recommendation.........................................16
III.15.Patents and Trademarks.......................................16
III.16.Taxes........................................................16
III.17.Employee Benefit Plans; Erisa................................17
III.18.Environmental Matters........................................21
III.19.Disclosure...................................................22
III.20.Absence of Undisclosed Liabilities...........................22
III.21.Finders or Brokers...........................................22
III.22.State Antitakeover Statutes..................................22
III.23.Opinion of Financial Advisor.................................23
III.24.Insurance....................................................23
III.25.Employment and Labor Contracts...............................23
III.26.Pending Transactions.........................................23
III.27.Indemnification Agreements...................................23
III.28.Indemnified Liabilities......................................24
III.29.Commercial Arrangements with Tel-save Holdings, Inc..........24
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<PAGE>
PAGE
IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER.........................................................24
IV.1. Organization and Qualification...............................24
IV.2. Authority Relative to this Agreement.........................25
IV.3. No Violations, Etc. ........................................25
IV.4. Proxy Statement..............................................26
IV.5. Finders or Brokers...........................................26
IV.6. Offer Documents..............................................27
V. COVENANTS...........................................................27
V.1. Conduct of Business of Company Pending the Merger............27
V.2. Preparation of the Proxy Statement; Stockholders Meetings....30
V.3. Additional Agreements; Cooperation...........................31
V.4. Publicity....................................................32
V.5. No Solicitation..............................................32
V.6. Access to Information........................................34
V.7. Notification of Certain Matters..............................34
V.8. Resignation of Directors.....................................35
V.9. Indemnification..............................................35
V.10. Fees and Expenses............................................36
V.11. Stockholder Litigation.......................................36
VI. CONDITIONS..........................................................36
VI.1. Conditions to the Merger.....................................36
VI.2. Conditions to Obligations of Parent..........................37
VI.3. Conditions to Obligations of Company.........................37
VII. TERMINATION, AMENDMENT AND
WAIVER............................................................38
VII.1. Termination..................................................38
ViI.2. Effect of Termination........................................39
VII.3. Termination Payment. .......................................39
VII.4 Proceeds of the Good Faith Deposit...........................40
VII.5 Amendment....................................................40
VII.6 Waiver.......................................................41
VIII. GENERAL
PROVISIONS........................................................41
VIII.1.Definitions..................................................41
VIII.2.Non-survival of Representations, Warranties and Agreements...44
VIII.3.Notices......................................................44
VIII.4.Severability.................................................45
VIII.5.Miscellaneous................................................46
VIII.6.Specific Performance.........................................46
VIII.7.Waiver of Jury Trial.........................................46
-ii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") being made
and entered into as of this 20th day of November, 1997 by and among
INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("PARENT"), MOONLIGHT
ACQUISITION CORP., a Delaware corporation which is wholly owned by Parent
("PURCHASER"), and SHARED TECHNOLOGIES FAIRCHILD INC., a Delaware corporation
("COMPANY").
WHEREAS, the Boards of Directors of Parent, Purchaser and
Company have each determined that it is in the best interests of their
respective stockholders for Parent to acquire Company upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, it is
proposed that Purchaser shall make a cash tender offer (the "OFFER") to
acquire 4,000,000 of the issued and outstanding shares of Common Stock, par
value $.004 per share, of Company ("COMPANY COMMON STOCK") (shares of Company
Common Stock being hereinafter collectively referred to as "SHARES") for
$15.00 per Share (such amount being hereinafter referred to as the "PER SHARE
OFFER AMOUNT") net to the seller in cash, upon the terms and subject to the
conditions of this Agreement and the Offer; and
WHEREAS, the Board of Directors of Company (the "BOARD")
has unanimously approved the making of the Offer and resolved and agreed to
recommend that holders of Shares tender their Shares pursuant to the Offer;
and
WHEREAS, also in furtherance of such acquisition, the
Boards of Directors of Parent, Purchaser and Company have each approved the
merger (the "MERGER") of Purchaser with and into Company in accordance with
the General Corporation Law of the State of Delaware (the "GCL") and upon the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
I. THE OFFER
I.1. THE OFFER. (a) Provided that this Agreement shall
not have been terminated in accordance with Section 7.1 and none of the
events set forth in Annex A hereto shall have occurred or be existing,
Purchaser shall commence the Offer as promptly as reasonably practicable
after the date hereof, but in no event later than five business days after
the initial public announcement of Purchaser's intention to commence the
Offer. The Offer shall, unless extended as provided below, expire 20
business days after the commencement of the Offer. The
<PAGE>
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the satisfaction of the conditions
set forth in Annex A hereto. The number of Shares that Purchaser will accept
in the Offer shall be 4,000,000 Shares. Purchaser expressly reserves the
right to waive any such condition, to increase the price per Share payable in
the Offer, to increase the maximum number of Shares to be purchased in the
Offer and to make any other changes in the terms and conditions of the Offer;
PROVIDED, HOWEVER, that, without the consent of Company, no change may be
made which decreases the price per Share payable in the Offer, which reduces
the maximum number of Shares to be purchased in the Offer or which imposes
conditions to the Offer in addition to those set forth in Annex A hereto or
modifies such conditions, or which changes the form of consideration payable
in the Offer. The Per Share Offer Amount shall, subject to applicable
withholding of taxes, be net to the seller in cash, upon the terms and
subject to the conditions of the Offer. Subject to the terms and conditions
of the Offer, Purchaser shall pay, as promptly as practicable after
expiration of the Offer, for all Shares validly tendered and not withdrawn.
The Offer may not be extended for more than 20 days beyond its original
scheduled expiration date unless any of the conditions to the Offer shall not
have been satisfied, in which case the Offer shall remain open until such
time as all of the conditions to the Offer have been satisfied; PROVIDED,
HOWEVER, in no event will Purchaser be required to extend the Offer beyond
February 28, 1998.
(b) As soon as reasonably practicable on the date of
commencement of the Offer, Purchaser shall file with the Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "SCHEDULE 14D-1")
with respect to the Offer. The Schedule 14D-1 shall contain or shall
incorporate by reference an offer to purchase (the "OFFER TO PURCHASE") and
forms of the related letter of transmittal and any related summary
advertisement (the Schedule 14D-1, the Offer to Purchase and such other
documents, together with all supplements and amendments thereto, being
referred to herein collectively as the "OFFER DOCUMENTS"). Company and its
counsel shall be given an opportunity to review the Offer Documents prior to
their filing with the SEC. Parent, Purchaser and Company agree to correct
promptly any information provided by any of them for use in the Offer
Documents which shall have become false or misleading, and Parent and
Purchaser further agree to take all steps necessary to cause the Schedule
14D-1 as so corrected to be filed with the SEC and the other Offer Documents
as so corrected to be disseminated to holders of Shares, in each case as and
to the extent required by applicable federal securities laws.
-2-
<PAGE>
I.2. COMPANY ACTION. (a) Company hereby approves of and
consents to the Offer and represents that (i) the Board, at a meeting duly
called and held on November 20, 1997, has unanimously (A) determined that
this Agreement and the transactions contemplated hereby, including each of
the Offer and the Merger, are fair to and in the best interests of the
holders of Shares, (B) approved and adopted this Agreement and the
transactions contemplated hereby and (C) recommended that the stockholders of
Company accept the Offer and approve and adopt this Agreement and the
transactions contemplated hereby, and (ii) Credit Suisse First Boston
Corporation ("FIRST BOSTON") has rendered to the Board its opinion that the
consideration to be received by the holders of Shares pursuant to each of the
Offer and the Merger is fair to the holders of Shares from a financial point
of view, subject to the assumptions and qualifications contained in such
opinion, and which shall be confirmed promptly in writing. Company hereby
consents to the inclusion in the Offer Documents of the recommendation of the
Board described in the immediately preceding sentence. Assuming that neither
Parent nor Purchaser are Interested Stockholders (as such term is defined in
Section 203 of the GCL) immediately prior to the Board taking the action
described in this Section 1.2, the approval set forth in clause (a)(i) shall,
among other things, satisfy the restrictions on business combinations
contained in Section 203 of the GCL with respect to the transactions
contemplated hereby. Company has been advised by each of its directors and
executive officers that they intend to vote all Shares beneficially owned by
them in favor of the approval and adoption by the stockholders of Company of
this Agreement and the transactions contemplated hereby.
(b) As soon as reasonably practicable on or after the
date of commencement of the Offer, Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-9") containing the
recommendation of the Board described in Section 1.2(a) and shall disseminate
the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and any
other applicable federal securities laws. Company, Parent and Purchaser
agree to correct promptly any information provided by any of them for use in
the Schedule 14D-9 which shall have become false or misleading, and Company
further agrees to take all steps reasonably necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws.
(c) Company shall promptly furnish Purchaser with
mailing labels containing the names and addresses of all record holders of
Shares and with security position listings of Shares held in stock
depositories, each as of a recent date, together
-3-
<PAGE>
with all other available listings and computer files containing names,
addresses and security position listings of record holders and beneficial
owners of Shares. Company shall furnish Purchaser with such additional
information, including, without limitation, updated listings and computer
files of stockholders, mailing labels and security position listings, and
such other assistance as Parent, Purchaser or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and
Purchaser shall hold in confidence the information contained in such labels,
listings and files, shall use such information only in connection with the
Offer and the Merger, and, if this Agreement shall be terminated in
accordance with Section 7.1, shall deliver to Company all copies of such
information then in their or their agents' possession.
I.3. VOTING OF SHARES ACQUIRED BY PURCHASER. During the
period beginning on the date on which the Offer is consummated and ending on
the later of (a) the date on which this Agreement is terminated, and (b) the
date on which Purchaser receives any regulatory approvals necessary to
consummate the Merger (as more fully described in Section 6.2(c)), Purchaser
hereby agrees to exercise its voting rights in respect of any Shares it owns
for the election of directors to the Board in the same proportion as the
voting rights of any Shares not owned by Purchaser have been exercised.
II. THE MERGER
II.1. MERGER; SURVIVING CORPORATION. In accordance
with the provisions of this Agreement and the GCL, at the Effective Time (as
such term is defined in Section 2.5; other capitalized terms used herein
without definition are defined in Section 8.1), Purchaser shall be merged
with and into Company, and Company shall be the surviving corporation
(hereinafter sometimes called the "SURVIVING CORPORATION") and shall continue
its corporate existence under the laws of the State of Delaware. At the
Effective Time the separate corporate existence of Purchaser shall cease.
All properties, franchises and rights belonging to Company and Purchaser, by
virtue of the Merger and without further act or deed, shall be deemed to be
vested in the Surviving Corporation, which shall thenceforth be responsible
for all the liabilities and obligations of each of Purchaser and Company.
II.2. CERTIFICATE OF INCORPORATION. At the Effective
Time, the Certificate of Incorporation of Company shall be the Certificate of
Incorporation of the Surviving Corporation; PROVIDED, HOWEVER, that, at the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be amended
-4-
<PAGE>
in its entirety so that it will read as Purchaser's Certificate of
Incorporation, except that the name of the Surviving Corporation shall be
"SHARED TECHNOLOGIES FAIRCHILD INC.". As so amended, the Certificate of
Incorporation of Company as in effect immediately prior to the Effective Time
shall thereafter continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation until further altered or amended
as provided therein or by law.
II.3. BYLAWS. The Bylaws of Purchaser in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation until altered, amended or repealed as provided therein and in the
Certificate of Incorporation of the Surviving Corporation.
II.4. DIRECTORS AND OFFICERS. The Directors of
Purchaser prior to the Effective Time shall be the directors of the Surviving
Corporation. The officers of Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation. Each of such directors
and officers shall hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation.
II.5. EFFECTIVE TIME. The Merger shall become
effective at the time of filing of a certificate of merger with the Secretary
of State of the State of Delaware in accordance with the provisions of
Sections 251 or 253, as the case may be, of the GCL (the "CERTIFICATE OF
MERGER"), or at a later time specified as the effective time in the
Certificate of Merger, which Certificate of Merger shall be so filed as soon
as practicable after the meeting of stockholders contemplated in Section 5.2
and the satisfaction or, if permissible, waiver of the conditions set forth
in Article VI. The date and time when the Merger shall become effective are
referred to herein as the "EFFECTIVE TIME." Contemporaneously with such
filing, a closing shall be held at the offices of Kronish, Lieb, Weiner &
Hellman LLP, 1114 Avenue of the Americas, New York, New York 10036, or such
other place as shall be agreed to by the parties, for the purpose of
confirming the satisfaction or waiver, as the case may be, of the conditions
set forth in Article VI.
II.6. CONVERSION OF SHARES. (a) Each issued and
outstanding share of Company Common Stock immediately prior to the Effective
Time (other than shares of Company Common Stock to be cancelled as set forth
in Section 2.6(b) and 2.6(c)) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into, exchanged for
and represent the right to receive an amount equal to $15.00 per Share (the
"PER SHARE AMOUNT") in cash (the "SHARES CONSIDERATION"), payable, without
interest, to the holder of such Share, upon surrender, in the manner
described below, of the certificate that formerly evidenced such Share.
-5-
<PAGE>
(b) Each Share and Preferred Share (as defined below)
issued and outstanding immediately prior to the Effective Time which is then
owned beneficially or of record by Parent or any Subsidiary of Parent shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and retired and cease to exist, without any conversion
thereof.
(c) Each Share and Preferred Share (as defined below)
held in Company's treasury immediately prior to the Effective Time shall, by
virtue of the Merger, be cancelled and retired and cease to exist, without
any conversion thereof.
(d) Each issued and outstanding share of Series D
Preferred Stock, par value $.01 per share (the "SERIES D STOCK"), Series I 6%
Cumulative Convertible Preferred Stock, par value $.01 per share (the
"CONVERTIBLE PREFERRED STOCK"), and Series J Special Preferred Stock, par
value $.01 per share (the "SPECIAL PREFERRED STOCK"), of Company (all such
shares of Preferred Stock being hereafter collectively referred to as the
"PREFERRED SHARES") immediately prior to the Effective Time (other than the
Preferred Shares to be cancelled as set forth in Section 2.6(b) and 2.6(c))
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into, exchanged for and represent the right to
receive an amount equal to $15.00 per share of the Series D Stock, $251.21
per share of the Convertible Preferred Stock and $109.44 per share of the
Special Preferred Stock (all such amounts collectively, the "PREFERRED PER
SHARE AMOUNT") in cash (the "PREFERRED SHARES CONSIDERATION"; the Shares
Consideration and the Preferred Shares Consideration collectively, the
"MERGER CONSIDERATION"), payable, without interest, to the holder of such
Preferred Share, upon surrender in the manner described above of the
certificate that formerly evidenced such Preferred Share.
(e) Notwithstanding anything in this Section 2.6 to the
contrary, Shares which are issued and outstanding immediately prior to the
Effective Time and which are held by any stockholder of Company who has not
voted such shares in favor of the Merger and who shall have properly
exercised its rights of appraisal for such shares in the manner provided by
the GCL (the "DISSENTING SHARES") shall not be converted into or be
exchangeable for the right to receive the Merger Consideration, unless and
until such holder shall have failed to perfect or shall have effectively
withdrawn or lost his right to appraisal and payment, as the case may be. If
such holder shall have so failed to perfect or shall have effectively
withdrawn or lost such right, his shares shall thereupon be deemed to have
been converted into and to have become exchangeable for, at the Effective
Time, the right to receive the Merger Consideration, without any interest
thereon. Company shall give Parent prompt
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notice of any Dissenting Shares (and shall also give Parent prompt notice of
any withdrawals of such demands for appraisal rights) and Parent shall have
the right to direct all negotiations and proceedings with respect to any such
demands. Neither Company nor the Surviving Corporation shall, except with
the prior written consent of Parent, voluntarily make any payment with
respect to, or settle or offer to settle, any such demand for appraisal
rights. Stockholders of Company who shall have perfected their right of
appraisal and not withdrawn or otherwise lost such right of appraisal, shall
be entitled to receive payment of the appraised value of the shares of
Company Common Stock held by them in accordance with the provisions of
Section 262 of the GCL.
II.7. PURCHASER COMMON STOCK. Each share of common
stock of Purchaser issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of
Purchaser or the holder thereof, be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation. From
and after the Effective Time, each outstanding certificate theretofore
representing shares of Purchaser common stock shall be deemed for all
purposes to evidence ownership of and to represent the number of shares of
Surviving Corporation common stock into which such shares of Purchaser common
stock shall have been converted. Promptly after the Effective Time, the
Surviving Corporation shall issue to Parent a stock certificate or
certificates representing 100 shares of Surviving Corporation common stock in
exchange for the certificate or certificates that formerly represented shares
of Purchaser common stock, which shall be surrendered by Parent and cancelled.
II.8. SURRENDER OF SHARES. (a) Prior to the
Effective Time, Parent shall make available, by transferring to the Exchange
Agent for the benefit of the stockholders of Company, such amount of cash as
shall be payable in exchange for outstanding Shares or Preferred Shares
pursuant to Section 2.6 hereof. Such funds shall be invested by the Exchange
Agent as directed by Parent, PROVIDED that such investments shall be in
obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of
America, or in deposit accounts, certificates of deposit or banker's
acceptances of, repurchase or reverse repurchase agreements with, or
Eurodollar time deposits purchased from, commercial banks with capital,
surplus and undivided profits aggregating in excess of $50 million (based on
the most recent financial statements of such bank which are then publicly
available at the SEC or otherwise).
(b) As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record (other than to holders of
Shares or Preferred Shares to be cancelled
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as set forth in Section 2.6(b) or 2.6(c) or Dissenting Shares) of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding Shares or Preferred Shares (the "CERTIFICATES") (I) a
form letter of transmittal (which shall be in customary form and shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent) and (II) instructions for effecting the surrender of the
Certificates in exchange for the Merger Consideration.
(c) Upon surrender of a Certificate for cancellation to
the Exchange Agent, together with such letter of transmittal, duly executed,
and such other agreements as the Exchange Agent shall reasonably request, the
holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration, and the Certificate so surrendered shall forthwith
be cancelled. Until surrendered as contemplated by this Section 2.8, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration with respect to the Shares
or Preferred Shares formerly represented thereby. No interest shall accrue
or be paid on the Merger Consideration payable upon the surrender of any
Certificate.
(d) Any amounts of cash delivered or made available to
the Exchange Agent pursuant to this Section 2.8 and not exchanged for
Certificates within six months after the Effective Time pursuant to this
Section 2.8 shall be returned by the Exchange Agent to Parent, which
thereafter shall act as Exchange Agent subject to the rights of holders of
unsurrendered Certificates under this Article II. Thereafter such holders
shall be entitled to look to the Surviving Corporation (subject to abandoned
property, escheat and other similar laws) only as general creditors thereof
with respect to any Merger Consideration that may be payable upon due
surrender of the Certificates held by them. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Exchange Agent shall be liable to
any holder of Shares or Preferred Shares for any Merger Consideration
delivered in respect of such Share or Preferred Share to a public official
pursuant to any abandoned property, escheat or other similar law.
(e) If any payment of the Merger Consideration is to be
made to a person other than that in which the Certificate surrendered is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for
transfer and that the person requesting such payment shall pay any transfer
or other taxes required by reason of the payment to a person other than the
registered holder of the Certificate surrendered or establish
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to the satisfaction of the Surviving Corporation that such tax has been paid
or is not applicable.
(f) After the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares or Preferred Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates representing such shares are presented to the Surviving
Corporation, they shall be cancelled and exchanged for the Merger
Consideration as provided in this Article II.
II.9. COMPANY STOCK OPTIONS AND WARRANTS. Prior to
the Effective Time, Company shall take all actions necessary (and Parent and
Purchaser consent to the taking of such actions) so that all options and
warrants outstanding immediately prior to the Effective Time under any option
plan or warrant including, without limitation, the 1994 Director's Option
Plan (with respect to which the term of office of each director shall be
deemed to have been terminated on May 1, 1998), the 1996 Equity Incentive
Plan and Shared Technologies, Inc.'s 1987 Stock Option Plan (all such
warrants and options collectively, the "COMPANY STOCK OPTION PLANS") shall be
cancelled and terminated at the Effective Time and that each holder of such
options and warrants shall receive in the Merger a cash payment equal to the
difference between (A) the Per Share Amount times the number of Shares
subject to such outstanding options or warrants (to the extent then
exercisable at prices not in excess of the Per Share Amount) and (B) the
aggregate exercise price of all such outstanding options and warrants. From
and after the date hereof, no additional options or warrants shall be granted
under the Company Stock Option Plans.
II.10. GOOD FAITH DEPOSIT. Concurrently with the
execution and delivery of this Agreement, Purchaser shall pay to Company
$26,250,000 (the "GOOD FAITH DEPOSIT"). The proceeds of the Good Faith
Deposit shall be disbursed in accordance with Section 7.4.
II.11. TERMINATION OF THE PLEDGE AGREEMENT. If the
Merger is consummated, then Parent and Purchaser shall terminate the Pledge
Agreement, and the Pledge Agent shall return to RHI any collateral which has
been pledged pursuant to the Pledge Agreement.
III. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby makes the following representations and
warranties to Parent and Purchaser, which representations and warranties
(except for those contained in Sections 3.2, 3.3, 3.4, 3.10, 3.14, 3.21,
3.22, 3.23 and 3.29) shall be deemed to have been made on July 16, 1997:
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III.1. ORGANIZATION AND QUALIFICATION. Each of
Company 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 Company 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 Company and its subsidiaries taken as a whole (a "COMPANY
MATERIAL ADVERSE EFFECT"). Section 3.1 of the Disclosure Statement sets
forth, with respect to Company and each of its subsidiaries, the
jurisdictions in which they are qualified or otherwise licensed as a foreign
corporation to do business. Neither Company nor any of its subsidiaries is
in violation of any of the provisions of its Certificate of Incorporation (or
other applicable charter document) or Bylaws. Company has delivered to
Parent accurate and complete copies of the Certificate of Incorporation (or
other applicable charter document) and Bylaws, as currently in effect, of
each of Company and its subsidiaries.
III.2. CAPITAL STOCK OF SUBSIDIARIES. The only direct
or indirect subsidiaries of Company are those listed in Section 3.2 of the
Disclosure Statement previously delivered by Company to Parent (the
"DISCLOSURE STATEMENT"). Company 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 3.2 of the Disclosure Statement) of all the outstanding shares of
capital stock of each of its subsidiaries, there are no proxies with respect
to such shares, and no equity securities of any of such subsidiaries are or
may be required to be issued by reason of any options, warrants, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any such subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any such
subsidiary is bound to issue additional shares of its capital stock or
securities convertible into or exchangeable for such shares. Other than as
set forth in Section 3.2 of the Disclosure Statement, all of such shares so
owned by Company 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 3.2 of the Disclosure
Statement, Company does not directly or indirectly own any interest in any
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corporation, partnership, joint venture or other business association or entity.
III.3. CAPITALIZATION. The authorized capital stock
of Company consists of 50,000,000 shares of Company Common Stock, and
25,000,000 shares of preferred stock, $.01 par value per share, of which
1,000,000 shares have been designated Series D Stock, 250,000 shares have
been designated Convertible Preferred Stock, and 200,000 shares have been
designated Special Preferred Stock. As of the close of business on November
20, 1997, 17,187,605 shares of Company Common 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 November
20, 1997, (x) 2,051,364 shares of Company Common Stock were reserved for
issuance upon exercise of outstanding options and 4,244,740 shares of Company
Common Stock were reserved for issuance upon exercise of outstanding
convertible preferred securities and (y) 1,873,550 shares of Company Common
Stock were reserved for issuance upon exercise of the warrants, all of which
warrants, options and Company Stock Option Plans are listed and described in
Section 3.3 of the Disclosure Statement. Other than the Company Stock Option
Plans and the warrants, Company has no other plan which provides for the
grant of options or warrants 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 Company
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 pursuant to Company's 401(k) Plan, there will not be, any shares of
capital stock of Company 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 Company to issue, transfer or sell
any of its securities. Company has paid all dividends payable through
November 28, 1997 in respect of each of the Series D Preferred Stock and the
Convertible Preferred Stock.
III.4. AUTHORITY RELATIVE TO THIS AGREEMENT. Company
is a corporation duly organized, validly existing and in good standing under
the laws of Delaware. Company has full corporate power and authority to
execute and deliver this Agreement and to consummate the Merger and other
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the consummation of the Merger and other transactions
contemplated hereby and thereby have been duly and validly authorized by the
Board of Directors of Company and no other corporate proceedings on the part
of Company are necessary to authorize this Agreement or to consummate the
Merger or other transactions contemplated hereby or thereby (other than,
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with respect to the Merger, the approval of Company's stockholders pursuant
to Section 251(c) of the GCL). This Agreement has been duly and validly
executed and delivered by Company and, assuming the due authorization,
execution and delivery hereof by Parent and Purchaser, constitutes a valid
and binding agreement of Company, enforceable against Company 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.
III.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 3.5(b) hereof,
except as listed in Section 3.5 of the Disclosure Statement, neither the
execution and delivery of this Agreement by Company nor the consummation of
the Merger or other transactions contemplated hereby or thereby nor
compliance by Company with any of the provisions hereof will (i) violate,
conflict with, or result in a breach of any provisions 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 Company or any of its subsidiaries under, any of the terms, conditions or
provisions of (x) their respective charters or bylaws, (y) except as set
forth in Section 3.5 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 Company 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 Company 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, securities
interests, charges or encumbrances which would not, individually or in the
aggregate, either have a Company Material Adverse Effect or materially impair
Company's ability to consummate the Merger or other transactions contemplated
hereby.
(b) No filing or registration with, notification to and
no permit, authorization, consent or approval of any governmental entity
(including, without limitation, any federal, state or local regulatory
authority or agency) is required by
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Company in connection with the execution and delivery of this Agreement or
the consummation by Company of the Merger or other transactions contemplated
hereby or thereby, 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 Company's
stockholders pursuant to the GCL, (iv) filings with applicable state public
utility commissions identified in Section 2.5 of the Disclosure Statement,
(v) filings with the SEC and (vi) 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 Company Material Adverse Effect or materially impair
Company's ability to consummate the Merger or other transactions contemplated
hereby or thereby.
(c) Company and its subsidiaries are not in violation of
or default under, except as set forth in Section 3.5 of the Disclosure
Statement, (x) any note, bond, mortgage, indenture or deed of trust, or (y)
and license, lease, agreement or other instrument or obligation to which
Company 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 (x) and (y) above, for such violations or defaults which would not,
individually or in the aggregate, either have a Company Material Adverse
Effect or materially impair Company's ability to consummate the Merger or
other transactions contemplated hereby. It is understood that Company has
certain covenants in its bank facilities which Company from time to time may
violate and that such violations shall not be deemed a breach so long as
Company promptly seeks, and in a reasonable period time obtains, waivers of
such violations from the lenders under such facilities (unless such lenders
have accelerated the indebtedness under such facilities).
III.6. COMMISSION FILINGS; FINANCIAL STATEMENTS.
Company has filed all forms, reports, schedules, statements and other
documents required to be filed by it since December 31, 1994 (as supplemented
and amended since the time of filing collectively, the "SEC REPORTS") with
the SEC, each 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
Exchange Act. The audited consolidated financial statements and unaudited
consolidated interim financial statements of Company 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 present fairly, in all material respects, the
financial position and results of
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operations and cash flows of Company and its subsidiaries on a consolidated
basis at the respective dates and for the respective periods indicated (and
in the case of all such financial statements that are interim financial
statements, contain all adjustments so to present fairly). None of the SEC
Reports contained at the time filed any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
III.7. ABSENCE OF CHANGES OR EVENTS. Except as set
forth in Section 3.7 of the Disclosure Statement and in Company's Form 10-K
for the fiscal year ended December 31, 1996, as filed with the SEC, since
December 31, 1996, Company and its subsidiaries have not incurred any
material liability, except in the ordinary course of their businesses
consistent with their past practices, and there has not been any change, or
any event involving a prospective change, in the business, financial
condition or results of operations of Company or any of its subsidiaries
which has had, or is reasonably likely to have, a Company Material Adverse
Effect and Company and its subsidiaries have conducted their respective
businesses in the ordinary course consistent with their past practices.
III.8. PROXY STATEMENT. None of the information
supplied or to be supplied by or on behalf of Company for inclusion or
incorporation by reference in the proxy statement, in definitive form,
relating to Company Stockholder Meeting (as hereinafter defined), or in the
related proxy and notice of meeting, or soliciting material used in
connection therewith (referred to herein collectively as the "PROXY
STATEMENT") will, at the dates mailed to stockholders and at the time of
Company Stockholder Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading. The Proxy Statement (except for
information relating solely to Parent and Purchaser) will comply as to form
in all material respects with the provisions of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder.
III.9. LITIGATION. Except as set forth in Section 3.9
of the Disclosure Statement, there is no (i) claim, action, suit or
proceeding pending or, to the best knowledge of Company or any of its
subsidiaries, threatened against or relating to Company 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
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which Company, any subsidiary of Company 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 Company Material
Adverse Effect or materially impair Company's ability to consummate the
Merger.
III.10. TITLE TO AND CONDITION OF PROPERTIES. Except
as set forth in Section 3.10 of the Disclosure Statement, Company 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 Company's and its subsidiaries' December 31, 1996 audited
consolidated balance sheet contained in Company's Form 10-K for the fiscal
year ended December 31, 1996 filed with the SEC except for property since
sold or otherwise disposed of in the ordinary course of business and
consistent with past practice.
III.11. CONTRACTS AND COMMITMENTS. Other than as
disclosed in Section 3.11 of the Disclosure Statement, no existing material
contract or material commitment of Company or any of its subsidiaries, or as
to which any thereof is a party or their respective assets are bound,
contains an agreement with respect to any change of control that would be
triggered by the Merger. Other than as set forth in Section 3.11 of the
Disclosure Statement, neither this Agreement, the Merger nor the other
transactions contemplated hereby will result in any outstanding loans or
borrowings by Company or any subsidiary of Company becoming due, going into
default or giving the lenders or other holders of debt instruments the right
to require Company or any of its subsidiaries to repay all or a portion of
such loans or borrowings; provided that it is expressly understood and agreed
that Company is not making any representations or warranties with respect to
the effect of the financial condition or results of operation of Parent and
Purchaser.
III.12. LABOR MATTERS. Each of Company 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 Company 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 Company,
any labor strike or stoppage threatened) against or affecting Company 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 Company or any of its subsidiaries who are not currently
organized.
III.13. COMPLIANCE WITH LAW. Except for matters set
forth in Section 3.13 of the Disclosure Statement, neither Company nor any of
its subsidiaries has violated or failed to
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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 Company
Material Adverse Effect; the conduct of the business of Company 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 non-conformities would not, individually or in the aggregate, have a
Company Material Adverse Effect. Company 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 Company Material Adverse Effect.
III.14. BOARD RECOMMENDATION. The Board of Directors
of Company has, by a majority vote at a meeting of such Board duly held on
November 20, 1997, approved and adopted this Agreement, the Merger and the
other transactions contemplated hereby, determined that the Merger is fair to
the stockholders of Company and recommended that the stockholders of Company
approve and adopt this Agreement, the Merger and the other transactions
contemplated hereby.
III.15. PATENTS AND TRADEMARKS. Company 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 Company Material
Adverse Effect.
III.16. TAXES. "TAX" or "TAXES" shall mean all
federal, state, local and foreign taxes, duties, levies, charges and
assessments of any nature, including social security payments and deductibles
relating to wages, salaries and benefits and payments to subcontractors (to
the extent required under applicable Tax law), and also including all
interest penalties and additions imposed with respect to such amounts.
Except as set forth in Section 3.16 of the Disclosure Statement: (i) Company
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 Company and/or its subsidiaries;
(ii) all material Taxes of Company and its
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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
Company and its subsidiaries have either been paid or are being contested in
good faith by appropriate proceedings; (iv) to the best knowledge of Company,
no deficiency has been asserted or assessed against Company or any of its
subsidiaries, and no examination of Company 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) Company 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
Company or any of its subsidiaries for any period ending after the Effective
Date; (viii) Company and its subsidiaries have made timely payments of the
Taxes required to be deducted and withheld from the wages paid to their
employees; and (ix) Company and its subsidiaries are not parties to any tax
sharing or tax matters agreement other than the tax sharing agreement dated
March 13, 1996 by and among TFC, RHI and Company.
III.17. EMPLOYEE BENEFIT PLANS; ERISA. Except as set
forth in Section 3.17 of the Disclosure Statement:
(a) 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"), maintained or contributed to by Company or any of
its subsidiaries, or with respect to which Company or any of its subsidiaries
contributes or is obligated to make payments thereunder or otherwise may have
any liability ("PENSION BENEFITS PLANS").
(b) Company has furnished Purchaser with a true and
complete schedule of all "welfare benefit plans" (as defined in Section 3(1)
of ERISA), maintained or contributed to by Company or any of its subsidiaries
or with respect to which Company or any of its subsidiaries otherwise may
have any liability ("WELFARE PLANS"), all multiemployer plans as defined in
Section 3(37) of ERISA covering employees employed in the United States to
which Company or any of its subsidiaries is required to make contributions or
otherwise may have any liability, all stock bonus, stock option, restricted
stock, stock appreciation right, stock purchase, bonus, incentive, deferred
compensation,
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severance and vacation or other employee benefit plans, programs or
arrangements that are not Pension Benefit Plans or Welfare Plans maintained
or contributed to by Company or a subsidiary or with respect to which Company
or any subsidiary otherwise may have any liability ("OTHER PLANS").
(c) Company and each of its subsidiaries, and each of
the Pension Benefit Plans, Welfare Plans and Other Plans (collectively, the
"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 Company Material Adverse Effect.
(d) All contributions to, and payments from, the Plans
which are required to have been made in accordance with the 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 Company
Material Adverse Effect. All contributions required to have been made in
accordance with Section 302 of ERISA or Section 412 of the Code to any
employee pension benefit plan (as defined in Section 3(2) of ERISA)
maintained by Company or any ERISA Affiliate 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 Company 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 Company or
a subsidiary of Company 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
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provisions of the Code (including, without limitation, Sections 79, 105, 106,
125 or 129 of the Code) is and has been maintained in compliance in all
material respects with all pertinent provisions of the Code and Treasury
Regulations thereunder.
(g) Except as disclosed in Company's Form 10-K for the
fiscal year ended December 31, 1996, there are (i) no investigations, audits
or examinations pending, or to the best knowledge of Company, threatened by
any governmental entity involving any of the Plans, (ii) no termination
proceedings involving the Plans and (iii) no pending or, to the best of
Company's knowledge, threatened claims (other than routine claims for
benefits), suits or proceedings against any Plan, against the assets of any
of the trusts under any Plan or against any fiduciary of any Plan with
respect to the operation of such plan or asserting any rights or claims to
benefits under any 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 (g),
give rise to any liability which would, individually or in the aggregate,
have a Company Material Adverse Effect, nor, to the best of Company's
knowledge, are there any facts which would give rise to any liability which
would, individually or in the aggregate, have a Company Material Adverse
Effect in the event of any such investigation, audit, examination, claim,
suit or proceeding.
(h) None of Company, 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" (within the meaning of Section 4975 of the Code or Section 406
of ERISA) which presents a material risk of resulting in a tax or penalty on
Company 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 Company
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 Company 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 Company Material
Adverse Effect.
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(j) Neither Company nor any ERISA Affiliate of Company
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 Company 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 Company, 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 (a "MULTIEMPLOYER PLAN"), covering
employees employed in the United States.
(l) With respect to each of the Plans, true, correct and
complete copies of the following documents have been made available to Parent
(i) the current plans and related trust documents, including amendments
thereto, (ii) any current summary plan descriptions, (iii) the most recent
Forms 5500 (if any) filed with respect to each such Plan, (iv) the three most
recent financial statements and actuarial reports, if applicable (v) the most
recent IRS determination letter, if applicable, (vi) if any application for
an IRS determination letter is pending, copies of all such applications for
determination including attachments, exhibits and schedules thereto, (vii)
all material agreements (including settlement agreements or other similar
agreements relating to any Plan); and (viii) all material correspondence
between Company and any of its subsidiaries and the IRS, PBGC, Department of
Labor or any other governmental entity relating to any of the Plans.
(m) Neither Company, any of its subsidiaries, any
organization to which Company 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 described in Section 4069(a) of ERISA, the
liability for which would, individually or in the aggregate, have a Company
Material Adverse Effect.
(n) Except as disclosed in Section 2.17 of the
Disclosure Statement, none of the Welfare Plans maintained by Company 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 where the full expense
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of such coverage or benefits is paid by the participant or the participant's
beneficiary. Company and each of its subsidiaries which maintain a "group
health plan" within the meaning of Section 5000(b)(1) of the Code have
complied with the notice and continuation requirements of Section 4980B of
the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder except where the failure to comply would not, individually or in
the aggregate, have a Company Material Adverse Effect.
(o) No liability under any Plan has been funded nor has
any such obligation been satisfied with the purchase of a contract from an
insurance company as to which Company or any of its subsidiaries has received
notice that such insurance company is in rehabilitation.
(p) The consummation of the transactions contemplated by
this Agreement will not either alone or in connection with an employee's
termination of employment or other event 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
Company or any of its subsidiaries.
III.18. ENVIRONMENTAL MATTERS. Except as set forth in
Section 3.18 of the Disclosure Statement and except for such matters as would
not, individually or in the aggregate, have a Company Material Adverse Effect:
(a) Company and its subsidiaries have obtained all
Environmental Permits and all licenses and other authorizations and have made
all registrations and given all notifications that are required under any
applicable Environmental Law.
(b) Except as set forth in Section 3.18 of the
Disclosure Statement, there is no Environmental Claim pending against Company
and its subsidiaries under an Environmental Law.
(c) Except as set forth in Section 3.18 of the
Disclosure Statement, Company and its subsidiaries are in compliance with all
terms and conditions of their Environmental Permits, and are in compliance
with all applicable Environmental Laws.
(d) Except as set forth in Section 3.18 of the
Disclosure Statement, Company and its subsidiaries did not generate, treat,
store, transport, discharge, dispose of or release any Hazardous Materials on
or from any property now or previously owned, leased or used by Company and
its subsidiaries.
(e) For purposes of Section 3.18(a):
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(i) "Environment" shall mean any surface water, ground water, or
drinking water supply, land surface or subsurface strata, or ambient air and
includes, without limitation, any indoor location;
(ii) "Environmental Claim" means any written notice or written 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;
(iii) "Environmental Laws" means any federal, state, and local laws,
codes, and regulations as now or previously in effect 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;
(iv) "Environmental Permit" shall mean a permit, identification
number, license or other written authorization required under any applicable
Environmental Law; and
(v) "Hazardous Materials" shall mean all pollutants, contaminants, or
chemical, hazardous or toxic materials, substances, constituents or wastes,
including, without limitation, asbestos or asbestos-containing materials,
polychlorinated biphenyls and petroleum, oil, or petroleum or oil derivatives
or constituents, including, without limitation, crude oil or any fraction
thereof.
III.19. DISCLOSURE. All of the facts and circumstances not required
to be disclosed as exceptions under or to any of the foregoing
representations and warranties made by Company, in this Article III by reason
of any minimum disclosure requirement in any such representation and warranty
would not, in the aggregate, have a Company Material Adverse Effect.
III.20. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Section 3.20 of the Disclosure Statement, neither Company 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 personality or realty or unusual or extraordinary
commitments, except the liabilities recorded on Company's consolidated
balance sheet at December 31, 1996 included in the financial statements
referred in Section 3.6 and the notes
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thereto, and except for liabilities or obligations incurred in the ordinary
course of business and consistent with past practice since December 31, 1996
that would not individually or in the aggregate have a Company Material
Adverse Effect.
III.21. FINDERS OR BROKERS. Except as set forth in Section 3.21
of the Disclosure Statement, none of Company, the subsidiaries of Company,
the Board of Directors of Company or any member of the Board of Directors of
Company 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 3.21 of
the Disclosure Statement sets forth the maximum consideration (present and
future) agreed to be paid to each such party.
III.22. STATE ANTITAKEOVER STATUTES. Company 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 GCL 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 Company's
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 or any
provision hereof, or (z) would subject Parent to any material impediment or
condition in connection with the exercise of any of its rights under this
Agreement.
III.23. OPINION OF FINANCIAL ADVISOR. Company has received the
opinion of First Boston dated the date of this Agreement, to the effect that,
as of such date, the Merger Consideration is fair from a financial point of
view to the holders of shares of Company Common Stock.
III.24. INSURANCE. Section 3.24 of the Disclosure Statement
lists all insurance policies in force on the date hereof covering the
businesses, properties and assets of Company and its subsidiaries, and all
such policies are currently in effect.
III.25. EMPLOYMENT AND LABOR CONTRACTS. Neither Company nor any
of its subsidiaries is a party to any employment contract or other similar
contract or any other contract for the provision of management or consulting
services to Company or any of its subsidiaries with any past or present
officer, director, employee or, to the best of Company's knowledge, any
entity affiliated with any past or present officer,
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director or employee other than the agreements executed by employees
generally, the forms of which have been delivered to Parent.
III.26. PENDING TRANSACTIONS. Section 3.26 of the Disclosure
Statement lists the status of the Pending Transactions.
III.27. INDEMNIFICATION AGREEMENTS. Each of the RHI
Indemnification Agreement, the FHC Indemnification Agreement and the Pledge
Agreement is a valid and binding agreement of Company and, to the knowledge
of Company, each of such agreements is enforceable against RHI Holdings, Inc.
("RHI") and The Fairchild Corporation ("TFC"), Fairchild Holding Corp.
("FHC"), and RHI, respectively, except to the extent that such 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. Each of the RHI
Indemnification Agreement, the FHC Indemnification Agreement and the Pledge
Agreement shall inure to the benefit of the Surviving Corporation and shall
be enforceable by the Surviving Corporation except to the extent that such
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.
As of the date hereof, Company has no knowledge of any liabilities or claims
for which Company is indemnified under the RHI Indemnification Agreement and
FHI Indemnification Agreement (other than (i) the contingent liabilities
related to a dispute with the United States Government under government
contract accounts rules concerning potential liability arising out of the use
of and accounting for approximately $50.0 million in excess pension funds
relating to certain government contracts in the discontinued aerospace
business of Fairchild Industries, Inc. ("FII"), the nonsurviving constituent
corporation in their merger of March 13, 1996, with Shared Technologies,
Inc.; (ii) all non-telecommunications environmental liabilities of FII; and
(iii) approximately $50.0 million (at June 30, 1995 of costs associated with
post-retirement healthcare benefits of FII) as such items are described in
Company's Annual Report on Form 10-K for the year ended December 31, 1996)
that would (were the indemnification under the RHI Indemnification Agreement
and FHI Indemnification Agreement not available), individually or in the
aggregate, have a Company Material Adverse Effect.
III.28. INDEMNIFIED LIABILITIES. Notwithstanding all of the
representations and warranties contained in this Article III (except for
Section 3.27), it is hereby agreed that Company need not disclose as
exceptions to any of the foregoing representations and warranties any losses,
liabilities and damages or actions or claims for which Company is indemnified
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under each of the FHI Indemnification Agreement and the RHI Indemnification
Agreement.
III.29. COMMERCIAL ARRANGEMENTS WITH TEL-SAVE HOLDINGS, INC.
Except as disclosed in Schedule A attached hereto, neither Company nor any of
its subsidiaries or affiliates has entered into, or is a party to, any
commercial contracts, agreements, leases, plans, instruments, registrations,
licenses, permits, commitments, arrangements or undertakings with Tel-Save
Holdings, Inc. or any of its subsidiaries or affiliates, whether written or
oral.
IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser jointly and severally represents and
warrants to Company as follows:
IV.1. ORGANIZATION AND QUALIFICATION. Each of Parent and
Purchaser 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
Parent and Purchaser 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 Parent's or Purchaser's ability to consummate the Offer,
the Merger or the other transactions contemplated hereby (a "PARENT MATERIAL
ADVERSE EFFECT"). Neither Parent nor Purchaser is in violation of any of the
provisions of its Certificate of Incorporation (or other applicable charter
document) or Bylaws.
IV.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Purchaser has full corporate power and authority to execute and deliver this
Agreement and to consummate the Offer, the Merger and other transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the Offer, the Merger and other transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of
Parent and Purchaser and no other corporate proceedings on the part of Parent
and Purchaser are necessary to authorize this Agreement or to consummate the
Offer, the Merger or other transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by each of Parent and
Purchaser and, assuming the due authorization, execution and delivery hereof
by Company, constitutes a valid and binding agreement of Parent and
Purchaser, enforceable against Parent and Purchaser in accordance with its
terms, except to the
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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.
IV.3. 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 4.3(b) hereof, neither the
execution and delivery of this Agreement by Parent and Purchaser nor the
consummation of the Offer, the Merger or other transactions contemplated
hereby nor compliance by Parent and Purchaser 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 Parent and Purchaser under, any of the terms,
conditions or provisions of (x) their respective charters or bylaws or (y)
any note, bond, mortgage, indenture or deed of trust, 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 Parent or Purchaser or any of their
respective properties or assets, except, in the case of clause (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, have a Parent Material Adverse Effect.
(b) No filing or registration with, notification to and no permit,
authorization, consent or approval of any governmental entity is required by
Parent or Purchaser in connection with the execution and delivery of this
Agreement or the consummation by Parent and Purchaser of the Offer, the
Merger or other transactions contemplated hereby, except (i) in connection
with the applicable requirements of the HSR Act, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware,
(iii) filings with the SEC and state securities administrators, (iv) filings
with the Federal Communications Commission or any applicable state public
utility commissions or applicable state or local regulatory agency or
authority, 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, have a Parent
Material Adverse Effect.
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(c) As of the date hereof (x) Parent and Purchaser are not in
violation of or default under any note, bond, mortgage, indenture or deed of
trust, or (y) any license, lease, agreement or other instrument or obligation to
which Parent is a party or to which they or any of their respective properties
or assets may be subject, except, in the case of clauses (x) and (y) above, for
such violations or defaults which would not, individually or in the aggregate,
have a Parent Material Adverse Effect.
IV.4. PROXY STATEMENT. None of the information supplied or to be
supplied by or on behalf of Parent and Purchaser for inclusion or incorporation
by reference in the Proxy Statement will, at the dates mailed to stockholders
and at the time of Company Stockholder Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
IV.5. FINDERS OR BROKERS. None of Parent, Purchaser, the Board of
Directors of Parent or Purchaser or any member of the Board of Directors of
Parent or Purchaser 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 Offer or the
Merger other than Bear, Stearns & Co., Inc., whose fees shall be paid by Parent.
IV.6. OFFER DOCUMENTS. The Offer Documents will not, at the time
the Offer Documents are filed with the SEC or are first published, sent or given
to stockholders of Company, as the case may be, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, Parent and Purchaser make no representation or warranty with respect
to any information supplied by Company or any of its representatives which is
contained in any of the foregoing documents or the Offer Documents. The Offer
Documents shall comply in all material respects as to form with the requirements
of the Exchange Act and the rules and regulations thereunder.
V. COVENANTS
V.1. CONDUCT OF BUSINESS OF COMPANY PENDING THE MERGER. Except as
contemplated by this Agreement or as expressly agreed to in writing by Parent,
during the period from the date of this Agreement to the Effective Time, each of
Company and its subsidiaries will conduct their respective operations according
to its ordinary course of business consistent
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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, Company will not, nor
will it permit any of its subsidiaries to, without the prior written consent of
Parent, which consent shall not be unreasonably withheld:
(a) amend its certificate of incorporation or bylaws;
(b) authorize for issuance, issue, sell, deliver, grant any options
for, or otherwise agree or commit to issue, sell or deliver any shares of any
class of its capital stock or any securities convertible into shares of any
class of its capital stock, except (i) pursuant to and in accordance with the
terms of currently outstanding convertible securities, warrants and options, and
(ii) shares granted to employees as matching contributions pursuant to Company's
401(k) Plan in an aggregate amount not to exceed 40,000 shares;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend (other than a dividend of stock of Shared
Technologies Cellular, Inc. owned by Company) 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;
(d) (i) create, incur, assume, maintain or permit to exist any debt
for borrowed money other than under existing lines of credit in the ordinary
course of business consistent with past practice; (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except for
(a) its wholly owned subsidiaries, and (b) STF Canada, Inc. 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 except
for STF Canada, Inc. in an aggregate amount not to exceed $1,000,000;
(e) (i) increase in any manner the compensation of (x) any employee
except in the ordinary course of business consistent with past practice or (y)
any of its directors or
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officers; (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 any director or officer or employee, whether past
or present, relating to any such pension, retirement allowance or other employee
benefit, except as required under currently existing agreements, plans or
arrangements; (iii) grant any severance or termination pay to, or enter into any
employment or severance agreement with, (x) any employee except in the ordinary
course of business consistent with past practice or (y) any of its directors or
officers except for honorarium payments to outside directors of Company in an
amount not to exceed $300,000 in the aggregate; 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; provided, however, that
this clause (iv) shall not prohibit Company from renewing any such plan,
agreement or arrangement already in existence on terms no more favorable to the
parties to such plan, agreement or arrangement;
(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
involving payments or receipts by Company or its subsidiaries not in excess of
$50,000, other than (i) customer agreements, (ii) leases for rental space in an
amount not to exceed $250,000 for any lease or (iii) developer agreements in an
amount not to exceed $250,000 for any agreement; provided, however, that Company
will not enter into agreements with any local exchange carriers, competitive
local exchange carriers or incumbent local exchange companies which require a
financial commitment by Company or any of its subsidiaries or which limit the
ability of Company or any of its subsidiaries to conduct their respective
business;
(g) 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
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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;
(h) authorize or commit to make capital expenditures in excess of
$200,000 for any one order in Company's service business (other than purchases
by Company's systems business in the ordinary course of business consistent with
past practice);
(i) make any change in the accounting methods or accounting practices
followed by Company;
(j) settle any action, suit, claim, investigation or proceeding
(legal, administrative or arbitrative) in excess of $50,000 without the consent
of the Parent; provided, however, that Company may settle the matter set forth
in item 2 of Section 3.9 of the Disclosure Statement as previously discussed
with Parent;
make any election under the Code which would have a Company Material
Adverse Effect;
(l) amend, change or alter in any respect any of the RHI
Indemnification Agreement, the FHC Indemnification Agreement or the Pledge
Agreement (except as specifically contemplated by this Agreement); or
(m) agree to do any of the foregoing.
Promptly following execution and delivery of this Agreement, Parent
shall appoint a senior executive (the "CONSULTANT") to act as a management
consultant and advisor to the Company relative to the conduct of its business in
the ordinary course, including the activities described in clauses (d)-(j) of
this Section 5.1. The Consultant shall liaise directly with the chief executive
officer and chief operating officer of the Company and shall be informed of, and
participate as a consultant in, all management decisions made by such officers.
In the event that the Company determines to implement management decisions
contrary to the advice of the Consultant, and the Consultant determines in his
good faith judgment, that such management decisions either alone or taken
together with other management decisions implemented against the advice of the
Consultant, could lead to a Company Material Adverse Effect, the Consultant
shall promptly notify the Executive Committee of the Board of Directors of the
Company in writing of his determination and his contrary recommendation (the
"CONSULTANT NOTICE"). In the event the Executive Committee of the Board of
Directors does not cause management of the Company to act in accordance with the
recommendations of the Consultant set forth in the Consultant Notice by
directing management so
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to act in writing within five days of receipt of the Consultant Notice, Parent
and Purchaser may, by delivery of written notice to the Company within 30 days
following the expiration of such five day period, terminate this Agreement in
accordance with the provisions of Section 7.1(i) hereof. The written consent or
recommendation of the Consultant with respect to any matter shall be deemed to
be the consent of Parent thereto.
V.2. PREPARATION OF THE PROXY STATEMENT; STOCKHOLDERS MEETINGS.
(a) As soon as practicable following the date hereof, Company shall
prepare and file the Proxy Statement with the SEC under the Exchange Act, and
shall use its reasonable best efforts to have the Proxy Statement cleared by the
SEC. Parent, Purchaser and Company shall cooperate with each other in the
preparation of the Proxy Statement, and Company shall notify Parent of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between Company or any representative of Company and the SEC.
Company shall give Parent and its counsel the opportunity to review the Proxy
Statement prior to its being filed with the SEC and shall give Parent and its
counsel the opportunity to review all amendments and supplements to the Proxy
Statement and all responses to requests for additional information and replies
to comments prior to their being filed with, or sent to, the SEC, and prior to
the filing of the Proxy Statement, any amendments or supplements to the Proxy
Statement or any other correspondence to the SEC (collectively, the "PROXY
FILINGS"), the Proxy Filings shall be reasonably satisfactory to Parent. Each
of Company, Parent and Purchaser agrees to use its reasonable best efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC and to cause the Proxy Statement and
all required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Stockholders' Meeting at the earliest practicable
time.
(b) Company shall, as soon as practicable after the date hereof, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"COMPANY STOCKHOLDER MEETING"), as promptly as practicable after the date
hereof, for the purpose of obtaining the approval (the "COMPANY STOCKHOLDER
APPROVAL") of a majority of the stockholders of Company of this Agreement and
shall, through its Board of Directors, recommend to its stockholders the
approval and adoption of this Agreement, the Merger and the other transactions
contemplated hereby, and shall use all commercially reasonable efforts to
solicit from its stockholders proxies in favor of approval and adoption of this
Agreement; provided, however, that such
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recommendation is subject to any action required by the fiduciary duties of the
Board of Directors.
V.3. 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, material leases and other
material contracts that are specified on Schedule 5.3 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 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.
(b) 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. At any time upon the written
request of Parent, Company shall advise Parent of the number of shares of
Company Common Stock or any series of Preferred Stock outstanding on such date.
V.4. PUBLICITY. Company, Parent and Purchaser 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.
V.5. NO SOLICITATION. (a) Company shall not, nor shall it permit any
of its subsidiaries to, nor shall it authorize or permit any of its officers,
directors or employees or any investment banker, financial advisor, attorney,
accountant
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or other representative retained by it or any of its subsidiaries to, directly
or indirectly, (i) solicit any Company Takeover Proposal (as hereinafter
defined) or (ii) participate in any discussions or negotiations regarding any
Company Takeover Proposal; provided, however, that if, at any time prior to
Company Stockholders Meeting, the Board of Directors of Company determines in
good faith, after consultation with outside counsel, that it is necessary to do
so in order to comply with its fiduciary duties to Company's stockholders under
applicable law the Company may, in response to a Company Takeover Proposal that
was not solicited, and subject to compliance with Section 5.5(c), (x) furnish
information with respect to Company to any person pursuant to a customary
confidentiality agreement (as determined by Company after consultation with its
outside counsel) and (y) participate in negotiations regarding such Company
Takeover Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
director or executive officer of Company or any of its subsidiaries, whether or
not such person is purporting to act on behalf of Company or any of its
subsidiaries or otherwise, shall be deemed to be a breach of this Section 5.5(a)
by Company. For purposes of this Agreement, "COMPANY TAKEOVER PROPOSAL" means
any inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of 20% or more of the assets of Company or its
subsidiaries or 20% or more of any class of equity securities of Company or any
of its subsidiaries, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of Company or any of its subsidiaries, any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Company or any of its subsidiaries, other than
the transactions contemplated by this Agreement, or any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Merger or which would reasonably be expected to
dilute materially the benefits to Parent of the transactions contemplated by
this Agreement.
(b) Except as set forth in this Section 5.5, neither the Board of
Directors of Company nor any committee thereof shall (i) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of the
Merger or this Agreement, (ii) approve or recommend, or propose publicly to
approve to recommend, any Company Takeover Proposal or (iii) cause Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, a "COMPANY ACQUISITION AGREEMENT") related to
any Company Takeover Proposal. Notwithstanding the foregoing, in the event that
prior to the Company Stockholders Meeting the Board of Directors of Company
determines in good faith, after
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consultation with outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to Company's stockholders under applicable law,
the Board of Directors of Company may (subject to this and the following
sentences) (x) withdraw or modify its approval or recommendation of the Merger
and this Agreement or (y) approve or recommend a Company Superior Proposal (as
defined below) or terminate this Agreement (and concurrently with or after such
termination, if it so chooses, cause Company to enter into any Company
Acquisition Agreement with respect to any Company Superior Proposal) but in each
of the cases set forth in this clause (y), no action shall be taken by Company
pursuant to clause (y) until a time that is after the fifth business day
following Parent's receipt of written notice advising Parent that the Board of
Directors of Company has received a Company Superior Proposal, specifying the
material terms and conditions of such Company Superior Proposal and identifying
the person making such Company Superior Proposal, to the extent such
identification of the person making such proposal does not breach the fiduciary
duties of the Board of Directors as advised by outside legal counsel. For
purposes of this Agreement, a "COMPANY SUPERIOR PROPOSAL" means any bona fide
proposal made by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Company Common Stock and Company
Preferred Stock then outstanding or all or substantially all the assets of
Company and otherwise on terms that the Board of Directors of Company determines
in its good faith judgment (based on the advice of a financial advisor of
nationally recognized reputation) to be more favorable to Company's stockholders
than the Merger.
(c) In addition to the obligations of Company set forth in paragraphs
(a) and (b) of this Section 5.5, Company shall immediately advise Parent orally
and in writing of any request for information or of any Company Takeover
Proposal, the material terms and conditions of such request or Company Takeover
Proposal, and to the extent such disclosure is not a breach of the fiduciary
duties of the Board of Directors as advised by outside legal counsel, the
identity of the person making such request or Company Takeover Proposal.
(d) Nothing contained in this Section 5.5 shall prohibit Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act, or from making any disclosure to
Company's stockholders if, in the good faith judgment of the Board of Directors
of Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its fiduciary duties to Company's stockholders under
applicable law; provided, however, neither Company nor its Board of Directors
nor any committee thereof shall, except as permitted by Section 5.5(b),
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withdraw or modify, or propose publicly to withdraw or modify, its position with
respect to this Agreement or the Merger or approve or recommend, or propose
publicly to approve or recommend, a company Takeover Proposal.
V.6. ACCESS TO INFORMATION. From the date of this Agreement until the
Effective Time, Company shall provide Parent 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 Parent to make such inspections as it may reasonably require and will
cause its officers and those of its subsidiaries to furnish Parent with such
financial and operating data and with respect to its business and properties as
Parent may from time to time reasonably request.
V.7. NOTIFICATION OF CERTAIN MATTERS. Company or Parent, 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
Section 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23 or 3.29 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 Company or Parent, 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 its 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.
V.8. RESIGNATION OF DIRECTORS. At or prior to the Effective Time,
Company shall take all commercially reasonable efforts to deliver to Parent the
resignations of such directors of Company and its subsidiaries as Parent shall
specify, effective at the Effective Time.
V.9. INDEMNIFICATION. (a) As of the date of this Agreement and for a
period of six years following the Effective Time of the Merger, Parent and the
Surviving Corporation will indemnify and hold harmless any persons who were
directors or officers of Company or a subsidiary of Company prior to the
Effective Time of the Merger (the "INDEMNIFIED PERSONS") to the fullest extent
such person could have been indemnified under the GCL or under the certificate
of incorporation or bylaws of Company or the certificate of incorporation or
bylaws of any subsidiary of Company in effect immediately prior to the Effective
Time of the Merger, with respect to any act or failure to
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act by any such Indemnified Person prior to the Effective Time of the Merger.
(b) Any determination required to be made with respect to whether an
Indemnified Person's conduct complies with the standards set forth under the GCL
or other applicable corporate law shall be made by independent counsel selected
by the Indemnified Persons and reasonably acceptable to Parent and the Surviving
Corporation. Parent or the Surviving Corporation shall pay such counsel's fees
and expenses (it being agreed that neither the Indemnified Persons, Parent nor
the Surviving Corporation shall challenge any such determination by such
independent counsel).
(c) The provisions of this Section 5.9 are for the benefit of the
Indemnified Persons, any of whom shall have all rights at law and in equity to
enforce the rights hereunder.
(d) In the event that Parent or the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other person
and Parent or the Surviving Corporation or such successor or assign is not the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers all or substantially all of its properties and assets to any
person, then, and in each case, proper provision shall be made so that such
person or the continuing or surviving corporation assumes the obligations set
forth in this Section 5.9.
(e) Parent shall cause the Surviving Corporation to maintain in
effect for not less than five years from the Effective Time the current policies
of directors' and officers' liability insurance maintained by Company and its
subsidiaries (provided that Parent may substitute therefor policies of at least
the same coverage containing terms and conditions which are no less advantageous
to the Indemnified Parties in all material respects so long as no lapse in
coverage occurs as a result of such substitution) with respect to all matters,
including the transactions contemplated hereby, occurring prior to, and
including the Effective Time, provided that, in the event that any claim is
asserted or made within such five year period, such insurance shall be continued
in respect of any such claim until final disposition of any and all such claims,
provided, further, that Parent shall not be obligated to make annual premium
payments for such insurance to the extent such premiums exceed 200% of the
premiums paid as of the date hereof by Company for such insurance.
V.10. FEES AND EXPENSES. Whether or not the Merger is
consummated, Company and Parent shall bear their respective expenses incurred in
connection with the Merger, including, without limitation, the preparation,
execution and performance
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of this Agreement and the transactions contemplated hereby, and all fees and
expenses of investment bankers, finders, brokers, agents, representatives,
counsel and accountants.
V.11. STOCKHOLDER LITIGATION. Each of Company and Parent shall
give the other the reasonable opportunity to participate in the defense of any
stockholder litigation against or in the name of Company or Parent, as
applicable, and/or their respective directors relating to the transactions
contemplated by this Agreement.
VI. CONDITIONS
VI.1. CONDITIONS TO THE MERGER. The obligations of each party to
effect the Merger shall be subject to the satisfaction or waiver, at or prior to
the Effective Time, of each of the following conditions:
(a) The Merger and this Agreement shall have been validly approved
and adopted by the affirmative votes of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon.
(b) The waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall have expired.
(c) No judgment, order, decree, statute, law, ordinance, rule or
regulation entered, enacted, promulgated, enforced or issued by any court or
other governmental entity of competent jurisdiction or other legal restraint or
prohibition shall be in effect preventing the consummation of the Offer or the
Merger.
VI.2. CONDITIONS TO OBLIGATIONS OF PARENT. The obligation of
Parent to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) All of the representations and warranties of Company set forth
herein shall be true and correct as of July 16, 1997, and the representations
and warranties set forth in Sections 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23
and 3.29 shall be true and correct as of the date hereof and the Closing Date,
as if made at and as of such time, except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality" or "material adverse effect" set forth
therein) does not have, and is not likely to have, individually or in the
aggregate, a Company Material Adverse Effect or cause any material increase in
the consideration required to be paid by Parent and Purchaser effectively to
consummate the Merger.
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(b) Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date.
(c) All necessary consents and approvals of any federal, state or
local 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 material adverse effect on the
Surviving Corporation or a Parent Material Adverse Effect.
VI.3. CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of
Company to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) The representations and warranties of Parent and Purchaser set
forth herein shall be true and correct both when made and at and as of the
Closing Date, as if made at and as of such date, except whether the failure of
such representations and warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "material adverse effect" set
forth therein) does not have, and is not likely to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(b) Parent and Purchaser shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing Date.
VII. TERMINATION, AMENDMENT AND WAIVER
VII.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of Company:
(a) by consent of the Boards of Directors of Company, Parent and
Purchaser;
(b) by Parent and Purchaser upon notice to Company if any material
default under or material breach of any covenant or agreement in this Agreement
by Company shall have occurred and shall not have been cured within ten days
after receipt of such notice, or any representation or warranty contained herein
on the part of Company shall not have been true and correct in any material
respect at and as of the date made;
(c) by Company upon notice to Parent and Purchaser if any material
default under or material breach of any covenant or agreement in this Agreement
by Parent or Purchaser shall have occurred and shall not have been cured within
ten
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days after receipt of such notice, or any representation or warranty contained
herein on the part of Parent or Purchaser shall not have been true and correct
in any material respect at and as of the date made;
(d) by Parent and Purchaser, on the one hand, or Company, on the
other, upon notice to the other if the Merger shall not have become effective on
or before September 30, 1998, unless such date is extended by the consent of the
Boards of Directors of Company, Parent and Purchaser evidenced by appropriate
resolutions; PROVIDED, HOWEVER, that the right to terminate this Agreement under
this Section 7.1(d) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date;
(e) by any of Parent, Purchaser and Company if the approval of the
stockholders of Company required for consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required vote at a duly
held meeting of stockholders or any adjournment thereof;
(f) by Parent or Purchaser, if Section 5.5 shall be breached by
Company or any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative of Company, in
any material respect and Company shall have failed promptly to terminate the
activity giving rise to such breach and use best efforts to cure such breach
upon notice thereof from Parent or Purchaser, or Company shall breach Section
5.5 by failing to promptly notify Parent or Purchaser as required thereunder;
(g) by Parent or Purchaser if, at any time, (i) Company shall have
withdrawn or modified in any manner adverse to Parent or Purchaser its approval
or recommendation of this Agreement or the Merger or failed to reconfirm its
recommendation within 15 business days after a written request to do so, or
recommended any Company Takeover Proposal or (ii) the Board of Directors of
Company or any committee thereof shall have resolved to take any of the
foregoing actions;
(h) by the Company if it elects to terminate this Agreement in
accordance with Section 5.5(b); PROVIDED that it has complied with all
provisions thereof, including the notice provisions therein, and that it
complies with applicable requirements relating to the payment (including the
timing of the payment) of the termination fee required by Section 7.3; or
(i) by Parent or Purchaser in accordance with the provisions of the
last paragraph of Section 5.1 of this Agreement; provided that it has complied
with all provisions thereof, including the notice provisions therein.
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VII.2. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to the provisions of Section 7.1, the provisions of this
Agreement (other than Sections 5.10, 7.2, 7.3 and 7.4 hereof) shall become void
and have no effect, with no liability on the part of any party hereto or its
stockholders or directors or officers in respect thereof, except as set forth in
Sections 7.3 and 7.4, PROVIDED that nothing contained herein shall be deemed to
relieve any party of any liability it may have to any other party with respect
to a breach of its obligations under this Agreement.
VII.3. TERMINATION PAYMENT. As compensation for entering into this
Agreement, taking action to consummate the transactions hereunder and incurring
the costs and expenses related thereto and other losses and damages, including
the foregoing of other opportunities, Company and Parent agree as follows:
(a) Company shall pay to Parent the sum of $10.0 million plus all
reasonably documented out-of-pocket expenses (including, but not limited to, the
reasonable fees and expenses of counsel and its other advisers) of Parent and
Purchaser incurred in connection with the transactions contemplated by this
Agreement (including the preparation and negotiation of this Agreement) promptly
after, but in no event later than two days following, whichever of the following
first occurs:
(i) Parent or Purchaser shall have exercised its right to
terminate this Agreement pursuant to Sections 7.1(b), 7.1(f), 7.1(g) or
7.1(i) hereof.
(ii) Company shall have exercised its right to terminate this
Agreement pursuant to Section 7.1(e) or Section 7.1(h).
(c) Company shall not be obligated to make any payment pursuant to
this Section 7.3, if at the time such payment becomes due Parent or Purchaser is
in material breach of its obligations under this Agreement.
VII.4. PROCEEDS OF THE GOOD FAITH DEPOSIT. (a) Subject to Section
7.4(c), Company shall pay out from the proceeds of the Good Faith Deposit an
amount equal to $15,000,000 (the "TERMINATION FEE") to Tel-Save Holdings, Inc.
("TEL-SAVE") to satisfy termination fees arising from Company's termination of
that certain Agreement and Plan of Merger dated as of July 16, 1997 among
Tel-Save, TSHCo, Inc. and Company.
(b) Subject to Section 7.4(c), Company shall pay the Good Faith
Deposit (less the Termination Fee) to Tel-Save in exchange for the termination
of any options to purchase Company
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Common Stock held by Tel-Save under that certain Option Agreement dated as of
July 16, 1997 by and between Tel-Save and Company.
(c) In the event that Parent or Purchaser terminates this Agreement
pursuant to Section 7.1(a), 7.1(b), 7.1(f), 7.1(g) or 7.1(i) or Company
terminates this Agreement other than pursuant to Section 7.1(c) or Section
7.1(d), then Company must repay to Purchaser the Good Faith Deposit (including
any Termination Fee which has been paid to Tel-Save).
VII.5. AMENDMENT. This Agreement may be amended by the parties
hereto only in a writing signed on behalf of each of them, at any time before or
after approval of the Agreement by the stockholders of Company, but after such
approval no amendment shall be made which alters the Merger Consideration
without the further approval of the stockholders of Company other than Parent;
provided that no amendment or consent given or made on behalf of Company shall
be effective unless approved by a majority of the members of the Board as
constituted as of the date hereof (or of any successor directors duly elected by
such members).
VII.6. WAIVER. Any term or provision of this Agreement (other than
the requirements for approval by the stockholders of Company) may be waived in
writing at any time by the party which is, or whose stockholders are, entitled
to the benefits thereof.
VIII. GENERAL PROVISIONS
VIII.1. DEFINITIONS. As used in the Agreement, the following terms
have the following respective meanings:
AGREEMENT: as defined in the recitals.
BOARD: as defined in the recitals.
CERTIFICATE OF MERGER: as defined in Section 2.5.
CERTIFICATES: as defined in Section 2.8(b).
CLOSING DATE: means the date on which the Effective Time occurs.
COBRA: as defined in Section 3.17(n).
CODE: means the Internal Revenue Code of 1986, as amended.
COMPANY: as defined in the first paragraph of this Agreement.
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COMPANY ACQUISITION AGREEMENT: as defined in Section 5.5(b).
COMPANY COMMON STOCK: means issued and outstanding shares of Common
Stock, par value $.004 per share, of Company.
Company Material Adverse Effect: as defined in Section 3.1.
COMPANY STOCKHOLDER APPROVAL: as defined in Section 5.2(b).
COMPANY STOCKHOLDER MEETING: as defined in Section 5.2(b).
COMPANY STOCK OPTION PLANS: as defined in Section 2.9.
COMPANY SUPERIOR PROPOSAL: as defined in Section 5.5(b).
COMPANY TAKEOVER PROPOSAL: as defined in Section 5.5(a).
CONSULTANT: as defined in Section 5.1.
CONSULTANT NOTICE: as defined in Section 5.1.
CONVERTIBLE PREFERRED STOCK: as defined in Section 2.6(d).
DISCLOSURE STATEMENT: as defined in Section 3.2.
DISSENTING SHARES: as defined in Section 2.6(e).
EFFECTIVE TIME: as defined in Section 2.5.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
ERISA AFFILIATE: as defined in Section 3.17(d).
EXCHANGE ACT: as defined in Section 1.2(b).
EXCHANGE AGENT: Continental Stock Transfer & Trust Company or such
other a bank or trust company to be designated by Parent prior to the Effective
Time to act as exchange agent.
FHC: means Fairchild Holding Corp.
FHC INDEMNIFICATION AGREEMENT: means the Indemnification Agreement
between FHC and Company dated March 13, 1996.
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FII: as defined in Section 3.27.
FIRST BOSTON: as defined in Section 1.2(a).
GCL: as defined in the recitals.
GOOD FAITH DEPOSIT: as defined in Section 2.10.
HSR ACT: as defined in Section 3.5(b).
INDEMNIFIED PERSONS: as defined in Section 5.9(a).
IRS: as defined in Section 3.17(e).
MERGER: as defined in the recitals.
MERGER CONSIDERATION: as defined in Section 2.6(d).
MULTIEMPLOYER PLAN: as defined in Section 3.17(k).
OFFER DOCUMENTS: as defined in Section 1.1(b).
OFFER TO PURCHASE: as defined in Section 1.1(b).
OTHER PLANS: as defined in Section 3.17(b).
PARENT: as defined in the first paragraph of this Agreement.
Parent Material Adverse Event: as defined in Section
4.1.
PBGC: as defined in Section 3.17(j).
PENDING TRANSACTIONS: means the pending transactions regarding ICS
Communications, Inc. and GE Capital-Rescum, L.L.P.
PENSION BENEFIT PLANS: as defined in Section 3.17(a).
PER SHARE AMOUNT: as defined in Section 2.6(a).
PER SHARE OFFER AMOUNT: as defined in the recitals.
PERSON: an individual, partnership, joint venture, corporation,
trust, unincorporated organization and a government or any department or agency
thereof.
PLANS: as defined in Section 3.17(c).
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PLEDGE AGENT: shall mean Gadsby & Hannah.
PLEDGE AGREEMENT: means the Pledge Agreement dated as of March 13,
1996 by RHI in favor of Gadsby & Hannah as pledge agent.
PREFERRED PER SHARE AMOUNT: as defined in Section 2.6(d).
PREFERRED SHARES: as defined in Section 2.6(d).
PROXY FILINGS: as defined in Section 5.2(a).
PROXY STATEMENT: as defined in Section 3.8.
PURCHASER: as defined in the first paragraph of this Agreement.
RHI: means RHI Holdings, Inc.
RHI INDEMNIFICATION AGREEMENT: means the Indemnification Agreement
dated March 13, 1996 by and among TFC, RHI and Company.
SCHEDULE 14D-1: as defined in Section 1.1(b).
SCHEDULE 14D-9: as defined in Section 1.2(b).
SEC: as defined in Section 1.1(b).
SEC REPORTS: as defined in Section 3.6.
SECURITIES ACT: as defined in Section 3.6.
SERIES D STOCK: as defined in Section 2.6(d).
SHARES: means collectively, all shares of Company Common Stock.
SHARES CONSIDERATION: as defined in Section 2.6(a).
SPECIAL PREFERRED STOCK: as defined in Section 2.6(d).
SUBSIDIARY: with respect to any Person, any corporation or other
business entity, a majority (by number of votes) of the shares of capital stock
(or other voting interests) of which at the time outstanding is owned by such
Person directly or indirectly through Subsidiaries.
SURVIVING CORPORATION: as defined in Section 2.1.
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<PAGE>
TEL-SAVE: as defined in Section 7.4(a).
TERMINATION FEE: as defined in Section 7.4(a).
TFC: means The Fairchild Corporation.
TAX or TAXES: as defined in Section 3.16.
WELFARE PLANS: as defined in Section 3.17(b).
VIII.2. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
No representations, warranties or agreements in this Agreement or in any
instrument delivered by Parent, Purchaser or Company pursuant to this Agreement
shall survive the Merger.
VIII.3. NOTICES. All notices, requests, claims, demands, consents
and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or by fax or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to Parent or Purchaser, a copy to:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attention: Chief Financial Officer
Telecopy: (813) 829-2470
with a copy to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, NY 10036
Attention: Ralph J. Sutcliffe, Esq.
Telecopy: (212) 479-6275
if to Company, a copy to:
Shared Technologies Fairchild Inc.
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Telecopy No.: (860) 258-2455
Attention: Kenneth M. Dorros, Esq.
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
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<PAGE>
New York, NY 10005
Telecopy No.: (212) 269-5420
Attention: James J. Clark, Esq..
and
The Fairchild Corporation
300 West Service Road
P.O. Box 10803
Chantilly, VA 22021
Telecopy No.: (703) 478-5775
Attention: Donald E. Miller, Esq.
VIII.4. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated thereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated by this Agreement including
the Merger, be consummated as originally contemplated to the fullest extent
possible.
VIII.5. MISCELLANEOUS. This Agreement (including the exhibits,
documents and instruments referred to herein or therein) (A) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and thereof; (B) is not intended to confer upon any other
person other than the parties hereto any rights or remedies hereunder; (C) shall
not be assigned by operation of law or otherwise, except that each of Parent and
Purchaser may assign its rights and obligations hereunder without the consent of
Company to one or more direct or indirect Subsidiaries of Parent (it being
recognized that such an assignment shall not release or discharge the assignor
from its obligations under this Agreement); and (D) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement may be executed in
two or more counterparts which together shall constitute a single instrument.
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<PAGE>
VIII.6. SPECIFIC PERFORMANCE. The parties agree that due to the
unique subject matter of this transaction, monetary damages will be insufficient
to compensate the non-breaching party in the event of a breach of any part of
this Agreement. Accordingly, the parties agree that the non-breaching party
shall be entitled (without prejudice to any other right or remedy to which it
may be entitled) to an appropriate decree of specific performance, or an
injunction restraining any violation of this Agreement or other equitable
remedies to enforce this Agreement (without establishing the likelihood of
irreparable injury or posting bond or other security), and the breaching party
waives in any action or proceeding brought to enforce this Agreement the defense
that there exists an adequate remedy at law.
VIII.7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR
AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS AGREEMENT.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, Parent, Purchaser and Company have caused this
Agreement to be executed by their respective duly authorized officers on the
date first above written.
INTERMEDIA COMMUNICATIONS INC.
By: _______________________
Name:
Title:
MOONLIGHT ACQUISITION CORP.
By: _______________________
Name:
Title:
SHARED TECHNOLOGIES FAIRCHILD INC.
By: _______________________
Name: _____________________
Title: _____________________
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<PAGE>
SCHEDULE A
Long Distance Services Agreement, dated November 13, 1997, between
Company and Tel-Save Holdings, Inc.
<PAGE>
ANNEX A
Conditions to the Offer
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) any applicable waiting period
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer, or (ii) at any time on or after the date of this
Agreement, and prior to the acceptance for payment of Shares, any of the
following conditions shall exist:
(a) any judgment, order, decree, statute, law, ordinance, rule or
regulation entered, enacted, promulgated, enforced or issued by any court
or other governmental entity of competent jurisdiction or other legal
restraint or prohibition shall be in effect preventing the consummation of
the Offer;
(b) all necessary consents and approvals of any federal, state or
local governmental authority or any other third party required for the
consummation of the Offer and the transactions contemplated by this
Agreement shall not 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 or a
Parent Material Adverse Effect;
(c) any of the representations and warranties of Company set forth in
the Agreement shall not be true and correct as of July 16, 1997 or any of
the representations and warranties set forth in Sections 3.2, 3.3, 3.4,
3.10, 3.14, 3.21, 3.22, 3.23 and 3.29 of the Agreement shall not be true as
of the date Parent shall first accept Shares for payment, where the failure
of such representations and warranties to be so true and correct (without
giving effect to any limitation as to "materiality" or "material adverse
effect" set forth therein) has, or is likely to have, individually or in
the aggregate, a Company Material Adverse Effect or cause any material
increase in the consideration required to be paid by Parent and Purchaser
effectively to consummate the Offer or the Merger;
<PAGE>
(d) Company shall not have performed any obligation required to be
performed by it under this Agreement as of the date Parent shall first
accept Shares for payment, where the non-performance of such obligation
has, or is likely to have, individually or in the aggregate, a Company
Material Adverse Effect or cause any material increase in the consideration
required to be paid by Parent and Purchaser effectively to consummate the
Offer;
(e) the Merger Agreement shall have been terminated in accordance
with its terms; or
(f) Purchaser and Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder;
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
-2-
<PAGE>
EXHIBIT 2
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of November 24, 1997,
between INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("BUYER"), RHI
HOLDINGS, INC., a Delaware corporation (the "SELLER") and Shared Technologies
Fairchild Inc., a Delaware corporation (the "COMPANY").
R E C I T A L S :
Seller desires to sell to Buyer and Buyer desires to purchase from Seller,
all right, title and interest in and to 250,000 shares of Series I 6% Cumulative
Convertible Preferred Stock, par value $.01 per share (the "PREFERRED STOCK")
issued by the Company and owned by Seller, all upon the terms and subject to
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE
1.1. PURCHASE AND SALE. In consideration of the payment by Buyer of the
Convertible Purchase Price (as defined in Section 1.2(a) below), Seller hereby
agrees to sell, assign, transfer, convey and deliver to Buyer, and Buyer hereby
agrees to purchase, acquire and take assignment and delivery of, all the right,
title and interest of Seller on the day designated by Seller (the "Closing
Date") in and to the Preferred Stock.
1.2. PURCHASE PRICE. The aggregate purchase price for the Convertible
Preferred Stock (the "CONVERTIBLE PURCHASE PRICE") shall be $62,827,425 plus any
accrued dividends from November 24, 1997 to the Closing Date. The Convertible
Purchase Price is payable on the Closing Date in cash, by certified or bank
check or by wire transfer of immediately available funds to such accounts as the
Seller may designate in writing.
1.3. DELIVERY OF THE PREFERRED STOCK. On the Closing Date, Seller shall
deliver to Buyer certificate(s) representing the Preferred Stock duly endorsed
in blank or accompanied by stock powers or other instruments of transfer duly
endorsed in blank, and bearing or accompanied by all requisite stock transfer
stamps.
<PAGE>
-2-
2. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer and the Company as follows:
2.1. ORGANIZATION OF SELLER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation.
2.2. AUTHORITY. Seller has all requisite power and authority to execute
and deliver this Agreement and to carry out its obligations hereunder. Seller
has obtained all necessary corporate approvals for the execution and delivery of
this Agreement and the performance of its obligations hereunder. This Agreement
has been duly executed and delivered by Seller and (assuming due authorization,
execution and delivery by the other parties hereto) constitutes Seller's legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
2.3. AUTHORIZED CAPITAL. Seller owns the Preferred Stock beneficially
and of record, free and clear of all liens, pledges, security interests, claims,
voting restrictions and agreements, proxies or other encumbrances ("LIENS"),
except as may be otherwise provided for (i)in that certain Shareholder's
Agreement, dated March 13, 1996, among Seller, the Company and Anthony D.
Autorino and that certain Pledge Agreement dated as of March 13, 1996 by RHI in
favor of Gadsby & Hannah as pledge agent (the "PLEDGE AGREEMENT") and (ii) that
certain Amended and Restated Pledge Agreement dated as of July 18, 1997 between
RHI and Citicorp USA Inc. (the "CITICORP PLEDGE AGREEMENT"). Upon consummation
of the transactions contemplated hereby, Buyer will acquire good and marketable
title to the Convertible Preferred Stock free and clear of any Liens.
2.4. BROKERS, FINDERS, ETC. All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried on without the
participation of any person or entity acting on behalf of Seller in such manner
as to give rise to any valid claim against Buyer for any brokerage or finder's
fee, commission or similar compensation.
2.5. NO MISSTATEMENTS OR OMISSIONS. No representation or warranty made
in this Agreement by Seller is false or misleading as to any material fact, or
omits to state a material fact required to make any of the statements made
herein not misleading in any material respect.
<PAGE>
-3-
3. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and the Company as follows:
3.1. ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
3.2. AUTHORITY. Buyer has all requisite power and authority to execute
and deliver this Agreement and to carry out its obligations hereunder. Buyer
has obtained all necessary corporate approvals for the execution and delivery of
this Agreement and the performance of its obligations hereunder. This Agreement
has been duly executed and delivered by Buyer and (assuming due authorization,
execution and delivery by the other parties hereto) constitutes Buyer's legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
3.3. BROKERS, FINDERS, ETC. All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried on without the
participation of any person or entity acting on behalf of Buyer in such manner
as to give rise to any valid claim against Seller for any brokerage or finder's
fee, commission or similar compensation, other than Bear, Stearns & Co. Inc.,
whose fees shall be paid by Buyer.
3.4. NO MISSTATEMENTS OR OMISSIONS. No representation or warranty made
in this Agreement by Buyer is false or misleading as to any material fact stated
therein, or omits to state a material fact required to make any of the
statements made therein not misleading in any material respect.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Seller and Buyer as follows:
4.1. ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
4.2. AUTHORITY. The Company has all requisite power and authority to
execute and deliver this Agreement and to carry out its obligations hereunder.
The Company has obtained all necessary corporate approvals for the execution and
delivery of this Agreement and the performance of its
<PAGE>
-4-
obligations hereunder. This Agreement has been duly executed and delivered by
the Company and (assuming due authorization, execution and delivery by the other
parties hereto) constitutes the Company's legal, valid and binding obligation,
enforceable against it in accordance with its terms.
4.3. NO MISSTATEMENTS OR OMISSIONS. No representation or warranty made
in this Agreement by the Company is false or misleading as to any material fact
stated therein, or omits to state a material fact required to make any of the
statements made therein not misleading in any material respect.
5. INDEMNIFICATION
5.1. INDEMNIFICATION BY SELLER. Seller agrees to defend, indemnify and
hold harmless Buyer, any subsidiary or affiliate thereof and its officers,
directors, shareholders and controlling persons, employees, agents, successors
and assigns from and against any and all liabilities, losses, damages, claims,
costs, expenses, judgments, interest and penalties (including, without
limitation, attorneys', accountants' and outside advisors' fees and
disbursements) (collectively, "LOSSES") incurred as a result of, arising out of
or resulting from (i) the breach of any representation or warranty made by
Seller and contained in this Agreement or (ii) the breach of any covenant or
agreement made by Seller and contained in this Agreement.
5.2. INDEMNIFICATION BY BUYER. Buyer agrees to defend, indemnify and
hold harmless Seller, any subsidiary or affiliate thereof and its officers,
directors, shareholders and controlling persons, employees, agents, successors
and assigns from and against any and all Losses incurred as a result of, arising
out of or resulting from (i) the breach of any representation or warranty made
by Buyer and contained in this Agreement or (ii) the breach of any covenant or
agreement made by Buyer and contained in this Agreement.
5.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements made by Buyer and Seller shall survive the
signing and consummation of this Agreement. All representations, covenants and
warranties made by Seller in this Agreement will be deemed to have been relied
upon by Buyer (notwithstanding any investigation by Buyer). All
representations, covenants and warranties made by Buyer in this Agreement will
be deemed to have been relied upon by Seller (notwithstanding any investigation
by Seller).
<PAGE>
-5-
5.4. NOTICE OF CLAIMS. An indemnified party shall give prompt written
notice to the indemnifying party of any claim against the indemnified party
which might give rise to a claim by the indemnified party against the
indemnifying party under the indemnification provisions contained herein,
stating the nature and basis of the claim and the actual or estimated amount
thereof, PROVIDED, HOWEVER, that failure to give such notice will not effect the
obligation of the indemnifying party to provide indemnification in accordance
with the terms of Section 5.1 or 5.2 unless, and only to the extent that, the
indemnifying party is actually prejudiced thereby. In the event that any
action, suit or proceeding is brought against any indemnified party with respect
to which the indemnifying party may have liability under the indemnification
provisions contained herein, the indemnifying party shall, upon written
acknowledgement by the indemnifying party that such action, suit or proceeding
is an indemnifiable Loss pursuant to Section 5.1 or 5.2, have the right, at the
cost and expense of the indemnifying party, to defend such action in the name
and on behalf of the indemnified party (using counsel satisfactory to the
indemnified party), and, in connection with any such action, the indemnified
party and the indemnifying party agree to render to each other such assistance
as may reasonably be required in order to ensure proper and adequate defense of
such action, PROVIDED, HOWEVER, that an indemnified party shall have the right
to retain its own counsel, with fees and expenses paid by the indemnifying
party, if representation of such indemnified party by counsel retained by the
indemnifying party would be inappropriate because of actual or potential
differing interests between such indemnified party and the indemnifying party.
If the indemnifying party shall fail to defend such action, suit or proceeding,
then the indemnified party shall have the right to defend such action without
prejudice to its rights to indemnification under Section 5.1 or 5.2 and, in
connection therewith, the indemnified party and the indemnifying party agree to
render to each other such assistance as may reasonably be required in order to
ensure proper and adequate defense of such action. Neither the indemnified
party nor the indemnifying party shall make any settlement of any claim which
might give rise to liability of the indemnifying party under the indemnification
provisions contained herein without the written consent of each party, which
consent shall not be unreasonably withheld, delayed or conditioned.
6. OTHER AGREEMENTS
6.1. TERMINATION OF PLEDGE. Each of Buyer and the Company hereby
consents to the termination of the Pledge
<PAGE>
-6-
Agreement and the release of the proceeds from the sale of the Preferred Stock
to Seller pursuant hereto, subject to any claims of Citicorp USA Inc. pursuant
to the Citicorp Pledge Agreement.
7. GENERAL
7.1. EXPENSES. All expenses of the preparation, execution and
consummation of this Agreement and of the transactions contemplated hereby
including, without limitation, attorneys', accountants' and outside advisors'
fees and disbursements, shall be borne by the party incurring such expense.
7.2. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties and supersede all prior agreements and understandings relating to
the subject matter hereof and this Agreement shall not be amended except by a
written instrument hereafter signed by all of the parties hereto.
7.3. ASSIGNMENT. None of the parties hereto may assign its rights or
delegate its obligations under this Agreement without the written consent of the
other parties hereto. This Agreement and all of the provisions hereof shall be
binding upon and inure only to the benefit of the parties hereto and their
respective heirs, executors, personal representatives and successors.
7.4. FURTHER ACTION. Each of the parties hereto shall use all
reasonable efforts to do, or cause to be done, all things necessary, proper or
advisable under applicable law to carry out the provisions of this Agreement and
shall execute and deliver such documents and other papers as may be required to
carry out the provisions of this Agreement.
7.5. NOTICES. All notices, requests, claims, demands and ther
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by fax or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to Buyer, a copy to:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
<PAGE>
-7-
Attention: Chief Financial Officer
Telecopy: (813) 829-2470
with a copy to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, NY 10036
Attention: Ralph J. Sutcliffe, Esq.
Telecopy: (212) 479-6275
if to Seller, a copy to:
RHI Holdings, Inc.
c/o The Fairchild Corporation
300 West Service Road
P.O. Box 10803
Chantilly, VA 22021
Telecopy No.: (703) 478-5775
Attention: Donald E. Miller, Esq.
if to the Company, a copy to:
Shared Technologies, Inc.
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Telecopy No.: (860) 258-2455
Attention: Kenneth M. Dorros, Esq.
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Telecopy No.: (212) 269-5420
Attention: James J. Clark, Esq.
7.6. SPECIFIC PERFORMANCE. The parties agree that due to the unique
subject matter of this transaction, monetary damages will be insufficient to
compensate the non-breaching party in the event of a breach of any part of this
Agreement. Accordingly, the parties agree that the non-breaching party shall
be entitled (without prejudice to any other right or remedy to which it may be
entitled) to an appropriate decree of specific performance, or an injunction
restraining any violation of this Agreement or other equitable remedies to
enforce this Agreement (without establishing the likelihood of irreparable
injury or posting bond or other security), and the
<PAGE>
-8-
breaching party waives in any action or proceeding brought to enforce this
Agreement the defense that there exists an adequate remedy at law.
7.7. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated thereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
7.8. HEADINGS. The headings of Sections and Subsections are for
reference only and shall not limit or control the meaning thereof.
7.9. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.10. GOVERNING LAW. THE VALIDITY AND CONSTRUCTION OF THIS AGREEMENT
SHALL BE GOVERNED BY THE INTERNAL LAWS (AND NOT THE PRINCIPLES OF CONFLICT OF
LAWS) OF THE STATE OF DELAWARE.
7.11. VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF DELAWARE OR
OF THE UNITED STATES OF AMERICA RESIDING IN THE STATE OF DELAWARE AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY ACCEPT FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY WAIVES, AND
AGREES NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE
INTERPRETATION OR ENFORCEMENT OF THIS AGREEMENT THAT IT IS NOT SUBJECT THERETO
OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT
MAINTAINABLE IN SAID COURTS OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY
SAID COURTS OR THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM EXECUTION, THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT
<PAGE>
-9-
THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR (PROVIDED THAT
PROCESS SHALL BE SERVED IN ANY MANNER REFERRED TO IN THE FOLLOWING SENTENCE)
THAT SERVICE OF PROCESS UPON SUCH PARTY IS INEFFECTIVE. EACH PARTY AGREES THAT
SERVICE OF PROCESS IN ANY SUCH ACTION, SUIT OR PROCEEDING AGAINST IT WITH
RESPECT TO THIS AGREEMENT MAY BE MADE UPON IT IN ANY MANNER PERMITTED BY THE
LAWS OF THE STATE OF DELAWARE OR THE FEDERAL LAWS OF THE UNITED STATES. SERVICE
OF PROCESS IN ANY MANNER REFERRED TO IN THE PRECEDING SENTENCE SHALL BE DEEMED,
IN EVERY RESPECT, EFFECTIVE SERVICE OF PROCESS UPON SUCH PARTY.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
-10-
7.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT
ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT.
IN WITNESS WHEREOF, and intending to be legally bound thereby, the parties
hereto have caused this Agreement to be duly executed and delivered by their
duly authorized officers as of the date and year first above written.
INTERMEDIA COMMUNICATIONS INC.
By: ______________________
Name:
Title:
RHI HOLDINGS, INC.
By: ______________________
Name:
Title:
SHARED TECHNOLOGIES FAIRCHILD INC.
By: ______________________
Name:
Title:
By signing below each of Shared Technologies Fairchild Inc. (formerly known
as Shared Technologies, Inc.), RHI Holdings, Inc. and Anthony D. Autorino hereby
consent to the transactions contemplated by this Agreement and hereby amend the
terms of that certain Shareholder's Agreement, dated March 13, 1996, to the
extent necessary to permit the transactions contemplated by the terms of this
Agreement.
SHARED TECHNOLOGIES FAIRCHILD INC.
<PAGE>
-11-
By: ______________________
Name:
Title:
RHI HOLDINGS, INC.
By: ______________________
Name:
Title:
___________________________
ANTHONY D. AUTORINO
<PAGE>
Exhibit 3
LOAN AGREEMENT
LOAN AGREEMENT (this "Agreement"), dated as of November 20, 1997,
between INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("Buyer") and
SHARED TECHNOLOGIES FAIRCHILD INC., a Delaware corporation (the "Company").
R E C I T A L S :
- - - - - - - -
The Company desires to redeem 200,000 shares of Series J Special
Preferred Stock, par value $.01 per share (the "SPECIAL PREFERRED STOCK") issued
by the Company and owned by RHI Holdings, Inc. ("RHI"), and Buyer agrees to loan
to the Company certain funds to facilitate such redemption, all upon the terms
and subject to conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the parties hereto hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to the Company as follows:
1.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
1.2 AUTHORITY. Buyer has all requisite power and authority to
execute and deliver this Agreement and to carry out its obligations hereunder.
Buyer has obtained all necessary corporate approvals for the execution and
delivery of this Agreement and the performance of its obligations hereunder.
This Agreement has been duly executed and delivered by Buyer and (assuming due
authorization, execution and delivery by the Company) constitutes Buyer's legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Buyer as follows:
<PAGE>
-2-
2.1 ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
2.2 AUTHORITY. The Company has all requisite power and authority to
execute and deliver this Agreement and the Promissory Note (as defined below)
and to carry out its obligations hereunder. The Company has obtained all
necessary corporate approvals for the execution and delivery of this Agreement
and the Promissory Note and the performance of its obligations hereunder and
thereunder. This Agreement has been duly executed and delivered by the Company
and (assuming due authorization, execution and delivery by Buyer) constitutes
the Company's legal, valid and binding obligation, enforceable against it in
accordance with its terms.
3. THE LOAN
If the Company elects to redeem the Special Preferred Stock, Buyer
shall lend to Company $21,918,000 in accordance with the terms of the Promissory
Note attached hereto as Exhibit A (the "PROMISSORY NOTE"), the Company shall
borrow such amount from Buyer and execute the Promissory Note and Buyer shall
execute a Subordination Agreement in the form attached hereto as Exhibit B.
4. GENERAL
4.1 EXPENSES. All expenses of the preparation, execution and
consummation of this Agreement and of the transactions contemplated hereby
including, without limitation, attorneys, accountants and outside advisors, fees
and disbursements, shall be borne by the party incurring such expense.
4.2 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties and supersede all prior agreements and
understandings relating to the subject matter hereof and this Agreement shall
not be amended except by a written instrument hereafter signed by all of the
parties hereto.
4.3 ASSIGNMENT. None of the parties hereto may assign its rights or
delegate its obligations under this Agreement without the written consent of the
other parties hereto. This Agreement and all of the provisions hereof shall be
binding upon and inure only to the benefit of the parties hereto and their
respective heirs, executors, personal representatives and successors.
<PAGE>
-3-
4.4 FURTHER ACTION. Each of the parties hereto shall use all
reasonable efforts to do, or cause to be done, all things necessary, proper or
advisable under applicable law to carry out the provisions of this Agreement and
shall execute and deliver such documents and other papers as may be required to
carry out the provisions of this Agreement.
4.5 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by fax or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to Buyer, a copy to:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attention: Chief Financial Officer
Telecopy: (813) 829-2470
with a copy to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, NY 10036
Attention: Ralph J. Sutcliffe, Esq.
Telecopy: (212) 479-6275
if to the Company, a copy to:
Shared Technologies, Inc.
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Telecopy No.: (860) 258-2455
Attention: Kenneth M. Dorros, Esq.
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Telecopy No.: (212) 269-5420
Attention: James J. Clark, Esq.
4.6 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other
<PAGE>
-4-
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated thereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.
4.7 HEADINGS. The headings of Sections and Subsections are for
reference only and shall not limit or control the meaning thereof.
4.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.9 GOVERNING LAW. THE VALIDITY AND CONSTRUCTION OF THIS AGREEMENT
SHALL BE GOVERNED BY THE INTERNAL LAWS (AND NOT THE PRINCIPLES OF CONFLICT OF
LAWS) OF THE STATE OF DELAWARE.
4.10 VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF DELAWARE OR
OF THE UNITED STATES OF AMERICA RESIDING IN THE STATE OF DELAWARE AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY ACCEPT FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY WAIVES, AND
AGREES NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE
INTERPRETATION OR ENFORCEMENT OF THIS AGREEMENT THAT IT IS NOT SUBJECT THERETO
OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT
MAINTAINABLE IN SAID COURTS OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY
SAID COURTS OR THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM EXECUTION, THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE
OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR (PROVIDED THAT PROCESS SHALL BE
SERVED IN ANY MANNER REFERRED TO IN THE FOLLOWING SENTENCE) THAT SERVICE OF
PROCESS UPON SUCH PARTY IS INEFFECTIVE. EACH PARTY AGREES THAT SERVICE OF
PROCESS IN ANY SUCH ACTION, SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO THIS
AGREEMENT MAY BE MADE UPON IT IN ANY MANNER PERMITTED BY THE LAWS OF THE STATE
OF DELAWARE OR THE FEDERAL LAWS OF THE UNITED STATES. SERVICE OF PROCESS IN ANY
MANNER
<PAGE>
-5-
REFERRED TO IN THE PRECEDING SENTENCE SHALL BE DEEMED, IN EVERY RESPECT,
EFFECTIVE SERVICE OF PROCESS UPON SUCH PARTY.
(SIGNATURE PAGE FOLLOWS]
<PAGE>
-6-
4.11 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT
ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT.
IN WITNESS WHEREOF, and intending to be legally bound thereby, the
parties hereto have caused this Agreement to be duly executed and delivered by
their duly authorized officers as of the date and year first above written.
INTERMEDIA COMMUNICATIONS INC.
By:
-----------------------------
Name:
Title:
SHARED TECHNOLOGIES FAIRCHILD INC.
By:
-----------------------------
Name:
Title:
<PAGE>
Exhibit A
---------
Promissory Note
$21,918,000.00 New York, New York
_________ __, 1997
FOR VALUE RECEIVED, the undersigned, SHARED TECHNOLOGIES FAIRCHILD
INC., a Delaware corporation (the "Company"), hereby promises to pay to the
order of INTERMEDIA COMMUNICATIONS INC., a Delaware corporation (the "Lender"),
the principal sum of TWENTY ONE MILLION NINE HUNDRED EIGHTEEN THOUSAND DOLLARS
AND NO CENTS ($21,918,000.00), together with interest thereon from the date
hereof until the date such amounts are paid in accordance with the terms hereof
at the rate set forth below.
Payments of the principal amount hereof shall be made at the same time
and on the same terms as payments of the liquidation preference were required to
made under the terms of the Series J Special Preferred Stock, par value $.01 per
share (the "Special Preferred Stock") issued by the Company. Interest on this
Note shall accrue and be payable on the same terms as dividends were payable
under the terms of the Special Preferred Stock. In no event shall the interest
rate applicable at any time to this Note exceed the maximum rate permitted by
law.
The principal of and the interest on this Note shall be payable in
lawful money of the United States of America at the offices of the Lender, at
3625 Queen Palm Drive, Tampa, Florida, 33619, or at such other location as the
Lender may designate by written notice to the Company. Any payment which is
required to be made on a day which is a legal holiday for banking institutions
generally, at the place where payment is to be made, shall be made on the next
succeeding day which is not a legal holiday without additional interest and with
the same force and effect as if made on the date specified herein for such
payment.
To induce the Lender to make the loan evidenced by this Note, the Company
represents and warrants to the Lender that (i) the Company is duly incorporated
and validly existing in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority to make, deliver and
<PAGE>
-8-
perform this Note; (ii) the execution, delivery and performance by the Company
of this Note have been duly authorized by all necessary corporate action and
does not and will not violate or conflict with its charter or by-laws or any
law, rule, regulation or order binding on the Company or any agreement or
instrument to which the Company is a party or which may be binding on the
Company; (iii) this Note has been fully executed by an authorized officer of the
Company and constitutes a legal, valid, binding and enforceable obligation of
the Company; and (iv) no authorization, consent, approval, license, exemption of
or filing or registration with, any court or government or governmental agency
is or will be necessary to the valid execution, delivery or performance by the
Company of this Note.
The Company agrees to pay all costs and expenses including reasonable
attorneys' fees, incurred by Lender in investigating and enforcing any of
Lender's rights and remedies hereunder, whether or not suit is instituted.
The Company hereby waives presentment, notice of dishonor, protest and
notice of protest, and any or all other notices or demands (other than demand
for payment) in connection with the delivery, acceptance, performance, default,
endorsement or guarantee of this Note. The liability of the Company hereunder
shall be unconditional and shall not be in any manner affected by any indulgence
whatsoever granted or consented to by Lender, including, but not limited to any
extension of time, renewal, waiver or other modification. Any failure of Lender
to exercise any right hereunder shall not be construed as a waiver of the right
to exercise the same or any other right at any time and from time to time
thereafter. The Lender may accept late payments, or partial payments, even
though marked "payment in full" or containing words of similar import or other
conditions, without waiving any of its rights. No amendment, modification or
waiver of any provision of this Note or consent to any departure by the Company
therefrom shall be effective, irrespective of any course of dealing, unless the
same shall be in writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. This Note cannot be changed or terminated orally or by
estoppel or waiver or by any alleged oral modification regardless of any claimed
partial performance referable thereto.
Any notice from the Lender to the Company shall be deemed given when
delivered to the Company by hand or when deposited in the United States mail and
addressed to the Company
<PAGE>
-9-
at the last address of the Company appearing on the Lender's records.
This Note is non-negotiable and may not be pledged, sold, transferred or
assigned by the Lender.
This Note shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to instruments made and to be performed
wholly within that state. If any provision of this Note is held to be illegal
or unenforceable for any reason whatsoever, such illegality or unenforceability
shall not affect the validity of any other provision hereof.
EACH OF THE LENDER AND THE COMPANY AGREES THAT ANY ACTION, SUIT OR
PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE MAY BE INITIATED AND
PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN THE
STATE OF DELAWARE. EACH OF THE LENDER AND THE COMPANY CONSENTS TO AND SUBMITS TO
THE EXERCISE OF JURISDICTION OVER ITS PERSON BY ANY SUCH COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO THE LENDER AT ITS ADDRESS SET FORTH ABOVE, AND TO
THE COMPANY AT ITS ADDRESS SET FORTH BELOW OR TO ANY OTHER ADDRESS AS MAY APPEAR
IN THE LENDER'S RECORDS AS THE ADDRESS OF THE COMPANY.
IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS
NOTE, EACH OF THE LENDER AND THE COMPANY WAIVES (I) TRIAL BY JURY, (II) ANY
OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE AND (III) ANY CLAIM FOR
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
The Lender is authorized to fill in any blank spaces and to otherwise
complete this Note and correct any patent errors herein.
<PAGE>
-10-
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed by its proper corporate officers thereunto duly authorized.
SHARED TECHNOLOGIES FAIRCHILD INC.
By:
------------------------------
Name:
Title:
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
<PAGE>
EXHIBIT 4
EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of November 20, 1997 (this "Agreement"),
among INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("PURCHASER"), and
the individuals and entities whose names and addresses are set forth at the foot
of this Agreement (collectively, the "STOCKHOLDERS", and each, individually, a
"STOCKHOLDER"), it being understood that the Stockholders are executing this
Agreement in their capacity as stockholders of the Company (as defined below)
and not in their capacity as directors or officers of the Company.
WHEREAS, Purchaser and its wholly owned subsidiary, Moonlight Acquisition
Corp. (the "SUBSIDIARY"), propose to enter into an Agreement and Plan of Merger,
dated as of the date hereof (the "MERGER AGREEMENT"), with Shared Technologies
Fairchild, Inc., a Delaware corporation (the "COMPANY"), which Merger Agreement
provides, among other things, for the acquisition of the Company by Subsidiary
through a merger pursuant to which Subsidiary will merge with and into the
Company (the "MERGER") and all outstanding shares of Common Stock of the
Company, par value $.01 per share ("COMPANY COMMON STOCK") other than shares
held by Purchaser and Subsidiary will be converted into the right to receive
$15.00 per share (the "PER SHARE AMOUNT") and each outstanding share of
Preferred Stock of the Company, par value, $.01 per share ("COMPANY PREFERRED
STOCK") which is convertible into Common Stock and is not owned by Purchaser
will be converted into the right to receive the Per Share Amount multiplied by
the number of shares of Company Common Stock into which such share of Company
Preferred Stock is convertible which would have been received had such share of
Preferred Stock been converted immediately prior to the Merger (the "PREFERRED
STOCK PER SHARE AMOUNT"), in each case, net to the holder thereof in cash; and
WHEREAS, as of the date hereof, the Stockholders own (both beneficially and
of record) the number of shares of Company Common Stock, options to purchase
Company Common Stock ("Options") and Company Preferred Stock set forth opposite
their respective names at the foot of this Agreement; and
WHEREAS, as a condition to the willingness of Purchaser and the Subsidiary
to enter into the Merger Agreement, Purchaser and the Subsidiary have required
that the Stockholders agree, and in order to induce Purchaser and the Subsidiary
<PAGE>
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to enter into the Merger Agreement, the Stockholders have agreed, to enter into
this Agreement governing the voting and disposition of the shares of Company
Common Stock, Company Common Stock issuable upon exercise of Options and Company
Preferred Stock now owned and which may hereafter be acquired by any of the
Stockholders (the "SHARES").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
I. GRANT OF OPTION. Each Stockholder hereby grants to Purchaser an exclusive
and irrevocable option (each an "OPTION", and together the "OPTIONS") to
purchase from such Stockholder any and all Shares held by such Stockholder
(the "OPTION SHARES") at a price equal to the Per Share Amount, net to the
Seller in cash, for each Share which is a share of Company Common Stock and
a price equal to the Preferred Stock Per Share Amount, net to the Seller in
cash, for each Share which is a share of Company Preferred Stock.
Purchaser may assign to any subsidiary or affiliate of Purchaser (including
Subsidiary) the right to exercise the Options. Each Option may be
exercised individually from each Stockholder, in whole or in part, at any
time or from time to time, on or after the date hereof and prior to the
Termination Date (as defined below). No Stockholder shall, prior to the
termination of the Option, take, or refrain from taking, any action which
would have the effect of preventing or disabling such Stockholder from
delivering the Option Shares or otherwise performing its obligations under
this Agreement. In the event Purchaser wishes to exercise any Option, in
whole or in part, the following procedures shall be followed:
(a) Purchaser shall send a written notice to such Stockholder specifying
the number and kind of Option Shares Purchaser will purchase and the
place and date on or before the later of (x) ten business days from
the date such notice is mailed, (y) two days after the date of
expiration or termination of any applicable waiting period under Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR ACT") and (z) two days after the receipt of any necessary
approvals from the Federal Communications Commission (the "FCC") or
any applicable State regulatory authority for the closing of such
purchase. If
<PAGE>
-3-
such closing is to occur sooner than ten business days from the date
such notice is mailed, notice shall also be given at the time such
written notice is given by telephone or telecopy. To the extent such
notice provides for the purchase of Option Shares issuable upon
exercise of Options, the Stockholder hereby agrees to exercise the
option relating to such Option Shares sufficiently prior to such
closing to permit certificates for such Option Shares to be delivered
at such closing.
(b) At the closing of such purchase, (i) Purchaser (or any affiliate or
subsidiary of Purchaser) shall pay to such Stockholder the aggregate
price for the Option Shares so purchased by certified or cashier's
check or wire transfer of immediately available funds and (ii) such
Stockholder shall deliver to Purchaser (or, at the option of
Purchaser, an affiliate or subsidiary of Purchaser) a certificate or
certificates, duly endorsed in blank or accompanied by stock powers
duly executed in blank, representing the number of Option Shares
purchased.
(c) To the extent any Stockholder has sold any Option Shares to Purchaser
pursuant to that certain purchase agreement dated the date hereof or
pursuant to the Lender offer to be made pursuant to the Merger
Agreement prior to the exercise of the Option, such Option Shares
shall cease to be Option Shares subject to this Agreement.
II. VOTING OF SHARES. Each Stockholder, until the Termination Date, shall
cause the Shares owned by such Stockholder to be voted at any meeting
of the stockholders of the Company or in any consent in lieu of such a
meeting in favor of the consummation of the transactions contemplated
by the Merger Agreement, against any transactions inconsistent
therewith, and as otherwise reasonably requested by Purchaser in order
to carry out the purposes of the Merger Agreement. For the purposes
of this Agreement, "TERMINATION DATE" shall mean the earlier of (i)
two days after the termination of the Merger Agreement in accordance
with its terms, (ii) the Effective Time (as defined in the Merger
Agreement), and (iii) the termination of this Agreement by the mutual
written agreement of the parties hereto or pursuant to the terms of
Section 9 of this Agreement.
<PAGE>
-4-
III. IRREVOCABLE PROXY. Each Stockholder hereby irrevocably appoints
Purchaser, until the Termination Date, as its attorney and proxy
pursuant to the provisions of Section 212 of the General Corporation
Law of the State of Delaware, with full power of substitution, to vote
and take other actions (by written consent or otherwise) in favor of
the consummation of the transactions contemplated by the Merger
Agreement, against any transactions inconsistent therewith, and as
otherwise reasonably required in order to carry out the purposes of
the Merger Agreement, with respect to the Shares (and all other
securities issued to the Stockholder in respect of the Shares) which
each Stockholder is entitled to vote at any meeting of stockholders of
the Company (whether annual or special and whether or not an adjourned
or postponed meeting) or in respect of any consent in lieu of any such
meeting or otherwise. This proxy and power of attorney is irrevocable
and coupled with an interest in favor of Purchaser. Each Stockholder
hereby revokes all other proxies and powers of attorney with respect
to the Shares (and all other securities issued to the Stockholder in
respect of the Shares) which it may have heretofore appointed or
granted, and no subsequent proxy or power of attorney shall be given
or written consent executed (and if given or executed, shall not be
effective) by the Stockholder with respect thereto.
IV. NO DISPOSITION OR ENCUMBRANCE OF SHARES. Each Stockholder hereby
covenants and agrees that, until the expiration of the Options as
provided in Section 1 of this Agreement, except as contemplated by
this Agreement, the Stockholder shall not, and shall not offer or
agree to, sell, transfer, tender, assign, hypothecate or otherwise
dispose of, or create or permit to exist any security interest, lien,
claim, pledge, option, right of first refusal, agreement, limitation
on the Stockholder's voting rights, charge or other encumbrance of any
nature whatsoever with respect to the Shares, except for the security
interest arising from that certain Pledge Agreement dated as of March
13, 1996 between RHI Holdings, Inc. and Gadsby & Hannah (the "Pledge
Agent") and except for the security interest arising from that certain
Amended and Restated Pledge Agreement dated as of July 18, 1997
between RHI Holdings, Inc. and Citicorp USA, Inc. (the "Citicorp
Pledge Agreement").
V. NO SOLICITATION OF TRANSACTIONS. Each Stockholder shall not, directly
or indirectly, through any agent or
<PAGE>
-5-
representative or otherwise, (i) solicit, initiate or encourage the
submission of any proposal or offer from any individual, corporation,
partnership, limited partnership, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934 as amended), trust, association or
entity or government, political subdivision, agency or instrumentality
of a government (collectively, other than Purchaser and any affiliate
of Purchaser, a "PERSON") relating to (a) any acquisition or purchase
of all or any of the Shares or (b) any acquisition or purchase of all
or any portion of the assets of, or any equity interest in, the
Company or any subsidiary of the Company or any business combination
with the Company or any subsidiary of the Company or (ii) participate
in any negotiations regarding, or furnish to any Person any
information with respect to, or otherwise cooperate in any way with,
or assist or participate or facilitate or encourage, any effort or
attempt by any Person to do or seek any of the foregoing. Each
Stockholder immediately shall cease and cause to be terminated all
existing discussions or negotiations of the Stockholder and its agents
or other representatives with any Person conducted heretofore with
respect to any of the foregoing. Each Stockholder shall notify
Purchaser promptly if any such proposal or offer, or any inquiry or
contact with any Person with respect thereto, is made and shall, in
any such notice to Purchaser, indicate in reasonable detail the
identity of the Person making such proposal, offer, inquiry or contact
and the terms and conditions of such proposal, offer, inquiry or
contact. The provisions of this Section 3 shall not apply to or
restrict any action that may be taken by the Stockholder in its
capacity as an officer or director of the Company.
VI. LEGEND ON CERTIFICATES. The certificate(s) evidencing the Shares and
the agreements evidencing the Options shall be endorsed with a
restrictive legend substantially as follows:
The shares [options] evidenced by this certificate [agreement]
are subject to a stock option agreement dated as of November 20,
1997 between the registered holder hereof and Intermedia
Communications Inc., a copy of which is on file at the principal
office of the Company. The holder of this certificate
[agreement], by his acceptance hereof, agrees to be
<PAGE>
-6-
bound by all the terms of such agreement, as the same is in
effect from time to time.
VII. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each Stockholder
hereby severally represents and warrants with respect to itself and
its ownership of the Shares to Purchaser and the Subsidiary as
follows:
65535.VII1. AUTHORITY RELATIVE TO THIS AGREEMENT. The Stockholder
has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery
of this Agreement by the Stockholder and the consummation by the
Stockholder of the transactions contemplated hereby have been
duly and validly authorized by all necessary action on the part
of the Stockholder. This Agreement has been duly and validly
executed and delivered by the Stockholder and, assuming the due
authorization, execution and delivery by Purchaser, constitutes a
legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms,
except that such enforceability may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally.
65535.VII2. NO CONFLICT. The execution and delivery of this
Agreement by the Stockholder does not, and the performance of
this Agreement by the Stockholder will not, (i) require any
consent, approval, authorization or permit of, or filing with or
notification to (other than pursuant to the HSR Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and the Other Regulatory Approvals), any governmental or
regulatory authority, domestic or foreign, (ii) conflict with or
violate the Certificate of Incorporation or By-laws (or
comparable organizational documents) of the Stockholder, (iii)
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Stockholder or by which any
property or asset of the Stockholder is bound, or (iv) result in
any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any right of termination, amendment, acceleration
or cancellation of, or result in the creation of a lien or other
encumbrance of any nature whatsoever on any
<PAGE>
-7-
property or asset of the Stockholder pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the
Stockholder is a party or by which the Stockholder or any
property or asset of the Stockholder is bound except that a
consent pursuant to that certain Shareholders' Agreement dated
March 13, 1996 by and among Shared Technologies Inc., RHI
Holdings Inc. and Anthony D. Autorino (the "Shareholders
Agreement") may be required and have been obtained.
65535.VII3. TITLE TO THE SHARES. The Shares and Options owned by
the Stockholder (as set forth on the signature pages hereto) are
all the Shares and Options of the Company owned, either of record
or beneficially, by the Stockholder. The Stockholder owns all
such Shares free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements,
limitations on the Stockholder's voting rights, charges and other
encumbrances of any nature whatsoever (except for the liens
granted to the Pledge Agent and pursuant to the Citicorp Pledge
Agreement), and, except as provided in this Agreement, other than
the Shareholders Agreement, the Pledge Agreement and the Citicorp
Pledge Agreement, the Stockholder has not appointed or granted
any proxy, which appointment or grant is still effective, with
respect to the Shares. RHI hereby agrees to obtain a release
from their limitation on voting rights in the Citicorp Pledge
Agreement within 10 days after the date of this Agreement.
65535.VII4. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Stockholder.
VIII. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to the Stockholders as follows:
65535.VIII1. Purchaser has all necessary power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by
<PAGE>
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Purchaser and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action on the
part of Purchaser. This Agreement has been duly and validly
executed and delivered by Purchaser and, assuming the due
authorization, execution and delivery by the Stockholders,
constitutes a legal, valid and binding obligation of Purchaser,
enforceable against the Purchaser in accordance with its terms,
except that such enforceability may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally.
65535.VIII2. NO CONFLICT. The execution and delivery of this
Agreement by Purchaser does not, and the performance of this
Agreement by Purchaser will not, (i) require any consent,
approval, authorization or permit of, or filing with or
notification to (other than pursuant to the HSR Act, the Exchange
Act and the Other Regulatory Approvals), any governmental or
regulatory authority, domestic or foreign, (ii) conflict with or
violate the Certificate of Incorporation or By-laws of Purchaser,
(iii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Purchaser or by which any
property or asset of Purchaser is bound, or (iv) result in any
breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give
to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other
encumbrance of any nature whatsoever on any property or asset of
Purchaser pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Purchaser is a party or by
which Purchaser or any property or asset of Purchaser is bound.
65535.VIII3. BROKERS. Other than Bear, Stearns & Co., Inc., no
broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by
or on behalf of Purchaser.
IX. TERMINATION OF AGREEMENT. Purchaser reserves the right in its sole
discretion at any time hereafter to terminate this Agreement, the
Options and all irrevocable proxies granted to it hereunder.
<PAGE>
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X. MISCELLANEOUS.
65535.X1. EXPENSES. Except as otherwise provided herein or in the
Merger Agreement, all costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be
paid by the party incurring such expenses.
65535.X2. FURTHER ASSURANCES. Purchaser and the Stockholders will
execute and deliver all such further documents and instruments
and take all such further action as may be necessary in order to
consummate the transactions contemplated hereby.
65535.X3. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any of the provisions
of this Agreement were not performed in accordance with the terms
hereof and that the parties shall be entitled to specific
performance of the terms hereof (without establishing the
likelihood of irreparable injury or posting bond or other
security) in addition to any other remedy to which they may be
entitled at law or in equity.
65535.X4. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between Purchaser and the Stockholders with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, between Purchaser and the
Stockholders with respect to the subject matter hereof.
65535.X5. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise, except that Purchaser may assign
all or any of its rights and obligations hereunder to any
affiliate of Purchaser, provided that no such assignment shall
relieve Purchaser of its obligations hereunder if such assignee
does not perform such obligations.
65535.X6. OBLIGATIONS OF SUCCESSORS; PARTIES IN INTEREST. This
Agreement shall be binding upon, inure solely to the benefit of,
and be enforceable by, the successors and permitted assigns of
the parties hereto. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
<PAGE>
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65535.X7. AMENDMENT; WAIVER. This Agreement may not be amended or
changed except by an instrument in writing signed by the parties
hereto. Any party hereto may (i) extend the time for the
performance of any obligation or other act of the other party
hereto, (ii) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant
hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party or
parties to be bound thereby.
65535.X8. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
65535.X9. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given
(and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, telecopy, telegram or telex or by
registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a
notice given in accordance with this Section 7(i)):
if to Purchaser:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attention: Chief Financial Officer
Telecopy: (813) 829-2470
with a copy to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036
Attention: Ralph J. Sutcliffe, Esq.
Telecopy: (212) 997-3527
if to any Stockholder:
<PAGE>
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at the respective addresses of such Stockholder set forth at the foot
of this Agreement.
65535.X10. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed
in that State.
65535.X11. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and
shall not affect in any way the meaning or interpretation of this
Agreement.
65535.X12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall
constitute one and the same agreement.
65535.X13. The obligations of the Stockholders hereunder are
several and no Stockholder shall be liable for any breach by any
other Stockholder if his or its obligations hereunder.
65535.X14. WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY
RIGHT IT MIGHT HAVE TO A JURY TRIAL OF ANY DISPUTE ARISING IN
CONNECTION WITH THIS AGREEMENT.
XI. CONSENTS. Each of the Stockholders, the Company and RHI Holdings,
Inc. hereby consents to the execution and delivery of this Agreement
by all parties hereto and the grants of voting rights and Options
pursuant hereto and agrees that all Option Shares purchased by
Purchasers pursuant hereto shall be acquired free and clear of any
obligation under the Shareholders Agreement.
IN WITNESS WHEREOF, Purchaser has caused this Agreement to be
executed by its officers thereunto duly authorized and the Stockholders and
the Company have duly executed or caused this Agreement to be executed by
its officers thereunto duly authorized as of the date first written above.
PURCHASER:
<PAGE>
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INTERMEDIA COMMUNICATIONS INC.
By: ___________________________
Name: Robert M. Manning
Title: Senior Vice President and Chief Financial Officer
SHAREHOLDERS: NUMBER OF SHARES OWNED:
RHI HOLDINGS, INC. 6,225,000 COMPANY COMMON STOCK
250,000 COMPANY PREFERRED STOCK
By: ___________________________
Name:
Title:
Address: c/o The Fairchild Corporation
300 West Service
PO Box 10803
Chantilly, Virginia
Attention: Donald Miller, Esq.
Telecopy: (703) 478-5775
[Signature Pages Continue on Next Page]
<PAGE>
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Anthony D. Autorino 870,416 COMPANY COMMON STOCK OPTIONS TO
PURCHASE 296,667 SHARES OF COMPANY
COMMON STOCK
____________________________________
Address: c/o Shared Technologies Fairchild, Inc.
100 Great Meadow Road
Wethersfield, Connecticut 06109
Attention: Kenneth Doros
Telecopy: (860) 258-2455
Jeffrey J. Steiner UP TO 47,500 COMPANY COMMON STOCK
OPTIONS TO PURCHASE 116,667 SHARES OF
COMPANY COMMON STOCK
____________________________________
Address: c/o The Fairchild Corporation
300 West Service
PO Box 10803
Chantilly, Virginia
Attention: Donald Miller, Esq.
Telecopy: (703) 478-5775
SHARED TECHNOLOGIES FAIRCHILD INC.
By:_________________________________
<PAGE>
EXHIBIT 5
This Settlement Agreement (the "Agreement"), dated as of November 20, 1997,
by and among Intermedia Communications, Inc. ("ICI"), Moonlight Acquisition
Corp. ("Moonlight"), Tel-Save Holdings, Inc. ("Tel-Save"), Shared Technologies
Fairchild Inc., ("STF") and TSHCo, Inc. ("TSH") (collectively, the "Parties").
R E C I T A L S
WHEREAS, on July 16, 1997, Tel-Save, TSH and STF entered into an Agreement
and Plan of Merger (the "Tel-Save Merger Agreement") and certain other
agreements and arrangements;
WHEREAS, on November 17, 1997, ICI and Moonlight commenced a litigation
against Tel-Save, STF and certain other parties, styled INTERMEDIA
COMMUNICATIONS, INC. AND MOONLIGHT ACQUISITION CORP. V. SHARED TECHNOLOGIES
FAIRCHILD, INC., ET AL., C.A. No. 16038, Del. Ch. 1997 (the "Litigation") and
offered to acquire STF (the "ICI Proposal"); and
WHEREAS, the Parties desire to terminate the Litigation and settle all
disputes among them arising from, or relating in any way to, the Tel-Save Merger
Agreement (and all agreements and arrangements contemplated therein or relating
thereto) and the ICI Proposal, and to enter into certain other arrangements
among them, including, but not limited to, an Agreement and Plan of Merger,
dated the date hereof, by and among STF, ICI and Moonlight (the "ICI Merger
Agreement");
NOW, THEREFORE, for good and valuable consideration, including the mutual
promises, releases, representations, covenants and obligations contained herein
or contemplated hereby, the sufficiency of which is hereby acknowledged, the
Parties hereby agree as follows:
1. SETTLEMENT OF DISPUTE.
1.1 Promptly after the execution and delivery hereof, each of the Parties
hereto shall cause their respective attorneys to execute a stipulation of
dismissal, in the form annexed hereto as Exhibit A, dismissing the Litigation
with prejudice. Immediately upon execution of said stipulation of dismissal,
ICI and Moonlight shall cause their attorneys to file said stipulation of
dismissal with the Court of Chancery of the State of Delaware, in and for New
Castle County. Each party to the Litigation shall take all steps necessary to
effectuate the dismissal with prejudice of the Litigation, and shall pay its own
expenses, including attorneys' fees, incident to the Litigation and to the
preparation and performance of this Agreement.
<PAGE>
1.2 (a) Subject to the provisions of paragraph 1.2(c) hereof, each of the
Parties, for itself and its respective officers, directors, affiliates, parent
and subsidiary corporations, partners, agents, attorneys, successors, assigns,
and anyone claiming any right through it or under it, mutually, irrevocably and
unconditionally releases and forever discharges each of the other Parties and
their present and former officers, directors, affiliates, parent and subsidiary
corporations, partners, agents, representatives, employees, controlling persons,
and their respective successors and assigns (collectively, the "Releasees"),
from any and all claims, actions, causes of action, suits, debts, dues, rights,
offsets, demands, sums of money, accounts, damages, judgments, reckonings,
bonds, bonuses, charges, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, extents, executions,
and complaints whatsoever, in law, equity or otherwise, under federal law, state
law or otherwise, whether known or unknown, which such Party and/or its
officers, directors, affiliates, parent and subsidiary corporations, partners,
agents, attorneys, successors, assigns, and anyone claiming any right through it
or under it, ever had, now has, or hereafter may have, for, upon, or by any
matter, cause or thing whatsoever, from the beginning of the world to the day of
this Agreement, based on, relating or with respect to, or arising out of:
(i) the facts, underlying claims, or affirmative defenses that
were asserted, or could have been asserted, in the Litigation;
(ii) the filing or prosecution of the Litigation, or any process or
proceedings therein;
(iii) the Tel-Save Merger Agreement, the STF Voting Agreements (as
defined below), the Option (as defined below), the ICI Proposal or the LD
Agreement, as originally executed and delivered (as defined below), or the
negotiation or execution of any thereof;
(iv) the negotiation or execution of this Agreement, the ICI Merger
Agreement, the Amended LD Agreement (as defined below), the Option
Agreement, of even date herewith, among ICI and certain stockholders of STF
(the "Option Agreement"), the Stock Purchase Agreement to be entered,
between ICI and RHI (the "Stock Purchase Agreement"), the Loan Agreement to
be entered between ICI and STF (the "Loan Agreement"), or any other
agreement contemplated by such agreements to be executed on or after the
date hereof; or
(v) any acts, facts, transactions, occurrences, conduct,
statements or representations on the part of the
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<PAGE>
Parties or their respective present or former officers, directors,
affiliates, parent and subsidiary corporations, partners, agents,
representatives, employees or controlling persons with regard to, or
directly or indirectly related to, the merger or sale of, or failure to
merge or sell, or any offer or proposal to merge or sell, or failure to
include any particular term in any agreement to merge or sell, STF, or any
statement or omission in the Joint Proxy Statement of Tel-Save and STF of
October 30, 1997.
(b) Subject to the provisions of paragraph 1.2(c) hereof, each of
the Parties, for itself and its respective officers, directors, affiliates,
parent and subsidiary corporations, partners, agents, attorneys, successors,
assigns, and anyone claiming any right through it or under it, covenants not to
sue or bring any claim or action, of any nature whatsoever, against the
Releasees, or any one or more of them, in any forum, based on, relating to or
arising out of:
(i) the facts, underlying claims, or affirmative defenses that
were asserted, or could have been asserted, in the Litigation;
(ii) the filing or prosecution of the Litigation, or any
proceedings therein;
(iii) the Tel-Save Merger Agreement, the STF Voting Agreements (as
defined below), the Option (as defined below), the ICI Proposal or the LD
Agreement, as originally executed and delivered (as defined below);
(iv) the negotiation or execution of this Agreement, the ICI Merger
Agreement, the Amended LD Agreement (as defined below), the Option
Agreement, the Stock Purchase Agreement, the Loan Agreement, or any other
agreement contemplated by such agreements to be executed on or after the
date hereof; or
(v) any acts, facts, transactions, occurrences, conduct,
statements or representations on the part of the Parties or their
respective present or former officers, directors, affiliates, parent and
subsidiary corporations, partners, agents, representatives, employees or
controlling persons with regard to, or directly or indirectly related to,
the merger or sale of, or failure to merge or sell, or any offer or
proposal to merge or sell, or failure to include any particular term in any
agreement to merge or sell, STF, or any statement or omission in the Joint
Proxy Statement of Tel-Save and STF of October 30, 1997.
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<PAGE>
(c) Nothing in paragraphs 1.2(a) or 1.2(b) hereof shall alter,
modify, release or apply to:
(i) the rights, obligations, covenants, representations or
warranties of the Parties under or in this Agreement;
(ii) the rights, obligations, covenants, representations or
warranties of STF, ICI and Moonlight under or in the ICI Merger Agreement,
the Option Agreement, the Stock Purchase Agreement, the Loan Agreement, or
any other agreement contemplated by such agreements to be executed on or
after the date hereof;
(iii) the rights, obligations, consents, representations or
warranties of STF and Tel-Save, Inc. under or in the Amended LD Agreement
(as defined below); or
(iv) the rights, obligations, covenants, representations, or
warranties of STF and ICI under or in the Notes (as defined below).
(d) Simultaneously with the execution of this Agreement, ICI,
Moonlight, STF, RHI Holdings, Inc. ("RHI") and The Fairchild Corporation ("TFC")
are executing and delivering a release in favor of Daniel Borislow ("Borislow"),
and Borislow is executing and delivering a release in favor of ICI, Moonlight,
STF, RHI, and TFC, in each case in the forms attached as Exhibit B and Exhibit
C, respectively. Simultaneously with the execution of this Agreement, ICI,
Moonlight, Tel-Save and TSH are executing and delivering a release in favor of
RHI and TFC, and RHI and TFC are executing and delivering a release in favor of
ICI, Moonlight, Tel-Save and TSH, in each case in the forms attached as Exhibit
D and Exhibit E, respectively.
1.3 Neither this Agreement nor any of the terms hereof nor any
negotiations, proceedings or agreements in connection herewith shall constitute,
or be construed as or be deemed to be evidence of, an admission on the part of
any Party of any liability or wrongdoing whatsoever, or of the truth or untruth
of any of the claims made by any party in the Litigation, or of the merit or any
lack of merit of any of the defenses thereto; nor shall this Agreement, or any
of the terms hereof, or any negotiations or proceedings in connection herewith,
be offered or received in evidence, or used in any proceeding against any of the
Parties, or used in any proceeding for any purpose whatsoever, except with
respect to the effectuation and enforcement of this Agreement, the ICI Merger
Agreement, the Option Agreement, the Stock Purchase Agreement, the Loan
Agreement, the Amended LD Agreement (as defined below), the Notes (as defined
below), any other agreement contemplated by such agreement to be executed on or
after the date
-4-
<PAGE>
hereof, the discontinuance with prejudice of the Litigation, or the releases
referred to in paragraph 1.2(d) hereof.
2. TERMINATION OF THE TEL-SAVE MERGER AGREEMENT AND CERTAIN
RELATED AGREEMENTS. (a) (i) Tel-Save, TSH and STF hereby terminate the Tel-Save
Merger Agreement, (ii) Tel-Save and STF hereby terminate the Option Agreement,
dated as of July 16, 1997 (the "Option"), between Tel-Save and STF, (iii) the
agreements, dated as of July 16, 1997 (the "STF Voting Agreements"), by Tel-Save
with each of RHI Holdings, Inc., J.J. Cramer & Co., Mentor Partners, L.P. and
Anthony D. Autorino, and the voting agreement, dated as of July 16, 1997,
between STF and Borislow (the "Borislow Voting Agreement") by their own terms
shall be terminated upon termination of the Tel-Save Merger Agreement, and
Tel-Save hereby agrees and confirms that it shall have no rights under the STF
Voting Agreements, and STF hereby agrees and confirms that it shall have no
rights under the Borislow Voting Agreement, and (iv) except for the Long
Distance Agreement, dated as of November 13, 1997 (the "LD Agreement"), between
Tel-Save, Inc. and STF, as amended as described herein, and except for this
Agreement (and the releases and other instruments contemplated herein), each of
Tel-Save, TSH and STF hereby terminates all other agreements and arrangements of
any kind arising from or relating to the Tel-Save Merger Agreement and the
transactions contemplated thereby (the Tel-Save Merger Agreement, the Option,
the STF Voting Agreements, the Borislow Voting Agreement and such other
agreements, collectively, the "Terminated Agreements")). Except as expressly
provided herein, the termination of the Terminated Agreements shall be without
liability to any party to any such Terminated Agreement and shall release each
party thereto from any and all further obligations thereunder, including, but
not limited to, any obligation to pay any termination fees described in the
Tel-Save Merger Agreement.
(b) In consideration for the termination of the Tel-Save Merger
Agreement, the Option and the STF Voting Agreements, STF hereby pays to Tel-Save
$26.250 million by certified check drawn on a bank reasonably acceptable to
Tel-Save or wire transfer of immediately available funds.
3. ADDITIONAL TRANSACTIONS. (a) ICI hereby transfers to Tel-Save
$211 million by certified check drawn on a bank reasonably acceptable to
Tel-Save or wire transfer of immediately available funds.
(b) Tel-Save hereby sells, assigns and transfers to ICI all of its
right, title and interest in and to all of the $163,637,000 face amount of the
12 1/4% Senior Subordinated Discount Notes Due 2006 of STF (the "Notes") held by
it on the date hereof. Tel-Save represents and warrants to ICI that: (i)
Tel-Save owns the Notes, free and clear of all liens,
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<PAGE>
encumbrances, restrictions and defects of title of any kind ("Liens") imposed or
incurred by it and, to Tel-Save's knowledge, Tel-Save owns the Notes free and
clear of all Liens whatsoever; (ii) Tel-Save has the right to transfer such
Notes to ICI without (x) violating any contract, agreement or arrangement to
which it is a party or by which it or its assets may be bound, and (y) the
imposition of any Lien on the Notes arising from such transfer; and (iii)
Tel-Save paid approximately $167 million to acquire the Notes. From time to
time after the date hereof, at the request of ICI, and without any additional
consideration therefor, Tel-Save shall execute and deliver to ICI such
instruments and documents of conveyance and transfer, and do and cause to be
done such acts or things, as ICI may reasonably request in order to more
effectively transfer and assign to ICI, or perfect or record, ICI's interest in
or title to, the Notes.
(c) Simultaneously with the execution of this Agreement, Tel-Save,
Inc. and STF are amending the LD Agreement by executing and delivering an
amendment in the form attached as Exhibit F (the LD Agreement as so amended, the
"Amended LD Agreement").
4. STANDSTILL. For a period from the date hereof to the earlier
of the first anniversary of the date hereof and the date the ICI Merger
Agreement shall have been terminated, none of Tel-Save nor any of its affiliates
(as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) will (and none will assist or encourage others to),
directly or indirectly:
(i) acquire or agree, offer, seek or propose to acquire (or
request permission to do so), ownership (including, but not limited to,
beneficial ownership as defined in Rule 13d-3 under the Exchange Act) of
all or substantially all of the assets or businesses of STF, or any
securities issued by STF, or any rights or options to acquire such
ownership (including from a third party), or
(ii) seek or propose to acquire control of the management or
policies of STF (or request permission to do so), or
(iii) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing.
5. REPRESENTATIONS AND WARRANTIES. Each of the Parties hereby
represents and warrants to each other Party hereto as follows:
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<PAGE>
(a) It has full corporate power and authority to execute and
deliver this Agreement and any agreements and documents contemplated hereunder
(the "Related Agreements") to which it is a party and to perform its obligations
hereunder and thereunder. The execution, delivery and performance by it of this
Agreement and the Related Agreements to which it is a party have been duly
authorized by all necessary corporate action on its part, and this Agreement and
each of the Related Agreements to which it is a party constitutes a valid and
binding obligation of it, enforceable against it in accordance with its terms.
(b) Neither the execution and delivery of this Agreement and the
Related Agreements to which it is a party nor the consummation of the
transactions contemplated hereby or thereby constitutes a violation or breach of
the certificate of incorporation or by-laws (or other governing instrument) of
it or any provision of any contract, license or franchise or other instrument to
which it is a party or by which it may be bound.
6. NOTICES. All notices, requests, demands, consents and other
communications required or permitted under this Agreement (collectively,
"Notice") shall be effective only if given in writing and shall be considered to
have been duly given when (i) delivered by hand, (ii) sent by telecopier (with
receipt confirmed), provided that a copy is mailed (on the same date) by
certified or registered mail, return receipt requested, postage prepaid, or
(iii) received by the addressee, if sent by Express Mail, Federal Express or
other reputable express delivery service (receipt requested), or by first class
certified or registered mail, return receipt requested, postage prepaid. Notice
shall be sent in each case to the appropriate addresses or telecopier numbers
set forth below (or to such other addresses and telecopier numbers as a Party
may from time to time designate as to itself by notice similarly given to the
other Parties in accordance herewith, which shall not be deemed given until
received by the addressee). Notice shall be given:
(i) to ICI and Moonlight at:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attn: Chief Financial Officer
Telecopier: (813) 829-2470
copy to: Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036-7798
Attn: Ralph J. Sutcliffe, Esq.
Telecopier: (212) 479-6275
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<PAGE>
(ii) to STF at:
Shared Technologies, Inc.
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Attn: Kenneth M. Dorros, Esq.
Telecopier: (860) 258-2455
copy to: Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: James J. Clark, Esq.
Telecopier: (212) 269-5420
and
The Fairchild Corporation
300 West Service Road
P.O. Box 10803
Chantilly, VA 22021
Attn: Donald E. Miller, Esq.
Telecopier: (703) 478-5775
(iii) to Tel-Save and TSH at:
6805 Route 202
New Hope, Pennsylvania 18938
Attn: Chief Executive Officer
Telecopier: (215) 862-1083
copy to: Arnold & Porter
399 Park Avenue
New York, New York 10022
Attn: Jonathan C. Stapleton, Esq.
Telecopier: (212) 715-1399
and
Aloysius T. Lawn, IV, Esq.
General Counsel
Tel-Save Holdings, Inc.
6805 Route 202
New Hope, Pennsylvania 18938
Telecopier: (215) 862-1083
7. FURTHER ASSURANCES. Each of the Parties shall, at any time and
from time to time after the date hereof, fairly and in good faith, do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney, receipts, acknowledgments, acceptances and assurances as may
be reasonably required to procure for each of
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<PAGE>
the Parties and their respective successors and assigns, the consideration to be
delivered to them as provided for herein or otherwise to carry out the intent
and purposes of this Agreement or to consummate any of the transactions
contemplated hereby.
8. SEVERABILITY. Any provision of this Agreement that 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9. MISCELLANEOUS PROVISIONS.
9.1 This Agreement may not be amended, modified, discharged or
terminated, nor may the rights of any Party hereunder be waived, except by a
written document that is executed by each Party hereto. No waiver of any
provision of this Agreement shall be deemed to constitute a waiver of any other
provision hereof, nor shall any waiver constitute a continuing waiver.
9.2. This Agreement may be executed in any number of counterparts,
each of which when executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument.
9.3 The Exhibits referred to herein are a part of this Agreement for
all purposes. Terms used in this Agreement shall have the same meanings when
used in such Exhibits.
9.4 Captions and headings are employed herein for convenience of
reference only and shall not affect the construction or interpretation of any
provision hereof.
9.5 This Agreement is made under and shall be governed by and
construed in accordance with the substantive laws of the State of New York
applicable to contracts made and to be performed entirely within that state.
9.6 This Agreement and the agreements and instruments contemplated
herein constitute the entire agreement between Tel-Save and TSH, on the one
hand, and the other Parties hereto, on the other hand, with respect to the
subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.
INTERMEDIA COMMUNICATIONS INC.
By: _________________________
MOONLIGHT ACQUISITION CORP.
By: _________________________
TEL-SAVE HOLDINGS, INC.
By: _________________________
SHARED TECHNOLOGIES FAIRCHILD INC.
By: _________________________
TSHCO. INC.
By: _________________________
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<PAGE>
Exhibit 6
September 18, 1996
Personal and Confidential
- -------------------------
Mr. Anthony Autorino
Chief Executive Officer
Shared Technologies Inc.
100 Great Meadow Road
Wethersfield, CT 06109
Dear Mr. Autorino:
The undersigned (the "Company") and you ("ST") are about to engage in
exploratory discussions regarding a possible acquisition by the Company of ST or
a similar transaction (any of the foregoing, a "Transaction"). The Company and
ST have each requested the right to review various non-public information
regarding the other (any such information, written or oral, regarding the
Company, including any of its direct or indirect subsidiaries, "Company
Evaluation Material" and any such information, written or oral, regarding ST,
including any of its direct or indirect subsidiaries, "ST Evaluation Material").
The Company hereby undertakes with respect to the ST Evaluation Material, and ST
hereby undertakes with respect to the Company Evaluation Material, and each of
the Company and ST otherwise agree as follows:
1. The Evaluation Material will be used solely for the purpose of
evaluating a possible Transaction, and until two (2) years from
the date hereof, such Evaluation Material will be kept strictly
confidential by the Company or ST, as the case may be, and their
respective affiliates, directors, officers, employees, advisors
(including Bear, Stearns & Co. Inc., who has been retained by the
Company to act on its behalf), agents or controlling persons
(such affiliates and other persons being herein referred to
collectively as "Representatives", except that the Evaluation
Material or portions thereof may be disclosed to Representatives
who need to know such information for the purpose of evalu-
<PAGE>
-2-
ating a possible Transaction (it being understood that prior to
such disclosure Representatives will be informed of the
confidential nature of the Evaluation Material and shall be agree
to be bound by this Agreement). The Company and ST agree to be
responsible for any breach of this Agreement by their respective
Representatives.
2. The term "Evaluation Material" does not include any information
which (i) at the time of disclosure or thereafter is generally
known by the public (other than as a result of its disclosure by
the Company or ST or their respective Representatives) or (ii)
was or becomes available to the Company or ST, as the case may
be, on a nonconfidential basis from a person not to the knowledge
of the Company or ST, as the case may be, otherwise bound by a
confidentiality agreement with the other and who is not, to the
knowledge of the Company or ST, as the case may be, otherwise
prohibited from transmitting the information to the Company or
ST, as the case may be, or (iii) is independently developed by
the Company or ST, as the case may be, or their respective
Representatives. As used in this Agreement, the term "person"
shall be broadly interpreted to include, without limitation, any
corporation, company, joint venture, partnership or individual
and the term "affiliate" shall have the meaning set forth in Rule
144 issued under the Securities Act of 1933.
3. In the event the Company, ST or their respective Representatives
are required by applicable law or regulation or by legal process
to disclose any Evaluation Material each agrees to (i)
immediately notify the other of the existence, terms and
circumstances surrounding such a request, and (ii) consult with
the other on the advisability of taking legally available steps
to resist or narrow such request.
4. Prior to the earlier of two (2) years from the date hereof or the
completion of a Transaction, unless otherwise required by law in
the opinion of outside counsel, neither the Company nor ST will,
without prior written consent of the
<PAGE>
-3-
other, disclose to any person either the fact that discussions or
negotiations are taking place concerning a possible Transaction,
or any of the terms, conditions or other facts with respect to
any such possible Transaction, including the status thereof and
the fact that the Evaluation Material has been made available to
the Company or ST.
5. The Company and ST each hereby acknowledges that it is aware, and
that it will advise its Representatives who receive the
Evaluation Material, that the United States securities laws
prohibit any person who has material, non-public information
concerning the matters which are the subject of this Agreement
from purchasing or selling securities of the other (and options,
warrants and rights relating thereto) or from communicating such
information to any other person under circumstances in which it
is reasonably foreseeable that such person including, without
limitation, any of its Representatives, is likely to purchase or
sell such securities.
6. Neither the Company nor any of its Representatives, on the one
hand, nor ST or any of its Representatives, on the other hand, is
making any representation or warranty hereunder, express or
implied, as to the accuracy or completeness of the Company
Evaluation Material or ST Evaluation Material, respectively, or
any other information provided pursuant hereto. Neither party,
nor any of their respective affiliates, Representatives,
officers, directors, employees, agents or controlling persons
(within the meaning of the 1934 Act) shall have any liability
hereunder to the other or any other person (including, without
limitation, any of its Representatives) resulting from use of the
Evaluation Material.
7. The Company and ST agree that unless and until a definitive
agreement with respect to any Transaction has been executed and
delivered, neither party will be under any legal obligation of
any kind whatsoever with respect to such
<PAGE>
-4-
a Transaction by virtue of (i) this Agreement or (ii) any written
or oral expression with respect to such a Transaction except, in
the case of this Agreement, for the matters specifically agreed
to herein.
8. Neither party has granted the other any license, copyright, or
similar right with respect to any of the Evaluation Material or
any other information provided pursuant hereto.
9. Upon determining not to proceed with a Transaction, the Company
or ST, as the case may be, will promptly advise the other of that
determination in writing. In that event or at any time requested
by either the Company or ST, all Evaluation Material, including
all copies, reproductions, summaries, extracts thereof or based
thereon, previously provided to the other shall be returned or be
certified in writing to have been destroyed.
10. The Company and ST shall be entitled to equitable relief by way
of injunction for any breach or threatened breach of any of the
provisions of this Agreement by the other.
11. The validity and interpretation of this Agreement shall be
governed by, and construed and enforced in accordance with, the
laws of the State of New York applicable to agreements made and
to be fully performed therein (excluding the conflicts of laws
rules). The Company and ST irrevocably submit to the
jurisdiction of any court of the State of New York or the United
States District Court of the Southern District of the State of
New York for the purpose of any suit, action or other proceeding
arising out of this Agreement, or any of the agreements or
transactions contemplated hereby, which is brought by or against
it and (i) hereby irrevocably agree that all claims in respect of
any such suit, action or proceeding may be heard and determined
in any such court, (ii) to the extent that either the Company or
ST has acquired, or hereafter may acquire, any immunity from
jurisdiction of any such court or from any legal process therein,
it hereby waives to the fullest extent permitted by law, such
immunity and (iii) agrees not to commence any action, suit or
pro-
<PAGE>
-5-
ceeding relating to this Agreement or any Transaction except in
such court. Each of the Company and ST hereby waives, and agrees
not to assert in any such suit, action or proceeding, in each
case, to the fullest extent permitted by applicable law, any
claim that (a) it is not personally subject to the jurisdiction
of any such court, (b) it is immune from any legal process
(whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with
respect to it or its property or (c) any such suit, action or
proceeding is brought in an inconvenient forum.
12. The benefits of this Agreement shall inure to the respective
successors and assigns of the parties and the obligations and
liabilities assumed in this Agreement by the parties hereto shall
be binding upon their respective successors and assigns.
13. If it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) that any term or
provision hereof is invalid or unenforceable, (i) the remaining
terms and provisions hereof shall be unimpaired and shall remain
in full force and effect and (ii) the invalid or unenforceable
provision or term shall be replaced by a term or provision that
is enforceable and that comes closest to expressing the intention
of such invalid or unenforceable term or provision.
14. This Agreement embodies the entire agreement and understanding of
the parties hereto and supersedes any and all prior agreements,
arrangements and understandings relating to the matters provided
for herein. No alteration, waiver, amendment, change or
supplement hereto shall be binding or effective unless the same
is set forth in writing signed by a duly authorized
Representative of each party.
15. For the convenience of the parties, any number of counterparts of
this Agreement may be executed by the parties hereto. Each such
counterpart shall be, and shall be deemed to be, an
<PAGE>
-6-
original instrument, but all such counterparts taken together
shall constitute one and the same Agreement.
<PAGE>
-7-
This Agreement is being delivered to you in duplicate. Kindly execute
and return one copy of this letter which will constitute our Agreement with
respect to the subject matter of this letter.
Very truly yours,
INTERMEDIA COMMUNICATIONS INC.
By:
---------------------------------
David C. Ruberg, Chairman and Chief
Executive Officer
Confirmed and agreed to
this ____ day of September, 1996
SHARED TECHNOLOGIES INC.
By:
----------------------------
Anthony Autorino,
Chief Executive Officer
<PAGE>
This Agreement is being delivered to you in duplicate. Kindly execute
and return one copy of this letter which will constitute our Agreement with
respect to the subject matter of this letter.
Very truly yours,
INTERMEDIA COMMUNICATIONS INC.
By:
---------------------------------
David C. Ruberg, Chairman and Chief
Executive Officer
Confirmed and agreed to
this ____ day of November, 1996
SHARED TECHNOLOGIES INC.
By:
----------------------------
Anthony Autorino,
Chief Executive Officer
