SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) :
December 27, 1996
SHARED TECHNOLOGIES CELLULAR, INC.
DELAWARE 1-13732 06-386411
(State or other (Commission (I.R.S.
jurisdiction of File Number) Employer
incorporation) Identification
No.)
100 Great Meadow Road, Suite 102
Wethersfield, CT 06109
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code
(860)-258-2500)
Total number of sequentially numbered pages in this
filing, including exhibits hereto: 45
Item 5: Other Events
Shared Technologies Cellular, Inc. ("STC" or the "Company") entered into an
agreement dated as of December 27, 1996 (the "Purchase Agreement") with RHI
Holdings, Inc. ("RHI") pursuant to which STC agreed to sell up to 1,500,000
common stock units ("Units") for an aggregate purchase price of $4,500,000.
Each Unit consists of one share of the Company's common stock, $.01 par
value, and one warrant to purchase an additional share of such common stock.
The Units were priced at $3.00 each, and the warrants have and exercise price of
of $3.00 per share.
The Purchase Agreement provides for several stages of financing. The
Company closed on the first stage of financing on December 30, 1996,
selling 250,000 Units and receiving proceeds of $730,000, net of certain
transactional expenses. The Purchase Agreement further provides for up to
three additional stages of financing, pursuant to which RHI may purchase an
additional 250,000 Units on or prior to January 31, 1997, an additional
166,667 Units on or prior to February 28, 1997 and an additional 833,333 Units
on or prior to May 29, 1997, provided, however, that STC may, at its sole
discretion, terminate such right of RHI at any time in whole or in part.
STC has the option to repurchase (the "Repurchase Option"), at any time on
or prior to May 29, 1997 all of the Units purchased by RHI and held by RHI
at such time at the prices set forth in Section 2 of the Purchase Agreement.
If STC does not exercise the Repurchase Option, RHI will have the option
(the "Special Option") to purchase such number of additional Units from
Issuer as would result in RHI having purchased an aggregate of 666,667 Units
under the Purchase Agreement.
The Purchase Agreement provides that STC shall use its best efforts to cause
the Board of Directors of STC to include at least one member designated by
RHI so long as RHI owns capital stock (or rights to purchase capital stock)
comprising 5% or more of the voting power in STC and at least two members
designated by RHI so long as RHI owns capital stock (or rights to purchase
capital stock) comprising 10% or more of the voting power in STC.
The Company intends to use proceeds received from the financing for general
working capital.
In addition, pursuant to an option agreement dated as of December 27, 1996
(the "Option Agreement") between RHI and Shared Technologies Fairchild Inc.,
a Delaware corporation ("STFI"), RHI purchased from STFI an option
(the "Series B Option") to purchase from STFI 250,000 shares of Series B
Convertible Preferred Stock, $.01 par value (the "Series B Preferred Shares")
of STC and related rights of STFI under a certain stock purchase agreement
dated as of August 19, 1996 (the "STFI Stock Purchase Agreement"). The Series
B Option expires June 4, 1997 unless RHI exercises the Special Option. Each
share of Series B Preferred stock is convertible into a minimum of 2.5
shares of STC common stock and a maximum of 3.33 shares of STC common stock
(the conversion price is based on the market price of such common stock).
Upon conversion of the Series B Preferred Shares, the holder shall receive
from STC a warrant entitling the holder to purchase such number of shares of
STC common stock equal to the number of shares issued to such holder upon
such conversion. The STFI Stock Purchase Agreement provides that STFI shall
be entitled to designate at least one member to STC's Board of Directors so
long as STFI owns capital stock (or rights to purchase capital stock)
comprising more than 5% of the voting power in STC.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No. Description Page No.
4.1 Purchase Agreement dated
December 27, 1996 5
4.2 Common Stock Warrant 25
4.3 Option Agreement 40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Shared Technologies Cellular, Inc.
By: _/s/ Vincent DiVincenzo
Vincent DiVincenzo
Chief Financial Officer
Date: January 23, 1997
PURCHASE AGREEMENT
dated as of December 27, 1996
between
SHARED TECHNOLOGIES CELLULAR, INC.
and
RHI HOLDINGS, INC.
TABLE OF CONTENTS
Page
1. Purchase and Sale.......................................... 1
1.1 Purchase................................................... 1
1.2 Notice of Purchase.................................... 2
1.3 The Closings.......................................... 2
2. Company's Repurchase Option.................................... 3
3. Representations and Warranties of the Company.................. 3
3.1 Organization and Corporate Power...................... 3
3.2 Authorization......................................... 4
3.3 Capitalization........................................ 4
3.4 Stockholder Agreements................................ 5
3.5 Subsidiaries.......................................... 5
3.6 SEC Filings........................................... 5
3.7 Financial Statements.................................. 5
3.8 Absence of Undisclosed Liabilities.................... 6
3.9 Certain Developments.................................. 6
3.10 Title to Properties................................... 6
3.11 Contracts and Commitments............................. 7
3.12 Proprietary Rights; Employee Restrictions............. 7
3.13 Effect of Transactions................................ 8
3.14 Litigation............................................ 8
3.15 Securities Laws....................................... 8
3.16 Business.............................................. 8
3.17 Books and Records..................................... 8
3.18 Environmental Compliance.............................. 9
3.19 Information Supplied to RHI........................... 9
3.20 Brokers............................................... 9
3.21 Employee Benefit Plans................................ 10
3.22 Employees............................................. 10
4. Representations and Warranties of RHI.......................... 10
4.1 Investment............................................ 10
4.2 Authority............................................. 11
4.3 Experience............................................ 11
4.4 Accredited Investor................................... 11
5. Conditions Precedent to Closing................................ 11
6. Certain Covenants of the Company............................... 12
6.1 Financial Statements.................................. 12
6.2 Payment of Taxes, Compliance with Laws, etc........... 12
6.3 Insurance............................................. 13
6.4 Maintenance of Properties and Licenses................ 13
6.5 Affiliated Transactions............................... 13
6.6 Inspection Rights..................................... 13
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Page
6.7 Litigation............................................ 14
6.8 Merger, Consolidations, Disposal of Ownership of
Subsidiaries, etc..................................... 14
6.9 RHI Designates to Board of Directors.................. 14
7. Miscellaneous.................................................. 14
7.1 Transfer of Rights.................................... 14
7.2 Rules 144 and 144A.................................... 15
7.3 Delays or Omissions................................... 15
7.4 Adjustments........................................... 15
7.5 Successors and Assigns................................ 16
7.6 Survival of Representations and Warranties............ 16
7.7 Expenses.............................................. 16
7.8 Notices............................................... 16
7.9 No Conditions to Effectiveness; Entire Agreement...... 17
7.10 Amendments and Waivers................................ 17
7.11 Counterparts.......................................... 17
7.12 Governing Law......................................... 18
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PURCHASE AGREEMENT
This Agreement dated as of December 27, 1996 is by and among SHARED
TECHNOLOGIES CELLULAR, INC., a Delaware corporation, (the "Company"), and RHI
HOLDINGS, INC., a Delaware corporation ("RHI").
WHEREAS, the Company wishes to sell to RHI, and RHI wishes to purchase
from the Company, units of the Company, each unit consisting of (i) one share of
common stock, par value $0.01 per share (the "Common Stock"), of the Company and
(ii) one detachable warrant (each, a "Warrant," and collectively, the
"Warrants") to purchase, initially, one share of Common Stock at, initially, a
price of $3.00 per share (such unit, "Unit").
WHEREAS, concurrently herewith, Shared Technologies Fairchild Inc., a
Delaware corporation ("STFI"), and RHI are entering into that certain Option
Agreement dated as of the date hereof (the "Option Agreement").
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and intending to be legally bound by the terms and
conditions of this Agreement, the parties hereto hereby agree as follows:
1. Purchase and Sale
1.1 Purchase.
(a) Subject to the conditions set forth herein, RHI hereby agrees to
purchase from the Company, and the Company hereby agrees to sell to RHI, on (the
"Initial Commitment") or prior to December 31, 1996, 250,000 Units at a purchase
price of $3.00 per Unit (the "Purchase Price"). The purchase and sale of Units
pursuant to this paragraph is herein referred to as the "Initial Closing."
(b) In addition, subject to the conditions set forth herein, RHI
hereby agrees to purchase (the "Additional Commitment") from the Company, and
the Company hereby agrees to sell to RHI:
(1) on or prior to January 31, 1997, an additional 250,000
Units,
(2) on or prior to February 28, 1997, an addition- al 166,667
Units, and
(3) on or prior to the 150th day after the date of Initial
Closing (such 150th day, the "Applicable Date"), an
additional 833,333 Units,
in each case, at the Purchase Price per Unit; provided, however, that RHI may by
notice to the Company, or the Company by notice to RHI, terminate the Additional
Commitment, in whole or in part, each at its option and for any or no reason
whatsoever. Upon such termination of the Additional Commitment, RHI shall no
longer be obligated to purchase from the Company, and the Company shall no
longer be obligated to sell to RHI (except pursuant to Section 1.1(c)), any
additional Units.
(c) In the event that the Company does not exercise the Repurchase
Option on or prior to the Applicable Date, RHI shall have the right to purchase
(the "Special Option"), within 5 business days of the Applicable Date, such
number of additional Units from the Company at the Purchase Price per Unit as
would result in RHI having purchased an aggregate of 666,667 Units under this
Agreement. The Special Option may be exercised by notice to the Company
specifying the proposed date of purchase, which shall be a business day. Such
notice shall be irrevocable and binding upon RHI. In the event that RHI shall
not have purchased an aggregate of 666,667 Units under this Agreement on or
prior to the 156th day after the date of the Initial Closing, the Option (as
defined in the Option Agreement) shall terminate in accordance with the terms of
the Option Agreement.
(d) In the event of any stock dividend, stock split or combination or
any other recapitalization, the Purchase Price and the number of Units subject
to the Initial Commitment, the Additional Commitment and the Special Option, as
well as the repurchase prices set forth in Section 2 below, shall be adjusted
accordingly.
1.2 Notice of Purchase. RHI may purchase Units pursuant to the Initial
Commitment or the Additional Commitment by giving notice to the Company of its
intention to purchase. Such notice shall state the proposed date of purchase
(which shall be a business day) and the number of Units to be purchased on such
date. Such notice shall be irrevocable and binding upon RHI.
1.3 The Closings. Each closing (a "Closing") of the sale and purchase of
the Units by RHI pursuant to this Agreement shall take place at the offices of
the Company or at such other place as the parties hereto shall agree. At each
Closing, the Company shall deliver to RHI the stock certificate(s) representing
the shares of Common Stock and the warrant certificate(s) in the form of Exhibit
A hereto representing the Warrants (collectively, the "Warrant Certificates")
comprising the Units being purchased, registered in the name of RHI (or the name
or names of its nominee(s)), and RHI shall deliver to the Company the Purchase
Price for each Unit being purchased by certified check or other immediately
available funds. The Company shall also deliver to RHI (i) the documents set
forth in Section 5 and (ii) the fees and disbursements of RHI's counsel referred
to in Section 7.7. Notwithstanding the foregoing, the
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stock certificate(s) representing the shares of Common Stock that are part of
the Units being purchased at the Initial Closing may be delivered as soon as
practicable after the Initial Closing but in any event within 10 days of the
Initial Closing; provided, however, that (x) RHI shall have received at the
Initial Closing evidence satisfactory to it that the Company has irrevocably
instructed the transfer agent and registrar for the Common Stock to issue such
stock certificate(s) to RHI and (y) for all purposes, RHI shall be deemed a
holder of, and have the benefits of, the shares of Common Stock to be
represented by such stock certificate(s).
2. Company's Repurchase Option. The Company shall have the right to repurchase
(the "Repurchase Option"), at any time on or prior to the Applicable Date, all
of the Units purchased by RHI and held at such time by RHI (but not less than
all of such Units), at a price per Unit equal to (i) $3.15 if repurchased on or
prior to January 31, 1997, (ii) $3.30 if repurchased after January 31, 1997 but
on or prior to February 28, 1997 and (iii) $3.45 if repurchased after February
28, 1997 but on or prior to the Applicable Date; provided, however, that STFI
shall, simultaneously with such repurchase by the Company, repurchase the Option
(as defined in the Option Agreement) from RHI in accordance with the terms of
the Option Agreement. The Repurchase Option may be exercised by notice to RHI
specifying the proposed date of repurchase, which shall be a business day. Such
notice shall be irrevocable and binding upon the Company.
3. Representations and Warranties of the Company. Except as disclosed in the
Disclosure Schedule hereto by reference to specific sections of this Agreement,
the Company hereby represents and warrants, at the date hereof and at each
Closing, to RHI as follows:
3.1 Organization and Corporate Power. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is qualified to do business
as a foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to so qualify would not have a material
adverse effect on the condition (financial or otherwise), assets, liabilities,
properties, business, operations or prospects of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect"). The Company and
each of its subsidiaries has all required corporate power and authority to own
its property, to carry on its business as presently conducted or contemplated,
to enter into and perform the obligations incurred or to be incurred under this
Agreement and the Warrants (the "Financing Documents"), and generally to carry
out the transactions contemplated hereby. The charter documents of the Company
and its subsidiaries, as amended to date, that have been furnished to counsel
for RHI by the Company, are correct and complete at the date hereof. Except as
set forth in the Disclosure Schedule, neither the Company nor any
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of its subsidiaries is in violation of (a) any material agreement or instrument
relating to accounts payable arising in the ordinary course of business of the
Company and its subsidiaries, or (b) any term of its charter documents, or (c)
any term of any other agreement or instrument, or any judgment, decree, order
law, statute, rule, authorization or government regulation, in each case,
applicable to the Company or any of its subsidiaries or to which the Company or
any of its subsidiaries is a party or by which it or any of its respective
properties is bound.
3.2 Authorization. This Agreement is and the Warrants when issued will be
the valid and binding obligations of the Company, enforceable in accordance with
their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights and remedies of creditors
generally and to the exercise of judicial discretion in accordance with general
principles of equity. The execution, delivery and performance of the Financing
Documents have been duly authorized by all necessary corporate or other action
of the Company. The issuance, sale and delivery of the shares of Common Stock
hereunder (the "Shares"), the issuance and delivery of the Warrants and the
issuance of shares of Common Stock issuable upon exercise of Warrants (the
"Warrant Shares" and together with the Shares and the Warrants, the
"Securities") have been duly authorized by all necessary corporate action on the
part of the Company, and the Securities have been reserved for issuance. The
Shares and the Warrant Shares, when issued, will be duly and validly issued,
fully paid and nonassessable. Other than required filings under applicable state
securities laws, no consent, approval, or authorization of, or designation,
declaration or filing with, any governmental authority or any other person or
entity is required on the part of the Company in connection with the execution
and delivery of the Financing Documents, or the issuance and delivery of the
Securities in accordance with the terms of this Agreement or the consummation of
any other transaction contemplated hereby.
3.3 Capitalization. The authorized capital stock of the Company at the date
hereof consists of (a) 10,000,000 shares of Common Stock, 4,606,184 of which
shares are issued and outstanding, and (b) 5,000,000 shares of Preferred Stock,
of which 500,000 are issued and outstanding. All of the issued and outstanding
shares of the Company's capital stock have been duly authorized and validly
issued and are fully paid and non-assessable and all securities previously
issued and sold by the Company were issued and sold in compliance with
applicable Federal and state securities laws. Except as set forth in the
Disclosure Schedule, no other shares of capital stock of the Company or any of
its subsidiaries or securities convertible into or exchangeable for such shares
have been issued or reserved for issuance, and except as contemplated by the
Financing Documents, (a) no subscription, warrant, option, convertible security
or other right (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company or
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any of its subsidiaries is authorized or outstanding, (b) there is not any
commitment or offer of the Company or any of its subsidiaries to issue any
subscription, warrant (other than the Warrants), option, convertible security or
other such right to issue or distribute to holders of any shares of its
indebtedness or assets of the Company or any of its subsidiaries, (c) neither
the Company nor any of its subsidiaries has any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof, and (d) there are no restrictions on the
transfer of the Company's capital stock other than those arising from Federal
and state securities laws. Except as contemplated by this Agreement, no person
or entity is entitled to (x) any preemptive or similar right with respect to
issuance of any capital stock of the Company, or (y) any rights with respect to
the registration of any capital stock of the Company under the Securities Act of
1933, as amended (the "Securities Act").
3.4 Stockholder Agreements. Except as set forth on the Disclosure Schedule,
there are no agreements, written or oral, between the Company and any of the
holders of the Company's capital stock, or, to the best of the Company's
knowledge, between or among any holders of the Company's capital stock, in their
capacities as such.
3.5 Subsidiaries. Except as set forth in the Disclosure Schedule, the
Company has no subsidiaries and does not own directly or indirectly, any
interest in any corporation, association or business entity. Each subsidiary of
the Company is wholly owned.
3.6 SEC Filings. Except as set forth in the Disclosure Schedule, the
Company has timely filed all reports and other documents required to be filed
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Securities Act, and rules and regulations promulgated thereunder
(including schedules and exhibits, collectively, "SEC Filings"). No filing made
under the Securities Act or the Exchange Act, as of its date, contained any
false or misleading statement or omitted to include any statement necessary to
make the statements therein contained not misleading.
3.7 Financial Statements. The Company has made available to RHI a copy of
all of the Company's SEC Filings. The financial statements (including the
footnotes thereto) included in the SEC Filings (collectively, "Financial
Statements") were prepared in accordance with generally accepted accounting
principles consistently applied during the periods covered thereby, are correct,
complete and in accordance with the books and records of the Company and its
subsidiaries in all material respects, and fairly and accurately present the
consolidated financial position of the
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Company on the dates of such statements and the consolidated results of its
operations for the periods covered thereby.
3.8 Absence of Undisclosed Liabilities. Except as and to the extent
expressly disclosed in the Financial Statements, the Company does not know of
any liabilities of a type required under generally accepted accounting
principles to be disclosed therein as of the respective dates thereof.
3.9 Certain Developments. Since the date of the Company's Form 10-Q for the
nine months ended September 30, 1996, there has been (a) a material decline in
the Company's financial condition, (b) no declaration, setting aside or payment
of any dividend or other distribution with respect to, or any direct or indirect
redemption or acquisition of any of the capital stock of the Company, (c) no
waiver of any material right of the Company or any of its subsidiaries or
cancellation of any material debt or claim held by the Company or any of its
subsidiaries, (d) no loan by the Company or any of its subsidiaries to any
officer, or director, employee or stockholder of the Company or any of its
subsidiaries, or any agreement or commitment therefor, (e) no material loss,
destruction or damage to any property of the Company or any of its subsidiaries,
whether or not insured, (f) no material labor disputes involving the Company or
any of its subsidiaries and no material change in the personnel of the Company
or any of its subsidiaries or the terms and conditions of their employment, and
(g) otherwise than for fair value and in the ordinary course of business, no
acquisition or disposition of any assets (or any contract or arrangement
therefor), nor any other transaction by the Company or any of its subsidiaries.
3.10 Title to Properties. To the best of the Company's knowledge, the
Company and its subsidiaries have good and marketable title to, or a valid
leasehold interest in, all of the properties and assets owned or used by them or
located on their premises, free and clear of all liens, restrictions or
encumbrances, except such liens, restrictions or encumbrances as would not,
singly or in the aggregate, have a Material Adverse Effect. All machinery,
equipment and other tangible assets included in such properties is in good
condition and repair, reasonable wear and tear excepted, and all leases of real
or personal property to which the Company or any of its subsidiaries is a party
are fully effective and afford the Company and its subsidiaries peaceful and
undisturbed possession of the subject matter of the lease. Neither the Company
nor any of its subsidiaries is in violation of any zoning, building or safety
ordinance, regulation or requirement or other law, or regulation applicable to
the operation of its owned properties which violation would have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries is in violation
of any zoning, building or safety ordinance, regulation or requirement or other
law or regulation applicable to the operation of its leased properties, nor has
it received any notice of violation with
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which it has not complied, where such violation would have a Material Adverse
Effect.
3.11 Contracts and Commitments. The SEC Filings include all agreements of
any nature to which the Company or any of its subsidiaries is a party or by
which it or any of its properties are bound which are material to the conduct
and operations of its business and properties. To the best of the Company's
knowledge, all such agreements are valid, binding and in full force and effect.
To the best of the Company's knowledge, no key employee is a party to any
outstanding contract, obligation or commitment with any prior employer. Neither
the Company nor any of its subsidiaries is a party to any oral or written
contract or agreement prohibiting them from freely competing or engaging in the
business or businesses of the Company anywhere in the world. Except as set forth
in Schedule 3.11, neither the Company nor any of its subsidiaries is in default
under any contract, obligation or commitment which default would, singly or in
the aggregate, have a Material Adverse Effect, and to the best knowledge of the
Company, there is no state of facts which upon notice or lapse of time or both
would constitute such a default. Neither the Company nor any of its subsidiaries
is a party to any contract or arrangement which under circumstances now
foreseeable would have a Material Adverse Effect.
3.12 Proprietary Rights; Employee Restrictions. Except as disclosed in the
Disclosure Schedule, the Company and its subsidiaries have ownership of or
license to use all patent, copyright, trademark or other proprietary rights used
or to be used in their business as presently conducted or contemplated and, to
the best knowledge of the Company, neither the present nor contemplated
business, activities or products of the Company and its subsidiaries infringe
any such patent, copyright, trademark or other proprietary rights of others.
Neither the Company nor any of its subsidiaries has received any notice or other
claim from any person asserting that any of the present or contemplated
activities of the Company or any of its subsidiaries infringe or may infringe
any such rights of such person. To the best knowledge of the Company, the
Company and its subsidiaries have the right to use, free and clear of claims or
rights of others, all trade secrets and know-how, including without limitation:
customer lists, manufacturing processes, hardware designs, programming
processes, software and other trade secrets or know-how required for or incident
to their products or its business as presently conducted or contemplated. The
Company and its subsidiaries have taken all steps required to establish and
preserve their ownership of all copyright, trade secret and other proprietary
rights with respect to their products and technology. Neither the Company nor
any of its subsidiaries is aware of any infringement by others of its
copyrights, trademarks or other proprietary rights in any of its products,
technology or services, or any violation of the confidentiality of any of its
proprietary information. To the best knowledge of the Company,
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neither the Company nor any of its subsidiaries is making unlawful use of any
confidential information or trade secrets of any past or present employees of
the Company or any of its subsidiaries. To the best knowledge of the Company,
the activities of employees of the Company and its subsidiaries on their behalf
do not violate any agreements or arrangements known to the Company which any
such employees may have with former employers.
3.13 Effect of Transactions. The execution, delivery and performance by the
Company of this Agreement and the offering, issuance and sale of the Securities
do not and will not conflict with or result in any violation of, breach of or
default under any contract, obligation or commitment of the Company or any of
its subsidiaries, or any charter provision, by-law or corporate restriction of
the Company or any of its subsidiaries, or result in the creation of any lien,
charge, security interest or encumbrance of any nature upon any of the
properties or assets of the Company or any of its subsidiaries, except pursuant
to this Agreement, or violate any instrument, agreement, judgment, decree,
order, statute, rule or governmental regulation applicable to the Company or any
of its subsidiaries or to which the Company or any of its subsidiaries is a
party or by which it or any of its properties is bound.
3.14 Litigation. Except as otherwise disclosed in the Disclosure Schedule,
there is no action, suit, proceeding or claim or governmental inquiry pending
or, to the best knowledge of the Company, threatened (a) against the Company or
any of its subsidiaries or otherwise affecting any of its properties or assets,
or (b) against any director, officer or Key Employee which may have a Material
Adverse Effect or (c) which may call into question the validity, or materially
hinder the enforceability or performance, of any Financing Document, nor, to the
best knowledge of the Company, has there occurred any event or does there exist
any condition on the basis of which such action, suit, proceeding, inquiry or
investigation might properly be instituted.
3.15 Securities Laws. Assuming the accuracy of the representations and
warranties of RHI contained in Section 4, the offer, issuance and sale of the
Securities in accordance with this Agreement are and will be in compliance with
applicable Federal and state securities laws, as presently in effect.
3.16 Business. The Company and its subsidiaries have all necessary
franchises, permits, licenses and other rights and privileges (collectively,
"Permits") necessary to permit them to own their property and to conduct their
business as is presently conducted or contemplated, except any such Permit the
failure of which to have would not have a Material Adverse Effect.
3.17 Books and Records. The minute books of the Company and its
subsidiaries contain complete and accurate records of all
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meetings and other corporate actions of their respective stockholders and Boards
of Directors and committees thereof. The stock ledgers of the Company and its
subsidiaries are complete and reflects all issuances, transfers, repurchases and
cancellations of shares of their respective capital stock.
3.18 Environmental Compliance. Neither the Company nor any of its
subsidiaries or any of their respective successors (a) has ever violated, or is
presently not in compliance with, any Federal, state, and local environmental or
health and safety laws, rules, regulations, ordinances, or by-laws
("Environmental Laws") applicable to its business and properties; (b) has
generated, manufactured, refined, transported, treated, stored, handled,
disposed of, transferred, produced, or processed any pollutant, toxic substance,
hazardous waste, hazardous substance, hazardous material, oil, or petroleum
product ("Hazardous Materials") as defined under any Environmental Law, or any
solid waste, or has knowledge of the release or threat of release of any
Hazardous Materials from its products, properties or facilities; (c) has (i)
entered into or been subject to any consent decree, compliance order, or
administrative order with respect to any environmental or health and safety
matter relating to its business or any of its properties of facilities, (ii)
received notice under the citizen suit provision of any Environmental Law in
connection with its business or any of its properties or facilities, (iii)
received any request for information, notice, demand letter, administrative
inquiry, or formal or informal complaint or claim with respect to any
environmental or health and safety matter relating to its business or any of its
properties or facilities, or (iv) been subject to or threatened with any
governmental or citizen enforcement action with respect to any environmental or
health and safety matter relating to its business or any of its properties or
facilities, and has no reason to believe that any matters described in (i)-(iv)
above will be forthcoming. No lien has been imposed on any of the properties or
facilities of the Company or any of its subsidiaries by any governmental agency
at the Federal, state, or local level in connection with the presence of any
Hazardous Materials.
3.19 Information Supplied to RHI. Neither this Agreement, the Disclosure
Schedule and Exhibits attached hereto, the other Financing Documents nor any
document, certificate, projection or statement furnished to RHI by or on behalf
of the Company contains any untrue statement of a material fact, and neither
this Agreement nor the Disclosure Schedule omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
3.20 Brokers. There are no claims for and no person is entitled to any
brokerage commissions, finder's fees or similar compensation in connection with
the transactions contemplated by
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this Agreement from the Company or based on any arrangement or agreement made by
or on behalf of the Company.
3.21 Employee Benefit Plans. The Company does not maintain or contribute to
any employee benefit plans other than the plans identified on the Disclosure
Schedule. The Company is and has been in material compliance with the provisions
of all laws or rules or regulations applicable to any employee benefit plan
maintained or contributed to by the Company for the benefit of its employees
and, to the best knowledge of the Company, there are no claims (other than
routine claims for benefits) pending or threatened with respect to any of such
employee benefit plans. The Company does not maintain or contribute to, and has
ever maintained or contributed to, any qualified retirement plan that is subject
to the minimum funding requirements of Section 412 of the United States Internal
Revenue Code of 1986, as amended. There are no unfunded obligations of the
Company under any retirement, pension, profit-sharing or deferred compensation
plan or program. The Company is not required to make any payments or
contributions to any employee benefit plan pursuant to any collective bargaining
agreement. The Company has never maintained or contributed to any employee
benefit plan providing or promising any health or other non-pension benefits to
terminated employees. For purposes of this Section, the term "Company" includes
all entities that have controlled, have been under the control of, or have been
under common control with, the Company.
3.22 Employees. The Company is not aware that any officer, director,
executive or key employee of or consultant to the Company or any of its
subsidiaries has any plans to terminate his relationship with the Company or
such subsidiaries. The Company and its subsidiaries have complied in all
material respects with all applicable laws relating to the employment of labor,
including provisions relating to wages, laws, equal opportunity, collective
bargaining and the payment of social security and other taxes. None of the
employees of the Company or any of its subsidiaries is represented by any labor
union or covered by any collective bargaining agreements, the Company is not
aware of any effort to establish a labor union or bargaining unit or similar
organizational effort with respect to any such employees, and there is no labor
strike or other labor trouble pending or threatened and with respect to the
Company or any of its subsidiaries.
4. Representations and Warranties of RHI.
RHI represents and warrants to the Company as follows:
4.1 Investment. RHI is acquiring the Securities for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same, and RHI has no present or contemplated agreement, undertaking,
arrangement,
-10-
obligation, indebtedness or commitment providing for the disposi-
tion thereof.
4.2 Authority. RHI has full power and authority to execute, deliver and
perform this Agreement in accordance with its terms. RHI has not been organized,
reorganized, or recapitalized specifically for the purpose of investing in the
Company. This Agreement is a valid and binding obligation of RHI, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights and
remedies of creditors generally and to the exercise of judicial discretion in
accordance with general principles of equity.
4.3 Experience. RHI has adequate net worth and means to provide for its
current needs and contingencies and the financial capacity to sustain a complete
loss of its investment in the Company.
4.4 Accredited Investor. RHI is an "accredited investor" as defined in Rule
501 of Regulation D adopted under the Securities Act.
5. Conditions Precedent to Closing. The effectiveness of the Initial Commitment
shall be subject to the receipt by RHI of the following, each in form and
substance satisfactory to RHI (it being understood that, in connection with any
Closing subsequent to the Initial Closing, the Company shall also deliver such
of the following as RHI shall reasonably request):
5.1 An opinion from the General Counsel of the Company, dated as of the
applicable Closing date, addressed to RHI, and substantially in the form
attached hereto as Exhibit C;
5.2 A certificate of the Secretary of the Company, dated as of the
applicable Closing date, certifying as to (i) the incumbency and signatures of
officers of the Company executing the Financing Documents and all other
documents executed and delivered in connection herewith, (ii) a copy of the
certificate of incorporation of the Company as in effect on such Closing date,
certified as of a recent date by the Secretary of the State of Delaware, (iii) a
copy of the by-laws of the Company, as in effect on such Closing date, and (iv)
a copy of the resolutions of the Board of Directors of the Company authorizing
and approving the Company's execution, delivery and performance of the Financing
Documents, all matters in connection with the Financing Documents, and the
transactions contemplated thereby; and
5.3 A certificate as of the most recent practicable date prior to the
applicable Closing date, of the Secretary of State of the State of Delaware as
to the Company's good standing;
-11-
5.4 All consents and waivers required in connection with the Company's
issuance of the Securities; and
5.5 All other documents, instruments and agreements that RHI shall
reasonably require in connection with this Agreement.
6. Certain Covenants of the Company. The Company covenants and agrees that for
so long as RHI holds shares of capital stock representing 5% or more of the
voting power on matters properly brought for a vote of the Company's
stockholders ("Voting Power"), it will perform and observe the covenants and
provisions of Sections 6.5, 6.6 and 6.9, and so long as RHI holds 5% or more of
the Voting Power and has exercised the Option (as defined in the Option
Agreement), it will perform and observe the following covenants and provisions
(for purposes of this Agreement, ownership of any options, warrants or
convertible securities entitling the holder thereof to acquire record or
beneficial ownership in shares of capital stock shall be deemed ownership of the
Voting Power of an equivalent number of shares of such capital stock):
6.1 Financial Statements. The Company will maintain books of account in
accordance with generally accepted accounting principles applied on a consistent
basis, keep full and complete financial records and furnish to RHI the following
reports:
(a) within fifteen (15) days after the date of such filing, copies of
all documents filed by the Company with the SEC including, but not limited to,
all reports on Forms 10-K, 10-Q, 8-K and their exhibits; and
(b) such other financial information as RHI may reasonably request,
including, without limitation, certificates of the principal financial officer
of the Company concerning compliance with the covenants of the Company under
this Section , other customary information and materials, including, without
limitation, reports of adverse developments, management letters, communications
with stockholders or directors, press releases, registration statements and any
other reports filed by the Company, or by any of its officers and directors with
respect to the Company, with a securities exchange or with the Securities and
Exchange Commission (the "Commission").
6.2 Payment of Taxes, Compliance with Laws, etc. The Company will pay and
discharge all lawful taxes, assessments and governmental charges or levies
imposed upon it or any of its subsidiaries or upon their income or property
before the same shall become in default, as well as all lawful claims for labor,
materials and supplies which, if not paid when due, might become a lien or
charge upon their property or any part thereof; provided, however, that the
Company shall not be required to pay and discharge any such tax, assessment,
charge, levy, or claim so long as the validity thereof is being contested by the
Company in good faith by
-12-
appropriate proceedings and an adequate reserve therefor has been established on
its books. The Company will, and will cause its subsidiaries to, use its best
efforts to comply with all applicable laws and regulations in the conduct of its
business including, without limitation, all Environmental Laws.
6.3 Insurance. The Company will, and will cause its subsidiaries to, keep
its insurable properties insured, upon reasonable business terms, by financially
sound and reputable insurers against liability, and the perils of casualty, fire
and extended coverage in amounts of coverage sufficient in the reasonable
business judgment of the Company to protect the Company and its subsidiaries.
The Company will, and will cause its subsidiaries to, maintain with such
insurers insurance against other hazards and risks and liability to persons and
property which, in the reasonable business judgment of the Company, is customary
in the industry in which the Company operates for companies of comparable size.
6.4 Maintenance of Properties and Licenses. The Company will, and will
cause its subsidiaries to, maintain all properties used or useful in the conduct
of their business (including, without limitation, transmission sites) in good
repair, working order and condition as is reasonably necessary to permit such
business to be properly and advantageously conducted. The Company will, and will
cause its subsidiaries to, keep in full force and effect all licenses, permits,
approvals, consents and authorizations necessary or appropriate to conduct their
businesses as presently conducted and as proposed to be conducted (collectively,
"Licenses").
6.5 Affiliated Transactions. Except with respect to compensation
arrangements with, and the reimbursement of expenses of, employees of the
Company in the ordinary course of business, all transactions by and between the
Company or any of its subsidiaries and any director, officer, employee, or
stockholder of the Company or any of its subsidiaries or persons controlled by
or affiliated with such director, officer, employee or stockholder, shall be
conducted on an arm's-length basis, shall be on terms and conditions no less
favorable to the Company than could be obtained from non-related persons at such
time and shall be approved by the Board of Directors after full disclosure of
the terms thereof, for which purpose the interest party, if a director, and any
affiliate of the interested party who is a director, shall not be entitled to
vote.
6.6 Inspection Rights. At any time during normal business hours and upon
reasonable prior notice to the Company, RHI or any of its designated
representatives or agents may (a) visit and inspect the premises and any of the
properties of the Company and its subsidiaries including its records and books
of account (and make copies thereof and take extracts therefrom), and (b)
discuss the affairs, finances and accounts of the Company and its
-13-
subsidiaries with its officers, directors, employees and
accountants, all at the expense of RHI.
6.7 Litigation. The Company promptly (and, in any event, not later than the
date of release of such information to the public generally) shall notify RHI or
its transferees of any litigation or governmental proceeding or investigation
pending (or, to the best knowledge of the Company, threatened) against the
Company or any of its subsidiaries or against any officer, director, key
employee, or principal stockholder of the Company or any of its subsidiaries,
that if adversely determined, could have a Material Adverse Effect.
6.8 Merger, Consolidations, Disposal of Ownership of Subsidiaries, etc.
Without the prior written consent of RHI, the Company will not, and will not
permit any of its subsidiaries to:
(a) consolidate with or merge with any other corporation or entity;
(b) convey, transfer or lease all or substantially all of its assets
in a single transaction or series of transactions to any person or entity;
(c) sell or otherwise dispose of any shares of any subsidiary or
affiliate, nor will the Company permit any subsidiary to issue, sell or dispose
of any shares of such subsidiary's own stock; or
(d) sell, transfer or otherwise dispose of any of its Licenses.
6.9 RHI Designates to Board of Directors. The Company shall use its best
efforts so that, for so long as RHI owns shares of capital stock comprising five
percent (5%) or more of the Voting Power, at least one member of the Company's
Board of Directors is at all times designated by RHI, and for so long as RHI
owns shares of capital stock comprising ten percent (10%) or more of the Voting
Power, at least two members of the Company's Board of Directors is at all times
designated by RHI. The Company shall use its best efforts to enter into all such
agreements and take all other such actions as are necessary or appropriate in
order to effect the foregoing or as reasonably requested by RHI in connection
therewith. For purposes of this Section 6.9, ownership of any options, warrants
or convertible securities that upon exercise or conversion shall entitle the
holder thereof to acquire shares of capital stock, shall be deemed to be
ownership of the Voting Power of the equivalent number of shares of capital
stock.
7. Miscellaneous.
7.1 Transfer of Rights.
-14-
(a) Transfer of Rights. The rights granted to RHI under Section may be
transferred to The Fairchild Corporation, a New York corporation, or any of its
affiliates (within the meaning of the Securities Act); provided, however, that
the Company must receive written notice of said transfer, stating the name and
address of said transferee or assignee and identifying the securities with
respect to which such rights are being assigned.
(b) Transferees. Any transferee to whom rights under Section are
transferred in compliance with the terms hereof shall, as a condition to such
transfer, deliver to the Company a written instrument by which such transferee
agrees to be bound by the obligations imposed by Section hereof to the same
extent as if such transferee were RHI hereunder. Upon the execution of such
instrument, such transferee shall be treated as RHI for all purposes hereunder.
(c) Subsequent Transferees. A transferee to whom rights are
transferred pursuant to this Section 7.1 may not again transfer such rights to
any other person or entity, other than as provided in (a) or (b) above.
7.2 Rules 144 and 144A. At all times the Company will file all reports
required under the Securities Act or the Exchange Act and the rules and
regulations thereunder, and will take such further action as may be reasonably
required to enable any holder of "restricted securities" (as defined in Rule 144
adopted by the Commission under the Securities Act) to sell such securities
pursuant to Rule 144 or Rule 144A, as amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission.
7.3 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any holder of Securities or the Company, upon any breach
or default of the Company or such holder, as the case may be, under this
Agreement, shall impair any such right, power or remedy of such holder or the
Company, as the case may be, nor shall it be construed to be a waiver of any
such breach or default or of any similar breach or default theretofore or
thereafter occurring, or an acquiescence therein. Any waiver, permit, consent or
approval of any kind or character on the part of any holder or the Company of
any breach or default under this Agreement, or any waiver on the part of any
holder or the Company of any provisions of conditions of this Agreement must be
made in writing and shall be effective only to the extent specifically set forth
in such writing. All remedies, either under this Agreement or by law or
otherwise afforded to any holder, shall be cumulative and not alternative.
7.4 Adjustments. Except as otherwise specifically provided, all applicable
provisions of this Agreement shall be automatically adjusted to reflect any
stock dividend, stock split or combination or other such recapitalization.
-15-
7.5 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions of this Agreement shall bind and inure to the benefit of the
respective successors, assigns, heirs, executors, and administrators of the
parties hereto.
7.6 Survival of Representations and Warranties. The representations,
warranties, covenants, promises and agreements contained in this Agreement shall
survive and remain in full force and effect for one (1) year after the Initial
Closing date, without regard to any investigation made at any time by RHI or on
their behalf.
7.7 Expenses. The Company shall reimburse to RHI, promptly upon demand
therefor, the fees and expenses of Cahill Gordon & Reindel, counsel to RHI, and
any other professional and out-of-pocket expenses incurred by RHI; provided,
however, that RHI shall not be responsible for more than $20,000 of the fees and
expenses of Cahill Gordon & Reindel in connection with the negotiation,
preparation, execution and delivery of this Agreement and the documents in
connection herewith. In addition, the company shall bear its own legal and other
expenses in connection with the transactions contemplated by this Agreement.
7.8 Notices. All notices, requests, consents and other communications under
this Agreement shall be in writing and shall be delivered by hand, by
telecopier, by overnight courier or mailed by first class certified or
registered mail, return receipt requested, postage prepaid:
(a) If to the Company:
Shared Technologies Cellular, Inc.
100 Great Meadow Road
Wethersfield, CT 06109
Attn: Legal Department
Telecopier: (860) 258-2455
(or at such other address as may have been furnished in writing by
the Company to RHI)
with a copy to:
Gadsby & Hannah LLP
125 Summer Street
Boston, MA 02110
Attn: Harold J. Carroll, Esq.
Telecopier: (617) 345-7050
-16-
(b) If to RHI:
RHI Holdings, Inc.
c/o The Fairchild Corporation
Washington Dulles International Airport
300 West Service Road
Chantilly, VA 20153
Attn: Donald E. Miller, Esq.
Telecopier: (703) 478-5775
(or at such other address as may have been furnished in writing by
RHI to the Company)
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: James J. Clark, Esq.
Telecopier: (212) 269-5420
Any communication delivered in accordance with this Section 7.8 shall be deemed
effective (i) if delivered by hand, when received at the receiving desk for the
addressee, (ii) if telecopied, when receipt is confirmed by the telecopier
machine, (iii) if sent by courier, two business days after deposit with such
courier and (iv) if sent by mail, four business days after deposit in the mails.
7.9 No Conditions to Effectiveness; Entire Agreement. There are no
conditions to the effectiveness of this Agreement. This Agreement, together with
the instruments and other documents contemplated to be executed and delivered in
connection herewith, contains the entire agreement and understanding of the
parties hereto, and supersedes any prior agreements or understandings between or
among them, with respect to the subject matter hereof.
7.10 Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the party against whom such amendment or waiver is to be enforced. No
waivers of or exceptions to any term, condition or provision of this Agreement,
in any one or more instances, shall be deemed to be, or construed as, a further
continuing waiver of any such term, condition or provision.
7.11 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
-17-
7.12 Governing Law. This Agreement shall be governed by and
interpreted and construed in accordance with the laws of the State
of Connecticut.
-18-
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as an instrument as of the date first above written.
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Anthony D. Autorino
-------------------------------
Name: Anthony D. Autorino
Title: Chief Executive Officer
RHI HOLDINGS, INC.
By: /s/ Colin M. Cohen
-------------------------------
Name: Colin M. Cohen
Title: Vice President and
Chief Financial Officer
WARRANT CERTIFICATE
Date: _____ ___, ___ [ ] Warrants
NEITHER THE WARRANTS EVIDENCED HEREBY, NOR THE STOCK TO BE ISSUED UPON EXERCISE
THEREOF, HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED OR REGISTERED UNDER ANY STATE SECURITIES LAWS
(THE "STATE SECURITIES LAWS"). NO SALE OR OTHER DISPOSITION MAY BE MADE WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND COMPLIANCE WITH
THE APPLICABLE STATE SECURITIES LAWS, OR, IN THE CASE OF A SALE OR OTHER
DISPOSITION OTHER THAN PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE ISSUER AND ITS COUNSEL, THAT
SAID REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND THAT APPLICABLE
STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH.
This Warrant Certificate certifies that RHI HOLDINGS, INC.
("Purchaser"), a Delaware corporation, or any entity to which this Warrant is
assigned in compliance with the terms hereof (Purchaser and any such assignee
being hereafter sometimes referred to as "Holder"), is the holder of the number
of Warrants set forth above. Each Warrant entitles the Holder to subscribe to
and purchase, during the period commencing at the date first set forth above and
ending at 5 p.m. Hartford, Connecticut, local time, on the fifth (5th)
anniversary of such date (the "Expiration Time"), one(1) fully paid and
nonassessable share of common stock, par value $0.01 per share (the "Common
Stock"), of Shared Technologies Cellular, Inc. (the "Company"), a Delaware
corporation with its principal place of business at 100 Great Meadow Road,
Wethersfield, Connecticut, at a purchase
- -------------------
1 If any of the events specified in Section 3 occur after the date of the
Agreement and before the date of issuance of this Warrant Certificate, the
number specified here shall be adjusted in accordance with Section 3.
-2-
price of $3.00(2) (such price, as adjusted in accordance with the terms herein,
the "Exercise Price"). The number of shares for which each Warrant is
exercisable (as adjusted, the "Exercise Ratio") and the Exercise Price is
subject to adjustment as set forth herein.
The Warrants evidenced hereby were issued to Purchaser pursuant to
that certain Purchase Agreement dated as of December 27, 1996 between the
Company and Purchaser (the "Agreement").
ARTICLE I
DEFINITIONS
1.1 "Common Stock Equivalents" shall mean Convertible
Securities and Rights.
1.2 "Convertible Securities" means any securities which are directly or
indirectly convertible or exchangeable into Common Stock.
1.3 "Effective Price" means the quotient obtained by dividing (i) Minimum
Consideration by (ii) Maximum Shares Upon Exercise.
1.4 "Fair Market Value" means, at any date:
(a) The average of the closing prices of the Common Stock
quoted in the Over-The-Counter Market Summary (if not
on the Nasdaq system) or the closing price quoted on
the Nasdaq Stock Market or any exchange on which the
Common Stock is listed, whichever is applicable, as
published in the Eastern Edition of The Wall Street
Journal for the five (5) consecutive trading days
prior to such date; or
(b) If the Common Stock is not traded over-the-counter or
on an exchange, the per share fair market value of
- -------------------
2 If any of the events specified in Section 3 occur after the date of the
Agreement and before the date of issuance of this Warrant Certificate, the
Purchase Price specified here shall be adjusted in accordance with Section
3.
-3-
the Common Stock at such date, as determined by an independent
appraiser appointed in good faith by the Company's Board of
Directors. The cost of such appraisal shall be borne by the Company.
1.5 "Maximum Shares Upon Exercise" means the maximum number of shares of
Common Stock issuable under a Common Stock Equivalent upon complete
exercise and full conversion of all Rights or Convertible Securities
represented thereby, computed without regard to contingent adjustment
to the number of shares issuable upon exercise and conversion (other
than adjustments caused solely by the passage of time which increase
the number of shares issuable upon exercise and conversion).
1.6 "Minimum Consideration" means the minimum aggregate consideration paid
or payable at any time for the purchase of the Common Stock Equivalents
during the term of the Common Stock Equivalents, and upon complete
exercise and full conversion of the Common Stock Equivalents, computed
without regard to contingent adjustments to exercise or conversion
price (other than adjustments caused solely by the passage of time
which reduce such minimum aggregate consideration).
1.7 "Rights" means any options, warrants, or rights to
purchase Common Stock or Convertible Securities.
ARTICLE II
EXERCISE AND PAYMENT
2.1 Cash Exercise. The Warrants represented by this Warrant Certificate may
be exercised by Holder, in whole or in part, by the surrender of this
Warrant Certificate at the principal office of the Company, and by the
payment to the Company, by certified, cashier's or other check
acceptable to the Company, of an amount equal to the aggregate Exercise
Price of the shares being purchased.
2.2 Net Issue Exercise. In lieu of exercising this Warrant
pursuant to Section 2.1, Holder may elect to receive
shares of Common Stock equal to the value of the
Warrants evidenced hereby (or of any portion thereof
-4-
remaining unexercised) by surrender of this Warrant Certificate at the
principal office of the Company together with notice of such election,
in which event the Company shall issue to Holder a number of shares of
Common Stock computed using the following formula:
X = Y (A-B)
A
Where X = the number of shares of Common Stock to be
issued to Holder;
Y = the number of shares of Common Stock purchasable under
the Warrants being exercised (at the date of such
calculation);
A = the Fair Market Value of one share of
Common Stock (at the date of such
calculation); and
B = Exercise Price (as adjusted to the date of such
calculation).
2.3 Stock Certificate. In the event of any exercise of Warrants evidenced
hereby, certificates for the shares of Common Stock so purchased shall be
delivered to Holder within a reasonable time and, unless the Warrants
evidenced hereby has been fully exercised or has expired, a new Warrant
Certificate representing the Warrants that have been exercised shall also
be issued to Holder within such time.
2.4 Automatic Exercise.
(a) To the extent the Warrants evidenced hereby are not previously
exercised, and if the Fair Market Value of one share of Common Stock
is greater than the Exercise Price, the Warrants evidenced hereby
shall be deemed automatically exercised in accordance with Section
2.2 hereof (even if not surrendered) immediately before the
Expiration Time.
(b) If at any date prior to the Expiration Time the Fair Market Value of
one share of Common Stock is greater than 200% of the Exercise
Price, the Warrants
-5-
evidenced hereby shall be deemed automatically exercised in
accordance with Section 2.2 hereof (even if not surrendered).
(c) To the extent the Warrants evidenced hereby are deemed automatically
exercised pursuant to this Section 2.4, the Company agrees to notify
Holder within a reasonable period of time of the number of shares of
Common Stock, if any, Holder is to receive by reason of such
automatic exercise.
2.5 Stock Fully Paid, Reservation of Shares. The Company covenants and agrees
that all Common Stock which may be issued upon the exercise of Warrants
evidenced hereby will, upon issuance, be fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof
(excluding taxes based on the income of Holder). The Company further
covenants and agrees that at all times prior to the Expiration Time, the
Company will have authorized and reserved for issuance a sufficient number
of shares of Common Stock as would be required upon the full exercise of
the Warrants evidenced hereby.
2.6 Fractional Shares. No fractional share of Common Stock will be issued in
connection with any exercise hereof, but in lieu of a fractional share
upon complete exercise hereof, Holder may purchase a whole share at the
then effective Exercise Price.
ARTICLE III
CERTAIN ADJUSTMENTS OF NUMBER OF
SHARES PURCHASABLE AND WARRANT PRICE
3.1 Reclassification, Consolidation or Merger. In case of: (i) any
reclassification or change of outstanding securities issuable upon
exercise of Warrants; (ii) any consolidation or merger of the Company with
or into another corporation (other than a merger with another corporation
in which the Company is a continuing corporation and which does not result
in any reclassification, change or exchange of outstanding securities
issuable upon exercise of Warrants); or (iii) any sale or transfer to
another corporation of all, or substantially all, of the property of the
Company,
-6-
then, and in each such event, the Company or such successor or purchasing
corporation, as the case may be, shall execute a new Warrant Certificate
which will provide that Holder shall have the right to exercise the
Warrants evidenced by such new Warrant Certificate and purchase upon such
exercise, in lieu of each share of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of securities, money and
property receivable upon such reclassification, change, consolidation,
merger, sale or transfer by a holder of one share of Common Stock issuable
upon exercise of a Warrant had a Warrant been exercised immediately prior
to such reclassification, change, consolidation, merger, sale or transfer.
Such new Warrant Certificate shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided in
this Section 3 and the provisions of Section 3.1, shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales and
transfers.
3.2 Subdivision or Combination of Shares. If the Company shall at any time
while this Warrant remains outstanding and unexercised in whole or in
part: (i) divide its Common Stock, the Exercise Price shall be
proportionately reduced and the Exercise Ratio shall be proportionately
increased; or (ii) combine shares of its Common Stock, the Exercise Price
shall be proportionately increased and the Exercise Ratio shall be
proportionately decreased.
3.3 Adjustment for Issue or Sale of Shares at Less Than the
Exercise Price.
(a) If, in a transaction other than an issuance excepted
from this provisions as set forth below or an
issuance that causes an adjustment under Sections 3.1
or 3.2, the Company shall at any time or from time to
time, issue any additional shares of Common Stock or
Common Stock Equivalents without consideration or for
a net consideration per share (or Effective Price in
the case of Common Stock Equivalents) less than the
Exercise Price in effect immediately prior to such
issuance, then, and in each case, the Exercise Price
shall be lowered to an amount equal to the lowest per
share price received, or deemed received, by the
Company as consideration for such Shares. In
addition, the Exercise Ratio shall be adjusted in
accordance with the formula:
-7-
E' = E x (O + N)
(O + (N x P/M))
Where E' = the adjusted Exercise Ratio;
E = the current Exercise Ratio;
O = the number of shares of Common Stock outstanding
immediately prior to the issuance to which this
Section 3.3 applies;
N = the number of shares of Common Stock so issued or
the Maximum Shares Upon Exercise of the Common Stock
Equivalents so issued, as the case may be;
P = the price of the shares of Common Stock so issued or
the Effective Price of the Common Stock Equivalents so
issued, as the case may be; and
M = the Exercise Price as of the time of determination
or at the time of sale, as the case may be.
(b) There shall be no adjustment under this Section 3.3
for any sales or issuances: (i) in a transaction in
which an adjustment will be made pursuant to
Section 3.1 or 3.2; (ii) of Common Stock or Common
Stock Equivalents not in excess of ten percent (10%)
of the shares of Common Stock issued and outstanding
as of the date of the Agreement (measured
cumulatively from the date of the Agreement), if such
issuance is made pursuant to an employee incentive
plan approved by the Company's shareholders and Board
of Directors; or (iii) upon exercise or conversion of
Common Stock Equivalents outstanding on the date of
the Agreement.
(c) The issuance of Common Stock Equivalents shall be deemed an issuance
at the time of the issuance of such shares of Common Stock
underlying the Common Stock Equivalents. No adjustment of the
Exercise Price or the Exercise Ratio shall be made under this
Section 3.3 upon the issuance of shares of Common Stock upon the
exercise or conversion of Common Stock
-8-
Equivalents if an adjustment has previously been made as above
provided. Any adjustment of the Exercise Price or the Exercise Ratio
shall be disregarded, if, as and when such Common Stock Equivalents
expire or are cancelled without being exercised so that the Exercise
Price and Exercise Ratio effective immediately upon such
cancellation or expiration shall be equal to the Exercise Price and
Exercise Ratio, respectively, in effect at the time of the issuance
of the expired or cancelled Common Stock Equivalents, with such
additional adjustments as would have been made to the Exercise Price
and Exercise Ratio had the expired or cancelled Common Stock
Equivalents not been issued.
3.4 Certain Distributions. If at any time the Company grants, issues or sells
options, convertible securities, or rights to purchase capital stock of
the Company, warrants or other securities pro rata to the record holders
of Common Stock (the "Distribution Rights") or, without duplication, makes
any dividend or otherwise makes any distribution ("Distribution") on
shares of Common Stock (whether in cash, property, evidences of
indebtedness or otherwise), then the Company shall grant, issue, sell or
make to Holder the aggregate Distribution Rights or Distribution, as the
case may be, which the Holder would have acquired if Holder had held the
maximum number of Shares acquirable upon complete exercise of the Holder's
Warrants immediately before the record date for the grant, issuance or
sale of such Distribution Rights or Distribution, as the case may be, or,
if there is no such record date, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Distribution Rights or Distribution, as the case may be. Except as
provided in this Section 3.4, no payment or adjustment will be made for
dividends on any Common Stock.
3.5 Other Action Affecting Common Stock. If the Company takes any action with
respect to its capital structure affecting its Common Stock after the date
hereof other than an action described in either of Sections 3.1 and 3.2
hereof, which would have a material effect upon Holder's rights hereunder,
the Exercise Price and the Exercise Ratio shall be adjusted in such manner
and at such time as the Board of Directors of the Company shall in good
faith determine to be equitable under the circumstances; provided,
however, that in no event shall the Exercise Price be
-9-
increased or the Exercise Ratio be decreased pursuant to
this Section 3.5.
3.6 Time of Adjustments to the Exercise Price and Exercise Ratio. All
adjustments to the Exercise Price and the Exercise Ratio, unless otherwise
specified herein, shall be effective as of the earliest of:
(a) the date of issue (or date of sale, if earlier) of
the security causing the adjustment;
(b) the effective date of a division or combination of
shares; and
(c) the record date of any action of holders of the Company's capital
stock of any class taken for the purpose of dividing or combining
shares or entitling shareholders to receive a distribution or
dividends.
3.7 Notice of Adjustments. In each case of an adjustment in the Exercise Price
and Exercise Ratio, the Company, at its expense, shall cause the Chief
Financial Officer of the Company to compute such adjustment and prepare a
certificate setting forth such adjustment and showing in detail the facts
upon which such adjustment is based. The Company shall promptly mail a
copy of each such certificate to Holder pursuant to Section 5.12 hereof.
3.8 Duration of Adjusted Exercise Price or Exercise Ratio. Following each
adjustment of the Exercise Price or Exercise Ratio, such adjusted Exercise
Price or Exercise Ratio shall remain in effect until further adjustment of
the Exercise Price or Exercise Ratio, respectively.
ARTICLE IV
TRANSFER, EXCHANGE AND LOSS
4.1 Transfer. The Warrants evidenced hereby are transferable on the books of
the Company and at its principal office by the registered Holder hereof
upon surrender of this Warrant Certificate properly endorsed, subject to
compliance with the federal and state securities laws. The Company shall
issue and deliver to the transferee a new Warrant Certificate or
Certificates representing the
-10-
Warrants so transferred. Upon any partial transfer, the Company will issue
an deliver to Holder a new Warrant Certificate or Certificates with
respect to the Warrants not so transferred. Notwithstanding the foregoing,
Holder shall not be entitled to transfer a number of shares or an interest
in this Warrant Certificate representing less than five percent (5%) of
the aggregate shares initially covered by this Warrant Certificate. Any
transferee shall be subject to the same restrictions on transfer with
respect to this Warrant as the Purchaser.
4.2 Securities Laws. Upon any issuance of shares of Common Stock upon exercise
of Warrants evidenced hereby, it shall be the Company's responsibility to
comply with the requirements of: (1) the Securities Act; (2) the
Securities Exchange Act of 1934, as amended; (3) any applicable listing
requirements of any national securities exchange; (4) any State Securities
Laws; and (5) requirements under any other law or regulation applicable to
the issuance or transfer of such shares. If required by the Company, in
connection with each issuance of shares of Common Stock upon exercise of
Warrants evidenced hereby, Holder will give: (i) assurances in writing,
satisfactory to the Company, that such shares are not being purchased with
a view to the distribution thereto in violation of applicable laws, (ii)
sufficient information, in writing, to enable the Company to rely on
exemptions from the registration or qualification requirements of
applicable laws, if available, with respect to such exercise, and (iii)
its cooperation to the Company in connection with such compliance.
4.3 Exchange. This Warrant Certificate is exchangeable at the principal office
of the Company for a Warrant Certificate or Certificates representing the
same aggregate number of Warrants evidenced hereby. Each new Warrant
Certificate shall be identical in form and content to this Warrant
Certificate, except for appropriate changes in the number of Warrants, the
percentage stated in Section 4.1 above, and any other changes which are
necessary in order to prevent the exchange from changing the respective
rights and obligations of the Company and the Holder as they existed
immediately prior to such exchange.
4.4 Loss or Mutilation. Upon receipt by the Company of
evidence satisfactory to it of the ownership of, and the
loss, theft, destruction or mutilation of, this Warrant
-11-
Certificate and (in the case of loss, theft, or destruction) of indemnity
satisfactory to it, and (in the case of mutilation) upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a
new Warrant Certificate.
ARTICLE V
MISCELLANEOUS
5.1 No Shareholder Rights Until Exercise. Except as specifically provided
herein, no Holder Hereof, solely by virtue hereof, shall be entitled to
any rights as a shareholder of the Company. Holder shall have all rights
of a shareholder with respect to securities purchased and paid for as
provided herein (a) upon exercise hereof at the time of cash or net issue
exercise pursuant to Section 2.1 and 2.2 hereof or (b) at the time of
automatic exercise hereof (even if not surrendered) pursuant to Section
2.5 hereof.
5.2 Notice of Changes in Capital Structure. The Company further covenants and
agrees that it will give each Holder at least 10 days' prior written
notice of any intended change to the composition of its capital structure,
whether by issuance of new securities or otherwise, if any such change
would require an adjustment of the Exercise Ratio or the Exercise Price
hereunder.
5.3 No Dilution or Impairment. The Company will not, by amendment of its
charter or through reorganization, consolidation, merger, dilution, sale
of assets or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant Certificate,
but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution
or other impairment. Without limiting the generality of the foregoing, the
Company will not increase the par value of any shares of stock receivable
upon the exercise of Warrants evidenced hereby above the amount payable
therefor upon such exercise, and at all times will take all such action as
may be necessary or appropriate in order that the Company may validly and
-12-
legally issue fully paid and nonassessable stock upon the exercise of
Warrants evidenced hereby.
5.4 Registration Rights. The holders of shares of Common Stock or other
securities issued upon exercise of the Warrants evidenced hereby are
entitled to the registration rights set forth in the Registration Rights
Agreement dated as of December 27, 1996 between the Company and Purchaser.
5.5 Governmental Approvals. The Company will from time to time take all action
which may be necessary to obtain and keep effective any and all permits,
consents and approvals of governmental agencies and authorities and
securities acts filings under federal and state laws, which may be or
become requisite in connection with the issuance, sale, and delivery of
Warrants evidenced hereby, and the issuance, sale and delivery of the
shares of Common Stock or other securities or property issuable or
deliverable upon exercise of Warrants.
5.6 Governing Laws. It is the intention of the parties hereto that except as
set forth below, the internal laws of the state of Connecticut, U.S.A.
(irrespective of its choice of law principles) shall govern the validity
of this warrant, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties hereto.
Notwithstanding the foregoing, the corporation laws of the State of
Delaware shall govern the procedural and substantive matters pertaining to
the due authorization, issuance, delivery and exercise of this Warrant and
the shares of Common Stock upon exercise hereof. Except as set forth
below, the parties hereby agree that any suit to enforce any provision of
this Warrant arising out of or based upon this Warrant or the business
relationship between any of the parties hereto shall be brought in the
United States District Court of the District of Connecticut or the
Superior Court in Hartford, Connecticut. Each party hereby agrees that
such courts shall have personal jurisdiction and venue with respect to
such party, and each party hereby submits to the personal jurisdiction and
venue of such courts. In addition to the foregoing jurisdiction, Holder at
its sole option, may commence any such suit in any jurisdiction in which
the Company has a business office or is incorporated.
-13-
5.7 Binding Upon Successors and Assigns. Subject to, and unless otherwise
provided in, this Warrant, each and all of the covenants, terms
provisions, and agreements contained herein shall be binding upon, and
inure to the benefit of the permitted successors, executors, heirs,
representatives, administrators and assigns of the parties hereto.
5.8 Severabililty. If any one or more provisions of this Warrant Certificate,
or the application thereof, shall for any reason and to any extent be
invalid or unenforceable, the remainder of this Warrant Certificate and
the application of such provisions to other persons or circumstances shall
be interpreted so as best to reasonably effect the intent of the parties
hereto. The parties further agree to replace any such void or
unenforceable provisions of this Warrant Certificate with valid and
enforceable provisions which will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable
provisions.
5.9 Default, Amendment and Waivers. This Warrant may be amended upon the
written consent of the Company and the Holder. The waiver by a party of
any breach hereof for default in payment of any amount due hereunder or
default in the performance hereof shall not be deemed to constitute a
waiver of any other default or any succeeding breach or default.
5.10 No Waiver. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of
the right of such party thereafter to enforce such
provisions.
5.11 Attorneys' Fees. Should suit be brought to enforce or interpret any part
of this Warrant Certificate, the prevailing party shall be entitled to
recover, as an element of the costs of suit and not as damages, reasonable
attorneys fees to be fixed by the court (including without limitation,
costs, expenses and fees on any appeal). The prevailing party shall be the
party entitled to recover its costs of suit, regardless of whether such
suit proceeds to final judgment. A party not entitled to recover its costs
shall not be entitled to recover attorneys' fees. No sum for attorneys'
fees shall be counted in calculating the amount of a judgment for
-14-
purposes of determining if a party is entitled to recover
costs or attorneys' fees.
5.12 Notices. whenever any party hereto desires or is required to give any
notices, demand, or request with respect to this Warrant, each such
communication shall be in writing and shall be effective only if it is
delivered by personal service, sent by telecopy or mailed, United States
certified mail, overnight service, postage prepaid, return receipt
requested, addressed as follows:
Company: Share Technologies Cellular, Inc.
100 Great Meadow Road
Wethersfield, CT 06109
Attn: Legal Department
Fax No. (203) 258-2401
Holder: RHI Holdings, Inc.
Washington Dulles International Airport
300 West Service Road
Chantilly, VA 20153
Attn: Donald E. Miller, Esq.
Fax No. (703) 478-5775
Such communication shall be effective when they are personally delivered,
or telecopied, to the addressee thereof; but if sent by certified mail in
the manner set forth above, they shall be effective one (1) business days
after being deposited in the United States mail. Any party may change its
address for such communications by giving notice thereof to the other
party in conformity with this Section.
5.13 Time. Time is of the essence of this Warrant.
5.14 No Endorsement. Holder understands that no federal or state securities
administrator has made any findings or determination relating to the
fairness of investment in the Company or purchase of the Common Stock
hereunder and that no federal or state securities administrator has
recommended or endorsed the offering of securities by the Company
hereunder.
5.15 Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter,
-15-
singular or plural, as the identity of the person,
persons, entity or entities may require.
5.16 Further Assurances. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the
transactions described herein and contemplated hereby, and to carry into
effect the intents and purposes of this Warrant.
-16-
COMPANY:
SHARED TECHNOLOGIES CELLULAR, INC.
By:
------------------------------
Name:
Title:
THIS OPTION AGREEMENT HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS
SO REGISTERED OR AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT IS AVAILABLE.
OPTION AGREEMENT
This OPTION AGREEMENT ("Agreement") is made as of the 27th day of
December, 1996 by and between Shared Technologies Fairchild Inc., a Delaware
corporation with a principal place of business at 100 Great Meadow Road,
Wethersfield, Connecticut 06109 (the "Company") and RHI Holdings, Inc., a
Delaware corporation with a principal place of business at 110 East 59th Street,
31st Floor, New York, New York 10022 ("Optionee"). Capitalized terms used herein
and not defined herein shall have the meanings ascribed to them in the Purchase
Agreement by and between Optionee and the Issuer of even date herewith (the
"Purchase Agreement").
WHEREAS, the Company is the owner of Two Hundred Fifty Thousand
(250,000) shares of Series B Convertible Preferred Stock (the "Series B
Preferred"), $.01 par value per share of Shared Technologies Cellular, Inc., a
Delaware corporation (the "Issuer"), and a certain warrant (the "Warrant")
registered in the name of the Company representing the right to purchase shares
of common stock ("Common Stock"), $.01 par value per share of the Issuer, and
all capital stock, rights and privileges appurtenant thereto and associated
therewith, (such shares of Series B Preferred, such Warrant and such capital
stock, rights and privileges, collectively, the "Securities"), including,
without limitation, the rights set forth in a certain Stock Purchase Agreement
dated as of August 19, 1996 between the Issuer and the Company (the "Stock
Purchase Agreement") and a certain Equity Holders Agreement dated as of August
19, 1996 among International Capital Partners, Inc. and its affiliates, Zesiger
Capital Group LLC and the Company (the "Equity Holders Agreement"); and
WHEREAS, the Company desires to grant Optionee an option to purchase
the Securities and Optionee desires an option to purchase the Securities, upon
the terms and conditions herein stated.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Grant of Option. The Company hereby grants to Optionee an option
(the "Option") to purchase all, but not less than all, of the Securities upon
the terms and conditions hereinafter set forth.
-2-
2. Payment for the Option. Simultaneously with the execution hereof,
Optionee shall pay to the Company Five Thousand Dollars ($5,000.00) (the "Option
Price") by certified or bank cashier's check or other immediately available
funds for the purchase of the Option.
3. Effective Date. This Option shall become effective upon the Initial
Closing.
4. Termination Date. This Option shall terminate and be of no further
force or effect 156 days after the date of the Initial Closing if Optionee has
failed to purchase 666,667 or more Units pursuant to the Purchase Agreement on
or prior to such date (the "Termination Date").
5. Repurchase of Option. If the Issuer exercises its Repurchase Option
pursuant to Section 2 of the Purchase Agreement, the Company shall repurchase
the Option from Optionee by paying to Optionee the Option Price by certified or
bank cashier's check or other immediately available funds.
6. Purchase Price. The purchase price of the Securities shall be Two
Million Four Hundred Ninety-Five Thousand Dollars ($2,495,000.00) (the "Purchase
Price") and shall be payable in the form of a Promissory Note substantially in
the form of Exhibit A attached hereto and made a part hereof (the "Note"). The
Note shall be secured by a Pledge Agreement substantially in the form of Exhibit
B attached hereto and made a part hereof (the "Pledge Agreement").
7. Exercise Procedure. Subject to the conditions set forth in this
Option Agreement, this Option shall be exercised by Optionee's delivery of
written notice of exercise to the Company at its address set forth above. Such
exercise shall be effective upon receipt by the Company of an executed original
copy of the Note and the Pledge Agreement. (The effective date of exercise, if
at all, is referred to herein as the "Exercise Date"). The Optionee may not
purchase less than all of the Securities.
8. Delivery of Shares. (a) Upon payment of the Purchase Price, the
Company shall deliver to Optionee :
(i) the shares of Series B Preferred, duly endorsed in blank or
accompanied by duly executed stock transfer powers with all requisite
stock transfer stamps attached; and
(ii) the Warrant, accompanied by a duly executed Warrant
assignment.
(b) Effective upon payment of the Purchase Price, the Company hereby
sells, assigns and transfers unto Optionee, and Optionee hereby purchases,
acquires and accepts all right, title, and interest of the Company in, to and
under the Stock Purchase Agreement and the Equity Holders Agreement.
-3-
(c) The Company and Optionee shall execute such other instruments and
take such other action as are reasonably requested by the other or the Issuer to
effect the transfers of the Securities.
9. Representations and Warranties of the Company. The Company hereby
represents and warrants to Optionee as of the date hereof and as of the Exercise
Date, that:
(a) The Company is the sole, legal and beneficial owner and holder of
the Securities, and all such shares of Securities are owned free and clear of
all liens, encumbrances, charges, restrictions and assessments of every nature.
The Company has full power and authority to sell, assign and transfer the
Securities in accordance with the terms hereof.
(b) The Company has full right, power, authority and capacity to sell,
assign, transfer and deliver the Securities pursuant to this Assignment. Upon
payment of the Purchase Price and delivery of the Securities to Optionee,
Optionee will have good, valid and marketable title to the Securities, free and
clear of all liens, encumbrances, charges, restrictions and assessments of every
nature, except as provided in the Pledge Agreement.
(c) The execution, delivery and performance by the Company of this
Agreement has been duly authorized by all requisite corporate action. This
Agreement has been duly executed and delivered on behalf of the Company and
constitutes the valid and binding obligations of the Company, enforceable in
accordance with its terms, except that enforceability hereof may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and by principles of equity regarding the
availability of remedies.
10. Representations and Warranties of Optionee. Optionee represents
and warrants on the date hereof and at the Exercise Date that:
(a) The execution, delivery and performance by Optionee of this
Agreement has been, and the Note and the Pledge Agreement will be, duly
authorized by all requisite corporate action. This Agreement has been, and the
Note and the Pledge Agreement will be, duly executed and delivered on behalf of
Optionee and constitute the valid and binding obligations of Optionee,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the rights and remedies of creditors generally and to the exercise of
judicial discretion in accordance with general principles of equity.
(b) Optionee acknowledges that all documents, records and books
pertaining to this investment have been made available for inspection by it, its
attorney and/or its accountant and the books and records of the Company will be
available upon reasonable notice, for inspection by Optionee during reasonable
business hours at the Company's
-4-
principal place of business. Optionee and/or its advisor(s) have had a
reasonable opportunity to ask questions of and receive answers from the Company
or a person or persons acting on its behalf, concerning the terms and
conditions of the offering of the Option and the Securities. All such questions
have been answered to the full satisfaction of Optionee. No representations
(whether written or oral) have been furnished to Optionee or its advisor(s) in
connection with the offering of the Option or the Securities which were in any
way inconsistent with the information referenced above. Optionee is acquiring
the Option and the Securities without being furnished any offering literature
or prospectus other than the documents referred to herein.
(c) Optionee (i) has adequate means of providing for its current needs
and possible personal contingencies, (ii) has no need for liquidity in this
investment, (iii) is able to bear the substantial economic risks of an
investment in the Option and the Securities for an indefinite period, (iv) can
afford a complete loss of such investment, and (v) does not have an overall
commitment to investments which are not readily marketable, that are
disproportionate to Optionee's net worth, and Optionee's investment in the
Option and the Securities will not cause such overall commitment to become
excessive.
(d) Optionee recognizes that the purchase of the Option and the
Securities involves significant risks and is not recommended for investors who
have any need for a current return on their investment or who cannot bear the
risk of losing their entire investment.
(e) Optionee understands that the sale of the Option or the Securities
have not been registered under the Securities Act of 1933, as amended (the
"Act"), in reliance upon an exemption therefrom. Optionee understands that the
Option and the Securities must be held indefinitely unless the sale or other
transfer thereof is subsequently registered under the Act or an exemption from
such registration is available.
(f) The Option and the Securities are being purchased solely for
Optionee's own account for investment purposes only and not for the account of
any other person and not for distribution, assignment or resale to others, and
no other person has a direct or indirect beneficial interest in the Option or
the Securities.
(g) Optionee will not transfer the Option or the Securities without
registering them under applicable federal or state securities laws unless the
transfer is exempt from registration under such laws. Optionee realizes that the
Company may not allow a transfer of the Option or the Securities unless the
transferee meets the suitability standards as an initial purchaser of the Option
or the Securities. Optionee understands that legends will be placed on
certificates representing the Securities, with respect to the above restrictions
on resale or other disposition of the Securities and that stop transfer
instructions have or will be placed with respect to the Option and the
Securities so as to restrict the assignment, resale or other disposition
thereof.
-5-
11. Non Transferability of Option. The Option is personal and no
rights granted hereunder may be transferred, assigned, pledged or hypothecated
in any way (whether by operation of law or otherwise) nor shall any such rights
be subject to execution, attachment or similar process; provided, however, that
the Option may be transferred to The Fairchild Corporation, a New York
corporation ("TFC"), or any of its affiliates (as such term is defined in the
Act). Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of the Option or of such rights contrary to the provisions hereof, or
upon the levy of any attachment or similar process upon the Option or such
rights, the Option and such rights shall, at the election of the Company, shall
terminate and be of no further force or effect.
12. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the parties hereto; provided, however that the
Option may be sold or otherwise transferred only to TFC or its affiliates
without any restriction whatsoever (other than applicable Federal and state
securities laws). Upon any such transfer, the transferee of the Option shall
have the benefits of this Agreement.
(b) Except as provided herein, this Agreement may not be amended or
otherwise modified unless evidenced in writing and signed by the Company and
Optionee.
(c) Any notice required or desired to be served, given or delivered
hereunder shall be in writing, and shall be deemed to have been validly served,
given or delivered upon the earlier of (a) personal delivery to the address set
forth below, (b) in the case of mailed notice, three (3) days after deposit in
the United States mails, with proper postage for certified mail, return receipt
requested, postage prepaid, (c) in the case of telex, facsimile or other
telecommunications transmission, upon receipt, or (d) in the case of notice by
Federal Express or other reputable overnight courier service, one (1) business
day after delivery to such courier service, addressed to the party to be
notified as follows: (i) if to Optionee, at the address set forth above,
Attention: Jeffrey J. Steiner (Telecopy: (212) 888-5674), with a copy to Donald
E. Miller, Esq., The Fairchild Corporation, 300 West Service Road, Chantilly,
Virginia 22021 (Telecopy: (703) 478-5775) and (ii) if to the Company, at the
address set forth above, Attention: Legal Department (Telecopy: (860) 258-2455),
or at such other address as the party to whom such notice is directed may have
designated by notice to the other party hereto.
(d) This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut, without regard to its principles of
conflicts of laws.
-6-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under their respective corporate seals as of the day and year first
above written.
SHARED TECHNOLOGIES FAIRCHILD INC.
By: /s/ Vincent DiVincenzo
-------------------------------
Vincent DiVincenzo
Chief Financial Officer
RHI HOLDINGS, INC.
By: /s/ Colin M. Cohen
-------------------------------
Name: Colin M. Cohen
Title: Vice President and
Chief Financial Officer
ACKNOWLEDGED AND AGREED TO:
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Vincent DiVincenzo
-----------------------------
Vincent DiVincenzo
Chief Financial Officer
Date: December 27, 1996
