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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 20, 1999
SHARED TECHNOLOGIES CELLULAR, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13732 06-386411
(State of incorporation) (Commission File No.) (IRS Employer
Identification No.)
100 Great Meadow Road, Suite 104
Wethersfield, Connecticut 06109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 258-2500
(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 20, 1999, Shared Technologies Cellular, Inc. (the "Company") completed
the acquisition of all of the issued and outstanding capital stock of Retail
Cellular, Inc. ("RCI"), with an effective date as of July 15, 1999, for a
purchase price of 150,000 shares of the Company's common stock. The acquisition
was valued at approximately $1,547,000. RCI will be held as a wholly-owned
subsidiary of the Company.
It is intended that the transaction will enhance the Company's sales
capabilities, particularly in connection with the distribution of the Company's
prepaid cellular services.
The Company purchased RCI from Retail Distributors, Inc. ("RDI"), the chief
executive officer of which is Victor Grillo, Sr., who was elected to the
Company's Board of Directors on July 7, 1999 at the annual meeting of the
Company's stockholders.
In connection with the RCI transaction, the Company also entered into a Services
Agreement with RDI, pursuant to which RDI will provide certain services relating
to the marketing and distribution of the Company's prepaid cellular services.
Pursuant to terms of the Service Agreement, the Company has paid RDI
approximately $843,000 and issued to RDI 118,194 shares of the Company's Common
Stock. Additional compensation, exclusive of expenses, is performance based,
payable through the issuance of Common Stock purchase warrants. Also, RCI
entered into a Consulting Agreement with RDI, expiring March 31, 2001, pursuant
to which RDI shall provide certain sales and marketing services for a monthly
fee of $10,000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
4.1 Stock Purchase Agreement dated as of July 15, 1999 by and between
Shared Technologies Cellular, Inc. and Retail Distributors, Inc.
4.2 Services Agreement dated as of July 15, 1999 by and between Shared
Technologies Cellular, Inc. and Retail Distributors, Inc.,
including form of Warrant to Purchase Common Stock of the Company
issuable to Retail Distributors, Inc., attached as Exhibit A
thereto.
4.3 Consulting Agreement dated as of July 15, 1999 by and between
Retail Cellular, Inc. and Retail Distributors, Inc.
4.4 Registration Rights Agreement dated as of July 15, 1999 by and
between Shared Technologies Cellular, Inc. and Retail
Distributors, Inc.
</TABLE>
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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.
Date: July 22, 1999 SHARED TECHNOLOGIES CELLULAR, INC.
By:/s/ Vincent DiVincenzo
-------------------------------
Name: Vincent DiVincenzo
Title: Chief Financial Officer
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STOCK PURCHASE AGREEMENT
THIS AGREEMENT made this 15th day of July, 1999 by and between RETAIL
DISTRIBUTORS, INC., a Delaware corporation ("RDI"), and SHARED TECHNOLOGIES
CELLULAR, INC., a Delaware corporation ("STC").
WITNESSETH:
WHEREAS, RDI is the owner of One Thousand (1,000) shares (the " RCI
Shares") of the common stock, $.01 par value, of Retail Cellular, Inc., a
Delaware corporation ("RCI"), which comprise all of the issued and outstanding
shares of capital stock of RCI; and
WHEREAS, RDI desires to sell the RCI Shares to STC, and STC desires to
purchase the RCI Shares, upon the terms and conditions set forth in this
Agreement;
NOW THEREFORE, for and in consideration of the mutual agreements
hereinafter set forth and of other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Purchase and Sale of RCI Shares.
1.1 Transfer of Stock. Based upon the representations, warranties and
agreements contained herein and subject to the terms and conditions hereinafter
set forth RDI agrees to sell, transfer, convey and deliver to STC on the Closing
Date (as hereinafter defined) and STC agrees to purchase, acquire and accept
from RDI, the RCI Shares.
1.2 Closing. The closing of the sales of the RCI Shares hereunder (the
"Closing") shall take place through the exchange of documents by overnight
courier. The time and place of the Closing are herein called "Closing" and the
"Closing Date."
1.3 Transactions at Closing. At the Closing, RDI shall deliver to STC
the stock certificate representing the RCI Shares, accompanied by a stock power
duly endorsed in blank, and STC shall pay the purchase price for such shares in
the manner provided in Section 1.4 hereof. Each of the parties shall also
deliver such certificates, documents and opinions as are necessary to satisfy
the conditions set forth in this Agreement. Purchase Price for RCI Shares.
1.4 Payment of Purchase Price. Subject to the terms and conditions
herein stated, STC agrees to deliver to RDI at Closing One Hundred Fifty
Thousand (150,000) shares of STC common stock, $01 par value, (the "Purchase
Price").
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1.5 Tax-Free Reorganization. This Agreement contemplates a tax-free
reorganization of RCI pursuant to the terms of which RCI will become a
wholly-owned subsidiary of STC, pursuant to Code Section368(a)(1)(B). RDI shall
receive capital stock in STC in exchange for the capital stock of RCI. The
parties expect that the reorganization will further certain of their business
objectives, including, without limitation, providing shareholders of RDI an
equity incentive to reinforce their commitment to assist in the success of STC's
business interests and providing STC with the ownership of RCI to enhance STC's
sales capabilities.
2. Representations and Warranties of RDI.
Each of the Schedules described in this Section 2 is annexed hereto and
made a part of this Agreement, is dated as of the date of this Agreement, and is
identified specifically as a Schedule to a particular Section.
RDI represents and warrants to STC as follows:
2.1 Due Incorporation; Good Standing; Corporate Authority.
(1) RDI is a corporation duly organized, validly existing and
in good standing under the laws of Delaware and has the corporate power
and authority to own or lease all of its properties and assets
(including, without limitation, its shares of capital stock of RCI) and
to carry on its business as it is now being conducted. The Board of
Directors of RDI has authorized and approved this Agreement, and RDI
has the corporate power and is duly authorized to enter into this
Agreement and to carry out the transactions contemplated hereby. The
copies of the corporate charter of RDI and all amendments thereto
(certified by the Secretary of State of Delaware) and of its by-laws as
amended to date (certified by its Secretary) which have heretofore
been, or prior to the Closing Date will be, delivered to STC are true
and complete. . This Agreement, when executed and delivered by the
undersigned officers of STC and RDI, will constitute the valid and
binding agreement of RDI, enforceable in accordance with its terms.
(2) RCI is a corporation duly organized, validly existing and
in good standing under the laws of Delaware and has the corporate power
and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted. The copies of the
corporate charter of RCI and all amendments thereto (certified by the
Secretary of State of Delaware) and of its by-laws as amended to date
(certified by its Secretary) which have heretofore been, or prior to
the Closing Date will be, delivered to STC are true and complete.
2.2 Capitalization.
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(1) The authorized capital stock of RCI consists of Two
Thousand (2,000) shares of common stock, $.01 par value ("RCI Common
Stock"), of which, as of the date hereof One Thousand (1,000) shares
are issued and outstanding, all of which are owned beneficially and of
record by RDI:
(2) The RCI Shares have been duly authorized and validly
issued and are fully paid and non-assessable. None of such shares were
issued in violation of any preemptive rights of subscription or
purchase in respect thereof. There are no outstanding obligations,
options or rights to acquire shares of capital stock of RCI or any
outstanding securities or other instruments convertible into shares of
capital stock of RCI.
2.3 No Violation of Other Instruments. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby will not, violate any provision of the corporate charter or by-laws of
RDI or of RCI or any provision of, or result in the acceleration of any
obligation under, any mortgage, note, lien, lease, franchise, license, permit,
agreement, instrument, order, arbitration, award, judgment or decree or in the
termination of any license, franchise, lease or permit to which either RDI or
RCI is a party or by which either of them is bound, and do not and will not
violate or conflict with any law, statute, rule, regulation or restriction of
any kind or character to which RDI or RCI or their respective properties are
subject.
2.4 Subsidiaries. RDI does not own or control (directly or indirectly)
any capital stock or other equity securities of any other corporation or
business organization except for RCI. RCI does not own or control (directly or
indirectly) any capital stock or other equity securities of any other
corporation or business organization.
2.5 Limited Operating History of RCI. RCI has a limited operating
history. As such, RCI has no material assets or liabilities as of the Closing
Date, with the exception of a consulting agreement with Ray J.Wysocki, Jr., a
true copy of which has been delivered to STC. 2.6 Personal Property. RCI owns no
tangible personal property as of the Closing Date.
2.7 Absence of Changes. As of the Closing Date, RCI will not have, (i)
incurred any obligation or liability (absolute or contingent) except pursuant to
this Agreement; (ii) increased the salary or compensation payable to any of its
directors, officers, employees or agents; (iii) made or received any loans or
advances to or from any individuals, firms, corporations or other entities; (iv)
suffered any operating losses or waived any rights of substantial value; (v)
made any capital expenditures or commitments therefor in excess of $5,000 in the
aggregate; (vi) issued, sold, purchased or redeemed, or except as contemplated
by this Agreement, agreed to issue, sell, purchase or redeem any common stock or
any other capital stock, bond, right, option or other security, or declared, set
aside or paid any dividend or other distribution in respect of its capital stock
of any class; or (vii) entered into any transaction other than in the ordinary
course of business except for this Agreement. RDI agrees that from the date
hereof to the Closing Date,
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the business of RCI will be operated in the regular and ordinary course and RCI
will not take any action enumerated in clauses (i) through (vii) above without
the prior written consent of STC.
2.8 Accounts Receivable. RCI has and on the Closing Date will have good
and marketable title to its accounts receivable free and clear of all liens,
defenses, counterclaims and set offs and all such receivables are and at the
Closing Date will be and bona fide receivables representing obligations for the
total dollar amount thereof shown on the books of RCI, which resulted or shall
result from the regular course of its business.
2.9 Intellectual Property. As of the Closing Date, RCI holds no
patents, patent applications, trademarks, trademark registrations, trademark
registration applications, trade names and service names (collectively "RCI
Intellectual Property") owned or licensed by or to RCI.
2.10 Liabilities. There are no material liabilities of RCI as of the
Closing Date.
2.11 Judgments, Decrees and Orders in Restraint of Business. RCI is not
a party to or subject to any judgment, decree or order entered in any suit or
proceeding brought by any governmental agency or by any other person enjoining
it in respect of any business practice or the acquisition of any property or the
conduct of business in any area.
2.12 Insurance. Since the commencements of its business operations in
1999, RCI has been adequately insured with respect to risks normally insured
against, and in amounts normally carried by companies similarly situated. All
coverages will be cancelled as of the Closing Date.
2.13 Interests in Property. No officer or director of RCI or any
stockholder of RCI has any material interest in any property, real or personal,
tangible or intangible, used in or pertaining to the business of RCI.
2.14 Real Property. RCI has no interests of any kind in real property.
2.15 Litigation. There are no material claims, actions, suits or
proceedings pending or threatened against or affecting RCI or any material part
of its properties or business or which would prevent or hinder the consummation
of the transactions contemplated hereby; and RCI is not charged with or to the
knowledge of RDI, threatened with a charge of a violation, or under
investigation with respect to a possible violation, of any provision of any
federal, state or local law, administrative ruling or regulation relating in a
material way to any material aspect of its business, which individually or in
the aggregate would be likely to have a material adverse effect on the business
or financial condition of RCI.
2.16 Contracts. Except for a consulting agreement with Ray J. Wysocki
entered into on or about the date hereof, RCI is not a party to any contracts of
any kind as of the date hereof, including, without limitation, of the following
types:
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(1) Any union contract or employment contract or arrangement, oral or
written, with any officer, consultant, director or employees;
(2) Any plan, contract or arrangement, oral or written providing for
bonuses, pensions, deferred compensation, retirement payments, profit sharing,
employee welfare benefits, through the purchase of insurance or otherwise, or
the like, including any plans incorporated into union contracts (identifying
such of the foregoing as shall be qualified under Section 401(a) of the Internal
Revenue Code);
(3) Any lease of personal property other than in the ordinary course of
business;
(4) Any contract for the purchase of equipment or construction
involving any expenditure by it of more than $5,000.00;
(5) Any joint venture contract or arrangement or any other agreement
not with employees which involves a sharing of profits;
(6) Any instrument evidencing or related in any way to indebtedness for
borrowed money by way of direct loan, purchase money obligations, conditionally
sales, lease purchase arrangement, guarantee or otherwise;
(7) Any contract containing covenants materially limiting the freedom
of RCI to compete in any line of business with any persons;
(8) Any material license agreement either as licensor or as licensee;
(9) Any material purchase or sale contract involving a purchase or sale
price of $5,000.00 or more or any material warranties or commitments made in
connection therewith by RCI;
(10) Except for those made in the ordinary course of business, any
material contract or agreement not of the type covered otherwise by this Section
3.16 which is not to be performed by RCI prior to the date hereof; and
(11) Any contract agreement, plan, lease, license, instrument or other
arrangement undertaking or understanding which requires the consent of the other
party thereto or of any other person to the consummation of the transactions
contemplated hereby.
All such contracts, agreements, plans, leases, licenses, instruments,
and other arrangements undertakings and understandings are valid and in full
force and effect and RCI has not breached any material provisions of and in not
in default in any materially respect under the terms of any such contract,
agreement, plan, lease or license.
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2.17 Taxes. Each of RDI and RCI has duly filed with the appropriate
governmental agencies all federal, state and local tax returns or reports
required to be filed and has paid or has set up an adequate reserve for the
payment of all taxes, interest, penalties, assessments or deficits required to
be paid or claimed to be due in respect to the periods covered by such returns
or reports and set up an adequate reserve for the payment of all income,
franchise, excise, property transfers, sales, use, value added, employment or
other taxes, excises or governmental charges payable and respect of the period
subsequent to the last of said periods. Neither RDI nor RCI has any material
liability for such taxes in excess of the amounts so paid and does not
anticipate any material liability for such taxes in excess of the reserves so
established. Neither RDI nor RCI is delinquent in the payment of any tax,
assessment or governmental charge and has not requested any extension of time
within which to file any tax return which have not since been filed. No
deficiencies for any tax assessment or governmental charge have been claimed,
proposed or assessed with respect to RDI or RCI.
2.18 Government Permits. Set forth in Schedule 2.18 is a complete and
accurate list and description of all material permits, licenses, orders and
other authorizations and approvals of all federal, state, local or foreign
governmental or regulatory bodies (collectively "Government Permits") used or
required in the conduct of the business of RCI. RCI is in compliance with all
such Government Permits; all such Government Permits are in full force and
effect and no suspension or cancellation nor any proposed adverse modification
of any of them is pending or, to the knowledge of the of RDI, threatened. No
consent of any governmental or regulatory body issuing such Government Permits
is necessary for the consummation of the transactions contemplated by this
Agreement. The consummation of the transactions contemplated hereby will not
result in the suspension, cancellation or modification of any Government Permit
currently held or to be obtained by RCI.
2.19 Bank Accounts. As of the Closing Date, RCI has no accounts at
banks and other institutions or the type of accounts therein in which RCI would
have cash or cash equivalents invested or on deposit.
2.20 Foreign Qualifications. Neither the ownership nor the leasing by
RCI of its properties nor the conduct of its business requires RCI to be
qualified to do business in any jurisdiction other than Massachusetts.
2.21 Compliance With Laws. RDI does not know of any existing violations
of any applicable provisions of federal, state or local law or regulations,
which in the aggregate are material to the business of RCI, and since the date
of commencement of its business operations, RCI has not been charged with any
violation of any federal or state law or regulation relating to its
manufacturing or business practices, employment practices, or safety and working
conditions in its plant.
2.22 Borrowings. As of the Closing Date, RCI had no indebtedness for
borrowed money or any commitments to borrow money, or any guarantees with
respect to borrowed
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money given or committed to be given by RCI, nor had it made any commitments to
borrow money or guarantee any indebtedness
2.23 Labor. There are no labor strikes or other labor troubles
(including any disputes, grievances or claims of a similar nature) pending or,
to the best of the knowledge and belief of RDI, threatened against RCI.
2.24 Physical Assets. All of the physical assets used in the business
of RCI comply in all material respect with all applicable ordinances and
regulations and building, zoning, environmental or other laws. The fixed assets,
machinery and equipment of RCI are in reasonable and serviceable condition,
ordinary wear and tear excepted.
2.25 Books and Records. The books of account, stock record books,
corporate minute books and other business records of RCI are, and on the Closing
Date will be, complete and correct in all material respects and maintained in
accordance with good business practices.
2.26 Miscellaneous. No representation or warranty made by RDI in this
Agreement and no statement made by or on behalf of RDI in any certificate,
document, exhibit or schedule furnished or to be furnished in connection with
the transactions herein contemplated contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary to make such representation or warranty or any such statement not
misleading.
3. Representations and Warranties of STC.
STC represents and warrants to RDI as follows:
3.1 Corporate Organization; Good Standing; Corporate Authority. STC is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Board of Directors of STC has authorized and
approved this Agreement, and the execution hereof, and STC has corporate power
and is duly authorized to consummate the transactions contemplated by this
Agreement. This Agreement, when executed and delivered by the undersigned
officers of STC and RDI, will constitute the valid and binding agreement of STC,
enforceable in accordance with its terms.
3.2 Authorization of STC Shares. The issuance of the STC Shares and the
Warrants has been duly authorized and when issued and delivered pursuant to this
Agreement, the STC Shares will have been legally and validly issued and will be
fully paid and non-assessable, and no stockholder of STC will have any
preemptive right of subscription or purchase in respect thereof.
3.3 No Violation of Other Instruments. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby and thereby will not, violate any provision of the corporate charter or
by-laws of STC, or any provision of, or result in the acceleration of any
obligation under, any mortgage, note, lien, lease, franchise, license,
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permit, agreement, instrument, order, arbitration award, judgment or decree or
in the termination of any license, franchise, lease or permit to which STC is a
party or by which it is bound and will not violate or conflict with any other
restriction of any kind or character to which STC is subject.
3.4 Financial Statements of STC. The financial statements of STC, as
stated in its filings with the U.S. Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended, for each of the three years
preceding the Closing, fairly present the financial position of STC as of the
dates thereof and the results of its operations and the changes in its financial
position for such years in conformity with generally accepted accounting
principles applied on a consistent basis.
3.5 Miscellaneous. No representation or warranty made by STC in this
Agreement and no statement made by or on behalf of STC in any certificate,
document, exhibit or schedule furnished or to be furnished in connection with
the transactions herein contemplated contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary to make such representation or warranty or any such statement not
misleading.
3.6 Litigation. There are no material claims, actions, suits or
proceedings pending or threatened against or affecting STC or any material part
of its properties or business or which would prevent or hinder the consummation
of the transactions contemplated hereby; and STC is not charged with or to the
knowledge of STC, threatened with a charge of a violation, or under
investigation with respect to a possible violation, of any provision of any
federal, state or local law, administrative ruling or regulation relating in a
material way to any material aspect of its business, which individually or in
the aggregate would be likely to have a material adverse effect on the business
or financial condition of STC.
4. Ownership of RCI Shares by RDI.
4.1 Representations of RDI. RDI represents and warrants to STC:
(1) That it is the sole beneficial and record owner of the RCI
Shares being sold by it hereunder, free and clear of any and all claims,
pledges, security interests, encumbrances, restrictions upon transfer and other
rights of other whatsoever;
(2) That at the Closing STC will acquire good and marketable title
to the RCI Shares being sold by it hereunder free and clear of any and claims,
pledges, security interests, encumbrances, restrictions upon transfer and other
rights of others whatsoever;
(3) That no person has given notice of or has any adverse claim to
any of such shares; and
(4) That it has full right, power, and authority to execute and
deliver this Agreement and to carry out the transactions contemplated hereby.
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4.2 Restrictions Prior to Closing Date. RDI agrees that between the
date hereof and the Closing Date, it shall not sell, pledge, transfer, otherwise
dispose of, or grant any rights to any third parties with respect to, the RCI
Shares nor permit RCI to enter into any commitment, agreement, understanding or
other arrangement which could result in the change of control of RCI otherwise
then pursuant to this Agreement.
5. Indemnification by RDI.
5.1 Indemnification. RDI agrees to indemnify, defend and hold harmless
STC and RCI and its and their officers, directors, employees and shareholders
from and against any and all actions, suits, proceedings, claims, demands,
assessments, judgments, liability, loss, damage, cost or expense, including,
without limitation, its reasonable attorneys fees and disbursements
(collectively, "Losses" and singly a "Loss"), arising out of the untruth of any
representation or the breach of any warranty or covenant, agreement or other
provision made or to be performed by RDI under or pursuant to or contained in
this Agreement or any other agreement, certificate or other writing executed and
delivered pursuant hereto.
5.2 Indemnification. STC agrees to indemnify, defend and hold harmless
RDI and its officers, directors, employees and shareholders from and against any
and all Losses, arising out of the untruth of any representation or the breach
of any warranty or covenant, agreement or other provision made or to be
performed by STC under or pursuant to or contained in this Agreement or any
other agreement, certificate or other writing executed and delivered pursuant
hereto.
5.3 Threshold for Indemnification. Sections 5.1 and 5.2 hereof shall
only apply with respect to Claim(s) individually or in the aggregate in excess
of $5,000.
6. Transactions Prior to Closing Date.
6.1 Investigation of Assets and Business. STC may, prior to the Closing
Date and through its own representatives make such investigation of the assets
and business of RCI, including the confirmation of its assets and liabilities,
as it deems necessary or advisable, but such investigation, if conducted, shall
not affect the representations and warranties of RDI hereunder. RDI agrees to
permit STC and its representatives to have full access at all reasonable times
to the premises and to all books and records of RCI and the officers of RDI and
RCI will furnish to STC such financial and operating data and other information
with respect to the business and properties of RCI as STC shall from time to
time reasonably request. In the event of the termination of this Agreement at or
prior to the Closing Date, STC will deliver to RDI all copies in the possession
of STC or its representatives of documents, work papers and other materials so
obtained by STC or otherwise obtained by STC or on its behalf from RDI or RCI in
connection with the matters covered by this Agreement, whether so obtained
before or after the execution hereof. STC will not at any time until the Closing
Date itself use for any purpose other than as set forth in this Agreement
directly or indirectly or through any subsidiary, any information so obtained or
otherwise obtained from RDI or RCI hereunder or in connection
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herewith and will use its best efforts to have all such information kept
confidential and not used in any way detrimental to RDI or RCI. RDI shall permit
STC and its agents to review and examine the financial statements, books and
records of RCI and will request its independent certified public accountants to
permit STC and its agents to review and examine the working papers of such
accountants relating to the books and accounts of RCI.
6.2 Conduct of Business. RDI agrees that from and after the date hereof
to the Closing Date and except as otherwise consented to or approved in writing
by STC or as required by this Agreement, the business of RCI shall be conducted
only in the ordinary course and so as to comply with the provisions of Section
2.7 of this Agreement.
7. Conditions to STC's Obligation to Close.
The obligation of STC to consummate the Closing hereunder is subject to
the satisfaction of the following conditions on or prior to the Closing Date;
provided however, STC may waive any such condition and proceed with the Closing:
7.1 Performance. Each of the acts and undertakings of RDI to be
performed on or before the Closing Date pursuant to the terms hereof shall have
been performed.
7.2 Certificates, Etc. STC shall have been furnished:
(1) A certified copy of the resolution or resolutions duly adopted
by the Board of Directors of RDI approving this Agreement and the services
agreement between RDI and STC to be entered into on or about the date hereof;
(2) Certificates of Good Standing as to each of RDI and RCI issued
by the Secretary of State of Delaware;
7.3 Truth of Representations and Warranties. Except as affected by
transactions contemplated by this Agreement, the representations and warranties
of RDI contained in this Agreement and in the Schedules delivered to STC
pursuant hereto shall be true in all material respects on and as of the Closing
Date with the same effect as if those representations and warranties had been
made on and as of such date regardless of the date of this Agreement, and STC
shall have received at the Closing a certificate to that effect, dated the
Closing Date, executed on behalf of RDI by its President or Treasurer.
7.4 Other Agreements. Concurrently with the execution of this
Agreement,
(a) STC and RDI shall enter into a mutually agreeable services
agreement (the "Services Agreement"), and
(b) RCI and Ray J. Wysocki, Jr. shall enter into a mutually
agreeable consulting agreement (the "Consulting Agreement").
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7.5 Consent of Other Parties. To the extent that any mortgages, notes,
leases, franchises, agreements, licenses or permits by which any corporation
that is a party hereto is bound shall require the consent of any other person to
the transactions contemplated hereby, such consents shall have been obtained by
the Closing Date.
7.6 Receipt of Approvals. STC shall have received or shall satisfy
itself that it will receive from all authorities having any jurisdiction over
the business of STC or RCI all necessary approvals of the transactions
contemplated hereby and no such approval (or any license or permit granted to
STC or RCI) shall have been withdrawn or suspended; and STC and RDI agree to use
their best efforts to obtain such approvals.
7.7 Directors and Officers. All officers and directors of RCI other
than Raymond J. Wysocki, Jr. shall have resigned from their positions. Mr.
Wysocki shall remain a director and President of RCI and shall report to STC's
chief executive officer. STC agrees that Victor Grillo, Sr. shall be nominated
for election to the Board of Directors of STC at the next annual meeting of
stockholders of STC.
7.8 Delivery of Books and Records. The books of account, stock record
books, corporate minute books and other business records of RCI shall have been
delivered to STC.
7.9 Approval of Counsel. STC shall have received the approval of its
counsel to the effect that all legal requirements necessary to the consummation
of the transactions contemplated hereby shall have been completed to the
satisfaction of such counsel in all material respects, provided that the parties
have exercised commercially reasonable efforts to consummate this transaction in
a timely fashion.
8. Conditions to the Obligations of RDI to Close.
The obligations of RDI to consummate the Closing shall be subject to
the satisfaction of the following conditions prior to or at the Closing Date,
provided however, RDI by written waiver executed by them may waive any such
condition and proceed with the Closing:
8.1 Performance. Each of the acts and undertakings of STC to be
performed on or before the Closing Date pursuant to the terms hereof shall have
been performed.
8.2 Certificates, Etc. STC shall have furnished RDI with:
(1) A certified copy of the resolutions duly adopted by the Board of
Directors of STC approving this Agreement and the services agreement between RDI
and STC to be entered into on or about the date hereof;
(2) A Certificate of Good Standing as to STC issued by the Secretary
of State of Delaware;
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8.3 Truth of Representations and Warranties. Except as affected by
transactions contemplated by this Agreement, the representations and warranties
of STC contained in this Agreement and in the Schedules delivered to RDI
pursuant hereto shall be true in all material respects on and as of the Closing
Date with the same effect as those such representations and warranties had been
made on and as of such date regardless of the date of this Agreement, and RDI
shall each have received at the Closing a certificate to that effect dated the
Closing Date and executed on behalf of STC by its Chief Executive Officer, Chief
Financial Officer or Senior Vice President and General Counsel.
8.4 Approval of Counsel. RDI shall have received the approval of its
counsel to the effect that all legal requirements necessary to the consummation
of the transactions contemplated hereby shall have been completed to the
satisfaction of such counsel in all material respects, provided that the parties
have exercised commercially reasonable efforts to consummate this transaction in
a timely fashion.
8.5 Registration Rights Agreement. STC and RDI shall enter into a
mutually agreeable registration rights agreement with respect to shares of STC
common stock to be issued hereunder and under the Services Agreement of even
date.
9. Termination.
9.1 Termination Prior to Closing Date. This Agreement may be terminated
prior to the Closing Date upon written notice thereof to the other parties:
(1) By mutual consent of RDI and STC;
(2) By RDI if the conditions specified in Section 8 hereof are not
satisfied or waived in writing at or prior to the Closing Date;
(3) By STC if the conditions specified in Section 7 hereof are not
satisfied or waived in writing at or prior to the Closing Date; and
(4) By either of RDI or STC if the consummation of the transactions
contemplated hereby has become inadvisable or impracticable by reason of the
institution or threat of material litigation or proceedings against RDI, RCI, or
STC or any of them and the granting of the requested relief with respect thereto
would prevent or materially hinder the consummation of the transactions
contemplated hereby.
9.2 Effect of Termination. Upon termination as provided in this Section
9, the obligations of the terminating party shall cease, and unless such
termination shall be by mutual consent, all other remedies shall be available to
the terminating party. In the event of termination of this Agreement for any
reason, the Services Agreement and the Consulting Agreement shall terminate
effective as of the date of termination hereof.
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10. RDI's Investment Representation; Registration Rights, Etc.
10.1 Investment Representation. RDI represents that it is acquiring the
STC Shares and Warrants, as the case may be (collectively the "STC Securities"),
for investment and not with a view to any distribution thereof except pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, (hereinafter referred to as the "Securities Act"). RDI agrees that it
shall not dispose of any of the STC Securities without compliance with the
registration requirements of the Securities Act unless in the opinion of counsel
for STC, such disposition may be made without registration. RDI understands that
(i) the STC Securities must be held indefinitely unless the same are registered
under the Securities Act at the time of their disposition or an exemption from
such registration is available; (ii) Rule 144 under the Securities Act is not
presently available, and if and when available any sale thereunder of any of the
STC Securities may be made only in limited amounts in accordance with the terms
and conditions of that Rule; (iii) to the extent Rule 144 is not now applicable
to the STC Securities or registration under the Securities Act is not in effect,
sales of the STC Securities will require compliance with an exemption under the
Securities Act in the obtaining of an appropriate opinion of counsel thereon;
the STC Securities are not currently being registered under the Securities Act
on the grounds that, in the opinion of STC and its counsel, the issuance thereof
is exempt under Section 4(2) of the Securities Act and/or Regulation D under the
Securities Act as a transaction by an issuer not involving any public offering,
and STC's reliance thereon is predicated in part on RDI's representations and
warranties set forth in this subsection. RDI agrees that the STC Securities
shall bear a legend reflecting the above restrictions and that the STC
Securities may not be transferred in violation of the legend.
10.2 Registration Rights. The 150,000 shares of STC common stock
composing the Purchase Price (see Section 1.4 hereof) shall be entitled to the
registration rights provided for pursuant to a registration rights agreement
entered into between RDI and STC on or about the date hereof.
10.3 Information and Access to Data. RDI acknowledges receipt of copies
of STC's (i) Registration Statement on Form S-3 as filed with the Securities and
Exchange Commission (the "Commission") on October 28, 1998 (ii) Annual Report on
Form 10-K for the year ended December 31, 1997, (iii) Quarterly Reports on Form
10-Q for the quarters ended March 31, 1998, June 30, 1998 and September 30,
1998, (iv) all Current Reports on Form 8-K filed with the Commission since
December 31, 1997 and (v) the Company's definite Proxy Statement for its 1998
Annual Meeting of Stockholders. STC has granted to RDI the opportunity to ask
questions of and receive answers from representatives of STC, its officers,
employees and agents concerning STC, and all such questions have been answered
to RDI's full satisfaction.
11. Miscellaneous.
11.1 Representations and Warranties. The representations and warranties
of RDI included or provided for herein other than those set forth in Section 4
shall survive for a period of
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two (2) year from and after the Closing Date. The representations and
warranties of RDI included or provided for in Section 4 hereof shall survive the
closing of the transactions contemplated hereby without time limitation except
as otherwise provided by law.
11.2 Expenses. All legal, accounting and other costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party or parties incurring such expenses.
11.3 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered in hand or sent by certified
mail or reputable overnight courier, postage or charges prepaid, addressed as
follows:
If to STC: Shared Technologies Cellular, Inc.
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Attn: Legal Department
If to RDI: Beth Geller, Esq.
DTR Associates Limited Partnership
150 E. Palmetto Park Road, Suite 700
Boca Raton, FL 33432
or such other address as shall be furnished in writing by any party in
accordance with this Section 11.3 and any such notice or communication shall be
deemed effective as of the date so given.
11.4 Entire Agreement. This Agreement and the Exhibits and Schedules
which are a part hereof set forth the entire understanding between the parties
and supersede all previous and contemporaneous written or oral negotiations,
commitments, understandings and agreements relating to the subject matter
contained herein.
11.5 Successors and Assigns. This Agreement shall be binding upon and
shall enure to the benefit of the parties hereto and their respective successors
in interest and permitted assigns. Neither this Agreement nor any rights or
obligations hereunder may be assigned by RDI without the prior written consent
of STC. Neither this Agreement nor any rights or obligations hereunder may be
assigned by STC without the prior written consent of RDI.
11.6 Amendments. This Agreement and any provision contained herein may
not be amended, waived or discharged except by a written instrument signed by
the party to be bound thereby.
11.7 Counterparts. This Agreement may be executed in two or more
counterparts all of which shall be considered one and the same Agreement and
shall be effective when two or more
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counterparts have been signed by each of the parties it being understood that
all parties need not sign the same counterpart.
11.8 Law Governing. This Agreement and the rights and obligations of
the parties hereunder shall be governed by and construed in accordance with the
laws of the State of Connecticut.
11.9 Further Assurances. RDI and STC each agree to execute and deliver
such other documents, certificates, agreements and writings and to take such
other action as any party may reasonable deem to be necessary or desirable in
order to consummate or implement expeditiously the transactions contemplated by
this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, intending the same to take effect as a sealed instrument, as of the
date first above written.
RETAIL DISTRIBUTORS, INC.
By: /s/ Ray J. Wysocki
--------------------
Its: President
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Vincent DiVincenzo
-----------------------
Its CFO
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SERVICES AGREEMENT
This agreement ("Agreement") is made as of the 15th day of July, 1999 by and
between RETAIL DISTRIBUTORS, INC., a Delaware corporation ("RDI"), and SHARED
TECHNOLOGIES CELLULAR, INC., a Delaware corporation ("STC").
RECITALS:
WHEREAS, RDI has agreed to provide to STC certain services relating to the
marketing and distribution of STC's cellular services and products, and such
other services as set forth herein, and STC has agreed to retain RDI to provide
such services, in accordance with the terms and conditions hereof.
NOW THEREFORE, in consideration of the mutual covenants contained herein, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Term and Termination. This Agreement shall have a term commencing as of the
date hereof and expiring March 31, 2001. This Agreement may be terminated by
either party by reason of the other party's default, in accordance with the
provisions of Section 8 hereof, and is subject to termination pursuant to
Section 19.
2. The Services.
Description of Services. The services (collectively referred to herein as the
"Services") to be provided by RDI to STC hereunder shall consist of the
following. RDI shall assist STC in the marketing, sale and distribution of STC's
prepaid cellular products and services, including, without limitation, those
sold through STC's CellEase(R) private label program and through MCI WorldCom,
("Prepaid Services"). The Services shall further include, without limitation,
preparation and delivery of marketing presentations to retailers, assistance in
media (i.e. advertising) planning, media purchasing and media reporting for
Prepaid Services, training of sales personnel of STC and its business partners
(including, without limitation, MCI WorldCom), and other activities reasonably
related to the marketing, sale and distribution of Prepaid Services, and, to a
lesser degree, STC's other products and services. The Services also shall
include RDI providing its commercially reasonable efforts to assist STC in the
collection of all accounts receivable open on the books of STC as of January 31,
1999 from all sales of Prepaid Services (the "Accounts Receivable"). All
Services shall be provided in accordance with STC's instructions and
requirements, as reasonably provided by STC to RDI from time to time.
3. Expenses. For so long as RDI is providing Services pursuant to this
Agreement, STC agrees to pay to RDI the following monthly fixed expense
reimbursements, payable at the end of each month, subject to pro ration for any
partial months and subject to STC's right of set off pursuant to section 3(d)
below:
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a. $90,000 per month, for the period of February 8, 1999 through September 30,
1999;
b. $65,000 per month, for the period of October 1, 1999 through December 31,
1999; and
c. $40,000 per month, for the period of January 1, 2000 through December 31,
2000.
d. STI shall have a right of set off with respect to its payment obligations set
forth in this Section 3, as against the payment obligations owing by RDI to STC
pursuant to that certain Secured Promissory Note dated February 16, 1999 in the
principal amount of $500,000 made by RDI and given to STC (the "Note"), as such
Note obligations become due and only up to the amount of the payment obligations
then due under the Note.
e. In no event shall RDI's reasonable actual costs and expenses incurred in
providing the Services exceed the amounts payable pursuant to this Section 3.
4. Compensation Payable to RDI. RDI shall receive the following compensation for
providing the Services during the term of this Agreement, pursuant to the terms
hereof. All payments to RDI pursuant to this Section 4 shall be made by wire
transfer.
a. Fees Based on Revenue Sharing. STC agrees to pay to RDI monthly fees based on
all of STC's monthly collected revenues from retail sales, during the periods
set forth below, of Prepaid Services through all of its distribution channels
(including, without limitation, MCI WorldCom) on all such sales during the time
period set forth below ("Collected Revenues"), as follows:
(i) During the period of February 8, 1999 through September 30, 1999,
RDI shall be entitled to receive fees in an amount equal to one percent (1%) of
Collected Revenues for each month during such period;
(ii) During the period of October 1, 1999 through December 31, 1999,
RDI shall be entitled to receive fees in an amount equal to three-quarters of
one percent (0.75%) of Collected Revenues for each month during such period; and
(iii) During the period of January 1, 2000 through December 31, 2000,
RDI shall be entitled to receive fees in an amount equal to one-half of one
percent (0.5%) of Collected Revenues for each month during such period.
(iv) The amounts payable pursuant to Sections 4(a)(i), (ii) and (iii)
above shall be payable on or before the 15th day of the month following the
month in which such fees accrue. All such payments shall be subject to pro
ration for any partial months.
(b) Fee Based on Retail Locations. STC agrees to pay to RDI a one-time fee in an
amount equal to $20 multiplied by the number of retail locations that are active
or authorized distributors of Prepaid Services as of April 30, 1999 ("Retail
Location Fees"), regardless of whether such distributors are obtained directly
by STC or through the efforts of MCI WorldCom,
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RCI or any third party. For purposes of this Section 4(b), The Home Shopping
Network shall count as 2,300 retail locations. Such fee shall be payable to RDI
on or before May 15, 1999.
(c) Fees Based on Phone Orders. STC agrees to pay to RDI weekly fees based on
the number of phone orders received by STC for the period commencing as of the
date hereof through April 30, 1999, as follows. A phone order refers to a bona
fide order for a phone that utilizes Prepaid Services which is received by STC
or any of its distributors, including, without limitation, MCI WorldCom, from
the date hereof through April 30, 1999 (a "Phone Order"). Such fees ("Phone
Order Fees") shall be payable to RDI on the Tuesday following the week in which
such fee accrues. The amount of such Phone Order Fees shall be determined, in
part, by the attainment of the following $2 Million Threshold. As used herein,
the term $2 Million Threshold shall mean the sum of all Collection Fees, Retail
Location Fees and Phone Order Fees accrued pursuant to this Agreement. At any
time prior to the attainment of the $2 Million Threshold, RDI shall receive
Phone Order Fees in the amount of $5 for each Phone Order and an additional $5
at such time as the phone relating to such Phone Order is actually shipped to
the end user. At such time as the $2 Million Threshold is reached, Phone Order
Fees, Collection Fees and Retail Location Fees shall cease to accrue.
(d) Fees Based on Collection of Accounts Receivable. STC agrees to pay to RDI
fees in an amount equal to one-half (1/2) of all Accounts Receivable, as that
term is defined in Section 2 above, that are collected by STC each month during
the term hereof ("Collection Fees"). Such fees shall be payable to RDI on or
before the 15th of the month following the month in which any such Accounts
Receivable are collected by STC. The terms Accounts Receivable and Collected
Revenues (see Section 4(a)) are mutually exclusive.
(e) Form of Payment. At the option of STC, compensation payable to RDI pursuant
to Sections 4(b)and (c) above shall be payable in either cash or in shares of
STC's voting common stock, $.01 par value ("STC Stock"), as follows. For
valuation purposes, in the event that STC elects to pay such fees in STC Stock,
such shares shall be valued based on the average of the closing price of STC
common stock, as reported by Nasdaq, for the 22 consecutive trading days
immediately prior to the date of this Agreement. Fractional shares shall be
rounded to the nearest whole number. Any such issuance of STC Stock shall
constitute a private placement, subject to applicable law and appropriate
documentation. Any shares of STC Stock issued pursuant to this Section 4(e)
shall receive the registration rights set forth in the Registration Rights
Agreement entered into on or about the date hereof between RDI and STC.
(f). Warrants. During the term of this Agreement, RDI shall be eligible to
receive warrants for the purchase of shares of STC Stock ("Warrants"), as
follows. All Warrants issuable pursuant to this Section 4(f) shall be issuable
only if the applicable quarterly target is achieved as of the applicable date,
except that with respect to the quarterly targets for 1999 the achievement of
each such 1999 quarterly target shall be pro rated if, and only if, at least 75%
of the target is achieved. For example, if as of December 31, 1999 the Number of
Lines is 250,000 (i.e. 83.3% of the target of 300,000), then STC shall issue a
warrant for the purchase of 62,500 shares of STC Stock (i.e. 83.3% x 75,000 =
62,500). All Warrants shall have a term of three (3) years from their date of
issuance and shall have basic anti-dilution protection for stock splits, etc.
Warrant certificates shall
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be delivered to RDI within thirty (30) days of becoming issuable, and shall be
issued in the form of warrant certificate attached hereto as Exhibit A.
(i) Warrants Based on STC Sales. RDI shall be eligible to receive
Warrants based on the attainment by STC of the following sales targets for
Prepaid Services. Such sales targets shall be computed on a net basis. In other
words, the measure for the Number of Stores shall be the total number of retail
locations offering Prepaid Services as of the applicable quarterly date, and the
measure for the Number of Lines shall be based on active MINs for end users of
Prepaid Services as of the applicable quarterly date. Sales targets for the
first year of the term hereof are as follows:
7/31/99 9/30/99 12/31/99 3/31/00
Number of Stores 10,000 20,000 25,000 30,000
Number of Lines 100,000 175,000 300,000 350,000
(A) Number of Stores. For each quarter, as set forth in
Section 4(f)(i) above, for which STC attains the applicable sales target for
Number of Stores, RDI shall receive a warrant to purchase 75,000 shares of STC
common stock at an exercise price per share equal to the exercise price for the
corresponding quarter, as listed in the following table:
7/31/99 9/30/99 12/31/99 3/31/00
Exercise Price $9.00 $10.00 $11.00 $12.00
(B) Number of Lines: Year One. For each quarter, as set forth
in Section 4(f)(i) above, for which STC attains the applicable sales target for
Number of Lines, RDI shall receive a warrant to purchase 75,000 shares of STC
Stock at an exercise price per share equal to the exercise price for the
corresponding quarter, as listed in the table set forth in Section 4(f)(i)(A)
above.
(C) Number of Lines: Year Two. For each quarter, as set forth
in the table below, for which STC attains the applicable sales target for Number
of Lines, RDI shall receive a warrant to purchase 100,000 shares of STC Stock at
an exercise price of $14 per share.
6/30/00 9/30/00 12/31/00 3/31/01
Number of Lines 400,000 450,000 500,000 550,000
(ii) Warrants Based on Success of Television Ads. During the period of
April 1, 1999 through March 31, 2000, RDI shall be eligible to receive Warrants
based on the success of television advertisements for Prepaid Services in
generating calls from customers, as follows. For each of the months during such
period, RDI shall receive a warrant for the purchase of 25,000 shares of STC
Stock if STC achieves a ratio of calls-to-advertising dollars spent of at least
20,000 calls for each $100,000 of television advertising purchased by either
STC, MCI WorldCom or Tradwells or on their behalf, as the case may be, for
Prepaid Services during such month. Advertising expenditures shall be supported
by appropriate affidavits confirming such expenditures. Such Warrants shall have
an exercise price of $14 per share.
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5. Confidential Information.
(a) Information. RDI, Ray J. Wysocki, Victor Grillo, Sr. and Christine McCartney
(such individuals hereinafter referred to as the "Restricted Individuals")
acknowledge and agree that all non-public information relating to STC's
customers, prospective customers, distributors, prospective distributors,
carriers, suppliers and other business partners, trade secrets, business plans,
sales and marketing strategies, contracts, technologies and processes, software,
products, services, product development activities, procurement and sales
records, promotion and pricing information, financial data, and other
proprietary data and information of STC, whether known to RCI prior to or during
the term of this Agreement (collectively, "Confidential Information") are
valuable, special and unique assets of STC. Confidential Information shall not
include information in the public domain, information independently developed by
RDI, and information properly obtained by RDI from a third-party not bound by
confidentiality obligations. RDI and the Restricted Individuals acknowledge that
their access to and knowledge of the Confidential Information is essential to
the performance of RDI's duties for STC. RDI and the Restricted Individuals
represent and agree that, except as specifically authorized in writing by STC or
in connection with the performance of its duties hereunder, RDI and the
Restricted Individuals will not, either during or after the term hereof (i)
disclose any Confidential Information to any person or entity for any purpose
whatsoever, or (ii) make use of any Confidential Information for its own
purposes or for the benefit of any other person or entity, other than STC. RDI
and the Restricted Individuals acknowledge that all Confidential Information
will at all times be subject to the control of STC, and RDI and the Restricted
Individuals agree to surrender and return the same to STC upon request of STC,
and in any event will surrender and return such no later than the termination of
this Agreement for any reason. The obligations of this Section 5(a) shall
survive the termination of this Agreement, except as limited by Section 7(b)
below.
b. Work Product, etc. RDI and the Restricted Individuals hereby assign, transfer
and convey to STC all of their right, title and interest to all work products
generated by RDI and/or the Restricted Individuals in connection with this
Agreement, including, without limitation, all sales, marketing, advertising and
distribution plans and material, conceived or developed solely, or jointly with
others by RDI and/or the Restricted Individuals during the term hereof (a) which
relate directly or indirectly to the business of STC; or (b) which result from
any work performed or managed by RDI and/or the Restricted Individuals for STC.
The obligations of RDI and the Restricted Individuals under this Section 5(b)
shall survive the termination of this Agreement, except as limited by Section
7(b) below.
6. Restrictive Covenant.
During the term hereof and for a period of one (1) year thereafter, except as
limited by Section 7(b) hereof, and only if and so long as STC is in material
compliance with it obligations hereunder (giving effect to any applicable cure
period with respect to any default by STC), RDI and the Restricted Individuals
shall not directly or indirectly:
(a) conduct or assist others in conducting or be involved or interested in any
manner in any business relating to the provision of prepaid cellular products or
services or the rental of cellular phones within the United States;
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(b) recruit, solicit or hire, or assist any other person or party in recruiting,
soliciting or hiring any Employee (as hereinafter defined), or induce or attempt
to induce or assist any other person or entity in inducing or attempting to
induce any Employee to terminate or alter its relationship with STC
(collectively "Recruiting Activity"). For the purposes of this Section 6(b), the
term "Employee" shall mean any person who is, or within the six (6) month period
preceding the date of any such Recruiting Activity was, an employee or
consultant of STC or of an STC subsidiary or affiliate; or
(c) solicit any Customer (as hereinafter defined), or induce, attempt to induce
or assist any other person or entity in inducing or attempting to induce any
Customer to discontinue or alter its relationship with STC (collectively
"Solicitation Activity"). For the purposes of this Section 6(c), the term
"Customer" shall mean any individual, firm, partnership, corporation or other
entity which is, or within the twelve (12) month period immediately preceding
the date of such Solicitation Activity was, a customer, distributor, dealer,
telecommunications carrier, or sales agent of STC. It is understood and agreed
that the business(es) of STC are national in scope, and that the geographical
scope of the covenants set forth in this Section 6 is therefore appropriate. IT
IS EXPRESSLY UNDERSTOOD AND AGREED THAT THE SCOPE OF EACH OF THE COVENANTS
CONTAINED IN THIS SECTION 6 ARE REASONABLE AS TO TIME, AFFECTED PERSONS, SCOPE
OF ACTIVITIES AND GEOGRAPHIC AREA AND ARE NECESSARY TO PROTECT THE LEGITIMATE
BUSINESS INTERESTS OF STC. It is further agreed that such covenants will be
regarded as divisible and if any such covenant is found by any court of
competent jurisdiction to be unenforceable because it extends for too long a
period of time or over too great a range of activities or persons or in too
broad a geographic area, it shall be interpreted to extend over the maximum
period of time, range of activities or persons, or geographic area as to which
it may be enforceable. The provisions of this Section 6 shall survive the
termination of this Agreement.
7. Equitable Remedies.
(a) It is hereby acknowledged that a violation of any of the provisions set
forth in Sections 5 or 6 of this Agreement is likely to result in irreparable
harm to STC. Therefore, in the event of any such violation, STC shall be
entitled to injunctive relief, which shall be in addition to any and all
remedies otherwise available at law. For purposes of Sections 5, 6 and 7 hereof,
references to STC are deemed to include STC's affiliates, with the term
"affiliates" defined as any entity which controls STC, is controlled by STC or
with which STC is under common control.
(b) Notwithstanding anything else contained in this Agreement, Sections 5, 6 and
7 hereof shall not survive the expiration of this Agreement in the event that
either (i) STC and RDI fail to negotiate a mutually agreeable renewal of this
Agreement, or (ii) STC elects not to pay to RDI a noncompete payment of $100,000
per month for the twelve (12) months following the expiration of the term
hereof.
8. Termination.
(a) Termination by STC. STC shall have the right to terminate this Agreement in
the event that RDI (i) materially defaults on any of its obligations hereunder,
and such default continues uncured
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for more than thirty (30) business days following RDI's receipt of notice
thereof, except that RDI shall not be entitled to any cure period in the event
of more than three (3) defaults within any period of twelve (12) consecutive
months; (ii) becomes insolvent or has filed against it (voluntarily or
involuntarily) a petition for bankruptcy under federal or state bankruptcy laws
and such petition is not removed within 30 days of being filed; (iii) materially
breaches any of the covenants set forth in Sections 5 and 6 hereof; or (iv) in
the event of a material default, that goes uncured beyond the applicable cure
period, by RDI pursuant to the terms of a consulting agreement between RDI and
Retail Cellular, Inc. entered into on or about the date hereof.
(b) Termination by RDI. RDI shall have the right to terminate this Agreement in
the event that STC (i) materially defaults on any of its obligations hereunder,
and such default continues uncured for more than thirty (30) business days
following STC's receipt of notice thereof, except that STC shall not be entitled
to any cure period in the event of more than three (3) defaults within any
period of twelve (12) consecutive months; or (ii) becomes insolvent or has filed
against it (voluntarily or involuntarily) a petition for bankruptcy under
federal or state bankruptcy laws and such petition is not removed within 30 days
of being filed.
9. Audit Rights of RDI RDI shall have the right to audit STC's records relating
to the determination of compensation payable to RDI pursuant to Section 4 of
this Agreement, limited to no more than two (2) such audits per year. RDI shall
provide ten (10) days' notice of its desire to conduct such an audit, and shall
bear all of its own expenses associated therewith, except in the event that such
an audit reveals an error of more than five (5%) in the computation of any
month's aggregate compensation payments, then STC shall reimburse RDI for its
reasonable out-of-pocket expenses incurred with respect to such audit.
10. Indemnification.
a. Indemnification by STC. STC agrees to indemnify, defend and hold harmless
RDI, its subsidiaries and affiliates, and its and their respective officers,
directors, employees, agents, subsidiaries and affiliates, from and against any
and all actions, suits, proceedings, claims, demands, assessments, judgments,
liabilities, loss, damages, costs or expenses, including, without limitation,
RDI's reasonable attorneys' fees and disbursements (collectively, "Claims") and
arising out of any material breach of this Agreement by STC or the negligence or
misconduct of STI in connection with this Agreement.
b. Indemnification by RDI. RDI agrees to indemnify, defend and hold harmless
STC, its subsidiaries and affiliates, and its and their respective officers,
directors, employees, agents, subsidiaries and affiliates, from and against any
and all Claims arising out of any material breach of this Agreement by RDI or
the negligence or misconduct of RDI in connection with this Agreement.
11. Notices. Any notices or other communications required or permitted hereunder
shall be in writing and shall be delivered by hand or sent by certified mail or
reputable overnight courier, postage or charges prepaid, addressed as follows:
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<PAGE> 8
If to STC: Shared Technologies Cellular, Inc.
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Attn: Legal Department
If to RDI: Beth Geller, Esq.
DTR Associates Limited Partnership
150 E. Palmetto Park Road, Suite 700
Boca Raton, FL 33432
or such other address as shall be furnished in writing by any party in
accordance with this Section 11 and any such notice or communication shall be
deemed effective as of the date so given.
12. Entire Agreement. This Agreement, including all schedules and exhibits, sets
forth the entire understanding between the parties and supersedes all previous
and contemporaneous written or oral negotiations, commitments, understandings
and agreements relating to the subject matter contained herein.
13. Amendments. This Agreement and any provision contained herein may not be
amended, waived or discharged except by a written instrument signed by the party
to be bound thereby.
14. Counterparts. This Agreement may be executed in two or more counterparts all
of which shall be considered one and the same Agreement and shall be effective
when one or more counterparts have been signed by each of the parties it being
understood that all parties need not sign the same counterpart.
15. Assignment. Neither party may assign this Agreement to any third party
without the prior written consent of the other party, such consent not to be
unreasonably withheld or delayed. This Agreement shall be valid and binding upon
all heirs, successors and permitted transferees or assigns of the parties
hereto.
16. Limitations of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER,
DIRECTLY OR OTHERWISE, FOR INCIDENTAL, CONSEQUENTIAL (INCLUDING LOST PROFITS),
INDIRECT, PUNITIVE OR SPECIAL DAMAGES ARISING IN ANY WAY IN CONNECTION WITH THIS
AGREEMENT.
17. Arbitration. Any dispute or disagreement arising between the parties in
connection with this Agreement, which is not settled to the mutual satisfaction
of the parties within thirty (30) days (or such longer period as may be mutually
agreed upon) from the date that either party informs the other in writing that
such dispute or disagreement exists, shall be submitted for arbitration to
J.A.M.S./ENDISPUTE, in Hartford, Connecticut, in accordance with the
J.A.M.S./ENDISPUTE Arbitration Rules and Procedures, as amended by this
Agreement. The cost of the arbitration, including the fees and expenses of the
arbitrator(s), will be shared equally by the parties unless the award otherwise
provides. Each party shall bear the cost of preparing and presenting its case.
The parties agree that the arbitrator(s) shall have no power or authority
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<PAGE> 9
to make awards or issue orders of any kind except as expressly permitted by this
Agreement, and in no event shall the arbitrator(s) have the authority to make
any award that provides for punitive or exemplary damages. The decision of the
arbitrator(s) shall follow the plain meaning of the relevant documents, and
shall be final and binding upon the parties. The award may be confirmed and
enforced in any court of competent jurisdiction.
18. Independent Contractor Status and Agency. It is expressly understood and
agreed that RDI shall at all times hereunder be an independent contractor of
STC. As such, RDI shall have no responsibilities for withholding any taxes on
behalf of RDI or its employees. RDI shall have no authority to bind STC
contractually in any way, except as expressly authorized in writing by an
officer of STC.
19. Change of Control. In the event STC enters into an agreement or series of
related agreements that result in a Change of Control, as that term is defined
herein, the party acquiring control of STC shall have the right to terminate
this Agreement for convenience, which shall mean for reason other than pursuant
to Section 8(a) hereof. As of the effective date of such a Change of Control,
one-half of the maximum number of warrants that would have been issuable to RDI
prospectively, from and after the date of such Change of Control, shall be
issued to RDI. In that following a Change of Control the party acquiring control
of STC elects to terminate this Agreement for convenience, then as of the
effective date of such termination the maximum number of warrants that would
have been issuable to RDI prospectively, from and after the effective date of
such termination, shall be issued to RDI. As used herein, the term Change of
Control shall mean either the acquisition of more than 50% of the voting control
of STC by any person or entity or the acquisition of all or substantially all of
the assets of STC by any person or entity.
20. General.
(a) This Agreement shall be governed by the laws of the State of Connecticut,
without giving effect to any principle of conflict-of-laws that would require
the application of the law of any other jurisdiction.
(b) In the event of a dispute arising out of this Agreement, the prevailing
party shall be entitled to recovery of its reasonable legal fees and expenses.
(c) The waiver of any provision of this Agreement shall not be construed as a
continuing waiver of such breach or of other breaches of the same or of other
provisions hereof.
(d) The section headings of this Agreement are for reference purposes only and
shall not constitute a part hereof or affect the meaning or interpretation of
this Agreement. Whether defined terms are stated in the singular or plural shall
not affect their construction as defined terms.
(e) All payment obligations, provisions relating to limitations of liability,
post-termination obligations and any other provisions that by sense and context
are intended to survive the termination of this Agreement shall so remain in
effect after the termination hereof until the
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<PAGE> 10
running of the applicable statute of limitations. Notwithstanding the foregoing,
the restrictive covenant provisions contained herein shall survive for only (1)
year following the termination of this Agreement.
(f) Each party represents that it has full power and authority to enter into and
perform this Agreement and knows of no impediment to its performance, including,
without limitation, any required third-party consent or waiver, to permit or
enable it to perform its obligations hereunder.
(g) In the event that this Agreement is not fully executed and delivered by
April 30, 1999, then it shall be of no force or effect.
The parties acknowledge that they have each read this Agreement in its entirety,
understand it and agree to be bound by its terms and conditions.
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<PAGE> 11
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of the date first written above.
RETAIL DISTRIBUTORS, INC.
By: /s/ Ray J. Wysocki
Its: President
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Vincent DiVincenzo
Its: CFO
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<PAGE> 12
Execution by Restricted Individuals.
The undersigned hereby execute this Agreement in their capacities as individuals
solely with respect to, acknowledging their obligations under, and agreeing to
be bound by Section 5, 6 and 7 of this Agreement, as of the date hereof.
/s/ Ray J. Wysocki
Ray J. Wysocki
/s/ Victor Grillo, Sr.
Victor Grillo, Sr.
/s/ Christine McCartney
Christine McCartney
12
<PAGE> 13
EXHIBIT A
[ATTACH WARRANT]
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<PAGE> 14
EXHIBIT A
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 3 OF THIS WARRANT
Warrant No. RDI-___ No. of Shares __________
(subject to adjustment)
Date of Issuance: __________________
SHARED TECHNOLOGIES CELLULAR, INC.
Common Stock Purchase Warrant
(Void after 5:00 p.m. Eastern time on [insert three years from issuance date])
SHARED TECHNOLOGIES CELLULAR, INC. (the "Company"), for value received,
hereby certifies that RETAIL DISTRIBUTORS, INC., or its registered assigns (the
"Registered Holder"), are entitled, subject to the terms set forth below, to
purchase from the Company, at any time or from time to time on or after [INSERT
DATE OF ISSUANCE] and on or before [INSERT THIRD ANNIVERSARY OF DATE OF
ISSUANCE](the "Exercise Period") at not later than 5:00 p.m. (Eastern time),
[ ] SHARES of Common Stock, $0.01 par value per share, of the Company
("Common Stock") (subject to appropriate adjustment in the event of any stock
dividend, stock split, reverse stock split, combination or other similar
recapitalization affecting such Common Stock), at a purchase price per share of
[ ]. The number of shares purchasable upon exercise of this Warrant, and the
purchase price per share, each as adjusted from time to time pursuant to the
provisions of this Warrant, are hereinafter referred to as the "Warrant Stock"
and the "Purchase Price," respectively.
1. Exercise. The purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part, by the surrender of this
Warrant (with the purchase form attached hereto as Exhibit 1 duly executed) at
the principal office of the Company and by the payment to the Company, by check
or wire transfer, of an amount equal to the then applicable Purchase Price
multiplied by the number of shares then being purchased. The Company agrees that
the shares so purchased shall be deemed to be issued to the holder hereof as the
record owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for such shares as
aforesaid. In the event of any exercise of this Warrant, the Company shall
promptly instruct the transfer agent of its Common Stock to issue to the holder
hereof certificate(s) for the shares of stock so purchased shall and, unless
this Warrant has been fully exercised or expired, the Company shall issue to the
holder hereof as soon as practicable, but in any event within thirty (30) days
of the exercise date, a new Warrant
<PAGE> 15
representing the portion of the shares, if any, with respect to which this
Warrant shall not then have been exercised.
2. Anti-Dilution Provisions.
(1) Adjustment for Recapitalization. If outstanding shares of the
Company's Common Stock shall be subdivided into a greater number of shares or a
dividend in Common Stock shall be paid in respect of Common Stock, the Purchase
Price in effect immediately prior to such subdivision or at the record date of
such dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. When any adjustment is required to be made in the
Purchase Price, the number of shares of Warrant Stock purchasable upon the
exercise of this Warrant shall be changed to the number determined by dividing
(i) an amount equal to the number of shares issuable upon the exercise of this
Warrant immediately prior to such adjustment, multiplied by the Purchase Price
in effect immediately prior to such adjustment, by (ii) the Purchase Price in
effect immediately after such adjustment.
(2) Adjustment for Reorganization, Consolidation, Merger, Etc. If there
shall occur any capital reorganization or reclassification of the Company's
Common Stock (other than a change in par value or a subdivision or combination
as provided for in subsection 2(a) above), or any consolidation or merger of the
Company with or into another corporation, or a transfer of all or substantially
all of the assets of the Company, then, as part of any such reorganization,
reclassification, consolidation, merger or sale, as the case may be, lawful
provision shall be made so that the Registered Holder of this Warrant shall have
the right thereafter to receive upon the exercise hereof the kind and amount of
shares of stock or other securities or cash or property which such Registered
Holder would have been entitled to receive if, immediately prior to any such
reorganization, reclassification, consolidation, merger or sale, as the case may
be, such Registered Holder had held the number of shares of Common Stock which
were then purchasable upon the exercise of this Warrant. In any such case,
appropriate adjustment (as reasonably determined by the Board of Directors of
the Company) shall be made in the application of the provisions set forth herein
with respect to the rights and interests thereafter of the Registered Holder of
this Warrant such that the provisions set forth in this Section 2 (including
provisions with respect to adjustment of the Purchase Price) shall thereafter be
applicable, as nearly as is reasonably practicable, in relation to any shares of
stock or other securities or cash or property thereafter deliverable upon the
exercise of this Warrant. If any such capital reorganization, reclassification,
consolidation, merger or sale results in a cash distribution in excess of the
Purchase Price provided by this Warrant, the Registered Holder may, at the
Registered Holder's option, exercise this Warrant without making payment of the
Purchase Price, and in such case the Company shall, upon distribution to the
Registered Holder, consider the Purchase Price to have been paid in full, and in
making settlement to the Registered Holder, shall deduct an amount equal to the
Purchase Price from the amount payable to the Registered Holder.
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<PAGE> 16
(3) Liquidation, Dissolution, Etc. If the Company shall, other than as
provided in Section 2(b) above, dissolve, liquidate or wind up its affairs, the
Registered Holder shall thereafter have the right to receive upon proper
exercise of this Warrant, in lieu of the shares of Common Stock that the
Registered Holder otherwise would have been entitled to receive, the same kind
and amount of securities or assets as would have been issued, distributed or
paid to the Registered Holder upon any such dissolution, liquidation or winding
up with respect to such shares of Common Stock of the Company had the Registered
Holder been the Registered Holder of record of such shares of Stock receivable
upon exercise of this Warrant on the date for determining those entitled to
receive any such distribution, provided that the Registered Holder shall have
exercised this Warrant within thirty (30) days of notice from the Company of
such dissolution, liquidation or winding up.
3. Limitation on Sales, etc. Each holder of this Warrant acknowledges
that this Warrant and the Warrant Stock have not been registered under the
Securities Act of 1933, as amended (the "Act"), and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Warrant or any
Warrant Stock issued upon its exercise in the absence of (a) an effective
registration statement under the Act as to this Warrant or such Warrant Stock
and registration or qualification of this Warrant or such Warrant Stock under
any applicable Blue Sky or state securities law then in effect, or (b) an
opinion of counsel, satisfactory to the Company, that such registration and
qualification are not required. Each certificate or other instrument for Warrant
Stock issued upon the exercise of this Warrant shall bear a legend substantially
to the foregoing effect.
Notwithstanding the foregoing, the Registered Holder may require the
Company to issue a certificate representing the Warrant Stock without a legend
in substitution for a legended certificate representing the Warrant Stock if
either (i) such Warrant Stock has been registered for resale under the Act or
(ii) the Registered Holder has received an opinion of counsel reasonably
satisfactory to the Company that such registration is not required with respect
to such Warrant Stock.
4. No Impairment. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, 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, 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 of
this Warrant against impairment.
5. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such shares of Warrant Stock and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise,
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<PAGE> 17
shall be validly issued, fully paid and nonassessable, free and clear of all
liens, security interests, charges and other encumbrances or restrictions on
sale and free and clear of all preemptive rights.
6. Registration Rights. The Company acknowledges and agrees that,
pursuant to a Registration Rights Agreement dated as of March __, 1999, between
the Company and the Registered Holder, the Registered Holder has certain
registration rights with respect to the Warrant Stock.
7. Exchange of Warrants. Upon the surrender by the Registered Holder of
any Warrant or Warrants, properly endorsed, to the Company at the principal
office of the Company, the Company will, subject to the provisions of Section 3
hereof, issue and deliver to or upon the order of such Holder, at the Company's
expense, a new Warrant or Warrants of like tenor, in the name of such Registered
Holder or as such Registered Holder (upon payment by such Registered Holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant or Warrants so surrendered.
8. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
9. Transfers, etc.
(1) The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. Any Registered Holder may
change its or his address as shown on the warrant register by written notice to
the Company requesting such change.
(2) Subject to the provisions of Section 3 hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, upon surrender of this
Warrant with a properly executed assignment (in the form of Exhibit 2 hereto) at
the principal office of the Company.
(3) Until any transfer of this Warrant is made in the warrant register,
the Company may treat the Registered Holder of this Warrant as the absolute
owner hereof for all purposes; provided, however, that if and when this Warrant
is properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
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<PAGE> 18
10. Mailing of Notices, etc. All notices and other communications from
the Company to the Registered Holder of this Warrant shall be mailed by
first-class certified or registered mail, postage or charges prepaid, to the
address furnished to the Company in writing by the last Registered Holder of
this Warrant who shall have furnished an address to the Company in writing. All
notices and other communications from the Registered Holder of this Warrant or
in connection herewith to the Company shall be mailed by first-class certified
or registered mail or by reputable overnight courier, postage or charges
prepaid, to the Company at its principal office set forth below. If the Company
should at any time change the location of its principal office to a place other
than as set forth below, it shall give prompt written notice to the Registered
Holder of this Warrant and thereafter all references in this Warrant to the
location of its principal office at the particular time shall be as so specified
in such notice.
11. No Rights as Stockholder. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
12. Change or Waiver. Any term of this Warrant may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought.
13. Headings. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
14. Governing Law. This Warrant will be governed by and construed in
accordance with the laws of the State of Delaware without regard to
conflict-of-laws principles that would require the application of the laws of
another jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and issued by its duly authorized officers as of the date hereof.
[Corporate Seal] SHARED TECHNOLOGIES CELLULAR, INC.
By: ______________________
Vincent DiVincenzo
Senior Vice President
100 Great Meadow Road
Suite 104
Wethersfield, CT 06109
ATTEST:
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<PAGE> 19
- -----------------
Kenneth M. Dorros
Secretary
6
<PAGE> 20
EXHIBIT 1
PURCHASE FORM
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ___), hereby irrevocably elects to exercise the Warrant and to
purchase _____ shares of the Common Stock covered by such Warrant and herewith
makes payment of $________, representing the full purchase price for such shares
at the price per share provided for in such Warrant.
Signature____________________________
Address:_____________________________
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<PAGE> 21
EXHIBIT 2
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (No. _____) with respect to the number of shares of Common Stock covered
thereby set forth below, unto:
Name of Assignee Address No. of Shares
The undersigned hereby irrevocably constitutes and appoints __________________,
attorney in fact, to transfer same on the books of the Company with full power
of substitution.
Dated: _____________ Signature ____________________________
____________________________
Witness _____________________________
<PAGE> 1
CONSULTING AGREEMENT
This consulting agreement (the "Agreement") is entered into as of the 15th day
of July, 1999, by and between RETAIL CELLULAR, INC. ("RCI"), having offices at
10 California Avenue, Framingham, MA 01701, a Delaware corporation, which is to
become, on or about the date hereof, a wholly-owned subsidiary of Shared
Technologies Cellular, Inc. ("STC"), and RETAIL DISTRIBUTORS, INC., A DELAWARE
CORPORATION ("Consultant").
RECITALS:
WHEREAS, RCI wishes to engage the services of Consultant to provide certain
services to RCI, and Consultant has agreed to provide such services pursuant to
the terms hereof.
NOW THEREFORE, in consideration of the mutual promises and covenants set forth
herein, the parties agree as follows.
1. Responsibilities of Consultant.
1.1 During the term hereof, Consultant shall provide certain consulting
services to RCI in the area of assisting STC in its sales of prepaid cellular
services. Consultant shall report to the chief executive officer of STC and the
Board of Directors of RCI.
2. Responsibilities of RCI.
2.1 RCI shall compensate Consultant in accordance with Section 4 of this
Agreement.
3. Term and Termination.
3.1 This Agreement shall commence as of July 15, 1999 and shall continue
through March 31, 2001, subject to termination as provided hereinafter.
3.2 Either party may terminate this Agreement at any time for Cause, as
that term is defined herein.
(a) With respect to RCI, the term Cause shall mean (i) any material default
of RCI that is not cured within ten (10) days of RCI's receipt of
written notice thereof, except that RCI shall not be entitled to any
cure period in the event of more than three (3) defaults within any
period of twelve (12) consecutive months, or (ii) the filing against
RCI of a petition (voluntarily or involuntarily) pursuant to any
federal or state bankruptcy laws and such petition is not removed
within 30 days of being filed.
(b) With respect to Consultant, the term Cause shall mean (i) the willful
failure or refusal to comply with explicit lawful directives of RCI or
to render the services
<PAGE> 2
required herein; (ii) indictment of Consultant for a criminal offense;
(iii) any material default by Consultant that is not cured within ten
(10) days of Consultant's receipt of written notice thereof, except
that Consultant shall not be entitled to any cure period in the event
of more than three (3) defaults within any period of twelve (12)
consecutive months.
3.3 RCI may terminate this Agreement at any time in the event that
Consultant becomes insolvent or has filed against it (voluntarily or
involuntarily) a petition for bankruptcy under federal or state bankruptcy laws
and such petition is not removed within 30 days of being filed.
3.4 In the event of termination of this Agreement by RCI for Cause or by
reason of Consultant's insolvency or unremoved bankruptcy petition, pursuant to
Section 3.3 hereof, then RCI shall have the right to terminate that certain
Services Agreement by and between STC and Retail Distributors, Inc. ("RDI")
entered into on or about the date hereof, without further obligation of any
kind, except for then accrued payment obligations hereunder and under said
Services Agreement.
4. Consultant's Compensation.
4.1 During the term hereof, RCI shall pay compensation to Consultant at the
rate of $10,000 per month, payable at the end of each month, commencing as of
February 8, 1999, and terminating December 31, 2000, notwithstanding that the
term of this Agreement expires March 31, 2001.
5. Independent Contractor Status.
5.1 It is expressly understood and agreed that Consultant shall at all
times hereunder be an independent contractor and not an employee of RCI or its
Affiliates. As such, neither RCI nor its Affiliates shall have any
responsibilities for withholding any taxes on behalf of Consultant, nor shall
Consultant's employees be eligible for insurance or other benefits ordinarily
available to employees of RCI and its Affiliates.
6. Confidential Information.
6.1 Information. Consultant acknowledges and agrees that all non-public
information relating to RCI's or any of its Affiliate's customers, prospective
customers, distributors, prospective distributors, carriers, suppliers and other
business partners, trade secrets, business plans, sales and marketing
strategies, contracts, technologies and processes, software, products, services,
product development activities, procurement and sales records, promotion and
pricing information, financial data, and other proprietary data and information
of RCI and its Affiliates, whether known to RCI prior to or during the term of
this Agreement, (collectively, "Information") are valuable, special and unique
assets of RCI and its Affiliates. As used in this Agreement, the term Affiliate
shall mean any entity which controls RCI, is controlled by RCI or with which RCI
is under common control. Consultant acknowledges that his access to and
knowledge of the Information is essential to the performance of its duties for
RCI. Consultant represents and agrees that, except as specifically authorized in
writing by RCI or STC or in connection with the performance of its
2
<PAGE> 3
duties hereunder, Consultant will not, either during or after the term hereof
(i) disclose any Information to any person or entity for any purpose whatsoever,
or (ii) make use of any Information for its own purposes or for the benefit of
any other person or entity, other than RCI or its Affiliates. Consultant
acknowledges that all Information will at all times be subject to the control of
RCI and its Affiliates, and Consultant agrees to surrender and return the same
to RCI or STC upon request of RCI or STC, and in any event will surrender and
return such no later than the termination of this Agreement for any reason. The
obligations of this Section 6.1 shall survive the termination of this Agreement,
except as limited by Section 7.2 below. Notwithstanding, the foregoing,
Information shall not include information generally known in the industry, other
than through a breach of this Agreement, information provided to Consultant by a
third party not bound by a confidentiality agreement concerning such
information, and information independently developed by Consultant indicated by
its records.
6.2 Work Product, etc. Consultant hereby assigns, transfers and conveys to
RCI all of Consultant's right, title and interest to all work products generated
by Consultant in connection with this Agreement, including, without limitation,
all sales, marketing, advertising and distribution plans and material, conceived
or developed solely, or jointly with others by Consultant during the term hereof
(a) which relate directly or indirectly to the business of RCI or its
Affiliates; or (b) which result from any work performed or managed by Consultant
for RCI or its Affiliates. The obligations of Consultant under this Section 6.2
shall survive the termination of this Agreement, except as limited by Section
7.2 below.
7 Restrictive Covenant.
7.1 During the term hereof and for a period of one (1) year thereafter,
except as limited by Section 7.2 below, provided that RCI or its successors in
interest are not in material breach of their obligations hereunder, after giving
effect to any applicable cure period with respect to such breach, Consultant
shall not, directly or indirectly:
(a) conduct or assist others in conducting or be involved or interested
in any manner in any business relating to the provision of prepaid cellular
products or services within the United States;
(b) recruit, solicit or hire, or assist any other person or party in
recruiting, soliciting or hiring any Employee (as hereinafter defined), or
induce or attempt to induce or assist any other person or entity in inducing or
attempting to induce any Employee to terminate or alter its relationship with
RCI or any of its Affiliates (collectively "Recruiting Activity"). For the
purposes of this Section 7.1(b), the term "Employee" shall mean any person who
is, or within the six (6) month period preceding the date of any such Recruiting
Activity was, an employee or consultant of RCI or any of its Affiliates; or
(c) solicit any Customer (as hereinafter defined), or induce, attempt
to induce or assist any other person or entity in inducing or attempting to
induce any Customer to discontinue or alter its relationship with RCI or any of
its Affiliates (collectively "Solicitation Activity"). For the
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<PAGE> 4
purposes of this Section 7.1(c), the term "Customer" shall mean any individual,
firm, partnership, corporation or other entity which is, or within the twelve
(12) month period immediately preceding the date of such Solicitation Activity
was, a customer, distributor, dealer, telecommunications carrier, or sales agent
of RCI or any of its Affiliates. It is understood and agreed that the
business(es) of RCI or any of its Affiliates are national in scope, and that the
geographical scope of the covenants set forth in this Section 7.1(c) is
therefore appropriate. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THE SCOPE OF
EACH OF THE COVENANTS CONTAINED IN THIS SECTION 7.1(c) ARE REASONABLE AS TO
TIME, AFFECTED PERSONS, SCOPE OF ACTIVITIES AND GEOGRAPHIC AREA AND ARE
NECESSARY TO PROTECT THE LEGITIMATE BUSINESS INTERESTS OF RCI OR ANY OF ITS
AFFILIATES. It is further agreed that such covenants will be regarded as
divisible and if any such covenant is found by any court of competent
jurisdiction to be unenforceable because it extends for too long a period of
time or over too great a range of activities or persons or in too broad a
geographic area, it shall be interpreted to extend over the maximum period of
time, range of activities or persons, or geographic area as to which it may be
enforceable.
7.2 Notwithstanding anything else contained in this Agreement, Sections 6,
7 and 8 hereof shall not survive the expiration of the services agreement
entered into by and between STC and RDI on or about the date hereof (the
"Services Agreement") in the event that either (i) STC and RDI fail to negotiate
a mutually agreeable renewal of the Services Agreement, or (ii) STC elects to
not pay to RDI a noncompete payment of $100,000 per month for the twelve (12)
months following the expiration of the term of the Services Agreement, as
provided thereunder.
8. Equitable Remedies. It is hereby acknowledged that a violation of any
of the provisions set forth in Sections 6 or 7 of this Agreement is likely to
result in irreparable harm to RCI and/or its Affiliates. Therefore, in the event
of any such violation, RCI and/or its Affiliates, as the case may be, shall be
entitled to injunctive relief, which shall be in addition to any and all
remedies otherwise available at law.
9. Agency.
9.1 Consultant's authority to bind RCI shall be limited to such
authorization as may be granted by the Chief Executive Officer of STC from time
to time.
10. No Conflicts.
10.1 Consultant hereby represents and warrants that its engagement by RCI
will in no way conflict with or be constrained by any prior or current
engagement, consulting agreement or relationship with any person or entity
whether oral or written. Notwithstanding the preceding sentence, RCI
acknowledges that Consultant intends to devote a portion of its time to other
endeavors.
11. Arbitration. Any dispute or disagreement arising between the parties in
connection with this Agreement, which is not settled to the mutual satisfaction
of the parties within thirty (30) days (or such longer period as may be mutually
agreed upon) from the date that either party
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informs the other in writing that such dispute or disagreement exists, shall be
submitted for arbitration to J.A.M.S./ENDISPUTE, in Hartford, Connecticut, in
accordance with the J.A.M.S./ENDISPUTE Arbitration Rules and Procedures, as
amended by this Agreement. The cost of the arbitration, including the fees and
expenses of the arbitrator(s), will be shared equally by the parties unless the
award otherwise provides. Each party shall bear the cost of preparing and
presenting its case. The parties agree that the arbitrator(s) shall have no
power or authority to make awards or issue orders of any kind except as
expressly permitted by this Agreement, and in no event shall the arbitrator(s)
have the authority to make any award that provides for punitive or exemplary
damages. The decision of the arbitrator(s) shall follow the plain meaning of the
relevant documents, and shall be final and binding upon the parties. The award
may be confirmed and enforced in any court of competent jurisdiction.
12. Notices. Any notices or other communications required or permitted
hereunder shall be in writing and shall be delivered by hand or sent by
certified mail or reputable overnight courier, postage or charges prepaid,
addressed as follows:
If to RCI: Retail Cellular, Inc.
c/o Shared Technologies Cellular, Inc.
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Attn: Legal Department
If to RDI: Beth Geller, Esq.
DTR Associates Limited Partnership
150 E. Palmetto Park Road, Suite 700
Boca Raton, FL 33432
or such other address as shall be furnished in writing by any party in
accordance with this Section 12 and any such notice or communication shall be
deemed effective as of the date so given.
13. General.
13.1 No modification of this Agreement shall be valid unless in writing
signed by the parties hereto.
13.2 Neither party may assign this Agreement to any third party without the
prior written consent of the other party. This Agreement shall be valid and
binding upon all heirs, successors and permitted transferees or assigns of the
parties hereto.
13.3 This Agreement shall be governed by the laws of the State of
Connecticut, without giving effect to any principle of conflict-of-laws that
would require the application of the law of any other jurisdiction.
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6
13.4 In the event of a dispute arising out of this Agreement, the prevailing
party shall be entitled to recovery of its reasonable legal fees and expenses.
13.5 The waiver of any provision of this Agreement shall not be construed as
a continuing waiver of such breach or of other breaches of the same or of other
provisions hereof.
13.6 The section headings of this Agreement are for reference purposes only
and shall not constitute a part hereof or affect the meaning or interpretation
of this Agreement. Whether defined terms are stated in the singular or plural
shall not affect their construction as defined terms.
13.7 All payment obligations, confidentiality and restrictive covenant
provisions, and any other provisions that by sense and context are intended to
survive the termination of this Agreement shall so remain in effect after the
termination hereof until the running of the applicable statute of limitations.
Notwithstanding the foregoing, said restrictive covenant provisions shall
survive for only one (1) year following the termination of this Agreement.
13.8 The parties acknowledge that they have each read this Agreement in its
entirety, understand it and agree to be bound by its terms and conditions.
13.9 This Agreement represents the entire agreement between the parties with
respect to the subject matter hereof and supersedes any and all prior
agreements, discussions and understandings, whether oral or written.
13.11 In the event that any provision(s) of this Agreement shall be declared
invalid, illegal or unenforceable, the validity, legality and enforceability of
remaining provisions and severable portions thereof shall not in any way be
affected or impaired thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
CONSULTANT RETAIL CELLULAR, INC.,
a Delaware corporation
By:/s/ Ray J. Wysocki By:/s/ Vincent DiVincenzo
------------------------------ ---------------------------------
Retail Distributors, Inc., Vincent DiVincenzo, Treasurer
a Delaware corporation
Date: 7/16/99 Date: 7/15/99
-------------------------- --------------------
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of July 15, 1999, by and between RETAIL DISTRIBUTORS, INC., a
Delaware corporation ("RDI"), and SHARED TECHNOLOGIES CELLULAR, INC., a Delaware
corporation (the "Company").
RECITALS:
A. Simultaneously with the execution and delivery of this Agreement,
the Company and RDI have entered into (i) a Stock Purchase Agreement whereby the
Company has issued to RDI 150,000 shares (the "Issued Shares") of common stock,
par value $.01 per share, of the Company (the "Common Stock") in exchange for
all of the issued and outstanding shares of common stock of Retail Cellular,
Inc. owned by RDI and (ii) a Service Agreement, whereby the Company, upon RDI's
achievement of certain performance milestones as more particularly set forth
therein, will issue to RDI warrants (the "Warrants") to purchase shares of
Common Stock, and whereby further, the Company may issue to RDI additional
shares of Common Stock in consideration for services to be rendered by RDI (the
"Service Shares"); and
B. The Issued Shares, the Warrants and the Service Shares will be
issued to RDI without registration under the Securities Act of 1933, as amended,
and applicable state securities laws, and the Company and RDI desire to provide
hereunder for the registration of the shares of Common Stock issued pursuant to
the Stock Purchase Agreement and the Service Agreement and issuable upon
exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
independent covenants contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following capitalized
terms have the meanings set forth below:
Applicable Period -- In the case of a Shelf Registration
Statement, the period referred to in Section 2.1(b)(ii), and in the
case of any other Registration Statement, nine (9) months or such
shorter period as is necessary to complete the distribution of the
Registrable Securities covered thereby.
<PAGE> 2
Conversion Shares -- The shares of Common Stock issued to
Qualified Holders upon exercise of the Warrants and any shares of
Common Stock issued as a stock dividend or in a stock split or in
connection with any other stock combination or division in respect of
the Conversion Shares issued upon such conversion and/or exercise.
Demand - As defined in Section 2.1(b)(i) hereof.
Exchange Act - The Securities Exchange Act of 1934, as
amended, or similar federal statute then in effect, and a reference to
a particular section thereof or regulation thereunder shall be deemed
to include a reference to the comparable section, if any, of, or
regulation, if any, under, any such similar federal statute.
Issued Shares - The 150,000 shares of Common Stock issued to
RDI pursuant to the Stock Purchase Agreement.
Majority Holders -- Qualified Holders holding sixty-seven
percent (67%) of the Registrable Securities included in a Shelf
Registration Statement.
Notice of Demand -- As defined in Section 2.1(b)(i) hereof.
Person - An individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any
department or agency thereof.
Piggy-back Registration - A registration of Conversion Shares
and/or Service Shares pursuant to Section 2.1(c) hereof.
Prior S-3 - The Registration Statement on Form S-3 filed by
the Company with the SEC on March 8, 1999 relating to the resale of up
to 4,980,000 shares of Common Stock by the selling stockholders named
therein.
Prospectus -- The prospectus included in a Registration
Statement, including any preliminary prospectus, and any such
Prospectus as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and by all other
amendments and supplements to such Prospectus, including post-effective
amendments, and in each case including all exhibits thereto and all
material incorporated by reference therein.
Qualified Holder - RDI so long as it holds any of the Issued
Shares, Conversion Shares or Service Shares and any officer, director
or employee of RDI to whom RDI or a successor-in-interest (such
successor-in-interest also to be deemed for purposes hereof a Qualified
Holder) transfers such Issued Shares, Conversion Shares or Service
Shares.
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Registrable Securities - The Issued Shares and any Conversion
Shares and Service Shares issued to, and held by, a Qualified Holder.
As to any Registrable Securities, once issued such securities shall
cease to be Registrable Securities when: (i) a Registration Statement
with respect to the sale of such securities shall have become effective
under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement or, if earlier, when
the Applicable Period shall have expired with respect to such
securities; (ii) they are eligible to be distributed to the public
pursuant to Rule 144(k) (or any successor provision) under the
Securities Act; (iii) new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company
and subsequent disposition of them shall not require registration or
qualification of them under the Securities Act or any similar state law
then in force; or (iv) they shall have ceased to be outstanding.
Registration Statement -- A Shelf Registration Statement, any
registration statement registering shares held by Qualified Holders
pursuant to Section 2.1(c) hereof and all amendments and supplements to
any such Registration Statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
SEC -- The Securities and Exchange Commission.
Securities Act -- The Securities Act of 1933, as amended, or
similar federal statute then in effect, and a reference to a particular
section thereof or regulation thereunder shall be deemed to include a
reference to the comparable section, if any, of, or regulation, if any,
under, such similar federal statute.
Seller - As defined in Section 2.1(h) hereof.
Shelf Registration -- A registration required to be effected
pursuant to Section 2.1(a) or (b).
Shelf Registration Statement -- A "shelf" registration
statement of the Company pursuant to the provisions of Section 2.1(a)
or (b) of this Agreement which covers Registrable Securities and is
filed on Form S-3 under Rule 415 under the Securities Act, or any
similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference
therein.
Underwriter -- A person who acts as an underwriter with
respect to any registration of securities pursuant to this Agreement.
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Underwritten Offering -- A sale of securities of the Company
to an Underwriter or Underwriters for reoffering to the public.
ARTICLE 2
REGISTRATION RIGHTS
2.1 Registration.
(1) Shelf Registration of Issued Shares. On or before
the thirtieth (30th) day following the date that the Prior S-3 is declared
effective by the SEC, but in any event on or before the one hundred twentieth
(120th) day following the date hereof, the Company will prepare and file with
the SEC a Shelf Registration Statement covering the resale of the Issued Shares,
and will use its reasonable best efforts to effect as expeditiously as
reasonably possible a Shelf Registration of the Issued Shares. The agreements of
the Company set forth in Section 2.2(b)(ii) shall apply equally to such Shelf
Registration Statement.
(2) Shelf Registration of Conversion Shares.
(1) At any time from and after the date of filing the
Shelf Registration Statement described in Section 2.1(a) until the third (3rd)
anniversary of the later of the initial issuance of the Warrants or the Service
Shares, one (1) or more Qualified Holders holding in the aggregate at least the
number of Conversion Shares and Service Shares equal to fifty percent (50%) of
the Conversion Shares and Service Shares that may or have been issued (as
adjusted for stock splits, stock dividends, reverse stock splits or any other
combination or division of the Conversion Shares) will be entitled to deliver to
the Company, on two (2) occasions, a written notice (a "Demand") requesting a
Shelf Registration. Upon receipt of a Demand, the Company will deliver to each
Qualified Holder a written notice (the "Notice of Demand") which shall include a
copy of the Demand, together with a statement to the effect that the Company
will include all Registrable Securities in a Shelf Registration pursuant to this
Section 2.1(b) unless the Company receives, by a date specified in the Notice of
Demand (which date shall be no less than twenty (20) days following the delivery
of such Notice of Demand), a notice from a Qualified Holder to exclude all or a
portion of such Qualified Holder's Registrable Securities from such Shelf
Registration. Following receipt of a Demand, the Company shall, as expeditiously
as reasonably possible, use its reasonable best efforts to effect a Shelf
Registration of all Registrable Securities except: (i) those which a Qualified
Holder has on a timely basis requested to be excluded from such Shelf
Registration, and (ii) those of any Qualified Holder that does not provide
information reasonably requested by the Company in connection with the Shelf
Registration Statement. The Company may, at its option, include in such Shelf
Registration Statement shares held by any shareholder other than the Qualified
Holders having rights similar to those contained in this Section 2.1(b). It is
understood and agreed that the Qualified Holders may use one (1) Demand provided
in this Section 2(b)(i) to request that the Conversion Shares and Service Shares
then held by such Qualified Holders at the time of the Demand be included in the
Registration Statement to be filed with the SEC pursuant to Section 2.2(a).
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<PAGE> 5
(2) The Company agrees to use its reasonable best
efforts to keep the Shelf Registration Statement continuously effective for a
period of eighteen (18) months following the date on which such Shelf
Registration Statement is initially declared effective, or such shorter period
which will terminate when all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement. The Company further agrees, if necessary, to supplement or amend the
Shelf Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration.
(3) The Company shall not be obligated to take any
action to effect any registration pursuant to this Section 2.1(b) if the Company
shall furnish to the Qualified Holders a certificate signed by the President of
the Company, stating that in the good faith judgment of the Board of Directors
of the Company it would be detrimental to the Company and its stockholders for
such Shelf Registration Statement to be filed at the date filing would be
required, in which case the Company shall have an additional period of not more
than 90 days within which to file such Shelf Registration Statement.
(3) Piggy-back Registration.
(1) If the Company at any time prior to the third (3rd)
anniversary of the later of original issuance of the Warrants or the Service
Shares proposes to register any of its securities for an Underwritten Offering
under the Securities Act (other than pursuant to a Shelf Registration), whether
or not for sale for its own account, and if the registration form proposed to be
used may be used for the registration of Registrable Securities, the Company
will each such time give prompt written notice to all Qualified Holders of its
intention to do so. Upon the written request of any such Qualified Holder made
within thirty (30) days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by such
Qualified Holder), the Company will use its reasonable best efforts to cause all
such Registrable Securities as to which Qualified Holders requested registration
to be registered under the Securities Act (with the securities which the Company
at the time proposes to register), so as to permit the sale or other disposition
by such Qualified Holders of such Registrable Securities.
(2) No registration effected pursuant to this Section
2.1(c) shall be deemed to have been effected pursuant to Section 2.1(b) hereof.
(3) Notwithstanding anything to the contrary in this
Section 2.1(c), the Company shall have the right to discontinue any Piggy-back
Registration at any time prior to the effective date of such Piggy-back
Registration if the registration of other securities giving rise to such
Piggy-back Registration is discontinued; provided, that no such discontinuation
shall preclude an immediate or subsequent request for a Shelf Registration.
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(4) Registration Procedures. If the Company is required
by the provisions of this Section 2.1 to use its reasonable best efforts to
effect or cause the registration of any Registrable Securities under the
Securities Act as provided in this Section, the Company will, as expeditiously
as possible:
(1) prepare and file with the SEC a Registration
Statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such registration statement to become and remain effective
during the Applicable Period; in the case of a Shelf Registration Statement,
such Registration Statement shall be (A) reasonably acceptable to special
counsel for the Qualified Holders and (B) available for the sale of Registrable
Securities in accordance with the intended method or methods of distribution of
the selling Qualified Holders (subject to the limitation set forth in Section
2.1(b)(iii) hereof), which such method or methods shall be reasonably acceptable
to the Company;
(2) prepare and file with the SEC such amendments
and supplements to such Registration Statement as may be necessary to keep such
Registration Statement effective for the Applicable Period and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such Registration Statement during the
Applicable Period in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such Registration Statement;
(3) furnish to each seller of such Registrable
Securities and, in the case of an Underwritten Offering, each Underwriter of the
securities being sold by such seller, such number of copies of such Registration
Statement, such number of copies of the Prospectus included in such Registration
Statement and such other documents as such seller and Underwriter may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities owned by such seller (including any Prospectus amended or
supplemented as set forth in Section 2.1(d)(vi));
(4) use its reasonable best efforts to register or
qualify such Registrable Securities covered by such Registration Statement under
such other securities or "blue-sky laws", so-called, of such jurisdictions as
any seller and each Underwriter of the securities being sold by such seller
shall reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable such seller and underwriter to consummate the
disposition in such jurisdictions of such Registrable Securities owned by such
seller; provided, that the Company shall not for any such purpose be required to
(A) qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this Section
2.1(d)(iv) be obligated to be qualified, (B) subject itself to taxation in any
such jurisdiction, (C) to consent to general service of process in any such
jurisdictions, or (D) register or qualify such Registrable Securities in more
than ten (10) states; (1)
(5) use its reasonable best efforts to cause such
Registrable Securities covered by such registration statement to be registered
with or approved by such other
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<PAGE> 7
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof to consummate the disposition of such Registrable Securities;
(6) notify each seller of any such Registrable
Securities covered by such Registration Statement: (i) of the issuance by the
SEC or any state securities authority of any stop order suspending the
effectiveness of such Registration Statement or the initiation of any
proceedings for that purpose, (ii) of receipt of notification with respect to
the suspension of the qualification of the Registrable Securities for offer or
sale in any jurisdiction or the initiation of any proceeding for such purpose,
(iii) at any time when a Prospectus relating thereto is required to be delivered
under the Securities Act, of the Company's becoming aware that the Prospectus
included in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing (other than a fact relating to such
seller), and as promptly as practicable use its reasonable best efforts to
prepare a Prospectus supplemented or amended so that, as thereafter delivered to
the purchasers of such Registrable Securities, such Prospectus shall not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing;
(7) otherwise use its reasonable best efforts to
comply with federal and state laws and all applicable rules and regulations of
the SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement which shall satisfy the provisions of Section
11(a) of the Securities Act;
(8) use its reasonable best efforts (A) to cause all
such Registrable Securities covered by such Registration Statement to be listed
on each securities exchange on which similar securities issued by the Company
are then listed, if the listing of such Registrable Securities is then permitted
under the rules of such exchange or (B) to secure the listing of all such
Registrable Securities covered by such registration statement on the NASDAQ
SmallCap Market or the NASDAQ National Market System and, without limiting the
generality of the foregoing, to arrange for at least two (2) market makers to
register as such with respect to such Registrable Securities with the National
Association of Securities Dealers;
(9) provide a transfer agent and registrar for all
such Registrable Securities covered by such registration statement not later
than the effective date of such registration statement;
(10) make available for inspection by any seller of
such Registrable Securities covered by such Registration Statement, by any
Underwriter participating in any disposition to be effected pursuant to such
Registration Statement and by any attorney, accountant or other agent retained
by any such seller or any such Underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and
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<PAGE> 8
cause all of the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement; provided,
however, that all such persons shall agree to standard confidentiality
provisions regarding all such records, documents and information; and
(11) permit any holder of Registrable Securities
which holder, in the sole and exclusive judgment, exercised in good faith, of
such holder, might be deemed to be a controlling person of the Company, to
participate in the preparation of such registration or comparable statement.
Each Qualified Holder shall be deemed to have agreed by including Registrable
Securities in a Registration Statement that upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
2.1(d)(vi) hereof, such Qualified Holder will forthwith discontinue such
Qualified Holder's disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such Qualified
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 2.1(d)(vi) hereof and, if so directed by the Company,
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Qualified Holder's possession of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice, the
Applicable Period shall be extended by the number of days during the period from
and including the date of the giving of such notice to and including the date
when each seller of any Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 2.1(d)(vi) hereof.
If any Registration Statement, Prospectus or comparable statement
refers to any holder by name or otherwise as the holder of any securities of the
Company, then (whether or not, in the sole and exclusive judgment, exercised in
good faith, of such holder, such holder is or might be deemed to be a
controlling person of the Company) such holder shall have the right to require:
(i) the insertion therein of language, in form and substance reasonably
satisfactory to such holder and presented to the Company in writing, to the
effect that the holding of such holder of such securities is not to be construed
as a recommendation by such holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such holder
will assist in meeting any future financial requirements of the Company, or (ii)
in the event that such reference to such holder by name or otherwise is not
required by the Securities Act or any similar federal or state statute then in
force, the deletion of the reference to such holder. Each seller shall provide
to the Company in writing information concerning itself required by law to be
included in any Registration Statement registering shares held by such seller.
(5) Registration Expenses. The Company shall, whether or not any Shelf
Registration or Piggy-back Registration shall become effective, pay all expenses
incident to its performance of or compliance with this Section in connection
with a Shelf Registration or Piggy-back Registration, including without
limitation all registration and filing fees, fees and
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expenses of compliance with securities or blue sky laws (subject to the
limitation set forth in Section 2.1(d)(iv) hereof), printing expenses, messenger
and delivery expenses, fees and disbursements of counsel for the Company and all
independent public accountants and other persons retained by the Company;
provided, however, that the Company shall bear no responsibility for any fees or
disbursements of any counsel for any seller, any fees or disbursements of any
underwriter or any underwriting commissions and discounts. In all cases, any
allocation of Company personnel or other general overhead expenses of the
Company or other expenses for the preparation of financial statements or other
data normally prepared by the Company in the ordinary course of its business
shall be borne by the Company.
(6) Indemnification and Contribution. The Company hereby indemnifies,
to the extent permitted by law, each Qualified Holder, its officers, directors,
employees, agents and representatives, if any, and each Person, if any, that
"controls" such Qualified Holder within the meaning of Section 15 of the
Securities Act, against all losses, claims, damages, liabilities (or proceedings
in respect thereof) and expenses (under the Securities Act or common law or
otherwise), joint or several, caused by any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities (or proceedings in respect thereof) or expenses are
caused by any untrue statement or alleged untrue statement contained in or by
any omission or alleged omission from information respecting such Qualified
Holder furnished in writing to the Company by such Qualified Holder expressly
for use therein. In connection with any Registration Statement with respect to
Registrable Securities held by a Qualified Holder, each such Qualified Holder
will furnish to the Company in writing such information respecting such
Qualified Holder as shall be reasonably requested by the Company for use in any
such Registration Statement or Prospectus and will indemnify, to the extent
permitted by law, the Company, its officers, directors, employees, agents and
representatives and each Person, if any, that "controls" the Company within the
meaning of Section 15 of the Securities Act, against any losses, claims,
damages, liabilities (or proceedings in respect thereof) and expenses resulting
from any untrue statement or alleged untrue statement of a material fact or any
omission or alleged omission of a material fact required to be stated in the
Registration Statement or Prospectus or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement is contained
in or such omission is from information so furnished in writing by such
Qualified Holder expressly for use therein. Any Person entitled to
indemnification under the provisions of this Section 2.1(f) shall: (i) give
prompt notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, permit such indemnifying party to
assume the defense of such claim, with counsel reasonably satisfactory to the
indemnified party; and if such defense is so assumed, such indemnifying party
shall not enter into any settlement without the consent of the indemnified party
if such settlement attributes liability to the indemnified party and such
indemnifying party
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shall not be subject to any liability for any such settlement made without its
consent (which consent shall not be unreasonably withheld). In the event an
indemnifying party shall not be entitled, or elects not, to assume the defense
of a claim, such indemnifying party shall not be obligated to pay the fees and
expenses of more than one counsel or firm of counsel for all parties indemnified
by such indemnifying party in respect of such claim, unless in the reasonable
judgment of any such indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties in respect to
such claim. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of a participating Qualified Holder, its
officers, directors or any Person, if any, who controls such Qualified Holder as
aforesaid, and shall survive the transfer of such securities by such Qualified
Holder.
If for any reason the foregoing indemnity is unavailable, or is insufficient to
hold harmless an indemnified party, then the indemnifying party shall contribute
to the amount paid or payable by the indemnified party as a result of such
losses, claims, damages, liabilities or expenses (x) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
on the one hand and the indemnified party on the other or (y) if the allocation
provided by clause (x) above is not permitted by applicable law or provides a
lesser sum to the indemnified party than the amount hereinafter calculated, in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified party on
the other but also the relative fault of the indemnifying party and the
indemnified party as well as any other relevant equitable considerations.
Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(7) Certain Limitations on Registration Rights. In the case of a
Piggy-back Registration, if the Company or holders of securities initially
requesting or demanding such registration have determined to enter into an
underwriting agreement in connection therewith, all Registrable Securities to be
included in such registration shall be subject to such underwriting agreement,
and no Person may participate in such registration unless such Person agrees to
sell such Person's securities on the basis provided in the underwriting
arrangements approved by the Company or such holders and completes and/or
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other reasonable documents which must be executed under the terms
of such underwriting arrangements.
(8) Allocation of Securities Included in Registration Statement. In the
case of an Underwritten Offering, if the managing Underwriter shall advise the
Company and the Qualified Holders in writing that the inclusion in any
registration pursuant to this Section of some or all of the Registrable
Securities sought to be registered by the holders requesting such registration
creates a substantial risk that the proceeds or price per unit either the
Company or the holders of securities who have demanded such Underwritten
Offering will derive from such registration will be reduced or that the number
of securities to be registered (including those
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sought to be registered at the instance of the Company and any other party
entitled to participate in such registration as well as those sought to be
registered by the Qualified Holders) is too large a number to be reasonably
sold, then the number of Registrable Securities sought to be registered by each
Seller (as defined below) shall be reduced pro rata in proportion to the number
of securities sought to be registered by all Sellers to the extent necessary to
reduce the number of securities to be registered to the number recommended by
the managing underwriter.
For purposes of this Section 2.1(h), the term "Seller" shall mean and
include each holder of securities (including, but not limited to, Registrable
Securities) entitled to participate in the subject registration pursuant to
contractual piggy back registration rights held by such holder.
(9) Limitations on Sale or Distribution of Other Securities. Each
holder of Registrable Securities shall be deemed to have agreed by the inclusion
of Registrable Securities in a Registration Statement not to effect any public
sale or distribution, including (if requested by the Underwriter) any sale
pursuant to Rule 144 under the Securities Act, of any Registrable Securities,
and to use such holder's best efforts not to effect any public sale or
distribution of any other equity security of the Company or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (other than as part of such underwritten public offering) within seven
(7) days before or ninety (90) days (or such other period to which the
Underwriters of such offering may consent) after the effective date of any
Registration Statement filed by the Company pursuant to this Article II or
otherwise.
2.2 Rule 144. The Company covenants that it will timely file the
reports required to be filed by it under the Securities Act or the Exchange Act
(including but not limited to the reports under Sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(l) of Rule 144 adopted by the SEC
under the Securities Act) and the rules and regulations adopted by the SEC
thereunder (or, if the Company is not required to file such reports, will, upon
the request of any Qualified Holder, make publicly available such information),
and will take such further action as any Qualified Holder may reasonably
request, all to the extent required from time to time to enable such Qualified
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by: (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of any
Qualified Holder, the Company will deliver to such Qualified Holder a written
statement as to whether it has complied with such requirements.
ARTICLE 3
MISCELLANEOUS
3.1 Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of the Majority
Holders; provided, that no amendment, modification
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or supplement or waiver or consent to the departure with respect to the
provisions of Sections 2.1(b) or 2.1(f) hereof shall be effective as against any
Holder of Registrable Securities unless consented to in writing by such Holder
of Registrable Securities.
3.2 Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective representatives, administrators, heirs, successors and assigns, as
applicable, including, without limitation and without the need for an express
assignment, subsequent Qualified Holders. If any successor, assignee or
transferee of any Qualified Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such Person shall be entitled to receive the
benefits hereof and shall be conclusively deemed to have agreed to be bound by
all of the terms and provisions hereof.
3.3 Notices. All notices and other communications provided for
hereunder shall be in writing and shall be sent by certified mail or reputable
overnight courier or hand delivery, in each case postage or charges prepaid:
if to the Company, to:
Shared Technologies Cellular, Inc.
100 Great Meadow Road, Suite 102
Wethersfield, Connecticut 06109
Attention: Legal Department
if to RDI, to:
Retail Distributors, Inc.
150 East Palmetto Park Road
Boca Raton, FL 33432
Attention: Beth Geller, General Counsel
or such other address as shall be furnished in writing by any party in
accordance with this Section 3.3 and any such notice or communication shall be
deemed effective as of the date so given.
3.4 Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
3.5 Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of such provision, paragraph, word, clause, phrase or sentence in
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every other respect and of the remaining provisions, paragraphs, words, clauses,
phrases or sentences hereof shall not be in any way impaired, it being intended
that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
3.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
3.7 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Connecticut, without
regard to the conflicts of laws rules thereof.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
hereby have executed this Registration Rights Agreement as of the date first
above written.
RETAIL DISTRIBUTORS, INC.
By: /s/ Ray J. Wysocki
----------------------
Name: Ray J. Wysocki
Title: President
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Vincent DiVincenzo
------------------------
Name: Vincent DiVincenzo
Title: CFO
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