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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):
October 1, 1999
SHARED TECHNOLOGIES CELLULAR, INC.
(Exact name of registrant as specified in the charter)
State of 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 change since last report)
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ITEM 5. OTHER EVENTS.
Effective October 1, 1999, Shared Technologies Cellular, Inc. (the
"Company") closed a $6.1 million private placement of equity with three
investors, led by SIB Investment Holdings Limited, a wholly owned subsidiary of
Saudi International Bank. International Capital Partners, LLC of Stamford,
Connecticut and Oakes, Fitzwilliams & Co. S.A. of London acted as placement
agents for the Company in connection with this private placement.
Pursuant to a Securities Purchase Agreement entered into between the
Company and the investors (the "Securities Purchase Agreement"), the Company
issued an aggregate of 6,100 shares of a new Series D Convertible Preferred
Stock, $.01 per share. Each share of Series D Convertible Preferred Stock is
convertible into Common Stock of the Company in accordance with the formula
described below. The Company intends to use the proceeds from the offering for
general corporate purposes.
Description of Series D Convertible Preferred Stock. The following
description of the rights and preferences of the Series D Convertible Preferred
Stock is a summary, and is qualified in its entirety by reference to the entire
text of the Certificate of Designations, Preferences and Rights of the Series D
Convertible Preferred Stock (the "Certificate of Designation"), which is
attached as an exhibit to this Current Report on Form 8-K.
Voting. The holders of shares of Series D Convertible Preferred
Stock are not entitled to vote with respect to the business, management or
affairs of the Company.
For so long as any shares of Series D Convertible Preferred Stock
are outstanding, the following matters, however, will require the approval the
holders of a majority the outstanding shares of Series D Convertible Preferred
Stock:
(i) altering, changing, modifying or amending the terms of the
Series D Convertible Preferred Stock or the terms of any other stock
of the Company so as to adversely affect the Series D Convertible
Preferred Stock;
(ii) creating any new class or series of capital stock having
a preference over or ranking pari passu with the Series D
Convertible Preferred Stock as to redemption or distribution of
assets upon a Liquidation Event (as defined in the Certificate of
Designation) or any other liquidation, dissolution or winding up of
the Company;
(iii) increasing the authorized number of shares of Series D
Convertible Preferred Stock;
(iv) reissuing any shares of Series D Convertible Preferred
Stock which have been converted or redeemed in accordance with the
terms of the Certificate of Designation;
(v) issuing any Pari Passu Securities or Senior Securities
(each as defined in the Certificate of Designation) (other than
non-convertible debt securities or debt securities which are
convertible into or exchangeable for Common Stock of the Company or
any other equity or convertible security of the Company junior to
the Series D Convertible Preferred
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Stock);
(vi) redeeming, declaring, paying or making any provision for
any dividend or distribution with respect to the Common Stock of the
Company or any other capital stock of the Company ranking junior to
the Series D Convertible Preferred Stock as to the distribution of
assets upon liquidation, dissolution or winding up of the Company;
and
(vii) issuing any Series D Convertible Preferred Stock except
pursuant to the terms of the Securities Purchase Agreement, a copy
of which is filed as an exhibit to this Current Report on Form 8-K.
Dividends. The Series D Convertible Preferred Stock will not bear
dividends.
Liquidation. Upon the liquidation, dissolution or winding up of the
Company, the holders of Series D Convertible Preferred Stock, before any
distribution to the holders of Junior Securities (as defined in the Certificate
of Designation) but after payment to holders of Senior Securities, will be
entitled to receive an amount equal to the Stated Value (defined below) plus the
Premium (defined below) accrued on its Series D Convertible Preferred Stock in
accordance with the terms of the Certificate of Designation (the "Liquidation
Preference"). Any liquidation payments to the holders of the Series D
Convertible Preferred Stock will be made pari passu with liquidation payments to
the holders of the Company's Series C Convertible Preferred Stock.
Conversion. Each share of Series D Convertible Preferred Stock is
convertible into shares of Common Stock of the Company in accordance with the
following formula:
Number of Shares of = Stated Value plus accrued Premium
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Common Stock Issuable Conversion Price
The "Stated Value" is equal to $1,000 per share. The "Premium" is equal to 6%
per annum of the Stated Value, accruing from the date of issuance of the Series
D Convertible Preferred Stock through and including the date of conversion,
payable in Common Stock or cash, at the Company's option (subject to certain
conditions), upon conversion. The "Conversion Price" is $8.875 (subject to
adjustment for anti-dilution events), which was the market price for the
Company's Common Stock on October 1, 1999, the effective date of the sale of the
Series D Convertible Preferred Stock.
If, following conversion, the Company fails to deliver shares of its
Common Stock to an investor in accordance with the Certificate of Designation,
it may incur monetary and other penalties (including, in certain circumstances,
mandatory redemption of the Series D Convertible Preferred Stock).
On October 1, 2004, all shares of Series D Convertible Preferred
Stock then outstanding will be automatically converted into shares of Common
Stock at the then-prevailing Conversion Price.
Mandatory Conversion. The Company has the right to require
conversion of all of the outstanding shares of Series D Convertible Preferred
Stock at any time after October 1, 2000 if the closing sale price for the
Company's Common Stock, as reported by the principal securities exchange
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or trading market where the Common Stock is listed or traded, is greater than
$18.00 for fifteen (15) consecutive trading days, subject to satisfaction of
certain conditions set forth in the Certificate of Designation.
Mandatory Redemption. Each purchaser of Series D Convertible
Preferred Stock will have the right, upon the occurrence of a Mandatory
Redemption Event (as such term is defined in the Certificate of Designation), to
require the Company to redeem all or any part of such purchaser's Series D
Convertible Preferred Stock for a price (the "Mandatory Redemption Price") equal
to the greater of (a) the Liquidation Preference of the shares being redeemed
multiplied by 115% and (b) an amount calculated on the basis of the Conversion
Price and the price at which the Common Stock of the Company is then trading.
If the Corporation fails to pay the Mandatory Redemption Price
within ten (10) business days of the mandatory redemption date, the holder of
Series D Convertible Preferred Stock shall have the right to regain its rights
as such a holder and, upon written notice to such effect from the holder, the
Company shall return to such holder the certificates representing the Series D
Convertible Preferred Stock delivered to the Company in connection with the
mandatory redemption. In such event, the Conversion Price otherwise applicable
to future conversions of the Series D Convertible Preferred Stock shall be
reduced by one percent for each day beyond such tenth business day in which the
failure to pay continued, until the date of such notice, but the maximum
reduction of the Conversion Price shall be fifty percent.
Description of the Registration Rights Agreement. In accordance with
the Securities Purchase Agreement, the Company entered into a Registration
Rights Agreement with the investors, pursuant to which at any time from and
after January 1, 2000 until October 1, 2004, and upon the written request of one
or more of the investors holding in the aggregate at least fifty (50%) of the
registrable securities held by the investors, the Company is required to file
with the Securities and Exchange Commission a registration statement on Form S-3
covering the resale of the Common Stock issuable upon conversion of the Series D
Convertible Preferred Stock. The Registration Rights Agreement also provides the
investors with piggy-back registration rights in the event the Company at any
time prior to October 1, 2004 proposes to register any of its securities for an
underwritten offering.
Placement Agent Fees and Warrants. In consideration for their
private placement services, the Company paid to the placement agents cash
commissions equal to 5% of the aggregate purchase price paid by the investors
for the Series D Convertible Preferred Stock. In further consideration for their
placement services, the Company issued to the placement agents five-year
warrants to purchase up to an aggregate of 122,000 shares of the Company's
Common Stock at an exercise price of $11.09 per share, which price was 25%
greater than the Conversion Price of the Series D Convertible Preferred Stock.
ITEM 7. EXHIBITS.
4.1 Certificate of Designations, Preferences and Rights of the Series D
Convertible Preferred Stock of Shared Technologies Cellular, Inc. dated
October 1, 1999.
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4.2 Securities Purchase Agreement among the Company and the Purchasers dated
as of October 1, 1999.
4.3 Registration Rights Agreement among the Company and the Purchasers dated
as of October 1, 1999.
4.4 Warrant to Purchase Common Stock of the Company issued to International
Capital Partners, LLC.
4.5 Warrant to Purchase Common Stock of the Company issued to Oakes,
Fitzwilliams & Co., S.A.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 12, 1999 SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Vincent DiVincenzo
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Name: Vincent DiVincenzo
Title: Chief Financial officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
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<S> <C>
4.1 Certificate of Designations, Preferences and Rights of the Series D
Convertible Preferred Stock of Shared Technologies Cellular, Inc. dated
October 1, 1999.
4.2 Securities Purchase Agreement among the Company and the Purchasers
dated as of October 1, 1999.
4.3 Registration Rights Agreement among the Company and the Purchasers
dated as of October 1, 1999.
4.4 Warrant to Purchase Common Stock of the Company issued to
International Capital Partners, LLC.
4.5 Warrant to Purchase Common Stock of the Company issued to Oakes,
Fitzwilliams & Co., S.A.
</TABLE>
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CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
OF THE
SERIES D CONVERTIBLE PREFERRED STOCK
OF
SHARED TECHNOLOGIES CELLULAR, INC.
PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW
Shared Technologies Cellular, Inc., a Delaware corporation (the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation pursuant to the authority of the Board
of Directors as required by Section 151 of the Delaware General Corporation Law.
RESOLVED, that pursuant to the authority granted to the Board of
Directors in accordance with the provisions of the Corporation's Certificate of
Incorporation, the Board of Directors hereby authorizes a series of the
Corporation's previously authorized Preferred Stock, par value $.01 per share
(the "Preferred Stock"), and states that the designation and number of shares,
and the relative rights, preferences, privileges and restrictions thereof, shall
be as set forth in EXHIBIT A attached hereto.
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IN WITNESS WHEREOF, the Corporation has executed this Certificate of
Designation as of the 1st day of October, 1999.
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Anthony D. Autorino
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Anthony D. Autorino
Chairman and Chief Executive Officer
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EXHIBIT A
1. DESIGNATION AND AMOUNT.
The designation of this series, which consists of ten thousand (10,000)
shares of Preferred Stock, is the "Series D Convertible Preferred Stock" (the
"Series D Preferred Stock") and the face amount of each share of Series D
Preferred Stock (each, a "Series D Preferred Share" and collectively, the
"Series D Preferred Shares") shall be One Thousand Dollars ($1,000) per Series D
Preferred Share (the "Stated Value"). The date on which the Series D Preferred
Shares are issued and sold pursuant to the Securities Purchase Agreement, dated
as of October 1, 1999, between the Company and the Purchasers named therein (the
"Securities Purchase Agreement") is referred to herein as the "Issue Date". The
holders of Series D Preferred Shares are each referred to as a "Holder" and,
collectively, as the "Holders".
2. DIVIDENDS.
The Series D Preferred Stock will not bear dividends.
3. PRIORITY.
(a) Payment upon Dissolution.
(i) Upon the occurrence of (x) any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or other similar
proceedings in connection therewith, commenced by the Corporation or by its
creditors, as such, or relating to its assets or (y) the dissolution or other
winding up of the Corporation whether total or partial, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy proceedings,
or (z) any assignment for the benefit of creditors or any marshalling of the
material assets or material liabilities of the Corporation (each, a "Liquidation
Event"), no distribution shall be made to the holders of any shares of Junior
Securities (as defined below) unless, following the payment of preferential
amounts on all Senior Securities (as defined below), each Holder shall have
received the Liquidation Preference (as defined below) with respect to each
Series D Preferred Share then held by such Holder. In the event that upon the
occurrence of a Liquidation Event, and following the payment of preferential
amounts on all Senior Securities, the assets available for distribution to the
Holders and the holders of Pari Passu Securities (as defined below) are
insufficient to pay the Liquidation Preference with respect to all of the
outstanding Series D Preferred Shares and the preferential amounts payable to
such holders, the entire assets of the Corporation shall be distributed ratably
among the Series D Preferred Shares and the shares of Pari Passu Securities in
proportion to the ratio that the preferential amount payable on each such share
(which shall be the Liquidation Preference in the case of a Series D Preferred
Share) bears to the aggregate preferential amount payable on all such shares.
(ii) The "Liquidation Preference" with respect to a Series D
Preferred Share shall mean an amount
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equal to the Stated Value of such Series D Preferred Share plus the Premium (as
defined below) accrued on such Series D Preferred Share in accordance with the
terms hereof. "Junior Securities" shall mean the Common Stock and all other
capital stock of the Corporation that are not Pari Passu Securities or do not
have a preference over the Series D Preferred Stock in respect of redemption or
distribution upon liquidation. "Pari Passu Securities" shall mean the Series C
Convertible Preferred Stock of the Corporation and any other securities ranking
pari passu with the Series D Preferred Stock in respect of redemption or
distribution upon liquidation. "Senior Securities" shall mean (i) any debt
issued or assumed by the Corporation and (ii) any securities of the Corporation
which by their terms have a preference over the Series D Preferred Stock in
respect of redemption or distribution upon liquidation.
4. CONVERSION.
(a) Right to Convert. Each Holder shall have the right to convert, at any
time and from time to time after the Issue Date, all or any part of the Series D
Preferred Shares held by such Holder into such number of fully paid and
non-assessable shares ("Conversion Shares") of the Common Stock as is determined
in accordance with the terms hereof (a "Conversion").
(b) Conversion Notice. In order to convert Series D Preferred Shares, a
Holder shall send by facsimile transmission, at any time prior to 11:59 p.m.,
eastern time, on the date on which such Holder wishes to effect such Conversion
(the "Conversion Date"), (i) a notice of conversion (a "Conversion Notice"), in
substantially the form of Exhibit A-1 hereto, to the Corporation and to the
Corporation's transfer agent for the Common Stock (the "Transfer Agent") stating
the number of Series D Preferred Shares to be converted, the amount of Premium
(as defined below) accrued thereon, the applicable Conversion Price (as defined
below) and a calculation of the number of shares of Common Stock issuable upon
such Conversion and (ii) a copy of the certificate or certificates representing
the Series D Preferred Shares being converted. The Holder shall thereafter send
the original of the Conversion Notice and of such certificate or certificates to
the Transfer Agent. The Corporation shall issue a new certificate for Series D
Preferred Shares in the event that less than all of the Series D Preferred
Shares represented by a certificate delivered to the Corporation in connection
with a Conversion are converted. Except as otherwise provided herein, upon
delivery of a Conversion Notice by a Holder in accordance with the terms hereof,
such Holder shall, as of the applicable Conversion Date, be deemed for all
purposes to be record owner of the Common Stock to which such Conversion Notice
relates. In the case of a dispute between the Corporation and a Holder as to the
calculation of the Conversion Price or the number of Conversion Shares issuable
upon a Conversion, the Corporation shall issue to such Holder the number of
Conversion Shares that are not disputed within the time frames specified in
paragraph 4(e) below and shall submit the disputed calculations to its
independent accountant within one (1) Business Day of receipt of such Holder's
Conversion Notice. The Corporation shall cause such accountant to calculate the
Conversion Price as provided herein and to notify the Corporation and such
Holder of the results in writing no later than five (5) Business Days following
the Corporation's receipt of such Holder's Conversion Notice (such 5th Business
Day being referred to herein as the "Disputed Share Calculation Date"). Such
accountant's
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calculation shall be deemed conclusive absent manifest error. The
fees of any such accountant shall be borne by the party whose calculations were
most at variance with those of such accountant.
(c) Number of Conversion Shares; Conversion Price. The number of
Conversion Shares to be delivered by the Corporation pursuant to a Conversion
shall be determined in accordance with the following formula:
SV + P
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CP
where SV represents the aggregate Stated Value of the Series D Preferred Shares
to be converted,
P represents the aggregate Premium (i) accrued on such Series D Preferred
Shares and (ii) eligible for payment by the Corporation in Conversion
Shares, it being understood that, unless each of the Premium Share
Conditions (as defined in paragraph 4(f) below) is satisfied or waived by
the Holder of such Series D Preferred Shares, the Corporation may not pay
accrued Premium in shares of Common Stock and must pay such Premium on the
applicable Delivery Date (as defined below) in immediately available funds
in accordance with the terms of this Certificate, and
CP represents the Conversion Price (as defined below) in effect on the
applicable Conversion Date.
"Premium" with respect to a Series D Preferred Share shall be determined in
accordance with the following formula:
(SV)(.06)(N)
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365
where SV represents the Stated Value of such Series D Preferred Share, and
N represents the number of days elapsed from the Issue Date through and
including the Conversion Date relating to such Series D Preferred Share.
Subject to adjustment as provided elsewhere herein, "Conversion Price" shall
mean $8.875.
(d) Certain Definitions. "Trading Day" means any day on which the Common
Stock is purchased and sold on the principal securities exchange or market on
which the Common Stock is then listed or traded. "Business Day" means any day on
which the New York Stock Exchange and commercial banks located in the City of
New York are open for business.
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(e) Delivery of Common Stock Upon Conversion. Upon receipt of a Conversion
Notice from a Holder pursuant to paragraph 4(b) above, the Corporation shall, on
or before the close of business on the latest to occur of (i) the third (3rd)
Business Day following the Conversion Date set forth in such Conversion Notice,
(ii) the Business Day immediately following the day on which the certificates
representing the Series D Preferred Shares are delivered by such Holder to the
Corporation or the Transfer Agent, and (iii) with respect to Conversion Shares
that are the subject of a dispute as described in paragraph 4(b) above, the
Business Day immediately following the Disputed Share Calculation Date (the
latest of such Business Days being referred to herein as the "Delivery Date"),
issue and deliver or cause to be delivered to such Holder the number of
Conversion Shares to which such Holder is entitled to receive as provided
herein. The Corporation shall effect delivery of Conversion Shares to a Holder
by, as long as the Transfer Agent participates in the Depository Trust Company
("DTC") Fast Automated Securities Transfer program ("FAST"), crediting the
account of such Holder or its nominee at DTC (as specified in the applicable
Conversion Notice) with the number of Conversion Shares required to be
delivered, no later than the close of business on such Delivery Date. In the
event that Transfer Agent is not a participant in FAST or if a Holder so
specifies in a Conversion Notice or otherwise in writing on or before the
Conversion Date, the Corporation shall effect delivery of Conversion Shares by
delivering to the Holder or its nominee physical certificates representing such
Conversion Shares, no later than the close of business on such Delivery Date. If
any Conversion would create a fractional Conversion Share, such fractional
Conversion Share shall be disregarded and the number of Conversion Shares
issuable upon such Conversion, in the aggregate, shall be the rounded to the
nearest whole number of Conversion Shares. Conversion Shares delivered to the
Holder shall not contain any restrictive legend as long as (A) the sale,
transfer, pledge or other disposition of such Conversion Shares is covered by an
effective registration statement, (B) such Conversion Shares have been publicly
sold pursuant to Rule 144 ("Rule 144"), or (C) such Conversion Shares can be
sold pursuant to Rule 144(k) under Securities Act of 1933, as amended (the
"Securities Act"), or any successor rule or provision.
(f) Failure to Deliver Conversion Shares.
(i) In the event that the Corporation fails for any reason to
deliver to a Holder certificates (without any restrictive legend in the
circumstances described in clause (A) or (B) of paragraph 4(e) above)
representing the number of Conversion Shares specified in the applicable
Conversion Notice on or before the Delivery Date therefor (a "Conversion
Default") as a result of any willful action or any willful failure to act on the
part of the Corporation, and such failure to deliver certificates continues for
twenty (20) Business Days following the delivery of written notice thereof from
such Holder (such tenth Business Day being referred to herein as the "Conversion
Default Date"), the Corporation shall pay to such Holder payments ("Conversion
Default Payments") in the amount of (i) "N" multiplied by (ii) the aggregate
Stated Value of the Series D Preferred Shares which are the subject of such
Conversion Default multiplied by (iii) one percent (1%), where "N" equals the
number of days elapsed between the Conversion Default Date and the earlier to
occur of (A) the date on which all of the certificates (without any restrictive
legend in the circumstances described in clause (A),
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(B) or (C) of paragraph 4(e) above) representing such Conversion Shares are
issued and delivered to such Holder, (B) the date on which such Series D
Preferred Shares are redeemed pursuant to the terms hereof and (C) the date on
which a Withdrawal Notice (as defined below) is delivered to the Corporation.
Amounts payable under this subparagraph (f) shall be paid to the Holder in
immediately available funds on or before the fifth (5th) Business Day of the
calendar month immediately following the calendar month in which such amounts
have accrued.
(ii) In the event that a Holder has not received certificates
representing the Conversion Shares by the twentieth (20th) Business Day
following a Conversion Default as a result of any willful action or any willful
failure to act on the part of the Corporation, such Holder may, upon written
notice (a "Withdrawal Notice") delivered to the Corporation on such Business Day
or on any Business Day thereafter (unless, prior to the delivery of such notice,
such Conversion Shares are delivered to such Holder), withdraw its Conversion
Notice with respect to such Conversion Shares and regain its rights as a Holder
of the Series D Preferred Shares that are the subject of such Conversion
Default. In such event, the Conversion Price that would otherwise be in effect
when such Series D Preferred Shares are thereafter converted in accordance with
the terms hereof shall be reduced by one percent (1%) for each day occurring
during the period immediately following such 10th Business Day until the day on
which the such Holder delivers a Withdrawal Notice to the Corporation; provided,
however, that the maximum percentage by which such Conversion Price may be
reduced hereunder shall be fifty percent (50%). (For example, if such Conversion
Default were to continue for five days following such 10th Business Day, such
Conversion Price would be reduced by 5%; if for ten days, by 10%; and for fifty
days or more, 50%, so that the number of Conversion Shares deliverable upon
conversion of such Series D Preferred Shares would be increased
proportionately). Upon delivery by a Holder of a Withdrawal Notice, such Holder
shall retain all of such Holder's rights and remedies with respect to the
Corporation's failure to deliver such Conversion Shares (including without
limitation the right to receive the cash payments specified in subparagraph
4(f)(i) above).
(iii) In addition to any other remedies provided herein, each Holder
shall have the right to pursue actual damages for the Corporation's failure to
issue and deliver Conversion Shares on the applicable Delivery Date (including,
without limitation, damages relating to any purchase of shares of Common Stock
by such Holder to make delivery on a sale effected in anticipation of receiving
Conversion Shares upon Conversion, such damages to be in an amount equal to (A)
the aggregate amount paid by such Holder for the shares of Common Stock so
purchased minus (B) the aggregate Conversion Price for such Conversion Shares,
and such Holder shall have the right to pursue all other remedies available to
it at law or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief).
(g) Premium Share Conditions. The Corporation's right to pay accrued
Premium in Conversion Shares upon conversion of a Series D Preferred Share is
conditioned upon the satisfaction of each of the following conditions (the
"Premium Share
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Conditions"):
(i) the number of shares of Common Stock authorized, unissued and
unreserved for all other purposes, or held in the Corporation's treasury, is
sufficient to pay such Premium in Conversion Shares; and
(ii) the Common Stock is authorized for quotation on the Nasdaq
SmallCap Market or the Nasdaq National Market or for listing or quotation on the
New York Stock Exchange or any other national securities exchange and trading in
the Common Stock on such market or exchange has not been suspended;
In the event that any Premium Share Condition is not satisfied as of the
Conversion Date for a Series D Preferred Share, the premium accrued on such
Series D Preferred Share shall be payable by the Corporation to the Holder
thereof in immediately available funds on the Delivery Date immediately
following such Conversion Date. If the Corporation fails to deliver the amount
of such Premium in immediately available funds to a Holder on or before the
close of business on the Delivery Date therefor (a "Premium Cash Default"), such
amount will bear interest at an annual rate equal to at the lower of (x) ten
percent (10%) and (y) the highest interest rate permitted by applicable law (the
"Default Interest Rate"), accruing on a daily basis from and after such Delivery
Date until such amount is paid in full.
(h) Conversion at Maturity. On the date which is five (5) years following
the Issue Date (the "Maturity Date"), each Series D Preferred Share then
outstanding shall be automatically converted into the number of shares of Common
Stock equal to the Liquidation Preference of such shares divided by the
Conversion Price then in effect (a "Conversion at Maturity"); provided, however,
that if, on the Maturity Date, (i) the number of shares of Common Stock
authorized, unissued and unreserved for all other purposes, or held in the
Corporation's treasury, is not sufficient to effect the issuance and delivery of
the number of Conversion Shares into which all outstanding Series D Preferred
Shares are then convertible, or (ii) the Common Stock is not designated for
quotation or listed on the Nasdaq SmallCap Market, the Nasdaq National Market or
the New York Stock Exchange or trading in the Common Stock on such market or
exchange has been suspended, each Holder shall have the option, upon written
notice to the Corporation, to retain its rights as a holder of Series D
Preferred Shares, including without limitation, the right to convert such Series
D Preferred Shares in accordance with the terms of paragraphs 4(a) through 4(e)
hereof and, upon delivery of such notice, such Series D Preferred Shares shall
not be subject to a Conversion at Maturity hereunder until the thirtieth (30th)
day following the later of (a) the date on which the event specified (i) or (ii)
is no longer continuing and (b) the date on which the Corporation delivers to
each Holder written notice to such effect, and in such event, such thirtieth day
shall be deemed to be the Maturity Date for purposes of this Certificate of
Designation. If a Conversion at Maturity occurs, the Corporation and each Holder
shall follow the procedures for Conversion set forth in this Section 4, with the
Maturity Date deemed to be the Conversion Date, except that the Holder shall not
be required to send a Conversion Notice as contemplated by paragraph 4(b).
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5. ADJUSTMENTS TO CONVERSION PRICE.
(a) Adjustment to Conversion Price Due to Stock Split, Stock Dividend,
Etc. If, prior to the Conversion of all of the Series D Preferred Shares, (A)
the number of outstanding shares of Common Stock is increased by a stock split,
a stock dividend on the Common Stock, a reclassification of the Common Stock, or
other similar event, the Conversion Price shall be proportionately reduced, or
(B) the number of outstanding shares of Common Stock is decreased by a reverse
stock split, combination or reclassification of shares or other similar event,
the Conversion Price shall be proportionately increased. In such event, the
Corporation shall notify the Transfer Agent of such change on or before the
effective date thereof.
(b) Adjustment Due to Merger, Consolidation, Etc. If, prior to the
Conversion of all of the Series D Preferred Shares, there shall be any merger,
consolidation, business combination, tender offer, exchange of shares,
recapitalization, reorganization, redemption or other similar event, as a result
of which shares of Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes of stock or securities
of the Corporation or another entity (an "Exchange Transaction"), then such
Holder shall (A) upon the consummation of such Exchange Transaction, have the
right to receive, with respect to any shares of Common Stock then held by such
Holder, or which such Holder is then entitled to receive pursuant to a
Conversion Notice previously delivered by such Holder (and without regard to
whether such shares contain a restrictive legend or are freely-tradable), the
same amount and type of consideration (including without limitation, stock,
securities and/or other assets) and on the same terms as a holder of shares of
Common Stock would be entitled to receive in connection with the consummation of
such Exchange Transaction (the "Exchange Consideration"), and (B) upon the
Conversion of Series D Preferred Shares occurring subsequent to the consummation
of such Exchange Transaction (a "Subsequent Conversion"), have the right to
receive the Exchange Consideration which such Holder would have been entitled to
receive in connection with such Exchange Transaction had such shares been
converted immediately prior to such Exchange Transaction at the Conversion Price
applicable on the Conversion Date relating to such Subsequent Conversion, and in
any such case appropriate provisions shall be made with respect to the rights
and interests of such Holder to the end that the provisions hereof (including,
without limitation, provisions for the adjustment of the Conversion Price and of
the number of shares of Common Stock issuable upon a Conversion) shall
thereafter be applicable as nearly as may be practicable in relation to any
securities thereafter deliverable upon the Conversion of such Series D Preferred
Shares. The Corporation shall not effect any Exchange Transaction unless (i) it
first gives to each Holder twenty (20) days prior written notice of such
Exchange Transaction (an "Exchange Notice"), and makes a public announcement of
such event at the same time that it gives such notice (it being understood that
the filing by the Corporation of a Form 8-K for the purpose of disclosing the
anticipated consummation of the Exchange Transaction shall constitute an
Exchange Notice for purposes of this provision) and (ii) the resulting successor
or acquiring entity (if not the Corporation) assumes by written instrument the
obligations of the Corporation hereunder, including the terms of this
subparagraph 5(b), and under the Securities Purchase Agreement and the
Registration Rights Agreement.
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<PAGE> 10
(c) Distribution of Assets. If the Corporation or any of its subsidiaries
shall declare or make any distribution of cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or the immediately
preceding year), or any rights to acquire any of the foregoing, to holders of
Common Stock (or to a holder of the common stock of any such subsidiary) as a
partial liquidating dividend, by way of return of capital or otherwise,
including any dividend or distribution in shares of capital stock of a
subsidiary of the Corporation (collectively, a "Distribution"), then, upon a
Conversion by a Holder occurring after the record date for determining
stockholders entitled to such Distribution, the applicable Conversion Price for
Series D Preferred Shares not converted prior to the record date of a
Distribution shall be reduced by an amount equal to the fair market value of the
assets so distributed with respect to each share of Common Stock, such fair
market value to be determined by an investment banking firm selected by all of
the holders of Series D Preferred Shares then outstanding and reasonably
acceptable to the Corporation.
(d) Adjustments to Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this subparagraph 5(d), the
following definitions shall apply:
(A) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities.
(B) "Original Issue Date" shall mean the date on which a
Series D Preferred Share was first issued.
(C) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
" (D) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to subparagraph 5(d)(iii) below,
deemed to be issued) by the Corporation after the Original Issue Date, other
than shares of Common Stock issued or issuable:
(I) upon conversion of any Convertible Securities
outstanding on the Original Issue Date, or upon exercise of any Options
outstanding on the Original Issue Date;
(II) as a dividend or distribution on the Preferred
Stock;
(III) by reason of a dividend, stock split, split-up or
other distribution on shares of Common Stock that is covered by subparagraph
5(a) or 5(c) above;
(IV) to employees or directors of, or consultants to,
the
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<PAGE> 11
Corporation pursuant to a stock option, restricted stock or other plan or
arrangement approved by the Board of Directors of the Corporation, such number
of shares not to exceed 15% of the total number of shares of Common Stock from
time to time outstanding, calculated on a fully diluted basis; plus any shares
of Common Stock subject to options that terminate unexercised (and are eligible
to be regranted under the terms of the applicable plan or arrangement) and
shares of restricted stock repurchased from employees upon termination of
employment; or
(V) in connection with joint venture and corporate
partnering relationships approved by the Board of Directors of the Corporation,
and in connection with acquisition transactions approved by the Board of
Directors of the Corporation.
(ii) No Adjustment of Conversion Price. No adjustment in the number
of shares of Common Stock into which the Series D Preferred Stock is convertible
shall be made by adjustment in the applicable Conversion Price thereof: (a)
unless the consideration per share (determined pursuant to subparagraph 5(d)(v))
for an Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the applicable Conversion Price in effect on the date
of, and immediately prior to, the issue of such Additional Shares, or (b) if
prior to such issuance, the Corporation receives written notice from the holders
of at least a majority of the then outstanding shares of Series D Preferred
Stock, agreeing that no such adjustment shall be made as the result of the
issuance of Additional Shares of Common Stock.
(iii) Issue of Securities Deemed Issue of Additional Shares of
Common Stock. If the Corporation at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities, then the
maximum number of shares of Common Stock (as set forth in the instrument
relating thereto without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such Options
or, in the case of Convertible Securities and Options therefor, the conversion
or exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to subparagraph 5(d)(v) hereof)
of such Additional Shares of Common Stock would be less than the applicable
Conversion Price in effect on the date of and immediately prior to such issue,
and provided further that in any such case in which Additional Shares of Common
Stock are deemed to be issued:
(A) No further adjustment in the Conversion Price shall be
made upon the subsequent issue of Convertible Securities or shares of Common
Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) If such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Corporation, upon the exercise, conversion or
exchange thereof, the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect
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<PAGE> 12
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase becoming effective, be recomputed to reflect such increase insofar as
it affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) Upon the expiration or termination of any unexercised
Option, the Conversion Price shall be readjusted to reflect the Conversion Price
in effect at the time of the issuance of the expired or terminated Options, with
such additional adjustments as would have been made to the Conversion Price had
the expired or terminated Options not been issued, and the Additional Shares of
Common Stock deemed issued as the result of the original issue of such Option
shall not be deemed issued for the purposes of any subsequent adjustment of the
Conversion Price;
(D) In the event of any change in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any Option or
Convertible Security, including, but not limited to, a change resulting from the
anti-dilution provisions thereof, the Conversion Price then in effect shall
forthwith be readjusted to such Conversion Price as would have obtained had the
adjustment, which was made upon the issuance of such Option or Convertible
Security which has not been exercised or converted prior to such change, been
made upon the basis of such change; and
(E) No readjustment pursuant to clause (B) or (D) above shall
have the effect of increasing the Conversion Price to an amount which exceeds
the lower of (i) the Conversion Price on the original adjustment date, or (ii)
the Conversion Price that would have resulted from any issuances of Additional
Shares of Common Stock between the original adjustment date and such
readjustment date.
(iv) Adjustment of Conversion Price Upon Issuance of Additional
Shares of Common Stock. In the event the Corporation shall at any time after the
Original Issue Date issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to subparagraph
5(d)(iii), but excluding shares issued as a stock split or combination as
provided in subparagraph 5(a) or upon a dividend or distribution as provided in
subparagraph 5(c)), without consideration or for a consideration per share less
than the applicable Conversion Price in effect on the date of and immediately
prior to such issue, then and in such event, such Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying such Conversion Price by a fraction, (A) the
numerator of which shall be (1) the number of shares of Common Stock outstanding
immediately prior to such issue plus (2) the number of shares of Common Stock
which the aggregate consideration received or to be received by the Corporation
for the total number of Additional Shares of Common Stock so issued would
purchase at such Conversion Price; and (B) the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
plus the number of such Additional Shares of Common Stock so issued; provided
that, (i) for the purpose of this subparagraph 5(d)(iv), all shares of Common
Stock issuable upon exercise or conversion of Options or Convertible Securities
outstanding immediately prior to such issue shall be deemed to be outstanding,
and (ii)
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<PAGE> 13
the number of shares of Common Stock deemed issuable upon exercise or
conversion of such outstanding Options and Convertible Securities shall not give
effect to any adjustments to the conversion price or conversion rate of such
Options or Convertible Securities resulting from the issuance of Additional
Shares of Common Stock that is the subject of this calculation.
(v) Determination of Consideration. For purposes of this
subparagraph 5(d), the consideration received by the Corporation for the issue
of any Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property: Such consideration shall:
(I) insofar as it consists of cash, be computed at the
aggregate of cash received by the Corporation, excluding amounts paid or payable
for accrued interest;
(II) insofar as it consists of property other than cash,
be computed at the fair market value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(III) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (I) and (II) above,
as determined in good faith by the Board of Directors.
(B) Options and Convertible Securities. The consideration per
share received by the Corporation for Additional Shares of Common Stock deemed
to have been issued pursuant to subparagraph 5(d)(iii), relating to Options and
Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(vi) Multiple Closing Dates. In the event the Corporation shall
issue on more than one date Additional Shares of Common Stock which are
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<PAGE> 14
comprised of shares of the same series or class of Preferred Stock, and such
issuance dates occur within a period of no more than 120 days, then the
Conversion Price shall be adjusted only once on account of such issuances, with
such adjustment to occur upon the final such issuance and to give effect to all
such issuances as if they occurred on the date of the final such issuance.
(e) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Conversion Price pursuant to this Section 5, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series D Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series D Preferred Stock, furnish or cause to be furnished
to such holder a similar certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price then in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which then
would be received upon the conversion of Series D Preferred Stock.
(f) No Fractional Shares. If any adjustment under this Section would
create a fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and the number
of shares of Common Stock issuable upon Conversion shall be rounded to the
nearest whole number of shares.
6. MANDATORY CONVERSION.
(a) Mandatory Conversion. The Corporation shall have the right, upon the
satisfaction of each of the Mandatory Conversion Conditions (as defined below),
to require conversion of all of the Series D Preferred Shares outstanding on the
Mandatory Conversion Date (as defined below)(a "Mandatory Conversion"). In the
event of a Mandatory Conversion, the Corporation and each Holder shall follow
the procedures for Conversion set forth in Section 4 above, with the Mandatory
Conversion Date (as defined below) deemed to be the Conversion Date, except that
a Holder shall not be required to send a Conversion Notice as contemplated by
paragraph (b) of Section 4.
(b) Mandatory Conversion Notice. In order to effect a Mandatory Conversion
hereunder, the Corporation must deliver to each Holder written notice thereof (a
"Mandatory Conversion Notice") on or before 5:00 p.m. (eastern time) on a
Business Day (the "Mandatory Conversion Notice Date") that (i) occurs on or
before the third Business Day immediately following the last Trading Day of the
Mandatory Conversion Period (as defined below) and (ii) is not less than fifteen
(15) Trading Days prior to the date on which such Mandatory Conversion is to be
effected (the "Mandatory Conversion Date") and, at the same time that it
delivers such notice, the Corporation shall confirm delivery thereof with each
Holder by telephone, either personally or by voicemail message. Notwithstanding
the delivery by the Corporation of a Mandatory Conversion Notice, nothing
contained herein shall be deemed to limit in any way the right of a Holder to
convert Series D Preferred Shares prior to the
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<PAGE> 15
Mandatory Conversion Date.
(c) Mandatory Conversion Conditions. The Mandatory Conversion
Conditions are as follows:
(i) at any time after the 365-day period following the Closing
Date, the Closing Sale Price shall have been greater than $18.00 for fifteen
(15) consecutive Trading Days (such 15-Trading Day period being referred to
herein as a "Mandatory Conversion Period"); and
(ii) during the Mandatory Conversion Period, on the Mandatory
Conversion Notice Date and at all times during the period from the Mandatory
Conversion Notice Date through the Mandatory Conversion Date, (y) the Common
Stock shall be listed on the Nasdaq SmallCap Market, the Nasdaq National Market
System or the New York Stock Exchange, and (z) trading in the Common Stock, or
trading generally, shall not have been suspended by the principal market on
which the Common Stock is traded;
7. REDEMPTION.
(A) Mandatory Redemption by the Holder.
(a) Mandatory Redemption. In the event that a Mandatory Redemption
Event (as defined below) occurs, each Holder shall have the right to require the
Corporation to redeem all or any portion of the Series D Preferred Shares held
by such Holder (a "Mandatory Redemption") at the Mandatory Redemption Price (as
defined herein). In order to exercise its right to effect a Mandatory
Redemption, a Holder must deliver a written notice (a "Mandatory Redemption
Notice") to the Corporation at any time on or before 5:00 p.m. (eastern time) on
the third (3rd) Business Day following the Business Day on which the Mandatory
Redemption Event to which such Mandatory Redemption Notice relates is no longer
continuing. The Mandatory Redemption Notice shall specify the effective date of
such Mandatory Redemption (the "Mandatory Redemption Date") and the number of
such shares to be redeemed.
(b) Mandatory Redemption Event. Each of the following events shall
be deemed a "Mandatory Redemption Event":
(i) the Corporation fails for any reason (including without
limitation as a result of not having a sufficient number of shares of Common
Stock authorized and reserved for issuance) to issue shares of Common Stock to a
Holder and deliver certificates representing such shares to such Holder as and
when required by the provisions hereof upon Conversion of any Series D Preferred
Shares, as a result of any willful action or willful failure to act on the part
of the Corporation, and such failure continues for twenty (20) Business Days;
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<PAGE> 16
(ii) the Corporation breaches, in a material respect, any
covenant or other material term or condition of this Certificate, the Securities
Purchase Agreement, the Registration Rights Agreement, or any other agreement,
document, certificate or other instrument delivered in connection with the
transactions contemplated thereby, and such breach continues for a period of
five (5) Business Days after written notice thereof to the Corporation from a
Holder;
(iii) any material representation or warranty made by the
Corporation in the Securities Purchase Agreement, the Registration Rights
Agreement or any other agreement, document, certificate or other instrument
delivered in connection with the transactions contemplated hereby or thereby is
inaccurate or misleading in any material respect as of the date such
representation or warranty was made;
(iv) The effectiveness of any demand Registration Statement
required to be maintained pursuant to the terms of the Registration Rights
Agreement lapses for any reason (including without limitation, the issuance of a
stop order) or is unavailable to the Holder for the sale of Conversion Shares in
accordance with the terms of the Registration Rights Agreement, and such lapse
or unavailability continues for a period of five (5) consecutive Business Days
(other than as permitted under the Registration Rights Agreement), in any twelve
(12) month period, provided that such lapse or unavailability occurs as a result
of any willful action or willful failure to act on the part of the Corporation;
and
(v) the Common Stock is not quoted on the Nasdaq SmallCap
Market or the Nasdaq National Market or listed on the New York State Exchange,
or trading in the Common Stock on such market or exchange is suspended and such
suspension is in effect for more than five consecutive (5) Trading Days, and
such suspension or failure to be so quoted or listed occurs as a result of any
willful action or willful failure to act on the part of the Corporation.
(c) Mandatory Redemption Price. The "Mandatory Redemption Price"
shall be equal to the greater of (i) the Liquidation Preference of the Series D
Preferred Shares being redeemed multiplied by one hundred and fifteen percent
(115%) and (ii) an amount determined by dividing the Liquidation Preference of
the Series D Preferred Shares being redeemed by the Conversion Price in effect
on the Mandatory Redemption Date and multiplying the resulting quotient by the
average Closing Trade Price for the Common Stock on the five (5) Trading Days
immediately preceding (but not including) the Mandatory Redemption Date.
(d) Payment of Mandatory Redemption Price.
(i) The Corporation shall pay the Mandatory Redemption Price
to the Holder exercising its right to redemption on the later to occur of (i)
the
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<PAGE> 17
fifth (5th) Business Day following the Mandatory Redemption Date and (ii) the
date on which the Series D Preferred Shares being redeemed are delivered by the
Purchaser to the Corporation for cancellation (the "Mandatory Redemption Payment
Date").
(ii) If Corporation fails to pay the Mandatory Redemption
Price to the Holder on or before the Mandatory Redemption Date, the Holder shall
be entitled to interest thereon, from and after the Mandatory Redemption Payment
Date until the Mandatory Redemption Price has been paid in full, at an annual
rate equal to the Default Interest Rate.
(iii) If the Corporation fails to pay the Mandatory Redemption
Price within ten (10) Business Days of the Mandatory Redemption Date, then the
Holder shall have the right to regain its rights as a Holder of the Series D
Preferred Stock and, upon written notice to such effect from the Holder, the
Corporation shall return to such Holder the certificates representing the Series
D Preferred Shares that were delivered to the Corporation in connection with
such Mandatory Redemption; in such event, the Conversion Price otherwise
applicable to future Conversions of the Series D Preferred Shares shall be
reduced by one percent (1%) for each day beyond such 10th Business Day in which
the failure to pay the Mandatory Redemption Price continued until the date of
such notice; provided, however, that the maximum percentage by which such
Conversion Price may be reduced hereunder shall be fifty percent (50%).
8. MISCELLANEOUS.
(a) Transfer of Series D Preferred Shares. A Holder may sell or
transfer all or any portion of the Series D Preferred Shares to any person or
entity as long as such sale or transfer is the subject of an effective
registration statement under the Securities Act or is exempt from registration
thereunder and otherwise is made in accordance with the terms of the Securities
Purchase Agreement. From and after the date of such sale or transfer, the
transferee thereof shall be deemed to be a Holder. Upon any such sale or
transfer, the Corporation shall, promptly following the return of the
certificate or certificates representing the Series D Preferred Shares that are
the subject of such sale or transfer, issue and deliver to such transferee a new
certificate in the name of such transferee.
(b) Notices. Except as otherwise provided herein, any notice, demand
or request required or permitted to be given pursuant to the terms hereof, the
form or delivery of which notice, demand or request is not otherwise specified
herein, shall be in writing and shall be deemed delivered (i) when delivered
personally or by verifiable facsimile transmission on or before 5:00 p.m.,
eastern time, on a Business Day or, if such day is not a Business Day, on the
next succeeding Business Day, (ii) on the next Business Day after timely
delivery to an overnight courier and (iii) on the Business Day actually received
if deposited in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed to the parties as follows:
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<PAGE> 18
If to the Corporation:
Shared Technologies Cellular, Inc.
100 Great Meadow Road
Suite 100
Wethersfield, CT 06109
Attn: Legal Department
Tel: (860) 258-2500
Fax: (860) 258-2455
with a copy to:
Day, Berry & Howard LLP
260 Franklin Street
Boston MA 02110
Attn: Jeffrey A. Clopeck, Esq.
Tel: (617) 345-4600
Fax: (617) 345-4745
and if to any Holder, to such address for such Holder as shall be designated by
such Holder in writing to the Corporation.
(c) Lost or Stolen Certificate. Upon receipt by the Corporation of
evidence of the loss, theft, destruction or mutilation of a certificate
representing Series D Preferred Shares, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the
Corporation, and upon surrender and cancellation of such certificate if
mutilated, the Corporation shall execute and deliver to the Holder a new
certificate identical in all respects to the original certificate.
(d) No Voting Rights. Except as provided by applicable law and
paragraph 8(g) below, the Holders of the Series D Preferred Shares shall have no
voting rights with respect to the business, management or affairs of the
Corporation; provided that the Corporation shall provide each Holder with prior
notification of each meeting of stockholders (and copies of proxy statements and
other information sent to such stockholders).
(e) Remedies, Characterization, Other Obligations, Breaches and
Injunctive Relief. The remedies provided to a Holder in this Certificate of
Designation shall be cumulative and in addition to all other remedies available
to such Holder under this Certificate of Designation or under any Transaction
Document (as defined in the Securities Purchase Agreement), at law or in equity
(including without limitation a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing contained
herein shall limit such Holder's right to pursue actual damages for any failure
by the Corporation to comply
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<PAGE> 19
with the terms of these Certificate of Designation. The Corporation agrees with
each Holder that there shall be no characterization concerning this instrument
other than as specifically provided herein. Amounts set forth or provided for
herein with respect to payments, conversion and the like (and the computation
thereof) shall be the amounts to be received by the Holder hereof and shall not,
except as expressly provided herein, be subject to any other obligation of the
Corporation (or the performance thereof). The Corporation acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Holders and that the remedy at law for any such breach may be inadequate. The
Corporation agrees, in the event of any such breach or threatened breach, each
Holder shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.
(f) Failure or Delay not Waiver. No failure or delay on the part of
a Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
(g) Protective Provisions.
So long as shares of Series D Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval of the Holders of a
majority of the outstanding shares of Series D Preferred Stock:
(i) alter, change, modify or amend (x) the terms of the Series
D Preferred Stock in any way or (y) the terms of any other capital stock of the
Corporation so as to affect adversely the Series D Preferred Stock;
(ii) create any new class or series of capital stock having a
preference over or ranking pari passu with the Series D Preferred Stock as to
redemption or distribution of assets upon a Liquidation Event or any other
liquidation, dissolution or winding up of the Corporation;
(iii) increase the authorized number of shares of Series D
Preferred Stock;
(iv) re-issue any shares of Series D Preferred Stock which
have been converted or redeemed in accordance with the terms hereof;
(v) issue any Pari Passu Securities or Senior Securities
(other than non-convertible debt securities or debt securities which are
convertible into or exchangeable for Common Stock or any other equity or
convertible security of the Corporation junior to the Series D Preferred Stock);
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<PAGE> 20
(vi) redeem, or declare, pay or make any provision for any
dividend or distribution with respect to, the Common Stock or any other capital
stock of the Corporation ranking junior to the Series D Preferred Stock as to
the distribution of assets upon liquidation, dissolution or winding up of the
Corporation; or
(vii) issue any Series D Preferred Stock except pursuant to
the terms of the Securities Purchase Agreement.
In the event that the Holders of at a majority of the outstanding shares
of Series D Preferred Stock agree to allow the Corporation to alter or change
the rights, preferences or privileges of the shares of Series D Preferred Stock
pursuant to the terms hereof, then the Corporation will deliver notice of such
approved change to the holders of the Series D Preferred Stock that did not
agree to such alteration or change (the "Dissenting Holders") and the Dissenting
Holders shall have the right for a period of thirty (30) days following such
delivery to convert their Series D Preferred Shares pursuant to the terms hereof
as they existed prior to such alteration or change, or to continue to hold such
Series D Preferred Shares. No such change shall be effective to the extent that,
by its terms, it applies to less than all of the Holders of Series D Preferred
Shares then outstanding.
(h) BHCA Compliance. Notwithstanding the provisions of Section 4 and
Section 6 hereof, with respect to any Holder subject to the Bank Holding company
Act of 1956 (the "BHCA"), only such number of the Series D Preferred Shares held
by such Holder shall be convertible into Conversion Shares as may be permitted
at any time under the BHCA. Any Series D Preferred Shares which are not
convertible into Conversion Shares pursuant to the preceding sentence may be
held by such Holder until such time as such Series D Preferred Shares may, in
the opinion of counsel reasonable acceptable to such Holder, be converted into
Conversion Shares without violating the BHCA.
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EXHIBIT A-1
NOTICE OF CONVERSION
The undersigned hereby elects to convert shares of Series D Convertible
Preferred Stock (the "Preferred Stock"), represented by stock certificate No(s).
_____________ (the "Preferred Stock Certificates"), into shares of common
stock ("Common Stock") of Shared Technologies Cellular, Inc. according to the
terms and conditions of the Certificate of Designation relating to the Preferred
Stock (the "Certificate of Designation"), as of the date written below.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Certificate of Designation.
Date of Conversion:____________________________
Number of Shares of Preferred Stock to be
Converted:_____________________________________
Amount of Accrued Premium:_____________________
Applicable Conversion Price:___________________
Number of Shares of Common Stock to be
Issued:________________________________________
Name of Holder:________________________________
Address:_______________________________________
_______________________________________________
_______________________________________________
Signature:_____________________________________
Name:
Title:
Holder Requests Delivery to be made: (check one)
[ ] By Delivery of Physical Certificates to the Above Address
[ ] Through Depository Trust Corporation
(Account __________________________)
<PAGE> 1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of October 1,
1999, by and between Shared Technologies Cellular, Inc., a Delaware corporation
(the "Company"), and each of the entities whose names appear on the signature
pages hereof. Such entities are each referred to herein as a "Purchaser" and,
collectively, as the "Purchasers".
The Company wishes to sell to each Purchaser, and each Purchaser wishes to
buy, on the terms and subject to the conditions set forth in this Agreement,
shares (the "Preferred Shares") of the Company's Series D Convertible Preferred
Stock, par value $.01 per share (the "Preferred Stock"). The Preferred Shares
are convertible pursuant to the terms of the Certificate of Designation relating
to the Preferred Stock, the form of which is attached hereto as Exhibit A (the
"Certificate of Designation"), into shares (the "Conversion Shares") of the
Company's common stock, par value .01 per share (the "Common Stock"). The
Preferred Shares and the Conversion Shares are collectively referred to herein
as the "Securities". Any capitalized term used herein that is not otherwise
defined shall have the meaning specified therefor in the Certificate of
Designation.
The sale of the Preferred Shares by the Company to the Purchasers will be
effected in reliance upon the exemption from securities registration afforded by
the provisions of Regulation D ("Regulation D"), as promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities Act.
The Company has agreed to effect the registration of the Conversion Shares under
the Securities Act of 1933, as amended (the "Securities Act"), upon the request
of the Purchasers commencing six months after the Closing Date, as hereinafter
defined, pursuant to the Registration Rights Agreement of even date herewith by
and between the Company and each of the Purchasers (the "Registration Rights
Agreement").
The Company and each Purchaser hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES
1.1 Agreement to Purchase and Sell. Upon the terms and subject to the
satisfaction or waiver of the conditions set forth herein, the Company agrees to
sell and each Purchaser agrees to purchase the number of Preferred Shares set
forth below such Purchaser's name on the signature pages hereof at a purchase
price for such Preferred Shares equal to one thousand dollars ($1,000) times the
number of Preferred Shares purchased by such Purchaser (the "Purchase Price").
1.2 Closing. The closing of the purchase and sale of the Preferred Shares
hereunder (the "Closing") will occur upon the satisfaction (or waiver) of the
conditions set forth herein, the execution and delivery of this Agreement and
the other Transaction Documents (as defined below) by the Company and each
Purchaser (which delivery may be effected by facsimile transmission), and full
payment of the Purchase Price by each Purchaser by wire transfer of immediately
available funds against physical delivery by the Company of duly executed
certificates representing the Preferred Shares purchased by such Purchaser at
the Closing. The date on which the Closing occurs is hereinafter referred to as
the "Closing Date".
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1.3 Certain Definitions. When used herein, (A) "Business Day" shall mean
any day on which the New York Stock Exchange (the "NYSE") and commercial banks
in the city of New York are open for business, (B) an "affiliate" of a party
shall mean any person or entity controlling, controlled by or under common
control with that party and (C) "control" shall mean, with respect to an entity,
the ability to direct the business, operations or management of such entity,
whether through an equity interest therein or otherwise.
2. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER.
Each Purchaser hereby represents and warrants to the Company and agrees
with the Company that, as of the date of this Agreement and as of the Closing
Date:
2.1 Authorization: Enforceability. Such Purchaser is duly and validly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization with full power and authority
to purchase the Preferred Shares and to execute and deliver this Agreement. This
Agreement and the Registration Rights Agreement each constitutes such
Purchaser's valid and legally binding obligation, enforceable in accordance with
its terms.
2.2 Accredited Investor; Purchase as Principal. Such Purchaser is an
accredited investor as that term is defined in Rule 501 of Regulation D, and is
acquiring the Preferred Shares solely for its own account as a principal and not
with a present view to the public resale or distribution of all or any part
thereof, except pursuant to sales that are exempt from the registration
requirements of the Securities Act and/or sales registered under the Securities
Act; provided, however that in making such representation, such Purchaser does
not agree to hold the Securities for any minimum or specific term and reserves
the right to sell, transfer or otherwise dispose of the Securities at any time
in accordance with the provisions of this Agreement and with Federal and state
securities laws applicable to such sale, transfer or disposition.
2.3 Information. The Company has provided such Purchaser with information
regarding the business, operations and financial condition of the Company, and
has granted to such Purchaser the opportunity to ask questions of and receive
answers from representatives of the Company, its officers, directors, employees
and agents concerning the Company and materials relating to the terms and
conditions of the purchase and sale of the Preferred Shares hereunder. Neither
such information nor any other investigation conducted by such Purchaser or any
of its representatives shall modify, amend or otherwise affect such Purchaser's
right to rely on the Company's representations and warranties contained in this
Agreement.
2.4 Limitations on Disposition. Such Purchaser acknowledges that, except
as provided in the Registration Rights Agreement, the Securities have not been
and are not being registered under the Securities Act and may not be transferred
or resold without registration under the Securities Act or unless pursuant to an
exemption therefrom.
2.5 Legend. Such Purchaser understands that the certificates representing
the Securities may bear at issuance a restrictive legend in substantially the
following form:
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"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, and may not
be offered or sold unless a registration statement under the
Securities Act and applicable state securities laws shall have
become effective with regard thereto, or an exemption from
registration under such laws is available in connection with such
offer or sale."
Notwithstanding the foregoing, it is agreed that, as long as (A) the
resale or transfer (including without limitation a pledge) of any of the
Securities is registered pursuant to an effective registration statement, (B)
such Securities have been publicly sold pursuant to Rule 144 ("Rule 144"), or
(C) such Securities can be publicly sold pursuant to Rule 144(k) under the
Securities Act, such Securities shall be issued without any legend or other
restrictive language and, with respect to Securities upon which such legend is
stamped, the Company shall issue new certificates without such legend to the
holder upon request.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Purchaser and agrees
with each Purchaser that, as of the date of this Agreement and as of the Closing
Date:
3.1 Organization, Good Standing and Qualification. Each of the Company and
its subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority to carry on its business as now
conducted. Each of the Company and its subsidiaries is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on the consolidated
business or financial condition of the Company and its subsidiaries taken as a
whole.
3.2 Authorization; Consents. The Company has the requisite corporate power
and authority to enter into and perform its obligations under (i) this Agreement
and (ii) the Registration Rights Agreement (the instruments described in (i) and
(ii) being collectively referred to herein as the "Transaction Documents"), to
execute, file and perform its obligations under the Certificate of Designation,
to issue and sell the Preferred Shares to the Purchasers in accordance with the
terms hereof and to issue the Conversion Shares upon conversion of the Preferred
Shares in accordance with the Certificate of Designation. Except as set forth on
Schedule 3.2, all corporate action on the part of the Company by its officers,
directors and stockholders necessary for (A) the authorization, execution and
delivery of, and the performance by the Company of its obligations under, the
Transaction Documents, and (B) the authorization, execution and filing of, and
the performance by the Company of its obligations under, the Certificate of
Designation has been taken, and no further consent or authorization of the
Company, its Board of Directors, its stockholders, any governmental agency or
organization (other than such approval as may be required under the Securities
Act and applicable state securities laws in respect of the Registration Rights
Agreement), or any other person or entity is required (pursuant to any rule of
the National Association of Securities Dealers, Inc. or otherwise).
3.3 Enforcement. The Transaction Documents constitute valid and legally
binding obligations of the
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Company, enforceable in accordance with their respective terms.
3.4 Disclosure Documents; Agreements; Financial Statements; Other
Information. The Company has filed with the Commission: (i) the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, as amended, (ii)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, as
amended, and June 30, 1999, (iii) all Current Reports on Form 8-K, and any other
reports, required to be filed with the Commission since December 31, 1998 and
prior to the date hereof and (iv) the Company's definitive Proxy Statement for
its 1999 Annual Meeting of Stockholders (collectively, the "Disclosure
Documents"). The Company is not aware of any event occurring on or prior to the
Closing (other than the transactions effected hereby) that would require the
filing of, or with respect to which the Company intends to file, a Form 8-K
after the Closing. Each Disclosure Document, as of the date of the filing
thereof with the Commission, conformed in all material respects to the
requirements of the Exchange Act, and the rules and regulations thereunder and,
as of the date of such filing (or the date of any amendment to such filing),
such Disclosure Documents did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. All material agreements required to be filed as exhibits
to the Disclosure Documents have been filed as required. Neither the Company nor
any of its subsidiaries is in breach of any agreement to which it is a party or
by which it is bound where such breach is reasonably likely to have a material
adverse effect on (i) the consolidated business, operations, properties,
financial condition, prospects or results of operations of the Company and its
subsidiaries taken as a whole, (ii) the transactions contemplated hereby, by the
other Transaction Document and by the Certificate of Designation or (iii) the
ability of the Company to perform its obligations under this Agreement, under
the other Transaction Document and under the Certificate of Designation
(collectively, a "Material Adverse Effect"). Except as set forth in the
Disclosure Documents, the Company has no liabilities, contingent or otherwise,
other than liabilities incurred in the ordinary course of business which, under
generally accepted accounting principles, are not required to be reflected in
such financial statements and which, individually or in the aggregate, are not
material to the consolidated business or financial condition of the Company and
its subsidiaries taken as a whole. As of their respective dates, the financial
statements of the Company included in the Disclosure Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied at the times and during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
company as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year end adjustments).
3.5 Capitalization. The capitalization of the Company, including its
authorized capital stock, the number of shares issued and outstanding, the
number of shares issuable and reserved for issuance pursuant to the Company's
stock option plans, the number of shares issuable and reserved for issuance
pursuant to securities (other than the Preferred Stock) exercisable for, or
convertible
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into or exchangeable for any shares of Common Stock and the number of shares
initially to be reserved for issuance upon conversion of the Preferred Shares is
set forth on Schedule 3.5 hereto. All of such outstanding shares of capital
stock have been, or upon issuance will be, validly issued, fully paid and
non-assessable. Except as disclosed on Schedule 3.5, no shares of the capital
stock of the Company are subject to preemptive rights or any other similar
rights of the stockholders of the Company or any liens or encumbrances created
by or through the Company. Except as disclosed on Schedule 3.5, or as
contemplated herein, there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries.
3.6 Valid Issuance. The Preferred Shares are duly authorized and, when
issued, sold and delivered in accordance with the terms hereof, (i) will be duly
and validly issued, fully paid and nonassessable, free and clear of any taxes,
liens, claims, preemptive or similar rights or encumbrances imposed by or
through the Company (collectively, "Encumbrances"), (ii) based in part upon the
representations of each Purchaser in this Agreement, will be issued, sold and
delivered in compliance with all applicable Federal and state securities laws
and (iii) will be entitled to all of the rights, preferences and privileges set
forth in the Certificate of Designation. The Conversion Shares are duly
authorized and reserved for issuance and, when issued upon conversion of the
Preferred Shares in accordance with the terms of the Certificate of Designation,
will be duly and validly issued, fully paid and nonassessable, free and clear of
any Encumbrances.
3.7 No Conflict with Other Instruments. Except as set forth on Schedule
3.7, neither the Company nor any of its subsidiaries is in violation of any
provisions of its charter, bylaws or any other governing document as amended and
in effect on and as of the date hereof or in default (and no event has occurred,
which, with notice or lapse of time or both, would constitute a default) under
any provision of any instrument or contract to which it is a party or by which
it is bound, or of any provision of any Federal or state judgment, writ, decree,
order, statute, rule or governmental regulation applicable to the Company, which
would have a Material Adverse Effect. Except as set forth on Schedule 3.7, the
(i) execution, delivery and performance of this Agreement and the other
Transaction Document, (ii) execution and filing of the Certificate of
Designation and (iii) consummation of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Preferred Shares and
the reservation for issuance and issuance of the Conversion Shares) will not, in
any such case, result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument or contract or an event which
results in the creation of any lien, charge of encumbrance upon any assets of
the Company or of any of its subsidiaries or the triggering of any preemptive or
anti-dilution rights or rights of first refusal or first offer on the part of
holders of the Company's securities.
3.8 Financial Condition; Taxes; Litigation.
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3.8.1 The Company's financial condition is, in all material
respects, as described in the Disclosure Documents, except for
changes in the ordinary course of business and normal year-end
adjustments that are not, in the aggregate, materially adverse
to the consolidated business or financial condition of the
Company and its subsidiaries taken as a whole. Except as
otherwise described in the Disclosure Documents, there has
been no material adverse change to the Company's business,
operations, properties, financial condition, prospects or
results of operations since the date of the Company's most
recent Form 10-Q Quarterly Report filed with the Commission.
3.8.2 Neither the Company nor any of its subsidiaries is the subject
of any pending or, to the Company's knowledge, threatened
inquiry, investigation or administrative or legal proceeding
by the Internal Revenue Service, the taxing authorities of any
state or local jurisdiction, the Commission or any state
securities commission or other governmental or regulatory
entity which could reasonably be expected to have a Material
Adverse Effect.
3.8.3 Except as described on Schedule 3.8.3, there is no material
claim, litigation or administrative proceeding pending, or, to
the Company's knowledge, threatened or contemplated, against
the Company or any of its subsidiaries, or against any
officer, director or employee of the Company or any such
subsidiary in connection with such person's employment
therewith. Neither the Company nor any of its subsidiaries is
a party to or subject to the provisions of, any order, writ,
injunction, judgment or decree of any court or governmental
agency or instrumentality which could reasonably be expected
to have a Material Adverse Effect.
3.9 Reporting Company; Form S-3. The Company is subject to the reporting
requirements of the Exchange Act, has a class of securities registered under
Section 12 of the Exchange Act, and has filed all reports required thereby. The
Company is eligible to register for resale shares of its Common Stock on a
registration statement on Form S-3 under the Securities Act.
3.10 Intellectual Property. The Company and its subsidiaries each has the
right to use adequate trademarks, trade names and other rights to inventions,
know-how, patents, copyrights, confidential information and other intellectual
property rights necessary to conduct the business now operated by it, and is not
aware of any infringement by a third party with respect to such rights or of any
infringement by it or conflict with asserted rights of others that, in any such
case, if determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
consolidated business or financial condition of the Company and its subsidiaries
taken as a whole.
3.11 Registration Rights; Rights of Participation. Except as described on
Schedule 3.11 hereto, (A) the Company has not granted or agreed to grant to any
person or entity any rights (including "piggy-back" registration rights) to have
any securities of the Company registered with the Commission or any other
governmental authority and (B) no person or entity, including, but now limited
to, current or former stockholders of the Company, underwriters, brokers, agents
or other third parties, has any right of first refusal, preemptive right, right
of participation, anti-dilutive right or any similar right to participate in the
transactions contemplated by this Agreement, the other Transaction Document or
the Certificate of Designation which has not been waived or will
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not be waived or otherwise satisfied as of the Closing.
3.12 Listing on Nasdaq. The Common Stock is authorized for quotation on
the Nasdaq National Market, and trading in the Common Stock on the Nasdaq
National Market has not been suspended. The Company is, to its knowledge, in
full compliance with the listing criteria of the Nasdaq National Market, and
does not reasonably anticipate that the Common Stock will lose its listing on
the Nasdaq National Market, whether by reason of the transactions contemplated
by this Agreement, the other Transaction Document or the Certificate of
Designation, or otherwise and is not aware of any inquiry by or received any
notice from the Nasdaq regarding any failure or alleged failure by the Company
to comply with such criteria.
3.13 Solicitation; Other Issuances of Securities. Neither the Company nor
any of its subsidiaries or affiliates, nor any person acting on its or their
behalf, (i) has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Preferred Shares, (ii) has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under any
circumstances that would require registration of the Preferred Shares under the
Securities Act or (iii) has issued any shares of Common Stock or shares of any
series of preferred stock or other securities or instruments convertible into,
exchangeable for or otherwise entitling the holder thereof to acquire shares of
Common Stock which would be integrated with the sale of the Preferred Shares to
the Purchasers, or the issuance of the Conversion Shares upon the conversion or
exercise thereof, for purposes of determining whether stockholder approval is
required under the listing criteria of the Nasdaq National Market.
3.14 Fees. Except as described on Schedule 3.14 hereto, the Company is not
obligated to pay any compensation or other fee, cost or related expenditure to
any underwriter, broker, agent or other representative in connection with the
transactions contemplated hereby.
3.15 Foreign Corrupt Practices. To the knowledge of the Company, neither
the Company, nor any of its subsidiaries nor any director, officer, agent,
employee or other person acting on behalf of the Company or any subsidiary, has
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity, (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or
employee, (iii) violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government official or
employee.
3.16 Title. Neither the Company nor any of its subsidiaries owns any real
property; each of the Company and its subsidiaries has good and marketable title
to all personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except as set forth in Schedule 3.16 hereto and except
for liens, claims or encumbrances that do not interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries. Any
real property and facilities held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use
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<PAGE> 8
made and proposed to be made of such property and buildings by the Company and
its subsidiaries.
3.17 Regulatory Permits. The Company and its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, except where the failure to so possess such certificates,
authorizations or permits would not have a Material Adverse Effect, and neither
the Company nor any such subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit.
3.18 Key Employees. Each person whose name is set forth on Schedule 3.18
(each, a "Key Employee") is currently serving in the capacity indicated on such
schedule on a full-time basis. The Company is not aware of any fact or
circumstance (including without limitation the terms of any agreement to which
such person is a party or any litigation in which such person is or may become
involved) that would limit or prevent any such person from serving in such
capacity on a full-time basis in the foreseeable future, or of any intention on
the part of any such person to limit or terminate his or her employment with the
Company.
4. COVENANTS OF THE COMPANY.
4.1 Corporate Existence. The Company shall, so long as any Purchaser or
any affiliate of such Purchaser beneficially owns any Securities, maintain its
corporate existence in good standing and shall pay all taxes owed by it when due
except for taxes which the Company reasonably disputes.
4.2 Form D; Blue-Sky Qualification. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D. The Company
shall, on or before the Closing Date (or, if permitted under applicable law or
regulation, at such time following the Closing Date as required by such law or
regulation), take such action as is necessary to qualify the Preferred Shares
for sale under applicable state or "blue-sky" laws or obtain an exemption
therefrom.
4.3 Reporting Status. As long as any Purchaser or any affiliate of such
Purchaser beneficially owns any Securities and until the date on which any of
the foregoing may be sold to the public pursuant to Rule 144(k) (or any
successor rule or regulation), (i) the Company shall timely file with the
Commission all reports required to be so filed pursuant to the Exchange Act and
(ii) the Company shall not terminate its status as an issuer required by the
Exchange Act to file reports thereunder even if the Exchange Act or the rules or
regulations thereunder would permit such termination. The Company agrees to file
with the Commission a Form 8-K describing the terms of the transactions
contemplated by this Agreement and the other Transaction Document, with this
Agreement and the Registration Rights Agreement attached to such Form 8-K as
exhibits thereto, on or before the fifth (5th) Business Day following the
Closing Date in the form required by the Exchange Act.
4.4 Reservation of Common Stock. The Company shall at all times have
authorized and reserved for issuance, free from any preemptive rights, solely
for the purpose of effecting conversions of the Preferred Shares, such number of
its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all of the Preferred Shares (the "Reserved Amount"). As of
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the Closing Date, the Reserved Amount shall be 850,000 shares (subject to
equitable adjustment for each of the events specified in Section 6 of the
Certificate of Designation) shares of Common Stock. The Reserved Amount as of
the Closing Date shall be allocated to each Purchaser in the same proportion as
the number of Preferred Shares purchased by such Purchaser hereunder bears to
the aggregate number of Preferred Shares purchased by all of the Purchasers
hereunder.
4.5 Use of Proceeds. The Company shall use the proceeds from the sale of
the Preferred Shares for general corporate purposes only (it being understood
that acquisitions by the Company of other entities shall be considered within
the meaning of "general corporate purposes"), in the ordinary course of its
business and consistent with past practice, and shall not use such proceeds to
make a loan to any employee, officer or director of the Company or to repurchase
or pay a dividend on shares of Common Stock.
4.6 Quotation on Nasdaq. The Company shall (i) promptly following the
Closing, take such action as may be necessary to include all of the Conversion
Shares that may be issued by the Company on the Nasdaq National Market, and (ii)
use its reasonable commercial efforts to maintain the designation and quotation,
or listing, of the Common Stock on the Nasdaq National Market or the NYSE for a
minimum of five (5) years following the Closing.
4.7 Company's Instructions to Transfer Agent. On or prior to the Closing
Date, the Company shall execute and deliver irrevocable instructions to its
transfer agent (the "Transfer Agent") (i) to issue certificates representing
Conversion Shares upon conversion of the Preferred Shares in accordance with the
terms of the Certificate of Designation and receipt of (i) a valid Conversion
Notice (as defined in the Certificate of Designation) from a Purchaser and (ii)
a confirmation from the Company, in the amount specified in such Conversion
Notice, in the name of such Purchaser or its nominee (subject to the Company's
right pursuant to the terms of the Certificate of Designation to pay cash in
lieu of issuing such certificates upon a conversion), and (ii) to deliver such
certificates to such Purchaser no later than the close of business on the later
to occur of (A) the third (3rd) Business Day following the related Conversion
Date (as defined in the Certificate of Designation) and (B) the first Business
Day following the date of delivery of the original certificates, duly endorsed,
representing the Preferred Shares being converted. The Company shall instruct
the transfer agent that, in lieu of delivering physical certificates
representing shares of Common Stock to a Purchaser upon conversion of the
Preferred Shares, and as long as the Transfer Agent is a participant in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer program, and
such Purchaser has not informed the Company that it wishes to received physical
certificates therefor, the transfer agent may effect delivery of Conversion
Shares by crediting the account of such Purchaser or its nominee at DTC for the
number of shares for which delivery is required hereunder within the time frame
specified above for delivery of certificates. The Company represents to and
agrees with each Purchaser that it will not give any instruction to the Transfer
Agent that will conflict with the foregoing instruction or otherwise restrict
such Purchaser's right to convert the Preferred Shares or to receive Conversion
Shares in accordance with the terms of the Certificate of Designation. In the
event that the Company's relationship with the Transfer Agent should be
terminated for any reason, the company will use reasonable commercial efforts to
ensure that the Transfer Agent shall continue acting as transfer agent pursuant
to the terms hereof until such time that a
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successor transfer agent is appointed by the Company and receives the
instructions described above.
4.8 Use of Purchaser Name. Except as may be required by applicable law,
the Company shall not use, directly or indirectly, such Purchaser's name or the
name of any of its affiliates in any advertisement, announcement, press release
or other similar communication unless it has received the prior written consent
of any Purchaser for the specific use contemplated (which consent will not be
unreasonably withheld) or as otherwise required by applicable law or regulation.
4.9 Attendance at Board Meetings. For so long as Saudi International Bank
("SIB") or any affiliate of SIB shall hold Preferred Shares with an aggregate
Stated Value (as defined in the Certificate of Designation) of not less than $2
million, SIB shall be entitled to select a representative to whom the Company
shall give notice of, and permit to attend (but not participate as a director),
all meetings of the Board of Directors of the Company.
4.10 Board Representation. For so long as SIB or any affiliate of SIB
shall hold Preferred Shares with an aggregate Stated Value of not less than $3
million, the Company shall use its best efforts to cause the nomination of Ajit
G. Hutheesing and Nicholas E. Sinacori for election to the Board of Directors of
the Company.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Purchaser's Obligations at Closing. Each Purchaser's
obligations at the Closing, including without limitation its obligation to
purchase Preferred Shares at the Closing, are conditioned upon the satisfaction
by the Company (or waiver by such Purchaser) of each of the following events as
of the Closing Date:
5.1.1 the representations and warranties of the Company set forth in
this Agreement shall be true and correct in all material
respects as of such date as if made on such date;
5.1.2 the Company shall have complied with or performed in all
material respects all of the agreements, obligations and
conditions set forth in this Agreement that are required to be
complied with or performed by the Company on or before the
Closing;
5.1.3 the Company shall have delivered to such Purchaser a
certificate, signed by an officer of the Company, certifying
that the conditions specified in this paragraph 5.1 have been
fulfilled as of the Closing;
5.1.4 the Company shall have filed the Certificate of Designation
with the Secretary of State of the State of Delaware and shall
have furnished such Purchaser with reasonable evidence of such
filing;
5.1.5 the Company shall have delivered to such Purchaser an opinion
of counsel for the Company, dated as of such date, in
substantially the form set forth on Exhibit 5.1.5 hereto;
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<PAGE> 11
5.1.6 the Company shall have delivered to such Purchaser duly
executed certificates representing the Preferred Shares being
so purchased;
5.1.7 the Company shall have executed and delivered the Registration
Rights Agreement;
5.1.8 the Common Stock shall be designated for quotation on the
Nasdaq National Market and no suspension of trading in the
Common Stock on such market shall have occurred and be
continuing as of the Closing Date;
5.1.9 the Company shall have authorized and reserved for issuance
the number of shares of Common Stock required to be reserved
under paragraph 4.4 hereof; and
5.1.10 the requisite consent of the holders of the Series C
Preferred Stock of the Company shall have been obtained with
respect to the transactions contemplated by the Transaction
Documents, and the waiver of any pre-emptive rights to which
such holders and the holders of the Company's outstanding
convertible notes issued in May 1998 may be entitled shall
have been obtained, or such pre-emptive rights shall have
otherwise been satisfied.
5.2 Conditions to Company's Obligations at the Closing. The Company's
obligations at the Closing are conditioned upon the satisfaction (or waiver by
the Company) of each of the following events as of the Closing Date:
5.2.1 the representations and warranties of each Purchaser shall be
true and correct in all material respects as of such date as
if made on such date; and
5.2.2 each Purchaser shall have complied with or performed all of
the agreements, obligations and conditions set forth in this
Agreement that are required to be complied with or performed
by the Purchaser on or before the Closing.
6. MISCELLANEOUS
6.1 Survival. The representations and warranties made by the parties
herein shall survive the Closing for a period of eighteen months notwithstanding
any due diligence investigation made by or on behalf of the party seeking to
rely thereon. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that in such case the parties shall negotiate in good faith
to replace such provision with a new provision which is not illegal,
unenforceable or void, as long as such new provision does not materially change
the economic benefits of this Agreement to the parties.
6.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. The Purchaser may assign its rights and obligations
hereunder, in connection with any private
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<PAGE> 12
sale or transfer of the Preferred Shares in accordance with the terms hereof, as
long as, as a condition precedent to such transfer, the transferee executes an
acknowledgment agreeing to be bound by the applicable provisions of this
Agreement, in which case the term "Purchaser" shall be deemed to refer to such
transferee as though such transferee were an original signatory hereto. The
Company may not assign it rights or obligations under this Agreement except
that, in connection with a Change of Control Transaction (as defined below)
where the Company is not the surviving entity, the Company may assign its rights
or obligations hereunder to the surviving entity. For purposes hereof, "Change
of Control Transaction" shall mean the sale, conveyance or disposition of all or
substantially all of the assets of the Company or any of its subsidiaries
(including without limitation the sale or other conveyance of any common stock
or other equity securities of any of the Company's subsidiaries), or the
effectuation of a transaction or series of related transactions, in which more
than 50% of the voting power of the Company is disposed of, or the
consolidation, merger or other business combination of the Company or any of its
subsidiaries with or into any other entity, immediately following which the
prior stockholders of the Company fail to own, directly or indirectly, at least
fifty (50%) of the surviving entity.
6.3 No Reliance. Each party acknowledges that (i) it has such knowledge in
business and financial matters as to be fully capable of evaluating this
Agreement, the other Transaction Document and the transactions contemplated
hereby and thereby, (ii) it is not relying on any advice or representation of
the other party in connection with entering into this Agreement, the other
Transaction Document or such transactions (other than the representations made
in this Agreement or the other Transaction Document), (iii) it has not received
from such party any assurance or guarantee as to the merits (whether legal,
regulatory, tax, financial or otherwise) of entering into this Agreement or the
other Transaction Document or the performance of its obligations hereunder and
thereunder, and (iv) it has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisors to the extent that it
has deemed necessary, and has entered into this Agreement and the other
Transaction Document based on its own independent judgment and on the advice of
its advisors as it has deemed necessary, and not on any view (whether written or
oral) expressed by such party.
6.4 Independent Nature of Purchaser's Obligations and Rights. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at the Closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the other
Transaction Document, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
6.5 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed under the laws of the State of New York without regard to the conflict
of laws provisions thereof. Each party hereby irrevocably waives personal
service of process and consents to process being served
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<PAGE> 13
in any such suit, action or proceeding by mailing a copy thereof (certified or
registered mail, return receipt requested) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.
6.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
6.7 Headings. The headings used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
6.8 Notices. Any notice, demand or request required or permitted to be
given by any party to any other party pursuant to the terms of this Agreement
shall be in writing and shall be deemed given (i) when delivered personally or
by verifiable facsimile transmission (with an original to follow) on or before
5:00 p.m., eastern time, on a Business Day or, if such day is not a Business
Day, on the next succeeding Business Day, (ii) on the next Business Day after
timely delivery to a nationally-recognized overnight courier and (iii) on the
Business Day actually received if deposited in the U.S. mail (certified or
registered mail, return receipt requested, postage prepaid), addressed to the
parties as follows:
If to the Company:
Shared Technologies Cellular, Inc.
100 Great Meadow Road
Suite 100
Wethersfield, CT 06109
Attn: Legal Department
Tel: (860) 258-2500
Fax: (860) 258-2455
with a copy to:
Day, Berry & Howard LLP
260 Franklin Street
Boston, MA 02110
Attn: Jeffrey A. Clopeck, Esq.
Tel: (617) 345-4600
Fax: (617) 345-4745
and if to any Purchaser, to such address for such Purchaser as shall appear on
the signature page hereof executed by such Purchaser, or as shall be designated
by such Purchaser in writing to the Company.
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<PAGE> 14
6.9 Expenses. The Company and each Purchaser shall pay all costs and
expenses that it incurs in connection with the negotiation, execution, delivery
and performance of this Agreement.
6.10 Entire Agreement; Amendments; Waiver. This Agreement and the other
Transaction Document constitute the entire agreement between the parties with
regard to the subject mater hereof and thereof, superseding all prior agreements
or understandings, whether written or oral, between or among the parties. Except
as expressly provided herein, neither this Agreement nor any term hereof may be
amended or waived except pursuant to a written instrument executed by the
Company and the holders of at least two-thirds (2/3) of the Preferred Shares
then outstanding.
[Remainder of Page Intentionally Left Blank]
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<PAGE> 15
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Anthony D. Autorino
---------------------------------
Name: Anthony D. Autorino
Title: Chairman and CEO
PURCHASER NAME: SIB INVESTMENT HOLDINGS LIMITED
By: /s/ Gregga J. Baxter
----------------------------------
Name: Gregga J. Baxter
Title: Vice President
ADDRESS:
One Knights Bridge
London SWIX 7XS
c/o Saudi International Bank
520 Madison Avenue
New York, NY 10022
Tel: 212-207-9100
Fax: 212-758-5360
Number of shares of Series D Preferred Stock to be purchased: 5,000
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<PAGE> 16
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Anthony D. Autorino
----------------------------------
Name: Anthony D. Autorino
Title: Chairman and CEO
PURCHASER NAME: ARDARA INVESTMENT INC.
One Director:
DUCAT LIMITED
By: /s/ Michael J. Mello /s/ Elizabeth L. Jones
---------------------------------------------------------------
Name: Michael J. Mello Elizabeth L. Jones
Title: Two Directors
MAILING ADDRESS: ONLY BY EXPRESS COURIER:
P.O. Box 5136 Anita Fernandez
CH-1211 Geneva 11 Stand 11, rue de la Corraterie
CH-1204 Geneva
Tel: ___________________
Fax: 4122/709.29.24
Number of shares of Series D Preferred Stock to be purchased: 1,000
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<PAGE> 17
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Anthony D. Autorino
-----------------------------------
Name: Anthony D. Autorino
Title: Chairman and CEO
PURCHASER NAME: SWISSCON LIMITED
By: CORPORATE SERVICES (GUERNSEY) LIMITED
AS SECRETARIES TO THE COMPANY
/s/ D. M. LeLievre /s/ I. M. Hancock
- -------------------------------------- --------------------------
Name: D. M. LeLievre I. M. Hancock
Title: Director Director
ADDRESS: All correspondence to:
Westbourne, P.O. Box 44,
The Grange, St. Peter Port,
Guernsey, GY1 38C
Tel: 01481 727111
Fax: 01481 728317
Number of shares of Series D Preferred Stock to be purchased: 100
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of October 1,
1999, by and among Shared Technologies Cellular, Inc., a Delaware corporation
(the "Company"), and each of the entities whose names appear on the signature
pages hereof. Such entities are each referred to herein as a "Purchaser" and,
collectively, as the "Purchasers".
The Company has agreed, on the terms and subject to the conditions set
forth in the Securities Purchase Agreement of even date herewith (the
"Securities Purchase Agreement"), to issue and sell to each Purchaser shares
(the "Preferred Shares") of the Company's Series D Convertible Preferred Stock,
par value $.01 per share (the "Preferred Stock"). The Preferred Shares are
convertible pursuant to a Certificate of Designation (the "Certificate of
Designation") into shares (the "Conversion Shares") of the Company's Common
Stock, par value $.01 per share (the "Common Stock"). In order to induce the
Purchasers to enter into the Securities Purchase Agreement, the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended (the "Securities Act"), and under applicable state securities laws.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Securities Purchase Agreement.
In consideration of each Purchaser entering into the Securities Purchase
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
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(a)(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.
Demand - As defined in Section 2.1(a)(i) hereof.
Holder -- Any person owning or having the right to acquire, through
conversion of Preferred Shares, or through the exercise or conversion of
any securities issued to such Holder in exchange for the Preferred Shares,
Registrable Securities, including initially each Purchaser and thereafter
any permitted assignee thereof.
Exchange Act - The Securities Exchange Act of 1934, as amended.
<PAGE> 2
Majority Holders -- Holders holding fifty percent (50%) of the
Registrable Securities included in a Shelf Registration Statement.
Notice of Demand -- As defined in Section 2.1(a)(i) hereof.
Person - An individual, partnership, joint venture, corporation,
trust, limited liability company, limited liability partnership,
unincorporated organization or government or any department or agency
thereof.
Piggy-back Registration - A registration of Registrable Securities
pursuant to Section 2.1(b) hereof.
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.
Registrable Securities - The Conversion Shares, and any other shares
of Common Stock issuable pursuant to the terms of the Preferred Stock, or
pursuant to any securities issued to a Holder in exchange for Preferred
Stock, and any shares of capital stock issued or issuable from time to
time (with any adjustments) in replacement of, in exchange for or
otherwise in respect of the Conversion Shares or such other shares. 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.
Register, registered and registration - Refers to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and the declaration or ordering of
effectiveness of the Registration Statement by the SEC;
Registration Statement -- A Shelf Registration Statement, any
registration statement registering shares held by Holders pursuant to
Section 2.1(b) hereof and all amendments and supplements to any such
Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all
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<PAGE> 3
exhibits thereto and all material incorporated by reference therein.
SEC -- The Securities and Exchange Commission.
Securities Act -- The Securities Act of 1933, as amended.
Seller - As defined in Section 2.1(g) hereof.
Shelf Registration -- A registration required to be effected
pursuant to Section 2.1(a).
Shelf Registration Statement -- A "shelf"registration statement of
the Company pursuant to the provisions of Section 2.1(a) 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.
Underwritten Offering -- A sale of securities of the Company to an
Underwriter or Underwriters for reoffering to the public.
ARTICLE II
REGISTRATION RIGHTS
2.1 Registration.
(a) Demand Registration.
(i) At any time from and after the ninetieth (90th) day after
the date hereof until the fifth (5th) anniversary of the date hereof, one (1) or
more Holders holding in the aggregate at least fifty percent (50%) of the
Registrable Securities held by the Holders will be entitled to deliver to the
Company a written notice (a "Demand") requesting a Shelf Registration. Upon
receipt of a Demand, the Company will deliver to each 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(a) 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 Holder to exclude all or a portion of such 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 Holder has on a timely basis requested to
be excluded from such Shelf
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<PAGE> 4
Registration, and (ii) those of any Holder that does not provide information
reasonably requested by the Company in connection with the Shelf Registration
Statement. Notwithstanding the foregoing, the Company shall not be required to
effect more than one (1) Shelf Registration pursuant to this Section 2.1(a) so
long as (i) such Shelf Registration has been declared or ordered effective under
the Securities Act (and all applicable state securities laws) and (ii) the
Registrable Securities included in such Shelf Registration shall be eligible for
sale or shall have been sold pursuant to such Shelf Registration or the
Applicable Period shall have expired. The Company may, at its option, include in
such Shelf Registration Statement shares held by any other shareholders having
rights similar to those contained in this Section 2.1(a) or Section 2.1(b).
(ii) The Company agrees to use its reasonable best efforts to
keep the Shelf Registration Statement continuously effective for a period of two
(2) years 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.
(iii) The Company shall not be obligated to take any action to
effect any registration pursuant to this Section 2.1(a):
(A) if the Company shall furnish to the 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 the filing of a
registration statement would require the disclosure of material information
regarding a possible financing, business combination or other material
transaction, which disclosure the Board of Directors of the Company has
determined in its good faith judgment would be detrimental to the Company, then
the Company's obligation to use its best efforts to register, qualify or comply
under this Section 2.1(a) shall be deferred for a single period not to exceed
ninety (90) days from the date of its receipt of a Demand; or
(B) within 180 days immediately following the effective
date of any registration statement pertaining to an Underwritten Offering of
securities of the Company for its own account.
(b) Piggy-back Registration.
(i) If the Company at any time prior to the fifth (5th)
anniversary of the date hereof 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 Holders of its intention to do so. Upon the written request of any
such Holder made within twenty (20) days after the receipt of any such notice
(which request shall specify the Registrable Securities intended to be disposed
-4-
<PAGE> 5
of by such Holder), the Company will use its reasonable best efforts to cause
all such Registrable Securities as to which 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 Holders of such Registrable Securities.
(ii) No registration effected pursuant to this Section 2.1(b)
shall be deemed to have been effected pursuant to Section 2.1(a) hereof.
(iii) Notwithstanding anything to the contrary in this Section
2.1(b), 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.
(c) 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:
(i) 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 available for the sale of Registrable Securities
in accordance with the intended method or methods of distribution of the selling
Holders (subject to the limitation set forth in Section 2.1(a)(iii) hereof),
unless in the reasonable judgment of the Company such method or methods would
violate any applicable anti-manipulation provisions of the Exchange Act or the
Securities Act;
(ii) 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;
(iii) 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(c)(vi));
(iv) 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
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<PAGE> 6
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(c)(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) except as may be
required by the Underwriter in an Underwritten Offering, register or qualify
such Registrable Securities in more than twenty (20) states;
(v) use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) 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;
(vii) 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, but
not later than 45 calendar days after the close of the period covered thereby
(90 calendar days in case the period covered corresponds to a fiscal year of the
Company), an earnings statement which shall satisfy the provisions of Section
11(a) of the Securities Act;
(viii) 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;
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<PAGE> 7
(ix) 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;
(x) 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 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
(xi) 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; and
(xii) permit one counsel for the Holders of a majority of the
Registrable Securities to review the Registration Statement and all amendments
and supplements thereto, and any comments made by the staff of the SEC and the
Company's responses thereto, a reasonable period of time prior to the filing
thereof with the SEC.
Each 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(c)(vi) hereof,
such Holder will forthwith discontinue such Holder's disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 2.1(c)(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 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(c)(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
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<PAGE> 8
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 (as defined
below) 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.
(d) 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 expenses of
compliance with securities or blue sky laws (subject to the limitation set forth
in Section 2.1(c)(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.
(e) Indemnification and Contribution. The Company hereby
indemnifies, to the extent permitted by law, each Holder, its officers,
directors, employees, agents and representatives, if any, and each Person, if
any, that "controls" such 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 Holder
furnished in writing to the Company by such Holder expressly for use therein. In
connection with any Registration Statement with respect to Registrable
Securities held by a Holder, each such Holder will furnish to the Company in
writing such information respecting such 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
-8-
<PAGE> 9
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 Holder expressly for use therein provided, that, in
no event shall any indemnity under this Section 2.1(e) exceed the net purchase
price of securities sold by such Holder under the Registration Statement. Any
Person entitled to indemnification under the provisions of this Section 2.1(e)
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 and such indemnifying party 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 Holder, its officers, directors or any
Person, if any, who controls such Holder as aforesaid, and shall survive the
transfer of such securities by such 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
provided, however, that in no case shall such Holder be responsible for any
amount in excess of the net purchase price of securities sold by it under the
Registration Statement. 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.
(f) 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
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<PAGE> 10
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.
(g) Allocation of Securities Included in Registration Statement. In
the case of an Underwritten Offering, if the managing Underwriter shall advise
the Company and the 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 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 Holders) is too large a number to be reasonably sold,
then (subject to any superior rights in favor of Persons holding registration
rights on the date of this Agreement all of which have been disclosed in writing
by the Company to the Holders ("Existing Registration Rights")) the number of
Registrable Securities sought to be registered by each Seller 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; provided,
however, that with respect to any Shelf Registration effected pursuant to
Section 2.1(a), any securities sought to be included in any such Shelf
Registration by the Company or any other Seller of any such securities (other
than a Holder and other than any person holding Existing Registration Rights)
shall be excluded from any such Shelf Registration before any Registrable
Securities held by any Holder shall be excluded.
For purposes of this Section 2.1(g), 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.
(h) Limitations on Sale or Distribution of Other Securities. In
connection with any Underwritten Public Offering, 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
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<PAGE> 11
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 Holder, make publicly available such information),
and will take such further action as any Holder may reasonably request, all to
the extent required from time to time to enable such 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 Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
ARTICLE III
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 or supplement or waiver or
consent to the departure with respect to the provisions of Section 2.1(e) 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 Holders. If any successor, assignee or transferee of any 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. Any notice, demand or request required or permitted to be
given by any party to any other party pursuant to the terms of this Agreement
shall be in writing and shall be deemed given (i) when delivered personally or
by verifiable facsimile transmission (with an original to follow) on or before
5:00 p.m., eastern time, on a Business Day or, if such day is not a Business
Day, on the next succeeding Business Day, (ii) on the next Business Day after
timely delivery to a nationally-recognized overnight courier and (iii) on the
Business Day actually received if deposited in the U.S. mail (certified or
registered mail, return receipt requested, postage prepaid), addressed to the
parties as follows:
If to the Company:
Shared Technologies Cellular, Inc.
100 Great Meadow Road
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<PAGE> 12
Suite 100
Wethersfield, CT 06109
Attn: Legal Department
Tel: (860) 258-2500
Fax: (860) 258-2455
with a copy to:
Day, Berry & Howard LLP
260 Franklin Street
Boston, MA 02110
Attn: Jeffrey A. Clopeck, Esq.
Tel: (617) 345-4600
Fax: (617) 345-4745
and if to any Holder, to such address as shall be designated by such Holder
in writing to the Company.
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
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 New York, without regard to
the conflicts of laws rules thereof.
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<PAGE> 13
[Remainder of page intentionally left blank.]
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<PAGE> 14
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.
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Anthony D. Autorino
-----------------------------------
Name: Anthony D. Autorino
Title: Chairman and CEO
PURCHASER NAME: SIB INVESTMENT HOLDINGS LIMITED
By: /s/ Gregga J. Baxter
-----------------------------------
Name: Gregga J. Baxter
Title: Vice President
<PAGE> 15
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.
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Anthony D. Autorino
-----------------------------------
Name: Anthony D. Autorino
Title: Chairman and CEO
PURCHASER NAME: ARDARA INVESTMENT INC.
One Director
DUCAT LIMITED
By: /s/ Michael J. Mello /s/ Elizabeth L. Jones
----------------------------------------------------------------------
Name: Michael J. Mello Elizabeth L. Jones
Title: Two Directors
<PAGE> 16
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.
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Anthony D. Autorino
- ----------------------------------
Name: Anthony D. Autorino
Title: Chairman and CEO
PURCHASER NAME: SWISSCON LIMITED
By: CORPORATE SERVICES (GUERNSEY) LIMITED
AS SECRETARIES TO THE COMPANY
/s/ D. M. LeLievre /s/ I. M. Hancock
- ---------------------------- -------------------------------
Name: D. M. LeLievre I. M. Hancock
Title: Director Director
<PAGE> 1
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. D - 1 No. of Shares 120,000
(subject to adjustment)
Date of Issuance: OCTOBER 1, 1999
SHARED TECHNOLOGIES CELLULAR, INC.
COMMON STOCK PURCHASE WARRANT
(Void after 5:00 p.m. Eastern time on OCTOBER 1, 2004
SHARED TECHNOLOGIES CELLULAR, INC. (the "Company"), for value received,
hereby certifies that INTERNATIONAL CAPITAL PARTNERS, LLC, 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 OCTOBER 1, 1999 and on or before OCTOBER 1, 2004 (the "Exercise Period")
at not later than 5:00 p.m. (Eastern time), 120,000 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 $11.094 (the "Purchase Price"). 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.
(1) Cash 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
<PAGE> 2
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 representing the portion of
the shares, if any, with respect to which this Warrant shall not then have been
exercised.
(2) Net Exercise. In lieu of exercising this Warrant pursuant to Section
1(1) above, the Holder may elect to receive shares of Common Stock equal to the
value of this Warrant (or of any portion thereof remaining unexercised) by
surrender of this Warrant at the principal office of the Company together with a
notice of such election, in which event the Company shall issue to the
Registered Holder a number of shares of Common Stock computed using the
following formula:
X = Y(A-B)
------
A
where: X = the number of shares of Common Stock to be issued to the
Registered Holder
Y = the number of shares of Common Stock purchasable under
this Warrant (at the date of such calculation)
A = the fair market value of one share of Common Stock;
B = the Purchase Price (as adjusted to the date of such
calculation)
As used herein, the fair market value of a share of Common Stock shall
mean the average of the closing prices of the Common Stock quoted by Nasdaq, or
if not listed by Nasdaq, on the over the counter market or such other exchange
where such shares are listed, as applicable, for the ten (10) trading days prior
to the date of such election, exclusive of the two (2) trading days immediately
preceding such date of election. If the Common Stock is not listed on Nasdaq or
traded over the counter or on an exchange, the per share fair market value of
the Common Stock shall be as determined by an independent appraiser appointed in
good faith by the Company's Board of Directors. The cost of such appraisal shall
be borne by the Company.
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
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<PAGE> 3
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.
(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
-3-
<PAGE> 4
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, 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. 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.
7. 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,
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<PAGE> 5
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.
-5-
<PAGE> 6
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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
-6-
<PAGE> 7
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: /s/ Vincent DiVincenzo
--------------------------------------
Vincent DiVincenzo
Sr. Vice President and CFO
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
ATTEST:
/s/ Kenneth M. Dorros
- -------------------------
Kenneth M. Dorros
Secretary
-7-
<PAGE> 8
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:_____________________________
<PAGE> 9
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:
<TABLE>
<CAPTION>
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
<S> <C> <C>
</TABLE>
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
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. D - 2 No. of Shares 2,000
(subject to adjustment)
Date of Issuance: OCTOBER 1, 1999
SHARED TECHNOLOGIES CELLULAR, INC.
COMMON STOCK PURCHASE WARRANT
(Void after 5:00 p.m. Eastern time on OCTOBER 1, 2004
SHARED TECHNOLOGIES CELLULAR, INC. (the "Company"), for value received,
hereby certifies that OAKES FITZWILLIAMS & CO. S.A., 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 OCTOBER 1, 1999 and on or before OCTOBER 1, 2004 (the "Exercise Period")
at not later than 5:00 p.m. (Eastern time), 2,000 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 $11.094 (the "Purchase Price"). 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.
(1) Cash 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
<PAGE> 2
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 representing the portion of
the shares, if any, with respect to which this Warrant shall not then have been
exercised.
(2) Net Exercise. In lieu of exercising this Warrant pursuant to Section
1(1) above, the Holder may elect to receive shares of Common Stock equal to the
value of this Warrant (or of any portion thereof remaining unexercised) by
surrender of this Warrant at the principal office of the Company together with a
notice of such election, in which event the Company shall issue to the
Registered Holder a number of shares of Common Stock computed using the
following formula:
X = Y(A-B)
------
A
where: X = the number of shares of Common Stock to be issued to the
Registered Holder
Y = the number of shares of Common Stock purchasable under
this Warrant (at the date of such calculation)
A = the fair market value of one share of Common Stock;
B = the Purchase Price (as adjusted to the date of such
calculation)
As used herein, the fair market value of a share of Common Stock shall
mean the average of the closing prices of the Common Stock quoted by Nasdaq, or
if not listed by Nasdaq, on the over the counter market or such other exchange
where such shares are listed, as applicable, for the ten (10) trading days prior
to the date of such election, exclusive of the two (2) trading days immediately
preceding such date of election. If the Common Stock is not listed on Nasdaq or
traded over the counter or on an exchange, the per share fair market value of
the Common Stock shall be as determined by an independent appraiser appointed in
good faith by the Company's Board of Directors. The cost of such appraisal shall
be borne by the Company.
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
-2-
<PAGE> 3
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.
(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
-3-
<PAGE> 4
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, 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. 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.
7. 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
-4-
<PAGE> 5
(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.
8. 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.
9. 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.
10. 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.
11. 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.
-5-
<PAGE> 6
12. 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.
13. 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: /s/ Vincent DiVincenzo
-------------------------------
Vincent DiVincenzo
Sr. Vice President and CFO
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
ATTEST:
/s/ Kenneth M. Dorros
- ----------------------
Kenneth M. Dorros
Secretary
-6-
<PAGE> 7
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:_____________________________
<PAGE> 8
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:
<TABLE>
<CAPTION>
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
<S> <C> <C>
</TABLE>
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 ____________________________
