SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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) November 17, 1997
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Tel-Save Holdings, Inc.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 0-26728 23-2827736
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
6805 Route 202, New Hope, PA 18938
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code 215-862-1500
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
As previously reported, Registrant, Tel-Save Holdings, Inc.
(Tel-Save"), was a party to an Agreement and Plan of Merger, dated as of July
16, 1997 (the "Merger Agreement"), among Tel-Save, TSHCo, Inc., a wholly owned
subsidiary of Tel-Save ("Merger Sub"), and Shared Technologies Fairchild Inc.
("STF"), pursuant to which STF would be merged (the "Merger") with and into
Merger Sub, which would continue as a wholly owned subsidiary of Tel-Save, and
the holders of STF common stock would receive shares of Tel-Save common stock.
The meetings of the Tel-Save and STF stockholders to consider and vote upon the
Merger were scheduled to be held on December 1, 1997 and it was anticipated
that, if approved, the Merger would be effected promptly after the meetings.
On November 17, 1997, Intermedia Communications Inc. ("ICI")
announced that, in a letter sent to the Chairman of the Board of STF, it had
made an offer to acquire STF in a cash merger pursuant to which STF stockholders
would receive $15 per share of STF common stock, and that it had commenced a
lawsuit (the "ICI Litigation") against STF, STF's directors and Tel-Save in
Delaware Chancery Court, seeking, among other things, a declaration that STF's
directors have a fiduciary duty to STF's stockholders to terminate the Merger
Agreement and approve ICI's offer. On November 18, STF formally advised
Tel-Save, pursuant to the Merger Agreement, that STF had received the offer from
ICI and that the STF Board of Directors had determined, as permitted by the
terms of the Merger Agreement, to enter into discussions with ICI regarding its
proposal.
On November 20, 1997, Tel-Save, ICI and STF entered into a
Settlement Agreement (the "Settlement Agreement"), pursuant to which, among
other things, STF and ICI paid Tel-Save a total of $237.25 million in cash, ICI
consented to the dismissal of the ICI Litigation with prejudice, Tel-Save and
STF amended the telecommunications services agreement, dated as of November 13,
1997 (the "TelComm Agreement"), between Tel-Save and STF (to eliminate STF's
minimum payment obligations thereunder and to provide that the TelComm Agreement
could be terminated by either party after March 30, 1998; but providing that the
original terms would be restored were the ICI/STF merger agreement later
terminated), Tel-Save and STF terminated the
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Merger Agreement, without liability of any party thereto except as provided in
the Settlement Agreement, so as to permit the execution of an agreement between
ICI and STF providing for the acquisition of STF by ICI, and Tel-Save
transferred to ICI the $163.7 million face amount of STF's 12-1/4% Senior
Subordinated Discount Notes due 2006 (the "STF Notes") that Tel-Save had
previously acquired at a total cost of approximately $166 million.
Accordingly, the proposed Merger of STF into Merger Sub has been
terminated and the proposal to approve the transactions contemplated by the
Merger Agreement will not be considered and voted upon by Tel-Save's
stockholders at Tel-Save's Annual Meeting, which will be held, as scheduled, on
December 1, 1997.
A copy of the Settlement Agreement is attached to this Report as
an Exhibit and incorporated herein by reference and the foregoing description of
the terms thereof and the transactions contemplated by, and effected pursuant
to, such Settlement Agreement is qualified in its entirety by reference to such
Exhibit.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits
10.1 Settlement Agreement, dated as of November 20, 1997, by and among
Intermedia Communications, Inc., Moonlight Acquisition Corp.,
Tel-Save Holdings, Inc., TSHCo, Inc. and Shared Technologies
Fairchild Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Tel-Save Holdings, Inc.
(Registrant)
Date: November 24, 1997 By: Aloysius T. Lawn, IV
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General Counsel and Secretary
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EXHIBIT INDEX
10.1 Settlement Agreement, dated as of November 20, 1997, by and among
Intermedia Communications, Inc., Moonlight Acquisition Corp.,
Tel-Save Holdings, Inc., TSHCo, Inc. and Shared Technologies
Fairchild Inc.
This Settlement Agreement (the "Agreement"), dated as of
November 20, 1997, by and among Intermedia Communications, Inc. ("ICI"),
Moonlight Acquisition Corp. ("Moonlight"), Tel-Save Holdings, Inc. ("Tel-Save"),
Shared Technologies Fairchild Inc., ("STF") and TSHCo, Inc. ("TSH")
(collectively, the "Parties").
R E C I T A L S
WHEREAS, on July 16, 1997, Tel-Save, TSH and STF entered into
an Agreement and Plan of Merger (the "Tel-Save Merger Agreement") and certain
other agreements and arrangements;
WHEREAS, on November 17, 1997, ICI and Moonlight commenced a
litigation against Tel-Save, STF and certain other parties, styled Intermedia
Communications, Inc. and Moonlight Acquisition Corp. v. Shared Technologies
Fairchild, Inc., et al., C.A. No. 16038, Del. Ch. 1997 (the "Litigation") and
offered to acquire STF (the "ICI Proposal"); and
WHEREAS, the Parties desire to terminate the Litigation and
settle all disputes among them arising from, or relating in any way to, the
Tel-Save Merger Agreement (and all agreements and arrangements contemplated
therein or relating thereto) and the ICI Proposal, and to enter into certain
other arrangements among them, including, but not limited to, an Agreement and
Plan of Merger, dated the date hereof, by and among STF, ICI and Moonlight (the
"ICI Merger Agreement");
NOW, THEREFORE, for good and valuable consideration, including
the mutual promises, releases, representations, covenants and obligations
contained herein or contemplated hereby, the sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows:
1. Settlement of Dispute.
1.1 Promptly after the execution and delivery hereof,
each of the Parties hereto shall cause their respective attorneys to execute a
stipulation of dismissal, in the form annexed hereto as Exhibit A, dismissing
the Litigation with prejudice. Immediately upon execution of said stipulation of
dismissal, ICI and Moonlight shall cause their attorneys to file said
stipulation of dismissal with the Court of Chancery of the State of Delaware, in
and for New Castle County. Each party to the Litigation shall take all steps
necessary to effectuate the dismissal with prejudice of the Litigation, and
shall pay its own
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expenses, including attorneys' fees, incident to the Litigation and to the
preparation and performance of this Agreement.
1.2 (a) Subject to the provisions of paragraph 1.2(c)
hereof, each of the Parties, for itself and its respective officers, directors,
affiliates, parent and subsidiary corporations, partners, agents, attorneys,
successors, assigns, and anyone claiming any right through it or under it,
mutually, irrevocably and unconditionally releases and forever discharges each
of the other Parties and their present and former officers, directors,
affiliates, parent and subsidiary corporations, partners, agents,
representatives, employees, controlling persons, and their respective successors
and assigns (collectively, the "Releasees"), from any and all claims, actions,
causes of action, suits, debts, dues, rights, offsets, demands, sums of money,
accounts, damages, judgments, reckonings, bonds, bonuses, charges, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, extents, executions, and complaints whatsoever, in law,
equity or otherwise, under federal law, state law or otherwise, whether known or
unknown, which such Party and/or its officers, directors, affiliates, parent and
subsidiary corporations, partners, agents, attorneys, successors, assigns, and
anyone claiming any right through it or under it, ever had, now has, or
hereafter may have, for, upon, or by any matter, cause or thing whatsoever, from
the beginning of the world to the day of this Agreement, based on, relating or
with respect to, or arising out of:
(i) the facts, underlying claims, or affirmative defenses that
were asserted, or could have been asserted, in the Litigation;
(ii) the filing or prosecution of the Litigation, or any
process or proceedings therein;
(iii) the Tel-Save Merger Agreement, the STF Voting Agreements
(as defined below), the Option (as defined below), the ICI Proposal or
the LD Agreement, as originally executed and delivered (as defined
below), or the negotiation or execution of any thereof;
(iv) the negotiation or execution of this Agreement, the ICI
Merger Agreement, the Amended LD Agreement (as defined below), the
Option Agreement, of even date herewith, among ICI and certain
stockholders of STF (the "Option Agreement"), the Stock Purchase
Agreement to be entered, between ICI and RHI (the "Stock Purchase
Agreement"), the Loan Agreement to be entered between ICI and STF (the
"Loan Agreement"), or any other agreement contemplated by such
agreements to be executed on or after the date hereof; or
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(v) any acts, facts, transactions, occurrences, conduct,
statements or representations on the part of the Parties or their
respective present or former officers, directors, affiliates, parent
and subsidiary corporations, partners, agents, representatives,
employees or controlling persons with regard to, or directly or
indirectly related to, the merger or sale of, or failure to merge or
sell, or any offer or proposal to merge or sell, or failure to include
any particular term in any agreement to merge or sell, STF, or any
statement or omission in the Joint Proxy Statement of Tel-Save and STF
of October 30, 1997.
(b) Subject to the provisions of paragraph 1.2(c) hereof, each
of the Parties, for itself and its respective officers, directors, affiliates,
parent and subsidiary corporations, partners, agents, attorneys, successors,
assigns, and anyone claiming any right through it or under it, covenants not to
sue or bring any claim or action, of any nature whatsoever, against the
Releasees, or any one or more of them, in any forum, based on, relating to or
arising out of:
(i) the facts, underlying claims, or affirmative defenses that
were asserted, or could have been asserted, in the Litigation;
(ii) the filing or prosecution of the Litigation, or any
proceedings therein;
(iii) the Tel-Save Merger Agreement, the STF Voting Agreements
(as defined below), the Option (as defined below), the ICI
Proposal or the LD Agreement, as originally executed and
delivered (as defined below);
(iv) the negotiation or execution of this Agreement, the ICI
Merger Agreement, the Amended LD Agreement (as defined below),
the Option Agreement, the Stock Purchase Agreement, the Loan
Agreement, or any other agreement contemplated by such
agreements to be executed on or after the date hereof; or
(v) any acts, facts, transactions, occurrences, conduct,
statements or representations on the part of the Parties or
their respective present or former officers, directors,
affiliates, parent and subsidiary corporations, partners,
agents, representatives, employees or controlling persons with
regard to, or directly or indirectly related to, the merger or
sale of, or failure to merge or sell, or any offer or proposal
to merge or sell, or failure to include any particular term in
any agreement to merge or sell, STF, or any statement or
omission in the Joint Proxy Statement of Tel-Save and STF of
October 30, 1997.
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(c) Nothing in paragraphs 1.2(a) or 1.2(b) hereof shall alter,
modify, release or apply to:
(i) the rights, obligations, covenants, representations or
warranties of the Parties under or in this Agreement;
(ii) the rights, obligations, covenants, representations or
warranties of STF, ICI and Moonlight under or in the ICI
Merger Agreement, the Option Agreement, the Stock Purchase
Agreement, the Loan Agreement, or any other agreement
contemplated by such agreements to be executed on or after the
date hereof;
(iii) the rights, obligations, consents, representations or
warranties of STF and Tel-Save, Inc. under or in the Amended
LD Agreement (as defined below); or
(iv) the rights, obligations, covenants, representations, or
warranties of STF and ICI under or in the Notes (as defined
below).
(d) Simultaneously with the execution of this Agreement, ICI,
Moonlight, STF, RHI Holdings, Inc. ("RHI") and The Fairchild Corporation ("TFC")
are executing and delivering a release in favor of Daniel Borislow ("Borislow"),
and Borislow is executing and delivering a release in favor of ICI, Moonlight,
STF, RHI, and TFC, in each case in the forms attached as Exhibit B and Exhibit
C, respectively. Simultaneously with the execution of this Agreement, ICI,
Moonlight, Tel-Save and TSH are executing and delivering a release in favor of
RHI and TFC, and RHI and TFC are executing and delivering a release in favor of
ICI, Moonlight, Tel-Save and TSH, in each case in the forms attached as Exhibit
D and Exhibit E, respectively.
1.3 Neither this Agreement nor any of the terms
hereof nor any negotiations, proceedings or agreements in connection herewith
shall constitute, or be construed as or be deemed to be evidence of, an
admission on the part of any Party of any liability or wrongdoing whatsoever, or
of the truth or untruth of any of the claims made by any party in the
Litigation, or of the merit or any lack of merit of any of the defenses thereto;
nor shall this Agreement, or any of the terms hereof, or any negotiations or
proceedings in connection herewith, be offered or received in evidence, or used
in any proceeding against any of the Parties, or used in any proceeding for any
purpose whatsoever, except with respect to the effectuation and enforcement of
this Agreement, the ICI Merger Agreement, the Option Agreement, the Stock
Purchase Agreement, the Loan Agreement, the Amended LD Agreement (as defined
below), the Notes (as defined below), any other agreement contemplated by such
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agreement to be executed on or after the date hereof, the discontinuance with
prejudice of the Litigation, or the releases referred to in paragraph 1.2(d)
hereof.
2. Termination of the Tel-Save Merger Agreement and Certain
Related Agreements. (a) (i) Tel-Save, TSH and STF hereby terminate the Tel-Save
Merger Agreement, (ii) Tel-Save and STF hereby terminate the Option Agreement,
dated as of July 16, 1997 (the "Option"), between Tel-Save and STF, (iii) the
agreements, dated as of July 16, 1997 (the "STF Voting Agreements"), by Tel-
Save with each of RHI Holdings, Inc., J.J. Cramer & Co., Mentor Partners, L.P.
and Anthony D. Autorino, and the voting agreement, dated as of July 16, 1997,
between STF and Borislow (the "Borislow Voting Agreement") by their own terms
shall be terminated upon termination of the Tel-Save Merger Agreement, and
Tel-Save hereby agrees and confirms that it shall have no rights under the STF
Voting Agreements, and STF hereby agrees and confirms that it shall have no
rights under the Borislow Voting Agreement, and (iv) except for the Long
Distance Agreement, dated as of November 13, 1997 (the "LD Agreement"), between
Tel-Save, Inc. and STF, as amended as described herein, and except for this
Agreement (and the releases and other instruments contemplated herein), each of
Tel-Save, TSH and STF hereby terminates all other agreements and arrangements of
any kind arising from or relating to the Tel-Save Merger Agreement and the
transactions contemplated thereby (the Tel-Save Merger Agreement, the Option,
the STF Voting Agreements, the Borislow Voting Agreement and such other
agreements, collectively, the "Terminated Agreements")). Except as expressly
provided herein, the termination of the Terminated Agreements shall be without
liability to any party to any such Terminated Agreement and shall release each
party thereto from any and all further obligations thereunder, including, but
not limited to, any obligation to pay any termination fees described in the
Tel-Save Merger Agreement.
(b) In consideration for the termination of the Tel- Save
Merger Agreement, the Option and the STF Voting Agreements, STF hereby pays to
Tel-Save $26.250 million by certified check drawn on a bank reasonably
acceptable to Tel-Save or wire transfer of immediately available funds.
3. Additional Transactions. (a) ICI hereby transfers to
Tel-Save $211 million by certified check drawn on a bank reasonably acceptable
to Tel-Save or wire transfer of immediately available funds.
(b) Tel-Save hereby sells, assigns and transfers to ICI all of
its right, title and interest in and to all of the $163,637,000 face amount of
the 12 1/4% Senior Subordinated Discount Notes Due 2006 of STF (the "Notes")
held by it on the date hereof. Tel-Save represents and warrants to ICI that: (i)
Tel-Save owns the Notes, free and clear of all liens,
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encumbrances, restrictions and defects of title of any kind ("Liens") imposed or
incurred by it and, to Tel-Save's knowledge, Tel-Save owns the Notes free and
clear of all Liens whatsoever; (ii) Tel-Save has the right to transfer such
Notes to ICI without (x) violating any contract, agreement or arrangement to
which it is a party or by which it or its assets may be bound, and (y) the
imposition of any Lien on the Notes arising from such transfer; and (iii)
Tel-Save paid approximately $167 million to acquire the Notes. From time to time
after the date hereof, at the request of ICI, and without any additional
consideration therefor, Tel- Save shall execute and deliver to ICI such
instruments and documents of conveyance and transfer, and do and cause to be
done such acts or things, as ICI may reasonably request in order to more
effectively transfer and assign to ICI, or perfect or record, ICI's interest in
or title to, the Notes.
(c) Simultaneously with the execution of this Agreement,
Tel-Save, Inc. and STF are amending the LD Agreement by executing and delivering
an amendment in the form attached as Exhibit F (the LD Agreement as so amended,
the "Amended LD Agreement").
4. Standstill. For a period from the date hereof to the
earlier of the first anniversary of the date hereof and the date the ICI Merger
Agreement shall have been terminated, none of Tel-Save nor any of its affiliates
(as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) will (and none will assist or encourage others to),
directly or indirectly:
(i) acquire or agree, offer, seek or propose to
acquire (or request permission to do so), ownership
(including, but not limited to, beneficial ownership as
defined in Rule 13d-3 under the Exchange Act) of all or
substantially all of the assets or businesses of STF, or any
securities issued by STF, or any rights or options to acquire
such ownership (including from a third party), or
(ii) seek or propose to acquire control of the
management or policies of STF (or request permission to do
so), or
(iii) enter into any discussions, negotiations,
arrangements or understandings with any third party with
respect to any of the foregoing.
5. Representations and Warranties. Each of the Parties hereby
represents and warrants to each other Party hereto as follows:
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(a) It has full corporate power and authority to execute and
deliver this Agreement and any agreements and documents contemplated hereunder
(the "Related Agreements") to which it is a party and to perform its obligations
hereunder and thereunder. The execution, delivery and performance by it of this
Agreement and the Related Agreements to which it is a party have been duly
authorized by all necessary corporate action on its part, and this Agreement and
each of the Related Agreements to which it is a party constitutes a valid and
binding obligation of it, enforceable against it in accordance with its terms.
(b) Neither the execution and delivery of this Agreement and
the Related Agreements to which it is a party nor the consummation of the
transactions contemplated hereby or thereby constitutes a violation or breach of
the certificate of incorporation or by-laws (or other governing instrument) of
it or any provision of any contract, license or franchise or other instrument to
which it is a party or by which it may be bound.
6. Notices. All notices, requests, demands, consents and other
communications required or permitted under this Agreement (collectively,
"Notice") shall be effective only if given in writing and shall be considered to
have been duly given when (i) delivered by hand, (ii) sent by telecopier (with
receipt confirmed), provided that a copy is mailed (on the same date) by
certified or registered mail, return receipt requested, postage prepaid, or
(iii) received by the addressee, if sent by Express Mail, Federal Express or
other reputable express delivery service (receipt requested), or by first class
certified or registered mail, return receipt requested, postage prepaid. Notice
shall be sent in each case to the appropriate addresses or telecopier numbers
set forth below (or to such other addresses and telecopier numbers as a Party
may from time to time designate as to itself by notice similarly given to the
other Parties in accordance herewith, which shall not be deemed given until
received by the addressee). Notice shall be given:
(i) to ICI and Moonlight at:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attn: Chief Financial Officer
Telecopier: (813) 829-2470
copy to: Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036-7798
Attn: Ralph J. Sutcliffe, Esq.
Telecopier: (212) 479-6275
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(ii) to STF at:
Shared Technologies, Inc.
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Attn: Kenneth M. Dorros, Esq.
Telecopier: (860) 258-2455
copy to: Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: James J. Clark, Esq.
Telecopier: (212) 269-5420
and
The Fairchild Corporation
300 West Service Road
P.O. Box 10803
Chantilly, VA 22021
Attn: Donald E. Miller, Esq.
Telecopier: (703) 478-5775
(iii) to Tel-Save and TSH at:
6805 Route 202
New Hope, Pennsylvania 18938
Attn: Chief Executive Officer
Telecopier: (215) 862-1083
copy to: Arnold & Porter
399 Park Avenue
New York, New York 10022
Attn: Jonathan C. Stapleton, Esq.
Telecopier: (212) 715-1399
and
Aloysius T. Lawn, IV, Esq.
General Counsel
Tel-Save Holdings, Inc.
6805 Route 202
New Hope, Pennsylvania 18938
Telecopier: (215) 862-1083
7. Further Assurances. Each of the Parties shall, at any time
and from time to time after the date hereof, fairly and in good faith, do,
execute, acknowledge and deliver, or cause to be done, executed, acknowledged
and delivered, all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney, receipts, acknowledgments, acceptances and
assurances as may be reasonably required to procure for each of the Parties
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and their respective successors and assigns, the consideration to be delivered
to them as provided for herein or otherwise to carry out the intent and purposes
of this Agreement or to consummate any of the transactions contemplated hereby.
8. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9. Miscellaneous Provisions.
9.1 This Agreement may not be amended, modified,
discharged or terminated, nor may the rights of any Party hereunder be waived,
except by a written document that is executed by each Party hereto. No waiver of
any provision of this Agreement shall be deemed to constitute a waiver of any
other provision hereof, nor shall any waiver constitute a continuing waiver.
9.2 This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be an original,
but all of which together shall constitute one and the same instrument.
9.3 The Exhibits referred to herein are a part of this
Agreement for all purposes. Terms used in this Agreement shall have the same
meanings when used in such Exhibits.
9.4 Captions and headings are employed herein for
convenience of reference only and shall not affect the construction or
interpretation of any provision hereof.
9.5 This Agreement is made under and shall be governed by
and construed in accordance with the substantive laws of the State of New York
applicable to contracts made and to be performed entirely within that state.
9.6 This Agreement and the agreements and instruments
contemplated herein constitute the entire agreement between Tel-Save and TSH, on
the one hand, and the other Parties hereto, on the other hand, with respect to
the subject matter hereof.
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IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the day and year first above written.
INTERMEDIA COMMUNICATIONS INC.
By:____________________________
MOONLIGHT ACQUISITION CORP.
By:_____________________________
TEL-SAVE HOLDINGS, INC.
By:_____________________________
SHARED TECHNOLOGIES FAIRCHILD INC.
By:______________________________
TSHCO. INC.
By:______________________________
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