SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
SHARED TECHNOLOGIES CELLULAR, INC.
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
819487109
(CUSIP Number)
Donald E. Miller, Esq., Senior Vice President
and General Counsel
The Fairchild Corporation, 300 West Service Road
P.O. Box 10803, Chantilly, Virginia 20153
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 30, 1996
(Date of Event which Requires Filing of this
Statement)
If the filing person has previously filed a statement on Schedule
13G to report
the acquisition which is the subject of this Schedule 13D and is
filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Page 1 of 8 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
The Fairchild Corporation -- IRS EIN 34-0728587
RHI Holdings, Inc. -- IRS EIN 34-1545939
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[ ]
(b)[ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
The Reporting Persons are incorporated under the laws of
Delaware
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7 SOLE VOTING POWER
500,000 (see Items
4 and 5)
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NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
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OWNED BY EACH 9 SOLE DISPOSITIVE
POWER
REPORTING PERSON
WITH 500,000 (see Items
4 and 5)
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10 SHARED DISPOSITIVE
POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
500,000 (see Items 4 and 5)
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.79% (see Items 4 and 5)
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14 TYPE OF REPORTING PERSON
CO
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Page 2 of 8 Pages
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Item 1. Security and Issuer.
This statement relates to the common stock, par value
$0.01 per share
(the "Issuer Common Stock"), of Shared Technologies Cellular, Inc.,
a Delaware
corporation ("Issuer"), whose principal executive offices are
located at 100
Great Meadow Road, Wethersfield, CT 06109.
Item 2. Identity and Background.
This statement is filed by The Fairchild Corporation
("TFC") and RHI
Holdings, Inc. ("RHI," and together with TFC, the "Reporting
Persons"), each a
Delaware corporation. The address of the principal business and
principal office
of each of TFC and RHI is 300 West Service Road, Chantilly, VA
20153. TFC is a
leading worldwide supplier of aerospace fasteners. RHI is a wholly
owned
subsidiary of TFC.
Exhibit 1 of this statement sets forth the name, business
address, the
present principal occupation or employer, and the citizenship of
the executive
officers and directors of the Reporting Persons.
During the past five years prior to the date hereof, none
of the
Reporting Persons, and (to the knowledge of the Reporting Persons)
no executive
officer or director of the Reporting Persons has: (i) been
convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors); or
(ii) been a party to a civil proceeding of a judicial or
administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting
or mandating activities subject to, Federal or state securities
laws or finding
any violating with respect to such laws.
Item 3. Source and Amount of Funds or Other
Consideration.
On December 30, 1996, RHI acquired 250,000 Units (as
described below)
at an aggregate purchase price of $750,000. The source of the funds
was from
RHI's working capital. Any additional shares of Issuer Common Stock
or warrants
to be purchased by RHI would be purchased with RHI's working
capital.
Page 3 of 8 Pages
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Item 4. Purpose of Transaction.
RHI entered into the transactions described below for
investment
purposes. The Reporting Persons may from time to time consider
various
alternatives with respect to their investment in Issuer. None of
the Reporting
Persons currently has plans or proposals that relate to or would
result in any
of the matters described in subparagraphs (b), (c) or any of (e)
through (j) of
Item 4 of Schedule 13D.
Except as set forth below, none of the Reporting Persons
currently has
plans or proposals that relate to or would result in any of the
matters
described in subparagraphs (a) or (d) of Item 4 of Schedule 13D.
Pursuant to a Purchase Agreement dated as of December 27,
1996 (the
"Purchase Agreement") between Issuer and RHI, RHI purchased 250,000
Units at a
price of $3.00 per Unit. Each Unit consists of one share of Issuer
Common Stock
and one warrant to purchase Issuer Common Stock. Each warrant
entitles the
holder thereof to purchase, initially, one share of Issuer Common
Stock at a
price, initially, of $3.00 per share. The Purchase Agreement
provides that RHI
may purchase from Issuer an additional 250,000 Units on or prior to
January 31,
1997, an additional 166,667 Units on or prior to February 28, 1997
and an
additional 833,333 on or prior to May 29, 1997, at a purchase price
of $3.00 per
Unit; provided, however, that Issuer may, at its sole discretion,
terminate such
right of RHI at any time in whole or in part. Issuer has the option
to
repurchase (the "Repurchase Option"), at any time on or prior to
May 29, 1997,
all (but not less than all) of the Units purchased by RHI and held
by RHI at
such time at the prices set forth in Section 2 of the Purchase
Agreement. If
Issuer does not exercise the Repurchase Option, RHI will have the
option (the
"Special Option") to purchase such number of additional Units (at
$3.00 per
Unit) from Issuer as would result in RHI having purchased an
aggregate of
666,667 Units under the Purchase Agreement. The Purchase Agreement
provides that
Issuer shall use its best efforts to cause the Board of Directors
of Issuer to
include at least 1 member designated by RHI so long as RHI owns
capital stock
(or rights to purchase capital stock) comprising 5% or more of the
voting power
in Issuer and at least 2 members designated by RHI so long as RHI
owns capital
stock (or rights to purchase capital stock) comprising 10% or more
of the voting
power in Issuer.
Page 4 of 8 Pages
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In addition, pursuant to an Option Agreement dated as of
December 27,
1996 (the "Option Agreement") between RHI and Shared Technologies
Fairchild
Inc., a Delaware corporation ("STFI"), RHI purchased for $5,000 an
option (the
"Series B Option") to purchase from STFI (at an aggregate purchase
price of
$2,495,000) 250,000 shares of Series B Convertible Preferred Stock,
par value
$0.01 per share (the "Issuer Series B Preferred"), of Issuer and
related rights
of STFI under a certain Stock Purchase Agreement dated as of August
19, 1996
(the "STFI Stock Purchase Agreement") between Issuer and STFI and
under an
Equity Holders Agreement dated as of August 19, 1996 among
International Capital
Partners, Inc. and its affiliates, Zesiger Capital Group LLC and
STFI. The
Series B Option expires on June 4, 1997 unless RHI exercises the
Special Option.
STFI is obligated to repurchase the Series B Option if Issuer
exercises the
Repurchase Option. Each share of Issuer Series B Preferred is
convertible into a
minimum of 2-1/2 shares of Issuer Common Stock and a maximum of
3-1/3 shares of
Issuer Common Stock (the conversion rate is based on the market
price of the
Issuer Common Stock). The STFI Stock Purchase Agreement provides
that upon
conversion of any Issuer Series B Preferred into Issuer Common
Stock, Issuer
shall issue a warrant entitling the holder to purchase such number
of shares of
Issuer Common Stock equal to the number of shares issued to such
holder upon
such conversion. The STFI Stock Purchase Agreement provides that
STFI shall be
entitled to designate at least one member of Issuer's Board of
Directors so long
as STFI owns capital stock (or rights to purchase capital stock)
comprising more
than 5% of the voting power in Issuer.
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Persons beneficially own an aggregate of
500,000
shares of Issuer Common Stock, including 250,000 shares with
respect to which
RHI has warrants to purchase but has not yet purchased. Based upon
Issuer's
representation in the Purchase Agreement that there were 4,606,184
shares of
Issuer Common Stock outstanding at December 27, 1996, the Reporting
Persons'
beneficial ownership represents 9.79% of the Issuer Common Stock.
If the
Reporting Persons are deemed to beneficially own all of the Issuer
Common Stock
that it has contingent rights to purchase under the Purchase
Agreement and the
Option Agreement (and the various warrants issuable pursuant
thereto), the
Reporting Persons would beneficially own 4,428,572 shares of Issuer
Common Stock
(after giving effect to
Page 5 of 8 Pages
<PAGE>
the conversion of Issuer Series B Preferred at midpoint of the
conversion rate
collar), or 49.02% of the Issuer Common Stock.
In addition, RHI owns 6,200,000 shares of common stock of
STFI (the
"STFI Common Stock") and 250,000 shares of STFI's 6% Cumulative
Preferred Stock,
which shares are convertible into 3,921,568 shares of STFI Common
Stock. Based
upon STFI's representation that there were 15,685,269 shares of
STFI Common
Stock outstanding at January 15, 1997, the Reporting Persons'
beneficial
ownership of 10,121,568 shares of STFI Common Stock constitutes
approximately
51.62% of the STFI Common Stock (39.53% without giving effect to
conversion of
the STFI 6% Cumulative Preferred Stock). Jeffrey Steiner, the
Chairman, Chief
Executive Officer, President and 38.8% beneficial owner of TFC, is
Vice-Chairman
of the STFI Board of Directors. Donald Miller, General Counsel of
TFC, and
Natalia Hercot, daughter of Mr. Steiner and an employee of TFC, are
also members
of the 13-member STFI Board of Directors. By virtue of RHI's share
ownership in
STFI and TFC's representation on the STFI Board of Directors, the
Reporting
Persons may be deemed to beneficially own the 3,260,642 shares of
Issuer Common
Stock beneficially owned by STFI (which number gives effect to the
conversion of
250,000 shares of Issuer Series B Preferred owned by STFI at
midpoint of the
conversion rate range into 714,286 shares of Issuer Common Stock
and the
exercise of warrants to purchase a like number of Issuer Common
Stock). If the
Reporting Persons are deemed to beneficially own all of the Issuer
Common Stock
beneficially owned by STFI and to beneficially own all of the
Issuer Common
Stock that it has contingent rights to purchase under the Purchase
Agreement and
the Option Agreement (and the various warrants issuable pursuant
thereto), the
Reporting Persons would beneficially own 6,260,642 shares of Issuer
Common Stock
(after giving effect to the conversion of Issuer Series B Preferred
at midpoint
of the conversion rate collar), or 69.3% of the Issuer Common
Stock.
Jeffrey Steiner, as a result of his 38.8% beneficial
ownership in TFC
and his position as Chairman, Chief Executive Officer and President
of TFC, may
be deemed to be the beneficial owner of the 500,000 shares of
Issuer Common
Stock beneficially owned by the Reporting Persons. Mr. Steiner
disclaims such
beneficial ownership, except to the extent of his pecuniary
interest therein.
Page 6 of 8 Pages
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(b) The information required by this paragraph is set
forth in Items 7
through 11 of the cover page of this Schedule.
(c) through (e); Not applicable.
Item 6. Contracts, Arrangements, Understanding or
Relationships With
Respect to Securities of the Issuer.
See answer to Item 4.
Item 7. Material to be Filed as Exhibits.
Exhibit 1. Information concerning the executive officers
and directors
of RHI and TFC.
Exhibit 2. Purchase Agreement dated as of December 27,
1996 between
Shared Technologies Cellular, Inc. and RHI Holdings, Inc.
Exhibit 3. Form of Warrant Certificate (Exhibit A to
Purchase
Agreement).
Exhibit 4. Option Agreement dated as of December 27, 1996
between
Shared Technologies Fairchild, Inc. and RHI Holdings, Inc.
Page 7 of 8 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify
that the information set forth in this statement is true, complete
and correct.
January 17, 1997
THE FAIRCHILD CORPORATION
By: /s/ Colin M. Cohen
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Colin M. Cohen
Senior Vice President
and Chief Financial
Officer
RHI HOLDINGS, INC.
By: /s/ Colin M. Cohen
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Colin M. Cohen
Vice President
and Chief Financial
Officer
Exhibit 1
Directors and Executive Officers of
The Fairchild Corporation and RHI Holdings, Inc.
Information with respect to each of the directors and
executive
officers of TFC and RHI is set forth below. The business address of
each such
director or executive officer is 300 West Service Road, Chantilly,
VA 20153. All
directors and executive officers are citizens of the United States,
except Mr.
Steiner, who is a citizen of Austria, and Mr. Moskovic, who is a
citizen of
France.
Executive Officers of TFC
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Name Title
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Michael T. Alcox Vice President
Robert D. Busey Vice President
Colin M. Cohen Chief Financial Officer and
Senior Vice
President, Business Development
and Finance
John L. Flynn Senior Vice President, Tax
Harold R. Johnson Senior Vice President, Business
Development
Robert H. Kelley Vice President, Employee Benefits
Jeffrey P. Kenyon Vice President, Finance and
Planning
Donald E. Miller Senior Vice President, General
Counsel and
Secretary
Jacques S. Moskovic Senior Vice President
Karen L. Schneckenburger Vice President and Treasurer
Eric I. Steiner Executive Vice President and
Chief Operating
Officer
Jeffrey J. Steiner Chief Executive Officer and
President
<PAGE>
Directors of TFC Present Principal Occupation
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Name
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Michael T. Alcox *
Melville R. Barlow Retired
Mortimer M. Caplin Senior Member, Caplin &
Drysdale (attorneys), 1 Thomas
Circle, N.W.,
Washington, D.C. 20005
Colin M. Cohen *
Philip David Retired
Harold J. Harris President, Wm. H. Harris, Inc.
(retailer),
641 Bald Hill Road, Warwick, RI
02886
Samuel J. Krasney Managing Partner, ABBA Capital
Enterprises
(investments), 25700 Science Park
Drive,
Ste. 300,
Cleveland, OH 44122
Daniel Lebard Chairman of the Board, Daniel
Lebard
Management Development SA
(consulting),
20, Avenue Kleber, F75
116 Paris, France
Herbert S. Richey Retired
Robert A. Sharpe II Executive Vice President and
Chief
Financial Officer of
Fairchild Fasteners, a
division of Fairchild
Holding Corp., a wholly
owned subsidiary of RHI
Eric I. Steiner *
Jeffrey J. Steiner, Chairman *
Executive Officers of RHI
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Name Title
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Robert D. Busey Vice President
Colin M. Cohen Vice President and Chief
Financial Officer
Roy Crosley Vice President
John L. Flynn Vice President
Donald E. Miller Vice President and Secretary
Karen L. Schneckerburger Vice President and Treasurer
Jeffrey J. Steiner President and Chief Executive
Officer
Directors of RHI
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Name Present Principal Occupation
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Colin M. Cohen *
Irving Levine President and Chairman, The
Copley Fund, Inc.
(management investment), P.O. Box
3287, 315
Pleasant Street, Fall River, MA
02722
Jeffrey J. Steiner *
* Indicates director is an executive officer of TFC or RHI
or both, which
position is his present principal employment.
PURCHASE AGREEMENT
dated as of December 27, 1996
between
SHARED TECHNOLOGIES CELLULAR, INC.
and
RHI HOLDINGS, INC.
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase and
Sale.............................................. 1
1.1
Purchase.............................................. 1
1.2 Notice of
Purchase.................................... 2
1.3 The
Closings.......................................... 2
2. Company's Repurchase
Option.................................... 3
3. Representations and Warranties of the
Company.................. 3
3.1 Organization and Corporate
Power...................... 3
3.2
Authorization......................................... 4
3.3
Capitalization........................................ 4
3.4 Stockholder
Agreements................................ 5
3.5
Subsidiaries.......................................... 5
3.6 SEC
Filings........................................... 5
3.7 Financial
Statements.................................. 5
3.8 Absence of Undisclosed
Liabilities.................... 6
3.9 Certain
Developments.................................. 6
3.10 Title to
Properties................................... 6
3.11 Contracts and
Commitments............................. 7
3.12 Proprietary Rights; Employee
Restrictions............. 7
3.13 Effect of
Transactions................................ 8
3.14
Litigation............................................ 8
3.15 Securities
Laws....................................... 8
3.16
Business.............................................. 8
3.17 Books and
Records..................................... 8
3.18 Environmental
Compliance.............................. 9
3.19 Information Supplied to
RHI........................... 9
3.20
Brokers............................................... 9
3.21 Employee Benefit
Plans................................ 10
3.22
Employees............................................. 10
4. Representations and Warranties of
RHI.......................... 10
4.1
Investment............................................ 10
4.2
Authority............................................. 11
4.3
Experience............................................ 11
4.4 Accredited
Investor................................... 11
5. Conditions Precedent to
Closing................................ 11
6. Certain Covenants of the
Company............................... 12
6.1 Financial
Statements.................................. 12
6.2 Payment of Taxes, Compliance with Laws,
etc........... 12
6.3
Insurance............................................. 13
6.4 Maintenance of Properties and
Licenses................ 13
6.5 Affiliated
Transactions............................... 13
6.6 Inspection
Rights..................................... 13
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Page
6.7
Litigation............................................ 14
6.8 Merger, Consolidations, Disposal of Ownership of
Subsidiaries,
etc..................................... 14
6.9 RHI Designates to Board of
Directors.................. 14
7.
Miscellaneous.................................................. 14
7.1 Transfer of
Rights.................................... 14
7.2 Rules 144 and
144A.................................... 15
7.3 Delays or
Omissions................................... 15
7.4
Adjustments........................................... 15
7.5 Successors and
Assigns................................ 16
7.6 Survival of Representations and
Warranties............ 16
7.7
Expenses.............................................. 16
7.8
Notices............................................... 16
7.9 No Conditions to Effectiveness; Entire
Agreement...... 17
7.10 Amendments and
Waivers................................ 17
7.11
Counterparts.......................................... 17
7.12 Governing
Law......................................... 18
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PURCHASE AGREEMENT
This Agreement dated as of December 27, 1996 is by and
among SHARED
TECHNOLOGIES CELLULAR, INC., a Delaware corporation, (the
"Company"), and RHI
HOLDINGS, INC., a Delaware corporation ("RHI").
WHEREAS, the Company wishes to sell to RHI, and RHI
wishes to purchase
from the Company, units of the Company, each unit consisting of (i)
one share of
common stock, par value $0.01 per share (the "Common Stock"), of
the Company and
(ii) one detachable warrant (each, a "Warrant," and collectively,
the
"Warrants") to purchase, initially, one share of Common Stock at,
initially, a
price of $3.00 per share (such unit, "Unit").
WHEREAS, concurrently herewith, Shared Technologies
Fairchild Inc., a
Delaware corporation ("STFI"), and RHI are entering into that
certain Option
Agreement dated as of the date hereof (the "Option Agreement").
NOW, THEREFORE, in consideration of the mutual promises
and covenants
contained in this Agreement, and intending to be legally bound by
the terms and
conditions of this Agreement, the parties hereto hereby agree as
follows:
1. Purchase and Sale
1.1 Purchase.
(a) Subject to the conditions set forth herein, RHI
hereby agrees to
purchase from the Company, and the Company hereby agrees to sell to
RHI, on (the
"Initial Commitment") or prior to December 31, 1996, 250,000 Units
at a purchase
price of $3.00 per Unit (the "Purchase Price"). The purchase and
sale of Units
pursuant to this paragraph is herein referred to as the "Initial
Closing."
(b) In addition, subject to the conditions set forth
herein, RHI
hereby agrees to purchase (the "Additional Commitment") from the
Company, and
the Company hereby agrees to sell to RHI:
(1) on or prior to January 31, 1997, an additional
250,000
Units,
(2) on or prior to February 28, 1997, an addition-
al 166,667
Units, and
(3) on or prior to the 150th day after the date of
Initial
Closing (such 150th day, the "Applica- ble
Date"), an
additional 833,333 Units,
<PAGE>
in each case, at the Purchase Price per Unit; provided, however,
that RHI may by
notice to the Company, or the Company by notice to RHI, terminate
the Additional
Commitment, in whole or in part, each at its option and for any or
no reason
whatsoever. Upon such termination of the Additional Commitment, RHI
shall no
longer be obligated to purchase from the Company, and the Company
shall no
longer be obligated to sell to RHI (except pursuant to Section
1.1(c)), any
additional Units.
(c) In the event that the Company does not exercise the
Repurchase
Option on or prior to the Applicable Date, RHI shall have the right
to purchase
(the "Special Option"), within 5 business days of the Applicable
Date, such
number of additional Units from the Company at the Purchase Price
per Unit as
would result in RHI having purchased an aggregate of 666,667 Units
under this
Agreement. The Special Option may be exercised by notice to the
Company
specifying the proposed date of purchase, which shall be a business
day. Such
notice shall be irrevocable and binding upon RHI. In the event that
RHI shall
not have purchased an aggregate of 666,667 Units under this
Agreement on or
prior to the 156th day after the date of the Initial Closing, the
Option (as
defined in the Option Agreement) shall terminate in accordance with
the terms of
the Option Agreement.
(d) In the event of any stock dividend, stock split or
combination or
any other recapitalization, the Purchase Price and the number of
Units subject
to the Initial Commitment, the Additional Commitment and the
Special Option, as
well as the repurchase prices set forth in Section 2 below, shall
be adjusted
accordingly.
1.2 Notice of Purchase. RHI may purchase Units pursuant to the
Initial
Commitment or the Additional Commitment by giving notice to the
Company of its
intention to purchase. Such notice shall state the proposed date of
purchase
(which shall be a business day) and the number of Units to be
purchased on such
date. Such notice shall be irrevocable and binding upon RHI.
1.3 The Closings. Each closing (a "Closing") of the sale and
purchase of
the Units by RHI pursuant to this Agreement shall take place at the
offices of
the Company or at such other place as the parties hereto shall
agree. At each
Closing, the Company shall deliver to RHI the stock certificate(s)
representing
the shares of Common Stock and the warrant certificate(s) in the
form of Exhibit
A hereto representing the Warrants (collectively, the "Warrant
Certificates")
comprising the Units being purchased, registered in the name of RHI
(or the name
or names of its nominee(s)), and RHI shall deliver to the Company
the Purchase
Price for each Unit being purchased by certified check or other
immediately
available funds. The Company shall also deliver to RHI (i) the
documents set
forth in Section 5 and (ii) the fees and disbursements of RHI's
counsel referred
to in Section 7.7. Notwithstanding the foregoing, the
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<PAGE>
stock certificate(s) representing the shares of Common Stock that
are part of
the Units being purchased at the Initial Closing may be delivered
as soon as
practicable after the Initial Closing but in any event within 10
days of the
Initial Closing; provided, however, that (x) RHI shall have
received at the
Initial Closing evidence satisfactory to it that the Company has
irrevocably
instructed the transfer agent and registrar for the Common Stock to
issue such
stock certificate(s) to RHI and (y) for all purposes, RHI shall be
deemed a
holder of, and have the benefits of, the shares of Common Stock to
be
represented by such stock certificate(s).
2. Company's Repurchase Option. The Company shall have the right to
repurchase
(the "Repurchase Option"), at any time on or prior to the
Applicable Date, all
of the Units purchased by RHI and held at such time by RHI (but not
less than
all of such Units), at a price per Unit equal to (i) $3.15 if
repurchased on or
prior to January 31, 1997, (ii) $3.30 if repurchased after January
31, 1997 but
on or prior to February 28, 1997 and (iii) $3.45 if repurchased
after February
28, 1997 but on or prior to the Applicable Date; provided, however,
that STFI
shall, simultaneously with such repurchase by the Company,
repurchase the Option
(as defined in the Option Agreement) from RHI in accordance with
the terms of
the Option Agreement. The Repurchase Option may be exercised by
notice to RHI
specifying the proposed date of repurchase, which shall be a
business day. Such
notice shall be irrevocable and binding upon the Company.
3. Representations and Warranties of the Company. Except as
disclosed in the
Disclosure Schedule hereto by reference to specific sections of
this Agreement,
the Company hereby represents and warrants, at the date hereof and
at each
Closing, to RHI as follows:
3.1 Organization and Corporate Power. The Company and each of
its
subsidiaries is a corporation duly organized, validly existing and
in good
standing under the laws of the State of Delaware and is qualified
to do business
as a foreign corporation in each jurisdiction in which such
qualification is
required, except where the failure to so qualify would not have a
material
adverse effect on the condition (financial or otherwise), assets,
liabilities,
properties, business, operations or prospects of the Company and
its
subsidiaries taken as a whole (a "Material Adverse Effect"). The
Company and
each of its subsidiaries has all required corporate power and
authority to own
its property, to carry on its business as presently conducted or
contemplated,
to enter into and perform the obligations incurred or to be
incurred under this
Agreement and the Warrants (the "Financing Documents"), and
generally to carry
out the transactions contemplated hereby. The charter documents of
the Company
and its subsidiaries, as amended to date, that have been furnished
to counsel
for RHI by the Company, are correct and complete at the date
hereof. Except as
set forth in the Disclosure Schedule, neither the Company nor any
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<PAGE>
of its subsidiaries is in violation of (a) any material agreement
or instrument
relating to accounts payable arising in the ordinary course of
business of the
Company and its subsidiaries, or (b) any term of its charter
documents, or (c)
any term of any other agreement or instrument, or any judgment,
decree, order
law, statute, rule, authorization or government regulation, in each
case,
applicable to the Company or any of its subsidiaries or to which
the Company or
any of its subsidiaries is a party or by which it or any of its
respective
properties is bound.
3.2 Authorization. This Agreement is and the Warrants when
issued will be
the valid and binding obligations of the Company, enforceable in
accordance with
their terms, subject to applicable bankruptcy, insolvency,
reorganization,
moratorium and other similar laws affecting the rights and remedies
of creditors
generally and to the exercise of judicial discretion in accordance
with general
principles of equity. The execution, delivery and performance of
the Financing
Documents have been duly authorized by all necessary corporate or
other action
of the Company. The issuance, sale and delivery of the shares of
Common Stock
hereunder (the "Shares"), the issuance and delivery of the Warrants
and the
issuance of shares of Common Stock issuable upon exercise of
Warrants (the
"Warrant Shares" and together with the Shares and the Warrants, the
"Securities") have been duly authorized by all necessary corporate
action on the
part of the Company, and the Securities have been reserved for
issuance. The
Shares and the Warrant Shares, when issued, will be duly and
validly issued,
fully paid and nonassessable. Other than required filings under
applicable state
securities laws, no consent, approval, or authorization of, or
designation,
declaration or filing with, any governmental authority or any other
person or
entity is required on the part of the Company in connection with
the execution
and delivery of the Financing Documents, or the issuance and
delivery of the
Securities in accordance with the terms of this Agreement or the
consummation of
any other transaction contemplated hereby.
3.3 Capitalization. The authorized capital stock of the
Company at the date
hereof consists of (a) 10,000,000 shares of Common Stock, 4,606,184
of which
shares are issued and outstanding, and (b) 5,000,000 shares of
Preferred Stock,
of which 500,000 are issued and outstanding. All of the issued and
outstanding
shares of the Company's capital stock have been duly authorized and
validly
issued and are fully paid and non-assessable and all securities
previously
issued and sold by the Company were issued and sold in compliance
with
applicable Federal and state securities laws. Except as set forth
in the
Disclosure Schedule, no other shares of capital stock of the
Company or any of
its subsidiaries or securities convertible into or exchangeable for
such shares
have been issued or reserved for issuance, and except as
contemplated by the
Financing Documents, (a) no subscription, warrant, option,
convertible security
or other right (contingent or otherwise) to purchase or acquire any
shares of
capital stock of the Company or
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<PAGE>
any of its subsidiaries is authorized or outstanding, (b) there is
not any
commitment or offer of the Company or any of its subsidiaries to
issue any
subscription, warrant (other than the Warrants), option,
convertible security or
other such right to issue or distribute to holders of any shares of
its
indebtedness or assets of the Company or any of its subsidiaries,
(c) neither
the Company nor any of its subsidiaries has any obligation
(contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of
its capital
stock or any interest therein or to pay any dividend or make any
other
distribution in respect thereof, and (d) there are no restrictions
on the
transfer of the Company's capital stock other than those arising
from Federal
and state securities laws. Except as contemplated by this
Agreement, no person
or entity is entitled to (x) any preemptive or similar right with
respect to
issuance of any capital stock of the Company, or (y) any rights
with respect to
the registration of any capital stock of the Company under the
Securities Act of
1933, as amended (the "Securities Act").
3.4 Stockholder Agreements. Except as set forth on the
Disclosure Schedule,
there are no agreements, written or oral, between the Company and
any of the
holders of the Company's capital stock, or, to the best of the
Company's
knowledge, between or among any holders of the Company's capital
stock, in their
capacities as such.
3.5 Subsidiaries. Except as set forth in the Disclosure
Schedule, the
Company has no subsidiaries and does not own directly or
indirectly, any
interest in any corporation, association or business entity. Each
subsidiary of
the Company is wholly owned.
3.6 SEC Filings. Except as set forth in the Disclosure
Schedule, the
Company has timely filed all reports and other documents required
to be filed
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange
Act"), the Securities Act, and rules and regulations promulgated
thereunder
(including schedules and exhibits, collectively, "SEC Filings"). No
filing made
under the Securities Act or the Exchange Act, as of its date,
contained any
false or misleading statement or omitted to include any statement
necessary to
make the statements therein contained not misleading.
3.7 Financial Statements. The Company has made available to
RHI a copy of
all of the Company's SEC Filings. The financial statements
(including the
footnotes thereto) included in the SEC Filings (collectively,
"Financial
Statements") were prepared in accordance with generally accepted
accounting
principles consistently applied during the periods covered thereby,
are correct,
complete and in accordance with the books and records of the
Company and its
subsidiaries in all material respects, and fairly and accurately
present the
consolidated financial position of the
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Company on the dates of such statements and the consolidated
results of its
operations for the periods covered thereby.
3.8 Absence of Undisclosed Liabilities. Except as and to the
extent
expressly disclosed in the Financial Statements, the Company does
not know of
any liabilities of a type required under generally accepted
accounting
principles to be disclosed therein as of the respective dates
thereof.
3.9 Certain Developments. Since the date of the Company's Form
10-Q for the
nine months ended September 30, 1996, there has been (a) a material
decline in
the Company's financial condition, (b) no declaration, setting
aside or payment
of any dividend or other distribution with respect to, or any
direct or indirect
redemption or acquisition of any of the capital stock of the
Company, (c) no
waiver of any material right of the Company or any of its
subsidiaries or
cancellation of any material debt or claim held by the Company or
any of its
subsidiaries, (d) no loan by the Company or any of its subsidiaries
to any
officer, or director, employee or stockholder of the Company or any
of its
subsidiaries, or any agreement or commitment therefor, (e) no
material loss,
destruction or damage to any property of the Company or any of its
subsidiaries,
whether or not insured, (f) no material labor disputes involving
the Company or
any of its subsidiaries and no material change in the personnel of
the Company
or any of its subsidiaries or the terms and conditions of their
employment, and
(g) otherwise than for fair value and in the ordinary course of
business, no
acquisition or disposition of any assets (or any contract or
arrangement
therefor), nor any other transaction by the Company or any of its
subsidiaries.
3.10 Title to Properties. To the best of the Company's
knowledge, the
Company and its subsidiaries have good and marketable title to, or
a valid
leasehold interest in, all of the properties and assets owned or
used by them or
located on their premises, free and clear of all liens,
restrictions or
encumbrances, except such liens, restrictions or encumbrances as
would not,
singly or in the aggregate, have a Material Adverse Effect. All
machinery,
equipment and other tangible assets included in such properties is
in good
condition and repair, reasonable wear and tear excepted, and all
leases of real
or personal property to which the Company or any of its
subsidiaries is a party
are fully effective and afford the Company and its subsidiaries
peaceful and
undisturbed possession of the subject matter of the lease. Neither
the Company
nor any of its subsidiaries is in violation of any zoning, building
or safety
ordinance, regulation or requirement or other law, or regulation
applicable to
the operation of its owned properties which violation would have a
Material
Adverse Effect. Neither the Company nor any of its subsidiaries is
in violation
of any zoning, building or safety ordinance, regulation or
requirement or other
law or regulation applicable to the operation of its leased
properties, nor has
it received any notice of violation with
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<PAGE>
which it has not complied, where such violation would have a
Material Adverse
Effect.
3.11 Contracts and Commitments. The SEC Filings include all
agreements of
any nature to which the Company or any of its subsidiaries is a
party or by
which it or any of its properties are bound which are material to
the conduct
and operations of its business and properties. To the best of the
Company's
knowledge, all such agreements are valid, binding and in full force
and effect.
To the best of the Company's knowledge, no key employee is a party
to any
outstanding contract, obligation or commitment with any prior
employer. Neither
the Company nor any of its subsidiaries is a party to any oral or
written
contract or agreement prohibiting them from freely competing or
engaging in the
business or businesses of the Company anywhere in the world. Except
as set forth
in Schedule 3.11, neither the Company nor any of its subsidiaries
is in default
under any contract, obligation or commitment which default would,
singly or in
the aggregate, have a Material Adverse Effect, and to the best
knowledge of the
Company, there is no state of facts which upon notice or lapse of
time or both
would constitute such a default. Neither the Company nor any of its
subsidiaries
is a party to any contract or arrangement which under circumstances
now
foreseeable would have a Material Adverse Effect.
3.12 Proprietary Rights; Employee Restrictions. Except as
disclosed in the
Disclosure Schedule, the Company and its subsidiaries have
ownership of or
license to use all patent, copyright, trademark or other
proprietary rights used
or to be used in their business as presently conducted or
contemplated and, to
the best knowledge of the Company, neither the present nor
contemplated
business, activities or products of the Company and its
subsidiaries infringe
any such patent, copyright, trademark or other proprietary rights
of others.
Neither the Company nor any of its subsidiaries has received any
notice or other
claim from any person asserting that any of the present or
contemplated
activities of the Company or any of its subsidiaries infringe or
may infringe
any such rights of such person. To the best knowledge of the
Company, the
Company and its subsidiaries have the right to use, free and clear
of claims or
rights of others, all trade secrets and know-how, including without
limitation:
customer lists, manufacturing processes, hardware designs,
programming
processes, software and other trade secrets or know-how required
for or incident
to their products or its business as presently conducted or
contemplated. The
Company and its subsidiaries have taken all steps required to
establish and
preserve their ownership of all copyright, trade secret and other
proprietary
rights with respect to their products and technology. Neither the
Company nor
any of its subsidiaries is aware of any infringement by others of
its
copyrights, trademarks or other proprietary rights in any of its
products,
technology or services, or any violation of the confidentiality of
any of its
proprietary information. To the best knowledge of the Company,
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<PAGE>
neither the Company nor any of its subsidiaries is making unlawful
use of any
confidential information or trade secrets of any past or present
employees of
the Company or any of its subsidiaries. To the best knowledge of
the Company,
the activities of employees of the Company and its subsidiaries on
their behalf
do not violate any agreements or arrangements known to the Company
which any
such employees may have with former employers.
3.13 Effect of Transactions. The execution, delivery and
performance by the
Company of this Agreement and the offering, issuance and sale of
the Securities
do not and will not conflict with or result in any violation of,
breach of or
default under any contract, obligation or commitment of the Company
or any of
its subsidiaries, or any charter provision, by-law or corporate
restriction of
the Company or any of its subsidiaries, or result in the creation
of any lien,
charge, security interest or encumbrance of any nature upon any of
the
properties or assets of the Company or any of its subsidiaries,
except pursuant
to this Agreement, or violate any instrument, agreement, judgment,
decree,
order, statute, rule or governmental regulation applicable to the
Company or any
of its subsidiaries or to which the Company or any of its
subsidiaries is a
party or by which it or any of its properties is bound.
3.14 Litigation. Except as otherwise disclosed in the
Disclosure Schedule,
there is no action, suit, proceeding or claim or governmental
inquiry pending
or, to the best knowledge of the Company, threatened (a) against
the Company or
any of its subsidiaries or otherwise affecting any of its
properties or assets,
or (b) against any director, officer or Key Employee which may have
a Material
Adverse Effect or (c) which may call into question the validity, or
materially
hinder the enforceability or performance, of any Financing
Document, nor, to the
best knowledge of the Company, has there occurred any event or does
there exist
any condition on the basis of which such action, suit, proceeding,
inquiry or
investigation might properly be instituted.
3.15 Securities Laws. Assuming the accuracy of the
representations and
warranties of RHI contained in Section 4, the offer, issuance and
sale of the
Securities in accordance with this Agreement are and will be in
compliance with
applicable Federal and state securities laws, as presently in
effect.
3.16 Business. The Company and its subsidiaries have all
necessary
franchises, permits, licenses and other rights and privileges
(collectively,
"Permits") necessary to permit them to own their property and to
conduct their
business as is presently conducted or contemplated, except any such
Permit the
failure of which to have would not have a Material Adverse Effect.
3.17 Books and Records. The minute books of the Company and
its
subsidiaries contain complete and accurate records of all
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<PAGE>
meetings and other corporate actions of their respective
stockholders and Boards
of Directors and committees thereof. The stock ledgers of the
Company and its
subsidiaries are complete and reflects all issuances, transfers,
repurchases and
cancellations of shares of their respective capital stock.
3.18 Environmental Compliance. Neither the Company nor any of
its
subsidiaries or any of their respective successors (a) has ever
violated, or is
presently not in compliance with, any Federal, state, and local
environmental or
health and safety laws, rules, regulations, ordinances, or by-laws
("Environmental Laws") applicable to its business and properties;
(b) has
generated, manufactured, refined, transported, treated, stored,
handled,
disposed of, transferred, produced, or processed any pollutant,
toxic substance,
hazardous waste, hazardous substance, hazardous material, oil, or
petroleum
product ("Hazardous Materials") as defined under any Environmental
Law, or any
solid waste, or has knowledge of the release or threat of release
of any
Hazardous Materials from its products, properties or facilities;
(c) has (i)
entered into or been subject to any consent decree, compliance
order, or
administrative order with respect to any environmental or health
and safety
matter relating to its business or any of its properties of
facilities, (ii)
received notice under the citizen suit provision of any
Environmental Law in
connection with its business or any of its properties or
facilities, (iii)
received any request for information, notice, demand letter,
administrative
inquiry, or formal or informal complaint or claim with respect to
any
environmental or health and safety matter relating to its business
or any of its
properties or facilities, or (iv) been subject to or threatened
with any
governmental or citizen enforcement action with respect to any
environmental or
health and safety matter relating to its business or any of its
properties or
facilities, and has no reason to believe that any matters described
in (i)-(iv)
above will be forthcoming. No lien has been imposed on any of the
properties or
facilities of the Company or any of its subsidiaries by any
governmental agency
at the Federal, state, or local level in connection with the
presence of any
Hazardous Materials.
3.19 Information Supplied to RHI. Neither this Agreement, the
Disclosure
Schedule and Exhibits attached hereto, the other Financing
Documents nor any
document, certificate, projection or statement furnished to RHI by
or on behalf
of the Company contains any untrue statement of a material fact,
and neither
this Agreement nor the Disclosure Schedule omits to state a
material fact
necessary in order to make the statements contained herein or
therein not
misleading.
3.20 Brokers. There are no claims for and no person is
entitled to any
brokerage commissions, finder's fees or similar compensation in
connection with
the transactions contemplated by
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<PAGE>
this Agreement from the Company or based on any arrangement or
agreement made by
or on behalf of the Company.
3.21 Employee Benefit Plans. The Company does not maintain or
contribute to
any employee benefit plans other than the plans identified on the
Disclosure
Schedule. The Company is and has been in material compliance with
the provisions
of all laws or rules or regulations applicable to any employee
benefit plan
maintained or contributed to by the Company for the benefit of its
employees
and, to the best knowledge of the Company, there are no claims
(other than
routine claims for benefits) pending or threatened with respect to
any of such
employee benefit plans. The Company does not maintain or contribute
to, and has
ever maintained or contributed to, any qualified retirement plan
that is subject
to the minimum funding requirements of Section 412 of the United
States Internal
Revenue Code of 1986, as amended. There are no unfunded obligations
of the
Company under any retirement, pension, profit-sharing or deferred
compensation
plan or program. The Company is not required to make any payments
or
contributions to any employee benefit plan pursuant to any
collective bargaining
agreement. The Company has never maintained or contributed to any
employee
benefit plan providing or promising any health or other non-pension
benefits to
terminated employees. For purposes of this Section, the term
"Company" includes
all entities that have controlled, have been under the control of,
or have been
under common control with, the Company.
3.22 Employees. The Company is not aware that any officer,
director,
executive or key employee of or consultant to the Company or any of
its
subsidiaries has any plans to terminate his relationship with the
Company or
such subsidiaries. The Company and its subsidiaries have complied
in all
material respects with all applicable laws relating to the
employment of labor,
including provisions relating to wages, laws, equal opportunity,
collective
bargaining and the payment of social security and other taxes. None
of the
employees of the Company or any of its subsidiaries is represented
by any labor
union or covered by any collective bargaining agreements, the
Company is not
aware of any effort to establish a labor union or bargaining unit
or similar
organizational effort with respect to any such employees, and there
is no labor
strike or other labor trouble pending or threatened and with
respect to the
Company or any of its subsidiaries.
4. Representations and Warranties of RHI.
RHI represents and warrants to the Company as follows:
4.1 Investment. RHI is acquiring the Securities for its own
account for
investment and not with a view to, or for sale in connection with,
any
distribution thereof, nor with any present intention of
distributing or selling
the same, and RHI has no present or contemplated agreement,
undertaking,
arrangement,
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<PAGE>
obligation, indebtedness or commitment providing for the disposi-
tion thereof.
4.2 Authority. RHI has full power and authority to execute,
deliver and
perform this Agreement in accordance with its terms. RHI has not
been organized,
reorganized, or recapitalized specifically for the purpose of
investing in the
Company. This Agreement is a valid and binding obligation of RHI,
enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency,
reorganization, moratorium and other similar laws affecting the
rights and
remedies of creditors generally and to the exercise of judicial
discretion in
accordance with general principles of equity.
4.3 Experience. RHI has adequate net worth and means to
provide for its
current needs and contingencies and the financial capacity to
sustain a complete
loss of its investment in the Company.
4.4 Accredited Investor. RHI is an "accredited investor" as
defined in Rule
501 of Regulation D adopted under the Securities Act.
5. Conditions Precedent to Closing. The effectiveness of the
Initial Commitment
shall be subject to the receipt by RHI of the following, each in
form and
substance satisfactory to RHI (it being understood that, in
connection with any
Closing subsequent to the Initial Closing, the Company shall also
deliver such
of the following as RHI shall reasonably request):
5.1 An opinion from the General Counsel of the Company, dated
as of the
applicable Closing date, addressed to RHI, and substantially in the
form
attached hereto as Exhibit C;
5.2 A certificate of the Secretary of the Company, dated as of
the
applicable Closing date, certifying as to (i) the incumbency and
signatures of
officers of the Company executing the Financing Documents and all
other
documents executed and delivered in connection herewith, (ii) a
copy of the
certificate of incorporation of the Company as in effect on such
Closing date,
certified as of a recent date by the Secretary of the State of
Delaware, (iii) a
copy of the by-laws of the Company, as in effect on such Closing
date, and (iv)
a copy of the resolutions of the Board of Directors of the Company
authorizing
and approving the Company's execution, delivery and performance of
the Financing
Documents, all matters in connection with the Financing Documents,
and the
transactions contemplated thereby; and
5.3 A certificate as of the most recent practicable date prior
to the
applicable Closing date, of the Secretary of State of the State of
Delaware as
to the Company's good standing;
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<PAGE>
5.4 All consents and waivers required in connection with the
Company's
issuance of the Securities; and
5.5 All other documents, instruments and agreements that RHI
shall
reasonably require in connection with this Agreement.
6. Certain Covenants of the Company. The Company covenants and
agrees that for
so long as RHI holds shares of capital stock representing 5% or
more of the
voting power on matters properly brought for a vote of the
Company's
stockholders ("Voting Power"), it will perform and observe the
covenants and
provisions of Sections 6.5, 6.6 and 6.9, and so long as RHI holds
5% or more of
the Voting Power and has exercised the Option (as defined in the
Option
Agreement), it will perform and observe the following covenants and
provisions
(for purposes of this Agreement, ownership of any options, warrants
or
convertible securities entitling the holder thereof to acquire
record or
beneficial ownership in shares of capital stock shall be deemed
ownership of the
Voting Power of an equivalent number of shares of such capital
stock):
6.1 Financial Statements. The Company will maintain books of
account in
accordance with generally accepted accounting principles applied on
a consistent
basis, keep full and complete financial records and furnish to RHI
the following
reports:
(a) within fifteen (15) days after the date of such
filing, copies of
all documents filed by the Company with the SEC including, but not
limited to,
all reports on Forms 10-K, 10-Q, 8-K and their exhibits; and
(b) such other financial information as RHI may
reasonably request,
including, without limitation, certificates of the principal
financial officer
of the Company concerning compliance with the covenants of the
Company under
this Section , other customary information and materials,
including, without
limitation, reports of adverse developments, management letters,
communications
with stockholders or directors, press releases, registration
statements and any
other reports filed by the Company, or by any of its officers and
directors with
respect to the Company, with a securities exchange or with the
Securities and
Exchange Commission (the "Commission").
6.2 Payment of Taxes, Compliance with Laws, etc. The Company
will pay and
discharge all lawful taxes, assessments and governmental charges or
levies
imposed upon it or any of its subsidiaries or upon their income or
property
before the same shall become in default, as well as all lawful
claims for labor,
materials and supplies which, if not paid when due, might become a
lien or
charge upon their property or any part thereof; provided, however,
that the
Company shall not be required to pay and discharge any such tax,
assessment,
charge, levy, or claim so long as the validity thereof is being
contested by the
Company in good faith by
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<PAGE>
appropriate proceedings and an adequate reserve therefor has been
established on
its books. The Company will, and will cause its subsidiaries to,
use its best
efforts to comply with all applicable laws and regulations in the
conduct of its
business including, without limitation, all Environmental Laws.
6.3 Insurance. The Company will, and will cause its
subsidiaries to, keep
its insurable properties insured, upon reasonable business terms,
by financially
sound and reputable insurers against liability, and the perils of
casualty, fire
and extended coverage in amounts of coverage sufficient in the
reasonable
business judgment of the Company to protect the Company and its
subsidiaries.
The Company will, and will cause its subsidiaries to, maintain with
such
insurers insurance against other hazards and risks and liability to
persons and
property which, in the reasonable business judgment of the Company,
is customary
in the industry in which the Company operates for companies of
comparable size.
6.4 Maintenance of Properties and Licenses. The Company will,
and will
cause its subsidiaries to, maintain all properties used or useful
in the conduct
of their business (including, without limitation, transmission
sites) in good
repair, working order and condition as is reasonably necessary to
permit such
business to be properly and advantageously conducted. The Company
will, and will
cause its subsidiaries to, keep in full force and effect all
licenses, permits,
approvals, consents and authorizations necessary or appropriate to
conduct their
businesses as presently conducted and as proposed to be conducted
(collectively,
"Licenses").
6.5 Affiliated Transactions. Except with respect to
compensation
arrangements with, and the reimbursement of expenses of, employees
of the
Company in the ordinary course of business, all transactions by and
between the
Company or any of its subsidiaries and any director, officer,
employee, or
stockholder of the Company or any of its subsidiaries or persons
controlled by
or affiliated with such director, officer, employee or stockholder,
shall be
conducted on an arm's-length basis, shall be on terms and
conditions no less
favorable to the Company than could be obtained from non-related
persons at such
time and shall be approved by the Board of Directors after full
disclosure of
the terms thereof, for which purpose the interest party, if a
director, and any
affiliate of the interested party who is a director, shall not be
entitled to
vote.
6.6 Inspection Rights. At any time during normal business
hours and upon
reasonable prior notice to the Company, RHI or any of its
designated
representatives or agents may (a) visit and inspect the premises
and any of the
properties of the Company and its subsidiaries including its
records and books
of account (and make copies thereof and take extracts therefrom),
and (b)
discuss the affairs, finances and accounts of the Company and its
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subsidiaries with its officers, directors, employees and
accountants, all at the expense of RHI.
6.7 Litigation. The Company promptly (and, in any event, not
later than the
date of release of such information to the public generally) shall
notify RHI or
its transferees of any litigation or governmental proceeding or
investigation
pending (or, to the best knowledge of the Company, threatened)
against the
Company or any of its subsidiaries or against any officer,
director, key
employee, or principal stockholder of the Company or any of its
subsidiaries,
that if adversely determined, could have a Material Adverse Effect.
6.8 Merger, Consolidations, Disposal of Ownership of
Subsidiaries, etc.
Without the prior written consent of RHI, the Company will not, and
will not
permit any of its subsidiaries to:
(a) consolidate with or merge with any other corporation
or entity;
(b) convey, transfer or lease all or substantially all of
its assets
in a single transaction or series of transactions to any person or
entity;
(c) sell or otherwise dispose of any shares of any
subsidiary or
affiliate, nor will the Company permit any subsidiary to issue,
sell or dispose
of any shares of such subsidiary's own stock; or
(d) sell, transfer or otherwise dispose of any of its
Licenses.
6.9 RHI Designates to Board of Directors. The Company shall
use its best
efforts so that, for so long as RHI owns shares of capital stock
comprising five
percent (5%) or more of the Voting Power, at least one member of
the Company's
Board of Directors is at all times designated by RHI, and for so
long as RHI
owns shares of capital stock comprising ten percent (10%) or more
of the Voting
Power, at least two members of the Company's Board of Directors is
at all times
designated by RHI. The Company shall use its best efforts to enter
into all such
agreements and take all other such actions as are necessary or
appropriate in
order to effect the foregoing or as reasonably requested by RHI in
connection
therewith. For purposes of this Section 6.9, ownership of any
options, warrants
or convertible securities that upon exercise or conversion shall
entitle the
holder thereof to acquire shares of capital stock, shall be deemed
to be
ownership of the Voting Power of the equivalent number of shares of
capital
stock.
7. Miscellaneous.
7.1 Transfer of Rights.
-14-
<PAGE>
(a) Transfer of Rights. The rights granted to RHI under
Section may be
transferred to The Fairchild Corporation, a New York corporation,
or any of its
affiliates (within the meaning of the Securities Act); provided,
however, that
the Company must receive written notice of said transfer, stating
the name and
address of said transferee or assignee and identifying the
securities with
respect to which such rights are being assigned.
(b) Transferees. Any transferee to whom rights under
Section are
transferred in compliance with the terms hereof shall, as a
condition to such
transfer, deliver to the Company a written instrument by which such
transferee
agrees to be bound by the obligations imposed by Section hereof to
the same
extent as if such transferee were RHI hereunder. Upon the execution
of such
instrument, such transferee shall be treated as RHI for all
purposes hereunder.
(c) Subsequent Transferees. A transferee to whom rights
are
transferred pursuant to this Section 7.1 may not again transfer
such rights to
any other person or entity, other than as provided in (a) or (b)
above.
7.2 Rules 144 and 144A. At all times the Company will file all
reports
required under the Securities Act or the Exchange Act and the rules
and
regulations thereunder, and will take such further action as may be
reasonably
required to enable any holder of "restricted securities" (as
defined in Rule 144
adopted by the Commission under the Securities Act) to sell such
securities
pursuant to Rule 144 or Rule 144A, as amended from time to time, or
any similar
rule or regulation hereafter adopted by the Commission.
7.3 Delays or Omissions. No delay or omission to exercise any
right, power
or remedy accruing to any holder of Securities or the Company, upon
any breach
or default of the Company or such holder, as the case may be, under
this
Agreement, shall impair any such right, power or remedy of such
holder or the
Company, as the case may be, nor shall it be construed to be a
waiver of any
such breach or default or of any similar breach or default
theretofore or
thereafter occurring, or an acquiescence therein. Any waiver,
permit, consent or
approval of any kind or character on the part of any holder or the
Company of
any breach or default under this Agreement, or any waiver on the
part of any
holder or the Company of any provisions of conditions of this
Agreement must be
made in writing and shall be effective only to the extent
specifically set forth
in such writing. All remedies, either under this Agreement or by
law or
otherwise afforded to any holder, shall be cumulative and not
alternative.
7.4 Adjustments. Except as otherwise specifically provided,
all applicable
provisions of this Agreement shall be automatically adjusted to
reflect any
stock dividend, stock split or combination or other such
recapitalization.
-15-
<PAGE>
7.5 Successors and Assigns. Except as otherwise expressly
provided herein,
the provisions of this Agreement shall bind and inure to the
benefit of the
respective successors, assigns, heirs, executors, and
administrators of the
parties hereto.
7.6 Survival of Representations and Warranties. The
representations,
warranties, covenants, promises and agreements contained in this
Agreement shall
survive and remain in full force and effect for one (1) year after
the Initial
Closing date, without regard to any investigation made at any time
by RHI or on
their behalf.
7.7 Expenses. The Company shall reimburse to RHI, promptly
upon demand
therefor, the fees and expenses of Cahill Gordon & Reindel, counsel
to RHI, and
any other professional and out-of-pocket expenses incurred by RHI;
provided,
however, that RHI shall not be responsible for more than $20,000 of
the fees and
expenses of Cahill Gordon & Reindel in connection with the
negotiation,
preparation, execution and delivery of this Agreement and the
documents in
connection herewith. In addition, the company shall bear its own
legal and other
expenses in connection with the transactions contemplated by this
Agreement.
7.8 Notices. All notices, requests, consents and other
communications under
this Agreement shall be in writing and shall be delivered by hand,
by
telecopier, by overnight courier or mailed by first class certified
or
registered mail, return receipt requested, postage prepaid:
(a) If to the Company:
Shared Technologies Cellular, Inc.
100 Great Meadow Road
Wethersfield, CT 06109
Attn: Legal Department
Telecopier: (860) 258-2455
(or at such other address as may have been furnished in writing by
the Company to RHI)
with a copy to:
Gadsby & Hannah LLP
125 Summer Street
Boston, MA 02110
Attn: Harold J. Carroll, Esq.
Telecopier: (617) 345-7050
-16-
<PAGE>
(b) If to RHI:
RHI Holdings, Inc.
c/o The Fairchild Corporation
Washington Dulles International Airport
300 West Service Road
Chantilly, VA 20153
Attn: Donald E. Miller, Esq.
Telecopier: (703) 478-5775
(or at such other address as may have been furnished in writing by
RHI to the Company)
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: James J. Clark, Esq.
Telecopier: (212) 269-5420
Any communication delivered in accordance with this Section 7.8
shall be deemed
effective (i) if delivered by hand, when received at the receiving
desk for the
addressee, (ii) if telecopied, when receipt is confirmed by the
telecopier
machine, (iii) if sent by courier, two business days after deposit
with such
courier and (iv) if sent by mail, four business days after deposit
in the mails.
7.9 No Conditions to Effectiveness; Entire Agreement. There
are no
conditions to the effectiveness of this Agreement. This Agreement,
together with
the instruments and other documents contemplated to be executed and
delivered in
connection herewith, contains the entire agreement and
understanding of the
parties hereto, and supersedes any prior agreements or
understandings between or
among them, with respect to the subject matter hereof.
7.10 Amendments and Waivers. Except as otherwise expressly set
forth in
this Agreement, any term of this Agreement may be amended and the
observance of
any term of this Agreement may be waived (either generally or in a
particular
instance and either retroactively or prospectively), only with the
written
consent of the party against whom such amendment or waiver is to be
enforced. No
waivers of or exceptions to any term, condition or provision of
this Agreement,
in any one or more instances, shall be deemed to be, or construed
as, a further
continuing waiver of any such term, condition or provision.
7.11 Counterparts. This Agreement may be executed in several
counterparts,
each of which shall be deemed an original, but all of which
together shall
constitute one and the same instrument.
-17-
<PAGE>
7.12 Governing Law. This Agreement shall be governed
by and
interpreted and construed in accordance with the laws of the State
of Connecticut.
-18-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered
this Agreement as an instrument as of the date first above written.
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Anthony D. Autorino
-------------------------------
Name: Anthony D. Autorino
Title: Chief Executive Officer
RHI HOLDINGS, INC.
By: /s/ Colin M. Cohen
-------------------------------
Name: Colin M. Cohen
Title: Vice President and
Chief Financial Officer
WARRANT CERTIFICATE
Date: _____ ___, ___ [ ] Warrants
NEITHER THE WARRANTS EVIDENCED HEREBY, NOR THE STOCK TO BE ISSUED
UPON EXERCISE
THEREOF, HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED OR REGISTERED UNDER ANY STATE
SECURITIES LAWS
(THE "STATE SECURITIES LAWS"). NO SALE OR OTHER DISPOSITION MAY BE
MADE WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
COMPLIANCE WITH
THE APPLICABLE STATE SECURITIES LAWS, OR, IN THE CASE OF A SALE OR
OTHER
DISPOSITION OTHER THAN PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT, AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE ISSUER AND ITS
COUNSEL, THAT
SAID REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND THAT
APPLICABLE
STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH.
This Warrant Certificate certifies that RHI HOLDINGS,
INC.
("Purchaser"), a Delaware corporation, or any entity to which this
Warrant is
assigned in compliance with the terms hereof (Purchaser and any
such assignee
being hereafter sometimes referred to as "Holder"), is the holder
of the number
of Warrants set forth above. Each Warrant entitles the Holder to
subscribe to
and purchase, during the period commencing at the date first set
forth above and
ending at 5 p.m. Hartford, Connecticut, local time, on the fifth
(5th)
anniversary of such date (the "Expiration Time"), one(1) fully paid
and
nonassessable share of common stock, par value $0.01 per share (the
"Common
Stock"), of Shared Technologies Cellular, Inc. (the "Company"), a
Delaware
corporation with its principal place of business at 100 Great
Meadow Road,
Wethersfield, Connecticut, at a purchase
- -------------------
1 If any of the events specified in Section 3 occur after the
date of the
Agreement and before the date of issuance of this Warrant
Certificate, the
number specified here shall be adjusted in accordance with
Section 3.
<PAGE>
-2-
price of $3.00(2) (such price, as adjusted in accordance with the
terms herein,
the "Exercise Price"). The number of shares for which each Warrant
is
exercisable (as adjusted, the "Exercise Ratio") and the Exercise
Price is
subject to adjustment as set forth herein.
The Warrants evidenced hereby were issued to Purchaser
pursuant to
that certain Purchase Agreement dated as of December 27, 1996
between the
Company and Purchaser (the "Agreement").
ARTICLE I
DEFINITIONS
1.1 "Common Stock Equivalents" shall mean Convertible
Securities and Rights.
1.2 "Convertible Securities" means any securities which are
directly or
indirectly convertible or exchangeable into Common Stock.
1.3 "Effective Price" means the quotient obtained by dividing (i)
Minimum
Consideration by (ii) Maximum Shares Upon Exercise.
1.4 "Fair Market Value" means, at any date:
(a) The average of the closing prices of the Common Stock
quoted in the Over-The-Counter Market Summary (if not
on the Nasdaq system) or the closing price quoted on
the Nasdaq Stock Market or any exchange on which the
Common Stock is listed, whichever is applicable, as
published in the Eastern Edition of The Wall Street
Journal for the five (5) consecutive trading days
prior to such date; or
(b) If the Common Stock is not traded over-the-counter or
on an exchange, the per share fair market value of
- -------------------
2 If any of the events specified in Section 3 occur after the
date of the
Agreement and before the date of issuance of this Warrant
Certificate, the
Purchase Price specified here shall be adjusted in accordance
with Section
3.
<PAGE>
-3-
the Common Stock at such date, as determined by an
independent
appraiser appointed in good faith by the Company's
Board of
Directors. The cost of such appraisal shall be borne by
the Company.
1.5 "Maximum Shares Upon Exercise" means the maximum number of
shares of
Common Stock issuable under a Common Stock Equivalent upon
complete
exercise and full conversion of all Rights or Convertible
Securities
represented thereby, computed without regard to contingent
adjustment
to the number of shares issuable upon exercise and
conversion (other
than adjustments caused solely by the passage of time
which increase
the number of shares issuable upon exercise and
conversion).
1.6 "Minimum Consideration" means the minimum aggregate
consideration paid
or payable at any time for the purchase of the Common
Stock Equivalents
during the term of the Common Stock Equivalents, and upon
complete
exercise and full conversion of the Common Stock
Equivalents, computed
without regard to contingent adjustments to exercise or
conversion
price (other than adjustments caused solely by the passage
of time
which reduce such minimum aggregate consideration).
1.7 "Rights" means any options, warrants, or rights to
purchase Common Stock or Convertible Securities.
ARTICLE II
EXERCISE AND PAYMENT
2.1 Cash Exercise. The Warrants represented by this Warrant
Certificate may
be exercised by Holder, in whole or in part, by the
surrender of this
Warrant Certificate at the principal office of the
Company, and by the
payment to the Company, by certified, cashier's or other
check
acceptable to the Company, of an amount equal to the
aggregate Exercise
Price of the shares being purchased.
2.2 Net Issue Exercise. In lieu of exercising this Warrant
pursuant to Section 2.1, Holder may elect to receive
shares of Common Stock equal to the value of the
Warrants evidenced hereby (or of any portion thereof
<PAGE>
-4-
remaining unexercised) by surrender of this Warrant
Certificate at the
principal office of the Company together with notice of
such election,
in which event the Company shall issue to Holder a number
of shares of
Common Stock computed using the following formula:
X = Y (A-B)
A
Where X = the number of shares of Common Stock to be
issued to Holder;
Y = the number of shares of Common Stock
purchasable under
the Warrants being exercised (at the date
of such
calculation);
A = the Fair Market Value of one share of
Common Stock (at the date of such
calculation); and
B = Exercise Price (as adjusted to the date
of such
calculation).
2.3 Stock Certificate. In the event of any exercise of Warrants
evidenced
hereby, certificates for the shares of Common Stock so
purchased shall be
delivered to Holder within a reasonable time and, unless the
Warrants
evidenced hereby has been fully exercised or has expired, a
new Warrant
Certificate representing the Warrants that have been
exercised shall also
be issued to Holder within such time.
2.4 Automatic Exercise.
(a) To the extent the Warrants evidenced hereby are not
previously
exercised, and if the Fair Market Value of one share of
Common Stock
is greater than the Exercise Price, the Warrants
evidenced hereby
shall be deemed automatically exercised in accordance
with Section
2.2 hereof (even if not surrendered) immediately before
the
Expiration Time.
(b) If at any date prior to the Expiration Time the Fair
Market Value of
one share of Common Stock is greater than 200% of the
Exercise
Price, the Warrants
<PAGE>
-5-
evidenced hereby shall be deemed automatically
exercised in
accordance with Section 2.2 hereof (even if not
surrendered).
(c) To the extent the Warrants evidenced hereby are deemed
automatically
exercised pursuant to this Section 2.4, the Company
agrees to notify
Holder within a reasonable period of time of the number
of shares of
Common Stock, if any, Holder is to receive by reason of
such
automatic exercise.
2.5 Stock Fully Paid, Reservation of Shares. The Company
covenants and agrees
that all Common Stock which may be issued upon the exercise
of Warrants
evidenced hereby will, upon issuance, be fully paid and
nonassessable and
free from all taxes, liens and charges with respect to the
issue thereof
(excluding taxes based on the income of Holder). The Company
further
covenants and agrees that at all times prior to the
Expiration Time, the
Company will have authorized and reserved for issuance a
sufficient number
of shares of Common Stock as would be required upon the full
exercise of
the Warrants evidenced hereby.
2.6 Fractional Shares. No fractional share of Common Stock will
be issued in
connection with any exercise hereof, but in lieu of a
fractional share
upon complete exercise hereof, Holder may purchase a whole
share at the
then effective Exercise Price.
ARTICLE III
CERTAIN ADJUSTMENTS OF NUMBER OF
SHARES PURCHASABLE AND WARRANT PRICE
3.1 Reclassification, Consolidation or Merger. In case of: (i)
any
reclassification or change of outstanding securities issuable
upon
exercise of Warrants; (ii) any consolidation or merger of the
Company with
or into another corporation (other than a merger with another
corporation
in which the Company is a continuing corporation and which
does not result
in any reclassification, change or exchange of outstanding
securities
issuable upon exercise of Warrants); or (iii) any sale or
transfer to
another corporation of all, or substantially all, of the
property of the
Company,
<PAGE>
-6-
then, and in each such event, the Company or such successor
or purchasing
corporation, as the case may be, shall execute a new Warrant
Certificate
which will provide that Holder shall have the right to
exercise the
Warrants evidenced by such new Warrant Certificate and
purchase upon such
exercise, in lieu of each share of Common Stock theretofore
issuable upon
exercise of this Warrant, the kind and amount of securities,
money and
property receivable upon such reclassification, change,
consolidation,
merger, sale or transfer by a holder of one share of Common
Stock issuable
upon exercise of a Warrant had a Warrant been exercised
immediately prior
to such reclassification, change, consolidation, merger, sale
or transfer.
Such new Warrant Certificate shall provide for adjustments
which shall be
as nearly equivalent as may be practicable to the adjustments
provided in
this Section 3 and the provisions of Section 3.1, shall
similarly apply to
successive reclassifications, changes, consolidations,
mergers, sales and
transfers.
3.2 Subdivision or Combination of Shares. If the Company shall at
any time
while this Warrant remains outstanding and unexercised in
whole or in
part: (i) divide its Common Stock, the Exercise Price shall
be
proportionately reduced and the Exercise Ratio shall be
proportionately
increased; or (ii) combine shares of its Common Stock, the
Exercise Price
shall be proportionately increased and the Exercise Ratio
shall be
proportionately decreased.
3.3 Adjustment for Issue or Sale of Shares at Less Than the
Exercise Price.
(a) If, in a transaction other than an issuance excepted
from this provisions as set forth below or an
issuance that causes an adjustment under Sections 3.1
or 3.2, the Company shall at any time or from time to
time, issue any additional shares of Common Stock or
Common Stock Equivalents without consideration or for
a net consideration per share (or Effective Price in
the case of Common Stock Equivalents) less than the
Exercise Price in effect immediately prior to such
issuance, then, and in each case, the Exercise Price
shall be lowered to an amount equal to the lowest per
share price received, or deemed received, by the
Company as consideration for such Shares. In
addition, the Exercise Ratio shall be adjusted in
accordance with the formula:
<PAGE>
-7-
E' = E x (O + N)
(O + (N x P/M))
Where E' = the adjusted Exercise Ratio;
E = the current Exercise Ratio;
O = the number of shares of Common Stock
outstanding
immediately prior to the issuance to
which this
Section 3.3 applies;
N = the number of shares of Common Stock so
issued or
the Maximum Shares Upon Exercise of the
Common Stock
Equivalents so issued, as the case may
be;
P = the price of the shares of Common Stock
so issued or
the Effective Price of the Common Stock
Equivalents so
issued, as the case may be; and
M = the Exercise Price as of the time of
determination
or at the time of sale, as the case may
be.
(b) There shall be no adjustment under this Section 3.3
for any sales or issuances: (i) in a transaction in
which an adjustment will be made pursuant to
Section 3.1 or 3.2; (ii) of Common Stock or Common
Stock Equivalents not in excess of ten percent (10%)
of the shares of Common Stock issued and outstanding
as of the date of the Agreement (measured
cumulatively from the date of the Agreement), if such
issuance is made pursuant to an employee incentive
plan approved by the Company's shareholders and Board
of Directors; or (iii) upon exercise or conversion of
Common Stock Equivalents outstanding on the date of
the Agreement.
(c) The issuance of Common Stock Equivalents shall be
deemed an issuance
at the time of the issuance of such shares of Common
Stock
underlying the Common Stock Equivalents. No adjustment
of the
Exercise Price or the Exercise Ratio shall be made
under this
Section 3.3 upon the issuance of shares of Common Stock
upon the
exercise or conversion of Common Stock
<PAGE>
-8-
Equivalents if an adjustment has previously been made
as above
provided. Any adjustment of the Exercise Price or the
Exercise Ratio
shall be disregarded, if, as and when such Common Stock
Equivalents
expire or are cancelled without being exercised so that
the Exercise
Price and Exercise Ratio effective immediately upon
such
cancellation or expiration shall be equal to the
Exercise Price and
Exercise Ratio, respectively, in effect at the time of
the issuance
of the expired or cancelled Common Stock Equivalents,
with such
additional adjustments as would have been made to the
Exercise Price
and Exercise Ratio had the expired or cancelled Common
Stock
Equivalents not been issued.
3.4 Certain Distributions. If at any time the Company grants,
issues or sells
options, convertible securities, or rights to purchase
capital stock of
the Company, warrants or other securities pro rata to the
record holders
of Common Stock (the "Distribution Rights") or, without
duplication, makes
any dividend or otherwise makes any distribution
("Distribution") on
shares of Common Stock (whether in cash, property, evidences
of
indebtedness or otherwise), then the Company shall grant,
issue, sell or
make to Holder the aggregate Distribution Rights or
Distribution, as the
case may be, which the Holder would have acquired if Holder
had held the
maximum number of Shares acquirable upon complete exercise of
the Holder's
Warrants immediately before the record date for the grant,
issuance or
sale of such Distribution Rights or Distribution, as the case
may be, or,
if there is no such record date, the date as of which the
record holders
of Common Stock are to be determined for the grant, issue or
sale of such
Distribution Rights or Distribution, as the case may be.
Except as
provided in this Section 3.4, no payment or adjustment will
be made for
dividends on any Common Stock.
3.5 Other Action Affecting Common Stock. If the Company takes any
action with
respect to its capital structure affecting its Common Stock
after the date
hereof other than an action described in either of Sections
3.1 and 3.2
hereof, which would have a material effect upon Holder's
rights hereunder,
the Exercise Price and the Exercise Ratio shall be adjusted
in such manner
and at such time as the Board of Directors of the Company
shall in good
faith determine to be equitable under the circumstances;
provided,
however, that in no event shall the Exercise Price be
<PAGE>
-9-
increased or the Exercise Ratio be decreased pursuant to
this Section 3.5.
3.6 Time of Adjustments to the Exercise Price and Exercise Ratio.
All
adjustments to the Exercise Price and the Exercise Ratio,
unless otherwise
specified herein, shall be effective as of the earliest of:
(a) the date of issue (or date of sale, if earlier) of
the security causing the adjustment;
(b) the effective date of a division or combination of
shares; and
(c) the record date of any action of holders of the
Company's capital
stock of any class taken for the purpose of dividing or
combining
shares or entitling shareholders to receive a
distribution or
dividends.
3.7 Notice of Adjustments. In each case of an adjustment in the
Exercise Price
and Exercise Ratio, the Company, at its expense, shall cause
the Chief
Financial Officer of the Company to compute such adjustment
and prepare a
certificate setting forth such adjustment and showing in
detail the facts
upon which such adjustment is based. The Company shall
promptly mail a
copy of each such certificate to Holder pursuant to Section
5.12 hereof.
3.8 Duration of Adjusted Exercise Price or Exercise Ratio.
Following each
adjustment of the Exercise Price or Exercise Ratio, such
adjusted Exercise
Price or Exercise Ratio shall remain in effect until further
adjustment of
the Exercise Price or Exercise Ratio, respectively.
ARTICLE IV
TRANSFER, EXCHANGE AND LOSS
4.1 Transfer. The Warrants evidenced hereby are transferable on
the books of
the Company and at its principal office by the registered
Holder hereof
upon surrender of this Warrant Certificate properly endorsed,
subject to
compliance with the federal and state securities laws. The
Company shall
issue and deliver to the transferee a new Warrant Certificate
or
Certificates representing the
<PAGE>
-10-
Warrants so transferred. Upon any partial transfer, the
Company will issue
an deliver to Holder a new Warrant Certificate or
Certificates with
respect to the Warrants not so transferred. Notwithstanding
the foregoing,
Holder shall not be entitled to transfer a number of shares
or an interest
in this Warrant Certificate representing less than five
percent (5%) of
the aggregate shares initially covered by this Warrant
Certificate. Any
transferee shall be subject to the same restrictions on
transfer with
respect to this Warrant as the Purchaser.
4.2 Securities Laws. Upon any issuance of shares of Common Stock
upon exercise
of Warrants evidenced hereby, it shall be the Company's
responsibility to
comply with the requirements of: (1) the Securities Act; (2)
the
Securities Exchange Act of 1934, as amended; (3) any
applicable listing
requirements of any national securities exchange; (4) any
State Securities
Laws; and (5) requirements under any other law or regulation
applicable to
the issuance or transfer of such shares. If required by the
Company, in
connection with each issuance of shares of Common Stock upon
exercise of
Warrants evidenced hereby, Holder will give: (i) assurances
in writing,
satisfactory to the Company, that such shares are not being
purchased with
a view to the distribution thereto in violation of applicable
laws, (ii)
sufficient information, in writing, to enable the Company to
rely on
exemptions from the registration or qualification
requirements of
applicable laws, if available, with respect to such exercise,
and (iii)
its cooperation to the Company in connection with such
compliance.
4.3 Exchange. This Warrant Certificate is exchangeable at the
principal office
of the Company for a Warrant Certificate or Certificates
representing the
same aggregate number of Warrants evidenced hereby. Each new
Warrant
Certificate shall be identical in form and content to this
Warrant
Certificate, except for appropriate changes in the number of
Warrants, the
percentage stated in Section 4.1 above, and any other changes
which are
necessary in order to prevent the exchange from changing the
respective
rights and obligations of the Company and the Holder as they
existed
immediately prior to such exchange.
4.4 Loss or Mutilation. Upon receipt by the Company of
evidence satisfactory to it of the ownership of, and the
loss, theft, destruction or mutilation of, this Warrant
<PAGE>
-11-
Certificate and (in the case of loss, theft, or destruction)
of indemnity
satisfactory to it, and (in the case of mutilation) upon
surrender and
cancellation hereof, the Company will execute and deliver in
lieu hereof a
new Warrant Certificate.
ARTICLE V
MISCELLANEOUS
5.1 No Shareholder Rights Until Exercise. Except as specifically
provided
herein, no Holder Hereof, solely by virtue hereof, shall be
entitled to
any rights as a shareholder of the Company. Holder shall have
all rights
of a shareholder with respect to securities purchased and
paid for as
provided herein (a) upon exercise hereof at the time of cash
or net issue
exercise pursuant to Section 2.1 and 2.2 hereof or (b) at the
time of
automatic exercise hereof (even if not surrendered) pursuant
to Section
2.5 hereof.
5.2 Notice of Changes in Capital Structure. The Company further
covenants and
agrees that it will give each Holder at least 10 days' prior
written
notice of any intended change to the composition of its
capital structure,
whether by issuance of new securities or otherwise, if any
such change
would require an adjustment of the Exercise Ratio or the
Exercise Price
hereunder.
5.3 No Dilution or Impairment. The Company will not, by amendment
of its
charter or through reorganization, consolidation, merger,
dilution, sale
of assets or any other voluntary action, avoid or seek to
avoid the
observance or performance of any of the terms of this Warrant
Certificate,
but will at all times in good faith assist in the carrying
out of all such
terms and in the taking of all such action as may be
necessary or
appropriate in order to protect the rights of the Holder
against dilution
or other impairment. Without limiting the generality of the
foregoing, the
Company will not increase the par value of any shares of
stock receivable
upon the exercise of Warrants evidenced hereby above the
amount payable
therefor upon such exercise, and at all times will take all
such action as
may be necessary or appropriate in order that the Company may
validly and
<PAGE>
-12-
legally issue fully paid and nonassessable stock upon the
exercise of
Warrants evidenced hereby.
5.4 Registration Rights. The holders of shares of Common Stock or
other
securities issued upon exercise of the Warrants evidenced
hereby are
entitled to the registration rights set forth in the
Registration Rights
Agreement dated as of December 27, 1996 between the Company
and Purchaser.
5.5 Governmental Approvals. The Company will from time to time
take all action
which may be necessary to obtain and keep effective any and
all permits,
consents and approvals of governmental agencies and
authorities and
securities acts filings under federal and state laws, which
may be or
become requisite in connection with the issuance, sale, and
delivery of
Warrants evidenced hereby, and the issuance, sale and
delivery of the
shares of Common Stock or other securities or property
issuable or
deliverable upon exercise of Warrants.
5.6 Governing Laws. It is the intention of the parties hereto
that except as
set forth below, the internal laws of the state of
Connecticut, U.S.A.
(irrespective of its choice of law principles) shall govern
the validity
of this warrant, the construction of its terms, and the
interpretation and
enforcement of the rights and duties of the parties hereto.
Notwithstanding the foregoing, the corporation laws of the
State of
Delaware shall govern the procedural and substantive matters
pertaining to
the due authorization, issuance, delivery and exercise of
this Warrant and
the shares of Common Stock upon exercise hereof. Except as
set forth
below, the parties hereby agree that any suit to enforce any
provision of
this Warrant arising out of or based upon this Warrant or the
business
relationship between any of the parties hereto shall be
brought in the
United States District Court of the District of Connecticut
or the
Superior Court in Hartford, Connecticut. Each party hereby
agrees that
such courts shall have personal jurisdiction and venue with
respect to
such party, and each party hereby submits to the personal
jurisdiction and
venue of such courts. In addition to the foregoing
jurisdiction, Holder at
its sole option, may commence any such suit in any
jurisdiction in which
the Company has a business office or is incorporated.
<PAGE>
-13-
5.7 Binding Upon Successors and Assigns. Subject to, and unless
otherwise
provided in, this Warrant, each and all of the covenants,
terms
provisions, and agreements contained herein shall be binding
upon, and
inure to the benefit of the permitted successors, executors,
heirs,
representatives, administrators and assigns of the parties
hereto.
5.8 Severabililty. If any one or more provisions of this Warrant
Certificate,
or the application thereof, shall for any reason and to any
extent be
invalid or unenforceable, the remainder of this Warrant
Certificate and
the application of such provisions to other persons or
circumstances shall
be interpreted so as best to reasonably effect the intent of
the parties
hereto. The parties further agree to replace any such void or
unenforceable provisions of this Warrant Certificate with
valid and
enforceable provisions which will achieve, to the extent
possible, the
economic, business and other purposes of the void or
unenforceable
provisions.
5.9 Default, Amendment and Waivers. This Warrant may be amended
upon the
written consent of the Company and the Holder. The waiver by
a party of
any breach hereof for default in payment of any amount due
hereunder or
default in the performance hereof shall not be deemed to
constitute a
waiver of any other default or any succeeding breach or
default.
5.10 No Waiver. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of
the right of such party thereafter to enforce such
provisions.
5.11 Attorneys' Fees. Should suit be brought to enforce or
interpret any part
of this Warrant Certificate, the prevailing party shall be
entitled to
recover, as an element of the costs of suit and not as
damages, reasonable
attorneys fees to be fixed by the court (including without
limitation,
costs, expenses and fees on any appeal). The prevailing party
shall be the
party entitled to recover its costs of suit, regardless of
whether such
suit proceeds to final judgment. A party not entitled to
recover its costs
shall not be entitled to recover attorneys' fees. No sum for
attorneys'
fees shall be counted in calculating the amount of a judgment
for
<PAGE>
-14-
purposes of determining if a party is entitled to recover
costs or attorneys' fees.
5.12 Notices. whenever any party hereto desires or is required to
give any
notices, demand, or request with respect to this Warrant,
each such
communication shall be in writing and shall be effective only
if it is
delivered by personal service, sent by telecopy or mailed,
United States
certified mail, overnight service, postage prepaid, return
receipt
requested, addressed as follows:
Company: Share Technologies Cellular, Inc.
100 Great Meadow Road
Wethersfield, CT 06109
Attn: Legal Department
Fax No. (203) 258-2401
Holder: RHI Holdings, Inc.
Washington Dulles International Airport
300 West Service Road
Chantilly, VA 20153
Attn: Donald E. Miller, Esq.
Fax No. (703) 478-5775
Such communication shall be effective when they are
personally delivered,
or telecopied, to the addressee thereof; but if sent by
certified mail in
the manner set forth above, they shall be effective one (1)
business days
after being deposited in the United States mail. Any party
may change its
address for such communications by giving notice thereof to
the other
party in conformity with this Section.
5.13 Time. Time is of the essence of this Warrant.
5.14 No Endorsement. Holder understands that no federal or state
securities
administrator has made any findings or determination relating
to the
fairness of investment in the Company or purchase of the
Common Stock
hereunder and that no federal or state securities
administrator has
recommended or endorsed the offering of securities by the
Company
hereunder.
5.15 Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter,
<PAGE>
-15-
singular or plural, as the identity of the person,
persons, entity or entities may require.
5.16 Further Assurances. Each party agrees to cooperate fully with
the other
parties and to execute such further instruments, documents
and agreements
and to give such further written assurances, as may be
reasonably
requested by any other party to better evidence and reflect
the
transactions described herein and contemplated hereby, and to
carry into
effect the intents and purposes of this Warrant.
<PAGE>
-16-
COMPANY:
SHARED TECHNOLOGIES CELLULAR,
INC.
By:
- ------------------------------
Name:
Title:
THIS OPTION AGREEMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO REGISTERED
OR AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE.
OPTION AGREEMENT
This OPTION AGREEMENT ("Agreement") is made as of the
27th day of
December, 1996 by and between Shared Technologies Fairchild Inc.,
a Delaware
corporation with a principal place of business at 100 Great Meadow
Road,
Wethersfield, Connecticut 06109 (the "Company") and RHI Holdings,
Inc., a
Delaware corporation with a principal place of business at 110 East
59th Street,
31st Floor, New York, New York 10022 ("Optionee"). Capitalized
terms used herein
and not defined herein shall have the meanings ascribed to them in
the Purchase
Agreement by and between Optionee and the Issuer of even date
herewith (the
"Purchase Agreement").
WHEREAS, the Company is the owner of Two Hundred Fifty
Thousand
(250,000) shares of Series B Convertible Preferred Stock (the
"Series B
Preferred"), $.01 par value per share of Shared Technologies
Cellular, Inc., a
Delaware corporation (the "Issuer"), and a certain warrant (the
"Warrant")
registered in the name of the Company representing the right to
purchase shares
of common stock ("Common Stock"), $.01 par value per share of the
Issuer, and
all capital stock, rights and privileges appurtenant thereto and
associated
therewith, (such shares of Series B Preferred, such Warrant and
such capital
stock, rights and privileges, collectively, the "Securities"),
including,
without limitation, the rights set forth in a certain Stock
Purchase Agreement
dated as of August 19, 1996 between the Issuer and the Company (the
"Stock
Purchase Agreement") and a certain Equity Holders Agreement dated
as of August
19, 1996 among International Capital Partners, Inc. and its
affiliates, Zesiger
Capital Group LLC and the Company (the "Equity Holders Agreement");
and
WHEREAS, the Company desires to grant Optionee an option
to purchase
the Securities and Optionee desires an option to purchase the
Securities, upon
the terms and conditions herein stated.
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter
set forth and for other good and valuable consideration, the
receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as
follows:
1. Grant of Option. The Company hereby grants to Optionee
an option
(the "Option") to purchase all, but not less than all, of the
Securities upon
the terms and conditions hereinafter set forth.
<PAGE>
-2-
2. Payment for the Option. Simultaneously with the
execution hereof,
Optionee shall pay to the Company Five Thousand Dollars ($5,000.00)
(the "Option
Price") by certified or bank cashier's check or other immediately
available
funds for the purchase of the Option.
3. Effective Date. This Option shall become effective
upon the Initial
Closing.
4. Termination Date. This Option shall terminate and be
of no further
force or effect 156 days after the date of the Initial Closing if
Optionee has
failed to purchase 666,667 or more Units pursuant to the Purchase
Agreement on
or prior to such date (the "Termination Date").
5. Repurchase of Option. If the Issuer exercises its
Repurchase Option
pursuant to Section 2 of the Purchase Agreement, the Company shall
repurchase
the Option from Optionee by paying to Optionee the Option Price by
certified or
bank cashier's check or other immediately available funds.
6. Purchase Price. The purchase price of the Securities
shall be Two
Million Four Hundred Ninety-Five Thousand Dollars ($2,495,000.00)
(the "Purchase
Price") and shall be payable in the form of a Promissory Note
substantially in
the form of Exhibit A attached hereto and made a part hereof (the
"Note"). The
Note shall be secured by a Pledge Agreement substantially in the
form of Exhibit
B attached hereto and made a part hereof (the "Pledge Agreement").
7. Exercise Procedure. Subject to the conditions set
forth in this
Option Agreement, this Option shall be exercised by Optionee's
delivery of
written notice of exercise to the Company at its address set forth
above. Such
exercise shall be effective upon receipt by the Company of an
executed original
copy of the Note and the Pledge Agreement. (The effective date of
exercise, if
at all, is referred to herein as the "Exercise Date"). The Optionee
may not
purchase less than all of the Securities.
8. Delivery of Shares. (a) Upon payment of the Purchase
Price, the
Company shall deliver to Optionee :
(i) the shares of Series B Preferred, duly endorsed
in blank or
accompanied by duly executed stock transfer powers with
all requisite
stock transfer stamps attached; and
(ii) the Warrant, accompanied by a duly executed
Warrant
assignment.
(b) Effective upon payment of the Purchase Price, the
Company hereby
sells, assigns and transfers unto Optionee, and Optionee hereby
purchases,
acquires and accepts all right, title, and interest of the Company
in, to and
under the Stock Purchase Agreement and the Equity Holders
Agreement.
<PAGE>
-3-
(c) The Company and Optionee shall execute such other
instruments and
take such other action as are reasonably requested by the other or
the Issuer to
effect the transfers of the Securities.
9. Representations and Warranties of the Company. The
Company hereby
represents and warrants to Optionee as of the date hereof and as of
the Exercise
Date, that:
(a) The Company is the sole, legal and beneficial owner
and holder of
the Securities, and all such shares of Securities are owned free
and clear of
all liens, encumbrances, charges, restrictions and assessments of
every nature.
The Company has full power and authority to sell, assign and
transfer the
Securities in accordance with the terms hereof.
(b) The Company has full right, power, authority and
capacity to sell,
assign, transfer and deliver the Securities pursuant to this
Assignment. Upon
payment of the Purchase Price and delivery of the Securities to
Optionee,
Optionee will have good, valid and marketable title to the
Securities, free and
clear of all liens, encumbrances, charges, restrictions and
assessments of every
nature, except as provided in the Pledge Agreement.
(c) The execution, delivery and performance by the
Company of this
Agreement has been duly authorized by all requisite corporate
action. This
Agreement has been duly executed and delivered on behalf of the
Company and
constitutes the valid and binding obligations of the Company,
enforceable in
accordance with its terms, except that enforceability hereof may be
limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting
creditors' rights generally and by principles of equity regarding
the
availability of remedies.
10. Representations and Warranties of Optionee. Optionee
represents
and warrants on the date hereof and at the Exercise Date that:
(a) The execution, delivery and performance by Optionee
of this
Agreement has been, and the Note and the Pledge Agreement will be,
duly
authorized by all requisite corporate action. This Agreement has
been, and the
Note and the Pledge Agreement will be, duly executed and delivered
on behalf of
Optionee and constitute the valid and binding obligations of
Optionee,
enforceable in accordance with their respective terms, subject to
applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws
affecting the rights and remedies of creditors generally and to the
exercise of
judicial discretion in accordance with general principles of
equity.
(b) Optionee acknowledges that all documents, records and
books
pertaining to this investment have been made available for
inspection by it, its
attorney and/or its accountant and the books and records of the
Company will be
available upon reasonable notice, for inspection by Optionee during
reasonable
business hours at the Company's
<PAGE>
-4-
principal place of business. Optionee and/or its advisor(s) have
had a
reasonable opportunity to ask questions of and receive answers from
the Company
or a person or persons acting on its behalf, concerning the terms
and
conditions of the offering of the Option and the Securities. All
such questions
have been answered to the full satisfaction of Optionee. No
representations
(whether written or oral) have been furnished to Optionee or its
advisor(s) in
connection with the offering of the Option or the Securities which
were in any
way inconsistent with the information referenced above. Optionee is
acquiring
the Option and the Securities without being furnished any offering
literature
or prospectus other than the documents referred to herein.
(c) Optionee (i) has adequate means of providing for its
current needs
and possible personal contingencies, (ii) has no need for liquidity
in this
investment, (iii) is able to bear the substantial economic risks of
an
investment in the Option and the Securities for an indefinite
period, (iv) can
afford a complete loss of such investment, and (v) does not have an
overall
commitment to investments which are not readily marketable, that
are
disproportionate to Optionee's net worth, and Optionee's investment
in the
Option and the Securities will not cause such overall commitment to
become
excessive.
(d) Optionee recognizes that the purchase of the Option
and the
Securities involves significant risks and is not recommended for
investors who
have any need for a current return on their investment or who
cannot bear the
risk of losing their entire investment.
(e) Optionee understands that the sale of the Option or
the Securities
have not been registered under the Securities Act of 1933, as
amended (the
"Act"), in reliance upon an exemption therefrom. Optionee
understands that the
Option and the Securities must be held indefinitely unless the sale
or other
transfer thereof is subsequently registered under the Act or an
exemption from
such registration is available.
(f) The Option and the Securities are being purchased
solely for
Optionee's own account for investment purposes only and not for the
account of
any other person and not for distribution, assignment or resale to
others, and
no other person has a direct or indirect beneficial interest in the
Option or
the Securities.
(g) Optionee will not transfer the Option or the
Securities without
registering them under applicable federal or state securities laws
unless the
transfer is exempt from registration under such laws. Optionee
realizes that the
Company may not allow a transfer of the Option or the Securities
unless the
transferee meets the suitability standards as an initial purchaser
of the Option
or the Securities. Optionee understands that legends will be placed
on
certificates representing the Securities, with respect to the above
restrictions
on resale or other disposition of the Securities and that stop
transfer
instructions have or will be placed with respect to the Option and
the
Securities so as to restrict the assignment, resale or other
disposition
thereof.
<PAGE>
-5-
11. Non Transferability of Option. The Option is personal
and no
rights granted hereunder may be transferred, assigned, pledged or
hypothecated
in any way (whether by operation of law or otherwise) nor shall any
such rights
be subject to execution, attachment or similar process; provided,
however, that
the Option may be transferred to The Fairchild Corporation, a New
York
corporation ("TFC"), or any of its affiliates (as such term is
defined in the
Act). Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise
dispose of the Option or of such rights contrary to the provisions
hereof, or
upon the levy of any attachment or similar process upon the Option
or such
rights, the Option and such rights shall, at the election of the
Company, shall
terminate and be of no further force or effect.
12. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the
benefit of
the successors and assigns of the parties hereto; provided, however
that the
Option may be sold or otherwise transferred only to TFC or its
affiliates
without any restriction whatsoever (other than applicable Federal
and state
securities laws). Upon any such transfer, the transferee of the
Option shall
have the benefits of this Agreement.
(b) Except as provided herein, this Agreement may not be
amended or
otherwise modified unless evidenced in writing and signed by the
Company and
Optionee.
(c) Any notice required or desired to be served, given or
delivered
hereunder shall be in writing, and shall be deemed to have been
validly served,
given or delivered upon the earlier of (a) personal delivery to the
address set
forth below, (b) in the case of mailed notice, three (3) days after
deposit in
the United States mails, with proper postage for certified mail,
return receipt
requested, postage prepaid, (c) in the case of telex, facsimile or
other
telecommunications transmission, upon receipt, or (d) in the case
of notice by
Federal Express or other reputable overnight courier service, one
(1) business
day after delivery to such courier service, addressed to the party
to be
notified as follows: (i) if to Optionee, at the address set forth
above,
Attention: Jeffrey J. Steiner (Telecopy: (212) 888-5674), with a
copy to Donald
E. Miller, Esq., The Fairchild Corporation, 300 West Service Road,
Chantilly,
Virginia 22021 (Telecopy: (703) 478-5775) and (ii) if to the
Company, at the
address set forth above, Attention: Legal Department (Telecopy:
(860) 258-2455),
or at such other address as the party to whom such notice is
directed may have
designated by notice to the other party hereto.
(d) This Agreement shall be governed by and construed in
accordance
with the laws of the State of Connecticut, without regard to its
principles of
conflicts of laws.
<PAGE>
-6-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to
be executed under their respective corporate seals as of the day
and year first
above written.
SHARED TECHNOLOGIES FAIRCHILD
INC.
By: /s/ Vincent DiVincenzo
- -------------------------------
Vincent DiVincenzo
Chief Financial Officer
RHI HOLDINGS, INC.
By: /s/ Colin M. Cohen
- -------------------------------
Name: Colin M. Cohen
Title: Vice President and
Chief Financial
Officer
ACKNOWLEDGED AND AGREED TO:
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ Vincent DiVincenzo
-----------------------------
Vincent DiVincenzo
Chief Financial Officer
Date: December 27, 1996
