AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of July 16, 1997, is by and
between TEL-SAVE HOLDINGS, INC. ("Acquiror"), a Delaware corporation, and SHARED
TECHNOLOGIES XXXXXXXXX, INC. (the "Company"), a Delaware corporation.
WITNESSETH
WHEREAS, the respective Boards of Directors of the Acquiror and the Company
have approved the Agreement and Plan of Merger (the "Merger Agreement"), and
certain other agreements contemplated by the Merger Agreement (the "Transaction
Documents"), providing for certain transactions pursuant to which the Company
would be merged with and into TSHCo, Inc., a wholly-owned subsidiary of the
Acquiror (collectively, the "Transactions");
WHEREAS, as a condition to Acquiror's entry into the Transaction Documents
and the Transactions, and to induce such entry, the Company has agreed to grant
Acquiror the option set forth herein to purchase authorized but unissued shares
of the common stock of the Company, par value .004 per share ("Company Common
Stock");
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. Certain Definitions.
(a) Capitalized terms used but not defined herein shall have the same
meanings as in the Transaction Documents.
(b) The term "Effective Date" shall have the meaning specified in the
Merger Agreement.
(c) The term "Purchase Event" shall mean any event, pursuant to Section
10.2(b) of the Merger Agreement, which would, by the terms of such section,
require the Company to pay a Termination Fee (as defined in the Merger
Agreement).
2. Grant of Option. Effective on the date of any Purchase Event, Acquiror
shall have, and the Company hereby grants to Acquiror, the right and option to
purchase (the "Option") from the Company, at a price of $11.25 per share of
Company Common Stock (the "Exercise Price"), 3,000,000 shares of Company Common
Stock (the "Option Shares"). The Option shall be exercisable by Acquiror, in
whole at any time and in part from time to time, within one (1) year after the
effective date of such grant, by tender to the Company of the cash in payment of
the exercise price therefor, whereupon the Company shall promptly issue to
Acquiror the number of shares of Company Common Stock for which the Option is
being exercised and the exercise price for which is so tendered, such shares to
be deemed for all purposes to be
issued and outstanding as of and after such tender of cash to the Company in
payment of such exercise price.
3. Exercise of Option.
In the event Acquiror wishes to exercise the Option, it shall send to the
Company a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of shares it will purchase
pursuant to such exercise, and (ii) a place and date not earlier than three
business days nor later than 30 business days from the Notice Date for the
closing of such purchase (the "Closing Date"); provided that, if prior
notification to or approval of any federal or state regulatory agency is
required in connection with such purchase, the Acquiror shall promptly file the
required notice or application for approval and shall expeditiously process the
same and the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which any required notification period has
expired or been terminated or such approval has been obtained and any requisite
waiting period shall have passed.
4. Payment and Delivery of Certificates.
(a) At the closing referred to in Section 3 hereof, Acquiror shall pay to
the Company the aggregate purchase price for the shares of the Company Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by a wire transfer to a bank account designated by the Company.
(b) At such closing, simultaneously with the delivery of cash as provided
in subsection (a), the Company shall deliver to Acquiror a certificate or
certificates representing the number of shares of the Company Common Stock
purchased by Acquiror, and Acquiror shall deliver to the Company a letter
agreeing that Acquiror will not offer to sell, pledge or otherwise dispose of
such shares in violation of applicable law or the provisions of this Agreement.
(c) Certificates for the Company Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend which shall read
substantially as follows:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"),
and the regulations promulgated thereunder and may not be sold without
registration under the Securities Act or pursuant to an exemption from
registration thereunder."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such
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legend if Acquiror shall have delivered to the Company a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance
satisfactory to the Company, to the effect that such legend is not required for
purposes of the Securities Act and any applicable state securities laws and this
Agreement.
5. Representations. The Company hereby represents, warrants and covenants
to the Acquiror as follows:
(a) The Company shall at all times maintain sufficient authorized but
unissued shares of the Acquiror Common Stock so that the Option may be exercised
without authorization of additional shares of the Company Common Stock.
(b) The shares to be issued upon due exercise, in whole or in part, of the
Option, when paid for as provided herein, will be duly authorized, validly
issued, fully paid and nonassessable.
6. Adjustment Upon Changes in Capitalization. In the event of any change in
the Company Common Stock by reason of stock dividends, split-ups,
recapitalizations, combinations, exchanges of shares or the like, the type and
number of shares subject to the Option, and the purchase price per share, as the
case may be, shall be adjusted appropriately. Nothing contained in this Section
6 shall be deemed to authorize the Company to breach any provision of the
Transaction Documents.
7. Registration Rights. The Company shall, if requested by the Acquiror, as
expeditiously as possible file a registration statement on a form of general use
and available for use by the Company under the Securities Act if necessary in
order to permit or assist the sale or other disposition of the shares of the
Company Common Stock that have been acquired upon exercise of the Option in
accordance with the intended method of sale or other disposition requested by
the Acquiror. The Acquiror shall provide all information reasonably requested by
the Company for inclusion in any registration statement to be filed hereunder.
The Company will use its best efforts to cause such registration statement first
to become effective and then to remain effective for such period not in excess
of 270 days from the day such registration statement first becomes effective as
may be reasonably necessary to effect such sales or other dispositions. The
obligations of the Company hereunder to file a registration statement and to
maintain its effectiveness may be suspended for one or more periods of time not
exceeding 60 days in the aggregate if the Board of Directors of the Company
shall have determined that the filing of such registration statement or the
maintenance of its effectiveness would require disclosure of non-public
information that would materially and adversely affect the Company. The first
registration statement prepared under this Section 7 shall be at the Company's
expense except for
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underwriting commissions and the fees and disbursements of the Acquiror's
counsel attributable to the offering of the Company Common Stock by the
Acquiror. The preparation of a second registration statement may be requested
and effected hereunder at the Acquiror's sole expense. In no event shall the
Company be required to effect more than two registrations hereunder. The filing
of any registration statement hereunder may be delayed for such period of time
as may reasonably be required to facilitate any public distribution by the
Company of the Company Common Stock. If requested by the Acquiror in connection
with any registration, the Company will become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements for
parties similarly situated. In any such transaction the Company and the Acquiror
will also agree to indemnify each other on customary terms with respect to any
information provided by such party.
8. Severability. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Option will not permit the holder to acquire the full number of shares
of the Company Common Stock provided in Section 2 hereof (as adjusted pursuant
to Section 6 hereof), it is the express intention of the Company to allow the
holder to acquire such lesser number of shares as may be permissible, without
any amendment or modification hereof.
9. Miscellaneous.
(a) Expenses. Except as otherwise provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
(b) Entire Agreement. Except as otherwise expressly provided herein, this
Agreement and the Transaction Documents contain the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
upon any
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party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
(c) Assignment. Other than as provided in Section 7 hereof, neither of the
parties hereto may assign any of its rights or obligations under this Agreement
or the Option created hereunder to any other person, without the express written
consent of the other party.
(d) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by overnight express or by registered or certified mail, postage
prepaid, addressed as provided in the Merger Agreement. A party may change its
address for notice purposes by written notice to the other party hereto.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(f) Specific Performance. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Agreement by either
party hereto and that this Agreement may be enforced by either party hereto
through injunctive or other equitable relief.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Delaware applicable to agreements made and entirely
to be performed within such state and such federal laws as may be applicable.
(h) Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the first to occur of (a) the
consummation of the Merger, (b) January 15, 1998, or (c) the date of termination
of the Merger Agreement by any of the parties thereto other than pursuant to a
Purchase Event.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first written above.
TEL-SAVE HOLDINGS, INC.
By:/s/ Xxxxxx Xxxxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Executive Vice President
SHARED TECHNOLOGIES XXXXXXXXX, INC.
By:/s/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President,
General Counsel and Secretary
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