PURCHASE AGREEMENT
dated as of December 27, 1996
between
SHARED TECHNOLOGIES CELLULAR, INC.
and
RHI HOLDINGS, INC.
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 Xxxxxxxxx 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,
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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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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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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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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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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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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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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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 Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx 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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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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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 00-X, 00-X, 0-X 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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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.
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(a) Transfer of Rights. The rights granted to RHI under Section may be
transferred to The Xxxxxxxxx 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.
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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 Xxxxxx Xxxxxx & Xxxxxxx, 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 Xxxxxx Xxxxxx & Xxxxxxx 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.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attn: Legal Department
Telecopier: (000) 000-0000
(or at such other address as may have been furnished in writing by
the Company to RHI)
with a copy to:
Xxxxxx & Hannah LLP
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
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(b) If to RHI:
RHI Holdings, Inc.
c/o The Xxxxxxxxx Corporation
Washington Dulles International Airport
000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
(or at such other address as may have been furnished in writing by
RHI to the Company)
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
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.
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7.12 Governing Law. This Agreement shall be governed by and
interpreted and construed in accordance with the laws of the State
of Connecticut.
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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/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
RHI HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President and
Chief Financial Officer
