AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 9,
1995, by and among Xxxxxxxxx Industries, Inc., a Delaware cor-
poration ("Fairchild"), RHI Holdings, Inc., a Delaware corpora-
tion ("RHI"), The Xxxxxxxxx Corporation, a Delaware corporation
("TFC"), and Shared Technologies Inc., a Delaware corporation
("Shared Technologies").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Fairchild and
Shared Technologies have approved the merger of Fairchild with
and into Shared Technologies (the "Merger") upon the terms and
subject to the conditions set forth herein and in accordance
with the laws of the State of Delaware;
WHEREAS, RHI, which is a wholly owned subsidiary of
TFC, is the sole owner of all of the outstanding common stock
of Fairchild and has approved the Merger upon the terms and
subject to the conditions set forth herein, and RHI has
received an irrevocable proxy from the holder of approximately
9.84% of Shared Technologies' common stock (based on the shares
outstanding as of the date hereof) agreeing to vote for the
Merger;
WHEREAS, Fairchild is the sole owner of 100% of the
issued and outstanding capital stock of VSI Corporation
("VSI");
NOW, THEREFORE, in consideration of the premises and
of the mutual covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
MERGER
1.1 The Merger. At the Effective Time (as herein-
after defined), Fairchild shall be merged with and into Shared
Technologies as provided herein. Thereupon, the corporate
existence of Shared Technologies, with all its purposes, powers
and objects, shall continue unaffected and unimpaired by the
-2-
Merger, and the corporate identity and existence, with all the
purposes, powers and objects, of Fairchild shall be merged with
and into Shared Technologies and Shared Technologies as the
corporation surviving the Merger shall be fully vested there-
with and shall change its name to "Shared Technologies
Xxxxxxxxx Inc." The separate existence and corporate organiza-
tion of Fairchild shall cease upon the Merger becoming effec-
tive as herein provided and thereupon Fairchild and Shared
Technologies shall be a single corporation, Shared Technologies
Xxxxxxxxx Inc. (herein sometimes called the "Surviving Corpora-
tion"). Prior to the Effective Time, Fairchild and its subsid-
iaries will undergo a corporate reorganization (the "Fairchild
Reorganization") pursuant to which all the assets of Fairchild
and its subsidiaries (other than certain indebtedness and pre-
ferred stock) will be transferred to, and liabilities of
Fairchild and its subsidiaries will be assumed by, RHI except
for the assets and liabilities comprising the telecommunica-
tions systems and service business of Xxxxxxxxx Communications
Services Company, which as a result of said reorganization,
will reside in VSI, all as described on Schedule 9.1. Except
where indicated to the contrary, all references herein to
"Fairchild" shall be deemed to refer to Fairchild as it will
exist following the Fairchild Reorganization and, accordingly,
none of the representations, warranties, restrictions or cove-
nants contained in this Agreement apply to the businesses,
operations, assets or liabilities of Xxxxxxxxx Industries, Inc.
and its subsidiaries other than as they relate to the telecom-
munications systems and service business of Fairchild, and each
of TFC, RHI and Fairchild may operate such other businesses and
assets (including without limitation selling assets and busi-
nesses and incurring liabilities) as it deems appropriate in
the exercise of its business judgment.
1.2 Filing. As soon as practicable after the requi-
site approval of the Merger by the stockholders of Shared Tech-
nologies and the fulfillment or waiver of the conditions set
forth in Sections 9.1, 9.2 and 9.3 or on such later date as may
be mutually agreed to between Fairchild and Shared Technolo-
xxxx, the parties hereto will cause to be filed with the office
of the Secretary of State of the State of Delaware, a certifi-
cate of merger (the "Certificate of Merger"), in such form as
required by, and executed in accordance with, the relevant pro-
visions of the Delaware General Corporation Law (the "DGCL").
1.3 Effective Time of the Merger. The Merger shall
be effective at the time that the filing of the Certificate of
Merger with the office of the Secretary of State of the State
-3-
of Delaware is completed, or at such later time specified in
such Certificate of Merger, which time is herein sometimes
referred to as the "Effective Time" and the date thereof is
herein sometimes referred to as the "Effective Date."
ARTICLE II
CERTIFICATE OF INCORPORATION; BY-LAWS;
SHAREHOLDERS AGREEMENT
2.1 Certificate of Incorporation. The Certificate
of Incorporation of Shared Technologies, as amended in accor-
dance with this Agreement, shall be the Certificate of Incorpo-
ration of the Surviving Corporation.
2.2 By-Laws. The By-Laws of Shared Technologies, as
amended in accordance with this Agreement, shall be the By-Laws
of the Surviving Corporation until the same shall thereafter be
altered, amended or repealed in accordance with law, the Cer-
tificate of Incorporation of the Surviving Corporation or said
By-Laws.
2.3 Shareholders Agreement. At the Effective Time,
Shared Technologies, RHI and Xxxxxxx X. Xxxxxxxx shall enter
into a shareholders agreement in the form of Exhibit A hereto
(the "Shareholders Agreement") providing for the election of
directors and officers of the Surviving Corporation.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion. At the Effective Time the issued
shares of capital stock of Fairchild shall, by virtue of the
Merger and without any action on the part of the holders
thereof, become and be converted as follows: (A) each out-
standing share of Common Stock, $100.00 par value per share, of
Fairchild (the "Fairchild Common Stock") shall be converted
into and become the right to receive a Pro Rata Amount (as
defined below) of the Merger Consideration (as defined below);
and (B) each outstanding share of Series A Preferred Stock,
without par value, of Fairchild (the "Series A Preferred
Stock") and each outstanding share of Series C Preferred Stock,
without par value, of Fairchild (the "Series C Preferred
Stock") shall be converted into the right to receive an amount
-4-
in cash equal to $45.00 per share ($44,237,745 in the aggregate
for all such shares of Series A Preferred Stock and Series C
Preferred Stock) plus accrued and unpaid dividends thereon to
the Effective Time. "Merger Consideration" means (x) 6,000,000
shares of Common Stock, $.004 par value per share, of Shared
Technologies (the "Technologies Common Stock"), (y) shares of
Convertible Preferred Stock of Shared Technologies (the "Con-
vertible Preferred Stock") having an initial aggregate liquida-
tion value of $25,000,000 and the other terms set forth on the
attached Schedule 3.1(a) and (z) shares of Special Preferred
Stock of Shared Technologies (the "Special Preferred Stock")
having an initial aggregate liquidation value of $20,000,000
and the other terms set forth on the attached Schedule 3.1(b).
The Convertible Preferred Stock and Special Preferred Stock are
collectively referred to as the "Preferred Stock." With
respect to any share of capital stock, "Pro Rata Amount" means
the product of the Merger Consideration multiplied by a frac-
tion, the numerator of which is one and the denominator of
which is the aggregate number of all issued and outstanding
shares of such capital stock on the Effective Date.
3.2 Preferred Stock Pledge. Immediately after the
Effective Time, RHI shall pledge all of the shares of Preferred
Stock then issued to it (other than shares of Convertible Pre-
ferred Stock having an aggregate liquidation preference of
$1,500,000) to secure RHI's and Xxxxxxxxx'x obligations under
the Indemnification Agreement of TFC and RHI (the form of which
is attached as Exhibit B-1 hereto) pursuant to the terms of a
Pledge Agreement (the form of which is attached as Exhibit C
hereto) and with a pledge agent mutually agreed upon by the
parties. Such shares will be released from such pledge on the
later to occur of (i) third anniversary of the Effective Time
and (ii) the date on which the consolidated net worth (computed
in accordance with generally accepted accounting principles) of
The Xxxxxxxxx Corporation at such time (or evidenced by any
audited balance sheet) is at least (x) $25 million greater than
such net worth at September 30, 1995 (excluding for such pur-
pose any value attributed to the Preferred Stock on such bal-
ance sheet) and (y) $225 million (including for such purpose
the value of the Preferred Stock).
-5-
ARTICLE IV
CERTAIN EFFECTS OF THE MERGER
4.1 Effect of the Merger. On and after the Effec-
tive Time and pursuant to the DGCL, the Surviving Corporation
shall possess all the rights, privileges, immunities, powers,
and purposes of each of Fairchild and Shared Technologies; all
the property, real and personal, including subscriptions to
shares, causes of action and every other asset (including books
and records) of Fairchild and Shared Technologies, shall vest
in the Surviving Corporation without further act or deed; and
the Surviving Corporation shall assume and be liable for all
the liabilities, obligations and penalties of Fairchild and
Shared Technologies; provided, however, that this shall in no
way impair or affect the indemnification obligations of any
party pursuant to indemnification agreements entered into in
connection with this Agreement. No liability or obligation due
or to become due and no claim or demand for any cause existing
against either Fairchild or Shared Technologies, or any stock-
holder, officer or director thereof, shall be released or
impaired by the Merger, and no action or proceeding, whether
civil or criminal, then pending by or against Fairchild or
Shared Technologies, or any stockholder, officer or director
thereof, shall xxxxx or be discontinued by the Merger, but may
be enforced, prosecuted, settled or compromised as if the
Merger had not occurred, and the Surviving Corporation may be
substituted in any such action or proceeding in place of
Fairchild or Shared Technologies.
4.2 Further Assurances. If at any time after the
Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Sur-
viving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of
either of Fairchild or Shared Technologies, the officers of
such corporation are fully authorized in the name of their cor-
poration or otherwise to take, and shall take, all such further
action and TFC will, and cause each of its subsidiaries (direct
or indirect) to, take all actions reasonably requested by the
Surviving Corporation (at the Surviving Corporation's expense)
in furtherance thereof.
-6-
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SHARED TECHNOLOGIES
Shared Technologies represents and warrants to
Fairchild that:
5.1 Organization and Qualification. Each of Shared
Technologies and its subsidiaries (which for purposes of this
Agreement, unless indicated to the contrary, shall not include
Shared Technologies Cellular, Inc.) is a corporation duly orga-
nized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
Each of Shared Technologies and its subsidiaries is duly quali-
fied as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its prop-
erties owned or leased or the nature of its activities makes
such qualification necessary, except for failures to be so
qualified or in good standing which would not, individually or
in the aggregate, have a material adverse effect on the general
affairs, management, business, operations, condition (financial
or otherwise) or prospects of Shared Technologies and its sub-
sidiaries taken as a whole (a "Shared Technologies Material
Adverse Effect"). Neither Shared Technologies nor any of its
subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation (or other applicable charter docu-
ment) or By-Laws. Shared Technologies has delivered to
Fairchild accurate and complete copies of the Certificate of
Incorporation (or other applicable charter document) and
By-Laws, as currently in effect, of each of Shared Technologies
and its subsidiaries.
5.2 Capital Stock of Subsidiaries. The only direct
or indirect subsidiaries of Shared Technologies are those
listed in Section 5.2 of the Disclosure Statement previously
delivered by Shared Technologies to Fairchild (the "Disclosure
Statement"). Shared Technologies is directly or indirectly the
record (except for directors' qualifying shares) and beneficial
owner (including all qualifying shares owned by directors of
such subsidiaries as reflected in Section 5.2 of the Disclosure
Statement) of all of the outstanding shares of capital stock of
each of its subsidiaries, there are no proxies with respect to
such shares, and no equity securities of any of such subsidiar-
ies are or may be required to be issued by reason of any
options, warrants, scrip, rights to subscribe for, calls or
-7-
commitments of any character whatsoever relating to, or securi-
ties or rights convertible into or exchangeable for, shares of
any capital stock of any such subsidiary, and there are no con-
tracts, commitments, understandings or arrangements by which
any such subsidiary is bound to issue additional shares of its
capital stock or securities convertible into or exchangeable
for such shares. Other than as set forth in Section 5.2 of the
Disclosure Statement, all of such shares so owned by Shared
Technologies are validly issued, fully paid and nonassessable
and are owned by it free and clear of any claim, lien or encum-
brance of any kind with respect thereto. Except as disclosed
in Section 5.2 of the Disclosure Statement, Shared Technologies
does not directly or indirectly own any interest in any corpo-
ration, partnership, joint venture or other business associa-
tion or entity.
5.3 Capitalization. The authorized capital stock of
Shared Technologies consists of 20,000,000 shares of Common
Stock, par value $.004 per share, and 10,000,000 shares of Pre-
ferred Stock, par value $.01 per share. As of the date hereof,
8,495,815 shares of Common Stock were issued and outstanding
and 1,527,970 shares of Preferred Stock were issued and out-
standing. All of such issued and outstanding shares are val-
idly issued, fully paid and nonassessable and free of preemp-
tive rights. As of the date hereof 5,022,083 shares of Common
Stock were reserved for issuance upon exercise of outstanding
convertible securities, warrants, options, and options which
may be granted under the stock option plans of Shared Technolo-
xxxx (the "Stock Option Plans"), all of which warrants, options
and Stock Option Plans are listed and described in Section 5.3
of the Disclosure Statement. Other than the Stock Option
Plans, Shared Technologies has no other plan which provides for
the grant of options to purchase shares of capital stock, stock
appreciation or similar rights or stock awards. Except as set
forth above, there are not now, and at the Effective Time,
except for shares of Common Stock issued after the date hereof
upon the conversion of convertible securities and the exercise
of warrants and options outstanding on the date hereof or
issued after the date hereof pursuant to the Stock Option
Plans, there will not be, any shares of capital stock of Shared
Technologies issued or outstanding or any subscriptions,
options, warrants, calls, claims, rights (including without
limitation any stock appreciation or similar rights), convert-
ible securities or other agreements or commitments of any char-
acter obligating Shared Technologies to issue, transfer or sell
any of its securities.
-8-
5.4 Authority Relative to This Agreement. Shared
Technologies has full corporate power and authority to execute
and deliver this Agreement and to consummate the Merger and
other transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the Merger
and other transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Shared Technol-
ogies and no other corporate proceedings on the part of Shared
Technologies are necessary to authorize this Agreement or to
consummate the Merger or other transactions contemplated hereby
(other than, with respect to the Merger, the approval of Shared
Technologies' stockholders pursuant to Section 251(c) of the
DGCL). This Agreement has been duly and validly executed and
delivered by Shared Technologies and, assuming the due authori-
zation, execution and delivery hereof by Fairchild, constitutes
a valid and binding agreement of Shared Technologies, enforce-
able against Shared Technologies in accordance with its terms,
except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting the enforcement of creditors' rights
generally or by general equitable or fiduciary principles.
5.5 No Violations, etc.
(a) Assuming that all filings, permits, authoriza-
tions, consents and approvals or waivers thereof have been duly
made or obtained as contemplated by Section 5.5(b) hereof,
except as listed in Section 5.5 of the Disclosure Statement,
neither the execution and delivery of this Agreement by Shared
Technologies nor the consummation of the Merger or other trans-
actions contemplated hereby nor compliance by Shared Technolo-
xxxx with any of the provisions hereof will (i) violate, con-
flict with, or result in a breach of any provision of, or con-
stitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in
the termination or suspension of, or accelerate the performance
required by, or result in a right of termination or accelera-
tion under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of Shared Technologies or any of its subsidiaries under,
any of the terms, conditions or provisions of (x) their respec-
tive charters or by-laws, (y) except as set forth in
Section 5.5 of the Disclosure Statement, any note, bond, xxxx-
xxxx, indenture or deed of trust, or (z) any license, lease,
agreement or other instrument or obligation to which Shared
Technologies or any such subsidiary is a party or to which they
or any of their respective properties or assets may be subject,
-9-
or (ii) subject to compliance with the statutes and regulations
referred to in the next paragraph, violate any judgment, rul-
ing, order, writ, injunction, decree, statute, rule or regula-
tion applicable to Shared Technologies or any of its subsidiar-
ies or any of their respective properties or assets, except, in
the case of clauses (i)(z) and (ii) above, for such violations,
conflicts, breaches, defaults, terminations, suspensions,
accelerations, rights of termination or acceleration or cre-
ations of liens, security interests, charges or encumbrances
which would not, individually or in the aggregate, either have
a Shared Technologies Material Adverse Effect or materially
impair Shared Technologies' ability to consummate the Merger or
other transactions contemplated hereby.
(b) No filing or registration with, notification to
and no permit, authorization, consent or approval of any gov-
ernmental entity is required by Shared Technologies in connec-
tion with the execution and delivery of this Agreement or the
consummation by Shared Technologies of the Merger or other
transactions contemplated hereby, except (i) in connection with
the applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) the
filing of the Certificate of Merger with the Secretary of State
of the State of Delaware, (iii) the approval of Shared Technol-
ogies' stockholders pursuant to the DGCL, (iv) filings with
applicable state public utility commissions and (v) such other
filings, registrations, notifications, permits, authorizations,
consents or approvals the failure of which to be obtained, made
or given would not, individually or in the aggregate, either
have a Shared Technologies Material Adverse Effect or materi-
ally impair Shared Technologies' ability to consummate the
Merger or other transactions contemplated hereby.
(c) As of the date hereof, Shared Technologies and
its subsidiaries are not in violation of or default under (x)
their respective charter or bylaws, and (y) except as set forth
in Section 5.5 of the Disclosure Statement, any note, bond,
mortgage, indenture or deed of trust, or (z) any license,
lease, agreement or other instrument or obligation to which
Shared Technologies or any such subsidiary is a party or to
which they or any of their respective properties or assets may
be subject, except, in the case of clauses (y) and (z) above,
for such violations or defaults which would not, individually
or in the aggregate, either have a Shared Technologies Material
Adverse Effect or materially impair Shared Technologies' abil-
ity to consummate the Merger or other transactions contemplated
hereby.
-10-
5.6 Commission Filings; Financial Statements.
(a) Shared Technologies has filed all required
forms, reports and documents during the past three years
(collectively, the "SEC Reports") with the Securities and
Exchange Commission (the "SEC"), all of which complied when
filed in all material respects with all applicable requirements
of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") and
the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (the "Exchange Act").
As of their respective dates the SEC Reports (including all
exhibits and schedules thereto and documents incorporated by
reference therein) did not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not mis-
leading. The audited consolidated financial statements and
unaudited consolidated interim financial statements of Shared
Technologies and its subsidiaries included or incorporated by
reference in such SEC Reports have been prepared in accordance
with generally accepted accounting principles applied on a con-
sistent basis during the periods involved (except as may be
indicated in the notes thereto), and fairly present the consol-
idated financial position of Shared Technologies and its sub-
sidiaries as of the dates thereof and the consolidated results
of operations and consolidated cash flows for the periods then
ended (subject, in the case of any unaudited interim financial
statements, to normal year-end adjustments and to the extent
they may not include footnotes or may be condensed or summary
statements).
(b) Shared Technologies will deliver to Fairchild as
soon as they become available true and complete copies of any
report or statement mailed by it to its securityholders gener-
ally or filed by it with the SEC, in each case subsequent to
the date hereof and prior to the Effective Time. As of their
respective dates, such reports and statements (excluding any
information therein provided by Fairchild, as to which Shared
Technologies makes no representation) will not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they are made, not misleading and will comply in all material
respects with all applicable requirements of law. The audited
consolidated financial statements and unaudited consolidated
-11-
interim financial statements of Shared Technologies and its
subsidiaries to be included or incorporated by reference in
such reports and statements (excluding any information therein
provided by Fairchild, as to which Shared Technologies makes no
representation) will be prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in
the notes thereto) and will fairly present the consolidated
financial position of Shared Technologies and its subsidiaries
as of the dates thereof and the consolidated results of opera-
tions and consolidated cash flows for the periods then ended
(subject, in the case of any unaudited interim financial state-
ments, to normal year-end adjustments and to the extent they
may not include footnotes or may be condensed or summary
statements).
5.7 Absence of Changes or Events. Except as set
forth in Shared Technologies' Form 10-K for the fiscal year
ended December 31, 1994, as filed with the SEC, since
December 31, 1994:
(a) there has been no material adverse change, or
any development involving a prospective material adverse
change, in the general affairs, management, business,
operations, condition (financial or otherwise) or pros-
pects of Shared Technologies and its subsidiaries taken as
a whole;
(b) there has not been any direct or indirect
redemption, purchase or other acquisition of any shares of
capital stock of Shared Technologies or any of its subsid-
iaries, or any declaration, setting aside or payment of
any dividend or other distribution by Shared Technologies
or any of its subsidiaries in respect of its capital stock
(except for the distribution of the shares of Shared Tech-
nologies Cellular, Inc.);
(c) except in the ordinary course of its business
and consistent with past practice neither Shared Technolo-
xxxx nor any of its subsidiaries has incurred any indebt-
edness for borrowed money, or assumed, guaranteed,
endorsed or otherwise as an accommodation become respon-
sible for the obligations of any other individual, firm or
corporation, or made any loans or advances to any other
individual, firm or corporation;
-12-
(d) there has not been any change in accounting
methods, principles or practices of Shared Technologies or
its subsidiaries;
(e) except in the ordinary course of business and
for amounts which are not material, there has not been any
revaluation by Shared Technologies or any of its subsid-
iaries of any of their respective assets, including, with-
out limitation, writing down the value of inventory or
writing off notes or accounts receivables;
(f) there has not been any damage, destruction or
loss, whether covered by insurance or not, except for such
as would not, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect; and
(g) there has not been any agreement by Shared Tech-
nologies or any of its subsidiaries to (i) do any of the
things described in the preceding clauses (a) through (f)
other than as expressly contemplated or provided for in
this Agreement or (ii) take, whether in writing or other-
wise, any action which, if taken prior to the date of this
Agreement, would have made any representation or warranty
in this Article V untrue or incorrect.
5.8 Proxy Statement. None of the information sup-
plied by Shared Technologies for inclusion in the proxy state-
ment to be sent to the shareholders of Shared Technologies in
connection with the Special Meeting (as hereinafter defined),
including all amendments and supplements thereto (the "Proxy
Statement"), shall on the date the Proxy Statement is first
mailed to shareholders, at the time of the Special Meeting or
at the Effective Time, be false or misleading with respect to
any material fact, or omit to state any material fact required
to be stated therein or necessary in order to make the state-
ments made therein, in light of the circumstances under which
they are made, not misleading or necessary to correct any
statement in any earlier communication with respect to the
solicitation of proxies for the Special Meeting which has
become false or misleading. None of the information to be
filed by Fairchild and Shared Technologies with the SEC in con-
nection with the Merger or in any other documents to be filed
with the SEC or any other regulatory or governmental agency or
authority in connection with the transactions contemplated
hereby, including any amendments thereto (the "Other Docu-
ments"), insofar as such information was provided or supplied
by Shared Technologies, will contain any untrue statement of a
-13-
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not mis-
leading. The Proxy Statement shall comply in all material
respects with the requirements of the Exchange Act.
5.9 Litigation. Except as set forth in Section 5.9
of the Disclosure Statement, there is no (i) claim, action,
suit or proceeding pending or, to the best knowledge of Shared
Technologies or any of its subsidiaries, threatened against or
relating to Shared Technologies or any of its subsidiaries
before any court or governmental or regulatory authority or
body or arbitration tribunal, or (ii) outstanding judgment,
order, writ, injunction or decree, or application, request or
motion therefor, of any court, governmental agency or arbitra-
tion tribunal in a proceeding to which Shared Technologies, any
subsidiary of Shared Technologies or any of their respective
assets was or is a party except, in the case of clauses (i) and
(ii) above, such as would not, individually or in the aggre-
gate, either have a Shared Technologies Material Adverse Effect
or materially impair Shared Technologies' ability to consummate
the Merger.
5.10 Insurance. Section 5.10 of the Disclosure
Statement lists all insurance policies in force on the date
hereof covering the businesses, properties and assets of Shared
Technologies and its subsidiaries, and all such policies are
currently in effect. True and complete copies of all such pol-
icies have been delivered to Fairchild. Except as set forth in
Section 5.10 of the Disclosure Statement, Shared Technologies
has not received notice of the cancellation of any such insur-
ance policy.
5.11 Title to and Condition of Properties. Except
as set forth in Section 5.11 of the Disclosure Statement,
Shared Technologies and its subsidiaries have good title to all
of the real property and own outright all of the personal prop-
erty (except for leased property or assets) which is reflected
on Shared Technologies' and its subsidiaries' December 31, 1994
audited consolidated balance sheet contained in Shared Technol-
ogies' Form 10-K for the fiscal year ended December 31, 1994
filed with the SEC (the "Balance Sheet") except for property
since sold or otherwise disposed of in the ordinary course of
business and consistent with past practice. Except as set
forth in Section 5.11 of the Disclosure Statement, no such real
or personal property is subject to claims, liens or encum-
brances, whether by mortgage, pledge, lien, conditional sale
-14-
agreement, charge or otherwise, except for those which would
not, individually or in the aggregate, have a Shared Technolo-
xxxx Material Adverse Effect. Section 5.11 of the Disclosure
Statement contains a true and complete list of all real proper-
ties owned by Shared Technologies and its subsidiaries.
5.12 Leases. There has been made available to
Xxxxxxxxx true and complete copies of each lease requiring the
payment of rentals aggregating at least $35,000 per annum pur-
suant to which real or personal property is held under lease by
Shared Technologies or any of its subsidiaries, and true and
complete copies of each lease pursuant to which Shared Technol-
ogies or any of its subsidiaries leases real or personal prop-
erty to others. A true and complete list of all such leases is
set forth in Section 5.12 of the Disclosure Statement. All of
the leases so listed are valid and subsisting and in full force
and effect and are subject to no default with respect to Shared
Technologies or its subsidiaries, as the case may be, and, to
Shared Technologies' knowledge, are in full force and effect
and subject to no default with respect to any other party
thereto, and the leased real property is in good and satisfac-
tory condition.
5.13 Contracts and Commitments. Other than as dis-
closed in Section 5.13 of the Disclosure Statement, no existing
contract or commitment contains an agreement with respect to
any change of control that would be triggered by the Merger.
Other than as set forth in Section 5.13 of the Disclosure
Statement, neither this Agreement, the Merger nor the other
transactions contemplated hereby will result in any outstanding
loans or borrowings by Shared Technologies or any subsidiary of
Shared Technologies becoming due, going into default or giving
the lenders or other holders of debt instruments the right to
require Shared Technologies or any of its subsidiaries to repay
all or a portion of such loans or borrowings.
5.14 Labor Matters. Each of Shared Technologies and
its subsidiaries is in compliance in all material respects with
all applicable laws respecting employment and employment prac-
tices, terms and conditions of employment and wages and hours,
and neither Shared Technologies nor any of its subsidiaries is
engaged in any unfair labor practice. There is no labor
strike, slowdown or stoppage pending (or, to the best knowledge
of Shared Technologies, any labor strike or stoppage threat-
ened) against or affecting Shared Technologies or any of its
subsidiaries. No petition for certification has been filed and
is pending before the National Labor Relations Board with
-15-
respect to any employees of Shared Technologies or any of its
subsidiaries who are not currently organized.
5.15 Compliance with Law. Except for matters set
forth in the Disclosure Statement, neither Shared Technologies
nor any of its subsidiaries has violated or failed to comply
with any statute, law, ordinance, regulation, rule or order of
any foreign, federal, state or local government or any other
governmental department or agency, or any judgment, decree or
order of any court, applicable to its business or operations,
except where any such violation or failure to comply would not,
individually or in the aggregate, have a Shared Technologies
Material Adverse Effect; the conduct of the business of Shared
Technologies and its subsidiaries is in conformity with all
foreign, federal, state and local energy, public utility and
health requirements, and all other foreign, federal, state and
local governmental and regulatory requirements, except where
such nonconformities would not, individually or in the aggre-
gate, have a Shared Technologies Material Adverse Effect.
Shared Technologies and its subsidiaries have all permits,
licenses and franchises from governmental agencies required to
conduct their businesses as now being conducted, except for
such permits, licenses and franchises the absence of which
would not, individually or in the aggregate, have a Shared
Technologies Material Adverse Effect.
5.16 Board Recommendation. The Board of Directors
of Shared Technologies has, by a majority vote at a meeting of
such Board duly held on, or by written consent of such Board
dated, November 9, 1995, approved and adopted this Agreement,
the Merger and the other transactions contemplated hereby,
determined that the Merger is fair to the holders of shares of
Shared Technologies Common Stock and recommended that the
holders of such shares of Common Stock approve and adopt this
Agreement, the Merger and the other transactions contemplated
hereby.
5.17 Employment and Labor Contracts. Neither Shared
Technologies nor any of its subsidiaries is a party to any
employment, management services, consultation or other similar
contract with any past or present officer, director, employee
or other person or, to the best of Shared Technologies' knowl-
edge, any entity affiliated with any past or present officer,
director or employee or other person other than those set forth
in Section 5.17 of the Disclosure Statement and other than
those which (x) have a term of less than one year and
(y) involve payments of less than $30,000 per year, in each
-16-
case true and complete copies of which contracts have been
delivered to Xxxxxxxxx, and other than the agreements executed
by employees generally, the forms of which have been delivered
to Xxxxxxxxx.
5.18 Patents and Trademarks. Shared Technologies
and its subsidiaries own or have the right to use all patents,
patent applications, trademarks, trademark applications, trade
names, inventions, processes, know-how and trade secrets neces-
sary to the conduct of their respective businesses, except for
those which the failure to own or have the right to use would
not, individually or in the aggregate, have a Shared Technolo-
xxxx Material Adverse Effect ("Proprietary Rights"). All
issued patents and trademark registrations and pending patent
and trademark applications of the Proprietary Rights have pre-
viously been delivered to Xxxxxxxxx. No rights or licenses to
use Proprietary Rights have been granted by Shared Technologies
or its subsidiaries except those listed in Section 5.18 of the
Disclosure Statement; and no contrary assertion has been made
to Shared Technologies or any of its subsidiaries or notice of
conflict with any asserted right of others has been given by
any person except those which, even if correct, would not,
individually or in the aggregate, have a Shared Technologies
Material Adverse Effect. Shared Technologies has not given
notice of any asserted claim or conflict to a third party with
respect to Shared Technologies' Proprietary Rights. True and
complete copies of all material license agreements under which
Shared Technologies or any of its subsidiaries is a licensor or
licensee have been delivered to Xxxxxxxxx.
5.19 Taxes. "Tax" or "Taxes" shall mean all fed-
eral, state, local and foreign taxes, duties, levies, charges
and assessments of any nature, including social security pay-
ments and deductibles relating to wages, salaries and benefits
and payments to subcontractors (to the extent required under
applicable Tax law), and also including all interest, penalties
and additions imposed with respect to such amounts. Except as
set forth in Section 5.19 of the Disclosure Statement:
(i) Shared Technologies and its subsidiaries have prepared and
timely filed or will timely file with the appropriate govern-
mental agencies all franchise, income and all other material
Tax returns and reports required to be filed for any period
ending on or before the Effective Time, taking into account any
extension of time to file granted to or obtained on behalf of
Shared Technologies and/or its subsidiaries; (ii) all material
Taxes of Shared Technologies and its subsidiaries in respect of
the pre-Merger period have been paid in full to the proper
-17-
authorities, other than such Taxes as are being contested in
good faith by appropriate proceedings and/or are adequately
reserved for in accordance with generally accepted accounting
principles; (iii) all deficiencies resulting from Tax examina-
tions of federal, state and foreign income, sales and franchise
and all other material Tax returns filed by Shared Technologies
and its subsidiaries have either been paid or are being con-
tested in good faith by appropriate proceedings; (iv) to the
best knowledge of Shared Technologies, no deficiency has been
asserted or assessed against Shared Technologies or any of its
subsidiaries, and no examination of Shared Technologies or any
of its subsidiaries is pending or threatened for any material
amount of Tax by any taxing authority; (v) no extension of the
period for assessment or collection of any material Tax is cur-
rently in effect and no extension of time within which to file
any material Tax return has been requested, which Tax return
has not since been filed; (vi) no material Tax liens have been
filed with respect to any Taxes; (vii) Shared Technologies and
each of its subsidiaries will not make any voluntary adjustment
by reason of a change in their accounting methods for any
pre-Merger period that would affect the taxable income or
deductions of Shared Technologies or any of its subsidiaries
for any period ending after the Effective Date; (viii) Shared
Technologies and its subsidiaries have made timely payments of
the Taxes required to be deducted and withheld from the wages
paid to their employees; (ix) the Tax Sharing Agreement under
which Shared Technologies or any subsidiary will have any obli-
gation or liability on or after the Effective Date is attached
as Exhibit E; (x) Shared Technologies has foreign losses as
defined in Section 904(f)(2) of the Code listed in Section 5.19
of the Disclosure Statement; (xi) Shared Technologies and its
subsidiaries have unused foreign tax credits set forth in Sec-
tion 5.19 of the Disclosure Statement; and (xii) to the best
knowledge of Shared Technologies, there are no transfer pricing
agreements made with any taxation authority involving Shared
Technologies and its subsidiaries.
5.20 Employee Benefit Plans; ERISA.
(a) Except as set forth in Section 5.20 of the Dis-
closure Statement, there are no "employee pension benefit
plans" as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), covering
employees employed in the United States, maintained or contrib-
uted to by Shared Technologies or any of its subsidiaries, or
to which Shared Technologies or any of its subsidiaries
-18-
contributes or is obligated to make payments thereunder or
otherwise may have any liability ("Pension Benefits Plans").
(b) Shared Technologies has furnished Xxxxxxxxx with
a true and complete schedule of all "welfare benefit plans" (as
defined in Section 3(1) of ERISA) covering employees employed
in the United States, maintained or contributed to by Shared
Technologies or any of its subsidiaries ("Welfare Plans"), all
multiemployer plans as defined in Section 3(37) of ERISA cover-
ing employees employed in the United States to which Shared
Technologies or any of its subsidiaries is required to make
contributions or otherwise may have any liability, and, to the
extent covering employees employed in the United States, all
stock bonus, stock option, restricted stock, stock appreciation
right, stock purchase, bonus, incentive, deferred compensation,
severance and vacation plans maintained or contributed to by
Shared Technologies or a subsidiary.
(c) Shared Technologies and each of its subsidiar-
ies, and each of the Pension Benefit Plans and Welfare Plans,
are in compliance with the applicable provisions of ERISA (the
"Code") and other applicable laws except where the failure to
comply would not, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect.
(d) All contributions to, and payments from, the
Pension Benefit Plans which are required to have been made in
accordance with the Pension Benefit Plans and, when applicable,
Section 302 of ERISA or Section 412 of the Code have been
timely made except where the failure to make such contributions
or payments on a timely basis would not, individually or in the
aggregate, have a Shared Technologies Material Adverse Effect.
All contributions required to have been made in accordance with
Section 302 of ERISA or Section 412 of the Code to any employee
pension benefit plan (as defined in Section 3(2) of ERISA)
maintained by an ERISA Affiliate of Shared Technologies or any
of its subsidiaries have been timely made except where the
failure to make such contributions on a timely basis would not
individually or in the aggregate have a Shared Technologies
Material Adverse Effect. For purposes of this Agreement,
"ERISA Affiliate" shall mean any person (as defined in
Section 3(9) of ERISA) that is a member of any group of persons
described in Section 414(b), (c), (m) or (o) of the Code of
which Shared Technologies or a subsidiary is a member.
(e) The Pension Benefit Plans intended to qualify
under Section 401 of the Code are so qualified and have been
-19-
determined by the Internal Revenue Service ("IRS") to be so
qualified and nothing has occurred with respect to the opera-
tion of such Pension Benefit Plans which would cause the loss
of such qualification or exemption or the imposition of any
material liability, penalty or tax under ERISA or the Code.
Such plans have been or will be, on a timely basis, (i) amended
to comply with changes to the Code made by the Tax Reform Act
of 1986, the Unemployment Compensation Amendments of 1992, the
Omnibus Budget Reconciliation Act of 1993, and other applicable
legislative, regulatory or administrative requirements; and
(ii) submitted to the Internal Revenue Service for a determina-
tion of their tax qualification, as so amended; and no such
amendment will adversely affect the qualification of such
plans.
(f) Each Welfare Plan that is intended to qualify
for exclusion of benefits thereunder from the income of partic-
ipants or for any other tax-favored treatment under any provi-
sions of the Code (including, without limitation, Sections 79,
105, 106, 125 or 129 of the Code) is and has been maintained in
compliance with all pertinent provisions of the Code and Trea-
sury Regulations thereunder.
(g) Except as disclosed in Shared Technologies' Form
10-K for the fiscal year ended December 31, 1994, there are
(i) no investigations pending, to the best knowledge of Shared
Technologies, by any governmental entity involving the Pension
Benefit Plans or Welfare Plans, (ii) no termination proceedings
involving the Pension Benefit Plans and (iii) no pending or, to
the best of Shared Technologies' knowledge, threatened claims
(other than routine claims for benefits), suits or proceedings
against any Pension Benefit or Welfare Plan, against the assets
of any of the trusts under any Pension Benefit or Welfare Plan
or against any fiduciary of any Pension Benefit or Welfare Plan
with respect to the operation of such plan or asserting any
rights or claims to benefits under any Pension Benefit or Wel-
fare Plan or against the assets of any trust under such plan,
which would, in the case of clause (i), (ii) or (iii) of this
paragraph (f), give rise to any liability which would, individ-
ually or in the aggregate, have a Shared Technologies Material
Adverse Effect, nor, to the best of Shared Technologies' knowl-
edge, are there any facts which would give rise to any lia-
bility which would, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect in the event of any
such investigation, claim, suit or proceeding.
-20-
(h) None of Shared Technologies, any of its subsid-
iaries or any employee of the foregoing, nor any trustee,
administrator, other fiduciary or any other "party in interest"
or "disqualified person" with respect to the Pension Benefit
Plans or Welfare Plans, has engaged in a "prohibited transac-
tion" (as such term is defined in Section 4975 of the Code or
Section 406 of ERISA) which would be reasonably likely to
result in a tax or penalty on Shared Technologies or any of its
subsidiaries under Section 4975 of the Code or Section 502(i)
of ERISA which would, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect.
(i) Neither the Pension Benefit Plans subject to
Title IV of ERISA nor any trust created thereunder has been
terminated nor have there been any "reportable events" (as
defined in Section 4043 of ERISA and the regulations thereun-
der) with respect to either thereof which would, individually
or in the aggregate, have a Shared Technologies Material
Adverse Effect nor has there been any event with respect to any
Pension Benefit Plan requiring disclosure under Section 4063(a)
of ERISA or any event with respect to any Pension Benefit Plan
requiring disclosure under Section 4041(c)(3)(C) of ERISA which
would, individually or in the aggregate, have a Shared Technol-
ogies Material Adverse Effect.
(j) Neither Shared Technologies nor any subsidiary
of Shared Technologies has incurred any currently outstanding
liability to the Pension Benefit Guaranty Corporation (the
"PBGC") or to a trustee appointed under Section 4042(b) or (c)
of ERISA other than for the payment of premiums, all of which
have been paid when due. No Pension Benefit Plan has applied
for, or received, a waiver of the minimum funding standards
imposed by Section 412 of the Code. The information supplied
to the actuary by Shared Technologies or any of its subsidiar-
ies for use in preparing the most recent actuarial report for
Pension Benefit Plans is complete and accurate in all material
respects.
(k) Neither Shared Technologies, any of its subsid-
iaries nor any of their ERISA Affiliates has any liability
(including any contingent liability under Section 4204 of
ERISA) with respect to any multiemployer plan, within the mean-
ing of Section 3(37) of ERISA, covering employees employed in
the United States.
(l) Except as disclosed in Section 5.20 of the Dis-
closure Statement, with respect to each of the Pension Benefit
-21-
and Welfare Plans, true, correct and complete copies of the
following documents have been delivered to Xxxxxxxxx: (i) the
current plans and related trust documents, including amendments
thereto, (ii) any current summary plan descriptions, (iii) the
most recent Forms 5500, financial statements and actuarial
reports, if applicable, (iv) the most recent IRS determination
letter, if applicable; and (v) if any application for an IRS
determination letter is pending, copies of all such applica-
tions for determination including attachments, exhibits and
schedules thereto.
(m) Neither Shared Technologies, any of its subsid-
iaries, any organization to which Shared Technologies is a suc-
cessor or parent corporation, within the meaning of Section
4069(b) of ERISA, nor any of their ERISA Affiliates has engaged
in any transaction, within the meaning of Section 4069(a) of
ERISA, the liability for which would, individually or in the
aggregate, have a Shared Technologies Material Adverse Effect.
(n) Except as disclosed in Section 5.20 of the Dis-
closure Statement, none of the Welfare Plans maintained by
Shared Technologies or any of its subsidiaries are retiree life
or retiree health insurance plans which provide for continuing
benefits or coverage for any participant or any beneficiary of
a participant following termination of employment, except as
may be required under the Consolidated Omnibus Budget Reconcil-
iation Act of 1985, as amended ("COBRA"), or except at the
expense of the participant or the participant's beneficiary.
Shared Technologies and each of its subsidiaries which maintain
a "group health plan" within the meaning of Section 5000(b)(1)
of the Code have complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of
Subtitle B of Title I of ERISA and the regulations thereunder
except where the failure to comply would not, individually or
in the aggregate, have a Shared Technologies Material Adverse
Effect.
(o) No liability under any Pension Benefit or Wel-
fare Plan has been funded nor has any such obligation been sat-
isfied with the purchase of a contract from an insurance com-
pany as to which Shared Technologies or any of its subsidiaries
has received notice that such insurance company is in
rehabilitation.
(p) Except pursuant to the agreements listed in
Section 5.20 of the Disclosure Statement, the consummation of
the transactions contemplated by this Agreement will not result
-22-
in an increase in the amount of compensation or benefits or
accelerate the vesting or timing of payment of any benefits or
compensation payable to or in respect of any employee of Shared
Technologies or any of its subsidiaries.
(q) Shared Technologies has disclosed to Xxxxxxxxx
in Section 5.20 of the Disclosure Statement each material For-
eign Plan to the extent the benefits provided thereunder are
not mandated by the laws of the applicable foreign jurisdic-
tion. Shared Technologies and each of its subsidiaries and
each of the Foreign Plans are in compliance with applicable
laws and all required contributions have been made to the For-
eign Plans, except where the failure to comply or make contri-
butions would not, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect. For purposes
hereof, the term "Foreign Plan" shall mean any plan, with
respect to benefits voluntarily provided by Shared Technologies
or any subsidiary with respect to employees of any of them
employed outside the United States.
5.21 Environmental Matters.
(a) Except as set forth in Section 5.21 of the Dis-
closure Statement:
(i) each of Shared Technologies and its subsidiar-
ies, and the properties and assets owned by them, and to
the actual knowledge of Shared Technologies, all proper-
ties operated, leased, managed or used by Shared Technolo-
xxxx and its subsidiaries are in compliance with all
applicable Environmental Laws except where the failure to
be in compliance would not, individually or in the aggre-
gate, have a Shared Technologies Material Adverse Effect;
(ii) there is no Environmental Claim that is
(1) pending or threatened against Shared Technologies or
any of its subsidiaries or (2) pending or threatened
against any person or entity or any assets owned by Shared
Technologies or its subsidiaries whose liability for such
Environmental Claim has been retained or assumed by con-
tract or otherwise by Shared Technologies or any of its
subsidiaries or can be imputed or attributed by law to
Shared Technologies or any of its subsidiaries, the effect
of any of which would, individually or in the aggregate,
have a Shared Technologies Material Adverse Effect;
-23-
(iii) there are no past or present actions, activi-
ties, circumstances, conditions, events or incidents aris-
ing out of, based upon, resulting from or relating to the
ownership, operation or use of any property or assets cur-
rently or formerly owned, operated or used by Shared Tech-
nologies or any of its subsidiaries (or any predecessor in
interest of any of them), including, without limitation,
the generation, storage, treatment or transportation of
any Hazardous Materials, or the emission, discharge, dis-
posal or other Release or threatened Release of any Haz-
ardous Materials into the Environment which is presently
expected to result in an Environmental Claim;
(iv) no lien has been recorded under any Environmen-
tal Law with respect to any material property, facility or
asset owned by Shared Technologies or any of its subsid-
iaries; and to the actual knowledge of Shared Technolo-
xxxx, no lien has been recorded under any Environmental
Law with respect to any material property, facility or
asset, operated, leased or managed or used by Shared Tech-
nologies or its subsidiaries and relating to or resulting
from Shared Technologies or its subsidiaries operations,
lease, management or use for which Shared Technologies or
its subsidiaries may be legally responsible;
(v) neither Shared Technologies nor any of its sub-
sidiaries has received notice that it has been identified
as a potentially responsible party or any request for
information under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Resource Conservation and Recovery
Act, as amended ("RCRA"), or any comparable state law nor
has Shared Technologies or any of its subsidiaries
received any notification that any Hazardous Materials
that it or any of their respective predecessors in inter-
est has used, generated, stored, treated, handled, trans-
ported or disposed of, or arranged for transport for
treatment or disposal of, or arranged for disposal or
treatment of, has been found at any site at which any per-
son is conducting or plans to conduct an investigation or
other action pursuant to any Environmental Law;
(vi) to the actual knowledge of Shared Technologies,
there has been no Release of Hazardous Materials at, on,
upon, under, from or into any real property in the vicin-
ity of any property currently or formerly owned by Shared
Technologies or any of its subsidiaries that, through
-24-
soil, air, surface water or groundwater migration or con-
tamination, has become located on, in or under such prop-
erties and, to the actual knowledge of Shared Technolo-
xxxx, there has been no release of Hazardous Materials at,
on, upon, under or from any property currently or formerly
operated, leased, managed or used by Shared Technologies
or any of its subsidiaries that through soil, air, surface
water or groundwater migration or contamination has become
located on, in or under such properties as resulting from
or relating to Shared Technologies or any of its subsid-
iaries operations, lease, management or use thereof of for
which Shared Technologies and any of its subsidiaries may
be legally responsible;
(vii) no asbestos or asbestos containing material or
any polychlorinated biphenyls are contained within prod-
ucts presently manufactured and, to the best knowledge of
Shared Technologies manufactured at any time by Shared
Technologies or any of its subsidiaries and, to the actual
knowledge of Shared Technologies there is no asbestos or
asbestos containing material or any polychlorinated
biphenyl in, on or at any property or any facility or
equipment owned, operated, leased, managed or used by
Shared Technologies or any of its subsidiaries;
(viii) no property owned by Shared Technologies or any
of its subsidiaries and to the actual knowledge of Shared
Technologies, no property operated, leased, managed or
used by Shared Technologies and any of its subsidiaries is
(i) listed or proposed for listing on the National Priori-
ties List under CERCLA or (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Informa-
tion System List promulgated pursuant to CERCLA, or on any
comparable list published by any governmental authority;
(ix) no underground storage tank or related piping is
located at, under or on any property owned by Shared Tech-
nologies or any of its subsidiaries or to the actual
knowledge of Shared Technologies, any property operated,
leased, managed or used by Shared Technologies, nor to the
actual knowledge of Shared Technologies, has any such tank
or piping been removed or decommissioned from or at such
property;
(x) all environmental investigations, studies,
audits, assessments or reviews conducted of which Shared
Technologies has actual knowledge in relation to the
-25-
current or prior business or assets owned, operated,
leased, managed or used of Shared Technologies or any of
its subsidiaries or any real property, assets or facility
now or previously owned, operated, leased, managed or used
by Shared Technologies or any of its subsidiaries have
been delivered to Xxxxxxxxx; and
(xi) each of Shared Technologies and its subsidiaries
has obtained all permits, licenses and other authoriza-
tions ("Authorizations") required under any Environmental
Law with respect to the operation of its assets and busi-
ness and its use, ownership and operation of any real
property, and each such Authorization is in full force and
effect.
(b) For purposes of Section 5.21(a):
(i) "Actual Knowledge of Shared Technologies" means
the actual knowledge of individuals at the corporate
management level of Shared Technologies and its
subsidiaries.
(ii) "Environment" means any surface water, ground
water, drinking water supply, land surface or subsurface
strata, ambient air and including, without limitation, any
indoor location;
(iii) "Environmental Claim" means any notice or claim
by any person alleging potential liability (including,
without limitation, potential liability for investigatory
costs, cleanup costs, governmental costs, or harm,
injuries or damages to any person, property or natural
resources, and any fines or penalties) arising out of,
based upon, resulting from or relating to (1) the emis-
sion, discharge, disposal or other release or threatened
release in or into the Environment of any Hazardous Mate-
rials or (2) circumstances forming the basis of any xxxxx-
tion, or alleged violation, of any applicable Environmen-
tal Law;
(iv) "Environmental Laws" means all federal, state,
and local laws, codes, and regulations relating to pollu-
tion, the protection of human health, the protection of
the Environment or the emission, discharge, disposal or
other release or threatened release of Hazardous Materials
in or into the Environment;
-26-
(v) "Hazardous Materials" means pollutants, contami-
nants or chemical, industrial, hazardous or toxic materi-
als or wastes, and includes, without limitation, asbestos
or asbestos-containing materials, PCBs and petroleum, oil
or petroleum or oil products, derivatives or constituents;
and
(vi) "Release" means any past or present spilling,
leaking, pumping, pouring, emitting, emptying, discharg-
ing, injecting, escaping, leaching, dumping or disposing
of Hazardous Materials into the Environment or within
structures (including the abandonment or discarding of
barrels, containers or other closed receptacles containing
any Hazardous Materials).
5.22 Disclosure. No representation or warranty by
Shared Technologies herein, or in any certificate furnished by
or on behalf of Shared Technologies to Xxxxxxxxx in connection
herewith, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not
misleading.
5.23 Absence of Undisclosed Liabilities. Neither
Shared Technologies nor any of its subsidiaries has any liabil-
ities or obligations (including without limitation any liabili-
ties or obligations related to Shared Technologies Cellular,
Inc.) of any nature, whether absolute, accrued, unmatured, con-
tingent or otherwise, or any unsatisfied judgments or any
leases of personalty or realty or unusual or extraordinary com-
mitments, except the liabilities recorded on the Balance Sheet
and the notes thereto, and except for liabilities or obliga-
tions incurred in the ordinary course of business and consis-
tent with past practice since December 31, 1994 that would not
individually or in the aggregate have a Shared Technologies
Material Adverse Effect.
5.24 Finders or Brokers. Except as set forth in
Section 5.24 of the Disclosure Statement, none of Shared Tech-
nologies, the subsidiaries of Shared Technologies, the Board of
Directors or any member of the Board of Directors has employed
any investment banker, broker, finder or intermediary in con-
nection with the transactions contemplated hereby who might be
entitled to a fee or any commission in connection with the
Merger, and Section 5.24 of the Disclosure Statement sets forth
-27-
the maximum consideration (present and future) agreed to be
paid to each such party.
5.25 State Antitakeover Statutes. Shared Technolo-
xxxx has granted all approvals and taken all other steps neces-
sary to exempt the Merger and the other transactions contem-
plated hereby from the requirements and provisions of Section
203 of the DGCL and any other applicable state antitakeover
statute or regulation such that none of the provisions of such
Section 203 or any other "business combination," "moratorium,"
"control share" or other state antitakeover statute or regula-
tion (x) prohibits or restricts Shared Technologies' ability to
perform its obligations under this Agreement or its ability to
consummate the Merger and the other transactions contemplated
hereby, (y) would have the effect of invalidating or voiding
this Agreement any provision hereof, or (z) would subject
Xxxxxxxxx to any material impediment or condition in connection
with the exercise of any of its rights under this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TFC, RHI AND XXXXXXXXX
Each of TFC, RHI and Xxxxxxxxx represents and war-
rants to Shared Technologies that:
6.1 Organization and Qualification. Each of
Xxxxxxxxx and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corpo-
rate power and authority to own, lease and operate its proper-
ties and to carry on its business as now being conducted. Each
of Xxxxxxxxx and its subsidiaries is duly qualified as a for-
eign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned
or leased or the nature of its activities makes such qualifica-
tion necessary, except for failures to be so qualified or in
good standing which would not, individually or in the aggre-
gate, have a material adverse effect on the general affairs,
management, business, operations, condition (financial or
otherwise) or prospects of Xxxxxxxxx and its subsidiaries taken
as a whole (a "Xxxxxxxxx Material Adverse Effect"). Neither
Xxxxxxxxx nor any of its subsidiaries is in violation of any of
the provisions of its Certificate of Incorporation (or other
applicable charter document) or By-Laws. Xxxxxxxxx has deliv-
ered to Shared Technologies accurate and complete copies of the
-28-
Certificate of Incorporation (or other applicable charter docu-
ment) and By-Laws, as currently in effect, of each of Xxxxxxxxx
and its subsidiaries.
6.2 Capital Stock of Subsidiaries. The only direct
or indirect subsidiaries of Xxxxxxxxx are those listed in
Section 6.2 of the Disclosure Statement previously delivered by
Xxxxxxxxx to Shared Technologies (the "Disclosure Statement").
Xxxxxxxxx is directly or indirectly the record (except for
directors' qualifying shares) and beneficial owner (including
all qualifying shares owned by directors of such subsidiaries
as reflected in Section 6.2 of the Disclosure Statement) of all
of the outstanding shares of capital stock of each of its sub-
sidiaries, there are no proxies with respect to such shares,
and no equity securities of any of such subsidiaries are or may
be required to be issued by reason of any options, warrants,
scrip, rights to subscribe for, calls or commitments of any
character whatsoever relating to, or securities or rights con-
vertible into or exchangeable for, shares of any capital stock
of any such subsidiary, and there are no contracts, commit-
ments, understandings or arrangements by which any such subsid-
iary is bound to issue additional shares of its capital stock
or securities convertible into or exchangeable for such shares.
Other than as set forth in Section 6.2 of the Disclosure State-
ment, all of such shares so owned by Xxxxxxxxx are validly
issued, fully paid and nonassessable and are owned by it free
and clear of any claim, lien or encumbrance of any kind with
respect thereto. Except as disclosed in Section 6.2 of the
Disclosure Statement, Xxxxxxxxx does not directly or indirectly
own any interest in any corporation, partnership, joint venture
or other business association or entity.
6.3 Capitalization. The authorized capital stock of
Xxxxxxxxx consists of 1,400 shares of Common Stock, par value
$100.00 per share, and 3,000,000 shares of Preferred Stock,
without par value. As of the date hereof, 1,400 shares of Com-
mon Stock are issued and outstanding (all of which are owned by
RHI), 424,701 shares of Series A Preferred Stock are issued and
outstanding, 2,278 shares of Series B Preferred Stock are
issued and outstanding (which will be extinguished immediately
prior to the Effective Time) and 558,360 shares of Series C
Preferred Stock are issued and outstanding. All of such issued
and outstanding shares are validly issued, fully paid and non-
assessable and free of preemptive rights. Except as set forth
above, there are not now, and at the Effective Time, there will
not be, any shares of capital stock of Xxxxxxxxx issued or out-
standing or any subscriptions, options, warrants, calls,
-29-
claims, rights (including without limitation any stock appreci-
ation or similar rights), convertible securities or other
agreements or commitments of any character obligating Xxxxxxxxx
to issue, transfer or sell any of its securities.
6.4 Authority Relative to This Agreement. Each of
TFC and RHI is a corporation duly organized, validly existing
and in good standing under the laws of Delaware. Each of TFC,
RHI and Xxxxxxxxx has full corporate power and authority to
execute and deliver this Agreement and to consummate the Merger
and other transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the Merger
and other transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of each of TFC
(which owns all of the outstanding common stock of RHI), RHI
and Xxxxxxxxx and no other corporate proceedings on the part of
TFC, RHI or Xxxxxxxxx are necessary to authorize this Agreement
or to consummate the Merger or other transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by each of TFC (which owns all of the outstanding
common stock of RHI), RHI and Xxxxxxxxx and, assuming the due
authorization, execution and delivery hereof by Shared Technol-
ogies, constitutes a valid and binding agreement of each of
TFC, RHI and Xxxxxxxxx, enforceable against each of TFC, RHI
and Xxxxxxxxx in accordance with its terms, except to the
extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the enforcement of creditors' rights generally
or by general equitable or fiduciary principles.
6.5 No Violations, etc.
(a) Assuming that all filings, permits, authoriza-
tions, consents and approvals or waivers thereof have been duly
made or obtained as contemplated by Section 6.5(b) hereof, nei-
ther the execution and delivery of this Agreement by TFC, RHI
or Xxxxxxxxx nor the consummation of the Merger or other trans-
actions contemplated hereby nor compliance by Xxxxxxxxx with
any of the provisions hereof will (i) violate, conflict with,
or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the ter-
mination or suspension of, or accelerate the performance
required by, or result in a right of termination or accelera-
tion under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of TFC, RHI or Xxxxxxxxx or any of their respective
-30-
subsidiaries under, any of the terms, conditions or provisions
of (x) their respective charters or by-laws, (y) except as set
forth in Section 6.5 of the Disclosure Statement, any note,
bond, mortgage, indenture or deed of trust, or (z) any license,
lease, agreement or other instrument or obligation, to which
TFC, RHI or Xxxxxxxxx or any such subsidiary is a party or to
which they or any of their respective properties or assets may
be subject, or (ii) subject to compliance with the statutes and
regulations referred to in the next paragraph, violate any
judgment, ruling, order, writ, injunction, decree, statute,
rule or regulation applicable to TFC, RHI or Xxxxxxxxx or any
of their respective subsidiaries or any of their respective
properties or assets, except, in the case of clauses (i)(z) and
(ii) above, for such violations, conflicts, breaches, defaults,
terminations, suspensions, accelerations, rights of termination
or acceleration or creations of liens, security interests,
charges or encumbrances which would not, individually or in the
aggregate, either have a Xxxxxxxxx Material Adverse Effect or
materially impair Xxxxxxxxx'x ability to consummate the Merger
or other transactions contemplated hereby.
(b) No filing or registration with, notification to
and no permit, authorization, consent or approval of any gov-
ernmental entity is required by TFC, RHI or Xxxxxxxxx or any of
their respective subsidiaries in connection with the execution
and delivery of this Agreement or the consummation by Xxxxxxxxx
of the Merger or other transactions contemplated hereby, except
(i) in connection with the applicable requirements of the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware,
(iii) filings with applicable state public utility commissions,
and (iv) such other filings, registrations, notifications, per-
mits, authorizations, consents or approvals the failure of
which to be obtained, made or given would not, individually or
in the aggregate, either have a Xxxxxxxxx Material Adverse
Effect or materially impair Xxxxxxxxx'x ability to consummate
the Merger or other transactions contemplated hereby.
(c) As of the date hereof, Xxxxxxxxx and its subsid-
iaries are not in violation of or default under (x) their
respective charter or bylaws, and (y) except as set forth in
Sections 6.5 and 6.9 of the Disclosure Statement, any note,
bond, mortgage, indenture or deed of trust, or (z) any license,
lease, agreement or other instrument or obligation to which
Xxxxxxxxx or any such subsidiary is a party or to which they or
any of their respective properties or assets may be subject,
-31-
except, in the case of clauses (y) and (z) above, for such vio-
lations or defaults which would not, individually or in the
aggregate, either have a Xxxxxxxxx Material Adverse Effect or
materially impair Xxxxxxxxx'x ability to consummate the Merger
or other transactions contemplated hereby.
6.6 Commission Filings; Financial Statements.
(a) Xxxxxxxxx has filed all required forms, reports
and documents during the past three years (collectively, the
"SEC Reports") with the Securities and Exchange Commission (the
"SEC"), all of which complied when filed in all material
respects with all applicable requirements of the Securities Act
of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act") and the Securities Exchange
Act of 1934, as amended, and the rules and regulations promul-
gated thereunder (the "Exchange Act"). As of their respective
dates the SEC Reports (including all exhibits and schedules
thereto and documents incorporated by reference therein) did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or neces-
sary to make the statements therein, in light of the circum-
stances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consol-
idated interim financial statements of Xxxxxxxxx and its sub-
sidiaries included or incorporated by reference in such SEC
Reports were prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the
periods involved (except as may be indicated in the notes
thereto), and fairly presented the consolidated financial posi-
tion of Xxxxxxxxx and its subsidiaries (before giving effect to
the Xxxxxxxxx Reorganization) as of the dates thereof and the
consolidated results of operations and consolidated cash flows
for the periods then ended (subject, in the case of any unau-
dited interim financial statements, to normal year-end adjust-
ments and to the extent they may not include footnotes or may
be condensed or summary statements).
(b) Xxxxxxxxx will deliver to Shared Technologies as
soon as they become available true and complete copies of any
report or statement mailed by it to its securityholders gener-
ally or filed by it with the SEC, in each case subsequent to
the date hereof and prior to the Effective Time. As of their
respective dates, such reports and statements (excluding any
information therein provided by Shared Technologies, as to
which Xxxxxxxxx makes no representation) will not contain any
untrue statement of a material fact or omit to state a material
-32-
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they are made, not misleading and will comply in all material
respects with all applicable requirements of law. The audited
consolidated financial statements and unaudited consolidated
interim financial statements of Xxxxxxxxx and its subsidiaries
to be included or incorporated by reference in such reports and
statements (excluding any information therein provided by
Shared Technologies, as to which Xxxxxxxxx makes no representa-
tion) will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes
thereto) and will fairly present the consolidated financial
position of Xxxxxxxxx and its subsidiaries (before giving
effect to the Xxxxxxxxx Reorganization unless otherwise speci-
fied therein) as of the dates thereof and the consolidated
results of operations and consolidated cash flows for the peri-
ods then ended (subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments and to the
extent they may not include footnotes or may be condensed or
summary statements).
(c) Xxxxxxxxx has delivered to Shared Technologies
audited financial statements for the three years ended June 30,
1995 (the "Xxxxxxxxx Financial Statements") which were prepared
in accordance with generally accepted accounting principles
applied on a consistent basis and which fairly present the con-
solidated financial position, results of operations and cash
flows of Xxxxxxxxx and its subsidiaries as if the Xxxxxxxxx
Reorganization had occurred at the beginning of such three-year
period. In addition, Fairchild has delivered to Shared Tech-
nologies an unaudited pro forma balance sheet of each of D-M-E
Inc., Xxxxxxxxx Fasteners Inc. and RHI as of June 30, 1995
which was prepared in accordance with generally accepted
accounting principles applied on a consistent basis and which
fairly presents the consolidated financial position of such
entities if the Xxxxxxxxx Reorganization had occurred at such
date.
(d) Xxxxxxxxx will deliver to Shared Technologies
within 45 days of the end of each fiscal quarter subsequent to
the date hereof and prior to the Effective Time unaudited con-
solidated interim financial statements for such quarter pre-
pared in accordance with generally accepted accounting princi-
ples on the same basis as the Xxxxxxxxx Financial Statements
were prepared.
-33-
6.7 Absence of Changes or Events. Except as set
forth in Xxxxxxxxx'x Form 10-K for the fiscal year ended
June 30, 1995, as filed with the SEC, since June 30, 1995:
(a) there has been no material adverse change, or
any development involving a prospective material adverse
change, in the general affairs, management, business,
operations, condition (financial or otherwise) or pros-
pects of Xxxxxxxxx and its subsidiaries taken as a whole;
(it being understood that no such material adverse change
shall be deemed to have occurred with respect to Xxxxxxxxx
and VSI, taken as a whole, if the pro forma consolidated
net worth of Xxxxxxxxx, as evidenced by a pro forma clos-
ing date balance sheet to be delivered to Shared Technolo-
xxxx on the Effective Date, is at least $80,000,000);
(b) except as contemplated by Schedule 9.1 and
except for dividends by Xxxxxxxxx to RHI in an amount not
exceeding capital contributions made to Xxxxxxxxx by RHI
since June 30, 1995 plus $4,000,000, there has not been
any direct or indirect redemption, purchase or other
acquisition of any shares of capital stock of Xxxxxxxxx or
any of its subsidiaries, or any declaration, setting aside
or payment of any dividend or other distribution by
Xxxxxxxxx or any of its subsidiaries in respect of their
capital stock;
(c) except in the ordinary course of its business
and consistent with past practice neither Xxxxxxxxx nor
any of its subsidiaries has incurred any indebtedness for
borrowed money, or assumed, guaranteed, endorsed or other-
wise as an accommodation become responsible for the obli-
gations of any other individual, firm or corporation, or
made any loans or advances to any other individual, firm
or corporation;
(d) there has not been any change in accounting
methods, principles or practices of Xxxxxxxxx or its
subsidiaries;
(e) except in the ordinary course of business and
for amounts which are not material, there has not been any
revaluation by Xxxxxxxxx or any of its subsidiaries of any
of their respective assets, including, without limitation,
writing down the value of inventory or writing off notes
or accounts receivables;
-34-
(f) there has not been any damage, destruction or
loss, whether covered by insurance or not, except for such
as would not, individually or in the aggregate, have a
Xxxxxxxxx Material Adverse Effect; and
(g) there has not been any agreement by Xxxxxxxxx or
any of its subsidiaries to (i) do any of the things
described in the preceding clauses (a) through (f) other
than as expressly contemplated or provided for in this
Agreement or (ii) take, whether in writing or otherwise,
any action which, if taken prior to the date of this
Agreement, would have made any representation or warranty
in this Article VI untrue or incorrect.
6.8 Proxy Statement. None of the information sup-
plied by Xxxxxxxxx or any of its subsidiaries for inclusion in
the proxy statement to be sent to the shareholders of Shared
Technologies in connection with the Special Meeting (as herein-
after defined), including all amendments and supplements
thereto (the "Proxy Statement"), shall on the date the Proxy
Statement is first mailed to shareholders, and at the time of
the Special Meeting or at the Effective Time, be false or mis-
leading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the cir-
cumstances under which they are made, not misleading or neces-
sary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Special Meeting
which has become false or misleading. None of the information
to be filed by Xxxxxxxxx and Shared Technologies with the SEC
in connection with the Merger or in any other documents to be
filed with the SEC or any other regulatory or governmental
agency or authority in connection with the transactions contem-
plated hereby, including any amendments thereto (the "Other
Documents"), insofar as such information was provided or sup-
plied by Xxxxxxxxx or any of its subsidiaries, will contain any
untrue statement of a material fact or omit to state any mate-
rial fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under
which they are made, not misleading. The Proxy Statement shall
comply in all material respects with the requirements of the
Exchange Act.
6.9 Litigation. Except as set forth in Section 6.9
of the Disclosure Statement, there is no (i) claim, action,
suit or proceeding pending or, to the best knowledge of TFC,
RHI, Xxxxxxxxx or any of their subsidiaries, threatened against
-35-
or relating to Xxxxxxxxx or any of its subsidiaries before any
court or governmental or regulatory authority or body or arbi-
tration tribunal, or (ii) outstanding judgment, order, writ,
injunction or decree, or application, request or motion there-
for, of any court, governmental agency or arbitration tribunal
in a proceeding to which Xxxxxxxxx, any subsidiary of Xxxxxxxxx
or any of their respective assets was or is a party except, in
the case of clauses (i) and (ii) above, such as would not,
individually or in the aggregate, either have a Xxxxxxxxx Mate-
rial Adverse Effect or materially impair Xxxxxxxxx'x ability to
consummate the Merger or other transactions contemplated
hereby.
6.10 Insurance. Section 6.10 of the Disclosure
Statement lists all insurance policies in force on the date
hereof covering the businesses, properties and assets of
Xxxxxxxxx and its subsidiaries, and all such policies are cur-
rently in effect. True and complete copies of all such poli-
cies have been delivered to Shared Technologies. Except as set
forth in Section 6.10 of the Disclosure Statement, Xxxxxxxxx
has not received notice of the cancellation of any such insur-
ance policy.
6.11 Title to and Condition of Properties. Except
as set forth in Section 6.11 of the Disclosure Statement,
Xxxxxxxxx and its subsidiaries have good title to all of the
real property and own outright all of the personal property
(except for leased property or assets) which is reflected on
Xxxxxxxxx'x and its subsidiaries' June 30, 1995 audited consol-
idated balance sheet contained in the Xxxxxxxxx Financial
Statements (the "Balance Sheet") except for property since sold
or otherwise disposed of in the ordinary course of business and
consistent with past practice. Except as set forth in
Sections 6.9 and 6.11 of the Disclosure Statement, no such real
or personal property is subject to claims, liens or encum-
brances, whether by mortgage, pledge, lien, conditional sale
agreement, charge or otherwise, except for those which would
not, individually or in the aggregate, have a Xxxxxxxxx Mate-
rial Adverse Effect. Section 6.11 of the Disclosure Statement
contains a true and complete list of all real properties owned
by Xxxxxxxxx and its subsidiaries.
6.12 Leases. There has been made available to
Shared Technologies true and complete copies of each lease
requiring the payment of rentals aggregating at least $35,000
per annum pursuant to which real or personal property is held
under lease by Xxxxxxxxx or any of its subsidiaries, and true
-36-
and complete copies of each lease pursuant to which Xxxxxxxxx
or any of its subsidiaries leases real or personal property to
others. A true and complete list of all such leases is set
forth in Section 6.12 of the Disclosure Statement. All of the
leases so listed are valid and subsisting and in full force and
effect and subject to no default with respect to Xxxxxxxxx or
its subsidiaries, as the case may be, and, to Xxxxxxxxx'x
knowledge, are in full force and effect and subject to no
default and subject to no default with respect to any other
party thereto, and the leased real property is in good and sat-
isfactory condition.
6.13 Contracts and Commitments. Other than as dis-
closed in Section 6.13 of the Disclosure Statement, no existing
contract or commitment contains an agreement with respect to
any change of control that would be triggered as a result of
the Merger. Other than as set forth in Section 6.13 of the
Disclosure Statement, neither this Agreement, the Merger nor
the other transactions contemplated hereby will result in any
outstanding loans or borrowings by Xxxxxxxxx or any subsidiary
of Xxxxxxxxx becoming due, going into default or giving the
lenders or other holders of debt instruments the right to
require Xxxxxxxxx or any of its subsidiaries to repay all or a
portion of such loans or borrowings.
6.14 Labor Matters. Each of Xxxxxxxxx and its sub-
sidiaries is in compliance in all material respects with all
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and
neither Xxxxxxxxx nor any of its subsidiaries is engaged in any
unfair labor practice. There is no labor strike, slowdown or
stoppage pending (or, to the best knowledge of Xxxxxxxxx, any
labor strike or stoppage threatened) against or affecting
Xxxxxxxxx or any of its subsidiaries. No petition for certifi-
cation has been filed and is pending before the National Labor
Relations Board with respect to any employees of Xxxxxxxxx or
any of its subsidiaries who are not currently organized.
6.15 Compliance with Law. Except for matters set
forth in the Disclosure Statement, neither Xxxxxxxxx nor any of
its subsidiaries has violated or failed to comply with any
statute, law, ordinance, regulation, rule or order of any for-
eign, federal, state or local government or any other govern-
mental department or agency, or any judgment, decree or order
of any court, applicable to its business or operations, except
where any such violation or failure to comply would not, indi-
vidually or in the aggregate, have a Xxxxxxxxx Material Adverse
-37-
Effect; the conduct of the business of Xxxxxxxxx and its sub-
sidiaries is in conformity with all foreign, federal, state and
local energy, public utility and health requirements, and all
other foreign, federal, state and local governmental and regu-
latory requirements, except where such nonconformities would
not, individually or in the aggregate, have a Xxxxxxxxx Mate-
rial Adverse Effect. Xxxxxxxxx and its subsidiaries have all
permits, licenses and franchises from governmental agencies
required to conduct their businesses as now being conducted,
except for such permits, licenses and franchises the absence of
which would not, individually or in the aggregate, have a
Xxxxxxxxx Material Adverse Effect.
6.16 Board Recommendation. The Board of Directors
of Xxxxxxxxx has, by a unanimous vote at a meeting of such
Board duly held on, or by unanimous written consent of such
Board dated, November 9, 1995, approved and adopted this Agree-
ment, the Merger and the other transactions contemplated
hereby.
6.17 Employment and Labor Contracts. Neither
Xxxxxxxxx nor any of its subsidiaries is a party to any employ-
ment, management services, consultation or other similar con-
tract with any past or present officer, director, employee or
other person or, to the best of Xxxxxxxxx'x knowledge, any
entity affiliated with any past or present officer, director or
employee or other person other than those set forth in
Section 6.17 of the Disclosure Statement and other than those
which (x) have a term of less than one year and (y) involve
payments of less than $30,000 per year, in each case true and
complete copies of which contracts have been delivered to
Shared Technologies, and other than the agreements executed by
employees generally, the forms of which have been delivered to
Shared Technologies.
6.18 Patents and Trademarks. Xxxxxxxxx and its sub-
sidiaries own or have the right to use all patents, patent
applications, trademarks, trademark applications, trade names,
inventions, processes, know-how and trade secrets necessary to
the conduct of their respective businesses, except for those
which the failure to own or have the right to use would not,
individually or in the aggregate, have a Xxxxxxxxx Material
Adverse Effect ("Proprietary Rights"). All issued patents and
trademark registrations and pending patent and trademark appli-
cations of the Proprietary Rights have previously been deliv-
ered to Shared Technologies. No rights or licenses to use Pro-
prietary Rights have been granted by Xxxxxxxxx or its
-38-
subsidiaries except those listed in Section 6.18 of the Disclo-
sure Statement; and no contrary assertion has been made to
Xxxxxxxxx or any of its subsidiaries or notice of conflict with
any asserted right of others has been given by any person
except those which, even if correct, would not, individually or
in the aggregate, have a Xxxxxxxxx Material Adverse Effect.
Xxxxxxxxx has not given notice of any asserted claim or con-
flict to a third party with respect to Xxxxxxxxx'x Proprietary
Rights. True and complete copies of all material license
agreements under which Xxxxxxxxx or any of its subsidiaries is
a licensor or licensee have been delivered to Shared
Technologies.
6.19 Taxes. "Tax" or "Taxes" shall mean all fed-
eral, state, local and foreign taxes, duties, levies, charges
and assessments of any nature, including social security pay-
ments and deductibles relating to wages, salaries and benefits
and payments to subcontractors (to the extent required under
applicable Tax law), and also including all interest, penalties
and additions imposed with respect to such amounts. Except as
set forth in Sections 6.9 and 6.19 of the Disclosure Statement:
(i) Xxxxxxxxx and its subsidiaries have prepared and timely
filed or will timely file with the appropriate governmental
agencies all franchise, income and all other material Tax
returns and reports required to be filed for any period ending
on or before the Effective Time, taking into account any exten-
sion of time to file granted to or obtained on behalf of
Xxxxxxxxx and/or its subsidiaries; (ii) all material Taxes of
Xxxxxxxxx and its subsidiaries in respect of the pre-Merger
period have been paid in full to the proper authorities, other
than such Taxes as are being contested in good faith by appro-
priate proceedings and/or are adequately reserved for in accor-
dance with generally accepted accounting principles; (iii) all
deficiencies resulting from Tax examinations of federal, state
and foreign income, sales and franchise and all other material
Tax returns filed by Xxxxxxxxx and its subsidiaries have either
been paid or are being contested in good faith by appropriate
proceedings; (iv) to the best knowledge of Xxxxxxxxx, no defi-
ciency has been asserted or assessed against Xxxxxxxxx or any
of its subsidiaries, and no examination of Xxxxxxxxx or any of
its subsidiaries is pending or threatened for any material
amount of Tax by any taxing authority; (v) no extension of the
period for assessment or collection of any material Tax is cur-
rently in effect and no extension of time within which to file
any material Tax return has been requested, which Tax return
has not since been filed; (vi) no material Tax liens have been
filed with respect to any Taxes; (vii) Xxxxxxxxx and each of
-39-
its subsidiaries will not make any voluntary adjustment by rea-
son of a change in their accounting methods for any pre-Merger
period that would affect the taxable income or deductions of
Xxxxxxxxx or any of its subsidiaries for any period ending
after the Effective Date; (viii) Xxxxxxxxx and its subsidiaries
have made timely payments of the Taxes required to be deducted
and withheld from the wages paid to their employees; (ix) the
Tax Sharing Agreement under which Xxxxxxxxx or any subsidiary
will have any obligation or liability on or after the Effective
Date is attached as Exhibit E; (x) Xxxxxxxxx has foreign losses
as defined in Section 904(f)(2) of the Code listed in Section
6.19 of the Disclosure Statement; (xi) Xxxxxxxxx and its sub-
sidiaries have unused foreign tax credits set forth in Section
6.19 of the Disclosure Statement; and (xii) to the best knowl-
edge of Xxxxxxxxx, there are no transfer pricing agreements
made with any taxation authority involving Xxxxxxxxx and its
subsidiaries.
6.20 Employee Benefit Plans; ERISA.
(a) Except as set forth in Section 6.20 of the Dis-
closure Statement, there are no "employee pension benefit
plans" as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), covering
employees employed in the United States, maintained or contrib-
uted to by Xxxxxxxxx or any of its subsidiaries, or to which
Xxxxxxxxx or any of its subsidiaries contributes or is obli-
gated to make payments thereunder or otherwise may have any
liability ("Pension Benefits Plans").
(b) Xxxxxxxxx has furnished Shared Technologies with
a true and complete schedule of all "welfare benefit plans" (as
defined in Section 3(1) of ERISA) covering employees employed
in the United States, maintained or contributed to by Xxxxxxxxx
or any of its subsidiaries ("Welfare Plans"), all multiemployer
plans as defined in Section 3(37) of ERISA covering employees
employed in the United States to which Xxxxxxxxx or any of its
subsidiaries is required to make contributions or otherwise may
have any liability, and, to the extent covering employees
employed in the United States, all stock bonus, stock option,
restricted stock, stock appreciation right, stock purchase,
bonus, incentive, deferred compensation, severance and vacation
plans maintained or contributed to by Xxxxxxxxx or a
subsidiary.
(c) Xxxxxxxxx and each of its subsidiaries, and each
of the Pension Benefit Plans and Welfare Plans, are in
-40-
compliance with the applicable provisions of ERISA and other
applicable laws except where the failure to comply would not,
individually or in the aggregate, have a Xxxxxxxxx Material
Adverse Effect.
(d) All contributions to, and payments from, the
Pension Benefit Plans which are required to have been made in
accordance with the Pension Benefit Plans and, when applicable,
Section 302 of ERISA or Section 412 of the Code have been
timely made except where the failure to make such contributions
or payments on a timely basis would not, individually or in the
aggregate, have a Xxxxxxxxx Material Adverse Effect. All con-
tributions required to have been made in accordance with
Section 302 of ERISA or Section 412 of the Code to any employee
pension benefit plan (as defined in Section 3(2) of ERISA)
maintained by an ERISA Affiliate of Xxxxxxxxx or any of its
subsidiaries have been timely made except where the failure to
make such contributions on a timely basis would not individu-
ally or in the aggregate have a Xxxxxxxxx Material Adverse
Effect. For purposes of this Agreement, "ERISA Affiliate"
shall mean any person (as defined in Section 3(9) of ERISA)
that is a member of any group of persons described in
Section 414(b), (c), (m) or (o) of the Code of which Xxxxxxxxx
or a subsidiary is a member.
(e) The Pension Benefit Plans intended to qualify
under Section 401 of the Code are so qualified and have been
determined by the Internal Revenue Service ("IRS") to be so
qualified and nothing has occurred with respect to the opera-
tion of such Pension Benefit Plans which would cause the loss
of such qualification or exemption or the imposition of any
material liability, penalty or tax under ERISA or the Code.
Such plans have been or will be, on a timely basis, (i) amended
to comply with changes to the Code made by the Tax Reform Act
of 1986, the Unemployment Compensation Amendments of 1992, the
Omnibus Budget Reconciliation Act of 1993, and other applicable
legislative, regulatory or administrative requirements; and
(ii) submitted to the Internal Revenue Service for a determina-
tion of their tax qualification, as so amended; and no such
amendment will adversely affect the qualification of such
plans.
(f) Each Welfare Plan that is intended to qualify
for exclusion of benefits thereunder from the income of partic-
ipants or for any other tax-favored treatment under any provi-
sions of the Code (including, without limitation, Sections 79,
105, 106, 125, or 129 of the Code) is and has been maintained
-41-
in compliance with all pertinent provisions of the Code and
Treasury Regulations thereunder.
(g) Except as disclosed in Xxxxxxxxx'x Form 10-K for
the fiscal year ended June 30, 1995, there are (i) no investi-
gations pending, to the best knowledge of Xxxxxxxxx, by any
governmental entity involving the Pension Benefit Plans or Wel-
fare Plans, (ii) no termination proceedings involving the Pen-
sion Benefit Plans and (iii) no pending or, to the best of
Xxxxxxxxx'x knowledge, threatened claims (other than routine
claims for benefits), suits or proceedings against any Pension
Benefit or Welfare Plan, against the assets of any of the
trusts under any Pension Benefit or Welfare Plan or against any
fiduciary of any Pension Benefit or Welfare Plan with respect
to the operation of such plan or asserting any rights or claims
to benefits under any Pension Benefit or Welfare Plan or
against the assets of any trust under such plan, which would,
in the case of clause (i), (ii) or (iii) of this paragraph (f),
give rise to any liability which would, individually or in the
aggregate, have a Xxxxxxxxx Material Adverse Effect, nor, to
the best of Xxxxxxxxx'x knowledge, are there are any facts
which would give rise to any liability which would, individu-
ally or in the aggregate, have a Xxxxxxxxx Material Adverse
Effect in the event of any such investigation, claim, suit or
proceeding.
(h) None of Xxxxxxxxx, any of its subsidiaries or
any employee of the foregoing, nor any trustee, administrator,
other fiduciary or any other "party in interest" or "disquali-
fied person" with respect to the Pension Benefit Plans or Wel-
fare Plans, has engaged in a "prohibited transaction" (as such
term is defined in Section 4975 of the Code or Section 406 of
ERISA) which would be reasonably likely to result in a tax or
penalty on Xxxxxxxxx or any of its subsidiaries under
Section 4975 of the Code or Section 502(i) of ERISA which
would, individually or in the aggregate, have a Xxxxxxxxx Mate-
rial Adverse Effect.
(i) Neither the Pension Benefit Plans subject to
Title IV of ERISA nor any trust created thereunder has been
terminated nor have there been any "reportable events" (as
defined in Section 4043 of ERISA and the regulations thereun-
der) with respect to either thereof which would, individually
or in the aggregate, have a Xxxxxxxxx Material Adverse Effect
nor has there been any event with respect to any Pension Bene-
fit Plan requiring disclosure under Section 4063(a) of ERISA or
any event with respect to any Pension Benefit Plan requiring
-42-
disclosure under Section 4041(c)(3)(C) of ERISA which would,
individually or in the aggregate, have a Xxxxxxxxx Material
Adverse Effect.
(j) Neither Xxxxxxxxx nor any subsidiary of
Xxxxxxxxx has incurred any currently outstanding liability to
the Pension Benefit Guaranty Corporation (the "PBGC") or to a
trustee appointed under Section 4042(b) or (c) of ERISA other
than for the payment of premiums, all of which have been paid
when due. No Pension Benefit Plan has applied for, or
received, a waiver of the minimum funding standards imposed by
Section 412 of the Code. The information supplied to the actu-
ary by Xxxxxxxxx or any of its subsidiaries for use in prepar-
ing the most recent actuarial report for Pension Benefit Plans
is complete and accurate in all material respects.
(k) Except as set forth in Section 6.20 of the Dis-
closure Statement, neither Xxxxxxxxx, any of its subsidiaries
nor any of their ERISA Affiliates has any liability (including
any contingent liability under Section 4204 of ERISA) with
respect to any multiemployer plan, within the meaning of
Section 3(37) of ERISA, covering employees employed in the
United States.
(l) Except as disclosed in Section 6.20 of the Dis-
closure Statement, with respect to each of the Pension Benefit
and Welfare Plans, true, correct and complete copies of the
following documents have been delivered to Shared Technologies:
(i) the current plans and related trust documents, including
amendments thereto, (ii) any current summary plan descriptions,
(iii) the most recent Forms 5500, financial statements and
actuarial reports, if applicable, (iv) the most recent IRS
determination letter, if applicable; and (v) if any application
for an IRS determination letter is pending, copies of all such
applications for determination including attachments, exhibits
and schedules thereto.
(m) Neither Xxxxxxxxx, any of its subsidiaries, any
organization to which Xxxxxxxxx is a successor or parent corpo-
ration, within the meaning of Section 4069(b) of ERISA, nor any
of their ERISA Affiliates has engaged in any transaction,
within the meaning of Section 4069(a) of ERISA, the liability
for which would, individually or in the aggregate, have a
Xxxxxxxxx Material Adverse Effect.
(n) Except as disclosed in Section 6.20 of the Dis-
closure Statement, none of the Welfare Plans maintained by
-43-
Xxxxxxxxx or any of its subsidiaries are retiree life or
retiree health insurance plans which provide for continuing
benefits or coverage for any participant or any beneficiary of
a participant following termination of employment, except as
may be required under the Consolidated Omnibus Budget Reconcil-
iation Act of 1985, as amended ("COBRA"), or except at the
expense of the participant or the participant's beneficiary.
Xxxxxxxxx and each of its subsidiaries which maintain a "group
health plan" within the meaning of Section 5000(b)(1) of the
Code have complied with the notice and continuation require-
ments of Section 4980B of the Code, COBRA, Part 6 of Subtitle B
of Title I of ERISA and the regulations thereunder except where
the failure to comply would not, individually or in the aggre-
gate, have a Xxxxxxxxx Material Adverse Effect.
(o) No liability under any Pension Benefit or Wel-
fare Plan has been funded nor has any such obligation been sat-
isfied with the purchase of a contract from an insurance com-
pany as to which Xxxxxxxxx or any of its subsidiaries has
received notice that such insurance company is in
rehabilitation.
(p) Except pursuant to the agreements listed in
Section 6.20 of the Disclosure Statement, the consummation of
the transactions contemplated by this Agreement will not result
in an increase in the amount of compensation or benefits or
accelerate the vesting or timing of payment of any benefits or
compensation payable to or in respect of any employee of
Xxxxxxxxx or any of its subsidiaries.
(q) Xxxxxxxxx has disclosed to Shared Technologies
in Section 6.20 of the Disclosure Statement each material For-
eign Plan to the extent the benefits provided thereunder are
not mandated by the laws of the applicable foreign jurisdic-
tion. Xxxxxxxxx and each of its subsidiaries and each of the
Foreign Plans are in compliance with applicable laws and all
required contributions have been made to the Foreign Plans,
except where the failure to comply or make contributions would
not, individually or in the aggregate, have a Xxxxxxxxx Mate-
rial Adverse Effect. For purposes hereof, the term "Foreign
Plan" shall mean any plan with respect to benefits voluntarily
provided by Xxxxxxxxx or any subsidiary with respect to employ-
ees of any of them employed outside the United States.
-44-
6.21 Environmental Matters.
(a) Except as set forth in Section 6.21 of the Dis-
closure Statement:
(i) each of Xxxxxxxxx and its subsidiaries, and the
properties and assets owned by them, and to the actual
knowledge of Xxxxxxxxx, all properties operated, leased,
managed or used by Xxxxxxxxx and its subsidiaries are in
compliance with all applicable Environmental Laws except
where the failure to be in compliance would not, individu-
ally or in the aggregate, have a Xxxxxxxxx Material
Adverse Effect;
(ii) there is no Environmental Claim that is
(1) pending or threatened against Xxxxxxxxx or any of its
subsidiaries or (2) pending or threatened against any per-
son or entity or any assets owned by Xxxxxxxxx or its sub-
sidiaries whose liability for such Environmental Claim has
been retained or assumed by contract or otherwise by
Xxxxxxxxx or any of its subsidiaries or can be imputed or
attributed by law to Xxxxxxxxx or any of its subsidiaries,
the effect of any of which would, individually or in the
aggregate, have a Xxxxxxxxx Material Adverse Effect;
(iii) there are no past or present actions, activi-
ties, circumstances, conditions, events or incidents aris-
ing out of, based upon, resulting from or relating to the
ownership, operation or use of any property or assets cur-
rently or formerly owned, operated or used by Xxxxxxxxx or
any of its subsidiaries (or any predecessor in interest of
any of them), including, without limitation, the genera-
tion, storage, treatment or transportation of any Haz-
ardous Materials, or the emission, discharge, disposal or
other Release or threatened Release of any Hazardous Mate-
rials into the Environment which is presently expected to
result in an Environmental Claim;
(iv) no lien has been recorded under any Environmen-
tal Law with respect to any material property, facility or
asset owned by Xxxxxxxxx or any of its subsidiaries, and
to the actual knowledge of Xxxxxxxxx, no lien has been
recorded under any Environmental Law with respect to any
material property, facility or asset, operated, leased or
managed or used by Xxxxxxxxx or its subsidiaries and
relating to or resulting from Xxxxxxxxx or its
-45-
subsidiaries operations, lease, management or use for
which Xxxxxxxxx or its subsidiaries may be legally
responsible;
(v) neither Xxxxxxxxx nor any of its subsidiaries
has received notice that it has been identified as a
potentially responsible party or any request for informa-
tion under the Comprehensive Environmental Response, Com-
pensation and Liability Act of 1980, as amended
("CERCLA"), the Resource Conservation and Recovery Act, as
amended ("RCRA"), or any comparable state law nor has
Xxxxxxxxx or any of its subsidiaries received any notifi-
cation that any Hazardous Materials that it or any of
their respective predecessors in interest has used, gener-
ated, stored, treated, handled, transported or disposed
of, or arranged for transport for treatment or disposal
of, or arranged for disposal or treatment of, has been
found at any site at which any person is conducting or
plans to conduct an investigation or other action pursuant
to any Environmental Law;
(vi) to the actual knowledge of Xxxxxxxxx, there has
been no Release of Hazardous Materials at, on, upon,
under, from or into any real property in the vicinity of
any property currently or formerly owned by Xxxxxxxxx or
any of its subsidiaries that, through soil, air, surface
water or groundwater migration or contamination, has
become located on, in or under such properties and, to the
actual knowledge of Xxxxxxxxx, there has been no release
of Hazardous Materials at, on, upon, under or from any
property currently or formerly operated, leased, managed
or used by Xxxxxxxxx or any of its subsidiaries that
through soil, air, surface water or groundwater migration
or contamination has become located on, in or under such
properties as resulting from or relating to Xxxxxxxxx or
any of its subsidiaries operations, lease, management or
use thereof of for which Xxxxxxxxx and any of its subsid-
iaries may be legally responsible;
(vii) no asbestos or asbestos containing material or
any polychlorinated biphenyls are contained within prod-
ucts presently manufactured and, to the best knowledge of
Xxxxxxxxx manufactured at any time by Xxxxxxxxx or any of
its subsidiaries and, to the actual knowledge of Xxxxxxxxx
there is no asbestos or asbestos containing material or
any polychlorinated biphenyl in, on or at any property or
-46-
any facility or equipment owned, operated, leased, managed
or used by Xxxxxxxxx or any of its subsidiaries;
(viii) no property owned by Xxxxxxxxx or any of its
subsidiaries and to the actual knowledge of Xxxxxxxxx, no
property operated, leased, managed or used by Xxxxxxxxx
and any of its subsidiaries is (i) listed or proposed for
listing on the National Priorities List under CERCLA or
(ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promul-
gated pursuant to CERCLA, or on any comparable list pub-
lished by any governmental authority;
(ix) no underground storage tank or related piping is
located at, under or on any property owned by Xxxxxxxxx or
any of its subsidiaries or, to the actual knowledge of
Xxxxxxxxx, any property operated, leased, managed or used
by Xxxxxxxxx and any of its subsidiaries, nor, to the
actual knowledge of Xxxxxxxxx, has any such tank or piping
been removed or decommissioned from or at such property;
(x) all environmental investigations, studies,
audits, assessments or reviews conducted of which
Xxxxxxxxx has actual knowledge in relation to the current
or prior business or assets owned, operated, leased man-
aged or used by Xxxxxxxxx or any of its subsidiaries or
any real property, assets or facility now or previously
owned operated, managed, leased or used by Xxxxxxxxx or
any of its subsidiaries have been delivered to Shared
Technologies; and
(xi) each of Xxxxxxxxx and its subsidiaries has
obtained all permits, licenses and other authorizations
("Authorizations") required under any Environmental Law
with respect to the operation of its assets and business
and its use, ownership and operation of any real property,
and each such Authorization is in full force and effect.
(b) For purposes of Section 6.21(a):
(i) "Actual Knowledge of Xxxxxxxxx" means the
actual knowledge of individuals at the corporate manage-
ment level of Xxxxxxxxx and its subsidiaries.
(ii) "Environment" means any surface water, ground
water, drinking water supply, land surface or subsurface
-00-
xxxxxx, xxxxxxx air and including, without limitation, any
indoor location;
(iii) "Environmental Claim" means any notice or claim
by any person alleging potential liability (including,
without limitation, potential liability for investigatory
costs, cleanup costs, governmental costs, or harm,
injuries or damages to any person, property or natural
resources, and any fines or penalties) arising out of,
based upon, resulting from or relating to (1) the emis-
sion, discharge, disposal or other release or threatened
release in or into the Environment of any Hazardous Mate-
rials or (2) circumstances forming the basis of any xxxxx-
tion, or alleged violation, of any applicable Environmen-
tal Law;
(iv) "Environmental Laws" means all federal, state
and local laws, codes and regulations relating to pollu-
tion, the protection of human health, the protection of
the Environment or the emission, discharge, disposal or
other release or threatened release of Hazardous Materials
in or into the Environment;
(v) "Hazardous Materials" means pollutants, contami-
nants or chemical, industrial, hazardous or toxic materi-
als or wastes, and includes, without limitation, asbestos
or asbestos-containing materials, PCBs and petroleum, oil
or petroleum or oil products, derivatives or constituents;
and
(vi) "Release" means any past or present spilling,
leaking, pumping, pouring, emitting, emptying, discharg-
ing, injecting, escaping, leaching, dumping or disposing
of Hazardous Materials into the Environment or within
structures (including the abandonment or discarding of
barrels, containers or other closed receptacles containing
any Hazardous Materials).
6.22 Disclosure. No representation or warranty by
Xxxxxxxxx herein, or in any certificate furnished by or on
behalf of Xxxxxxxxx to Shared Technologies in connection here-
with, contains or will contain any untrue statement of a mate-
rial fact or omits or will omit to state a material fact neces-
sary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not
misleading.
-48-
6.23 Absence of Undisclosed Liabilities. Except as
set forth in Section 6.9 of the Disclosure Statement, neither
Xxxxxxxxx nor any of its subsidiaries has any liabilities or
obligations of any nature, whether absolute, accrued,
unmatured, contingent or otherwise, or any unsatisfied judg-
ments or any leases of personalty or realty or unusual or
extraordinary commitments, except the liabilities recorded on
the Balance Sheet and the notes thereto, and except for liabil-
ities or obligations incurred in the ordinary course of busi-
ness and consistent with past practice since June 30, 1995 that
would not individually or in the aggregate have a Xxxxxxxxx
Material Adverse Effect.
6.24 Finders or Brokers. Except as set forth in
Section 6.24 of the Disclosure Statement, none of Xxxxxxxxx,
the subsidiaries of Xxxxxxxxx, the Board of Directors or any
member of the Board of Directors has employed any investment
banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee
or any commission in connection with of the Merger, and
Section 6.24 of the Disclosure Statement sets forth the maximum
consideration (present and future) agreed to be paid to each
such party.
ARTICLE VII
CONDUCT OF BUSINESS OF XXXXXXXXX AND
SHARED TECHNOLOGIES PENDING THE MERGER
7.1 Conduct of Business of Xxxxxxxxx and Shared
Technologies Pending the Merger. Except as contemplated by
this Agreement or as expressly agreed to in writing by
Xxxxxxxxx and Shared Technologies, during the period from the
date of this Agreement to the Effective Time, each of Xxxxxxxxx
and its subsidiaries and Shared Technologies and its subsidiar-
ies will conduct their respective operations according to its
ordinary course of business consistent with past practice, and
will use all commercially reasonable efforts to preserve intact
its business organization, to keep available the services of
its officers and employees and to maintain satisfactory rela-
tionships with suppliers, distributors, customers and others
having business relationships with it and will take no action
which would materially adversely affect the ability of the par-
ties to consummate the transactions contemplated by this Agree-
ment. Without limiting the generality of the foregoing, and
except as otherwise expressly provided in this Agreement, prior
-49-
to the Effective Time, neither Xxxxxxxxx nor Shared Technolo-
xxxx will nor will they permit any of their respective subsid-
iaries to, without the prior written consent of the other
party:
(a) amend its certificate of incorporation or by-
laws, except Shared Technologies may amend its certificate
of incorporation and bylaws as required by the terms of
this Agreement;
(b) authorize for issuance, issue, sell, deliver,
grant any options for, or otherwise agree or commit to
issue, sell or deliver any shares of any class of its cap-
ital stock or any securities convertible into shares of
any class of its capital stock, except (i) pursuant to and
in accordance with the terms of currently outstanding con-
vertible securities, warrants and options, and
(ii) options granted under the Stock Option Plans of
Shared Technologies, in the ordinary course of business
consistent with past practice;
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock
or purchase, redeem or otherwise acquire any shares of its
own capital stock or of any of its subsidiaries, except as
otherwise expressly provided in this Agreement (including,
without limitation, Section 6.7(b)) and except for the
distribution of the shares of Shared Technologies Cellular
Inc. to the shareholders of Shared Technologies;
(d) except in the ordinary course of business, con-
sistent with past practice (i) create, incur, assume,
maintain or permit to exist any long-term debt or any
short-term debt for borrowed money other than under exist-
ing lines of credit; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any
other person except its wholly owned subsidiaries in the
ordinary course of business and consistent with past prac-
tices; or (iii) make any loans, advances or capital con-
tributions to, or investments in, any other person;
(e) except as otherwise expressly contemplated by
this Agreement (including without limitation as set forth
in Schedule 6.17 to the Disclosure Statement) or in the
-50-
ordinary course of business, consistent with past prac-
xxxx, (i) increase in any manner the compensation of any
of its directors, officers or other employees; (ii) pay or
agree to pay any pension, retirement allowance or other
employee benefit not required, or enter into or agree to
enter into any agreement or arrangement with such direc-
tor, officer or employee, whether past or present, relat-
ing to any such pension, retirement allowance or other
employee benefit, except as required under currently
existing agreements, plans or arrangements; (iii) grant
any severance or termination pay to, or enter into any
employment or severance agreement with, any of its direc-
tors, officers or other employees; or (iv) except as may
be required to comply with applicable law, become obli-
gated (other than pursuant to any new or renewed collec-
tive bargaining agreement) under any new pension plan,
welfare plan, multiemployer plan, employee benefit plan,
benefit arrangement, or similar plan or arrangement, which
was not in existence on the date hereof, including any
bonus, incentive, deferred compensation, stock purchase,
stock option, stock appreciation right, group insurance,
severance pay, retirement or other benefit plan, agreement
or arrangement, or employment or consulting agreement with
or for the benefit of any person, or amend any of such
plans or any of such agreements in existence on the date
hereof;
(f) except as otherwise expressly contemplated by
this Agreement, enter into any other agreements, commit-
ments or contracts, except agreements, commitments or con-
tracts for the purchase, sale or lease of goods or ser-
vices in the ordinary course of business, consistent with
past practice;
(g) except in the ordinary course of business, con-
sistent with past practice, or as contemplated by this
Agreement, authorize, recommend, propose or announce an
intention to authorize, recommend or propose, or enter
into any agreement in principle or an agreement with
respect to, any plan of liquidation or dissolution, any
acquisition of a material amount of assets or securities,
any sale, transfer, lease, license, pledge, mortgage, or
other disposition or encumbrance of a material amount of
assets or securities or any material change in its capi-
talization, or any entry into a material contract or any
amendment or modification of any material contract or any
-51-
release or relinquishment of any material contract rights;
or
(h) agree to do any of the foregoing.
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1 Approval of Stockholders; SEC and Other Filings.
(a) Shared Technologies shall cause a special meet-
ing of its stockholders (the "Special Meeting") to be duly
called and held as soon as reasonably practicable for the pur-
pose of (i) voting on this Agreement, (ii) authorizing Shared
Technologies' Board of Directors, to the extent permitted by
law, to make modifications of or amendments to this Agreement
as Shared Technologies' Board of Directors deems proper without
further stockholder approval and (iii) voting on all other
actions contemplated hereby which require the approval of
Shared Technologies' stockholders, including without limitation
any such approval needed to amend Shared Technologies' Certifi-
cate of Incorporation and Bylaws as required by this Agreement.
Shared Technologies shall comply with all applicable legal
requirements in connection with the Special Meeting.
(b) Shared Technologies and Fairchild shall xxxxxx-
ate with each other and use their best efforts to file with the
SEC or other applicable regulatory or governmental agency or
authority, as the case may be, as promptly as practicable the
Proxy Statement and the Other Documents. The parties shall use
their best efforts to have the Proxy Statement cleared by the
SEC as promptly as practicable after filing and, as promptly as
practicable after the Proxy Statement has been so cleared,
shall mail the Proxy Statement to the stockholders of Shared
Technologies as of the record date for the Special Meeting.
Subject to the fiduciary obligations of Shared Technologies'
Board of Directors under applicable law as advised by Xxxxxx &
Hannah or other nationally recognized counsel, the Proxy State-
ment shall contain the recommendation of the Board in favor of
the Merger and for approval and adoption of this Agreement. In
addition to the irrevocable proxy received from a stockholder
of Shared Technologies prior to the date hereof, Shared Tech-
nologies shall use its best efforts to solicit from stockhold-
ers of Shared Technologies proxies or consents in favor of such
approval and to take all other action necessary or, in the
-52-
reasonable judgment of Fairchild, helpful to secure the vote of
stockholders required by law to effect the Merger. Shared
Technologies and Fairchild each shall use its best efforts to
obtain and furnish the information required to be included in
the Proxy Statement and any Other Document, and Shared Technol-
ogies, after consultation with Fairchild, shall use its best
efforts to respond as promptly as is reasonably practicable to
any comments made by the SEC or any other applicable regulatory
or governmental agency or authority with respect to any of the
foregoing (or any preliminary version thereof). Shared Tech-
nologies will promptly notify Fairchild of the receipt of the
comments of the SEC or any other applicable regulatory or gov-
ernmental agency or authority, as the case may be, and of any
request by any of the foregoing for amendments or supplements
to the Proxy Statement or any Other Document, as the case may
be, or for additional information, and will supply Fairchild
with copies of all correspondence between Shared Technologies
and its representatives, on the one hand, and the SEC, any
other applicable regulatory or governmental agency or authority
or the members of the staff of any of the foregoing, on the
other hand, with respect to the Proxy Statement or any Other
Document, as the case may be. If at any time prior to the Spe-
cial Meeting any event should occur relating to Shared Technol-
ogies or any of its subsidiaries or Fairchild or any of its
affiliates or associates, or relating to the Financing (as
hereinafter defined) which should be set forth in an amendment
of or a supplement to, the Proxy Statement or any Other Docu-
ment, Shared Technologies will promptly inform Fairchild or
Fairchild will promptly inform Shared Technologies, as the case
may be. Whenever any event occurs which should be set forth in
an amendment of, or a supplement to, the Proxy Statement or any
Other Document, as the case may be, Fairchild and Shared Tech-
nologies will upon learning of such event, cooperate and
promptly prepare, file and mail such amendment or supplement.
(c) Fairchild shall use its best efforts to file
with and obtain from the Internal Revenue Service a favorable
ruling to the effect set forth in Schedule 9.2(d) hereto.
Fairchild and Shared Technologies shall cooperate with each
other and use their best efforts to effect a tender offer and
consent solicitation for the outstanding 12<% Senior Notes due
1999 of Fairchild and, if the Merger is consummated, to retire
all such Notes tendered in such offer.
-53-
8.2 Additional Agreements; Cooperation.
(a) Subject to the terms and conditions herein pro-
vided, each of the parties hereto agrees to use its best
efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate
with each other in connection with the foregoing, including
using its best efforts (i) to obtain all necessary waivers,
consents and approvals from other parties to loan agreements,
leases and other contracts that are specified on Schedule 8.2
to the Disclosure Statement, (ii) to obtain all necessary con-
sents, approvals and authorizations as are required to be
obtained under any federal, state or foreign law or regula-
tions, (iii) to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transac-
tions contemplated hereby, (iv) to lift or rescind any injunc-
tion or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions con-
templated hereby, (v) to effect all necessary registrations and
filings, including, but not limited to, filings under the HSR
Act and any pre-merger notifications required in any other
country, if any, and submissions of information requested by
governmental authorities, (vi) provide all necessary informa-
tion for the Proxy Statement and (vii) to fulfill all condi-
tions to this Agreement. In addition, Fairchild agrees to use
its best efforts (subject to compliance with all applicable
securities laws) to solicit and receive the irrevocable proxies
from shareholders of Shared Technologies contemplated by
Section 10.1(b). Shared Technologies agrees to use its best
efforts to cause the distribution to its shareholders of all
shares of capital stock of Shared Technologies Cellular, Inc.
("STCI") owned by Shared Technologies and its subsidiaries to
be completed prior to the Effective Time and, prior to such
distribution to cause STCI, to enter into an agreement prevent-
ing STCI from competing in the telecommunications systems and
service business.
(b) Shared Technologies will supply Fairchild with
copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between Shared
Technologies or its representatives, on the one hand, and the
Federal Trade Commission, the Antitrust Division of the United
States Department of Justice, the SEC and any other regulatory
or governmental agency or authority or members of their respec-
tive staffs, on the other hand, with respect to this Agreement,
-54-
the Merger and the other transactions contemplated hereby.
Each of the parties hereto agrees to furnish to the other party
hereto such necessary information and reasonable assistance as
such other party may request in connection with its preparation
of necessary filings or submissions to any regulatory or gov-
ernmental agency or authority, including, without limitation,
any filing necessary under the provisions of the HSR Act or any
other applicable Federal or state statute.
(c) Fairchild will supply Shared Technologies with
copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between
Fairchild or its representatives, on the one hand, and the Fed-
eral Trade Commission, the Antitrust Division of the United
States Department of Justice, the SEC or any other regulatory
or governmental agency or authority or members of their respec-
tive staffs, on the other hand, with respect to this Agreement,
the Merger and the other transactions contemplated hereby.
8.3 Publicity. Shared Technologies and Fairchild
agree to consult with each other in issuing any press release
and with respect to the general content of other public state-
ments with respect to the transactions contemplated hereby, and
shall not issue any such press release prior to such consulta-
tion, except as may be required by law.
8.4 No Solicitation.
(a) Each of Shared Technologies and Fairchild agrees
that, prior to the Effective Time, it shall not, and shall not
authorize or permit any of its subsidiaries or any of its or
its subsidiaries' directors, officers, employees, agents or
representatives to, directly or indirectly, solicit, initiate,
facilitate or encourage (including by way of furnishing or dis-
closing non-public information) any inquiries or the making of
any proposal with respect to any merger, consolidation or other
business combination involving Shared Technologies or its sub-
sidiaries or Fairchild or its subsidiaries or acquisition of
any kind of all or substantially all of the assets or capital
stock of Shared Technologies and its subsidiaries taken as a
whole or Fairchild and its subsidiaries taken as a whole (an
"Acquisition Transaction") or negotiate, explore or otherwise
communicate in any way with any third party (other than Shared
Technologies or Fairchild, as the case may be) with respect to
any Acquisition Transaction or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate
or fail to consummate the Merger or any other transactions
-55-
contemplated by this Agreement; provided that Shared Technolo-
xxxx or Fairchild may, in response to an unsolicited written
proposal with respect to an Acquisition Transaction from a
financially capable third party that contains no financing
condition, (i) furnish or disclose non-public information to
such third party and (ii) negotiate, explore or otherwise com-
municate with such third party, in each case only if the Board
of Directors of such party determines in good faith by a major-
ity vote, after consultation with its legal and financial advi-
sors, and after receipt of the written opinion of outside legal
counsel of such party that failing to take such action would
constitute a breach of the fiduciary duties of such Board of
Directors, that taking such action is reasonably likely to lead
to an Acquisition Transaction that is more favorable to the
stockholders of such party than the Merger and that failing to
take such action would constitute a breach of the Board's fidu-
ciary duties.
(b) Each of Shared Technologies and Fairchild shall
immediately advise the other in writing of the receipt of any
inquiries or proposals relating to an Acquisition Transaction
and any actions taken pursuant to Section 8.4(a).
8.5 Access to Information.
(a) From the date of this Agreement until the Effec-
tive Time, each of Shared Technologies and Fairchild will give
the other party and its authorized representatives (including
counsel, environmental and other consultants, accountants and
auditors) full access during normal business hours to all
facilities, personnel and operations and to all books and
records of it and its subsidiaries, will permit the other party
to make such inspections as it may reasonably require and will
cause its officers and those of its subsidiaries to furnish the
other party with such financial and operating data and other
information with respect to its business and properties as such
party may from time to time reasonably request.
(b) Each of the parties hereto will hold and will
cause its consultants and advisors to hold in strict confidence
pursuant to the Confidentiality Agreement dated October 1995
between the parties (the "Confidentiality Agreement") all docu-
ments and information furnished to the other in connection with
the transactions contemplated by this Agreement as if each such
consultant or advisor was a party thereto, and the provisions
of the Confidentiality Agreement shall survive any termination
-56-
of this Agreement but will be extinguished at the Effective
Time if the Merger occurs.
8.6 Financing. Fairchild will cooperate with Shared
Technologies to assist Shared Technologies in obtaining the
financing required for Shared Technologies to effect the Merger
(including the funds necessary to repay the indebtedness
referred to on Exhibit 9.1 and to pay the amounts owing to the
holders of the Series A and Series C Preferred Stock) (the
"Financing"). Immediately prior to the Effective Time,
Fairchild will certify the aggregate amount of accrued and
unpaid dividends on the Series A Preferred Stock and Series C
Preferred Stock to be paid by Shared Technologies pursuant to
the Merger.
8.7 Notification of Certain Matters. Shared Tech-
nologies or Fairchild, as the case may be, shall promptly
notify the other of (i) its obtaining of actual knowledge as to
the matters set forth in clauses (x) and (y) below, or (ii) the
occurrence, or failure to occur, of any event which occurrence
or failure to occur would be likely to cause (x) any represen-
tation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date
hereof to the Effective Time, or (y) any material failure of
Shared Technologies or Fairchild, as the case may be, or of any
officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement; provided, how-
ever, that no such notification shall affect the representa-
tions or warranties of the parties or the conditions to the
obligations of the parties hereunder.
8.8 Board of Directors of Shared Technologies. The
Shared Technologies Board of Directors shall take such corpo-
rate action as may be necessary to cause the directors compris-
ing its full board to be changed at the Effective Time to
include, subject to the requisite vote of the shareholders of
Shared Technologies, immediately after the Effective Time on
the Surviving Corporation Board of Directors the persons speci-
fied pursuant to the Shareholders Agreement.
8.9 Indemnification.
(a) The Surviving Corporation shall indemnify,
defend and hold harmless the present and former officers,
directors, employees and agents of Fairchild and its subsidiar-
ies against all losses, claims, damages, expenses or
-57-
liabilities arising out of actions or omissions or alleged
actions or omissions occurring at or prior to the Effective
Time to the same extent and on the same terms and conditions
(including with respect to advancement of expenses) provided
for in Xxxxxxxxx'x Certificate of Incorporation and By-Laws and
agreements in effect at the date hereof (to the extent consis-
tent with applicable law); provided that such actions or omis-
sions or alleged actions or omissions are exclusively related
to the business of the Xxxxxxxxx Communications Services Com-
pany; and, provided, further, that in no event will this indem-
nity extend to the transactions effected pursuant to this
Agreement, including but not limited to the Xxxxxxxxx
Reorganization.
(b) The provisions of this Section 8.9 are intended
to be for the benefit of and shall be enforceable by each
indemnified party hereunder, his or her heirs and his or her
representatives.
8.10 Fees and Expenses.
(a) Except as set forth in Section 8.10(b), in the
event this Agreement is terminated, Shared Technologies and
Fairchild shall bear their respective expenses incurred in con-
nection with the Merger, including, without limitation, the
preparation, execution and performance of this Agreement and
the transactions contemplated hereby, and all fees and expenses
of investment bankers, finders, brokers, agents, representa-
tives, counsel and accountants, except that the fees and
expenses of CS First Boston shall be shared equally by Shared
Technologies and Fairchild. If the Merger occurs, then the
Surviving Corporation shall be responsible, and reimburse
Fairchild, for all of such expenses incurred by Shared Technol-
ogies and Fairchild in connection with the Merger (but
Xxxxxxxxx'x expenses shall only be borne by the Surviving Cor-
poration to the extent set forth in Schedule 8.10).
(b) If this Agreement is terminated pursuant to Sec-
tion 10.1(d), (e) or (h), then Shared Technologies shall
promptly, but in no event later than the next business day
after the date of such termination, pay Fairchild, in immedi-
ately available funds, the amount of any and all fees and
expenses incurred by Fairchild (including, but not limited to,
fees and expenses of Xxxxxxxxx'x counsel, investment banking
fees and expenses and printing expenses) in connection with
this Agreement, the Merger and the other transactions contem-
plated hereby and, in addition, if such termination is pursuant
-58-
to Section 10.1(h), a fee of $5,000,000. If this Agreement is
terminated pursuant to Section 10.1(f) or (i) or pursuant to
Section 10.1(c) solely due to the failure of Fairchild to sat-
isfy the condition in Section 9.2(d) or to obtain tenders and
consents from at least 51% of the outstanding principal amount
of Xxxxxxxxx'x 12<% Senior Notes due 1999 as contemplated by
Schedule 9.1, then Fairchild shall promptly, but in no event
later than the next business day after the date of such termi-
nation, pay Shared Technologies, in immediately available
funds, the amount of any and all fees and expenses incurred by
Shared Technologies (including, but not limited to, fees and
expenses of Shared Technologies' counsel, investment banking
fees and expenses and printing expenses) in connection with
this Agreement, the Merger and the other transactions contem-
plated hereby and in addition, if such termination is pursuant
to Section 10.1(i), a fee of $5,000,000.
8.11 Post-Merger Cooperation. After the Effective
Time, the Surviving Corporation shall cooperate with RHI and
permit RHI to take all actions (including without limitation
the right to endorse checks and enter into agreements) reason-
ably required by RHI to allow RHI to assert title (and prose-
cute claims against and defend claims brought by third par-
ties), whether in its own name or in the name of Fairchild,
with respect to all assets, claims and privileges of Fairchild
that were owned by it, and defend against all liabilities and
claims attributable to it, in each case, immediately prior to
the Xxxxxxxxx Reorganization and that did not relate to the
telecommunications systems and service business. After the
Effective Time, RHI will cooperate with the Surviving Corpora-
tion and permit the Surviving Corporation to take all actions
(including without limitation the right to endorse checks and
enter into agreements) reasonably required by the Surviving
Corporation to allow the Surviving Corporation to assert title
(and prosecute claims against third parties) whether in its own
name or in the name of Fairchild, with respect to all assets,
claims and privileges of Xxxxxxxxx'x telecommunications systems
and service business.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Obligations of Each Party to
Effect the Merger. The respective obligations of each party to
effect the Merger shall be subject to the fulfillment or waiver
-59-
by the Board of Directors of the waiving party (subject to
applicable law) at or prior to the Effective Date of each of
the following conditions:
(a) Shared Technologies' shareholders shall have
duly approved and adopted the Merger, this Agreement and
any other transactions contemplated hereby which require
the approval of such shareholders by law as required by
applicable law;
(b) any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated;
(c) no order, statute, rule, regulation, executive
order, injunction, stay, decree or restraining order shall
have been enacted, entered, promulgated or enforced by any
court of competent jurisdiction or governmental or regula-
tory authority or instrumentality that prohibits the con-
summation of the Merger or the transactions contemplated
hereby;
(d) all necessary consents and approvals of any
United States or any other governmental authority or any
other third party required for the consummation of the
transactions contemplated by this Agreement shall have
been obtained except for such consents and approvals the
failure to obtain which individually or in the aggregate
would not have a material adverse effect on the Surviving
Corporation and any waiting period applicable to the con-
summation of the Merger under the HSR Act shall have
expired or been terminated;
(e) each of the transactions set forth on the
attached Schedule 9.1 shall have been consummated;
(f) the parties shall have received the written
opinion of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corpo-
ration or another investment banking firm of nationally
recognized standing selected by Fairchild that the fair
market value of the Preferred Stock is at least equal to
the positive difference between $47.5 million and the
value of the Shared Technologies Common Stock to be
received as Merger Consideration (based upon the closing
price thereof on the date preceding the Effective Time);
and
-60-
(g) Xxx X. Xxxxx shall have been offered an employ-
ment agreement on terms satisfactory to both Fairchild and
Shared Technologies.
9.2 Additional Conditions to Obligations of
Fairchild. The obligations of Fairchild to effect the Merger
shall be subject to the fulfillment or waiver (subject to
applicable law), at or prior to the Effective Date, of each of
the following conditions:
(a) Shared Technologies shall have furnished
Fairchild with certified copies of resolutions duly
adopted by its Board of Directors approving the execution
and delivery of this Agreement and the Merger and all
other necessary corporate action to enable Shared Technol-
ogies to comply with the terms of this Agreement;
(b) Shared Technologies shall have performed or com-
plied in all material respects with all its agreements,
obligations and covenants required by this Agreement to be
performed by it on or prior to the Effective Date, and
Shared Technologies shall have delivered to Fairchild a
certificate, dated the Effective Date, of its President
and its Secretary to such effect;
(c) the representations and warranties of Shared
Technologies contained herein shall be true and correct in
all material respects on the date of this Agreement and
the Effective Date as though such representations and war-
ranties were made at and on such date, and Shared Technol-
ogies shall have delivered to Fairchild a certificate,
dated the Effective Date, of its President and its Secre-
tary to such effect;
(d) Fairchild shall have received a favorable ruling
of the Internal Revenue Service to the effect set forth in
Schedule 9.2(d) hereto;
(e) Shared Technologies shall have amended its Cer-
tificate of Incorporation and Bylaws to the extent set
forth in Schedule 9.2(e);
(f) there shall not have occurred since December 31,
1994 any material adverse change in the business, opera-
tions, assets, financial condition or results of opera-
tions of Shared Technologies and its subsidiaries taken as
a whole;
-61-
(g) Shared Technologies shall have executed and
delivered a registration rights agreement in the form of
Exhibit D hereto;
(h) Shared Technologies shall have entered into a
Tax Sharing Agreement with RHI in the form of Exhibit E
hereto; and
(i) Shared Technologies shall have, prior to the
Effective Time, completed the distribution to its share-
holders of all of the capital stock of Shared Technologies
Cellular, Inc. owned by Shared Technologies and Shared
Technologies Cellular, Inc. shall have executed a
non-competition agreement with Shared Technologies, in
form and substance satisfactory to Fairchild.
9.3 Additional Conditions to Obligations of Shared
Technologies. The obligations of Shared Technologies to effect
the Merger shall be subject to the fulfillment or waiver (sub-
ject to applicable law), at or prior to the Effective Date, of
each of the following conditions:
(a) Each of TFC, RHI and Fairchild shall have fur-
nished Shared Technologies with certified copies of reso-
lutions duly adopted by its Board of Directors approving
the execution and delivery of this Agreement and the
Merger and all other necessary corporate action to enable
Fairchild to comply with the terms of this Agreement;
(b) Fairchild shall have performed or complied in
all material respects with all its agreements, obligations
and covenants required by this Agreement to be performed
by it on or prior to the Effective Date and Fairchild
shall have delivered to Shared Technologies a certificate,
dated the Effective Date, of its President and its Secre-
tary to such effect;
(c) the representations and warranties of TFC, RHI
and Fairchild contained herein shall be true and correct
in all material respects on the date of this Agreement and
the Effective Date as though such representations and war-
ranties were made at and on such date and Fairchild shall
have delivered to Shared Technologies a certificate, dated
the Effective Date, of its President and its Secretary to
such effect;
-62-
(d) there shall not have occurred since June 30,
1995 any material adverse change in the business, opera-
tions, assets, financial condition or results of opera-
tions of Fairchild and its wholly owned subsidiary, VSI,
taken as a whole (it being understood that no such mate-
rial adverse change shall be deemed to have occurred with
respect to Fairchild and VSI, taken as a whole, if the pro
forma consolidated net worth of Fairchild, as evidenced by
a pro forma closing date balance sheet to be delivered to
Shared Technologies on the Effective Date, is at least
$80,000,000); and
(e) RHI, The Xxxxxxxxx Corporation, D-M-E Inc. and
Xxxxxxxxx Fasteners Inc. shall have entered into Indemni-
fication Agreements with Shared Technologies in the forms
of Exhibits B1-3 hereto; and RHI shall have delivered to
Shared Technologies an executed Pledge Agreement in the
form of Exhibit C hereto, as well as the Preferred Stock
required to be pledged thereby.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated
at any time prior to the Effective Time whether before or after
approval by the stockholders of Shared Technologies:
(a) by mutual written consent of Fairchild and
Shared Technologies;
(b) by Fairchild if RHI has not received within 10
business days after the date of this Agreement irrevocable
proxies from holders of more than 50% of Shared Technolo-
xxxx common stock (on a fully diluted basis) agreeing to
vote for the Merger; provided, that such right of termina-
tion must be exercised, if at all, within 13 business days
after the date of this Agreement;
(c) by either Fairchild or Shared Technologies if
the Effective Time has not occurred on or prior to
January 31, 1996 unless the Merger has not occurred at
such time solely by reason of the condition set forth in
Section 9.2(d) having not yet been satisfied or because of
the failure of the Securities and Exchange Commission to
give timely approval to the proxy materials for Shared
-63-
Technologies shareholders, in which case February 28, 1996
or such other date, if any, as Fairchild and Shared Tech-
nologies shall agree upon, unless the absence of such
occurrence shall be due to the failure of the party seek-
ing to terminate this Agreement (or its subsidiaries or
affiliates) to perform in all material respects each of
its obligations under this Agreement required to be per-
formed by it at or prior to the Effective Time;
(d) by either Fairchild or Shared Technologies if,
at the Special Meeting (including any adjournment
thereof), the stockholders of Shared Technologies fail to
adopt and approve this Agreement, the Merger and any of
the other transactions contemplated hereby in accordance
with Delaware law;
(e) by Fairchild if Shared Technologies fails to
perform in any material respect any of its obligations
under this Agreement;
(f) by Shared Technologies if Fairchild fails to
perform in any material respect any of its obligations
under this Agreement;
(g) by Fairchild or Shared Technologies if a court
of competent jurisdiction or a governmental, regulatory or
administrative agency or commission shall have issued an
order, decree, or ruling or taken any other action, in
each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agree-
ment and such order, decree, ruling or other action shall
have become final and nonappealable;
(h) by Shared Technologies if its Board of Directors
shall have withdrawn, modified or amended in an adverse
manner its recommendation of the Merger as a result of its
exercise of its fiduciary duties; or
(i) by Fairchild if its Board of Directors shall
have withdrawn, modified or amended in an adverse manner
its recommendation of the Merger as a result of its exer-
cise of its fiduciary duties; or
(j) by either Shared Technologies or Fairchild if
either of their respective Board of Directors reasonably
determine that market conditions will not permit the com-
pletion of the Financing contemplated by Section 8.6 in a
-64-
timely manner or on acceptable terms or it becomes obvious
that the necessary marketing activities or filings neces-
sary for such Financing have not been completed in a
timely manner necessary to complete the Merger.
10.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to the foregoing provi-
sions of this Article X, this Agreement shall become void and
have no effect, with no liability on the part of any party or
its stockholders or directors or officers in respect thereof
except for agreements which survive the termination of this
Agreement and except for liability that TFC, RHI, Fairchild or
Shared Technologies might have arising from a breach of this
Agreement.
ARTICLE XI
SURVIVAL AND INDEMNIFICATION
11.1 Survival of Representations and Warranties.
All representations and warranties made in this Agreement shall
survive from the Effective Time until March 31, 1997 and shall
not be extinguished by the Merger or any investigation made by
or on behalf of any party hereto.
11.2 Indemnification by TFC and RHI. Each of TFC
and RHI hereby agrees, jointly and severally, to indemnify and
hold harmless Shared Technologies against any and all losses,
liabilities and damages or actions (or actions or proceedings,
whether commenced or threatened) or claims (including, without
limitation, counsel fees and expenses of Shared Technologies in
the event that TFC or RHI fail to assume the defense thereof)
in respect thereof (hereinafter referred to collectively as
"Losses") resulting from any breach of the representations and
warranties made by TFC, RHI or Fairchild in this Agreement;
provided, however, that TFC's and RHI's obligations under this
Section 11.2 is to the extent that the Losses exceed
$4,000,000. Notwithstanding the foregoing, in no event shall
Shared Technologies be entitled to indemnification for, and the
term "Losses" shall not include any consequential damages or
damages which are speculative, remote or conjectural (except to
the extent represented by a successful claim by a third party).
If any action, proceeding or claim shall be brought
or asserted against Shared Technologies by any third party,
which action, proceeding or claim, if determined adversely to
-65-
the interests of Shared Technologies would entitle Shared Tech-
nologies to indemnity pursuant to this Agreement, Shared Tech-
nologies shall promptly but in no event later than 10 days from
the date Shared Technologies receives written notice of such
action, proceeding or claim, notify TFC and RHI of the same in
writing specifying in detail the basis of such claim and the
facts pertaining thereto (but the failure to give such notice
in a timely fashion shall not affect TFC's and RHI's obliga-
tions under this Section 11.2 except to the extent it preju-
diced or damaged their ability to defend, settle or compromise
such claim or to pay any Losses resulting therefrom), and TFC
and RHI shall be entitled (but not obligated) to assume the
defense thereof by giving written notice thereof within 10 days
after TFC and RHI received notice of the claim from Shared
Technologies to Shared Technologies and have the sole control
of defense and settlement thereof (but only, with respect to
any settlement, if such settlement involves an unconditional
release of Shared Technologies and its subsidiaries in respect
of such claim), including the employment of counsel and the
payment of all expenses.
11.3 Indemnification by Shared Technologies. Shared
Technologies hereby agrees to indemnify and hold harmless TFC
and RHI against any and all losses, liabilities and damages or
actions (or actions or proceedings, whether commenced or
threatened) or claims (including, without limitation, counsel
fees and expenses of TFC and RHI in the event that Shared Tech-
nologies fails to assume the defense thereof) in respect
thereof hereinafter referred to as the "Shared Technologies'
Losses") resulting from the breach of the representations and
warranties made by Shared Technologies in this Agreement; pro-
vided, however, that Shared Technologies' obligation under this
Section 11.3 is to the extent that the Shared Technologies'
Losses exceed $4,000,000. Notwithstanding the foregoing, in no
event shall TFC or RHI be entitled to indemnification for, and
the term "Shared Technologies' Losses" shall not include any
consequential damages or damages which are speculative, remote
or conjectural (except to the extent represented by a success-
ful claim by a third party).
Shared Technologies at its option may make any indem-
nification pursuant to this Section 11.3 in cash or in shares
of Common Stock of Shared Technologies having a fair market
value at the time of issuance in an amount equal to the amount
of such loss. In the event that Shared Technologies makes a
payment in cash in fulfillment of its obligation under this
Section 11.3, the term "Shared Technologies' Losses" shall also
-66-
include the diminution as a result of such payment in the value
of the shares of Common Stock and Preferred Stock as a result
of such payment. In the event that Shared Technologies issues
Common Stock in fulfillment of its obligation under this
Section 11.3, the term "Shared Technologies' Losses" shall also
include the diminution as a result of such issuance in the
value of the shares of Common Stock and Preferred Stock of
Shared Technologies owned by RHI prior to such issuance.
If any action, proceeding or claim shall be brought
or asserted against TFC or RHI by any third party, which
action, proceeding or claim, if determined adversely to the
interests of TFC or RHI would entitle TFC or RHI to indemnity
pursuant to this Agreement, TFC or RHI shall, promptly but in
no event later than 10 days from the date TFC or RHI receives
written notice of such action, proceeding or claim, notify
Shared Technologies of the same in writing specifying in detail
the basis of such claim and the facts pertaining thereto (but
the failure to give such notice in a timely fashion shall not
affect Shared Technologies' obligations under this Section 11.3
except to the extent it prejudiced or damaged Shared Technolo-
xxxx' ability to defend, settle or compromise such claim or to
pay any Losses resulting therefrom), and Shared Technologies
shall be entitled (but not obligated) to assume the defense
thereof by giving written notice thereof within 10 days after
Shared Technologies received notice of the claim from TFC or
RHI to TFC or RHI and have the sole control of defense and
settlement thereof (but only, with respect to any settlement,
if such settlement involves an unconditional release of TFC and
RHI and their respective subsidiaries in respect of such
claim), including the employment of counsel and the payment of
all expenses.
11.4 Set-Off. In the event that either TFC, RHI or
Shared Technologies fails to make any payment required by Sec-
tion 11.2 or 11.3 hereof, the party entitled to receive such
payment may set off the amount thereof against any other pay-
ments owed by it to the party failing to make such payment.
-67-
ARTICLE XII
MISCELLANEOUS
12.1 Closing and Waiver.
(a) Unless this Agreement shall have been terminated
in accordance with the provisions of Section 10.1 hereof, a
closing (the "Closing" and the date and time thereof being the
"Closing Date") will be held as soon as practicable after the
conditions set forth in Sections 9.1, 9.2 and 9.3 shall have
been satisfied or waived. The Closing will be held at the
offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx or at such other places as the parties may agree.
Immediately thereafter, the Certificate of Merger will be
filed.
(b) At any time prior to the Effective Date, any
party hereto may (i) extend the time for the performance of any
of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warran-
ties of the other party contained herein or in any document
delivered pursuant hereto, and (iii) waive compliance with any
of the agreements of any other party or with any conditions to
its own obligations contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing duly autho-
rized by and signed on behalf of such party.
12.2 Notices.
(a) Any notice or communication to any party hereto
shall be duly given if in writing and delivered in person or
mailed by first class mail (registered or certified, return
receipt requested), facsimile or overnight air courier guaran-
teeing next day delivery, to such other party's address.
If to The Xxxxxxxxx Corporation, RHI Holdings, Inc.
or Fairchild Industries, Inc.:
000 Xxxx Xxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Esq.
-68-
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
If to Shared Technologies Inc.:
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Legal Department
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx & Hannah
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
(b) All notices and communications will be deemed to
have been duly given: at the time delivered by hand, if per-
sonally delivered; five business days after being deposited in
the mail, if mailed; when sent, if sent by facsimile; and the
next business day after timely delivery to the courier, if sent
by overnight air courier guaranteeing next day delivery.
12.3 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
12.4 Interpretation. The headings of articles and
sections herein are for convenience of reference, do not con-
stitute a part of this Agreement, and shall not be deemed to
limit or affect any of the provisions hereof. As used in this
Agreement, "person" means any individual, corporation, limited
or general partnership, joint venture, association, joint stock
company, trust, unincorporated organization or government or
any agency or political subdivision thereof; "subsidiary" of
any person means (i) a corporation more than 50% of the out-
standing voting stock of which is owned, directly or indi-
rectly, by such person or by one or more other subsidiaries of
-69-
such person or by such person and one or more subsidiaries
thereof or (ii) any other person (other than a corporation) in
which such person, or one or more other subsidiaries of such
person or such person and one or more other subsidiaries
thereof, directly or indirectly, have at least a majority own-
ership and voting power relating to the policies, management
and affairs thereof; and "voting stock" of any person means
capital stock of such person which ordinarily has voting power
for the election of directors (or persons performing similar
functions) of such person, whether at all times or only so long
as no senior class of securities has such voting power by rea-
son of any contingency.
12.5 Variations and Amendment. This Agreement may
be varied or amended only by written action of Shared Technolo-
xxxx and Fairchild, before or after the Special Meeting at any
time prior to the Effective Time.
12.6 No Third Party Beneficiaries. Except for the
provisions of Sections 8.9 (which are intended to be for the
benefit of the persons referred to therein, and may be enforced
by such persons) and 8.11, nothing in this Agreement shall con-
fer any rights upon any person or entity which is not a party
or permitted assignee of a party to this Agreement.
12.7 Use of Fairchild Name. RHI hereby grants a
royalty free license in perpetuity to Shared Technologies for
the use of the Fairchild name to Shared Technologies for exclu-
sive use by Shared Technologies as a trade name in the telecom-
munications system and services business but not for any other
use. In no event may Shared Technologies assign the right to
use the Fairchild name to any other person.
12.8 Governing Law. Except as the laws of the State
of Delaware are by their terms applicable, this Agreement shall
be governed by, and construed in accordance with, the laws of
the State of New York without regard to principles of conflicts
of laws.
12.9 Entire Agreement. This Agreement constitutes
the entire agreement among the parties with respect to the sub-
ject matter hereof and supersedes all other prior agreements
and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
12.10 No Recourse Against Others. No director,
officer or employee, as such, of Shared Technologies, TFC, RHI
-70-
or any of their respective subsidiaries shall have any lia-
bility for any obligations of Shared Technologies, TFC or RHI,
respectively, under this Agreement for any claim based on, in
respect of or by reason of such obligations or their creation.
12.11 Validity. The invalidity or unenforceability
of any provision of this Agreement shall not affect the valid-
ity or enforceability of any other provisions of this Agree-
ment, which shall remain in full force and effect.
-71-
IN WITNESS WHEREOF, the parties hereto have caused
this Merger Agreement to be executed by their duly authorized
officers all as of the day and year first above written.
SHARED TECHNOLOGIES INC.
By:/s/ Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board,
Chief Executive Officer
and President
FAIRCHILD INDUSTRIES, INC.
By:/s/ Xxxxxxx X. Steiner_________
Title: Chairman of the Board,
Chief Executive Officer
and President
THE XXXXXXXXX CORPORATION
By:/s/ Xxxxxxx X. Steiner_________
Title: Chairman of the Board,
Chief Executive Officer
and President
RHI HOLDINGS, INC.
By:/s/ Xxxxxxx X. Steiner_________
Title: Chairman of the Board,
Chief Executive Officer
and President
Schedule 9.1
The steps comprising the Fairchild Recapitalization
are as follows:
1. Xxxxxxxxx Industries, Inc., as it exists on the
date of the Merger Agreement ("FII"), will cause Fairchild Com-
munications Services Company, a Delaware partnership ("FCSC")
to merge into FII's wholly owned subsidiary, VSI Corporation
("VSI").
2. FII will then cause VSI to transfer all of VSI's
assets and liabilities (other than those of the former FCSC,
but excluding from those real estate owned by FCSC, and other
than the Assumed Indebtedness described below) to one or more
wholly owned subsidiaries.
3. FII (or Shared Technologies) will make a cash
tender offer to purchase all of the outstanding 12<% Senior
Notes due 1999 (the "12<% Notes") of FII and, in connection
therewith, will obtain such Noteholders' consent (representing
at least 51% of the outstanding principal amount of the 12<%
Notes) to the transfer by FII of all of the assets of FII
(other than the stock of VSI) to RHI and to amend the indenture
under which the 12<% Notes were issued to remove all covenants
which can be amended or deleted by majority vote. The aggre-
gate amount needed to be paid to consummate such tender offer
and consent solicitation is herein called the "Note Purchase
Amount".
4. Prior to the Effective Time, FII will transfer
(in one or more transactions) all of its assets to RHI, and
RHI will assume all liabilities, except for (i) the stock of
VSI (which will only have in it the assets and liabilities of
the former FCSC), (ii) the 12<% Senior Notes, (iii) the
Series A and C Preferred Stock and (iv) an amount of bank and
other indebtedness (the "Assumed Indebtedness") equal to
$223,500,000 minus (x) the Note Purchase Amount and
(y) $44,237,745 (the aggregate redemption price of the Series A
and C Preferred Stock) plus accrued dividends thereon through
the Effective Time, and RHI will contribute all of the out-
standing Series B Preferred Stock to FII.
5. Concurrently with the consummation of the
Merger, the Surviving Corporation will (i) purchase the 12<%
Notes tendered for the Note Purchase Amount, (ii) repay the
Assumed Indebtedness in full and (iii) deposit in escrow the
funds necessary to pay the holders of the Series A and Series C
-2-
Preferred Stock the amounts owed to them under the Merger
Agreement.
Schedule 9.2(d)
TAX RULINGS REQUESTED BY FAIRCHILD
Fairchild requests the following rulings be issued
regarding the mergers of the three corporate subsidiaries of
VSI into VSI:
1. The mergers will qualify as a complete liquida-
tion of each of the three corporate subsidiaries (FCSII,
FCSI, and FCNMC, which are the partners in FCSC) under
{ 332(a) of the Internal Revenue Code of 1986, as amended
(the "Code");
2. No gain or loss will be recognized by VSI on its
receipt of the assets from each of the three corporate
subsidiaries under { 332(a);
3. No gain or loss will be recognized by the three
corporate subsidiaries on the distribution of their
respective assets to VSI in complete liquidation under
{ 336 and { 337(a).
Fairchild requests the following rulings regarding
the formation of Subsidiary 1, the distribution of the stock of
Subsidiary 1 by VSI to FII, and the distribution of the stock
of Subsidiary 1 by FII to RHI:
4. VSI will recognize no gain or loss on its trans-
fer of assets (except the Telecommunications business) to
Subsidiary 1 in exchange for common stock of Subsidiary 1
and assumption of liabilities by Subsidiary 1 ({{ 351 and
357(a) of the Code and Rev. Rul. 77-449, 1977-2 C.B. 110).
VSI's basis in the stock of Subsidiary 1 received in
the transaction will equal the basis of the property trans-
ferred in exchange therefor, reduced by the sum of the liabili-
ties assumed by Subsidiary 1, or to which assets transferred
are taken subject ({ 358(a) and (d)).
5. Subsidiary 1 will recognize no gain or loss on
its transfer of assets to Subsidiaries 2, 3, 4, 5, 6 and 7
in exchange for the common stock of Subsidiaries 2, 3, 4,
5, 6 and 7 and the assumption of liabilities by
Subsidiaries 2 to 7 ({{ 351 and 357(a) and Rev. Rul.
77-449).
-2-
Subsidiary 1's basis in the stock of Subsidiaries 2
to 7 received in the transaction will equal the basis of the
property transferred to Subsidiaries 2 to 7, respectively, in
exchange therefor, reduced by the sum of the liabilities
assumed by Subsidiaries 2 to 7 or to which assets transferred
are taken subject ({ 358(a) and (d)).
6. No income, gain or loss will be recognized by
Subsidiary 1 upon the receipt of the assets of Fastener
and D-M-E businesses, stock of FDC, plus real estate held
for sale in exchange for stock of Subsidiary 1 and
Subsidiary 1's assumption of liabilities ({ 1032(a)).
7. The basis of the assets received by Subsidiary 1
will be the same as the basis of such assets in the hands
of VSI immediately prior to the Distribution ({ 362(b)).
8. No income, gain or loss will be recognized by FII
as the Shareholder of VSI on its receipt of the
Subsidiary 1 common stock pursuant to the Distribution
({ 355(a)).
9. No income, gain or loss will be recognized by RHI
as the Shareholder of FII on its receipt of Subsidiary 1
common stock pursuant to the Distribution ({ 355(a)).
10. No income, gain or loss will be recognized by
VSI and FII upon the distributions to their respective
Shareholders of all of the Subsidiary 1's common stock
pursuant to the Distribution ({ 355(c)).
Schedule 9.2(e)
The Restated Certificate of Incorporation of Shared
Technologies (the "Certificate") shall be amended in the fol-
lowing manner:
(a) Article Four of the Certificate shall be amended
to (i) increase the authorized common shares of the Corpora-
tion, $.004 par value, to 50,000,000 and (ii) to increase the
authorized shares of preferred stock of the Corporation, $.01
par value, to 25,000,000; and
(b) The Certificate shall be amended or a certificate
of designation shall be filed to reflect the terms of the Con-
vertible Preferred Stock and the [Special] Preferred Stock in
form and substance satisfactory to RHI and consistent with
Schedules 3.1 (c) and (b) hereof; and
The Amended and Restated Bylaws of the Corporation
(the "Bylaws") shall be amended in the following manner:
(a) Article II, Section 11 of the Bylaws is deleted
in its entirety and is replaced by the following paragraph:
"No action requiring shareholder approval may be
taken without a meeting of the shareholders entitled to vote
thereon."
(b) Article III, Section 1 of the Bylaws shall be
amended to include the following sentences at the end of such
section:
"So long as The Xxxxxxxxx Corporation and its affili-
ates (collectively, "TFC") owns 25% or more of the common stock
of the Corporation that TFC owned on the [Date of Merger] TFC
shall have the irrevocable right to appoint four (4) members of
the Board of Directors; provided, that so long as Xxx X. Xxxxx
is President and a Director of the Corporation, TFC shall only
be entitled to appoint three (3) directors."
"The Board of Directors may not grant any options
for, or any other rights to acquire, common stock of the Corpo-
ration, except for options issued pursuant to a plan approved
by the shareholders or in a transaction with non-affiliates
where such party pays cash for such option or right, unless
such transaction is approved by a majority of the sharehold-
ers."
-2-
(c) Article III, Section 10 of the Bylaws shall be
deleted in its entirety and replaced with the following
paragraph:
"Executive Committee. The Board of Directors of the
Corporation shall have an executive committee consisting of the
President, a director appointed by TFC as long as TFC owns at
least 25% of the common stock of the Corporation that TFC owned
on the [Date of Merger], and a third director appointed by the
Board of Directors of the Corporation. All actions taken by
the Executive Committee may only be taken pursuant to a unani-
mous vote by the members thereof."
(d) Article III, Sections 11, 12 and 13 shall be
amended to include the following sentence as the second sen-
tence of each such section:
"As long as TFC owns at least 25% of the common stock
of the Corporation, TFC will be entitled to appoint one direc-
tor to such committee."
(e) Article IV, Section 5 shall be amended to
include the following sentence at the end of such section:
"The Corporation shall have a Vice Chairman of the
Board of Directors who shall have such duties as are designated
by the Board of Directors."
(f) Article IV, Section 6 shall be deleted in its
entirety and replaced with the following paragraph:
"Executive Officers. The Chairman of the Board of the
Corporation shall also be the Chief Executive Officer of the
Corporation and shall be the senior executive of the Corpora-
tion and shall have overall supervision of the affairs of the
Corporation. The President of the Corporation shall also be
the Chief Operating Officer of the Company and he shall be
responsible for the day-to-day business operations of the Cor-
poration under the direction of the Chief Executive Officer.
Each of the Chief Executive Officer and the President shall see
that all orders and resolutions of the Board of Directors of
the Corporation are carried into effect, subject, however, to
the right of the Board of Directors to delegate any specific
powers, except as may be exclusively conferred on the President
by law, to the Chairman or any other officer of the Corpora-
tion. Each of the Chief Executive Officer and the President
-3-
may execute bonds, mortgages, and other contracts requiring a
signature under the seal of the Corporation.
(g) Article VIII, Section 1 shall be deleted in its
entirety and replaced with the following paragraph:
"By Directors or Shareholders. The bylaws of the
Corporation may be altered, amended or repealed at any validly
called and convened meeting of the shareholders by the affirma-
tive vote of the holders of a majority of the voting power of
shares entitled to vote thereon represented at such meeting in
person or by proxy and at any validly called and convened meet-
ing of the board of directors by the affirmative vote of at
least a majority of the directors (unless such alteration,
amendment or repeal in any way adversely affects the rights
granted to TFC hereunder or in Article II, Section 11, Article
III, Section 10 or Article IV, Section 6 of these bylaws, in
which event a vote of 80% of the directors shall be required);
provided, however, that the notice of such meeting shall state
that such alteration, amendment or repeal will be proposed."
Schedule 3.1(a)
SUMMARY OF TERMS OF 6% CUMULATIVE
CONVERTIBLE PREFERRED STOCK
Issuer........................ Shared Technologies Inc. (the
"Company").
Issue......................... $25 million of cumulative con-
vertible preferred stock con-
vertible into the common stock
of the Company (the "Convert-
ible Preferred Stock"). The
Convertible Preferred Stock
will be issued in such denomi-
nations as is requested by RHI.
Preferred Stock Dividends..... Payable quarterly at $[ ]
per share (6% per annum) in
cash. If for any reason a
dividend is not paid in cash
when scheduled, the amount of
such dividend shall accrue
interest at a rate of 12% per
annum until paid.
Liquidation Preference........ $25,000,000 in the aggregate
plus an additional amount (the
"Additional Amount") equal to
the total amount of dividends
the holder of the Convertible
Preferred Stock would have
received if dividends were paid
quarterly in cash at the rate
of 10% per annum for the life
of the issue minus the total
amount of cash dividends actu-
ally paid.
Conversion.................... Each share of Convertible Pre-
ferred Stock is convertible at
anytime at the option of the
holder into such number of Com-
mon Shares as is determined by
-2-
dividing the liquidation pref-
erence thereof by the conver-
sion price of $6.3750. The
conversion price is subject to
adjustment upon occurrence of
customary adjustment events
including, but not limited to
stock dividends, stock subdivi-
sions and reclassification or
combinations.
Optional Redemption........... The Convertible Preferred Stock
is not redeemable at the option
of the Company during the first
three years after issuance but
thereafter, upon 30 days' prior
written notice, is redeemable
at the option of the Company at
a redemption price of 100% of
liquidation preference plus the
Additional Amount.
Mandatory Redemption.......... On the 12th anniversary date of
original issuance of the Pre-
ferred Stock, the Company shall
redeem 100% of the outstanding
shares of Convertible Preferred
Stock for $25,000,000 plus the
Additional Amount.
Ranking....................... The Company is not permitted to
issue Preferred Stock ranking
senior to the Convertible Pre-
ferred Stock as to rights on
liquidation and as to payment
of dividends without the
approval of the holders of at
least two-thirds of the issued
and outstanding shares of the
Convertible Preferred Stock.
The Convertible Preferred Stock
will rank junior to the
Series C Preferred Stock of the
Company and on a parity with
each of the Series D and
Series F classes of preferred
stock and the Special Preferred
-3-
Stock of the Company with
regard to the right to receive
dividends and amounts distrib-
utable upon liquidation, disso-
lution or winding up of the
Company.
Voting Rights................. In the event that the Company
fails to make four consecutive
dividend payments on the Con-
vertible Preferred Stock, RHI
will be entitled to appoint one
director to the Board of Direc-
tors of the Company in addition
to other directors to which RHI
is entitled (with such addi-
tional directors(s) to be added
in lieu of existing non-RHI
directors); and if eight con-
secutive dividend payments fail
to be made, RHI will be enti-
tled to elect two directors in
addition to other directors to
which RHI is entitled (with
such additional director(s) to
be added in lieu of existing
non-RHI directors). The Pre-
ferred Stock has no other vot-
ing rights, except as required
by law.
Certain Restrictions.......... No dividends or distributions
on junior or parity equity
securities shall be permitted
if the Company has failed to
pay in full all accrued divi-
dends or failed to satisfy its
mandatory redemption obligation
at maturity with respect to the
Convertible Preferred Stock.
No redemptions or repurchases
of junior or parity equity
securities (other than the Spe-
cial Preferred Stock) shall be
permitted while the Convertible
Preferred Stock is in arrears
or in default. The Company
-4-
will not be permitted to create
or permit to exist any contrac-
tual restriction which would
restrict in any way the Compa-
ny's ability to make required
payments on the Convertible
Preferred Stock or the Series C
Preferred Stock of the Company.
Schedule 3.1(b)
SUMMARY OF TERMS OF
SPECIAL PREFERRED STOCK
Issuer........................ Shared Technologies Inc. (the
"Company").
Issue......................... Special Preferred Stock of the
Company (the "Special Preferred
Stock"). The Special Preferred
Stock will be issued in such
denominations as is requested
by RHI.
Preferred Stock Dividends..... None.
Liquidation Preference........ $20,000,000 initially in the
aggregate increasing by
$1,000,000 each year after 1996
to a maximum liquidation pref-
erence of $30,000,000 in 2007.
Optional Redemption........... Redeemable at the option of the
Company at any time upon
30 days' prior written notice,
at a redemption price of 100%
of liquidation preference.
Mandatory Redemption.......... All outstanding Special Pre-
ferred Stock will be
mandatorily redeemable in its
entirety at 100% of liquidation
preference upon a Change of
Control (to be defined) of the
Company and, in any event, in
2007. In addition, on March 31
of each year, commencing with
March 31, 1997, the Company
shall mandatorily redeem at
100% of liquidation preference
an amount (the "Required
Redemption Amount") of Special
Preferred Stock equal to 50% of
-2-
the amount, if any, by which
the Consolidated EBITDA of
Shared Technologies and its
subsidiaries exceeds the
Threshold Amount for the imme-
diately preceding year ended on
December 31. To the extent the
Required Redemption Amount
exceeds 50% of the sum (the
"Income Limitation") of (i) the
consolidated net income of
Shared Technologies and its
subsidiaries for the immedi-
ately preceding year ended on
December 31 (without deducting
therefrom any amounts on
account of dividends paid or
payable on any preferred stock
or redemptions of any preferred
stock of the Company, including
the Convertible Preferred
Stock, Special Preferred Stock
and Series C, D and F classes
of preferred stock of the Com-
pany) plus (ii) amounts attrib-
utable to the amortization of
goodwill for such immediately
preceding year, such excess
amount shall be carried forward
and be considered a Required
Redemption Amount for the next
succeeding year and for each
year thereafter until paid.
The Threshold Amount for each
year shall be as follows:
-3-
Year Ended Threshold
December 31, Amount*
1996............. $47.0 million
1997............. 53.0 million
1998............. 57.5 million
1999............. 60.5 million
2000............. 63.5 million
2001............. 66.5 million
2002............. 69.5 million
2003............. 72.5 million
2004............. 75.5 million
2005............. 78.5 million
2006............. 81.5 million
Ranking....................... The Company is not permitted to
issue Preferred Stock ranking
senior to the Special Preferred
Stock as to rights on liquida-
tion and as to payment of divi-
dends without the approval of
the holders of at least two-
thirds of the issued and out-
standing shares of the Special
Preferred Stock. The Special
Preferred Stock will rank jun-
ior to the Series C Preferred
Stock of the Company and on a
parity with each of the
Series D, and Series F classes
of preferred stock and the Con-
vertible Preferred Stock of the
Company with regard to the
right to receive dividends and
amounts distributable upon
liquidation, dissolution or
winding up of the Company.
_________________________
* In the event that the Company or any subsidiary sells or
disposes of any material asset or business, the Threshold
Amount for each year thereafter shall be reduced by the
amount of EBITDA attributable to such asset or business
for the four fiscal quarters immediately preceding such
sale or disposition.
-4-
Voting Rights................. The Special Preferred Stock has
no voting rights, except as
required by law.
Certain Restrictions.......... No dividends, distributions,
redemptions or repurchases on
junior or parity equity securi-
ties shall be permitted if the
Company has failed to satisfy
its mandatory redemption obli-
gations with respect to the
Special Preferred Stock. The
Company will not be permitted
to create or permit to exist
any contracted restriction
which would restrict in any way
the Company's payment obliga-
tions with respect to the Spe-
cial Preferred Stock or the
Series C Preferred Stock of the
Company.
EXHIBIT A
_______________________________________________________________
_______________________________________________________________
SHAREHOLDERS' AGREEMENT
among
SHARED TECHNOLOGIES INC.
RHI HOLDINGS, INC.
and
XXXXXXX X. XXXXXXXX
_______________________________________________________________
_______________________________________________________________
SHAREHOLDERS' AGREEMENT
This SHAREHOLDERS' AGREEMENT (this "Agreement") is
executed on __, 1995, by and among Shared Technologies
Inc., a Delaware corporation (the "Company"), RHI Holdings Inc.
("RHI") and Xxxxxxx X. Xxxxxxxx, shareholders of Shared Tech-
nologies Inc. (RHI and Xxxxxxx X. Xxxxxxxx and their respective
legal representatives, successors and assigns are referred to
herein individually as a "Shareholder" and collectively as the
"Shareholders").
WHEREAS, pursuant to the terms of an Agreement and
Plan of Merger dated as of November __, 1995 (the "Merger
Agreement") among the Company, The Xxxxxxxxx Corporation, RHI
and RHI's subsidiary, Xxxxxxxxx Industries, Inc. ("FII"), FII
is merging with and into the Company (the "Merger");
WHEREAS, each Shareholder owns as of the date hereof
(after giving effect to the Merger) the number of shares of
common stock, $.004 par value per share ("Common Stock"), of
the Company set forth opposite such Shareholder's name on
Schedule I;
WHEREAS, the shares of Common Stock owned by the
Shareholders represent approximately [47]% of the issued and
outstanding Common Stock of the Company;
WHEREAS, the Shareholders and the Company deem it to
be in their respective best interests to impose certain
restrictions on, and to provide for certain rights and obliga-
tions in respect of, the shares of Common Stock owned by them
or any interest therein, now or hereafter held by the Share-
holders or the Company;
NOW, THEREFORE, in consideration of the mutual prom-
ises, covenants, agreements and conditions made herein, and
other good and valuable consideration, the receipt and suffi-
ciency of which are hereby acknowledged and accepted, the par-
ties hereto hereby agree as follows:
ARTICLE I RESTRICTIONS ON TRANSFERS AND
PURCHASES BY THE SHAREHOLDERS
1.1. General Restrictions.
(a) No share of Common Stock, Convertible Preferred
Stock, any other capital stock or equity security (excluding
the Special Preferred Stock) of the Company or any interest in
any of the foregoing, owned as of the date hereof (beneficially
or otherwise) by any Shareholder (the "Shares") shall be sold,
-2-
assigned, donated or transferred in any manner (collectively, a
"Transfer"), except in accordance with this Agreement; pro-
vided, that the pledge or grant of a security interest in
Shares, and any subsequent foreclosure thereof and sale or
transfer resulting from such foreclosure, effected in good
faith in a bona fide transaction with andddddds institutional
lender, shall not constitute a Transfer and shall not be pre-
vented by the terms of this Agreement.
(b) Except for (i) Common Stock issuable upon con-
version of Convertible Preferred Stock, or exercise of stock
options, (ii) shares of Common Stock issued by the Company to
RHI to satisfy indemnification obligations of the Company under
the Merger Agreement and (iii) shares of Common Stock issued as
a dividend or distribution to shareholders of the Company, no
Shareholder shall purchase or acquire, directly or indirectly,
any additional shares of Common Stock during the two-year
period following the date of this Agreement without the prior
approval of not less than 80% of the members of the Board of
Directors of the Company.
(c) Except for Transfers permitted by Section 1.2,
no Shareholder shall Transfer any Shares during the two-year
period following the date of this Agreement without the prior
approval of not less than 80% of the members of the Board of
Directors and full compliance with the Securities Act of 1933,
as amended (the "Act"), and any applicable state securities
laws. If the Board of Directors approves a Transfer within
such two-year period after the date of this Agreement, the con-
ditions of this Agreement, including, but not limited to this
Article I, must be met. Every Transfer of Shares by a Share-
holder pursuant to this paragraph shall be subject to the con-
dition that the proposed transferee, if not already bound by
this Agreement, shall first agree in writing, in form satisfac-
tory to the Company, to be bound by the terms hereof.
1.2. Certain Permitted Transfers.
(a) Notwithstanding any other provision of this
Agreement, either Shareholder may, at any time following notice
to the other Shareholder, Transfer any of his or her Shares or
any interest therein to (i) an entity that is directly or indi-
rectly controlled by such Shareholder or an affiliate of such
Shareholder, (ii) his or her spouse, children, grandchildren or
parents or a trust solely for the benefit of any such person or
persons or (iii) to any other person not mentioned in clauses
(i) and (ii) of this Section 1.2(a) as long as the aggregate of
-3-
all such Transfers made by either Shareholder pursuant to this
clause (iii) does not exceed 10% of the number of shares of
Common Stock owned by such Shareholder as of the date of this
Agreement, in each case without the consent of any other party
hereto and without first offering such Shares to any other
party; provided, however, that such Transfer must be in full
compliance with the Act, all applicable state securities laws.
Every Transfer of Shares by a Shareholder pursuant to clauses
(i) and (ii) of this paragraph shall be subject to the condi-
tion that the proposed transferee, if not already bound by this
Agreement, shall first agree in writing, in form satisfactory
to the Company, to be bound by the terms hereof.
In addition, notwithstanding any other provision of
this Agreement, shares of Common Stock, Convertible Preferred
Stock or other capital stock or equity securities of the Com-
pany acquired by either Shareholder after the date of this
Agreement (other than through the exercise of options or war-
rants or through the conversion of convertible securities out-
standing as of the date hereof and other than shares received
as a result of stock splits or stock dividends) shall not be
subject to any of the provisions of Article I of this
Agreement.
1.3. First Negotiation Rights.
Subject to Sections 1.4 and 1.5, following the expi-
ration of the two-year period after the date of this Agreement,
a Shareholder may Transfer any or all Shares (or any interest
therein) owned by it free and clear of all restrictions and
other obligations imposed by this Agreement provided such
Shareholder first complies with Section 1.3. If any Share-
holder (for purposes of this Section 1.3, the "Offering Party")
desires to Transfer all or any portion of the Shares (or any
interest therein) held by such Offering Party, the Offering
Party shall deliver written notice to the other parties hereto
(the "Notice"), which Notice shall state the number of Shares
(or interest therein) which the Offering Party owns and wishes
to sell (the "Offered Shares"). By giving the Notice, the
Offering Party shall be deemed to have granted to the other
parties hereto an option to negotiate for the purchase of all
of (but not less than all of) such shares at a price to be
negotiated and agreed to (the "Negotiated Price") by the Offer-
ing Party and such other Shareholder for a 30-day period fol-
lowing the date of the Notice.
-4-
1.4. Take-Along Rights.
(a) Notwithstanding Section 1.3 of this Agreement,
neither Shareholder may effect a Transfer (or a series of
related Transfers) of Shares (except for Transfers permitted by
Section 1.2) constituting more than 50% of the Shares then
owned by such Shareholder to one person or a related group of
persons (other than Transfers effected by sales of Shares
through underwriters in a public offering or in the securities
markets generally) (the "Section 1.4 Shares") without first
complying with this Section 1.4. If either Shareholder (for
purposes of this Section 1.4, the "Section 1.4 Offering Party")
desires to Transfer the Section 1.4 Shares, such shareholder
shall give written notice (the "Take-Along Notice") to the
other Shareholder (the "Non-Selling Shareholder") stating
(i) the name and address of the transferee (the "Non-Qualified
Transferee"), and (ii) the price and terms upon which the
Non-Qualified Transferee proposes to purchase the Section 1.4
Shares. The Non-Selling Shareholder shall have the irrevocable
and exclusive option, but not the obligation (the "Take-Along
Option"), to sell to the Non-Qualified Transferee, up to such
number of Shares proposed to be sold by the Section 1.4 Offer-
ing Party (the "Included Shares") determined in accordance with
Section 1.4(b), at the price and on the terms set forth in the
Take-Along Notice. The Take-Along Option shall be exercised by
the Non-Selling Shareholder by giving written notice to the
Section 1.4 Offering Party, within ten business days of receipt
of the Take-Along Notice, indicating its election to exercise
the Take-Along Option (the "Participating Shareholder"). Fail-
ure by such Non-Selling Shareholder to give such notice within
the ten business day period shall be deemed an election by such
Non-Selling Shareholder not to sell its Shares pursuant to that
Take-Along Notice. The closing with respect to any sale to a
Non-Qualified Transferee pursuant to this Section shall be held
at the time and place specified in the Take-Along Notice but in
any event within 30 days of the date the Take-Along Notice is
given; provided, that if through the exercise of reasonable
efforts the Section 1.4 Offering Party is unable to cause such
transaction to close within 30 days, such period may be
extended for such reasonable period of time as may be necessary
to close such transaction. Consummation of the sale of Shares
by the Section 1.4 Offering Party to a Non-Qualified Transferee
shall be conditioned upon consummation of the sale by the Par-
ticipating Shareholder to such Non-Qualified Transferee of the
Included Shares, if any.
-5-
(b) The number of Shares purchased from the Partici-
pating Shareholder shall be determined by multiplying the num-
ber of Shares proposed to be purchased from the Section 1.4
Offering Party by a Non-Qualified Transferee by a fraction, the
numerator of which is the total number of Shares owned by the
Participating Shareholder and the denominator of which is the
sum of the total number of Shares owned by the Section 1.4
Offering Party and the Participating Shareholder.
(c) The Section 1.4 Offering Party shall arrange for
payment directly by the Non-Qualified Transferee to the Par-
ticipating Shareholder, upon delivery of the certificate or
certificates representing the Shares duly endorsed for trans-
fer, together with such other documents as the Non-Qualified
Transferee may reasonably request. The reasonable costs and
expenses incurred by the Section 1.4 Offering Party and the
Participating Shareholder in connection with a sale of Shares
subject to this Section 1.4 shall be allocated pro rata based
upon the number of Shares sold by each Shareholder to a
Non-Qualified Transferee.
(d) If at end of 30 days following the date on which
a Take-Along Notice was given, the sale of Shares by the Sec-
tion 1.4 Offering Party and the sale of the Included Shares
have not been completed in accordance with the terms of the
Non-Qualified Transferee's offer, all certificates representing
the Included Shares shall be returned to the Non-Selling Share-
holder, and all the restrictions on transfer contained in this
Agreement with respect to Shares owned by the Section 1.4
Offering Party shall again be in effect.
1.5. Right of First Refusal.
(a) Notwithstanding Section 1.3 of this Agreement,
if at any time following the expiration of the two-year period
after the date of this Agreement, either Shareholder receives
an offer (or related series of offers) (an "Offer") from any
person or related group of persons to purchase a number of
Shares equal to 10% or more of the outstanding Shares of the
Company (the "Section 1.5 Shares") and such Shareholder desires
to accept the Offer, (the "Selling Shareholder") shall give
written notice of its intent to accept the Offer (a "Transfer
Notice") to the other Shareholder (the "Section 1.5 Non-Selling
Shareholder"). Such notice shall contain a true and complete
description of the Offer (including a copy thereof) containing
(i) the Shares subject to such Offer, (ii) the proposed pur-
chase price, (iii) the identity of the person or group making
-6-
the Offer and, if known by the Selling Shareholder, whether
they are an agent for another party and (iv) all other material
terms and conditions of the Offer.
The Section 1.5 Non-Selling Shareholder shall have
the right, but not the obligation, to purchase the Shares sub-
ject to the Offer (the "First Option") on the same terms and
conditions as set forth in such notice, which option shall be
exercised by delivering to the Selling Shareholder written
notice of its commitment to purchase the Shares subject to the
Offer within five business days after receipt of the Transfer
Notice (the "Option Period"). Failure by the Section 1.5
Non-Selling Shareholder to give such notice within such five-
business-day period shall be deemed an election by such Section
1.5 Non-Selling Shareholder not to purchase the Section 1.5
Shares.
(b) The purchase of any Shares pursuant to the exer-
cise of the First Option shall be completed not later than 45
days following delivery of the Transfer Notice with respect to
such Shares. In the event that the First Option is not exer-
cised, the Selling Shareholder shall have the right for a
period of 45 days after the termination of the Option Period to
transfer the Shares subject to such Offer to the person named
in the Transfer Notice and on terms and conditions no less
favorable to the Selling Shareholder than those set forth in
the Transfer Notice.
(c) This Section 1.5 shall not be applicable with
respect to Transfers of Shares effected through underwriters in
a public offering or in the securities markets generally or
Transfers permitted under Section 1.2.
ARTICLE II LEGEND
In addition to any other legend required by appli-
cable law, all certificates representing Shares owned by any
Shareholder (other than Shares subject to Section 1.2(a)(iii)),
or their permitted transferees, shall bear legend number (1) to
assure the enforceability of this Agreement until such time as
such shares are sold to a non-Shareholder after the two-year
period following the date of this Agreement in accordance with
the terms hereof. All certificates representing shares not
registered under the Act shall bear in addition to legend (1),
legend (2):
-7-
(1) "THE TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS RESTRICTED BY AN AGREEMENT
ON FILE AT THE OFFICES OF THE CORPORATION. THE
CORPORATION WILL FURNISH A COPY OF SUCH AGREEMENT
TO THE RECORD HOLDER OF THIS INSTRUMENT WITHOUT
CHARGE ON REQUEST TO THE CORPORATION AT ITS PRIN-
CIPAL PLACE OF BUSINESS OR REGISTERED OFFICE."
(2) "THE SECURITIES REPRESENTED BY THIS CERTIFI-
CATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS
AND THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL
WITH RESPECT TO SUCH EXEMPTION."
ARTICLE III VOTING COVENANTS
(a) The Company and the Shareholders agree to take
all actions necessary to cause the Board of Directors of the
Company to consist at all times of eleven directors (subject to
the rights of any holders of Preferred Stock of the Company to
elect directors in the event of a dividend arrearage). The
nominees to the Board of Directors shall be determined in the
following manner: the Shareholders (other than RHI) shall
nominate seven (7) members and RHI shall nominate four (4) mem-
bers; provided, that so long as Xxx X. Xxxxx shall be the Pres-
ident of the Company, the Shareholders and the Company will
take all actions necessary to elect Xx. Xxxxx as a member of
the Board of Directors and during such time as Xx. Xxxxx is the
President and a Director RHI shall only be entitled to nominate
three (3) members. In the event that any Shareholder reason-
ably objects to the nomination of any particular person or per-
sons as a director, the Shareholder who nominated such person
or persons shall withdraw such nomination and nominate another
person or persons in replacement thereof.
(b) Each Shareholder shall, in any election for the
Company's Board of Directors, vote to cause the nominee or nom-
inees of each party listed in this section to be elected to the
Board of Directors of the Company. Each Shareholder shall
cause the holder of any proxy given by such Shareholder to com-
ply with this Article III.
-8-
(c) Should any director elected to the Board be
removed, become incapacitated, or die (the "Affected Director")
the shareholder or party which nominated the Affected Director
shall have the right to designate a replacement director to
complete the term of the Affected Director on the Board of
Directors of the Company.
(d) The Company and the Shareholders agree to take
all actions necessary to cause the Executive Committee of the
Board of Directors to consist of Xxxxxxx X. Xxxxxxxx, who shall
be Chairman and Chief Executive Officer of the Company, the
President and Chief Operating Officer of the Company (who ini-
tially shall be Xxx X. Xxxxx) and Xxxxxxx X. Xxxxxxx (or
another person designated by RHI), who shall be Vice-Chairman
of the Company.
ARTICLE IV MISCELLANEOUS
4.1. Termination. This Agreement, and all rights
and obligations of each party hereto, shall terminate upon
(i) agreement of all of the Shareholders and the Company,
(ii) the voluntary or involuntary dissolution of the Company,
(iii) the sale of all or substantially all of the assets of the
Company, (iv) when either Shareholder and its affiliates own
less than 25% of the shares of Common Stock (including options
to purchase shares of Common Stock) owned by such Shareholder
on the date of this Agreement (adjusted accordingly for any
stock splits or stock dividends by the Company after the date
hereof) or (v) on the date that Xxxxxxx X. Xxxxxxxx is no
longer the Chief Executive Officer of the Company.
4.2. Further Assurances. Each party hereto shall do
and perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other
agreements, certificates, instruments and documents as any
other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.
4.3. Severability. If any provision of this Agree-
ment is held to be illegal, invalid or unenforceable under any
present or future law, and if the rights or obligations of the
parties under this Agreement would not be materially and
adversely affected thereby, such provision shall be fully sepa-
rable, and this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never com-
prised a part thereof, the remaining provisions of this
-9-
Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision
or by its severance therefrom, and in lieu of such illegal,
invalid or unenforceable provision, there shall be added auto-
matically as a part of this Agreement, a legal, valid and
enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible, and the
parties hereto request the court or any arbitrator to whom dis-
putes relating to this Agreement are submitted to reform the
otherwise illegal, invalid or unenforceable provision in accor-
dance with this Section 4.3.
4.4. Entire Agreement. This Agreement contains the
entire understanding of the parties with respect to the trans-
actions contemplated hereby and supersede all prior agreements
and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
4.5. Counterparts. This Agreement may be executed
in one or more counterparts, all of which shall be considered
one and the same agreement, and shall become effective when one
or more of the counterparts have been signed by each party and
delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
4.6. Notices. All notices, consents, requests,
instructions, approvals and other communications provided for
herein shall be validly given, if in writing and delivered per-
sonally, by confirmed telecopy or sent by registered mail,
postage prepaid, to:
if to any Shareholder:
addressed to such Shareholder at the address set
forth opposite such Shareholders' name in Schedule I
if to the Company:
Shared Technologies Inc.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Legal Department
or to such other address as any party may, from time to time,
designate in a written notice given in a like manner, and any
-10-
such notice or communication shall be deemed to have been given
on the fifth business day after the date so sent, unless actu-
ally received earlier.
4.7. Governing Law. THIS AGREEMENT SHALL BE GOV-
ERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.
4.8. Specific Performance. Each party hereto
acknowledges that monetary damages would not adequately compen-
sate the other parties hereto for the breach of this Agreement
and that this Agreement shall therefore be specifically
enforceable, and any breach or threatened breach of this Agree-
ment shall be the proper subject of a temporary or permanent
injunction or restraining order. Further, each party hereto
and its successors, heirs, representatives and assigns waive
any claim or defense that there is an adequate remedy at law
for such breach or threatened breach.
4.9. Attorney's Fees. If attorneys' fees or other
costs are incurred to secure performance of any of the obliga-
tions herein provided for, or to establish damages for the
breach thereof, or to obtain any other appropriate relief,
whether by way of prosecution or defense, the prevailing party
or parties shall be entitled to recover reasonable attorney's
fees and costs incurred therein.
4.10. Waiver. No amendment or waiver of any provi-
sion of this Agreement, nor consent to any departure therefrom,
shall be effective unless the same shall be in writing and
signed by each party thereto, and then such waiver or consent
shall be effective only in a specific instance and for the spe-
cific purpose for which given. No failure on the part of a
party hereto to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any sin-
gle or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other
right. The remedies provided in this Agreement are cumulative
and not exclusive of any remedies provided by law.
4.11. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of each party hereto
and his or its successors, heirs, representatives and permitted
assigns. This Agreement shall be binding upon and inure to the
benefit of each individual signatory hereto and his, her or its
-11-
respective heirs, personal representatives and assigns, and any
receiver, trustee in bankruptcy or representative of the credi-
tors of each such person.
4.12. Person Defined. For purposes of this Agree-
ment, "Person" means all natural persons, corporations, busi-
ness trusts, associations, companies, partnerships, joint ven-
tures, and other entities and governments and agencies and
political subdivisions.
4.13. After-Acquired Shares. Subject to Section
1.1(b), whenever a Shareholder shall hereafter acquire any
shares of Common Stock, Convertible Preferred Stock or rights
or options with respect thereto, such shares so acquired shall
be voted in accordance with the terms of Article III of this
Agreement but shall not otherwise be subject to any of the
other terms and conditions contained herein.
-12-
IN WITNESS WHEREOF, this Agreement has been signed by
or on behalf of each of the parties hereto, all as of the date
first above written.
SHARED TECHNOLOGIES INC.
By:______________________________
Name:
Title:
RHI HOLDINGS, INC.
By:______________________________
Name:
Title:
_________________________________
Xxxxxxx X. Xxxxxxxx
SCHEDULE I
List of Shareholders
Common
Shareholder and Address Stock
RHI Holdings, Inc.
000 Xxxx Xxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, XX 00000 6,000,000
Xxxxxxx X. Xxxxxxxx [ ]
[Address]
Total [ ]
EXHIBIT B-1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is
made and entered into this day of , 1995 by and
between Shared Technologies Inc. ("Shared Technologies"), a
Delaware corporation, The Xxxxxxxxx Corporation ("TFC"), a Del-
aware corporation, and RHI Holdings Inc. ("RHI"), a Delaware
corporation and the sole common stockholder of Fairchild Indus-
tries, Inc. ("Fairchild").
W I T N E S S E T H :
WHEREAS, Shared Technologies, TFC, RHI and Fairchild
have entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated as of November , 1995; and
WHEREAS, capitalized terms used herein without defi-
nition shall have the respective meanings ascribed to such
terms in the Merger Agreement; and
WHEREAS, TFC is the sole common stockholder of RHI;
and
WHEREAS, the execution and delivery of this Agreement
is a condition to effecting the Merger at the Closing and each
of the parties has agreed to effect the Merger in reliance upon
the execution and delivery of this Agreement;
NOW, THEREFORE, in consideration of the transactions
contemplated by the Merger Agreement and other good and valu-
able consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Indemnification by RHI and TFC.
RHI and TFC, jointly and severally, hereby agree to
indemnify and hold harmless Shared Technologies against any and
all losses, liabilities and damages or actions or claims (or
actions or proceedings, whether commenced or threatened) in
respect thereof (hereinafter referred to collectively as
"Losses") resulting from any liability or claims (including
without limitation counsel fees and expenses of Shared Technol-
ogies in the event RHI and TFC fail to assume the defense
thereof) which related to the operations of Xxxxxxxxx
-2-
Industries, Inc. or any of its subsidiaries prior to the Effec-
tive Time, including without limitation those which have been
assumed by RHI pursuant to the Fairchild Recapitalization
described in Schedule 9.1 to the Merger Agreement except for
(x) Losses related to or arising out of the telecommunications
systems and service business of Fairchild Communication
Services Company and (y) the other obligations of Fairchild
expressly assumed by Shared Technologies as specified on
Schedule 9.1 to the Merger Agreement (clauses (x) and (y) being
defined as the "Assumed Liabilities"). Notwithstanding the
foregoing, in no event shall Shared Technologies be entitled to
indemnification for, and the term "Losses" shall not include
any consequential damages or damages which are speculative,
remote or conjectural (except to the extent represented by a
successful claim by a third party).
If any action, proceeding or claim shall be brought
or asserted against Shared Technologies by any third party,
which action, proceeding or claim, if determined adversely to
the interests of Shared Technologies would entitle Shared Tech-
nologies to indemnity pursuant to this Agreement, Shared Tech-
nologies shall promptly, but in no event later than 10 days
from the date Shared Technologies receives written notice of
such action, proceeding or claim, notify TFC and RHI of the
same in writing specifying in detail the basis of such claim
and the facts pertaining thereto (but the failure to give such
notice in a timely fashion shall not affect TFC's and RHI's
obligations under this Section 1 except to the extent it preju-
diced or damaged their ability to defend, settle or compromise
such claim or to pay any Losses resulting therefrom), and TFC
and RHI shall be entitled (but not obligated) to assume the
defense thereof by giving written notice thereof within 10 days
after TFC and RHI received notice of the claim from Shared
Technologies to Shared Technologies and have the sole control
of defense and settlement thereof (but only, with respect to
any settlement, if such settlement involves an unconditional
release of Shared Technologies or any of its subsidiaries in
respect of such claim), including the employment of counsel and
the payment of all expenses.
2. Indemnification by Shared Technologies.
Shared Technologies hereby agrees to indemnify and
hold harmless RHI and TFC against any and all losses, liabili-
ties and damages or actions or claims (or actions or proceed-
ings, whether commenced or threatened) in respect thereof
resulting from any liability or claims (including without
-3-
limitation counsel fees and expenses of RHI and TFC in the
event Shared Technologies fails to assume the defense thereof)
which related to the Assumed Liabilities (hereinafter referred
to collectively as "STI Losses"). Notwithstanding the fore-
going, in no event shall TFC and RHI be entitled to indemnifi-
cation for, and the term "STI Losses" shall not include, any
consequential damages or damages which are speculative, remote
or conjectural (except to the extent represented by a success-
ful claim by a third party).
If any action, proceeding or claim shall be brought
or asserted against RHI or TFC by any third party, which
action, proceeding or claim, if determined adversely to the
interests of RHI or TFC would entitle RHI or TFC to indemnity
pursuant to this Agreement, RHI or TFC shall promptly, but in
no event later than 10 days from the date RHI or TFC receives
written notice of such action, proceeding or claim, notify
Shared Technologies of the same in writing specifying in detail
the basis of such claim and the facts pertaining thereto (but
the failure to give such notice in a timely fashion shall not
affect Shared Technologies' obligations under this Section 2
except to the extent it prejudiced or damaged Shared Technolo-
xxxx' ability to defend, settle or compromise such claim or to
pay any Losses resulting therefrom), and Shared Technologies
shall be entitled (but not obligated) to assume the defense
thereof by giving written notice thereof within 10 days after
Shared Technologies received notice of the claim from RHI or
TFC to RHI or TFC and have the sole control of defense and
settlement thereof (but only, with respect to any settlement,
if such settlement involves an unconditional release of TFC and
RHI or any of their respective subsidiaries in respect of such
claim), including the employment of counsel and the payment of
all expenses.
3. Miscellaneous
3.1 Modification; Waivers. This Agreement may be
modified or amended only with the written consent of each party
hereto. No party hereto shall be released from its obligations
hereunder without the written consent of the other party. The
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively
or prospectively) by the party entitled to enforce such term,
but any such waiver shall be effective only if in a writing
signed by the party against which such waiver is to be
asserted. Except as otherwise specifically provided herein, no
delay on the part of any party hereto in exercising any right,
-4-
power or privilege hereunder shall operate as a waiver thereof,
nor shall any waiver on the part of any party hereto of any
right, power or privilege hereunder operate as a waiver of any
other right, power or privilege hereunder nor shall any single
or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder.
3.2 Entire Agreement. This Agreement represents the
entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter
hereof.
3.3 Severability. If any provision of this Agree-
ment, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this
Agreement or the application of such provision to other Persons
or circumstances shall not be affected thereby; provided that
the parties shall negotiate in good faith with respect to an
equitable modification of the provision or application thereof
held to be invalid.
3.4 Notices. (a) Any notice or communication to
any party hereto shall be duly given if in writing and deliv-
ered in person or mailed by first class mail (registered or
certified, return receipt requested), facsimile or overnight
air courier guaranteeing next day delivery, to such other par-
ty's address.
If to RHI Holdings, Inc.:
000 Xxxx Xxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Esq.
If to The Xxxxxxxxx Corporation:
000 Xxxx Xxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esq.
-5-
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
If to Shared Technologies Inc.:
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Legal Department
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx & Hannah
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No. (000) 000-0000
(b) All notices and communications will be deemed to
have been duly given: at the time delivered by hand, if per-
sonally delivered; five business days after being deposited in
the mail, if mailed; when sent, if sent by facsimile; and the
next business day after timely delivery to the courier, if sent
by overnight air courier guaranteeing next day delivery.
3.5 Successors and Assigns. This Agreement shall
inure to the benefit of and shall be binding upon RHI, TFC and
Shared Technologies and their respective successors and
assigns.
3.6 Counterparts. This Agreement may be executed in
one or more counterparts, each of which for all purposes shall
be deemed to be an original and all of which together shall
constitute the same agreement.
3.7 Headings. The Section headings in this Agree-
ment are for convenience of reference only, and shall not be
deemed to alter or affect the meaning or interpretation of any
provisions hereof.
-6-
3.8 Construction. This Agreement shall be governed,
construed and enforced with the laws of the state of New York,
without regard to principles of conflict of laws.
-7-
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their officers thereunto duly
authorized as of the date first written above.
THE XXXXXXXXX CORPORATION
By: _____________________________
Name:
Title:
RHI HOLDINGS, INC.
By: _____________________________
Name:
Title:
SHARED TECHNOLOGIES INC.
By: _____________________________
Name:
Title:
EXHIBIT B-2
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is
made and entered into this day of , 1995 by and
between Shared Technologies Inc. ("Shared Technologies"), a
Delaware corporation, and Xxxxxxxxx Fasteners, Inc. ("Fasten-
ers"), a Delaware corporation.
W I T N E S S E T H :
WHEREAS, Shared Technologies, The Fairchild Corpora-
tion, RHI Holdings Inc. and Fairchild Industries, Inc.
("Fairchild") have entered into an Agreement and Plan of Merger
(the "Merger Agreement") dated as of November , 1995; and
WHEREAS, Fasteners owns the assets and liabilities,
and conducts the operations, of the aerospace and industrial
fasteners business previously owned and conducted by Fairchild
and its subsidiaries; and
WHEREAS, capitalized terms used herein without defi-
nition shall have the respective meanings ascribed to such
terms in the Merger Agreement; and
WHEREAS, the execution and delivery of this Agreement
is a condition to effecting the Merger at the Closing and the
parties to the Merger Agreement have agreed to effect the
Merger in reliance upon the execution and delivery of this
Agreement;
NOW, THEREFORE, in consideration of the transactions
contemplated by the Merger Agreement and other good and valu-
able consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Indemnification by Fasteners.
Fasteners hereby agrees to indemnify and hold harm-
less Shared Technologies against any and all losses, liabili-
ties and damages or actions or claims (or actions or proceed-
ings whether commenced or threatened) in respect thereof (here-
inafter referred to collectively as "Losses") resulting from
any liability or claims (including without limitation counsel
fees and expenses for Shared Technologies in the event
-2-
Fasteners fails to assume the defense thereof) which related to
the aerospace and industrial fasteners business as previously
owned and conducted by Fairchild and its subsidiaries prior to
the Effective Time, including without limitation those which
have directly and indirectly been assumed by Fasteners pursuant
to the Fairchild Recapitalization described in Schedule 9.1 to
the Merger Agreement. Notwithstanding the foregoing, in no
event shall Shared Technologies be entitled to indemnification
for, and the term "Losses" shall not include, any consequential
damages or damages which are speculative, remote or conjectural
(except to the extent represented by a successful claim by a
third party).
If any action, proceeding or claim shall be brought
or asserted against Shared Technologies by any third party,
which action, proceeding or claim, if determined adversely to
the interests of Shared Technologies would entitle Shared Tech-
nologies to indemnity pursuant to this Agreement, Shared Tech-
nologies shall promptly, but in no event later than 10 days
from the date Shared Technologies receives written notice of
such action, proceeding or claim, notify Fasteners of the same
in writing specifying in detail the basis of such claim and the
facts pertaining thereto (but the failure to give such notice
in a timely fashion shall not affect Fasteners' obligations
under this Section 1 except to the extent it prejudiced or dam-
aged Fasteners' ability to defend, settle or compromise such
claim or to pay any Losses resulting therefrom), and Fasteners
shall be entitled (but not obligated) to assume the defense
thereof by giving written notice thereof within 10 days after
Fasteners received notice of the claim from Shared Technologies
to Shared Technologies and have the sole control of defense and
settlement thereof (but only, with respect to any settlement,
if such settlement involves an unconditional release of Shared
Technologies or any of its subsidiaries), including the employ-
ment of counsel and the payment of all expenses.
2. Indemnification by Shared Technologies.
Shared Technologies hereby agrees to indemnify and
hold harmless Fasteners against any and all losses, liabilities
and damages or actions or claims (or actions or proceedings
whether commenced or threatened) in respect thereof (herein-
after referred to collectively as "STI Losses") resulting from
(x) losses related to or arising out of the telecommunications
systems and service business of Fairchild Communication Ser-
vices Company and (y) the other obligations of Fairchild
expressly assumed by Shared Technologies as specified on
-3-
Schedule 9.1 to the Merger Agreement (including without limita-
tion counsel fees and expenses of Fasteners in the event Shared
Technologies fails to assume the defense thereof). Notwith-
standing the foregoing, in no event shall Fasteners be entitled
to indemnification for, and the term "STI Losses" shall not
include, any consequential damages or damages which are specu-
lative, remote or conjectural (except to the extent represented
by a successful claim by a third party).
If any action, proceeding or claim shall be brought
or asserted against Fasteners by any third party, which action,
proceeding or claim, if determined adversely to the interests
of Fasteners would entitle Fasteners to indemnity pursuant to
this Agreement, Fasteners shall promptly, but in no event later
than 10 days from the date Fasteners receives written notice of
such action, proceeding or claim, notify Shared Technologies of
the same in writing specifying in detail the basis of such
claim and the facts pertaining thereto (but the failure to give
such notice in a timely fashion shall not affect Shared Tech-
nologies' obligations under this Section 2 except to the extent
it prejudiced or damaged Shared Technologies' ability to
defend, settle or compromise such claim or to pay any Losses
resulting therefrom), and Shared Technologies shall be entitled
(but not obligated) to assume the defense thereof by giving
written notice thereof within 10 days after Shared Technologies
received notice of the claim from Fasteners to Fasteners and
have the sole control of defense and settlement thereof (but
only, with respect to any settlement, if such settlement
involves an unconditional release of Fasteners or any of its
subsidiaries), including the employment of counsel and the pay-
ment of all expenses.
3. Miscellaneous
3.1 Modification; Waivers. This Agreement may be
modified or amended only with the written consent of each party
hereto. No party hereto shall be released from its obligations
hereunder without the written consent of the other party. The
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively
or prospectively) by the party entitled to enforce such term,
but any such waiver shall be effective only if in a writing
signed by the party against which such waiver is to be
asserted. Except as otherwise specifically provided herein, no
delay on the part of any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof,
nor shall any waiver on the part of any party hereto of any
-4-
right, power or privilege hereunder operate as a waiver of any
other right, power or privilege hereunder nor shall any single
or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder.
3.2 Entire Agreement. This Agreement represents the
entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter
hereof.
3.3 Severability. If any provision of this Agree-
ment, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this
Agreement or the application of such provision to other Persons
or circumstances shall not be affected thereby; provided that
the parties shall negotiate in good faith with respect to an
equitable modification of the provision or application thereof
held to be invalid.
3.4 Notices. (a) Any notice or communication to
any party hereto shall be duly given if in writing and deliv-
ered in person or mailed by first class mail (registered or
certified, return receipt requested), facsimile or overnight
air courier guaranteeing next day delivery, to such other par-
ty's address.
If to Xxxxxxxxx Fasteners, Inc.:
000 Xxxx Xxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Esq.
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
-5-
If to Shared Technologies Inc.:
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Legal Department
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx & Hannah
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No. (000) 000-0000
(b) All notices and communications will be deemed to
have been duly given: at the time delivered by hand, if per-
sonally delivered; five business days after being deposited in
the mail, if mailed; when receipt acknowledged, if sent by fac-
simile; and the next business day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day
delivery.
3.5 Successors and Assigns. This Agreement shall
inure to the benefit of and shall be binding upon Fasteners and
Shared Technologies and their respective successors and
assigns.
3.6 Counterparts. This Agreement may be executed in
one or more counterparts, each of which for all purposes shall
be deemed to be an original and all of which together shall
constitute the same agreement.
3.7 Headings. The Section headings in this Agree-
ment are for convenience of reference only, and shall not be
deemed to alter or affect the meaning or interpretation of any
provisions hereof.
3.8 Construction. This Agreement shall be governed,
construed and enforced with the laws of the state of New York,
without regard to principles of conflict of laws.
-6-
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their officers thereunto duly
authorized as of the date first written above.
XXXXXXXXX FASTENERS, INC.
By: ____________________________
Name:
Title:
SHARED TECHNOLOGIES INC.
By: _____________________________
Name:
Title:
EXHIBIT B-3
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is
made and entered into this day of , 1995 by and
between Shared Technologies Inc. ("Shared Technologies"), a
Delaware corporation, and D-M-E, Inc. ("DME"), a Delaware cor-
poration.
W I T N E S S E T H :
WHEREAS, Shared Technologies, The Fairchild Corpora-
tion, RHI Holdings Inc. and Fairchild Industries, Inc.
("Fairchild") have entered into an Agreement and Plan of Merger
(the "Merger Agreement") dated as of November , 1995; and
WHEREAS, DME owns the assets and liabilities, and
conducts the operations, of the plastic injection molding busi-
ness previously owned and conducted by Fairchild and its sub-
sidiaries; and
WHEREAS, capitalized terms used herein without defi-
nition shall have the respective meanings ascribed to such
terms in the Merger Agreement; and
WHEREAS, the execution and delivery of this Agreement
is a condition to effecting the Merger at the Closing and the
parties to the Merger Agreement have agreed to effect the
Merger in reliance upon the execution and delivery of this
Agreement;
NOW, THEREFORE, in consideration of the transactions
contemplated by the Merger Agreement and other good and valu-
able consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Indemnification by DME.
DME hereby agrees to indemnify and hold harmless
Shared Technologies against any and all losses, liabilities and
damages or actions or claims (or actions or proceedings whether
commenced or threatened) in respect thereof (hereinafter
referred to collectively as "Losses") resulting from any lia-
bility or claims (including without limitation counsel fees and
expenses of Shared Technologies in the event DME fails to
-2-
assume the defense thereof) which related to the plastic injec-
tion molding business as previously conducted by Fairchild and
its subsidiaries prior to the Effective Time, including without
limitation those which have been directly and indirectly
assumed by DME pursuant to the Fairchild Recapitalization
described in Schedule 9.1 to the Merger Agreement. Notwith-
standing the foregoing, in no event shall Shared Technologies
be entitled to indemnification for, and the term "Losses" shall
not include, any consequential damages or damages which are
speculative, remote or conjectural (except to the extent repre-
sented by a successful claim by a third party).
If any action, proceeding or claim shall be brought
or asserted against Shared Technologies by any third party,
which action, proceeding or claim, if determined adversely to
the interests of Shared Technologies would entitle Shared Tech-
nologies to indemnity pursuant to this Agreement, Shared Tech-
nologies shall promptly, but in no event later than 10 days
from the date Shared Technologies receives written notice of
such action, proceeding or claim, notify DME of the same in
writing specifying in detail the basis of such claim and the
facts pertaining thereto (but the failure to give such notice
in a timely fashion shall not affect DME's obligations under
this Section 1 except to the extent it prejudiced or damaged
DME's ability to defend, settle or compromise such claim or to
pay any Losses resulting therefrom), and DME shall be entitled
(but not obligated) to assume the defense thereof by giving
written notice thereof within 10 days after DME received notice
of the claim from Shared Technologies to Shared Technologies
and have the sole control of defense and settlement thereof
(but only, with respect to any settlement, if such settlement
involves an unconditional release of Shared Technologies or any
of its subsidiaries in respect of such claim), including the
employment of counsel and the payment of all expenses.
2. Indemnification by Shared Technologies.
Shared Technologies hereby agrees to indemnify and
hold harmless DME against any and all losses, liabilities and
damages or actions or claims (or actions or proceedings whether
commenced or threatened) in respect thereof (hereinafter
referred to collectively as "STI Losses") resulting from
(x) losses related to or arising out of the telecommunications
systems and service business of Fairchild Communication Ser-
vices Company and (y) the other obligations of Fairchild
expressly assumed by Shared Technologies as specified on Sched-
ule 9.1 to the Merger Agreement (including without limitation
-3-
counsel fees and expenses of DME in the event Shared Technolo-
xxxx fails to assume the defense thereof). Notwithstanding the
foregoing, in no event shall DME be entitled to indemnification
for, and the term "STI Losses" shall not include, any conse-
quential damages or damages which are speculative, remote or
conjectural (except to the extent represented by a successful
claim by a third party).
If any action, proceeding or claim shall be brought
or asserted against DME by any third party, which action, pro-
ceeding or claim, if determined adversely to the interests of
DME would entitle DME to indemnity pursuant to this Agreement,
DME shall promptly, but in no event later than 10 days from the
date DME receives written notice of such action, proceeding or
claim, notify Shared Technologies of the same in writing speci-
fying in detail the basis of such claim and the facts pertain-
ing thereto (but the failure to give such notice in a timely
fashion shall not affect Shared Technologies' obligations under
this Section 2 except to the extent it prejudiced or damaged
Shared Technologies' ability to defend, settle or compromise
such claim or to pay any Losses resulting therefrom), and
Shared Technologies shall be entitled (but not obligated) to
assume the defense thereof by giving written notice thereof
within 10 days after Shared Technologies received notice of the
claim from DME to DME and have the sole control of defense and
settlement thereof (but only, with respect to any settlement,
if such settlement involves an unconditional release of DME or
any of its subsidiaries in respect of such claim), including
the employment of counsel and the payment of all expenses.
3. Miscellaneous
3.1 Modification; Waivers. This Agreement may be
modified or amended only with the written consent of each party
hereto. No party hereto shall be released from its obligations
hereunder without the written consent of the other party. The
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively
or prospectively) by the party entitled to enforce such term,
but any such waiver shall be effective only if in a writing
signed by the party against which such waiver is to be
asserted. Except as otherwise specifically provided herein, no
delay on the part of any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof,
nor shall any waiver on the part of any party hereto of any
right, power or privilege hereunder operate as a waiver of any
other right, power or privilege hereunder nor shall any single
-4-
or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder.
3.2 Entire Agreement. This Agreement represents the
entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter
hereof.
3.3 Severability. If any provision of this Agree-
ment, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this
Agreement or the application of such provision to other Persons
or circumstances shall not be affected thereby; provided that
the parties shall negotiate in good faith with respect to an
equitable modification of the provision or application thereof
held to be invalid.
3.4 Notices. (a) Any notice or communication to
any party hereto shall be duly given if in writing and deliv-
ered in person or mailed by first class mail (registered or
certified, return receipt requested), facsimile or overnight
air courier guaranteeing next day delivery, to such other par-
ty's address.
If to D-M-E, Inc.:
000 Xxxx Xxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Esq.
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
-5-
If to Shared Technologies Inc.:
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Legal Department
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx & Hannah
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
(b) All notices and communications will be deemed to
have been duly given: at the time delivered by hand, if per-
sonally delivered; five business days after being deposited in
the mail, if mailed; when receipt acknowledged, if sent by fac-
simile; and the next business day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day
delivery.
3.5 Successors and Assigns. This Agreement shall
inure to the benefit of and shall be binding upon DME and
Shared Technologies and their respective successors and
assigns.
3.6 Counterparts. This Agreement may be executed in
one or more counterparts, each of which for all purposes shall
be deemed to be an original and all of which together shall
constitute the same agreement.
3.7 Headings. The Section headings in this Agree-
ment are for convenience of reference only, and shall not be
deemed to alter or affect the meaning or interpretation of any
provisions hereof.
3.8 Construction. This Agreement shall be governed,
construed and enforced with the laws of the state of New York,
without regard to principles of conflict of laws.
-6-
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their officers thereunto duly
authorized as of the date first written above.
D-M-E, INC.
By: ____________________________
Name:
Title:
SHARED TECHNOLOGIES INC.
By: _____________________________
Name:
Title:
EXHIBIT C
PLEDGE AGREEMENT
PLEDGE AGREEMENT (the "Agreement"), dated as of
, 1995, made by RHI HOLDINGS, INC., a Delaware cor-
poration ("Pledgor"), in favor of [NAME OF PLEDGE AGENT] (the
"Pledgee").
R E C I T A L S :
A. Pursuant to the terms of an Agreement and Plan
of Merger dated as of , 1995 (the "Merger Agreement")
among Shared Technologies Inc. ("Shared Technologies"), The
Xxxxxxxxx Corporation ("TFC"), RHI and Xxxxxxxxx Industries,
Inc. (a wholly-owned subsidiary of RHI), RHI has received ____
shares of 6% Cumulative Convertible Preferred Stock, par value
$___ per share (the "Convertible Preferred Stock"), of Shared
Technologies and ____ shares of Special Preferred Stock, par
value $___ per share (the "Special Preferred Stock" and,
together with the Convertible Preferred Stock, the "Preferred
Stock").
B. This Agreement is given by Pledgor in favor of
Pledgee for the benefit of Shared Technologies to secure the
payment and performance by the Indemnifying Parties (as herein-
after defined) of Indemnification Agreements dated the date
hereof (the "Indemnification Agreements") between Shared Tech-
nologies and each of TFC, RHI, D-M-E Inc. and Fairchild Fasten-
ers, Inc. (collectively, the "Indemnifying Parties").
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Pledgor and
Pledgee hereby agree as follows:
SECTION 1. Pledge. As collateral security for the
payment and performance when due of all of the Indemnifying
Parties' obligations to Shared Technologies under the Indemni-
fication Agreements (the "Secured Obligations"), Pledgor hereby
pledges, assigns and grants to Pledgee for the benefit of and
as agent for Shared Technologies, until this Agreement termi-
nates, a continuing first priority security interest in and to
all of the right, title and interest of Pledgor in shares of
Preferred Stock of Shared Technologies described in Schedule I
-2-
hereto (the "Pledged Shares"). The term "Pledged Collateral"
shall mean (i) the Pledged Shares and all other securities or
property issued in exchange or as replacement for (by reason of
merger, reorganization or otherwise) the Pledged Shares by the
Company or a third party ("New Pledged Shares") and (ii) all
other assets or property substituted for the Pledged Shares in
accordance with Section 6 of this Agreement.
SECTION 2. Delivery of Pledged Shares. The certifi-
xxxxx representing the Pledged Shares, together with stock pow-
ers, are, concurrently with the execution of this Agreement,
being delivered to Pledgee (and with respect to any New Pledged
Shares will be promptly delivered to Pledgee when received by
Pledgor) and will be held by Pledgee pursuant to and in accor-
dance with the terms of this Agreement.
SECTION 3. Voting Rights; Distributions; etc.
(a) Pledgor shall be entitled to exercise any and
all voting and other consensual rights (including rights to
exercise) pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms or pur-
pose of this Agreement.
(b) Pledgor shall be entitled to receive and retain,
and to utilize free and clear of the lien of this Agreement,
any and all dividends or distributions made with respect to the
Pledged Collateral, provided, however, if a Dispute Notice (as
hereinafter defined) has been delivered, until there has been a
resolution of the dispute to which such Dispute Notice relates,
all dividends and distributions on the portion of Pledged Col-
lateral required to satisfy Shared Technologies' claims under
the relevant Dispute Notice, shall be delivered to and held by
the Pledge Agent. Upon resolution of the dispute which is the
subject of the Dispute Notice all dividends and distributions
shall forthwith be delivered to the party in whose favor the
dispute was resolved.
(c) Pledgee shall be deemed without further action
or formality to have granted to Pledgor all necessary consents
relating to voting rights and shall, if necessary, upon written
request of Pledgor, from time to time execute and deliver (or
cause to be executed and delivered) to Pledgor all such instru-
ments as Pledgor may reasonably request in order to permit
Pledgor to exercise the voting and other rights which it is
entitled to exercise pursuant to Section 3(a) hereof and to
-3-
receive the dividends and distributions which it is authorized
to receive and retain pursuant to Section 3(b) hereof.
SECTION 4. Other Liens. Pledgor shall not (i) sell,
convey, assign or otherwise dispose of (except pursuant to
Section 6), or grant any option, right or warrant with respect
to, any of the Pledged Collateral, or (ii) create or permit to
exist any lien upon or with respect to any Pledged Collateral
other than the lien and security interest granted to Pledgee
for the benefit of Shared Technologies under this Agreement.
SECTION 5. Cancellation of Pledged Shares upon Pay-
ment Default. In the event that Shared Technologies claims it
is entitled to a payment from an Indemnifying Party in accor-
dance with the terms of an Indemnification Agreement because of
a payment that Shared Technologies has made or is then obli-
gated to make to a third party and for which it is entitled to
indemnification under the Indemnification Agreements, such
Indemnifying Party shall have 30 days (the "Notice Period")
from its receipt of written notice of such claim to pay to
Shared Technologies the amount of such claim in cash or dispute
responsibility for indemnification of such claim by delivering
a written notice thereof to Shared Technologies (a "Dispute
Notice"). In the event that such Indemnifying Party fails to
pay any such claim or deliver a Dispute Notice within such
30-day period, Pledgee shall deliver to Shared Technologies, at
Shared Technologies' request (a "Pledge Notice"), Pledged
Shares or, if applicable, New Pledged Shares (in each case val-
ued at their liquidation preference) in an amount equal to such
claimed amount and Shared Technologies shall cancel the same
and they will cease to be Pledged Collateral for all purposes
of this Agreement. In the event of a claim subject to a Dis-
pute Notice, upon settlement of such dispute, if the Indemnify-
ing Party fails to pay the amount owing to Shared Technologies,
if any, as a result of such settlement (the "Undisputed Claim
Amount"), within 30 days thereof, Pledgee shall deliver to
Shared Technologies, upon delivery to Pledgee of a Pledge
Notice, Pledged Shares or, if applicable, New Pledged Shares
(in each case valued at their liquidation preference) equal to
the Undisputed Claim Amount and Shared Technologies shall can-
cel the same. Any such cancellation of Pledged Shares or New
Pledged Shares pursuant to this Section 5 will be deemed to
have satisfied the Indemnifying Party's obligations under the
Indemnification Agreements for the claim to the extent of the
liquidation preference of the Pledged Shares or New Pledged
Shares so cancelled. The foregoing rights of Shared Technolo-
xxxx shall not obviate Shared Technologies' other available
-4-
rights to seek indemnification payments from the Indemnifying
Parties.
SECTION 6. Substitution of Collateral. At its elec-
tion, Pledgor may substitute property or assets owned by it for
all or a portion of the Pledged Shares (or New Pledged Shares)
so long as (i) the fair market value of such substitute prop-
erty or assets is at least equal to the fair market value of
the Pledged Shares (or New Pledged Shares) for which substitu-
tion is sought, as evidenced by the written opinion of an
investment banking firm of nationally recognized standing rea-
sonably acceptable to Shared Technologies, (ii) such substitute
property or assets are not subject to any other lien or secu-
rity interest at the time of such substitution, (iii) Pledgor
delivers to Pledgee such instruments and documents which are
necessary for Pledgee to perfect a first priority lien on and
security interest in such substitute property or assets and
(iv) Pledgor, Pledgee and Shared Technologies shall have
entered into such amendments or supplements to this Agreement
as are reasonably requested by Pledgee and Shared Technologies
in order to ensure Pledgee's rights and remedies hereunder with
respect to such substituted property or assets.
SECTION 7. Termination of Agreement; Release of
Pledged Collateral. On the Termination Date, this Agreement
shall terminate and Pledgee's and Shared Technologies' rights
with respect to the Pledged Collateral shall terminate and
Pledgee shall promptly deliver the certificates (or other prop-
erty or assets) representing the Pledged Collateral to Pledgor,
free and clear of any lien or encumbrance thereon. "Termina-
tion Date" means the later to occur of (i) the third anniver-
sary of the date of this Agreement and (ii) the date on which
the consolidated net worth (computed in accordance with gener-
ally accepted accounting principles) of The Fairchild Corpora-
tion at such time (as evidenced by an audited balance sheet
delivered to Pledgee by Pledgor) is at least (x) $25 million
greater than such net worth at September 30, 1995 (excluding
for such purpose any value attributed to the Preferred Stock on
such balance sheet) and (y) $225 million (including for such
purpose the value of the Preferred Stock); provided that in the
event of any outstanding claims under the Indemnification
Agreements that are subject to a Dispute Notice, the Termina-
tion Date shall not be deemed to occur with respect to an
amount of Pledged Collateral equal to the claim which is the
subject of such Dispute Notice, until such dispute is resolved
unless, as to any such claim, the appropriate Indemnifying Par-
ties accept, by written agreement reasonably satisfactory to
-5-
Shared Technologies, full and unconditional liability for such
claim and agree to assume the defense thereof and full respon-
sibility therefor (an "Assumption"). The foregoing provisions
notwithstanding, in the event that a Pledge Notice has been
delivered as to which Pledgor has not yet responded and the
Notice Period has not yet expired, such claims shall be subject
to the terms of the proviso of the preceding sentence until the
earlier to occur of the payment by Pledgor of the Undisputed
Claim Amount or delivery by Pledgor to Shared Technologies of
an Assumption.
SECTION 8. Continuing Security Interest; Assignment.
This Agreement shall create a continuing security interest in
the Pledged Shares and shall (i) be binding upon Pledgor, its
successors and assigns, and (ii) inure, together with the
rights and remedies of each of Pledgee and Shared Technologies
hereunder, to the benefit of each of Pledgee and Shared Tech-
nologies and their respective successors, transferees and
assigns; no other Person (including, without limitation, any
other creditor of Pledgor or Shared Technologies) shall have
any interest herein or any right or benefit with respect
hereto.
SECTION 9. GOVERNING LAW; TERMS. THIS AGREEMENT
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT
THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HERE-
UNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
PROPERTY ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF NEW YORK.
SECTION 10. Severability of Provisions. Any provi-
sion of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
SECTION 11. Execution in Counterparts. This Agree-
ment and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an
original, but all such counterparts together shall constitute
one and the same agreement.
-6-
SECTION 12. Headings. The Section headings used in
this Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.
SECTION 13. Arbitration. Any controversy, dispute
or question arising out of or in connection with this Agree-
ment, or the interpretation, performance or non-performance of
this Agreement or any breach hereof, shall be determined by
arbitration held in New York, in accordance with the then
existing rules of the American Arbitration Association. Any
decision or award of such arbitration shall be final, conclu-
sive and binding on the parties hereto. Nothing contained
herein shall in any way deprive either party of its right to
obtain injunctions or other equitable relief, including pre-
liminary relief pending arbitration. All costs and expenses
(including counsel and expert witness fees) associated with any
such arbitration shall be paid by the party adjudged by the
arbitrator to be responsible for the costs. Any award rendered
by an arbitrator shall be enforceable in any court of competent
jurisdiction.
SECTION 14. Pledgee. Shared Technologies hereby
appoints [NAME OF PLEDGE AGENT] as its agent to act as its
pledge agent with respect to the Pledged Collateral pursuant to
this Agreement. The actions of Pledgee hereunder are subject
to the provisions of this Agreement. Pledgee shall have the
right hereunder to make demands, to give notices, to exercise
or refrain from exercising any rights, and to take or refrain
from taking action (including, without limitation, the release
or substitution of Pledged Collateral), in accordance with this
Agreement. Pledgee may resign as long as Pledgee is replaced
by a successor Pledgee approved by Pledgor and Shared Technolo-
xxxx. Upon the acceptance of any appointment as Pledgee by a
successor Pledgee, that successor Pledgee shall thereupon suc-
ceed to and become vested with all the rights, powers, privi-
leges and duties of the retiring Pledgee under this Agreement,
and the retiring Pledgee shall thereupon be discharged from its
duties and obligations under this Agreement. After any retir-
ing Pledgee's resignation, the provisions of this Agreement
shall inure to its benefit as to any actions taken or omitted
to be taken by it under this Agreement while it was Pledgee.
SECTION 15. Notices.
(a) Any notice or communication to any party hereto
shall be duly given if in writing and delivered in person or
mailed by first class mail (registered or certified, return
-7-
receipt requested), facsimile or overnight air courier guaran-
teeing next day delivery to such other party's address.
If to RHI Holdings, Inc.:
000 Xxxx Xxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Esq.
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
If to Shared Technologies Inc.:
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Legal Department
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx & Hannah
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
If to [Pledge Agent]:
[ ]
with a copy to:
(b) All notices and communications will be deemed to
have been duly given: at the time delivered by hand, if per-
sonally delivered; five business days after being deposited in
-8-
the mail, if mailed; when sent, if sent by facsimile; and the
next business day after timely delivery to the courier, if sent
by overnight air courier guaranteeing next day delivery.
SECTION 16. Entire Agreement. This Agreement con-
stitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all other prior agree-
ments and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
-9-
IN WITNESS WHEREOF, Pledgor has caused this Agreement
to be executed and delivered by its duly authorized officer as
of the date first above written.
RHI HOLDINGS, INC.,
as Pledgor
By: ____________________________
Name:
Title:
[NAME],
as Pledgee
By: ____________________________
Name:
Title:
SHARED TECHNOLOGIES INC.
By: ____________________________
Name:
Title:
SCHEDULE I
Pledged Shares
CLASS PAR CERTIFICATE NUMBER
ISSUER OF STOCK VALUE ___NO(S).__ OF SHARES
EXHIBIT D
_______________________________________________________________
_______________________________________________________________
REGISTRATION RIGHTS AGREEMENT
between
RHI HOLDINGS, INC.
THE XXXXXXXXX CORPORATION
and
SHARED TECHNOLOGIES INC.
Dated ____________, 1995
_______________________________________________________________
_______________________________________________________________
REGISTRATION RIGHTS AGREEMENT dated as of
_________ __, 1995, between SHARED TECHNOLOGIES INC., a Dela-
ware corporation (the "Company"), RHI HOLDINGS, INC., a Dela-
ware corporation ("RHI") and THE XXXXXXXXX CORPORATION, a Dela-
ware corporation ("TFC").
WITNESSETH:
WHEREAS, pursuant to an Agreement and Plan of Merger,
dated as of November __, 1995 (the "Merger Agreement"), among
the Company, TFC, RHI and Xxxxxxxxx Industries, Inc.
("Fairchild"), RHI has obtained (i) 6,000,000 shares of Common
Stock shares of the Company, par value $.004 (the "Common
Stock"), (ii) [ ] shares of 6% Cumulative Convertible Pre-
ferred Stock, par value $___ (the "Convertible Preferred
Stock"), of the Company and (iii) [ ] shares of Special Pre-
ferred Stock, par value $____ (the "Special Preferred Stock"
and, together with the Convertible Preferred Stock, the "Pre-
ferred Stock").
WHEREAS, the Company desires to provide RHI and its
successors and assigns with certain rights regarding the regis-
tration of the Common Stock and the Preferred Stock (including
Common Stock issuable upon conversion of the Convertible Pre-
ferred Stock and Common Stock issuable by the Company to RHI to
satisfy indemnification obligations of the Company under the
Merger Agreement).
NOW, THEREFORE, in consideration of the mutual cove-
nants and agreements made herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and accepted, the parties hereto agree as follows:
1. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following
respective meanings:
"Affiliate" has the meaning set forth in Rule 12b-2
under the Exchange Act (as in effect on the date of this Agree-
ment), it being understood that any limited partner of a part-
nership shall not be an Affiliate of such partnership solely by
virtue of its status as such a limited partner.
"Commission" means the United States Securities and
Exchange Commission or any other federal agency at the time
administering the Securities Act.
-2-
"Common Stock" means the common stock of Shared Tech-
nologies Inc., par value $.004.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules
and regulations of the Commission thereunder, as the same shall
be in effect at the time. Reference to a particular section of
the Securities Exchange Act of 1934, as amended, shall include
reference to the comparable section, if any, of any such subse-
quent similar federal statute.
"Merger Agreement" is defined in the Recitals.
"Person" means any individual, partnership, joint
venture, corporation, trust, unincorporated organization,
government or department or agency of a government.
"Preferred Stock" means, collectively, (i) the 6%
Cumulative Convertible Preferred Stock of the Company, par
value $ , issued pursuant to the Merger Agreement and
(ii) the Special Preferred Stock of the Company, par value
$____, issued pursuant to the Merger Agreement.
"Registrable Common Securities" means the shares of
Common Stock (i) issued to RHI pursuant to the Merger Agree-
ment, (ii) issued to RHI in the future to satisfy indemnifica-
tion obligations of the Company under the Merger Agreement and
(iii) issuable and issued upon conversion of any shares of Con-
vertible Preferred Stock. As to any particular Registrable
Common Securities, once issued such securities shall cease to
be Registrable Common Securities when (a) a registration state-
ment with respect to the sale of such securities shall have
become effective under the Securities Act and such securities
shall have been disposed of in accordance with such registra-
tion statement, (b) they shall have been sold as permitted by,
and in compliance with, Rule 144 (or successor provision) pro-
mulgated under the Securities Act or (c) they shall have ceased
to be outstanding.
"Registrable Preferred Securities" means the shares
of Preferred Stock issued to RHI pursuant to the Merger Agree-
ment. As to any particular Registrable Preferred Securities,
once issued such securities shall cease to be Registrable Pre-
ferred Securities when (a) a registration statement with
respect to the sale of such securities shall have become effec-
tive under the Securities Act and such securities shall have
been disposed of in accordance with such registration
-3-
statement, (b) they shall have been sold as permitted by, and
in compliance with, Rule 144 (or successor provision) promul-
gated under the Securities Act or (c) they shall have ceased to
be outstanding.
"Registrable Securities" means collectively the Reg-
istrable Common Securities and Registrable Preferred Securities
and any other securities issuable in connection therewith or in
replacement thereof by way of a dividend, distribution, recapi-
talization, exchange, merger, consolidation or other
reorganization.
"Registration Expenses" means all expenses incident
to the Company's performance of or compliance with Section 2,
including, without limitation, all registration, filing and
National Association of Securities Dealers, Inc. fees, all
listing fees, all fees and expenses of complying with securi-
ties or blue sky laws (including, without limitation, reason-
able fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable
Securities), all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and dis-
bursements of counsel for the Company and of its independent
public accountants, including the expenses of "comfort" letters
required by or incident to such performance and compliance, and
any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities; provided, however, that Reg-
istration Expenses shall exclude, and RHI shall pay, underwrit-
ers' fees and underwriting discounts and commissions and trans-
fer taxes in respect of the Registrable Securities being
registered.
"Securities Act" means the Securities Act of 1933, as
amended, or any subsequent similar federal statute, and the
rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time. References to a particu-
lar section of the Securities Act of 1933, as amended, shall
include a reference to the comparable section, if any, of any
such subsequent similar federal statute.
"Special Securities" is defined in the definition of
"Trigger Date" below.
"Trigger Date" means (i) with respect to shares of
Common Stock issued to satisfy indemnification obligations of
the Company under the Merger Agreement (collectively "Special
Securities"), on the date of their issuance, (ii) with respect
-4-
to the shares of Special Preferred Stock, on their date of
issuance and (iii) with respect to all other Registrable Secu-
rities, on the date which is two years after the date of this
Agreement.
2. Registration Rights.
2.1 Registration on Demand.
2.1.1 Demand. At any time following a Trigger
Date, upon the written request (the "Demand") of RHI that the
Company effect the registration under the Securities Act of all
or part of RHI's Registrable Securities, the Company shall:
use its best efforts to effect, as soon as practicable and in
any event within 90 days after the Demand is received from RHI,
the registration under the Securities Act (but not including by
means of a shelf registration pursuant to Rule 415 under the
Securities Act), of the Registrable Securities which the Com-
pany has been so requested to register by RHI.
2.1.2 Registration of Other Securities. When-
ever the Company shall effect a registration pursuant to this
Section 2.1 in connection with an underwritten offering by RHI
of Registrable Securities, holders of securities of the Company
who have "piggyback" registration rights may include all or a
portion of such securities in such registration, offering or
sale; provided that, if the amount of Registrable Securities to
be sold by RHI is to be reduced because of the views of the
managing underwriter or underwriters, then the securities
(other than the Registrable Securities) to be sold by such
other holders participating in such offering shall be reduced
by allocating the securities to be sold by such other holders
in proportion to the number of securities proposed to be sold
in such offering by such holders.
2.1.3 Registration Statement Form. Registra-
tions under this Section 2.1 shall be on such appropriate reg-
istration form of the Commission as shall be selected by the
Company. The Company shall include in any such registration
statement all information which, in the opinion of counsel to
the Company, is required to be included.
2.1.4 Expenses. The Company shall pay the Reg-
istration Expenses in connection with any registration
requested pursuant to this Section 2.1.
-5-
2.1.5 Effective Registration Statement. A reg-
istration requested pursuant to this Section 2.1 shall not be
deemed to have been effected (i) unless a registration state-
ment with respect thereto has become effective, (ii) if after
it has become effective, such registration is interfered with
by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any
reason not attributable to RHI and has not thereafter become
effective, or (iii) if the conditions to closing specified in
the underwriting agreement, if any, entered into in connection
with such registration are not satisfied or waived, other than
by reason of a failure on the part of RHI.
2.1.6 Selection of Underwriters. In connection
with each underwritten offering, RHI shall promptly select an
underwriter subject to the approval of the Company (which
approval shall not be unreasonably withheld by the Company).
2.1.7 Limitations on Registration on Demand.
The Company shall not be required to prepare and file a regis-
tration statement pursuant to this Section 2.1 which would
become effective within 90 days following the effective date of
a registration statement (other than a registration statement
filed on Form S-8) filed by the Company with the Commission
pertaining to an underwritten public offering of convertible
debt securities or equity securities for cash for the account
of the Company or another holder of securities of the Company
or if the Company gives written notice to RHI within 10 days of
receipt of a Demand that the Company will initiate within 30
days the preparation of such registration statement, and in
each such case RHI was afforded the opportunity to include Reg-
istrable Securities in such registration pursuant to
Section 2.2 (unless the managing underwriter for such registra-
tion is of the opinion that such inclusion would adversely
affect the Company's ability to complete its underwritten
offering). Notwithstanding anything in this Section 2.1 to the
contrary, in no event shall the Company be required to effect
(i) in the aggregate, more than three registrations pursuant to
this Section 2.1 (other than registrations pertaining to Spe-
cial Securities, which shall be unlimited in number and not
otherwise reduce the number of registrations available to the
Company pursuant to this Section 2.1) and (ii) more than one
registration pursuant to this Section 2.1 in any 180-day period
(other than registrations pertaining to Special Securities,
which shall not affect or be affected by this clause (ii)).
-6-
2.1.8 Right to Purchase in Lieu of Registra-
tion. If the Company receives a request for a Demand registra-
tion and the Company desires not to comply with such request,
then the Company may purchase all but not less than all of the
Registrable Securities proposed to be disposed of in such
request (the "Redeemable Shares") by delivering to RHI a notice
of the Company's election to purchase such Registrable Securi-
ties (the "Redemption Notice") within seven (7) days of receipt
by the Company of the request for the Demand registration pur-
suant to Section 2.1.1. Upon issuance of the Redemption
Notice, the Company shall be irrevocably committed to purchase
the Registrable Securities on the terms set forth herein. The
purchase price to be paid for the Registrable Securities shall
be the Closing Price on the Trading Day immediately prior to
the date the Company receives the notice for the Demand regis-
tration; provided, that in the event the Registrable Securities
are not listed and traded on any national securities exchange
or on NASDAQ (as defined below), the purchase price shall be
established by the written opinion of a nationally recognized
investment banking firm selected by RHI delivered to the Com-
pany at time of the request for a Demand registration. The
term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Registrable Securi-
ties in question shall be listed or admitted to trading shall
be open for the transaction of business or, if the Registrable
Securities shall not be listed or admitted to trading on any
national securities exchange, any day on which trading takes
place in the over-the-counter market. The Company shall pur-
chase the Registrable Securities within thirty (30) business
days of the issuance of the Redemption Notice by delivering the
purchase price in cash to RHI against delivery of the Registra-
ble Securities. "Closing Price" means the last sale price,
regular way, as reported in the principal consolidated transac-
tion reporting system with respect to securities listed or
admitted to trading on the principal national securities
exchange on which the Registrable Securities shall be listed or
admitted to trading or, if the Registrable Securities shall not
be listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the aver-
age of the high bid and low asked prices in the
over-the-counter market, as reported by the National Associa-
tion of Securities Dealers Automated Quotations System
("NASDAQ") or such other system then in use.
-7-
2.2 Piggyback Registration.
2.2.1 Right to Include Registrable Securities.
If the Company at any time proposes to register any of its
securities under the Securities Act by registration on Forms
X-0, X-0, X-0 or any successor or similar form(s) (except reg-
istrations on such Forms or similar form(s) solely for regis-
tration of securities in connection with (i) an employee bene-
fit plan or dividend reinvestment plan or a merger or xxxxxxx-
dation or (ii) debt securities which are not convertible into
Common Stock), whether or not for sale for its own account, it
shall, subject to Section 2.8, each such time give written
notice to RHI of its intention to do so and of RHI's rights
under this Section 2.2 at least 15 days prior to the filing of
a registration statement with respect to such registration with
the Commission. Upon the written request of RHI made as
promptly as practicable and in any event within 5 business days
after the receipt of any such notice, which request shall spec-
ify the Registrable Securities intended to be disposed of by
RHI, the Company shall, subject to Section 2.7, use its best
efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so
requested to register by RHI; provided, that with respect to
registrations effected for the account of another holder of
securities of the Company, RHI's rights to include Registrable
Securities will be subject to the consent of such other holder
under agreements existing as of the date of this Agreement;
provided, further, that if, at any time after giving written
notice of its intention to register any securities and prior to
the effective date of the registration statement filed in con-
nection with such registration, the Company shall determine for
any reason not to register or to delay registration of such
securities, the Company may, at its election, give written
notice of such determination to RHI and (i) in the case of a
determination not to register, shall be relieved of its obliga-
tion to register any Registrable Securities in connection with
such registration (but not from any obligation of the Company
to pay the Registration Expenses in connection therewith),
without prejudice; provided, however, that RHI may request that
such registration be effected as a registration under Section
2.1 hereof and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Regis-
trable Securities for the same period as the delay in register-
ing such other securities. No registration effected under this
Section 2.2 shall relieve the Company of its obligation to
effect any registration upon demand under Section 2.1. The
Company shall pay all Registration Expenses in connection with
-8-
registration of Registrable Securities requested pursuant to
this Section 2.2.
2.2.2 Priority in Piggyback Registrations.
Notwithstanding anything in paragraph 2.2.1 above to the con-
trary, if the managing underwriter of any underwritten offering
shall inform the Company by letter of its belief that the num-
ber or type of Registrable Securities requested to be included
in such registration would materially and adversely affect such
offering, then the Company shall include in such registration,
to the extent of the number and type which the Company is so
advised can be sold in (or during the time of) such offering,
first, all securities proposed by the Company to be sold for
its own account or by the holder of securities who initiated a
demand registration, and second, by reducing the other securi-
ties (including Registrable Securities to be sold by other
holders of securities (including RHI)) in proportion to the
number of securities proposed to be sold in such offering by
such holders.
2.3 Registration Procedures.
2.3.1 In connection with the registration of
any Registrable Securities under the Securities Act as provided
in Sections 2.1 and 2.2, the Company shall as expeditiously as
possible:
(i) prepare and file with the Commission the
requisite registration statement to effect such registration
and thereafter use its best efforts to cause such registration
statement to become and remain effective (subject to clause
(ii) below); provided, however, that the Company may discon-
tinue any registration of its securities which are not Regis-
trable Securities at any time prior to the effective date of
the registration statement relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary
to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such reg-
istration statement for such period as shall be required for
the disposition of all of such Registrable Securities; pro-
vided, that such period need not exceed 90 days;
-9-
(iii) furnish to RHI such number of conformed
copies of such registration statement and of each such amend-
ment and supplement thereto (in each case including all exhib-
its), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed
under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents,
as RHI may reasonably request;
(iv) use its best efforts (x) to register or
qualify all Registrable Securities and other securities covered
by such registration statement under such other securities or
Blue Sky laws of such States of the United States of America
where an exemption is not available and as RHI shall reasonably
request, (y) to keep such registration or qualification in
effect for so long as such registration statement remains in
effect, and (z) to take any other action which may reasonably
be necessary or advisable to enable RHI to consummate the dis-
position in such jurisdictions of the securities to be sold by
RHI, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign cor-
poration in any jurisdiction wherein it would not, but for the
requirements of this paragraph (iv), be obligated to be so
qualified or to consent to general service of process in any
such jurisdiction;
(v) use its best efforts to cause all Registra-
ble Securities covered by such registration statement to be
registered with or approved by such other federal or state gov-
ernmental agencies or authorities as may be necessary in the
opinion of counsel to the Company and counsel to RHI to consum-
mate the disposition of such Registrable Securities in accor-
dance with their intended method of disposition;
(vi) furnish to RHI and its underwriters, if
any, (x) an opinion of counsel for the Company, and (y) a "com-
fort" letter signed by the independent public accountants who
have certified the Company's financial statements included or
incorporated by reference in such registration statement, each
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein)
and, in the case of the accountant's comfort letter, with
respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's
counsel and in accountant's comfort letters delivered to the
underwriters in underwritten public offerings of securities
-10-
(and dated the dates such opinions and comfort letters are cus-
tomarily dated);
(vii) notify RHI when a prospectus relating
thereto is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading, in the light of the circumstances under which
they were made, and at the request of RHI promptly prepare and
furnish to it a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they
were made;
(viii) otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission,
and make available to its security holders, as soon as reason-
ably practicable, an earnings statement covering the period of
at least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the effec-
tive date of such registration statement, which earnings state-
ment shall satisfy the provisions of Section 11(a) of the Secu-
rities Act and Rule 158 promulgated thereunder, and promptly
furnish the same to RHI;
(ix) provide and cause to be maintained a trans-
fer agent and registrar (which, in each case, may be the Com-
pany) for all Registrable Securities covered by such registra-
tion statement from and after a date not later than the effec-
tive date of such registration; and
(x) use its best efforts to list all Registra-
ble Securities covered by such registration statement on any
national securities exchange or over-the-counter market, if
any, on which Registrable Securities of the same class and, if
applicable, series, covered by such registration statement are
then listed.
The Company may require RHI to furnish the Company
such information regarding RHI and the distribution of RHI's
-11-
Registrable Securities as the Company may from time to time
reasonably request in writing.
RHI agrees that upon receipt of any notice from the
Company of the happening of an event of the kind described in
Section 2.3.1(vii), RHI will forthwith discontinue its disposi-
tion of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until RHI's
receipt of the copies of the supplemented or amended prospectus
contemplated by Section 2.3.1(vii) and, if so directed by the
Company, RHI will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in
RHI's possession, of the prospectus relating to such Registra-
ble Securities current at the time of receipt of such notice.
2.4 Underwritten Offerings.
2.4.1 Requested Underwritten Offerings. If
requested by the underwriters for any underwritten offering by
RHI pursuant to a registration requested under Section 2.1, the
Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Company, RHI and the
underwriters, and to contain such representations and warran-
ties by the Company and RHI and such other terms as are gener-
ally prevailing in agreements of that type, including, without
limitation, indemnities to the effect and to the extent pro-
vided in Section 2.8. RHI will cooperate with the Company in
the negotiation of the underwriting agreement and will give
consideration to the reasonable suggestions of the Company
regarding the form and substance thereof. RHI shall be a party
to such underwriting agreement. RHI shall not be required to
make any representations or warranties to or agreements with
the Company or the underwriters other than representations,
warranties or agreements regarding RHI, RHI's Registrable Secu-
rities, RHI's intended method of distribution and any other
representations or warranties required by law or customarily
given by selling shareholders in an underwritten public
offering.
2.4.2 Piggyback Underwritten Offerings. If the
Company proposes to register any of its securities under the
Securities Act as contemplated by Section 2.2 and such securi-
ties are to be distributed by or through one or more underwrit-
ers, the Company will, subject to Section 2.2 and Section 2.7
hereof, if requested by RHI, arrange for such underwriters to
include all the Registrable Securities to be offered and sold
-12-
by RHI among the securities of the Company to be distributed by
such underwriters (subject to the provisio stated in
Section 2.2). RHI shall become a party to the underwriting
agreement negotiated between the Company and such underwriters.
RHI shall not be required to make any representations or war-
ranties to or agreements with the Company or the underwriters
other than representations, warranties or agreements regarding
RHI, RHI's Registrable Securities and RHI's intended method of
distribution or any other representations or warranties
required by law or customarily given by selling shareholders in
an underwritten public offering.
2.4.3 Holdback Agreements.
(i) If any registration of Registrable Securi-
ties (other than special securities) shall be in connection
with an underwritten public offering, RHI agrees not to effect
any public sale or distribution, including any sale pursuant to
Rule 144 under the Securities Act, of any Registrable Securi-
ties, and not to effect any such public sale or distribution of
any other equity security of the Company or of any security
convertible into or exchangeable or exercisable for any equity
security of the Company (in each case, other than as part of
such underwritten public offering) during the 15 days prior to,
and during the 90-day period beginning on, the effective date
of such registration statement, provided that RHI has received
written notice of such registration at least 15 days prior to
such effective date.
(ii) If any registration of Registrable Securi-
ties (other than special securities) shall be in connection
with an underwritten public offering, the Company agrees
(x) not to effect any public sale or distribution of any of its
equity securities or of any security convertible into or
exchangeable or exercisable for any equity security of the Com-
pany (other than in connection with any employee stock option
or other benefit plan) during the 15 days prior to, and during
the 90-day period beginning on the effective date of such reg-
istration statement (except as part of such registration) and
(y) that any agreement entered into after the date of this
Agreement pursuant to which the Company issues or agrees to
issue any privately placed equity securities shall contain a
provision under which holders of such securities agree not to
effect any public sale or distribution of any such securities
during the period referred to in the foregoing clause (x),
including any sale pursuant to Rule 144 under the Securities
Act (except as part of such registration, if permitted), if
-13-
such holder is participating in the offering pursuant to such
registration.
2.5 Preparation; Reasonable Investigation. In con-
nection with the preparation and filing of each registration
statement under the Securities Act pursuant to this Agreement,
the Company will give RHI, its underwriters, if any, and their
respective counsel and accountants the opportunity to partici-
xxxx in the preparation of such registration statement, each
prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, and give each of
them such access to its books and records, such opportunities
to discuss the business of the Company with officers and the
independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of RHI's and
such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. Any
expenses incurred by RHI in connection with any such investiga-
tion shall be borne by RHI.
2.6 Limitations, Conditions and Qualifications to
Obligations under Registration Covenants. The obligations of
the Company to use its best efforts to cause the Registrable
Securities to be registered under the Securities Act are sub-
ject to each of the following limitations, conditions and
qualifications:
In addition to its rights under Section 2.1.8 the
Company shall be entitled to postpone for a reasonable period
of time (but not exceeding 60 days) the filing of any registra-
tion statement otherwise required to be prepared and filed by
it pursuant to Section 2.1 if the Company determines, in its
reasonable judgment, that such registration and offering would
interfere with any financing, acquisition, corporate reorgani-
zation or other material transaction involving the Company or
any of its Affiliates or would require premature disclosures
thereof and promptly give RHI written notice of such determina-
tion, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If
the Company shall so postpone the filing of a registration
statement, RHI shall have the right to withdraw the request for
registration by giving written notice to the Company within 30
days after receipt of the notice of postponement and, in the
event of such withdrawal, such request shall not be counted for
purposes of the requests for registration to which RHI is enti-
tled pursuant to Section 2.1 hereof.
-14-
2.7 Indemnification.
2.7.1 Indemnification by the Company. In the
event of any registration of any securities of the Company
under the Securities Act, the Company will, and hereby does,
indemnify and hold harmless, in the case of any registration
statement filed pursuant to Section 2.1 or 2.2, RHI, its direc-
tors, officers, partners, agents, and affiliates and each other
Person who participates as an underwriter in the offering or
sale of such securities and each other Person, if any, who con-
trols RHI or any such underwriter within the meaning of the
Securities Act, insofar as losses, claims, damages, or liabili-
ties (or actions or proceedings, whether commenced or threat-
ened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such
securities were registered under the Securities Act, any pre-
liminary prospectus, final prospectus, or summary prospectus
contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they
were made not misleading, and the Company will reimburse RHI
and each such director, officer, partner, agent or affiliate,
underwriter and controlling Person for any legal or any other
expenses reasonably incurred by them in connection with inves-
tigating or defending any such loss, claim, liability, action
or proceeding; provided, that the Company shall not be liable
in any such case to the extent that any such loss, claim, dam-
age, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made
in such registration statement, any such preliminary prospec-
tus, final prospectus, summary prospectus, amendment or supple-
ment in reliance upon and in conformity with written informa-
tion furnished to the Company through an instrument duly exe-
cuted by or on behalf of RHI or such underwriter, as the case
may be, specifically stating that it is for use in the prepara-
tion thereof; and provided, further, that the Company shall not
be liable to RHI or any Person who participates as an under-
writer in the offering or sale of Registrable Securities or any
other person, if any, who controls RHI or such underwriter
within the meaning of the Securities Act, in any such case to
the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out
of such Person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to
-15-
the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the
written confirmation of the sale of Registrable Securities to
such Person if such statement or omission was corrected in such
final prospectus so long as such final prospectus, and any
amendments or supplements thereto, have been furnished to such
underwriter or RHI, as applicable. Such indemnity shall remain
in full force and effect regardless of any investigation made
by or on behalf of RHI or any such director, officer, partner,
agent or affiliate or controlling Person and shall survive the
transfer of such securities by RHI.
2.7.2 Indemnification by RHI. If any Registra-
ble Securities are included in any registration statement, each
of TFC and RHI will, and each hereby does, jointly and sever-
ally indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 2.7.1 above) the Company,
and each director of the Company, each officer of the Company
and each other Person, if any, who controls the Company within
the meaning of the Securities Act, with respect to any state-
ment or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or
any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information fur-
nished to the Company through an instrument duly executed by
TFC or RHI specifically stating that it is for use in the prep-
aration of such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement.
2.7.3 Notice of Claims, Etc. Promptly after
receipt by an indemnified party of notice of the commencement
of any action or proceeding involving a claim referred to in
the preceding paragraphs of this Section 2.7, such indemnified
party will, if a claim in respect thereof is to be made against
an indemnifying party, immediately give written notice to the
latter of the commencement of such action; provided, however,
that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 2.7,
except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in
respect of such claim, the indemnifying party shall be entitled
-16-
to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnify-
ing party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with
the defense thereof other than reasonable costs related to the
indemnified party's cooperation with the indemnifying party,
unless in such indemnified party's reasonable judgment a con-
flict of interest between such indemnified and indemnifying
parties arises in respect of such claim after the assumption of
the defense thereof. No indemnifying party shall be liable for
any settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably with-
held. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to
such claim or litigation.
2.7.4 Contribution. If the indemnification
provided for in this Section 2.7 shall for any reason be held
by a court to be unavailable to an indemnified party under
paragraph 2.7.1 or 2.7.2 hereof in respect of any loss, claim,
damage or liability, or any action in respect thereof, then, in
lieu of the amount paid or payable under paragraph 2.7.1 or
2.7.2 hereof, the indemnified party and the indemnifying party
under paragraph 2.7.1 or 2.7.2 hereof shall contribute to the
aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with
investigating the same), (i) in such proportion as is appropri-
ate to reflect the relative fault of the Company on one hand
and TFC and RHI on the other which resulted in such loss,
claim, damage or liability, or action in respect thereof, with
respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations or
(ii) if the allocation provided by paragraph (i) above is not
permitted by applicable law, in such proportion as shall be
appropriate to reflect the relative benefits received by the
Company on one hand and TFC and RHI on the other. No Person
guilty of fraudulent misrepresentation (within the meaning of
the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
-17-
In addition, no Person shall be obligated to contribute hereun-
der any amounts in payment for any settlement of any action or
claim, effected without such Person's consent, which consent
shall not be unreasonably withheld.
2.7.5 Other Indemnification. Indemnification
and contribution similar to that specified in the preceding
paragraphs of this Section 2.7 (with appropriate modifications)
shall be given by the Company and TFC and RHI with respect to
any required registration or other qualification of securities
under any federal or state law or regulation of any governmen-
tal authority other than the Securities Act.
2.7.6 Indemnification Payments. The indemnifi-
cation and contribution required by this Section 2.7 shall be
made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
2.7.7 Disclosure of Results of Investigation.
Each of TFC and RHI covenants and agrees that if in the course
of its investigation of the Company anything comes to its
attention that indicates there is or there could become a
breach of the Company's representations and warranties, cove-
nants and agreements contained in any underwriting agreement,
TFC and RHI shall promptly notify the Company of such matter.
Failure to so notify the Company shall cause TFC and RHI to
lose its right to indemnification under Section 2.7 with
respect to such discovered matter.
3. Rule 144. With a view to making available the bene-
fits of certain rules and regulations of the Commission which
may at any time permit the sale of the Registrable Securities
to the public without registration, after such time as a public
market exists for its Common Stock, the Company agrees to:
(a) use its best efforts to facilitate the sale of
the Registrable Securities to the public, without registration
under the Securities Act, pursuant to Rule 144 promulgated
under the Securities Act, provided that this shall not require
the Company to file reports under the Securities Act and the
Exchange Act at any time prior to the Company's being otherwise
required to file such reports;
(b) make and keep public information available, as
those terms are understood and defined in Rule 144 promulgated
under the Securities Act at all times after ninety (90) days
-18-
after the effective date of the first registration under the
Securities Act filed by the Company for an offering of its
securities to the general public;
(c) use its best efforts to then file with the Com-
mission in a timely manner all reports and other documents
required of the Company under the Securities Act and the
Exchange Act; and
(d) deliver a written statement as to whether it has
complied with such requirements of this Section, to RHI upon
RHI's request.
4. Legend. Any certificate evidencing Registrable Secu-
rities shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO A REGISTRATION RIGHTS AGREEMENT,
DATED AS OF BY AND BETWEEN
RHI HOLDINGS, INC. AND SHARED TECHNOLOGIES INC. A
COPY OF SUCH AGREEMENT SHALL BE FURNISHED WITHOUT
CHARGE BY SHARED TECHNOLOGIES INC. TO THE HOLDER
HEREOF UPON SUCH HOLDER'S WRITTEN REQUEST."
5. Modification; Waivers. This Agreement may be modi-
fied or amended only with the written consent of each party
hereto. No party hereto shall be released from its obligations
hereunder without the written consent of the other party. The
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively
or prospectively) by the party entitled to enforce such term,
but any such waiver shall be effective only if in a writing
signed by the party against which such waiver is to be
asserted. Except as otherwise specifically provided herein, no
delay on the part of any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof,
nor shall any waiver on the part of any party hereto of any
right, power or privilege hereunder operate as a waiver of any
other right, power or privilege hereunder nor shall any single
or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder.
6. Entire Agreement. This Agreement represents the
entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and
-19-
oral, between the parties with respect to the subject matter
hereof.
7. Severability. If any provision of this Agreement, or
the application of such provision to any Person or circum-
stance, shall be held invalid, the remainder of this Agreement
or the application of such provision to other Persons or cir-
cumstances shall not be affected thereby; provided, that the
parties shall negotiate in good faith with respect to an equi-
table modification of the provision or application thereof held
to be invalid.
8. Notices. (a) Any notice or communication to any
party hereto shall be duly given if in writing and delivered in
person or mailed by first class mail (registered or certified,
return receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to such other party's address.
If to RHI Holdings, Inc.:
000 Xxxx Xxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Esq.
If to Shared Technologies Inc.:
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Legal Department
(b) All notices and communications will be deemed to
have been duly given: at the time delivered by hand, if per-
sonally delivered; five business days after being deposited in
the mail, if mailed; when receipt acknowledged, if sent by fac-
simile; and the next business day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day
delivery.
9. Successors and Assigns. This Agreement shall inure
to the benefit of and shall be binding upon RHI and Shared
Technologies and their respective successors and assigns. In
the event that RHI assigns its rights to a holder or holders of
only a portion of the Registrable Securities, then all refer-
ences to RHI herein shall also be deemed to refer to such other
-20-
holder or holders but in such event RHI will have the sole
right to make decisions by and give notices for such holder or
holders under this Agreement; provided, that if RHI no longer
owns any Registrable Securities, then all decisions and notices
hereunder must be made by the holders of not less than a major-
ity of the Registrable Securities outstanding.
10. Counterparts. This Agreement may be executed in one
or more counterparts, each of which for all purposes shall be
deemed to be an original and all of which together shall con-
stitute the same agreement.
11. Headings. The Section headings in this Agreement are
for convenience of reference only, and shall not be deemed to
alter or affect the meaning or interpretation of any provisions
hereof.
12. Construction. This Agreement shall be governed, con-
strued and enforced in accordance with the laws of the state of
New York, without regard to its principles of conflict of laws.
13. No Inconsistent Agreements. The Company has not pre-
viously, and will not hereafter, enter into any agreement with
respect to its securities which is inconsistent with the rights
granted to RHI in this Agreement; except that holders of piggy-
back registration rights with respect to 9,458 shares of Common
Stock have such registration rights without allowance for cut-
back.
14. Recapitalizations, etc. In the event that any capi-
tal stock or other securities are issued in respect of, in
exchange for, or in substitution of, any Registrable Securities
by reason of any reorganization, recapitalization, reclassifi-
cation, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distri-
bution to stockholders or combination of the shares of Regis-
trable Securities or any other change in the Company's capital
structure, appropriate adjustments shall be made in this Agree-
ment so as to fairly and equitably preserve, as far as practi-
cable, the original rights and obligations of the parties
hereto under this Agreement.
15. Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement by a party hereto,
or where any provision hereof is validly asserted as a defense
by such party, such party, if successful, shall be entitled to
-21-
recover reasonably attorneys' fees in addition to any other
available remedy.
16. Specific Performance. The parties hereto agree that
the Registrable Securities of the Company cannot be purchased
or sold in the open market and that, for these reasons, among
others, the parties will be irreparably damaged in the event
that this Agreement is not specifically enforceable. Accord-
ingly, in the event of any controversy concerning the Registra-
ble Securities which is the subject of this Agreement, or any
right or obligation to register such securities, such right or
obligation shall be enforceable in a court of equity by spe-
cific performance. The rights granted in this Section 16 shall
be cumulative and not exclusive, and shall be in addition to
any and all other rights which the parties hereto may have
hereunder, at law or in equity.
-22-
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their respective
officers thereunto duly authorized as of the date first above
written.
SHARED TECHNOLOGIES INC.
By:______________________________
Name:
Title:
RHI HOLDINGS, INC.
By:______________________________
Name:
Title:
THE XXXXXXXXX CORPORATION
By:______________________________
Name:
Title:
EXHIBIT E
TAX SHARING AGREEMENT
THIS AGREEMENT is made this ___ day of November, 1995
between RHI Holdings, Inc., a Delaware corporation ("RHI") and
Shared Technologies Inc., a Delaware corporation ("Shared Tech-
nologies").
WHEREAS, RHI currently owns all of the outstanding
common stock of Xxxxxxxxx Industries, Inc., a Delaware corpora-
tion ("FII"), and FII owns all of the outstanding common stock
of VSI Corporation, a Delaware corporation ("VSI");
WHEREAS, the operations of RHI, FII and VSI are pres-
ently included in the consolidated Federal income tax return
filed for an affiliated group (within the meaning of { 1504 of
the Internal Revenue Code of 1986, as amended ("Code")) (the
"TFC Group") of which The Xxxxxxxxx Corporation, a Delaware
corporation ("TFC") is the common parent;
WHEREAS, TFC, RHI, FII and Shared Technologies have
signed an Agreement and Plan of Merger on November __, 1995
(the "Merger Agreement") under which, inter alia, FII will
merge into Shared Technologies;
WHEREAS, RHI and Shared Technologies desire to enter
into an agreement providing for payments between RHI and Shared
Technologies with respect to certain tax benefits and for
indemnification with respect to certain tax liabilities;
NOW, THEREFORE, in consideration of the premises and
of the mutual covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as
follows:
1. Indemnity
(A) Definition
This agreement applies to all Federal, State,
local, and foreign taxes (including income, franchise, with-
holding, and alternative minimum taxes), and also includes all
interest, penalties and additions imposed with respect to such
amounts (all such taxes and other amounts are collectively,
"Taxes").
-2-
(B) Tax Indemnification
(1) RHI shall pay and indemnify and shall hold
Shared Technologies harmless from and against (i) all Taxes and
claims for Taxes paid or payable by FII or VSI with respect to
any taxable year or period of FII or VSI or predecessor enti-
ties of either of them which ends on or before the date of the
merger of FII into Shared Technologies (the "Deconsolidation
Date"), including any tax liability which arises because FII
and VSI cease on the Deconsolidation Date to be members of the
TFC Group or of any other group filing a combined or xxxxxxx-
dated tax return for foreign, state, or local tax purposes, and
(ii) all taxes and claims for Taxes paid or payable by FII or
VSI by virtue of Section 1.1502-6 of the Treasury Regulations,
or by virtue of any similar provision of foreign, state, or
local law by reason that FII and VSI were members of a group
which files or has filed a consolidated federal income tax
return, or a combined or consolidated foreign, state, or local
tax return. For purposes of this Agreement, any taxable year
beginning before and ending after the Deconsolidation Date
shall be treated as ending on the Deconsolidation Date.
For purposes of this Agreement any income or
deduction arising from transactions characterized as deferred
intercompany transactions for Federal income tax purposes which
occurred before the Deconsolidation Date shall be deemed
attributable to a period ending on or before the
Deconsolidation Date (the "Pre-Deconsolidation Period").
(2) Shared Technologies shall pay RHI and
indemnify RHI and shall hold RHI harmless to the extent of any
reduction in tax payable by Shared Technologies for any taxable
year beginning on or after the Deconsolidation Date (a "Post-
Deconsolidation Period") as a result of a final disallowance of
any loss, deduction, or credit claimed by FII or VSI as members
of the TFC Group in a Pre-Deconsolidation Period and the allow-
ance of such deduction or credit in a Post-Deconsolidation
Period (or as a result of a final determination that additional
income is to be recognized in a Pre-Deconsolidation Period in
lieu of income which had been recognized in a Post-
Deconsolidation Period).
(3) Any reduction in tax payable by Shared
Technologies for a Post-Deconsolidation Period as a result of
utilization of net operating loss carryforwards or tax credit
carryforwards of FII and VSI originating in a Pre-
Deconsolidation Period shall result in payment by Shared
-3-
Technologies to RHI of 50% of the reduction in actual tax
otherwise payable by Shared Technologies. All carryforwards
and carrybacks shall be utilized in the order provided by the
Code and Treasury Regulations thereunder. Notwithstanding any
other representation and warranty or other provision in the
Merger agreement, RHI makes no representation and warranty
regarding (i) the amount of any net operating loss and tax
credits of the TFC Group allocable to FII or VSI on the Effec-
tive Date of the Merger of FII into Shared Technologies; (ii)
the amount of any net operating loss and tax credit of FII and
VSI that will be utilized by other members of the TFC Group
before the Deconsolidation Date; and (iii) the amount of any
reduction in tax payable by Shared Technologies due to utiliza-
tion of any net operating loss and tax credit of the TFC Group
allocable to FII and VSI.
(4) Any reduction in tax payable by the TFC
Group as a result of the allowance of any additional loss,
deduction, or credit claimed by the TFC Group on a claim for
refund or amended return filed after the Deconsolidation Date
for a Pre-Deconsolidation Period shall result in payment by RHI
to Shared Technologies of an amount equal to the increase in
actual tax otherwise payable by Shared Technologies caused by
the allowance of the loss, deduction or credit claimed by the
TFC Group. Said payment shall be made at the time the increase
in tax is paid by Shared Technologies.
(5) Any reduction in tax payable by the TFC
Group as a result of utilization of net operating losses or tax
credits of FII or VSI that originated in a Post-Deconsolidation
Period shall result in payment by RHI to Shared Technologies of
an amount equal to the increase in actual tax otherwise payable
by Shared Technologies caused by the TFC Group's use of such
net operating loss or credit. RHI shall pay such amount at the
time such increase is calculable. The TFC Group is not
required to take any action to reduce its taxes to the extent
such reduction causes a permanent tax detriment to the TFC
Group.
(6) Except as provided in Paragraph 1(B)(5),
all tax refunds received by FII or VSI for any periods prior to
the Deconsolidation Date received by Shared Technologies shall
be promptly paid by Shared Technologies to RHI.
(7) Shared Technologies is responsible for, and
will not be indemnified for, any taxes arising out of an elec-
tion under { 338 of the Code and Shared Technologies will not
-4-
make any election under { 338 of the Code regarding the trans-
actions contemplated by the Merger Agreement. Shared Technolo-
xxxx and RHI agree to report the merger of FII into Shared
Technologies on their Federal and state income tax returns as a
statutory merger under { 368(a)(1)(A) of the Code. Shared
Technologies and RHI agree to report all dividends declared and
paid by Shared Technologies to RHI with respect to Convertible
Preferred Stock on their Federal and State Income Tax Returns
as dividends.
(8) If any item resulting in an indemnification
hereunder is disallowed by a taxing authority and all remedies
discussed in paragraph 2 below are exhausted, then the indem-
xxxxx shall promptly return the related indemnification amounts
to the indemnitor.
(9) Fifty Percent (50%) of any reduction in tax
payable by Shared Technologies resulting from premiums, inter-
est and deferred financing fees associated with retirement of
$125,000,000 of FII's 12.25% Senior Notes due 1999 and existing
bank indebtedness of VSI in the Post-Deconsolidation Period
shall be paid by Shared Technologies to RHI.
(C) Time for Indemnification
Unless otherwise specified herein, payments required
under paragraph 1(B) above shall be made not later than the
date or dates on which the estimated payments or returns are
filed, or, if later, the date of any required notice or exhaus-
tion of remedies, as applicable.
(D) Returns, Payments and Refunds
(1) The TFC Group shall include the results of
FII and VSI operations for the Pre-Deconsolidation Period in
its consolidated Fedeal income tax return and any combined
state tax return or report for the Pre-Deconsolidation Period.
The TFC Group and RHI shall file or cause to be filed, when
due, all required federal, state, foreign, local, and other
returns, reports and declarations involving taxes for (either
mandatorily or at the discretion of TFC and on a consolidated,
separate or any other basis) the operations and assets of FII
and VSI for all taxable periods ending or deemed to end on or
before the Deconsolidation Date. Shared Technologies shall
file or cause to be filed, when due, all required, Federal,
state, foreign, local, and other returns, reports and declara-
tions involving taxes for the operations and assets of FII and
-5-
VSI for any taxable period beginning on or after the
Deconsolidation Date. RHI and Shared Technologies shall coop-
erate in filing the returns, reports and declarations for FII
and VSI described in this subparagraph (1) and shall make rele-
vant records available to each other and to FII and VSI at no
cost. Each return, report or declaration filed for a Pre-
Deconsolidation Period pursuant to this subparagraph (1) shall
be prepared in a manner consistent with the accounting princi-
ples and methods, elections and practices employed by the TFC
Group in preparing the same or similar returns, reports and
declarations for taxable periods prior to the Deconsolidation
Date.
(2) RHI and Shared Technologies shall each pay
or cause to be paid to the appropriate authorities all amounts
payable with respect to any returns, reports or declarations
which such party is required to file or cause to be filed pur-
suant to the preceeding subparagraph (1).
2. Tax Contests
(A) If a written claim is made by any taxing author-
ity that, if successful, could result in the indemnification of
Shared Technologies by RHI hereunder (an "Indemnifiable
Claim"), Shared Technologies shall promptly notify RHI in writ-
ing of such fact. In the event that such written notice is not
given within thirty (30) days of the receipt of such claim, the
bobligation to indemnify with respect to such claim shall ter-
minate if RHI is thereafter unable, directly or indirectly, to
contest such claim, pursue other administrative remedies, or
xxx for refund upon payment of the amount which is the subject
of the claim.
(B) Shared Technologies shall take, and shall cause
FII and VSI to take, any and all actions in connection with any
audit or similar proceeding relating to a Pre-Deconsolidation
Period, or in connection with contesting any Indemnifiable
Claim, as RHI shall reasonably request from time to time. RHI
shall control all audits or similar proceedings relating to a
Pre-Deconsolidation Period and all proceedings in connection
with contesting any Indemnifiable Claim and shall be entitled
to utilize counsel of its own choosing in connection therewith;
provided that, where the results of any such contest would have
a material adverse impact on the ability of Shared Technolo-
xxxx, FII or VSI to obtain the benefit of any item of deduc-
tion, loss or credit (or require Shared Technologies, FII or
VSI to recognize additional income) in any Post-Deconsolidation
-6-
Period, RHI shall reasonably consult with Shared Technologies
in connection with such contest. In connection with any such
proceedings, RHI, in its sole discretion, may: pursue or forego
any administrative appeal, proceedings, hearings and confer-
ences with the relevant taxing authority; pay the tax claims
and xxx for a refund (where applicable law permits such refund
suits) or contest the claim in any other legally permissible
manner; prosecute such contest to a determination in a court of
initial jurisdiction and in any applicable appellate courts; or
take any other action it deems appropriate. RHI shall xxxx-
xxxxx Shared Technologies for all reasonable out-of-pocket
costs (including fees and disbursements of outside counsel and
accountants) incurred in complying with any request by RHI pur-
suant to the first sentence of this subparagraph (B). If costs
are incurred in connection with a dispute involving both
Pre-Deconsolidation Period and Post-Deconsolidation Periods,
RHI and Shared Technologies shall agree on a reasonable alloca-
tion of such costs.
(C) Shared Technologies shall not settle or other-
wise compromise any Indemnifiable Claim of FII and VSI without
RHI's prior written consent; provided, however, that, nothing
contained herein shall require Shared Technologies to contest a
claim which it would otherwise be required to contest pursuant
hereto if Shared Technologies shall reasonably consult with RHI
with respect to such claim and shall waive payment by RHI of
any amount that might otherwise be payable by RHI hereunder by
way of indemnity in respect of such or any similar claim.
(D) The payments for Taxes between RHI and Shared
Technologies under their agreement are not subject to the $4
Million Basket in Sections 11.2 and 11.3 of the Merger
Agreement.
3. Interest
If any amount payable by RHI to Shared Technologies
or by Shared Technologies to RHI pursuant this Agreement is not
paid at the time set forth herein, the amount shall bear inter-
est, from the date of such event, at a rate equal to rate of
interest as described in { 6621(a) of the Code and computed
thereunder from time to time.
4. Entire Agreement: Prior Tax Agreements
This Tax Agreement constitutes the entire agreement
of the parties concerning the subject matter hereof and
-7-
supersedes and terminates all prior tax agreements among RHI,
FII and VSI effective on the day immediately preceding the
merger of FII into Shared Technologies.
5. Expenses
Unless otherwise expressly provided in this Agree-
ment, each party shall bear any and all expenses that arise
from its respective obligations under this Agreement.
6. Amendment
This Agreement may not be amended except by an agree-
ment in writing signed by the parties hereto.
7. Notices
All notices and other communications hereunder shall
be in writing and shall be delivered by hand or mailed by reg-
istered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other addresses
for the party as shall be specified by like notice) and shall
be deemed given on the date on which such notice is received:
If To: RHI Holdings, Inc.
000 Xxxx Xxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Esq.
With a copy to: Xxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
If To: Shared Technologies Inc.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Legal Department
-8-
With a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx & Hannah
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
8. Successors or Assigns
This Agreement shall constitute a direct obligation
of RHI and Shared Technologies and shall be binding upon, and
shall inure to the benefit of, the successors and assigns of
the corporations bound hereby.
9. Titles and Headings
Titles and headings to sections herein are included
for the convenience of reference only and are not intended to
be a part, or to affect the meaning or interpretation, of this
Agreement.
10. Legal Enforceability
Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such juris-
diction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof. Any such prohibition or unenforceability in any juris-
diction shall not invalidate or render unenforceable such pro-
vision in any other jurisdiction. Without prejudice to any
rights or remedies otherwise available to any party hereto,
each party hereto acknowledges that damages would be an inade-
quate remedy for any breach of the provisions of this Agreement
and agrees that the obligations of the parties hereunder shall
be specifically enforceable.
11. Governing Law
This Agreement shall be governed by the laws of the
State of Delaware, without regard to the principles of conflict
of laws thereof.
-9-
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first set forth above.
SHARED TECHNOLOGIES INC.
By: _____________________________
Title
RHI HOLDINGS, INC.
By: _____________________________
Title
