EXHIBIT (c)(1)
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PRIVILEGED AND CONFIDENTIAL
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AGREEMENT AND PLAN OF MERGER
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Among
INTERMEDIA COMMUNICATIONS INC.,
MOONLIGHT ACQUISITION CORP.
and
SHARED TECHNOLOGIES ▇▇▇▇▇▇▇▇▇ INC.
Dated November 20, 1997
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TABLE OF CONTENTS
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Page
I. THE OFFER............................................................. 1
1.1. The Offer............................................................. 1
1.2. Company Action........................................................ 2
1.3. Voting of Shares Acquired by Purchaser................................ 4
II. THE MERGER............................................................ 4
2.1. Merger; Surviving Corporation......................................... 4
2.2. Certificate of Incorporation.......................................... 4
2.3. Bylaws................................................................ 5
2.4. Directors and Officers................................................ 5
2.5. Effective Time........................................................ 5
2.6. Conversion of Shares.................................................. 5
2.7. Purchaser Common Stock................................................ 7
2.8. Surrender of Shares................................................... 7
2.9. Company Stock Options and Warrants.................................... 9
2.10. Good Faith Deposit.................................................... 9
2.11. Termination of the Pledge Agreement................................... 9
III. REPRESENTATIONS AND WARRANTIES OF COMPANY............................. 9
3.1. Organization and Qualification........................................ 9
3.2. Capital Stock of Subsidiaries......................................... 10
3.3. Capitalization........................................................ 10
3.4. Authority Relative to This Agreement.................................. 11
3.5. No Violations, etc.................................................... 12
3.6. Commission Filings; Financial Statements.............................. 13
3.7. Absence of Changes or Events.......................................... 13
3.8. Proxy Statement....................................................... 14
3.9. Litigation............................................................ 14
3.10. Title to and Condition of Properties.................................. 14
3.11. Contracts and Commitments............................................. 15
3.12. Labor Matters......................................................... 15
3.13. Compliance with Law................................................... 15
3.14. Board Recommendation.................................................. 16
3.15. Patents and Trademarks................................................ 16
3.16. Taxes................................................................. 16
3.17. Employee Benefit Plans; ERISA......................................... 17
3.18. Environmental Matters................................................. 21
3.19. Disclosure............................................................ 22
3.20. Absence of Undisclosed Liabilities.................................... 22
3.21. Finders or Brokers.................................................... 22
3.22. State Antitakeover Statutes........................................... 22
3.23. Opinion of Financial Advisor.......................................... 23
3.24. Insurance............................................................. 23
3.25. Employment and Labor Contracts........................................ 23
3.26. Pending Transactions.................................................. 23
3.27. Indemnification Agreements............................................ 23
3.28. Indemnified Liabilities............................................... 24
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3.29. Commercial Arrangements with
Tel-Save Holdings, Inc............................................... 24
IV. REPRESENTATIONS AND WARRANTIES OF PARENT
AND PURCHASER........................................................ 24
4.1. Organization and Qualification....................................... 24
4.2. Authority Relative to This Agreement................................. 25
4.3. No Violations, etc................................................... 25
4.4. Proxy Statement...................................................... 26
4.5. Finders or Brokers................................................... 26
4.6. Offer Documents...................................................... 27
V. COVENANTS............................................................ 27
5.1. Conduct of Business of Company Pending
the Merger........................................................... 27
5.2. Preparation of the Proxy Statement;
Stockholders Meetings................................................ 30
5.3. Additional Agreements; Cooperation................................... 31
5.4. Publicity............................................................ 32
5.5. No Solicitation...................................................... 32
5.6. Access to Information................................................ 34
5.7. Notification of Certain Matters...................................... 34
5.8. Resignation of Directors............................................. 35
5.9. Indemnification...................................................... 35
5.10. Fees and Expenses.................................................... 36
5.11. Stockholder Litigation............................................... 36
VI. CONDITIONS........................................................... 36
6.1. Conditions to the Merger............................................. 36
6.2. Conditions to Obligations of Parent.................................. 37
6.3. Conditions to Obligations of Company................................. 37
VII. TERMINATION, AMENDMENT AND WAIVER.................................... 38
7.1. Termination.......................................................... 38
7.2. Effect of Termination................................................ 39
7.3. Termination Payment.................................................. 39
7.4 Proceeds of the Good Faith Deposit................................... 40
7.5 Amendment............................................................ 40
7.6 Waiver............................................................... 41
VIII. GENERAL PROVISIONS................................................... 41
8.1. Definitions.......................................................... 41
8.2. Non-Survival of Representations,
Warranties and Agreements............................................ 44
8.3. Notices.............................................................. 44
8.4. Severability......................................................... 45
8.5. Miscellaneous........................................................ 46
8.6. Specific Performance................................................. 46
8.7. WAIVER OF JURY TRIAL................................................. 46
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (the "Agreement") being made and entered
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into as of this 20/th/ day of November, 1997 by and among INTERMEDIA
COMMUNICATIONS INC., a Delaware corporation ("Parent"), MOONLIGHT ACQUISITION
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CORP., a Delaware corporation which is wholly owned by Parent ("Purchaser"), and
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SHARED TECHNOLOGIES ▇▇▇▇▇▇▇▇▇ INC., a Delaware corporation ("Company").
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WHEREAS, the Boards of Directors of Parent, Purchaser and Company have
each determined that it is in the best interests of their respective
stockholders for Parent to acquire Company upon the terms and subject to the
conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire 4,000,000 of
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the issued and outstanding shares of Common Stock, par value $.004 per share, of
Company ("Company Common Stock") (shares of Company Common Stock being
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hereinafter collectively referred to as "Shares") for $15.00 per Share (such
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amount being hereinafter referred to as the "Per Share Offer Amount") net to the
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seller in cash, upon the terms and subject to the conditions of this Agreement
and the Offer; and
WHEREAS, the Board of Directors of Company (the "Board") has
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unanimously approved the making of the Offer and resolved and agreed to
recommend that holders of Shares tender their Shares pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and Company have each approved the merger (the
"Merger") of Purchaser with and into Company in accordance with the General
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Corporation Law of the State of Delaware (the "GCL") and upon the terms and
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subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
I. THE OFFER
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1.1. The Offer. (a) Provided that this Agreement shall not have
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been terminated in accordance with Section 7.1 and none of the events set forth
in Annex A hereto shall have occurred or be existing, Purchaser shall commence
the Offer as promptly as reasonably practicable after the date hereof, but in no
event later than five business days after the initial public announcement of
Purchaser's intention to commence the Offer. The Offer shall, unless extended
as provided below, expire 20 business days after the commencement of the Offer.
The obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the
satisfaction of the conditions set forth in Annex A hereto. The number of
Shares that Purchaser will accept in the Offer shall be 4,000,000 Shares.
Purchaser expressly reserves the right to waive any such condition, to increase
the price per Share payable in the Offer, to increase the maximum number of
Shares to be purchased in the Offer and to make any other changes in the terms
and conditions of the Offer; provided, however, that, without the consent of
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Company, no change may be made which decreases the price per Share payable in
the Offer, which reduces the maximum number of Shares to be purchased in the
Offer or which imposes conditions to the Offer in addition to those set forth in
Annex A hereto or modifies such conditions, or which changes the form of
consideration payable in the Offer. The Per Share Offer Amount shall, subject
to applicable withholding of taxes, be net to the seller in cash, upon the terms
and subject to the conditions of the Offer. Subject to the terms and conditions
of the Offer, Purchaser shall pay, as promptly as practicable after expiration
of the Offer, for all Shares validly tendered and not withdrawn. The Offer may
not be extended for more than 20 days beyond its original scheduled expiration
date unless any of the conditions to the Offer shall not have been satisfied, in
which case the Offer shall remain open until such time as all of the conditions
to the Offer have been satisfied; provided, however, in no event will Purchaser
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be required to extend the Offer beyond February 28, 1998.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Purchaser shall file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments
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and supplements thereto, the "Schedule 14D-1") with respect to the Offer. The
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Schedule 14D-1 shall contain or shall incorporate by reference an offer to
purchase (the "Offer to Purchase") and forms of the related letter of
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transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
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Documents"). Company and its counsel shall be given an opportunity to review
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the Offer Documents prior to their filing with the SEC. Parent, Purchaser and
Company agree to correct promptly any information provided by any of them for
use in the Offer Documents which shall have become false or misleading, and
Parent and Purchaser further agree to take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws.
1.2. Company Action. (a) Company hereby approves of and consents to
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the Offer and represents that (i) the Board, at a meeting duly called and held
on November 20, 1997, has unanimously (A) determined that this Agreement and the
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transactions contemplated hereby, including each of the Offer and the Merger,
are fair to and in the best interests of the holders of Shares, (B) approved and
adopted this Agreement and the transactions contemplated hereby and (C)
recommended that the stockholders of Company accept the Offer and approve and
adopt this Agreement and the transactions contemplated hereby, and (ii) Credit
Suisse First Boston Corporation ("First Boston") has rendered to the Board its
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opinion that the consideration to be received by the holders of Shares pursuant
to each of the Offer and the Merger is fair to the holders of Shares from a
financial point of view, subject to the assumptions and qualifications contained
in such opinion, and which shall be confirmed promptly in writing. Company
hereby consents to the inclusion in the Offer Documents of the recommendation of
the Board described in the immediately preceding sentence. Assuming that
neither Parent nor Purchaser are Interested Stockholders (as such term is
defined in Section 203 of the GCL) immediately prior to the Board taking the
action described in this Section 1.2, the approval set forth in clause (a)(i)
shall, among other things, satisfy the restrictions on business combinations
contained in Section 203 of the GCL with respect to the transactions
contemplated hereby. Company has been advised by each of its directors and
executive officers that they intend to vote all Shares beneficially owned by
them in favor of the approval and adoption by the stockholders of Company of
this Agreement and the transactions contemplated hereby.
(b) As soon as reasonably practicable on or after the date of
commencement of the Offer, Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
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recommendation of the Board described in Section 1.2(a) and shall disseminate
the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other
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applicable federal securities laws. Company, Parent and Purchaser agree to
correct promptly any information provided by any of them for use in the Schedule
14D-9 which shall have become false or misleading, and Company further agrees to
take all steps reasonably necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws.
(c) Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. Company shall furnish Purchaser with such
additional information, including, without limitation,
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updated listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance as Parent, Purchaser or their
agents may reasonably request. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer or the Merger, Parent
and Purchaser shall hold in confidence the information contained in such labels,
listings and files, shall use such information only in connection with the Offer
and the Merger, and, if this Agreement shall be terminated in accordance with
Section 7.1, shall deliver to Company all copies of such information then in
their or their agents' possession.
1.3. Voting of Shares Acquired by Purchaser. During the period
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beginning on the date on which the Offer is consummated and ending on the later
of (a) the date on which this Agreement is terminated, and (b) the date on which
Purchaser receives any regulatory approvals necessary to consummate the Merger
(as more fully described in Section 6.2(c)), Purchaser hereby agrees to exercise
its voting rights in respect of any Shares it owns for the election of directors
to the Board in the same proportion as the voting rights of any Shares not owned
by Purchaser have been exercised.
II. THE MERGER
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2.1. Merger; Surviving Corporation. In accordance with the
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provisions of this Agreement and the GCL, at the Effective Time (as such term is
defined in Section 2.5; other capitalized terms used herein without definition
are defined in Section 8.1), Purchaser shall be merged with and into Company,
and Company shall be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") and shall continue its corporate existence under the
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laws of the State of Delaware. At the Effective Time the separate corporate
existence of Purchaser shall cease. All properties, franchises and rights
belonging to Company and Purchaser, by virtue of the Merger and without further
act or deed, shall be deemed to be vested in the Surviving Corporation, which
shall thenceforth be responsible for all the liabilities and obligations of each
of Purchaser and Company.
2.2. Certificate of Incorporation. At the Effective Time, the
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Certificate of Incorporation of Company shall be the Certificate of
Incorporation of the Surviving Corporation; provided, however, that, at the
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Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be amended in its entirety so that it will read as Purchaser's Certificate
of Incorporation, except that the name of the Surviving Corporation shall be
"SHARED TECHNOLOGIES ▇▇▇▇▇▇▇▇▇ INC.". As so amended, the Certificate of
Incorporation of Company as in effect immediately prior to the Effective Time
shall thereafter continue
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in full force and effect as the Certificate of Incorporation of the Surviving
Corporation until further altered or amended as provided therein or by law.
2.3. Bylaws. The Bylaws of Purchaser in effect immediately prior to
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the Effective Time shall be the Bylaws of the Surviving Corporation until
altered, amended or repealed as provided therein and in the Certificate of
Incorporation of the Surviving Corporation.
2.4. Directors and Officers. The Directors of Purchaser prior to the
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Effective Time shall be the directors of the Surviving Corporation. The
officers of Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation. Each of such directors and officers shall
hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation.
2.5. Effective Time. The Merger shall become effective at the time
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of filing of a certificate of merger with the Secretary of State of the State of
Delaware in accordance with the provisions of Sections 251 or 253, as the case
may be, of the GCL (the "Certificate of Merger"), or at a later time specified
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as the effective time in the Certificate of Merger, which Certificate of Merger
shall be so filed as soon as practicable after the meeting of stockholders
contemplated in Section 5.2 and the satisfaction or, if permissible, waiver of
the conditions set forth in Article VI. The date and time when the Merger shall
become effective are referred to herein as the "Effective Time."
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Contemporaneously with such filing, a closing shall be held at the offices of
Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, or such other place as shall be agreed to by the parties, for the
purpose of confirming the satisfaction or waiver, as the case may be, of the
conditions set forth in Article VI.
2.6. Conversion of Shares. (a) Each issued and outstanding share of
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Company Common Stock immediately prior to the Effective Time (other than shares
of Company Common Stock to be cancelled as set forth in Section 2.6(b) and
2.6(c)) shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into, exchanged for and represent the right to
receive an amount equal to $15.00 per Share (the "Per Share Amount") in cash
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(the "Shares Consideration"), payable, without interest, to the holder of such
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Share, upon surrender, in the manner described below, of the certificate that
formerly evidenced such Share.
(b) Each Share and Preferred Share (as defined below) issued and
outstanding immediately prior to the Effective Time which is then owned
beneficially or of record by Parent or any Subsidiary of Parent shall, by virtue
of the Merger and without
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any action on the part of the holder thereof, be cancelled and retired and cease
to exist, without any conversion thereof.
(c) Each Share and Preferred Share (as defined below) held in
Company's treasury immediately prior to the Effective Time shall, by virtue of
the Merger, be cancelled and retired and cease to exist, without any conversion
thereof.
(d) Each issued and outstanding share of Series D Preferred Stock,
par value $.01 per share (the "Series D Stock"), Series I 6% Cumulative
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Convertible Preferred Stock, par value $.01 per share (the "Convertible
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Preferred Stock"), and Series J Special Preferred Stock, par value $.01 per
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share (the "Special Preferred Stock"), of Company (all such shares of Preferred
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Stock being hereafter collectively referred to as the "Preferred Shares")
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immediately prior to the Effective Time (other than the Preferred Shares to be
cancelled as set forth in Section 2.6(b) and 2.6(c)) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into, exchanged for and represent the right to receive an amount equal to $15.00
per share of the Series D Stock, $251.21 per share of the Convertible Preferred
Stock and $109.44 per share of the Special Preferred Stock (all such amounts
collectively, the "Preferred Per Share Amount") in cash (the "Preferred Shares
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Consideration"; the Shares Consideration and the Preferred Shares Consideration
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collectively, the "Merger Consideration"), payable, without interest, to the
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holder of such Preferred Share, upon surrender in the manner described above of
the certificate that formerly evidenced such Preferred Share.
(e) Notwithstanding anything in this Section 2.6 to the contrary,
Shares which are issued and outstanding immediately prior to the Effective Time
and which are held by any stockholder of Company who has not voted such shares
in favor of the Merger and who shall have properly exercised its rights of
appraisal for such shares in the manner provided by the GCL (the "Dissenting
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Shares") shall not be converted into or be exchangeable for the right to receive
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the Merger Consideration, unless and until such holder shall have failed to
perfect or shall have effectively withdrawn or lost his right to appraisal and
payment, as the case may be. If such holder shall have so failed to perfect or
shall have effectively withdrawn or lost such right, his shares shall thereupon
be deemed to have been converted into and to have become exchangeable for, at
the Effective Time, the right to receive the Merger Consideration, without any
interest thereon. Company shall give Parent prompt notice of any Dissenting
Shares (and shall also give Parent prompt notice of any withdrawals of such
demands for appraisal rights) and Parent shall have the right to direct all
negotiations and proceedings with respect to any such demands. Neither Company
nor the Surviving Corporation shall, except with the prior written consent of
Parent, voluntarily make any payment with respect to, or settle or offer
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to settle, any such demand for appraisal rights. Stockholders of Company who
shall have perfected their right of appraisal and not withdrawn or otherwise
lost such right of appraisal, shall be entitled to receive payment of the
appraised value of the shares of Company Common Stock held by them in accordance
with the provisions of Section 262 of the GCL.
2.7. Purchaser Common Stock. Each share of common stock of Purchaser
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issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of Purchaser or the holder
thereof, be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation. From and after the Effective Time,
each outstanding certificate theretofore representing shares of Purchaser common
stock shall be deemed for all purposes to evidence ownership of and to represent
the number of shares of Surviving Corporation common stock into which such
shares of Purchaser common stock shall have been converted. Promptly after the
Effective Time, the Surviving Corporation shall issue to Parent a stock
certificate or certificates representing 100 shares of Surviving Corporation
common stock in exchange for the certificate or certificates that formerly
represented shares of Purchaser common stock, which shall be surrendered by
Parent and cancelled.
2.8. Surrender of Shares. (a) Prior to the Effective Time, Parent
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shall make available, by transferring to the Exchange Agent for the benefit of
the stockholders of Company, such amount of cash as shall be payable in exchange
for outstanding Shares or Preferred Shares pursuant to Section 2.6 hereof. Such
funds shall be invested by the Exchange Agent as directed by Parent, provided
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that such investments shall be in obligations of or guaranteed by the United
States of America or of any agency thereof and backed by the full faith and
credit of the United States of America, or in deposit accounts, certificates of
deposit or banker's acceptances of, repurchase or reverse repurchase agreements
with, or Eurodollar time deposits purchased from, commercial banks with capital,
surplus and undivided profits aggregating in excess of $50 million (based on the
most recent financial statements of such bank which are then publicly available
at the SEC or otherwise).
(b) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record (other than to holders of Shares or
Preferred Shares to be cancelled as set forth in Section 2.6(b) or 2.6(c) or
Dissenting Shares) of a certificate or certificates that immediately prior to
the Effective Time represented outstanding Shares or Preferred Shares (the
"Certificates") (i) a form letter of transmittal (which shall be in customary
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form and shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the
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Exchange Agent) and (ii) instructions for effecting the surrender of the
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Certificates in exchange for the Merger Consideration.
(c) Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed, and such other
agreements as the Exchange Agent shall reasonably request, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration, and the Certificate so surrendered shall forthwith be cancelled.
Until surrendered as contemplated by this Section 2.8, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration with respect to the Shares or Preferred Shares
formerly represented thereby. No interest shall accrue or be paid on the Merger
Consideration payable upon the surrender of any Certificate.
(d) Any amounts of cash delivered or made available to the Exchange
Agent pursuant to this Section 2.8 and not exchanged for Certificates within six
months after the Effective Time pursuant to this Section 2.8 shall be returned
by the Exchange Agent to Parent, which thereafter shall act as Exchange Agent
subject to the rights of holders of unsurrendered Certificates under this
Article II. Thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) only
as general creditors thereof with respect to any Merger Consideration that may
be payable upon due surrender of the Certificates held by them. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Exchange Agent shall be
liable to any holder of Shares or Preferred Shares for any Merger Consideration
delivered in respect of such Share or Preferred Share to a public official
pursuant to any abandoned property, escheat or other similar law.
(e) If any payment of the Merger Consideration is to be made to a
person other than that in which the Certificate surrendered is registered, it
shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes re quired by
reason of the payment to a person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable.
(f) After the Effective Time, there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
Shares or Preferred Shares which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates representing such
shares are presented to the Surviving Corporation, they shall be
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cancelled and exchanged for the Merger Consideration as provided in this Article
II.
2.9. Company Stock Options and Warrants. Prior to the Effective
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Time, Company shall take all actions necessary (and Parent and Purchaser consent
to the taking of such actions) so that all options and warrants outstanding
immediately prior to the Effective Time under any option plan or warrant
including, without limitation, the 1994 Director's Option Plan (with respect to
which the term of office of each director shall be deemed to have been
terminated on May 1, 1998), the 1996 Equity Incentive Plan and Shared
Technologies, Inc.'s 1987 Stock Option Plan (all such warrants and options
collectively, the "Company Stock Option Plans") shall be cancelled and
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terminated at the Effective Time and that each holder of such options and
warrants shall receive in the Merger a cash payment equal to the difference
between (A) the Per Share Amount times the number of Shares subject to such
outstanding options or warrants (to the extent then exercisable at prices not in
excess of the Per Share Amount) and (B) the aggregate exercise price of all such
outstanding options and warrants. From and after the date hereof, no additional
options or warrants shall be granted under the Company Stock Option Plans.
2.10. Good Faith Deposit. Concurrently with the execution and
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delivery of this Agreement, Purchaser shall pay to Company $26,250,000 (the
"Good Faith Deposit"). The proceeds of the Good Faith Deposit shall be
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disbursed in accordance with Section 7.4.
2.11. Termination of the Pledge Agreement. If the Merger is
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consummated, then Parent and Purchaser shall terminate the Pledge Agreement, and
the Pledge Agent shall return to RHI any collateral which has been pledged
pursuant to the Pledge Agreement.
III. REPRESENTATIONS AND WARRANTIES OF COMPANY
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Company hereby makes the following representations and warranties to
Parent and Purchaser, which representations and warranties (except for those
contained in Sections 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23 and 3.29)
shall be deemed to have been made on July 16, 1997:
3.1. Organization and Qualification. Each of Company and its
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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 corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of Company and its
subsidiaries is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the
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character of its properties 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 Company and its subsidiaries
taken as a whole (a "Company Material Adverse Effect"). Section 3.1 of the
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Disclosure Statement sets forth, with respect to Company and each of its
subsidiaries, the jurisdictions in which they are qualified or otherwise
licensed as a foreign corporation to do business. Neither Company nor any of
its subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation (or other applicable charter document) or Bylaws. Company has
delivered to Parent accurate and complete copies of the Certificate of
Incorporation (or other applicable charter document) and Bylaws, as currently in
effect, of each of Company and its subsidiaries.
3.2. Capital Stock of Subsidiaries. The only direct or indirect
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subsidiaries of Company are those listed in Section 3.2 of the Disclosure
Statement previously delivered by Company to Parent (the "Disclosure
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Statement"). Company 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 3.2 of
the Disclosure Statement) of all 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 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
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, 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 3.2 of the Disclosure Statement, all
of such shares so owned by Company 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
3.2 of the Disclosure Statement, Company does not directly or indirectly own any
interest in any corporation, partnership, joint venture or other business
association or entity.
3.3. Capitalization. The authorized capital stock of Company
--------------
consists of 50,000,000 shares of Company Common Stock, and 25,000,000 shares of
preferred stock, $.01 par value per share, of which 1,000,000 shares have been
designated Series D Stock, 250,000 shares have been designated Convertible
Preferred Stock, and 200,000 shares have been designated Special Preferred
Stock. As of the close of business on November 20, 1997,
10
17,187,605 shares of Company Common Stock were issued and outstanding. All of
such issued and outstanding shares are validly issued, fully paid and
nonassessable and free of preemptive rights. As of November 20, 1997, (x)
2,051,364 shares of Company Common Stock were reserved for issuance upon
exercise of outstanding options and 4,244,740 shares of Company Common Stock
were reserved for issuance upon exercise of outstanding convertible preferred
securities and (y) 1,873,550 shares of Company Common Stock were reserved for
issuance upon exercise of the warrants, all of which warrants, options and
Company Stock Option Plans are listed and described in Section 3.3 of the
Disclosure Statement. Other than the Company Stock Option Plans and the
warrants, Company has no other plan which provides for the grant of options or
warrants 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 Company 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 pursuant to Company's
401(k) Plan, there will not be, any shares of capital stock of Company issued or
outstanding or any subscriptions, options, warrants, calls, claims, rights
(including without limitation any stock appreciation or similar rights),
convertible securities or other agreements or commitments of any character
obligating Company to issue, transfer or sell any of its securities. Company
has paid all dividends payable through November 28, 1997 in respect of each of
the Series D Preferred Stock and the Convertible Preferred Stock.
3.4. Authority Relative to This Agreement. Company is a corporation
------------------------------------
duly organized, validly existing and in good standing under the laws of
Delaware. Company has full corporate power and authority to execute and deliver
this Agreement and to consummate the Merger and other transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
consummation of the Merger and other transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of
Company and no other corporate proceedings on the part of Company are necessary
to authorize this Agreement or to consummate the Merger or other transactions
contemplated hereby or thereby (other than, with respect to the Merger, the
approval of Company's stockholders pursuant to Section 251(c) of the GCL). This
Agreement has been duly and validly executed and delivered by Company and,
assuming the due authorization, execution and delivery hereof by Parent and
Purchaser, constitutes a valid and binding agreement of Company, enforceable
against Company 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.
11
3.5. No Violations, etc. (a) Assuming that all filings, permits,
-------------------
authorizations, consents and approvals or waivers thereof have been duly made or
obtained as contemplated by Section 3.5(b) hereof, except as listed in Section
3.5 of the Disclosure Statement, neither the execution and delivery of this
Agreement by Company nor the consummation of the Merger or other transactions
contemplated hereby or thereby nor compliance by Company with any of the
provisions hereof will (i) violate, conflict with, or result in a breach of any
provisions 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 termination
or suspension of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Company or any of its subsidiaries under, any of the terms, conditions
or provisions of (x) their respective charters or bylaws, (y) except as set
forth in Section 3.5 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 Company 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 Company or any of its 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, securities interests, charges or encumbrances which would
not, individually or in the aggregate, either have a Company Material Adverse
Effect or materially impair Company's 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 governmental entity (including,
without limitation, any federal, state or local regulatory authority or agency)
is required by Company in connection with the execution and delivery of this
Agreement or the consummation by Company of the Merger or other transactions
contemplated hereby or thereby, except (i) in connection with the applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 Company's
stockholders pursuant to the GCL, (iv) filings with applicable state public
utility commissions identified in Section 2.5 of the Disclosure Statement, (v)
filings with the SEC and (vi) such other filings, registrations, notifications,
permits, authorizations, consents or approvals the failure of which to be
12
obtained, made or given would not, individually or in the aggregate, either have
a Company Material Adverse Effect or materially impair Company's ability to
consummate the Merger or other transactions contemplated hereby or thereby.
(c) Company and its subsidiaries are not in violation of or default
under, except as set forth in Section 3.5 of the Disclosure Statement, (x) any
note, bond, mortgage, indenture or deed of trust, or (y) and license, lease,
agreement or other instrument or obligation to which Company 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 (x) and (y) above, for
such violations or defaults which would not, individually or in the aggregate,
either have a Company Material Adverse Effect or materially impair Company's
ability to consummate the Merger or other transactions contemplated hereby. It
is understood that Company has certain covenants in its bank facilities which
Company from time to time may violate and that such violations shall not be
deemed a breach so long as Company promptly seeks, and in a reasonable period
time obtains, waivers of such violations from the lenders under such facilities
(unless such lenders have accelerated the indebtedness under such facilities).
3.6. Commission Filings; Financial Statements. Company has filed all
----------------------------------------
forms, reports, schedules, statements and other documents required to be filed
by it since December 31, 1994 (as supplemented and amended since the time of
filing collectively, the "SEC Reports") with the SEC, each 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 Exchange Act. The audited
--------------
consolidated financial statements and unaudited consolidated interim financial
statements of Company 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 consistent basis during the periods involved
(except as may be indicated in the notes thereto) and present fairly, in all
material respects, the financial position and results of operations and cash
flows of Company and its subsidiaries on a consolidated basis at the respective
dates and for the respective periods indicated (and in the case of all such
financial statements that are interim financial statements, contain all
adjustments so to present fairly). None of the SEC Reports contained at the
time filed any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.7. Absence of Changes or Events. Except as set forth in Section 3.7
----------------------------
of the Disclosure Statement and in Company's Form
13
10-K for the fiscal year ended December 31, 1996, as filed with the SEC, since
December 31, 1996, Company and its subsidiaries have not incurred any material
liability, except in the ordinary course of their businesses consistent with
their past practices, and there has not been any change, or any event involving
a prospective change, in the business, financial condition or results of
operations of Company or any of its subsidiaries which has had, or is reasonably
likely to have, a Company Material Adverse Effect and Company and its
subsidiaries have conducted their respective businesses in the ordinary course
consistent with their past practices.
3.8. Proxy Statement. None of the information supplied or to be
---------------
supplied by or on behalf of Company for inclusion or incorporation by reference
in the proxy statement, in definitive form, relating to Company Stockholder
Meeting (as hereinafter defined), or in the related proxy and notice of meeting,
or soliciting material used in connection therewith (referred to herein
collectively as the "Proxy Statement") will, at the dates mailed to stockholders
---------------
and at the time of Company Stockholder Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
(except for information relating solely to Parent and Purchaser) will comply as
to form in all material respects with the provisions of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder.
3.9. Litigation. Except as set forth in Section 3.9 of the Disclosure
----------
Statement, there is no (i) claim, action, suit or proceeding pending or, to the
best knowledge of Company or any of its subsidiaries, threatened against or
relating to Company 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 arbitration tribunal in a
proceeding to which Company, any subsidiary of Company 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
Company Material Adverse Effect or materially impair Company's ability to
consummate the Merger.
3.10. Title to and Condition of Properties. Except as set forth in
------------------------------------
Section 3.10 of the Disclosure Statement, Company 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 Company's and its
subsidiaries' December 31, 1996 audited consolidated balance sheet contained in
Company's Form 10-K for the fiscal year ended December 31, 1996 filed with the
SEC except for property since
14
sold or otherwise disposed of in the ordinary course of business and consistent
with past practice.
3.11. Contracts and Commitments. Other than as disclosed in Section
-------------------------
3.11 of the Disclosure Statement, no existing material contract or material
commitment of Company or any of its subsidiaries, or as to which any thereof is
a party or their respective assets are bound, contains an agreement with respect
to any change of control that would be triggered by the Merger. Other than as
set forth in Section 3.11 of the Disclosure Statement, neither this Agreement,
the Merger nor the other transactions contemplated hereby will result in any
outstanding loans or borrowings by Company or any subsidiary of Company becoming
due, going into default or giving the lenders or other holders of debt
instruments the right to require Company or any of its subsidiaries to repay all
or a portion of such loans or borrowings; provided that it is expressly
understood and agreed that Company is not making any representations or
warranties with respect to the effect of the financial condition or results of
operation of Parent and Purchaser.
3.12. Labor Matters. Each of Company and its subsidiaries 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 Company 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 Company, any labor strike or stoppage
threatened) against or affecting Company or any of its subsidiaries. No
petition for certification has been filed and is pending before the National
Labor Relations Board with respect to any employees of Company or any of its
subsidiaries who are not currently organized.
3.13. Compliance with Law. Except for matters set forth in Section
-------------------
3.13 of the Disclosure Statement, neither Company 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 Company
Material Adverse Effect; the conduct of the business of Company 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 non-
conformities would not, individually or in the aggregate, have a Company
Material Adverse Effect. Company 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,
15
licenses and franchises the absence of which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
3.14. Board Recommendation. The Board of Directors of Company has, by
--------------------
a majority vote at a meeting of such Board duly held on November 20, 1997,
approved and adopted this Agreement, the Merger and the other transactions
contemplated hereby, determined that the Merger is fair to the stockholders of
Company and recommended that the stockholders of Company approve and adopt this
Agreement, the Merger and the other transactions contemplated hereby.
3.15. Patents and Trademarks. Company 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
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 Company Material Adverse Effect.
3.16. Taxes. "Tax" or "Taxes" shall mean all federal, state, local
----- --- -----
and foreign taxes, duties, levies, charges and assessments of any nature,
including social security payments 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 3.16 of
the Disclosure Statement: (i) Company 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 extension of time to file granted to or obtained on behalf of Company and/or
its subsidiaries; (ii) all material Taxes of Company 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
appropriate proceedings and/or are adequately reserved for in accordance 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 Company and its subsidiaries have either
been paid or are being contested in good faith by appropriate proceedings; (iv)
to the best knowledge of Company, no deficiency has been asserted or assessed
against Company or any of its subsidiaries, and no examination of Company 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 currently in effect and no extension of time
within which to file any material
16
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) Company
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 Company or any of its subsidiaries for any
period ending after the Effective Date; (viii) Company and its subsidiaries have
made timely payments of the Taxes required to be deducted and withheld from the
wages paid to their employees; and (ix) Company and its subsidiaries are not
parties to any tax sharing or tax matters agreement other than the tax sharing
agreement dated March 13, 1996 by and among TFC, RHI and Company.
3.17. Employee Benefit Plans; ERISA. Except as set forth in
-----------------------------
Section 3.17 of the Disclosure Statement:
(a) 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"), maintained or contributed to by Company or any of its subsidiaries,
-----
or with respect to which Company or any of its subsidiaries contributes or is
obligated to make payments thereunder or otherwise may have any liability
("Pension Benefits Plans").
------------------------
(b) Company has furnished Purchaser with a true and complete schedule
of all "welfare benefit plans" (as defined in Section 3(1) of ERISA), maintained
or contributed to by Company or any of its subsidiaries or with respect to which
Company or any of its subsidiaries otherwise may have any liability ("Welfare
-------
Plans"), all multiemployer plans as defined in Section 3(37) of ERISA covering
-----
employees employed in the United States to which Company or any of its
subsidiaries is required to make contributions or otherwise may have any
liability, all stock bonus, stock option, restricted stock, stock appreciation
right, stock purchase, bonus, incentive, deferred compensation, severance and
vacation or other employee benefit plans, programs or arrangements that are not
Pension Benefit Plans or Welfare Plans maintained or contributed to by Company
or a subsidiary or with respect to which Company or any subsidiary otherwise may
have any liability ("Other Plans").
-----------
(c) Company and each of its subsidiaries, and each of the Pension
Benefit Plans, Welfare Plans and Other Plans (collectively, the "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 Company Material Adverse Effect.
(d) All contributions to, and payments from, the Plans which are
required to have been made in accordance with the Plans and, when applicable,
Section 302 of ERISA or Section 412 of the
17
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 Company 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 Company or any ERISA Affiliate 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 Company 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 Company or a subsidiary of Company 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
---
operation 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 determination 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 participants or for any other tax-favored
treatment under any provisions of the Code (including, without limitation,
Sections 79, 105, 106, 125 or 129 of the Code) is and has been maintained in
compliance in all material respects with all pertinent provisions of the Code
and Treasury Regulations thereunder.
(g) Except as disclosed in Company's Form 10-K for the fiscal year
ended December 31, 1996, there are (i) no investigations, audits or examinations
pending, or to the best knowledge of Company, threatened by any governmental
entity involving any of the Plans, (ii) no termination proceedings involving the
Plans and (iii) no pending or, to the best of Company's knowledge, threatened
claims (other than routine claims for benefits), suits or proceedings against
any Plan, against the assets of any of the trusts under any Plan or against any
fiduciary of any Plan with respect to the operation of such plan or asserting
any rights or claims to benefits under any 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 (g), give
18
rise to any liability which would, individually or in the aggregate, have a
Company Material Adverse Effect, nor, to the best of Company's knowledge, are
there any facts which would give rise to any liability which would, individually
or in the aggregate, have a Company Material Adverse Effect in the event of any
such investigation, audit, examination, claim, suit or proceeding.
(h) None of Company, any of its subsidiaries 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 transaction" (within the meaning
of Section 4975 of the Code or Section 406 of ERISA) which presents a material
risk of resulting in a tax or penalty on Company 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 Company 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
thereunder) with respect to either thereof which would, individually or in the
aggregate, have a Company 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 Company Material Adverse Effect.
(j) Neither Company nor any ERISA Affiliate of Company 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 Company or any of its subsidiaries for use in preparing the
most recent actuarial report for Pension Benefit Plans is complete and accurate
in all material respects.
(k) Neither Company, 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 (a "Multiemployer Plan"), covering employees employed in
------------------
the United States.
(l) With respect to each of the Plans, true, correct and complete
copies of the following documents have been made
19
available to Parent (i) the current plans and related trust documents, including
amendments thereto, (ii) any current summary plan descriptions, (iii) the most
recent Forms 5500 (if any) filed with respect to each such Plan, (iv) the three
most recent financial statements and actuarial reports, if applicable (v) the
most recent IRS determination letter, if applicable, (vi) if any application for
an IRS determination letter is pending, copies of all such applications for
determination including attachments, exhibits and schedules thereto, (vii) all
material agreements (including settlement agreements or other similar agreements
relating to any Plan); and (viii) all material correspondence between Company
and any of its subsidiaries and the IRS, PBGC, Department of Labor or any other
governmental entity relating to any of the Plans.
(m) Neither Company, any of its subsidiaries, any organization to
which Company is a successor or parent corporation, within the meaning of
Section 4069(b) of ERISA, nor any of their ERISA Affiliates has engaged in any
transaction described in Section 4069(a) of ERISA, the liability for which
would, individually or in the aggregate, have a Company Material Adverse Effect.
(n) Except as disclosed in Section 2.17 of the Disclosure Statement,
none of the Welfare Plans maintained by Company 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 Reconciliation Act of 1985, as amended ("COBRA"), or
-----
except where the full expense of such coverage or benefits is paid by the
participant or the participant's beneficiary. Company 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 Company Material Adverse
Effect.
(o) No liability under any Plan has been funded nor has any such
obligation been satisfied with the purchase of a contract from an insurance
company as to which Company or any of its subsidiaries has received notice that
such insurance company is in rehabilitation.
(p) The consummation of the transactions contemplated by this
Agreement will not either alone or in connection with an employee's termination
of employment or other event result in an increase in the amount of compensation
or benefits or accelerate the vesting or timing of payment of any benefits or
compensation
20
payable to or in respect of any employee of Company or any of its subsidiaries.
3.18. Environmental Matters. Except as set forth in Section 3.18 of
---------------------
the Disclosure Statement and except for such matters as would not, individually
or in the aggregate, have a Company Material Adverse Effect:
(a) Company and its subsidiaries have obtained all Environmental
Permits and all licenses and other authorizations and have made all
registrations and given all notifications that are required under any applicable
Environmental Law.
(b) Except as set forth in Section 3.18 of the Disclosure Statement,
there is no Environmental Claim pending against Company and its subsidiaries
under an Environmental Law.
(c) Except as set forth in Section 3.18 of the Disclosure Statement,
Company and its subsidiaries are in compliance with all terms and conditions of
their Environmental Permits, and are in compliance with all applicable
Environmental Laws.
(d) Except as set forth in Section 3.18 of the Disclosure Statement,
Company and its subsidiaries did not generate, treat, store, transport,
discharge, dispose of or release any Hazardous Materials on or from any property
now or previously owned, leased or used by Company and its subsidiaries.
(e) For purposes of Section 3.18(a):
(i) "Environment" shall mean any surface water, ground water, or
drinking water supply, land surface or subsurface strata, or ambient air and
includes, without limitation, any indoor location;
(ii) "Environmental Claim" means any written notice or written 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 emission, discharge, disposal or other release or threatened release
in or into the Environment of any Hazardous Materials or (2) circumstances
forming the basis of any violation, or alleged violation, of any applicable
Environmental Law;
(iii) "Environmental Laws" means any federal, state, and local laws,
codes, and regulations as now or previously in effect relating to pollution, the
protection of human health, the protection of the Environment or the emission,
21
discharge, disposal or other release or threatened release of Hazardous
Materials in or into the Environment;
(iv) "Environmental Permit" shall mean a permit, identification
number, license or other written authorization required under any applicable
Environmental Law; and
(v) "Hazardous Materials" shall mean all pollutants, contaminants,
or chemical, hazardous or toxic materials, substances, constituents or wastes,
including, without limitation, asbestos or asbestos-containing materials,
polychlorinated biphenyls and petroleum, oil, or petroleum or oil derivatives or
constituents, including, without limitation, crude oil or any fraction thereof.
3.19. Disclosure. All of the facts and circumstances not required to
----------
be disclosed as exceptions under or to any of the foregoing representations and
warranties made by Company, in this Article III by reason of any minimum
disclosure requirement in any such representation and warranty would not, in the
aggregate, have a Company Material Adverse Effect.
3.20. Absence of Undisclosed Liabilities. Except as set forth in
----------------------------------
Section 3.20 of the Disclosure Statement, neither Company nor any of its
subsidiaries has any liabilities or obligations of any nature, whether absolute,
accrued, unmatured, contingent or otherwise, or any unsatisfied judgments or any
leases of personality or realty or unusual or extraordinary commitments, except
the liabilities recorded on Company's consolidated balance sheet at December 31,
1996 included in the financial statements referred in Section 3.6 and the notes
thereto, and except for liabilities or obligations incurred in the ordinary
course of business and consistent with past practice since December 31, 1996
that would not individually or in the aggregate have a Company Material Adverse
Effect.
3.21. Finders or Brokers. Except as set forth in Section 3.21 of the
------------------
Disclosure Statement, none of Company, the subsidiaries of Company, the Board of
Directors of Company or any member of the Board of Directors of Company 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 the Merger, and Section 3.21 of the Disclosure
Statement sets forth the maximum consideration (present and future) agreed to be
paid to each such party.
3.22. State Antitakeover Statutes. Company has granted all approvals
---------------------------
and taken all other steps necessary to exempt the Merger and the other
transactions contemplated hereby from the requirements and provisions of Section
203 of the GCL and any other applicable state antitakeover statute or regulation
such
22
that none of the provisions of such Section 203 or any other "business
combination," "moratorium," "control share" or other state antitakeover statute
or regulation (x) prohibits or restricts Company's 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 or any provision hereof, or (z) would
subject Parent to any material impediment or condition in connection with the
exercise of any of its rights under this Agreement.
3.23. Opinion of Financial Advisor. Company has received the opinion
----------------------------
of First Boston dated the date of this Agreement, to the effect that, as of such
date, the Merger Consideration is fair from a financial point of view to the
holders of shares of Company Common Stock.
3.24. Insurance. Section 3.24 of the Disclosure Statement lists all
---------
insurance policies in force on the date hereof covering the businesses,
properties and assets of Company and its subsidiaries, and all such policies are
currently in effect.
3.25. Employment and Labor Contracts. Neither Company nor any of its
------------------------------
subsidiaries is a party to any employment contract or other similar contract or
any other contract for the provision of management or consulting services to
Company or any of its subsidiaries with any past or present officer, director,
employee or, to the best of Company's knowledge, any entity affiliated with any
past or present officer, director or employee other than the agreements executed
by employees generally, the forms of which have been delivered to Parent.
3.26. Pending Transactions. Section 3.26 of the Disclosure
--------------------
Statement lists the status of the Pending Transactions.
3.27. Indemnification Agreements. Each of the RHI Indemnification
--------------------------
Agreement, the FHC Indemnification Agreement and the Pledge Agreement is a valid
and binding agreement of Company and, to the knowledge of Company, each of such
agreements is enforceable against RHI Holdings, Inc. ("RHI") and The ▇▇▇▇▇▇▇▇▇
Corporation ("TFC"), ▇▇▇▇▇▇▇▇▇ Holding Corp. ("FHC"), and RHI, respectively,
--- ---
except to the extent that such 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. Each of the RHI Indemnification Agreement, the FHC Indemnification
Agreement and the Pledge Agreement shall inure to the benefit of the Surviving
Corporation and shall be enforceable by the Surviving Corporation except to the
extent that such enforceability may be limited by applicable bankruptcy,
23
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally or by general equitable or fiduciary principles.
As of the date hereof, Company has no knowledge of any liabilities or claims for
which Company is indemnified under the RHI Indemnification Agreement and FHI
Indemnification Agreement (other than (i) the contingent liabilities related to
a dispute with the United States Government under government contract accounts
rules concerning potential liability arising out of the use of and accounting
for approximately $50.0 million in excess pension funds relating to certain
government contracts in the discontinued aerospace business of ▇▇▇▇▇▇▇▇▇
Industries, Inc. ("FII"), the nonsurviving constituent corporation in their
---
merger of March 13, 1996, with Shared Technologies, Inc.; (ii) all non-
telecommunications environmental liabilities of FII; and (iii) approximately
$50.0 million (at June 30, 1995 of costs associated with post-retirement
healthcare benefits of FII) as such items are described in Company's Annual
Report on Form 10-K for the year ended December 31, 1996) that would (were the
indemnification under the RHI Indemnification Agreement and FHI Indemnification
Agreement not available), individually or in the aggregate, have a Company
Material Adverse Effect.
3.28. Indemnified Liabilities. Notwithstanding all of the
-----------------------
representations and warranties contained in this Article III (except for Section
3.27), it is hereby agreed that Company need not disclose as exceptions to any
of the foregoing representations and warranties any losses, liabilities and
damages or actions or claims for which Company is indemnified under each of the
FHI Indemnification Agreement and the RHI Indemnification Agreement.
3.29. Commercial Arrangements with Tel-Save Holdings, Inc. Except as
----------------------------------------------------
disclosed in Schedule A attached hereto, neither Company nor any of its
subsidiaries or affiliates has entered into, or is a party to, any commercial
contracts, agreements, leases, plans, instruments, registrations, licenses,
permits, commitments, arrangements or undertakings with Tel-Save Holdings, Inc.
or any of its subsidiaries or affiliates, whether written or oral.
IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
------------------------------------------------------
Each of Parent and Purchaser jointly and severally represents and
warrants to Company as follows:
4.1. Organization and Qualification. Each of Parent and Purchaser
------------------------------
is a corporation duly organized, 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
24
business as now being conducted. Each of Parent and Purchaser is duly qualified
as a foreign 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 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 Parent's or Purchaser's ability to
consummate the Offer, the Merger or the other transactions contemplated hereby
(a "Parent Material Adverse Effect"). Neither Parent nor Purchaser is in
------------------------------
violation of any of the provisions of its Certificate of Incorporation (or other
applicable charter document) or Bylaws.
4.2. Authority Relative to This Agreement. Each of Parent and
------------------------------------
Purchaser has full corporate power and authority to execute and deliver this
Agreement and to consummate the Offer, the Merger and other transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the Offer, the Merger and other transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of Parent and
Purchaser and no other corporate proceedings on the part of Parent and Purchaser
are necessary to authorize this Agreement or to consummate the Offer, the Merger
or other transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by each of Parent and Purchaser and, assuming the
due authorization, execution and delivery hereof by Company, constitutes a valid
and binding agreement of Parent and Purchaser, enforceable against Parent and
Purchaser 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.
4.3. No Violations, etc. (a) Assuming that all filings, permits,
-------------------
authorizations, consents and approvals or waivers thereof have been duly made or
obtained as contemplated by Section 4.3(b) hereof, neither the execution and
delivery of this Agreement by Parent and Purchaser nor the consummation of the
Offer, the Merger or other transactions contemplated hereby nor compliance by
Parent and Purchaser 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 termination or suspension of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Parent and
Purchaser under, any of the terms, conditions or provisions of (x) their
respective charters or bylaws or (y) any note, bond, mortgage, indenture or
25
deed of trust, 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 Parent or
Purchaser or any of their respective properties or assets, except, in the case
of clause (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, have a Parent Material Adverse Effect.
(b) No filing or registration with, notification to and no permit,
authorization, consent or approval of any governmental entity is required by
Parent or Purchaser in connection with the execution and delivery of this
Agreement or the consummation by Parent and Purchaser of the Offer, the Merger
or other transactions contemplated hereby, except (i) in connection with the
applicable requirements of the HSR Act, (ii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, (iii) filings with
the SEC and state securities administrators, (iv) filings with the Federal
Communications Commission or any applicable state public utility commissions or
applicable state or local regulatory agency or authority, 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, have a Parent Material Adverse Effect.
(c) As of the date hereof (x) Parent and Purchaser are not in
violation of or default under any note, bond, mortgage, indenture or deed of
trust, or (y) any license, lease, agreement or other instrument or obligation to
which Parent is a party or to which they or any of their respective properties
or assets may be subject, except, in the case of clauses (x) and (y) above, for
such violations or defaults which would not, individually or in the aggregate,
have a Parent Material Adverse Effect.
4.4. Proxy Statement. None of the information supplied or to be
---------------
supplied by or on behalf of Parent and Purchaser for inclusion or incorporation
by reference in the Proxy Statement will, at the dates mailed to stockholders
and at the time of Company Stockholder Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.5. Finders or Brokers. None of Parent, Purchaser, the Board of
------------------
Directors of Parent or Purchaser or any member of the Board of Directors of
Parent or Purchaser has employed any investment banker, broker, finder or
intermediary in connection
26
with the transactions contemplated hereby who might be entitled to a fee or any
commission in connection with the Offer or the Merger other than Bear, ▇▇▇▇▇▇▇ &
Co., Inc., whose fees shall be paid by Parent.
4.6. Offer Documents. The Offer Documents will not, at the time the
----------------
Offer Documents are filed with the SEC or are first published, sent or given to
stockholders of Company, as the case may be, contain any untrue statement of a
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 the light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, Parent and Purchaser make no representation or warranty with respect
to any information supplied by Company or any of its representatives which is
contained in any of the foregoing documents or the Offer Documents. The Offer
Documents shall comply in all material respects as to form with the requirements
of the Exchange Act and the rules and regulations thereunder.
V. COVENANTS
---------
5.1. Conduct of Business of Company Pending the Merger. Except as
-------------------------------------------------
contemplated by this Agreement or as expressly agreed to in writing by Parent,
during the period from the date of this Agreement to the Effective Time, each of
Company and its subsidiaries 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 relationships 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 parties to consummate the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Effective Time, Company will not, nor will it permit any of its
subsidiaries to, without the prior written consent of Parent, which consent
shall not be unreasonably withheld:
(a) amend its certificate of incorporation or bylaws;
(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 capital 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 convertible securities, warrants and options, and
(ii) shares granted to employees as matching
27
contributions pursuant to Company's 401(k) Plan in an aggregate amount not to
exceed 40,000 shares;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend (other than a dividend of stock of Shared
Technologies Cellular, Inc. owned by Company) 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;
(d) (i) create, incur, assume, maintain or permit to exist any debt
for borrowed money other than under existing lines of credit in the ordinary
course of business consistent with past practice; (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except for
(a) its wholly owned subsidiaries, and (b) STF Canada, Inc. in the ordinary
course of business and consistent with past practices; or (iii) make any loans,
advances or capital contributions to, or investments in, any other person except
for STF Canada, Inc. in an aggregate amount not to exceed $1,000,000;
(e) (i) increase in any manner the compensation of (x) any employee
except in the ordinary course of business consistent with past practice or (y)
any of its directors or officers; (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 any director or officer or
employee, whether past or present, relating 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, (x) any employee
except in the ordinary course of business consistent with past practice or (y)
any of its directors or officers except for honorarium payments to outside
directors of Company in an amount not to exceed $300,000 in the aggregate; or
(iv) except as may be required to comply with applicable law, become obligated
(other than pursuant to any new or renewed collective 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; provided, however, that this clause (iv) shall not prohibit
-------- -------
Company from renewing any such plan, agreement or
28
arrangement already in existence on terms no more favorable to the parties to
such plan, agreement or arrangement;
(f) except as otherwise expressly contemplated by this Agreement,
enter into any other agreements, commitments or contracts, except agreements,
commitments or contracts for the purchase, sale or lease of goods or services
involving payments or receipts by Company or its subsidiaries not in excess of
$50,000, other than (i) customer agreements, (ii) leases for rental space in an
amount not to exceed $250,000 for any lease or (iii) developer agreements in an
amount not to exceed $250,000 for any agreement; provided, however, that Company
-------- -------
will not enter into agreements with any local exchange carriers, competitive
local exchange carriers or incumbent local exchange companies which require a
financial commitment by Company or any of its subsidiaries or which limit the
ability of Company or any of its subsidiaries to conduct their respective
business;
(g) 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
capitalization, or any entry into a material contract or any amendment or
modification of any material contract or any release or relinquishment of any
material contract rights;
(h) authorize or commit to make capital expenditures in excess of
$200,000 for any one order in Company's service business (other than purchases
by Company's systems business in the ordinary course of business consistent with
past practice);
(i) make any change in the accounting methods or accounting
practices followed by Company;
(j) settle any action, suit, claim, investigation or proceeding
(legal, administrative or arbitrative) in excess of $50,000 without the consent
of the Parent; provided, however, that Company may settle the matter set forth
-------- -------
in item 2 of Section 3.9 of the Disclosure Statement as previously discussed
with Parent;
(k) make any election under the Code which would have a Company
Material Adverse Effect;
(l) amend, change or alter in any respect any of the RHI
Indemnification Agreement, the FHC Indemnification Agreement or the Pledge
Agreement (except as specifically contemplated by this Agreement); or
29
(m) agree to do any of the foregoing.
Promptly following execution and delivery of this Agreement, Parent
shall appoint a senior executive (the "Consultant") to act as a management
----------
consultant and advisor to the Company relative to the conduct of its business in
the ordinary course, including the activities described in clauses (d)-(j) of
this Section 5.1. The Consultant shall liaise directly with the chief executive
officer and chief operating officer of the Company and shall be informed of, and
participate as a consultant in, all management decisions made by such officers.
In the event that the Company determines to implement management decisions
contrary to the advice of the Consultant, and the Consultant determines in his
good faith judgment, that such management decisions either alone or taken
together with other management decisions implemented against the advice of the
Consultant, could lead to a Company Material Adverse Effect, the Consultant
shall promptly notify the Executive Committee of the Board of Directors of the
Company in writing of his determination and his contrary recommendation (the
"Consultant Notice"). In the event the Executive Committee of the Board of
------------------
Directors does not cause management of the Company to act in accordance with the
recommendations of the Consultant set forth in the Consultant Notice by
directing management so to act in writing within five days of receipt of the
Consultant Notice, Parent and Purchaser may, by delivery of written notice to
the Company within 30 days following the expiration of such five day period,
terminate this Agreement in accordance with the provisions of Section 7.1(i)
hereof. The written consent or recommendation of the Consultant with respect to
any matter shall be deemed to be the consent of Parent thereto.
5.2. Preparation of the Proxy Statement; Stockholders Meetings.
---------------------------------------------------------
(a) As soon as practicable following the date hereof, Company shall
prepare and file the Proxy Statement with the SEC under the Exchange Act, and
shall use its reasonable best efforts to have the Proxy Statement cleared by the
SEC. Parent, Purchaser and Company shall cooperate with each other in the
preparation of the Proxy Statement, and Company shall notify Parent of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between Company or any representative of Company and the SEC.
Company shall give Parent and its counsel the opportunity to review the Proxy
Statement prior to its being filed with the SEC and shall give Parent and its
counsel the opportunity to review all amendments and supplements to the Proxy
Statement and all responses to requests for additional information and replies
to comments prior to their being filed with, or sent to, the SEC,
30
and prior to the filing of the Proxy Statement, any amendments or supplements to
the Proxy Statement or any other correspondence to the SEC (collectively, the
"Proxy Filings"), the Proxy Filings shall be reasonably satisfactory to Parent.
--------------
Each of Company, Parent and Purchaser agrees to use its reasonable best efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC and to cause the Proxy Statement and
all required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Stockholders' Meeting at the earliest practicable
time.
(b) Company shall, as soon as practicable after the date hereof, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Company Stockholder Meeting"), as promptly as practicable after the date
----------------------------
hereof, for the purpose of obtaining the approval (the "Company Stockholder
-------------------
Approval") of a majority of the stockholders of Company of this Agreement and
--------
shall, through its Board of Directors, recommend to its stockholders the
approval and adoption of this Agreement, the Merger and the other transactions
contemplated hereby, and shall use all commercially reasonable efforts to
solicit from its stockholders proxies in favor of approval and adoption of this
Agreement; provided, however, that such recommendation is subject to any action
-------- -------
required by the fiduciary duties of the Board of Directors.
5.3. Additional Agreements; Cooperation. (a) Subject to the terms
----------------------------------
and conditions herein provided, 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, material leases and other material
contracts that are specified on Schedule 5.3 to the Disclosure Statement, (ii)
to obtain all necessary consents, approvals and authorizations as are required
to be obtained under any federal, state or foreign law or regulations, (iii) to
defend all lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iv) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby, (v)
to effect all necessary registrations and filings, including, but not limited
to, filings under the HSR Act and submissions of information requested by
governmental authorities, (vi) provide all necessary information
31
for the Proxy Statement and (vii) to fulfill all conditions to this Agreement.
(b) 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 governmental agency or authority, including,
without limitation, any filing necessary under the provisions of the HSR Act or
any other applicable Federal or state statute. At any time upon the written
request of Parent, Company shall advise Parent of the number of shares of
Company Common Stock or any series of Preferred Stock outstanding on such date.
5.4. Publicity. Company, Parent and Purchaser agree to consult with
---------
each other in issuing any press release and with respect to the general content
of other public statements with respect to the transactions contemplated hereby,
and shall not issue any such press release prior to such consultation, except as
may be required by law.
5.5. No Solicitation. (a) Company shall not, nor shall it permit
---------------
any of its subsidiaries to, nor shall it authorize or permit any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly, (i) solicit any Company Takeover
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding any Company Takeover Proposal; provided, however, that
-------- -------
if, at any time prior to Company Stockholders Meeting, the Board of Directors of
Company determines in good faith, after consultation with outside counsel, that
it is necessary to do so in order to comply with its fiduciary duties to
Company's stockholders under applicable law the Company may, in response to a
Company Takeover Proposal that was not solicited, and subject to compliance with
Section 5.5(c), (x) furnish information with respect to Company to any person
pursuant to a customary confidentiality agreement (as determined by Company
after consultation with its outside counsel) and (y) participate in negotiations
regarding such Company Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any director or executive officer of Company or any of its
subsidiaries, whether or not such person is purporting to act on behalf of
Company or any of its subsidiaries or otherwise, shall be deemed to be a breach
of this Section 5.5(a) by Company. For purposes of this Agreement, "Company
-------
Takeover Proposal" means any inquiry, proposal or offer from any person relating
-----------------
to any direct or indirect acquisition or purchase of 20% or more of the assets
of Company or its subsidiaries or 20% or more of any class of equity securities
of Company or any of its subsidiaries, any tender offer or exchange offer that
if
32
consummated would result in any person beneficially owning 20% or more of any
class of equity securities of Company or any of its subsidiaries, any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Company or any of its subsidiaries, other than
the transactions contemplated by this Agreement, or any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Merger or which would reasonably be expected to
dilute materially the benefits to Parent of the transactions contemplated by
this Agreement.
(b) Except as set forth in this Section 5.5, neither the Board of
Directors of Company nor any committee thereof shall (i) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of the
Merger or this Agreement, (ii) approve or recommend, or propose publicly to
approve to recommend, any Company Takeover Proposal or (iii) cause Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, a "Company Acquisition Agreement") related to
-----------------------------
any Company Takeover Proposal. Notwithstanding the foregoing, in the event that
prior to the Company Stockholders Meeting the Board of Directors of Company
determines in good faith, after consultation with outside counsel, that it is
necessary to do so in order to comply with its fiduciary duties to Company's
stockholders under applicable law, the Board of Directors of Company may
(subject to this and the following sentences) (x) withdraw or modify its
approval or recommendation of the Merger and this Agreement or (y) approve or
recommend a Company Superior Proposal (as defined below) or terminate this
Agreement (and concurrently with or after such termination, if it so chooses,
cause Company to enter into any Company Acquisition Agreement with respect to
any Company Superior Proposal) but in each of the cases set forth in this clause
(y), no action shall be taken by Company pursuant to clause (y) until a time
that is after the fifth business day following Parent's receipt of written
notice advising Parent that the Board of Directors of Company has received a
Company Superior Proposal, specifying the material terms and conditions of such
Company Superior Proposal and identifying the person making such Company
Superior Proposal, to the extent such identification of the person making such
proposal does not breach the fiduciary duties of the Board of Directors as
advised by outside legal counsel. For purposes of this Agreement, a "Company
-------
Superior Proposal" means any bona fide proposal made by a third party to
-----------------
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the shares of Company
Common Stock and Company Preferred Stock then outstanding or all or
substantially all the assets of Company and otherwise on terms that the Board of
Directors of Company
33
determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation) to be more favorable to Company's
stockholders than the Merger.
(c) In addition to the obligations of Company set forth in paragraphs
(a) and (b) of this Section 5.5, Company shall immediately advise Parent orally
and in writing of any request for information or of any Company Takeover
Proposal, the material terms and conditions of such request or Company Takeover
Proposal, and to the extent such disclosure is not a breach of the fiduciary
duties of the Board of Directors as advised by outside legal counsel, the
identity of the person making such request or Company Takeover Proposal.
(d) Nothing contained in this Section 5.5 shall prohibit Company from
taking and disclosing to its stockholders a position contemplated by Rule 14e-
2(a) promulgated under the Exchange Act, or from making any disclosure to
Company's stockholders if, in the good faith judgment of the Board of Directors
of Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its fiduciary duties to Company's stockholders under
applicable law; provided, however, neither Company nor its Board of Directors
-------- -------
nor any committee thereof shall, except as permitted by Section 5.5(b), withdraw
or modify, or propose publicly to withdraw or modify, its position with respect
to this Agreement or the Merger or approve or recommend, or propose publicly to
approve or recommend, a company Takeover Proposal.
5.6. Access to Information. From the date of this Agreement until
---------------------
the Effective Time, Company shall provide Parent 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 Parent to make such inspections as it may reasonably
require and will cause its officers and those of its subsidiaries to furnish
Parent with such financial and operating data and with respect to its business
and properties as Parent may from time to time reasonably request.
5.7. Notification of Certain Matters. Company or Parent, 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 representation or warranty contained in
Section 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23 or 3.29 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 Company or Parent, as the case
may be, or of any officer, director, employee or agent thereof, to comply with
34
or satisfy any covenant, condition or agreement to be complied with or satisfied
by its under this Agreement; provided, however, that no such notification shall
-------- -------
affect the representations or warranties of the parties or the conditions to the
obligations of the parties hereunder.
5.8. Resignation of Directors. At or prior to the Effective Time,
------------------------
Company shall take all commercially reasonable efforts to deliver to Parent the
resignations of such directors of Company and its subsidiaries as Parent shall
specify, effective at the Effective Time.
5.9. Indemnification. (a) As of the date of this Agreement and for a
---------------
period of six years following the Effective Time of the Merger, Parent and the
Surviving Corporation will indemnify and hold harmless any persons who were
directors or officers of Company or a subsidiary of Company prior to the
Effective Time of the Merger (the "Indemnified Persons") to the fullest extent
-------------------
such person could have been indemnified under the GCL or under the certificate
of incorporation or bylaws of Company or the certificate of incorporation or
bylaws of any subsidiary of Company in effect immediately prior to the Effective
Time of the Merger, with respect to any act or failure to act by any such
Indemnified Person prior to the Effective Time of the Merger.
(b) Any determination required to be made with respect to whether an
Indemnified Person's conduct complies with the standards set forth under the GCL
or other applicable corporate law shall be made by independent counsel selected
by the Indemnified Persons and reasonably acceptable to Parent and the Surviving
Corporation. Parent or the Surviving Corporation shall pay such counsel's fees
and expenses (it being agreed that neither the Indemnified Persons, Parent nor
the Surviving Corporation shall challenge any such determination by such
independent counsel).
(c) The provisions of this Section 5.9 are for the benefit of the
Indemnified Persons, any of whom shall have all rights at law and in equity to
enforce the rights hereunder.
(d) In the event that Parent or the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other person
and Parent or the Surviving Corporation or such successor or assign is not the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers all or substantially all of its properties and assets to any
person, then, and in each case, proper provision shall be made so that such
person or the continuing or surviving corporation assumes the obligations set
forth in this Section 5.9.
35
(e) Parent shall cause the Surviving Corporation to maintain in effect
for not less than five years from the Effective Time the current policies of
directors' and officers' liability insurance maintained by Company and its
subsidiaries (provided that Parent may substitute therefor policies of at least
the same coverage containing terms and conditions which are no less advantageous
to the Indemnified Parties in all material respects so long as no lapse in
coverage occurs as a result of such substitution) with respect to all matters,
including the transactions contemplated hereby, occurring prior to, and
including the Effective Time, provided that, in the event that any claim is
asserted or made within such five year period, such insurance shall be continued
in respect of any such claim until final disposition of any and all such claims,
provided, further, that Parent shall not be obligated to make annual premium
payments for such insurance to the extent such premiums exceed 200% of the
premiums paid as of the date hereof by Company for such insurance.
5.10. Fees and Expenses. Whether or not the Merger is consummated,
-----------------
Company and Parent shall bear their respective expenses incurred in connection
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,
representatives, counsel and accountants.
5.11. Stockholder Litigation. Each of Company and Parent shall give
----------------------
the other the reasonable opportunity to participate in the defense of any
stockholder litigation against or in the name of Company or Parent, as
applicable, and/or their respective directors relating to the transactions
contemplated by this Agreement.
VI. CONDITIONS
----------
6.1. Conditions to the Merger. The obligations of each party to
------------------------
effect the Merger shall be subject to the satisfaction or waiver, at or prior to
the Effective Time, of each of the following conditions:
(a) The Merger and this Agreement shall have been validly approved
and adopted by the affirmative votes of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon.
(b) The waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall have expired.
36
(c) No judgment, order, decree, statute, law, ordinance, rule or
regulation entered, enacted, promulgated, enforced or issued by any court or
other governmental entity of competent jurisdiction or other legal restraint or
prohibition shall be in effect preventing the consummation of the Offer or the
Merger.
6.2. Conditions to Obligations of Parent. The obligation of Parent to
-----------------------------------
effect the Merger is further subject to satisfaction or waiver of the following
conditions:
(a) All of the representations and warranties of Company set forth
herein shall be true and correct as of July 16, 1997, and the representations
and warranties set forth in Sections 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23
and 3.29 shall be true and correct as of the date hereof and the Closing Date,
as if made at and as of such time, except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality" or "material adverse effect" set forth
therein) does not have, and is not likely to have, individually or in the
aggregate, a Company Material Adverse Effect or cause any material increase in
the consideration required to be paid by Parent and Purchaser effectively to
consummate the Merger.
(b) Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date.
(c) All necessary consents and approvals of any federal, state or
local 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 material adverse effect on the
Surviving Corporation or a Parent Material Adverse Effect.
6.3. Conditions to Obligations of Company. The obligation of Company
------------------------------------
to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) The representations and warranties of Parent and Purchaser set
forth herein shall be true and correct both when made and at and as of the
Closing Date, as if made at and as of such date, except whether the failure of
such representations and warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "material adverse effect" set
forth therein) does not have, and is not likely to have, individually or in the
aggregate, a Parent Material Adverse Effect.
37
(b) Parent and Purchaser shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing Date.
VII. TERMINATION, AMENDMENT AND WAIVER
---------------------------------
7.1. Termination. This Agreement may be terminated at any time prior
-----------
to the Effective Time, whether before or after approval by the stockholders of
Company:
(a) by consent of the Boards of Directors of Company, Parent and
Purchaser;
(b) by Parent and Purchaser upon notice to Company if any material
default under or material breach of any covenant or agreement in this
Agreement by Company shall have occurred and shall not have been cured
within ten days after receipt of such notice, or any representation or
warranty contained herein on the part of Company shall not have been true
and correct in any material respect at and as of the date made;
(c) by Company upon notice to Parent and Purchaser if any material
default under or material breach of any covenant or agreement in this
Agreement by Parent or Purchaser shall have occurred and shall not have
been cured within ten days after receipt of such notice, or any
representation or warranty contained herein on the part of Parent or
Purchaser shall not have been true and correct in any material respect at
and as of the date made;
(d) by Parent and Purchaser, on the one hand, or Company, on the
other, upon notice to the other if the Merger shall not have become
effective on or before September 30, 1998, unless such date is extended by
the consent of the Boards of Directors of Company, Parent and Purchaser
evidenced by appropriate resolutions; provided, however, that the right to
-------- -------
terminate this Agreement under this Section 7.1(d) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before such date;
(e) by any of Parent, Purchaser and Company if the approval of the
stockholders of Company required for consummation of the Merger shall not
have been obtained by reason of the failure to obtain the required vote at
a duly held meeting of stockholders or any adjournment thereof;
(f) by Parent or Purchaser, if Section 5.5 shall be breached by
Company or any of its officers, directors or employees or any investment
banker, financial advisor,
38
attorney, accountant or other representative of Company, in any material
respect and Company shall have failed promptly to terminate the activity
giving rise to such breach and use best efforts to cure such breach upon
notice thereof from Parent or Purchaser, or Company shall breach Section
5.5 by failing to promptly notify Parent or Purchaser as required
thereunder;
(g) by Parent or Purchaser if, at any time, (i) Company shall have
withdrawn or modified in any manner adverse to Parent or Purchaser its
approval or recommendation of this Agreement or the Merger or failed to
reconfirm its recommendation within 15 business days after a written
request to do so, or recommended any Company Takeover Proposal or (ii) the
Board of Directors of Company or any committee thereof shall have resolved
to take any of the foregoing actions;
(h) by the Company if it elects to terminate this Agreement in
accordance with Section 5.5(b); provided that it has complied with all
--------
provisions thereof, including the notice provisions therein, and that it
complies with applicable requirements relating to the payment (including
the timing of the payment) of the termination fee required by Section 7.3;
or
(i) by Parent or Purchaser in accordance with the provisions of the
last paragraph of Section 5.1 of this Agreement; provided that it has
complied with all provisions thereof, including the notice provisions
therein.
7.2. Effect of Termination. In the event of the termination of this
---------------------
Agreement pursuant to the provisions of Section 7.1, the provisions of this
Agreement (other than Sections 5.10, 7.2, 7.3 and 7.4 hereof) shall become void
and have no effect, with no liability on the part of any party hereto or its
stockholders or directors or officers in respect thereof, except as set forth in
Sections 7.3 and 7.4, provided that nothing contained herein shall be deemed to
--------
relieve any party of any liability it may have to any other party with respect
to a breach of its obligations under this Agreement.
7.3. Termination Payment. As compensation for entering into this
-------------------
Agreement, taking action to consummate the transactions hereunder and incurring
the costs and expenses related thereto and other losses and damages, including
the foregoing of other opportunities, Company and Parent agree as follows:
(a) Company shall pay to Parent the sum of $10.0 million plus all
reasonably documented out-of-pocket expenses (including, but not limited to, the
reasonable fees and expenses
39
of counsel and its other advisers) of Parent and Purchaser incurred in
connection with the transactions contemplated by this Agreement (including the
preparation and negotiation of this Agreement) promptly after, but in no event
later than two days following, whichever of the following first occurs:
(i) Parent or Purchaser shall have exercised its right to
terminate this Agreement pursuant to Sections 7.1(b), 7.1(f), 7.1(g) or
7.1(i) hereof.
(ii) Company shall have exercised its right to terminate this
Agreement pursuant to Section 7.1(e) or Section 7.1(h).
(b) Company shall not be obligated to make any payment pursuant to
this Section 7.3, if at the time such payment becomes due Parent or Purchaser is
in material breach of its obligations under this Agreement.
7.4 Proceeds of the Good Faith Deposit. (a) Subject to Section
----------------------------------
7.4(c), Company shall pay out from the proceeds of the Good Faith Deposit an
amount equal to $15,000,000 (the "Termination Fee") to Tel-Save Holdings, Inc.
---------------
("Tel-Save") to satisfy termination fees arising from Company's termination of
--------
that certain Agreement and Plan of Merger dated as of July 16, 1997 among Tel-
Save, TSHCo, Inc. and Company.
(b) Subject to Section 7.4(c), Company shall pay the Good Faith
Deposit (less the Termination Fee) to Tel-Save in exchange for the termination
of any options to purchase Company Common Stock held by Tel-Save under that
certain Option Agreement dated as of July 16, 1997 by and between Tel-Save and
Company.
(c) In the event that Parent or Purchaser terminates this Agreement
pursuant to Section 7.1(a), 7.1(b), 7.1(f), 7.1(g) or 7.1(i) or Company
terminates this Agreement other than pursuant to Section 7.1(c) or Section
7.1(d), then Company must repay to Purchaser the Good Faith Deposit (including
any Termination Fee which has been paid to Tel-Save).
7.5 Amendment. This Agreement may be amended by the parties hereto
---------
only in a writing signed on behalf of each of them, at any time before or after
approval of the Agreement by the stockholders of Company, but after such
approval no amendment shall be made which alters the Merger Consideration
without the further approval of the stockholders of Company other than Parent;
provided that no amendment or consent given or made on behalf of Company shall
be effective unless approved by a majority of the members of the Board as
constituted as of the date hereof (or of any successor directors duly elected by
such members).
40
7.6 Waiver. Any term or provision of this Agreement (other than the
------
requirements for approval by the stockholders of Company) may be waived in
writing at any time by the party which is, or whose stockholders are, entitled
to the benefits thereof.
VIII. GENERAL PROVISIONS
------------------
8.1. Definitions. As used in the Agreement, the following terms
-----------
have the following respective meanings:
Agreement: as defined in the recitals.
---------
Board: as defined in the recitals.
-----
Certificate of Merger: as defined in Section 2.5.
---------------------
Certificates: as defined in Section 2.8(b).
------------
Closing Date: means the date on which the Effective Time occurs.
------------
COBRA: as defined in Section 3.17(n).
-----
Code: means the Internal Revenue Code of 1986, as amended.
----
Company: as defined in the first paragraph of this Agreement.
-------
Company Acquisition Agreement: as defined in Section 5.5(b).
-----------------------------
Company Common Stock: means issued and outstanding shares of Common
--------------------
Stock, par value $.004 per share, of Company.
Company Material Adverse Effect: as defined in Section 3.1.
-------------------------------
Company Stockholder Approval: as defined in Section 5.2(b).
----------------------------
Company Stockholder Meeting: as defined in Section 5.2(b).
---------------------------
Company Stock Option Plans: as defined in Section 2.9.
--------------------------
Company Superior Proposal: as defined in Section 5.5(b).
-------------------------
41
Company Takeover Proposal: as defined in Section 5.5(a).
-------------------------
Consultant: as defined in Section 5.1.
----------
Consultant Notice: as defined in Section 5.1.
-----------------
Convertible Preferred Stock: as defined in Section 2.6(d).
---------------------------
Disclosure Statement: as defined in Section 3.2.
--------------------
Dissenting Shares: as defined in Section 2.6(e).
-----------------
Effective Time: as defined in Section 2.5.
--------------
ERISA: the Employee Retirement Income Security Act of 1974, as
-----
amended.
ERISA Affiliate: as defined in Section 3.17(d).
---------------
Exchange Act: as defined in Section 1.2(b).
------------
Exchange Agent: Continental Stock Transfer & Trust Company or such
--------------
other a bank or trust company to be designated by Parent prior to the Effective
Time to act as exchange agent.
FHC: means ▇▇▇▇▇▇▇▇▇ Holding Corp.
---
FHC Indemnification Agreement: means the Indemnification Agreement
-----------------------------
between FHC and Company dated March 13, 1996.
FII: as defined in Section 3.27.
---
First Boston: as defined in Section 1.2(a).
------------
GCL: as defined in the recitals.
---
Good Faith Deposit: as defined in Section 2.10.
------------------
HSR Act: as defined in Section 3.5(b).
-------
Indemnified Persons: as defined in Section 5.9(a).
-------------------
IRS: as defined in Section 3.17(e).
---
Merger: as defined in the recitals.
------
Merger Consideration: as defined in Section 2.6(d).
--------------------
Multiemployer Plan: as defined in Section 3.17(k).
------------------
42
Offer Documents: as defined in Section 1.1(b).
---------------
Offer to Purchase: as defined in Section 1.1(b).
-----------------
Other Plans: as defined in Section 3.17(b).
-----------
Parent: as defined in the first paragraph of this Agreement.
------
Parent Material Adverse Event: as defined in Section
-----------------------------
4.1.
PBGC: as defined in Section 3.17(j).
----
Pending Transactions: means the pending transactions regarding ICS
--------------------
Communications, Inc. and GE Capital-Rescum, L.L.P.
Pension Benefit Plans: as defined in Section 3.17(a).
---------------------
Per Share Amount: as defined in Section 2.6(a).
----------------
Per Share Offer Amount: as defined in the recitals.
----------------------
Person: an individual, partnership, joint venture, corporation,
------
trust, unincorporated organization and a government or any department or agency
thereof.
Plans: as defined in Section 3.17(c).
-----
Pledge Agent: shall mean ▇▇▇▇▇▇ & Hannah.
------------
Pledge Agreement: means the Pledge Agreement dated as of March 13,
----------------
1996 by RHI in favor of ▇▇▇▇▇▇ & Hannah as pledge agent.
Preferred Per Share Amount: as defined in Section 2.6(d).
--------------------------
Preferred Shares: as defined in Section 2.6(d).
----------------
Proxy Filings: as defined in Section 5.2(a).
-------------
Proxy Statement: as defined in Section 3.8.
---------------
Purchaser: as defined in the first paragraph of this Agreement.
---------
RHI: means RHI Holdings, Inc.
---
RHI Indemnification Agreement: means the Indemnification Agreement
-----------------------------
dated March 13, 1996 by and among TFC, RHI and Company.
43
Schedule 14D-1: as defined in Section 1.1(b).
--------------
Schedule 14D-9: as defined in Section 1.2(b).
--------------
SEC: as defined in Section 1.1(b).
---
SEC Reports: as defined in Section 3.6.
-----------
Securities Act: as defined in Section 3.6.
--------------
Series D Stock: as defined in Section 2.6(d).
--------------
Shares: means collectively, all shares of Company Common Stock.
------
Shares Consideration: as defined in Section 2.6(a).
--------------------
Special Preferred Stock: as defined in Section 2.6(d).
-----------------------
Subsidiary: with respect to any Person, any corporation or other
----------
business entity, a majority (by number of votes) of the shares of capital stock
(or other voting interests) of which at the time outstanding is owned by such
Person directly or indirectly through Subsidiaries.
Surviving Corporation: as defined in Section 2.1.
---------------------
Tel-Save: as defined in Section 7.4(a).
--------
Termination Fee: as defined in Section 7.4(a).
---------------
TFC: means The ▇▇▇▇▇▇▇▇▇ Corporation.
---
Tax or Taxes: as defined in Section 3.16.
--- -----
Welfare Plans: as defined in Section 3.17(b).
-------------
8.2. Non-Survival of Representations, Warranties and Agreements. No
----------------------------------------------------------
representations, warranties or agreements in this Agreement or in any instrument
delivered by Parent, Purchaser or Company pursuant to this Agreement shall
survive the Merger.
8.3. Notices. All notices, requests, claims, demands, consents and
-------
other communications hereunder shall be in writing and shall be deemed given if
delivered personally or by fax or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
44
if to Parent or Purchaser, a copy to:
Intermedia Communications Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Company, a copy to:
Shared Technologies ▇▇▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq..
and
The ▇▇▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
8.4. Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated thereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually
45
acceptable manner in order that the transactions contemplated by this Agreement
including the Merger, be consummated as originally contemplated to the fullest
extent possible.
8.5. Miscellaneous. This Agreement (including the exhibits,
-------------
documents and instruments referred to herein or therein) (a) constitutes the
-
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and thereof; (b) is not intended to confer upon any other
-
person other than the parties hereto any rights or remedies hereunder; (c) shall
-
not be assigned by operation of law or otherwise, except that each of Parent and
Purchaser may assign its rights and obligations hereunder without the consent of
Company to one or more direct or indirect Subsidiaries of Parent (it being
recognized that such an assignment shall not release or discharge the assignor
from its obligations under this Agreement); and (d) shall be governed in all
-
respects, including validity, interpretation and effect, by the laws of the
State of Delaware. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement may be executed in
two or more counterparts which together shall constitute a single instrument.
8.6. Specific Performance. The parties agree that due to the unique
--------------------
subject matter of this transaction, monetary damages will be insufficient to
compensate the non-breaching party in the event of a breach of any part of this
Agreement. Accordingly, the parties agree that the non-breaching party shall be
entitled (without prejudice to any other right or remedy to which it may be
entitled) to an appropriate decree of specific performance, or an injunction
restraining any violation of this Agreement or other equitable remedies to
enforce this Agreement (without establishing the likelihood of irreparable
injury or posting bond or other security), and the breaching party waives in any
action or proceeding brought to enforce this Agreement the defense that there
exists an adequate remedy at law.
8.7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES
--------------------
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT
ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT.
[Remainder of Page Intentionally Left Blank]
46
IN WITNESS WHEREOF, Parent, Purchaser and Company have caused this
Agreement to be executed by their respective duly authorized officers on the
date first above written.
INTERMEDIA COMMUNICATIONS INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
MOONLIGHT ACQUISITION CORP.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
SHARED TECHNOLOGIES ▇▇▇▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
SCHEDULE A
----------
Long Distance Services Agreement, dated November 13, 1997, between Company and
Tel-Save Holdings, Inc.
ANNEX A
Conditions to the Offer
-----------------------
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) any applicable waiting period
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer, or (ii) at any time on or after the date of this
Agreement, and prior to the acceptance for payment of Shares, any of the
following conditions shall exist:
(a) any judgment, order, decree, statute, law, ordinance, rule
or regulation entered, enacted, promulgated, enforced or issued by any
court or other governmental entity of competent jurisdiction or other legal
restraint or prohibition shall be in effect preventing the consummation of
the Offer;
(b) all necessary consents and approvals of any federal, state
or local governmental authority or any other third party required for the
consummation of the Offer and the transactions contemplated by this
Agreement shall not 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 or a
Parent Material Adverse Effect;
(c) any of the representations and warranties of Company set
forth in the Agreement shall not be true and correct as of July 16, 1997 or
any of the representations and warranties set forth in Sections 3.2, 3.3,
3.4, 3.10, 3.14, 3.21, 3.22, 3.23 and 3.29 of the Agreement shall not be
true as of the date Parent shall first accept Shares for payment, where the
failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or "material
adverse effect" set forth therein) has, or is likely to have, individually
or in the aggregate, a Company Material Adverse Effect or cause any
material increase in the consideration required to be paid by Parent and
Purchaser effectively to consummate the Offer or the Merger;
(d) Company shall not have performed any obligation required to
be performed by it under this Agreement as of the date Parent shall first
accept Shares for payment, where the non-performance of such obligation
has, or is likely to have, individually or
in the aggregate, a Company Material Adverse Effect or cause any material
increase in the consideration required to be paid by Parent and Purchaser
effectively to consummate the Offer;
(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
(f) Purchaser and Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder;
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.