PURCHASE AGREEMENT
dated as of December 27, 1996
between
SHARED TECHNOLOGIES CELLULAR, INC.
and
RHI HOLDINGS, INC.
TABLE OF CONTENTS
Page
1. Purchase and
Sale.............................................. 1
1.1
Purchase.............................................. 1
1.2 Notice of
Purchase.................................... 2
1.3 The
Closings.......................................... 2
2. Company's Repurchase
Option.................................... 3
3. Representations and Warranties of the
Company.................. 3
3.1 Organization and Corporate
Power...................... 3
3.2
Authorization......................................... 4
3.3
Capitalization........................................ 4
3.4 Stockholder
Agreements................................ 5
3.5
Subsidiaries.......................................... 5
3.6 SEC
Filings........................................... 5
3.7 Financial
Statements.................................. 5
3.8 Absence of Undisclosed
Liabilities.................... 6
3.9 Certain
Developments.................................. 6
3.10 Title to
Properties................................... 6
3.11 Contracts and
Commitments............................. 7
3.12 Proprietary Rights; Employee
Restrictions............. 7
3.13 Effect of
Transactions................................ 8
3.14
Litigation............................................ 8
3.15 Securities
Laws....................................... 8
3.16
Business.............................................. 8
3.17 Books and
Records..................................... 8
3.18 Environmental
Compliance.............................. 9
3.19 Information Supplied to
RHI........................... 9
3.20
Brokers............................................... 9
3.21 Employee Benefit
Plans................................ 10
3.22
Employees............................................. 10
4. Representations and Warranties of
RHI.......................... 10
4.1
Investment............................................ 10
4.2
Authority............................................. 11
4.3
Experience............................................ 11
4.4 Accredited
Investor................................... 11
5. Conditions Precedent to
Closing................................ 11
6. Certain Covenants of the
Company............................... 12
6.1 Financial
Statements.................................. 12
6.2 Payment of Taxes, Compliance with Laws,
etc........... 12
6.3
Insurance............................................. 13
6.4 Maintenance of Properties and
Licenses................ 13
6.5 Affiliated
Transactions............................... 13
6.6 Inspection
Rights..................................... 13
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Page
6.7
Litigation............................................ 14
6.8 Merger, Consolidations, Disposal of Ownership of
Subsidiaries,
etc..................................... 14
6.9 RHI Designates to Board of
Directors.................. 14
7.
Miscellaneous.................................................. 14
7.1 Transfer of
Rights.................................... 14
7.2 Rules 144 and
144A.................................... 15
7.3 Delays or
Omissions................................... 15
7.4
Adjustments........................................... 15
7.5 Successors and
Assigns................................ 16
7.6 Survival of Representations and
Warranties............ 16
7.7
Expenses.............................................. 16
7.8
Notices............................................... 16
7.9 No Conditions to Effectiveness; Entire
Agreement...... 17
7.10 Amendments and
Waivers................................ 17
7.11
Counterparts.......................................... 17
7.12 Governing
Law......................................... 18
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PURCHASE AGREEMENT
This Agreement dated as of December 27, 1996 is by and
among SHARED
TECHNOLOGIES CELLULAR, INC., a Delaware corporation, (the
"Company"), and RHI
HOLDINGS, INC., a Delaware corporation ("RHI").
WHEREAS, the Company wishes to sell to RHI, and RHI
wishes to purchase
from the Company, units of the Company, each unit consisting of (i)
one share of
common stock, par value $0.01 per share (the "Common Stock"), of
the Company and
(ii) one detachable warrant (each, a "Warrant," and collectively,
the
"Warrants") to purchase, initially, one share of Common Stock at,
initially, a
price of $3.00 per share (such unit, "Unit").
WHEREAS, concurrently herewith, Shared Technologies
▇▇▇▇▇▇▇▇▇ Inc., a
Delaware corporation ("STFI"), and RHI are entering into that
certain Option
Agreement dated as of the date hereof (the "Option Agreement").
NOW, THEREFORE, in consideration of the mutual promises
and covenants
contained in this Agreement, and intending to be legally bound by
the terms and
conditions of this Agreement, the parties hereto hereby agree as
follows:
1. Purchase and Sale
1.1 Purchase.
(a) Subject to the conditions set forth herein, RHI
hereby agrees to
purchase from the Company, and the Company hereby agrees to sell to
RHI, on (the
"Initial Commitment") or prior to December 31, 1996, 250,000 Units
at a purchase
price of $3.00 per Unit (the "Purchase Price"). The purchase and
sale of Units
pursuant to this paragraph is herein referred to as the "Initial
Closing."
(b) In addition, subject to the conditions set forth
herein, RHI
hereby agrees to purchase (the "Additional Commitment") from the
Company, and
the Company hereby agrees to sell to RHI:
(1) on or prior to January 31, 1997, an additional
250,000
Units,
(2) on or prior to February 28, 1997, an addition-
al 166,667
Units, and
(3) on or prior to the 150th day after the date of
Initial
Closing (such 150th day, the "Applica- ble
Date"), an
additional 833,333 Units,
in each case, at the Purchase Price per Unit; provided, however,
that RHI may by
notice to the Company, or the Company by notice to RHI, terminate
the Additional
Commitment, in whole or in part, each at its option and for any or
no reason
whatsoever. Upon such termination of the Additional Commitment, RHI
shall no
longer be obligated to purchase from the Company, and the Company
shall no
longer be obligated to sell to RHI (except pursuant to Section
1.1(c)), any
additional Units.
(c) In the event that the Company does not exercise the
Repurchase
Option on or prior to the Applicable Date, RHI shall have the right
to purchase
(the "Special Option"), within 5 business days of the Applicable
Date, such
number of additional Units from the Company at the Purchase Price
per Unit as
would result in RHI having purchased an aggregate of 666,667 Units
under this
Agreement. The Special Option may be exercised by notice to the
Company
specifying the proposed date of purchase, which shall be a business
day. Such
notice shall be irrevocable and binding upon RHI. In the event that
RHI shall
not have purchased an aggregate of 666,667 Units under this
Agreement on or
prior to the 156th day after the date of the Initial Closing, the
Option (as
defined in the Option Agreement) shall terminate in accordance with
the terms of
the Option Agreement.
(d) In the event of any stock dividend, stock split or
combination or
any other recapitalization, the Purchase Price and the number of
Units subject
to the Initial Commitment, the Additional Commitment and the
Special Option, as
well as the repurchase prices set forth in Section 2 below, shall
be adjusted
accordingly.
1.2 Notice of Purchase. RHI may purchase Units pursuant to the
Initial
Commitment or the Additional Commitment by giving notice to the
Company of its
intention to purchase. Such notice shall state the proposed date of
purchase
(which shall be a business day) and the number of Units to be
purchased on such
date. Such notice shall be irrevocable and binding upon RHI.
1.3 The Closings. Each closing (a "Closing") of the sale and
purchase of
the Units by RHI pursuant to this Agreement shall take place at the
offices of
the Company or at such other place as the parties hereto shall
agree. At each
Closing, the Company shall deliver to RHI the stock certificate(s)
representing
the shares of Common Stock and the warrant certificate(s) in the
form of Exhibit
A hereto representing the Warrants (collectively, the "Warrant
Certificates")
comprising the Units being purchased, registered in the name of RHI
(or the name
or names of its nominee(s)), and RHI shall deliver to the Company
the Purchase
Price for each Unit being purchased by certified check or other
immediately
available funds. The Company shall also deliver to RHI (i) the
documents set
forth in Section 5 and (ii) the fees and disbursements of RHI's
counsel referred
to in Section 7.7. Notwithstanding the foregoing, the
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stock certificate(s) representing the shares of Common Stock that
are part of
the Units being purchased at the Initial Closing may be delivered
as soon as
practicable after the Initial Closing but in any event within 10
days of the
Initial Closing; provided, however, that (x) RHI shall have
received at the
Initial Closing evidence satisfactory to it that the Company has
irrevocably
instructed the transfer agent and registrar for the Common Stock to
issue such
stock certificate(s) to RHI and (y) for all purposes, RHI shall be
deemed a
holder of, and have the benefits of, the shares of Common Stock to
be
represented by such stock certificate(s).
2. Company's Repurchase Option. The Company shall have the right to
repurchase
(the "Repurchase Option"), at any time on or prior to the
Applicable Date, all
of the Units purchased by RHI and held at such time by RHI (but not
less than
all of such Units), at a price per Unit equal to (i) $3.15 if
repurchased on or
prior to January 31, 1997, (ii) $3.30 if repurchased after January
31, 1997 but
on or prior to February 28, 1997 and (iii) $3.45 if repurchased
after February
28, 1997 but on or prior to the Applicable Date; provided, however,
that STFI
shall, simultaneously with such repurchase by the Company,
repurchase the Option
(as defined in the Option Agreement) from RHI in accordance with
the terms of
the Option Agreement. The Repurchase Option may be exercised by
notice to RHI
specifying the proposed date of repurchase, which shall be a
business day. Such
notice shall be irrevocable and binding upon the Company.
3. Representations and Warranties of the Company. Except as
disclosed in the
Disclosure Schedule hereto by reference to specific sections of
this Agreement,
the Company hereby represents and warrants, at the date hereof and
at each
Closing, to RHI as follows:
3.1 Organization and Corporate Power. The Company and each of
its
subsidiaries is a corporation duly organized, validly existing and
in good
standing under the laws of the State of Delaware and is qualified
to do business
as a foreign corporation in each jurisdiction in which such
qualification is
required, except where the failure to so qualify would not have a
material
adverse effect on the condition (financial or otherwise), assets,
liabilities,
properties, business, operations or prospects of the Company and
its
subsidiaries taken as a whole (a "Material Adverse Effect"). The
Company and
each of its subsidiaries has all required corporate power and
authority to own
its property, to carry on its business as presently conducted or
contemplated,
to enter into and perform the obligations incurred or to be
incurred under this
Agreement and the Warrants (the "Financing Documents"), and
generally to carry
out the transactions contemplated hereby. The charter documents of
the Company
and its subsidiaries, as amended to date, that have been furnished
to counsel
for RHI by the Company, are correct and complete at the date
hereof. Except as
set forth in the Disclosure Schedule, neither the Company nor any
-3-
of its subsidiaries is in violation of (a) any material agreement
or instrument
relating to accounts payable arising in the ordinary course of
business of the
Company and its subsidiaries, or (b) any term of its charter
documents, or (c)
any term of any other agreement or instrument, or any judgment,
decree, order
law, statute, rule, authorization or government regulation, in each
case,
applicable to the Company or any of its subsidiaries or to which
the Company or
any of its subsidiaries is a party or by which it or any of its
respective
properties is bound.
3.2 Authorization. This Agreement is and the Warrants when
issued will be
the valid and binding obligations of the Company, enforceable in
accordance with
their terms, subject to applicable bankruptcy, insolvency,
reorganization,
moratorium and other similar laws affecting the rights and remedies
of creditors
generally and to the exercise of judicial discretion in accordance
with general
principles of equity. The execution, delivery and performance of
the Financing
Documents have been duly authorized by all necessary corporate or
other action
of the Company. The issuance, sale and delivery of the shares of
Common Stock
hereunder (the "Shares"), the issuance and delivery of the Warrants
and the
issuance of shares of Common Stock issuable upon exercise of
Warrants (the
"Warrant Shares" and together with the Shares and the Warrants, the
"Securities") have been duly authorized by all necessary corporate
action on the
part of the Company, and the Securities have been reserved for
issuance. The
Shares and the Warrant Shares, when issued, will be duly and
validly issued,
fully paid and nonassessable. Other than required filings under
applicable state
securities laws, no consent, approval, or authorization of, or
designation,
declaration or filing with, any governmental authority or any other
person or
entity is required on the part of the Company in connection with
the execution
and delivery of the Financing Documents, or the issuance and
delivery of the
Securities in accordance with the terms of this Agreement or the
consummation of
any other transaction contemplated hereby.
3.3 Capitalization. The authorized capital stock of the
Company at the date
hereof consists of (a) 10,000,000 shares of Common Stock, 4,606,184
of which
shares are issued and outstanding, and (b) 5,000,000 shares of
Preferred Stock,
of which 500,000 are issued and outstanding. All of the issued and
outstanding
shares of the Company's capital stock have been duly authorized and
validly
issued and are fully paid and non-assessable and all securities
previously
issued and sold by the Company were issued and sold in compliance
with
applicable Federal and state securities laws. Except as set forth
in the
Disclosure Schedule, no other shares of capital stock of the
Company or any of
its subsidiaries or securities convertible into or exchangeable for
such shares
have been issued or reserved for issuance, and except as
contemplated by the
Financing Documents, (a) no subscription, warrant, option,
convertible security
or other right (contingent or otherwise) to purchase or acquire any
shares of
capital stock of the Company or
-4-
any of its subsidiaries is authorized or outstanding, (b) there is
not any
commitment or offer of the Company or any of its subsidiaries to
issue any
subscription, warrant (other than the Warrants), option,
convertible security or
other such right to issue or distribute to holders of any shares of
its
indebtedness or assets of the Company or any of its subsidiaries,
(c) neither
the Company nor any of its subsidiaries has any obligation
(contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of
its capital
stock or any interest therein or to pay any dividend or make any
other
distribution in respect thereof, and (d) there are no restrictions
on the
transfer of the Company's capital stock other than those arising
from Federal
and state securities laws. Except as contemplated by this
Agreement, no person
or entity is entitled to (x) any preemptive or similar right with
respect to
issuance of any capital stock of the Company, or (y) any rights
with respect to
the registration of any capital stock of the Company under the
Securities Act of
1933, as amended (the "Securities Act").
3.4 Stockholder Agreements. Except as set forth on the
Disclosure Schedule,
there are no agreements, written or oral, between the Company and
any of the
holders of the Company's capital stock, or, to the best of the
Company's
knowledge, between or among any holders of the Company's capital
stock, in their
capacities as such.
3.5 Subsidiaries. Except as set forth in the Disclosure
Schedule, the
Company has no subsidiaries and does not own directly or
indirectly, any
interest in any corporation, association or business entity. Each
subsidiary of
the Company is wholly owned.
3.6 SEC Filings. Except as set forth in the Disclosure
Schedule, the
Company has timely filed all reports and other documents required
to be filed
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange
Act"), the Securities Act, and rules and regulations promulgated
thereunder
(including schedules and exhibits, collectively, "SEC Filings"). No
filing made
under the Securities Act or the Exchange Act, as of its date,
contained any
false or misleading statement or omitted to include any statement
necessary to
make the statements therein contained not misleading.
3.7 Financial Statements. The Company has made available to
RHI a copy of
all of the Company's SEC Filings. The financial statements
(including the
footnotes thereto) included in the SEC Filings (collectively,
"Financial
Statements") were prepared in accordance with generally accepted
accounting
principles consistently applied during the periods covered thereby,
are correct,
complete and in accordance with the books and records of the
Company and its
subsidiaries in all material respects, and fairly and accurately
present the
consolidated financial position of the
-5-
Company on the dates of such statements and the consolidated
results of its
operations for the periods covered thereby.
3.8 Absence of Undisclosed Liabilities. Except as and to the
extent
expressly disclosed in the Financial Statements, the Company does
not know of
any liabilities of a type required under generally accepted
accounting
principles to be disclosed therein as of the respective dates
thereof.
3.9 Certain Developments. Since the date of the Company's Form
10-Q for the
nine months ended September 30, 1996, there has been (a) a material
decline in
the Company's financial condition, (b) no declaration, setting
aside or payment
of any dividend or other distribution with respect to, or any
direct or indirect
redemption or acquisition of any of the capital stock of the
Company, (c) no
waiver of any material right of the Company or any of its
subsidiaries or
cancellation of any material debt or claim held by the Company or
any of its
subsidiaries, (d) no loan by the Company or any of its subsidiaries
to any
officer, or director, employee or stockholder of the Company or any
of its
subsidiaries, or any agreement or commitment therefor, (e) no
material loss,
destruction or damage to any property of the Company or any of its
subsidiaries,
whether or not insured, (f) no material labor disputes involving
the Company or
any of its subsidiaries and no material change in the personnel of
the Company
or any of its subsidiaries or the terms and conditions of their
employment, and
(g) otherwise than for fair value and in the ordinary course of
business, no
acquisition or disposition of any assets (or any contract or
arrangement
therefor), nor any other transaction by the Company or any of its
subsidiaries.
3.10 Title to Properties. To the best of the Company's
knowledge, the
Company and its subsidiaries have good and marketable title to, or
a valid
leasehold interest in, all of the properties and assets owned or
used by them or
located on their premises, free and clear of all liens,
restrictions or
encumbrances, except such liens, restrictions or encumbrances as
would not,
singly or in the aggregate, have a Material Adverse Effect. All
machinery,
equipment and other tangible assets included in such properties is
in good
condition and repair, reasonable wear and tear excepted, and all
leases of real
or personal property to which the Company or any of its
subsidiaries is a party
are fully effective and afford the Company and its subsidiaries
peaceful and
undisturbed possession of the subject matter of the lease. Neither
the Company
nor any of its subsidiaries is in violation of any zoning, building
or safety
ordinance, regulation or requirement or other law, or regulation
applicable to
the operation of its owned properties which violation would have a
Material
Adverse Effect. Neither the Company nor any of its subsidiaries is
in violation
of any zoning, building or safety ordinance, regulation or
requirement or other
law or regulation applicable to the operation of its leased
properties, nor has
it received any notice of violation with
-6-
which it has not complied, where such violation would have a
Material Adverse
Effect.
3.11 Contracts and Commitments. The SEC Filings include all
agreements of
any nature to which the Company or any of its subsidiaries is a
party or by
which it or any of its properties are bound which are material to
the conduct
and operations of its business and properties. To the best of the
Company's
knowledge, all such agreements are valid, binding and in full force
and effect.
To the best of the Company's knowledge, no key employee is a party
to any
outstanding contract, obligation or commitment with any prior
employer. Neither
the Company nor any of its subsidiaries is a party to any oral or
written
contract or agreement prohibiting them from freely competing or
engaging in the
business or businesses of the Company anywhere in the world. Except
as set forth
in Schedule 3.11, neither the Company nor any of its subsidiaries
is in default
under any contract, obligation or commitment which default would,
singly or in
the aggregate, have a Material Adverse Effect, and to the best
knowledge of the
Company, there is no state of facts which upon notice or lapse of
time or both
would constitute such a default. Neither the Company nor any of its
subsidiaries
is a party to any contract or arrangement which under circumstances
now
foreseeable would have a Material Adverse Effect.
3.12 Proprietary Rights; Employee Restrictions. Except as
disclosed in the
Disclosure Schedule, the Company and its subsidiaries have
ownership of or
license to use all patent, copyright, trademark or other
proprietary rights used
or to be used in their business as presently conducted or
contemplated and, to
the best knowledge of the Company, neither the present nor
contemplated
business, activities or products of the Company and its
subsidiaries infringe
any such patent, copyright, trademark or other proprietary rights
of others.
Neither the Company nor any of its subsidiaries has received any
notice or other
claim from any person asserting that any of the present or
contemplated
activities of the Company or any of its subsidiaries infringe or
may infringe
any such rights of such person. To the best knowledge of the
Company, the
Company and its subsidiaries have the right to use, free and clear
of claims or
rights of others, all trade secrets and know-how, including without
limitation:
customer lists, manufacturing processes, hardware designs,
programming
processes, software and other trade secrets or know-how required
for or incident
to their products or its business as presently conducted or
contemplated. The
Company and its subsidiaries have taken all steps required to
establish and
preserve their ownership of all copyright, trade secret and other
proprietary
rights with respect to their products and technology. Neither the
Company nor
any of its subsidiaries is aware of any infringement by others of
its
copyrights, trademarks or other proprietary rights in any of its
products,
technology or services, or any violation of the confidentiality of
any of its
proprietary information. To the best knowledge of the Company,
-7-
neither the Company nor any of its subsidiaries is making unlawful
use of any
confidential information or trade secrets of any past or present
employees of
the Company or any of its subsidiaries. To the best knowledge of
the Company,
the activities of employees of the Company and its subsidiaries on
their behalf
do not violate any agreements or arrangements known to the Company
which any
such employees may have with former employers.
3.13 Effect of Transactions. The execution, delivery and
performance by the
Company of this Agreement and the offering, issuance and sale of
the Securities
do not and will not conflict with or result in any violation of,
breach of or
default under any contract, obligation or commitment of the Company
or any of
its subsidiaries, or any charter provision, by-law or corporate
restriction of
the Company or any of its subsidiaries, or result in the creation
of any lien,
charge, security interest or encumbrance of any nature upon any of
the
properties or assets of the Company or any of its subsidiaries,
except pursuant
to this Agreement, or violate any instrument, agreement, judgment,
decree,
order, statute, rule or governmental regulation applicable to the
Company or any
of its subsidiaries or to which the Company or any of its
subsidiaries is a
party or by which it or any of its properties is bound.
3.14 Litigation. Except as otherwise disclosed in the
Disclosure Schedule,
there is no action, suit, proceeding or claim or governmental
inquiry pending
or, to the best knowledge of the Company, threatened (a) against
the Company or
any of its subsidiaries or otherwise affecting any of its
properties or assets,
or (b) against any director, officer or Key Employee which may have
a Material
Adverse Effect or (c) which may call into question the validity, or
materially
hinder the enforceability or performance, of any Financing
Document, nor, to the
best knowledge of the Company, has there occurred any event or does
there exist
any condition on the basis of which such action, suit, proceeding,
inquiry or
investigation might properly be instituted.
3.15 Securities Laws. Assuming the accuracy of the
representations and
warranties of RHI contained in Section 4, the offer, issuance and
sale of the
Securities in accordance with this Agreement are and will be in
compliance with
applicable Federal and state securities laws, as presently in
effect.
3.16 Business. The Company and its subsidiaries have all
necessary
franchises, permits, licenses and other rights and privileges
(collectively,
"Permits") necessary to permit them to own their property and to
conduct their
business as is presently conducted or contemplated, except any such
Permit the
failure of which to have would not have a Material Adverse Effect.
3.17 Books and Records. The minute books of the Company and
its
subsidiaries contain complete and accurate records of all
-8-
meetings and other corporate actions of their respective
stockholders and Boards
of Directors and committees thereof. The stock ledgers of the
Company and its
subsidiaries are complete and reflects all issuances, transfers,
repurchases and
cancellations of shares of their respective capital stock.
3.18 Environmental Compliance. Neither the Company nor any of
its
subsidiaries or any of their respective successors (a) has ever
violated, or is
presently not in compliance with, any Federal, state, and local
environmental or
health and safety laws, rules, regulations, ordinances, or by-laws
("Environmental Laws") applicable to its business and properties;
(b) has
generated, manufactured, refined, transported, treated, stored,
handled,
disposed of, transferred, produced, or processed any pollutant,
toxic substance,
hazardous waste, hazardous substance, hazardous material, oil, or
petroleum
product ("Hazardous Materials") as defined under any Environmental
Law, or any
solid waste, or has knowledge of the release or threat of release
of any
Hazardous Materials from its products, properties or facilities;
(c) has (i)
entered into or been subject to any consent decree, compliance
order, or
administrative order with respect to any environmental or health
and safety
matter relating to its business or any of its properties of
facilities, (ii)
received notice under the citizen suit provision of any
Environmental Law in
connection with its business or any of its properties or
facilities, (iii)
received any request for information, notice, demand letter,
administrative
inquiry, or formal or informal complaint or claim with respect to
any
environmental or health and safety matter relating to its business
or any of its
properties or facilities, or (iv) been subject to or threatened
with any
governmental or citizen enforcement action with respect to any
environmental or
health and safety matter relating to its business or any of its
properties or
facilities, and has no reason to believe that any matters described
in (i)-(iv)
above will be forthcoming. No lien has been imposed on any of the
properties or
facilities of the Company or any of its subsidiaries by any
governmental agency
at the Federal, state, or local level in connection with the
presence of any
Hazardous Materials.
3.19 Information Supplied to RHI. Neither this Agreement, the
Disclosure
Schedule and Exhibits attached hereto, the other Financing
Documents nor any
document, certificate, projection or statement furnished to RHI by
or on behalf
of the Company contains any untrue statement of a material fact,
and neither
this Agreement nor the Disclosure Schedule omits to state a
material fact
necessary in order to make the statements contained herein or
therein not
misleading.
3.20 Brokers. There are no claims for and no person is
entitled to any
brokerage commissions, finder's fees or similar compensation in
connection with
the transactions contemplated by
-9-
this Agreement from the Company or based on any arrangement or
agreement made by
or on behalf of the Company.
3.21 Employee Benefit Plans. The Company does not maintain or
contribute to
any employee benefit plans other than the plans identified on the
Disclosure
Schedule. The Company is and has been in material compliance with
the provisions
of all laws or rules or regulations applicable to any employee
benefit plan
maintained or contributed to by the Company for the benefit of its
employees
and, to the best knowledge of the Company, there are no claims
(other than
routine claims for benefits) pending or threatened with respect to
any of such
employee benefit plans. The Company does not maintain or contribute
to, and has
ever maintained or contributed to, any qualified retirement plan
that is subject
to the minimum funding requirements of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Internal
Revenue Code of 1986, as amended. There are no unfunded obligations
of the
Company under any retirement, pension, profit-sharing or deferred
compensation
plan or program. The Company is not required to make any payments
or
contributions to any employee benefit plan pursuant to any
collective bargaining
agreement. The Company has never maintained or contributed to any
employee
benefit plan providing or promising any health or other non-pension
benefits to
terminated employees. For purposes of this Section, the term
"Company" includes
all entities that have controlled, have been under the control of,
or have been
under common control with, the Company.
3.22 Employees. The Company is not aware that any officer,
director,
executive or key employee of or consultant to the Company or any of
its
subsidiaries has any plans to terminate his relationship with the
Company or
such subsidiaries. The Company and its subsidiaries have complied
in all
material respects with all applicable laws relating to the
employment of labor,
including provisions relating to wages, laws, equal opportunity,
collective
bargaining and the payment of social security and other taxes. None
of the
employees of the Company or any of its subsidiaries is represented
by any labor
union or covered by any collective bargaining agreements, the
Company is not
aware of any effort to establish a labor union or bargaining unit
or similar
organizational effort with respect to any such employees, and there
is no labor
strike or other labor trouble pending or threatened and with
respect to the
Company or any of its subsidiaries.
4. Representations and Warranties of RHI.
RHI represents and warrants to the Company as follows:
4.1 Investment. RHI is acquiring the Securities for its own
account for
investment and not with a view to, or for sale in connection with,
any
distribution thereof, nor with any present intention of
distributing or selling
the same, and RHI has no present or contemplated agreement,
undertaking,
arrangement,
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obligation, indebtedness or commitment providing for the disposi-
tion thereof.
4.2 Authority. RHI has full power and authority to execute,
deliver and
perform this Agreement in accordance with its terms. RHI has not
been organized,
reorganized, or recapitalized specifically for the purpose of
investing in the
Company. This Agreement is a valid and binding obligation of RHI,
enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency,
reorganization, moratorium and other similar laws affecting the
rights and
remedies of creditors generally and to the exercise of judicial
discretion in
accordance with general principles of equity.
4.3 Experience. RHI has adequate net worth and means to
provide for its
current needs and contingencies and the financial capacity to
sustain a complete
loss of its investment in the Company.
4.4 Accredited Investor. RHI is an "accredited investor" as
defined in Rule
501 of Regulation D adopted under the Securities Act.
5. Conditions Precedent to Closing. The effectiveness of the
Initial Commitment
shall be subject to the receipt by RHI of the following, each in
form and
substance satisfactory to RHI (it being understood that, in
connection with any
Closing subsequent to the Initial Closing, the Company shall also
deliver such
of the following as RHI shall reasonably request):
5.1 An opinion from the General Counsel of the Company, dated
as of the
applicable Closing date, addressed to RHI, and substantially in the
form
attached hereto as Exhibit C;
5.2 A certificate of the Secretary of the Company, dated as of
the
applicable Closing date, certifying as to (i) the incumbency and
signatures of
officers of the Company executing the Financing Documents and all
other
documents executed and delivered in connection herewith, (ii) a
copy of the
certificate of incorporation of the Company as in effect on such
Closing date,
certified as of a recent date by the Secretary of the State of
Delaware, (iii) a
copy of the by-laws of the Company, as in effect on such Closing
date, and (iv)
a copy of the resolutions of the Board of Directors of the Company
authorizing
and approving the Company's execution, delivery and performance of
the Financing
Documents, all matters in connection with the Financing Documents,
and the
transactions contemplated thereby; and
5.3 A certificate as of the most recent practicable date prior
to the
applicable Closing date, of the Secretary of State of the State of
Delaware as
to the Company's good standing;
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5.4 All consents and waivers required in connection with the
Company's
issuance of the Securities; and
5.5 All other documents, instruments and agreements that RHI
shall
reasonably require in connection with this Agreement.
6. Certain Covenants of the Company. The Company covenants and
agrees that for
so long as RHI holds shares of capital stock representing 5% or
more of the
voting power on matters properly brought for a vote of the
Company's
stockholders ("Voting Power"), it will perform and observe the
covenants and
provisions of Sections 6.5, 6.6 and 6.9, and so long as RHI holds
5% or more of
the Voting Power and has exercised the Option (as defined in the
Option
Agreement), it will perform and observe the following covenants and
provisions
(for purposes of this Agreement, ownership of any options, warrants
or
convertible securities entitling the holder thereof to acquire
record or
beneficial ownership in shares of capital stock shall be deemed
ownership of the
Voting Power of an equivalent number of shares of such capital
stock):
6.1 Financial Statements. The Company will maintain books of
account in
accordance with generally accepted accounting principles applied on
a consistent
basis, keep full and complete financial records and furnish to RHI
the following
reports:
(a) within fifteen (15) days after the date of such
filing, copies of
all documents filed by the Company with the SEC including, but not
limited to,
all reports on Forms ▇▇-▇, ▇▇-▇, ▇-▇ and their exhibits; and
(b) such other financial information as RHI may
reasonably request,
including, without limitation, certificates of the principal
financial officer
of the Company concerning compliance with the covenants of the
Company under
this Section , other customary information and materials,
including, without
limitation, reports of adverse developments, management letters,
communications
with stockholders or directors, press releases, registration
statements and any
other reports filed by the Company, or by any of its officers and
directors with
respect to the Company, with a securities exchange or with the
Securities and
Exchange Commission (the "Commission").
6.2 Payment of Taxes, Compliance with Laws, etc. The Company
will pay and
discharge all lawful taxes, assessments and governmental charges or
levies
imposed upon it or any of its subsidiaries or upon their income or
property
before the same shall become in default, as well as all lawful
claims for labor,
materials and supplies which, if not paid when due, might become a
lien or
charge upon their property or any part thereof; provided, however,
that the
Company shall not be required to pay and discharge any such tax,
assessment,
charge, levy, or claim so long as the validity thereof is being
contested by the
Company in good faith by
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appropriate proceedings and an adequate reserve therefor has been
established on
its books. The Company will, and will cause its subsidiaries to,
use its best
efforts to comply with all applicable laws and regulations in the
conduct of its
business including, without limitation, all Environmental Laws.
6.3 Insurance. The Company will, and will cause its
subsidiaries to, keep
its insurable properties insured, upon reasonable business terms,
by financially
sound and reputable insurers against liability, and the perils of
casualty, fire
and extended coverage in amounts of coverage sufficient in the
reasonable
business judgment of the Company to protect the Company and its
subsidiaries.
The Company will, and will cause its subsidiaries to, maintain with
such
insurers insurance against other hazards and risks and liability to
persons and
property which, in the reasonable business judgment of the Company,
is customary
in the industry in which the Company operates for companies of
comparable size.
6.4 Maintenance of Properties and Licenses. The Company will,
and will
cause its subsidiaries to, maintain all properties used or useful
in the conduct
of their business (including, without limitation, transmission
sites) in good
repair, working order and condition as is reasonably necessary to
permit such
business to be properly and advantageously conducted. The Company
will, and will
cause its subsidiaries to, keep in full force and effect all
licenses, permits,
approvals, consents and authorizations necessary or appropriate to
conduct their
businesses as presently conducted and as proposed to be conducted
(collectively,
"Licenses").
6.5 Affiliated Transactions. Except with respect to
compensation
arrangements with, and the reimbursement of expenses of, employees
of the
Company in the ordinary course of business, all transactions by and
between the
Company or any of its subsidiaries and any director, officer,
employee, or
stockholder of the Company or any of its subsidiaries or persons
controlled by
or affiliated with such director, officer, employee or stockholder,
shall be
conducted on an arm's-length basis, shall be on terms and
conditions no less
favorable to the Company than could be obtained from non-related
persons at such
time and shall be approved by the Board of Directors after full
disclosure of
the terms thereof, for which purpose the interest party, if a
director, and any
affiliate of the interested party who is a director, shall not be
entitled to
vote.
6.6 Inspection Rights. At any time during normal business
hours and upon
reasonable prior notice to the Company, RHI or any of its
designated
representatives or agents may (a) visit and inspect the premises
and any of the
properties of the Company and its subsidiaries including its
records and books
of account (and make copies thereof and take extracts therefrom),
and (b)
discuss the affairs, finances and accounts of the Company and its
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subsidiaries with its officers, directors, employees and
accountants, all at the expense of RHI.
6.7 Litigation. The Company promptly (and, in any event, not
later than the
date of release of such information to the public generally) shall
notify RHI or
its transferees of any litigation or governmental proceeding or
investigation
pending (or, to the best knowledge of the Company, threatened)
against the
Company or any of its subsidiaries or against any officer,
director, key
employee, or principal stockholder of the Company or any of its
subsidiaries,
that if adversely determined, could have a Material Adverse Effect.
6.8 Merger, Consolidations, Disposal of Ownership of
Subsidiaries, etc.
Without the prior written consent of RHI, the Company will not, and
will not
permit any of its subsidiaries to:
(a) consolidate with or merge with any other corporation
or entity;
(b) convey, transfer or lease all or substantially all of
its assets
in a single transaction or series of transactions to any person or
entity;
(c) sell or otherwise dispose of any shares of any
subsidiary or
affiliate, nor will the Company permit any subsidiary to issue,
sell or dispose
of any shares of such subsidiary's own stock; or
(d) sell, transfer or otherwise dispose of any of its
Licenses.
6.9 RHI Designates to Board of Directors. The Company shall
use its best
efforts so that, for so long as RHI owns shares of capital stock
comprising five
percent (5%) or more of the Voting Power, at least one member of
the Company's
Board of Directors is at all times designated by RHI, and for so
long as RHI
owns shares of capital stock comprising ten percent (10%) or more
of the Voting
Power, at least two members of the Company's Board of Directors is
at all times
designated by RHI. The Company shall use its best efforts to enter
into all such
agreements and take all other such actions as are necessary or
appropriate in
order to effect the foregoing or as reasonably requested by RHI in
connection
therewith. For purposes of this Section 6.9, ownership of any
options, warrants
or convertible securities that upon exercise or conversion shall
entitle the
holder thereof to acquire shares of capital stock, shall be deemed
to be
ownership of the Voting Power of the equivalent number of shares of
capital
stock.
7. Miscellaneous.
7.1 Transfer of Rights.
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(a) Transfer of Rights. The rights granted to RHI under
Section may be
transferred to The ▇▇▇▇▇▇▇▇▇ Corporation, a New York corporation,
or any of its
affiliates (within the meaning of the Securities Act); provided,
however, that
the Company must receive written notice of said transfer, stating
the name and
address of said transferee or assignee and identifying the
securities with
respect to which such rights are being assigned.
(b) Transferees. Any transferee to whom rights under
Section are
transferred in compliance with the terms hereof shall, as a
condition to such
transfer, deliver to the Company a written instrument by which such
transferee
agrees to be bound by the obligations imposed by Section hereof to
the same
extent as if such transferee were RHI hereunder. Upon the execution
of such
instrument, such transferee shall be treated as RHI for all
purposes hereunder.
(c) Subsequent Transferees. A transferee to whom rights
are
transferred pursuant to this Section 7.1 may not again transfer
such rights to
any other person or entity, other than as provided in (a) or (b)
above.
7.2 Rules 144 and 144A. At all times the Company will file all
reports
required under the Securities Act or the Exchange Act and the rules
and
regulations thereunder, and will take such further action as may be
reasonably
required to enable any holder of "restricted securities" (as
defined in Rule 144
adopted by the Commission under the Securities Act) to sell such
securities
pursuant to Rule 144 or Rule 144A, as amended from time to time, or
any similar
rule or regulation hereafter adopted by the Commission.
7.3 Delays or Omissions. No delay or omission to exercise any
right, power
or remedy accruing to any holder of Securities or the Company, upon
any breach
or default of the Company or such holder, as the case may be, under
this
Agreement, shall impair any such right, power or remedy of such
holder or the
Company, as the case may be, nor shall it be construed to be a
waiver of any
such breach or default or of any similar breach or default
theretofore or
thereafter occurring, or an acquiescence therein. Any waiver,
permit, consent or
approval of any kind or character on the part of any holder or the
Company of
any breach or default under this Agreement, or any waiver on the
part of any
holder or the Company of any provisions of conditions of this
Agreement must be
made in writing and shall be effective only to the extent
specifically set forth
in such writing. All remedies, either under this Agreement or by
law or
otherwise afforded to any holder, shall be cumulative and not
alternative.
7.4 Adjustments. Except as otherwise specifically provided,
all applicable
provisions of this Agreement shall be automatically adjusted to
reflect any
stock dividend, stock split or combination or other such
recapitalization.
-15-
7.5 Successors and Assigns. Except as otherwise expressly
provided herein,
the provisions of this Agreement shall bind and inure to the
benefit of the
respective successors, assigns, heirs, executors, and
administrators of the
parties hereto.
7.6 Survival of Representations and Warranties. The
representations,
warranties, covenants, promises and agreements contained in this
Agreement shall
survive and remain in full force and effect for one (1) year after
the Initial
Closing date, without regard to any investigation made at any time
by RHI or on
their behalf.
7.7 Expenses. The Company shall reimburse to RHI, promptly
upon demand
therefor, the fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel
to RHI, and
any other professional and out-of-pocket expenses incurred by RHI;
provided,
however, that RHI shall not be responsible for more than $20,000 of
the fees and
expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ in connection with the
negotiation,
preparation, execution and delivery of this Agreement and the
documents in
connection herewith. In addition, the company shall bear its own
legal and other
expenses in connection with the transactions contemplated by this
Agreement.
7.8 Notices. All notices, requests, consents and other
communications under
this Agreement shall be in writing and shall be delivered by hand,
by
telecopier, by overnight courier or mailed by first class certified
or
registered mail, return receipt requested, postage prepaid:
(a) If to the Company:
Shared Technologies Cellular, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Legal Department
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(or at such other address as may have been furnished in writing by
the Company to RHI)
with a copy to:
▇▇▇▇▇▇ & Hannah LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
-16-
(b) If to RHI:
RHI Holdings, Inc.
c/o The ▇▇▇▇▇▇▇▇▇ Corporation
Washington Dulles International Airport
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(or at such other address as may have been furnished in writing by
RHI to the Company)
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Any communication delivered in accordance with this Section 7.8
shall be deemed
effective (i) if delivered by hand, when received at the receiving
desk for the
addressee, (ii) if telecopied, when receipt is confirmed by the
telecopier
machine, (iii) if sent by courier, two business days after deposit
with such
courier and (iv) if sent by mail, four business days after deposit
in the mails.
7.9 No Conditions to Effectiveness; Entire Agreement. There
are no
conditions to the effectiveness of this Agreement. This Agreement,
together with
the instruments and other documents contemplated to be executed and
delivered in
connection herewith, contains the entire agreement and
understanding of the
parties hereto, and supersedes any prior agreements or
understandings between or
among them, with respect to the subject matter hereof.
7.10 Amendments and Waivers. Except as otherwise expressly set
forth in
this Agreement, any term of this Agreement may be amended and the
observance of
any term of this Agreement may be waived (either generally or in a
particular
instance and either retroactively or prospectively), only with the
written
consent of the party against whom such amendment or waiver is to be
enforced. No
waivers of or exceptions to any term, condition or provision of
this Agreement,
in any one or more instances, shall be deemed to be, or construed
as, a further
continuing waiver of any such term, condition or provision.
7.11 Counterparts. This Agreement may be executed in several
counterparts,
each of which shall be deemed an original, but all of which
together shall
constitute one and the same instrument.
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7.12 Governing Law. This Agreement shall be governed
by and
interpreted and construed in accordance with the laws of the State
of Connecticut.
-18-
IN WITNESS WHEREOF, the parties hereto have executed and
delivered
this Agreement as an instrument as of the date first above written.
SHARED TECHNOLOGIES CELLULAR, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
RHI HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and
Chief Financial Officer