EXHIBIT 10.2
================================================================================
REGISTRATION RIGHTS AGREEMENT
between
RHI HOLDINGS, INC.
THE FAIRCHILD CORPORATION
and
SHARED TECHNOLOGIES INC.
Dated March 13, 1996
================================================================================
REGISTRATION RIGHTS AGREEMENT dated as of March 13, 1996,
between SHARED TECHNOLOGIES INC., a Delaware corporation (the "Company"), RHI
HOLDINGS, INC., a Delaware corporation ("RHI") and THE FAIRCHILD CORPORATION, a
Delaware corporation ("TFC").
WITNESSETH:
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as
of November 9, 1995, as amended (the "Merger Agreement"), among the Company,
TFC, RHI and Fairchild Industries, Inc. ("Fairchild"), RHI has obtained
6,000,000 shares of Common Stock shares of the Company, par value $.004 (the
"Common Stock").
WHEREAS, pursuant to the Agreement to Exchange 6% Cumulative
Convertible Preferred Stock and Special Preferred Stock dated as of March 1,
1996 (the "Exchange Agreement") among the Company, TFC, RHI, Fairchild and
Fairchild Holding Company, RHI has obtained (i) 250,000 shares of Series I 6%
Cumulative Convertible Preferred Stock par value $.01 (the "Convertible
Preferred Stock"), of the Company and (ii) 200,000 shares of Series J Special
Preferred Stock, par value $.01 (the "Special Preferred Stock" and, together
with the Convertible Preferred Stock, the "Preferred Stock").
WHEREAS, the Company desires to provide RHI and its successors
and assigns with certain rights regarding the registration of the Common Stock
and the Preferred Stock (including Common Stock issuable upon conversion of the
Convertible Preferred Stock and Common Stock issuable by the Company to RHI to
satisfy indemnification obligations of the Company under the Merger Agreement).
NOW, THEREFORE, in consideration of the mutual covenants and
agreements made herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and accepted, the parties
hereto agree as follows:
1. DEFINITIONS. As used herein, unless the context
otherwise requires, the following terms have the following
respective meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect on the date of this Agreement), it being understood
that any limited partner of a partnership shall not be an Affiliate of such
partnership solely by virtue of its status as such a limited partner.
-2-
"Commission" means the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"Common Stock" means the common stock of Shared Technologies
Inc., par value $.004.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, as the same shall be in effect at the time. Reference to
a particular section of the Securities Exchange Act of 1934, as amended, shall
include reference to the comparable section, if any, of any such subsequent
similar federal statute.
"Exchange Agreement" is defined in the Recitals.
"Merger Agreement" is defined in the Recitals.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government or department or
agency of a government.
"Preferred Stock" means, collectively, (i) the 6% Cumulative
Convertible Preferred Stock of the Company, par value $.01, issued pursuant to
the Exchange Agreement and (ii) the Special Preferred Stock of the Company, par
value $.01, issued pursuant to the Exchange Agreement.
"Registrable Common Securities" means the shares of Common
Stock (i) issued to RHI pursuant to the Merger Agreement, (ii) issued to RHI in
the future to satisfy indemnification obligations of the Company under the
Merger Agreement and (iii) issuable and issued upon conversion of any shares of
Convertible Preferred Stock. As to any particular Registrable Common Securities,
once issued such securities shall cease to be Registrable Common Securities when
(a) a registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement, (b) they shall
have been sold as permitted by, and in compliance with, Rule 144 (or successor
provision) promulgated under the Securities Act or (c) they shall have ceased to
be outstanding.
"Registrable Preferred Securities" means the shares of
Preferred Stock issued to RHI pursuant to the Exchange Agreement. As to any
particular Registrable Preferred Securities, once issued such securities shall
cease to be Registrable Preferred Securities
-3-
when (a) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (b) they
shall have been sold as permitted by, and in compliance with, Rule 144 (or
successor provision) promulgated under the Securities Act or (c) they shall have
ceased to be outstanding.
"Registrable Securities" means collectively the Registrable
Common Securities and Registrable Preferred Securities and any other securities
issuable in connection therewith or in replacement thereof by way of a dividend,
distribution, recapitalization, exchange, merger, consolidation or other
reorganization.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 2, including, without
limitation, all registration, filing and National Association of Securities
Dealers, Inc. fees, all listing fees, all fees and expenses of complying with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities), all word processing, duplicating
and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of "comfort" letters required by or incident
to such performance and compliance, and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities; provided,
however, that Registration Expenses shall exclude, and RHI shall pay,
underwriters' fees and underwriting discounts and commissions and transfer taxes
in respect of the Registrable Securities being registered.
"Securities Act" means the Securities Act of 1933, as amended,
or any subsequent similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act of 1933, as amended,
shall include a reference to the comparable section, if any, of any such
subsequent similar federal statute.
"Special Securities" is defined in the definition of "Trigger
Date" below.
"Trigger Date" means (i) with respect to shares of Common
Stock issued to satisfy indemnification obligations of the Company under the
Merger Agreement (collectively "Special Securities"), on
-4-
the date of their issuance, (ii) with respect to the shares of Special Preferred
Stock, on their date of issuance and (iii) with respect to all other Registrable
Securities, on the date which is two years after the date of this Agreement.
2. REGISTRATION RIGHTS.
2.1 Registration on Demand.
2.1.1 Demand. At any time following a Trigger Date,
upon the written request (the "Demand") of RHI that the Company effect the
registration under the Securities Act of all or part of RHI's Registrable
Securities, the Company shall: use its best efforts to effect, as soon as
practicable and in any event within 90 days after the Demand is received from
RHI, the registration under the Securities Act (but not including by means of a
shelf registration pursuant to Rule 415 under the Securities Act), of the
Registrable Securities which the Company has been so requested to register by
RHI.
2.1.2 Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 2.1 in connection
with an underwritten offering by RHI of Registrable Securities, holders of
securities of the Company who have "piggyback" registration rights may include
all or a portion of such securities in such registration, offering or sale;
provided that, if the amount of Registrable Securities to be sold by RHI is to
be reduced because of the views of the managing underwriter or underwriters,
then the securities (other than the Registrable Securities) to be sold by such
other holders participating in such offering shall be reduced by allocating the
securities to be sold by such other holders in proportion to the number of
securities proposed to be sold in such offering by such holders.
2.1.3 Registration Statement Form. Registrations
under this Section 2.1 shall be on such appropriate registration form of the
Commission as shall be selected by the Company. The Company shall include in any
such registration statement all information which, in the opinion of counsel to
the Company, is required to be included.
2.1.4 Expenses. The Company shall pay the
Registration Expenses in connection with any registration requested pursuant to
this Section 2.1.
2.1.5 Effective Registration Statement. A
registration requested pursuant to this Section 2.1 shall not be deemed to have
been effected (i) unless a registration statement
-5-
with respect thereto has become effective, (ii) if after it has become
effective, such registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason not attributable to RHI and has not thereafter become
effective, or (iii) if the conditions to closing specified in the underwriting
agreement, if any, entered into in connection with such registration are not
satisfied or waived, other than by reason of a failure on the part of RHI.
2.1.6 Selection of Underwriters. In connection with
each underwritten offering, RHI shall promptly select an underwriter subject to
the approval of the Company (which approval shall not be unreasonably withheld
by the Company).
2.1.7 Limitations on Registration on Demand. The
Company shall not be required to prepare and file a registration statement
pursuant to this Section 2.1 which would become effective within 90 days
following the effective date of a registration statement (other than a
registration statement filed on Form S-8) filed by the Company with the
Commission pertaining to an underwritten public offering of convertible debt
securities or equity securities for cash for the account of the Company or
another holder of securities of the Company or if the Company gives written
notice to RHI within 10 days of receipt of a Demand that the Company will
initiate within 30 days the preparation of such registration statement, and in
each such case RHI was afforded the opportunity to include Registrable
Securities in such registration pursuant to Section 2.2 (unless the managing
underwriter for such registration is of the opinion that such inclusion would
adversely affect the Company's ability to complete its underwritten offering).
Notwithstanding anything in this Section 2.1 to the contrary, in no event shall
the Company be required to effect (i) in the aggregate, more than three
registrations pursuant to this Section 2.1 (other than registrations pertaining
to Special Securities, which shall be unlimited in number and not otherwise
reduce the number of registrations available to the Company pursuant to this
Section 2.1) and (ii) more than one registration pursuant to this Section 2.1 in
any 180-day period (other than registrations pertaining to Special Securities,
which shall not affect or be affected by this clause (ii)).
2.1.8 Right to Purchase in Lieu of Registration. If
the Company receives a request for a Demand registration and the Company desires
not to comply with such request, then the Company may purchase all but not less
than all of the Registrable Securities proposed to be disposed of in such
request (the "Redeemable Shares") by delivering to RHI a notice of the
-6-
Company's election to purchase such Registrable Securities (the "Redemption
Notice") within seven (7) days of receipt by the Company of the request for the
Demand registration pursuant to Section 2.1.1. Upon issuance of the Redemption
Notice, the Company shall be irrevocably committed to purchase the Registrable
Securities on the terms set forth herein. The purchase price to be paid for the
Registrable Securities shall be the Closing Price on the Trading Day immediately
prior to the date the Company receives the notice for the Demand registration;
provided, that in the event the Registrable Securities are not listed and traded
on any national securities exchange or on NASDAQ (as defined below), the
purchase price shall be established by the written opinion of a nationally
recognized investment banking firm selected by RHI delivered to the Company at
time of the request for a Demand registration. The term "Trading Day" shall mean
a day on which the principal national securities exchange on which the
Registrable Securities in question shall be listed or admitted to trading shall
be open for the transaction of business or, if the Registrable Securities shall
not be listed or admitted to trading on any national securities exchange, any
day on which trading takes place in the over-the-counter market. The Company
shall purchase the Registrable Securities within thirty (30) business days of
the issuance of the Redemption Notice by delivering the purchase price in cash
to RHI against delivery of the Registrable Securities. "Closing Price" means the
last sale price, regular way, as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which the Registrable
Securities shall be listed or admitted to trading or, if the Registrable
Securities shall not be listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers Automated Quotations System
("NASDAQ") or such other system then in use.
2.2 Piggyback Registration.
2.2.1 Right to Include Registrable Securities. If
the Company at any time proposes to register any of its securities under the
Securities Act by registration on Forms S-1, S-2, S-3 or any successor or
similar form(s) (except registrations on such Forms or similar form(s) solely
for registration of securities in connection with (i) an employee benefit plan
or dividend reinvestment plan or a merger or consolidation or (ii) debt
securities which are not convertible into Common Stock), whether or not for sale
for its own account, it shall, subject to Section 2.8, each such time give
written notice to RHI of its intention to do
-7-
so and of RHI's rights under this Section 2.2 at least 15 days prior to the
filing of a registration statement with respect to such registration with the
Commission. Upon the written request of RHI made as promptly as practicable and
in any event within 5 business days after the receipt of any such notice, which
request shall specify the Registrable Securities intended to be disposed of by
RHI, the Company shall, subject to Section 2.7, use its best efforts to effect
the registration under the Securities Act of all Registrable Securities which
the Company has been so requested to register by RHI; provided, that with
respect to registrations effected for the account of another holder of
securities of the Company, RHI's rights to include Registrable Securities will
be subject to the consent of such other holder under agreements existing as of
the date of this Agreement; provided, further, that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to RHI and (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not from
any obligation of the Company to pay the Registration Expenses in connection
therewith), without prejudice; provided, however, that RHI may request that such
registration be effected as a registration under Section 2.1 hereof and (ii) in
the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities for the same period as the delay in
registering such other securities. No registration effected under this Section
2.2 shall relieve the Company of its obligation to effect any registration upon
demand under Section 2.1. The Company shall pay all Registration Expenses in
connection with registration of Registrable Securities requested pursuant to
this Section 2.2.
2.2.2 Priority in Piggyback Registrations.
Notwithstanding anything in paragraph 2.2.1 above to the contrary, if the
managing underwriter of any underwritten offering shall inform the Company by
letter of its belief that the number or type of Registrable Securities requested
to be included in such registration would materially and adversely affect such
offering, then the Company shall include in such registration, to the extent of
the number and type which the Company is so advised can be sold in (or during
the time of) such offering, first, all securities proposed by the Company to be
sold for its own account or by the holder of securities who initiated a demand
registration, and second, by reducing the other securities (including
Registrable Securities to be sold by other holders of securities (including
-8-
RHI)) in proportion to the number of securities proposed to be sold in such
offering by such holders.
2.3 Registration Procedures.
2.3.1 In connection with the registration of any
Registrable Securities under the Securities Act as provided in Sections 2.1 and
2.2, the Company shall as expeditiously as possible:
(i) prepare and file with the Commission the
requisite registration statement to effect such registration and thereafter use
its best efforts to cause such registration statement to become and remain
effective (subject to clause (ii) below); provided, however, that the Company
may discontinue any registration of its securities which are not Registrable
Securities at any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement for such period as shall be required for the disposition
of all of such Registrable Securities; provided, that such period need not
exceed 90 days;
(iii) furnish to RHI such number of conformed copies
of such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as RHI may reasonably request;
(iv) use its best efforts (x) to register or qualify
all Registrable Securities and other securities covered by such registration
statement under such other securities or Blue Sky laws of such States of the
United States of America where an exemption is not available and as RHI shall
reasonably request, (y) to keep such registration or qualification in effect for
so long as such registration statement remains in effect, and (z) to take any
other action which may reasonably be necessary or advisable to enable RHI to
consummate the disposition in such jurisdictions of the
-9-
securities to be sold by RHI, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not, but for the requirements of this
paragraph (iv), be obligated to be so qualified or to consent to general service
of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or authorities as
may be necessary in the opinion of counsel to the Company and counsel to RHI to
consummate the disposition of such Registrable Securities in accordance with
their intended method of disposition;
(vi) furnish to RHI and its underwriters, if any,
(x) an opinion of counsel for the Company, and (y) a "comfort" letter signed by
the independent public accountants who have certified the Company's financial
statements included or incorporated by reference in such registration statement,
each covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountant's comfort letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountant's comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates such opinions
and comfort letters are customarily dated);
(vii) notify RHI when a prospectus relating thereto
is required to be delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, in the light
of the circumstances under which they were made, and at the request of RHI
promptly prepare and furnish to it a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made;
(viii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make
-10-
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder, and promptly furnish the same to RHI;
(ix) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement from and after a
date not later than the effective date of such registration; and
(x) use its best efforts to list all Registrable
Securities covered by such registration statement on any national securities
exchange or over-the-counter market, if any, on which Registrable Securities of
the same class and, if applicable, series, covered by such registration
statement are then listed.
The Company may require RHI to furnish the Company such
information regarding RHI and the distribution of RHI's Registrable Securities
as the Company may from time to time reasonably request in writing.
RHI agrees that upon receipt of any notice from the Company of
the happening of an event of the kind described in Section 2.3.1(vii), RHI will
forthwith discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until RHI's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 2.3.1(vii) and, if so directed by the Company, RHI will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in RHI's possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
2.4 Underwritten Offerings.
2.4.1 Requested Underwritten Offerings. If requested
by the underwriters for any underwritten offering by RHI pursuant to a
registration requested under Section 2.1, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the Company, RHI and the
underwriters, and to contain such representations and warranties by the Company
and RHI and such other terms as are generally prevailing in agreements of that
type, including, without limitation, indemnities to the
-11-
effect and to the extent provided in Section 2.8. RHI will cooperate with the
Company in the negotiation of the underwriting agreement and will give
consideration to the reasonable suggestions of the Company regarding the form
and substance thereof. RHI shall be a party to such underwriting agreement. RHI
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding RHI, RHI's Registrable Securities, RHI's intended method of
distribution and any other representations or warranties required by law or
customarily given by selling shareholders in an underwritten public offering.
2.4.2 Piggyback Underwritten Offerings. If the
Company proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, subject to Section 2.2 and
Section 2.7 hereof, if requested by RHI, arrange for such underwriters to
include all the Registrable Securities to be offered and sold by RHI among the
securities of the Company to be distributed by such underwriters (subject to the
provisio stated in Section 2.2). RHI shall become a party to the underwriting
agreement negotiated between the Company and such underwriters. RHI shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding RHI, RHI's Registrable Securities and RHI's intended method of
distribution or any other representations or warranties required by law or
customarily given by selling shareholders in an underwritten public offering.
2.4.3 Holdback Agreements.
(i) If any registration of Registrable Securities
(other than special securities) shall be in connection with an underwritten
public offering, RHI agrees not to effect any public sale or distribution,
including any sale pursuant to Rule 144 under the Securities Act, of any
Registrable Securities, and not to effect any such public sale or distribution
of any other equity security of the Company or of any security convertible into
or exchangeable or exercisable for any equity security of the Company (in each
case, other than as part of such underwritten public offering) during the 15
days prior to, and during the 90-day period beginning on, the effective date of
such registration statement, provided that RHI has received written notice of
such registration at least 15 days prior to such effective date.
(ii) If any registration of Registrable Securities
(other than special securities) shall be in connection with an
-12-
underwritten public offering, the Company agrees (x) not to effect any public
sale or distribution of any of its equity securities or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (other than in connection with any employee stock option or other
benefit plan) during the 15 days prior to, and during the 90-day period
beginning on the effective date of such registration statement (except as part
of such registration) and (y) that any agreement entered into after the date of
this Agreement pursuant to which the Company issues or agrees to issue any
privately placed equity securities shall contain a provision under which holders
of such securities agree not to effect any public sale or distribution of any
such securities during the period referred to in the foregoing clause (x),
including any sale pursuant to Rule 144 under the Securities Act (except as part
of such registration, if permitted), if such holder is participating in the
offering pursuant to such registration.
2.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give RHI, its underwriters, if
any, and their respective counsel and accountants the opportunity to participate
in the preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, and give each of them such access to its books and records, such
opportunities to discuss the business of the Company with officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of RHI's and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act. Any expenses incurred by RHI in connection with any such
investigation shall be borne by RHI.
2.6 Limitations, Conditions and Qualifications to Obligations
under Registration Covenants. The obligations of the Company to use its best
efforts to cause the Registrable Securities to be registered under the
Securities Act are subject to each of the following limitations, conditions and
qualifications:
In addition to its rights under Section 2.1.8 the Company
shall be entitled to postpone for a reasonable period of time (but not exceeding
60 days) the filing of any registration statement otherwise required to be
prepared and filed by it pursuant to Section 2.1 if the Company determines, in
its reasonable judgment, that such registration and offering would interfere
with any financing, acquisition, corporate reorganization or other material
transaction involving the Company or any of its Affiliates or would
-13-
require premature disclosures thereof and promptly give RHI written notice of
such determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If the Company shall
so postpone the filing of a registration statement, RHI shall have the right to
withdraw the request for registration by giving written notice to the Company
within 30 days after receipt of the notice of postponement and, in the event of
such withdrawal, such request shall not be counted for purposes of the requests
for registration to which RHI is entitled pursuant to Section 2.1 hereof.
2.7 Indemnification.
2.7.1 Indemnification by the Company. In the event
of any registration of any securities of the Company under the Securities Act,
the Company will, and hereby does, indemnify and hold harmless, in the case of
any registration statement filed pursuant to Section 2.1 or 2.2, RHI, its
directors, officers, partners, agents, and affiliates and each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls RHI or any such underwriter within the
meaning of the Securities Act, insofar as losses, claims, damages, or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus, or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances in which
they were made not misleading, and the Company will reimburse RHI and each such
director, officer, partner, agent or affiliate, underwriter and controlling
Person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of RHI or such underwriter, as the case
may be, specifically stating that it is for use in the preparation thereof; and
provided, further,
-14-
that the Company shall not be liable to RHI or any Person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
person, if any, who controls RHI or such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such final prospectus so
long as such final prospectus, and any amendments or supplements thereto, have
been furnished to such underwriter or RHI, as applicable. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of RHI or any such director, officer, partner, agent or affiliate or
controlling Person and shall survive the transfer of such securities by RHI.
2.7.2 Indemnification by RHI. If any Registrable
Securities are included in any registration statement, each of TFC and RHI will,
and each hereby does, jointly and severally indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 2.7.1 above) the
Company, and each director of the Company, each officer of the Company and each
other Person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by TFC or RHI specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement.
2.7.3 Notice of Claims, Etc. Promptly after receipt
by an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding paragraphs of this
Section 2.7, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, immediately give written notice to the
latter of the commencement of such action; provided, however, that the failure
of any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 2.7, except to the extent
-15-
that the indemnifying party is actually prejudiced by such failure to give
notice. In case any such action is brought against an indemnified party, unless
in such indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs related to the indemnified party's
cooperation with the indemnifying party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof. No indemnifying party shall be liable for any settlement of any
action or proceeding effected without its written consent, which consent shall
not be unreasonably withheld. No indemnifying party shall, without the consent
of the indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
2.7.4 Contribution. If the indemnification provided
for in this Section 2.7 shall for any reason be held by a court to be
unavailable to an indemnified party under paragraph 2.7.1 or 2.7.2 hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under paragraph 2.7.1 or
2.7.2 hereof, the indemnified party and the indemnifying party under paragraph
2.7.1 or 2.7.2 hereof shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating the same), (i) in such proportion as is
appropriate to reflect the relative fault of the Company on one hand and TFC and
RHI on the other which resulted in such loss, claim, damage or liability, or
action in respect thereof, with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations or (ii) if the allocation
provided by paragraph (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company on one hand and TFC and RHI on the other. No Person guilty of
fraudulent misrepresentation (within the
-16-
meaning of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In addition, no Person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim, effected without such Person's consent, which
consent shall not be unreasonably withheld.
2.7.5 Other Indemnification. Indemnification and
contribution similar to that specified in the preceding paragraphs of this
Section 2.7 (with appropriate modifications) shall be given by the Company and
TFC and RHI with respect to any required registration or other qualification of
securities under any federal or state law or regulation of any governmental
authority other than the Securities Act.
2.7.6 Indemnification Payments. The indemnification
and contribution required by this Section 2.7 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
2.7.7 Disclosure of Results of Investigation. Each
of TFC and RHI covenants and agrees that if in the course of its investigation
of the Company anything comes to its attention that indicates there is or there
could become a breach of the Company's representations and warranties, covenants
and agreements contained in any underwriting agreement, TFC and RHI shall
promptly notify the Company of such matter. Failure to so notify the Company
shall cause TFC and RHI to lose its right to indemnification under Section 2.7
with respect to such discovered matter.
3. Rule 144. With a view to making available the benefits of certain
rules and regulations of the Commission which may at any time permit the sale of
the Registrable Securities to the public without registration, after such time
as a public market exists for its Common Stock, the Company agrees to:
(a) use its best efforts to facilitate the sale of the
Registrable Securities to the public, without registration under the Securities
Act, pursuant to Rule 144 promulgated under the Securities Act, provided that
this shall not require the Company to file reports under the Securities Act and
the Exchange Act at any time prior to the Company's being otherwise required to
file such reports;
(b) make and keep public information available, as those terms
are understood and defined in Rule 144 promulgated under the Securities Act at
all times after ninety (90) days after the
-17-
effective date of the first registration under the Securities Act filed by the
Company for an offering of its securities to the general public;
(c) use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(d) deliver a written statement as to whether it has complied
with such requirements of this Section, to RHI upon RHI's request.
4. LEGEND. Any certificate evidencing Registrable
Securities shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A REGISTRATION RIGHTS AGREEMENT, DATED AS OF
BY AND BETWEEN RHI HOLDINGS, INC.
AND SHARED TECHNOLOGIES INC. A COPY OF SUCH AGREEMENT
SHALL BE FURNISHED WITHOUT CHARGE BY SHARED TECHNOLOGIES
INC. TO THE HOLDER HEREOF UPON SUCH HOLDER'S WRITTEN
REQUEST."
5. MODIFICATION; WAIVERS. This Agreement may be modified or amended
only with the written consent of each party hereto. No party hereto shall be
released from its obligations hereunder without the written consent of the other
party. The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
by the party entitled to enforce such term, but any such waiver shall be
effective only if in a writing signed by the party against which such waiver is
to be asserted. Except as otherwise specifically provided herein, no delay on
the part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party hereto of any right, power or privilege hereunder operate as a waiver
of any other right, power or privilege hereunder nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
6. ENTIRE AGREEMENT. This Agreement represents the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
-18-
7. SEVERABILITY. If any provision of this Agreement, or the application
of such provision to any Person or circumstance, shall be held invalid, the
remainder of this Agreement or the application of such provision to other
Persons or circumstances shall not be affected thereby; provided, that the
parties shall negotiate in good faith with respect to an equitable modification
of the provision or application thereof held to be invalid.
8. NOTICES. (a) Any notice or communication to any party hereto shall
be duly given if in writing and delivered in person or mailed by first class
mail (registered or certified, return receipt requested), facsimile or overnight
air courier guaranteeing next day delivery, to such other party's address.
If to RHI Holdings, Inc.:
300 West Service Road
P.O. Box 10803
Chantilly, VA 22001
Facsimile No.: (703) 888-5674
Attention: Donald Miller, Esq.
If to Shared Technologies Inc.:
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Facsimile No.: (203) 258-2401
Attention: Legal Department
(b) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, if mailed; when receipt
acknowledged, if sent by facsimile; and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.
9. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and shall be binding upon RHI and Shared Technologies and their respective
successors and assigns. In the event that RHI assigns its rights to a holder or
holders of only a portion of the Registrable Securities, then all references to
RHI herein shall also be deemed to refer to such other holder or holders but in
such event RHI will have the sole right to make decisions by and give notices
for such holder or holders under this Agreement; provided, that if RHI no longer
owns any Registrable Securities, then all decisions and notices hereunder must
be made by the holders of not less than a majority of the Registrable Securities
outstanding.
-19-
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which for all purposes shall be deemed to be an original
and all of which together shall constitute the same agreement.
11. HEADINGS. The Section headings in this Agreement are for
convenience of reference only, and shall not be deemed to alter or affect the
meaning or interpretation of any provisions hereof.
12. CONSTRUCTION. This Agreement shall be governed, construed and
enforced in accordance with the laws of the state of New York, without regard to
its principles of conflict of laws.
13. NO INCONSISTENT AGREEMENTS. The Company has not previously, and
will not hereafter, enter into any agreement with respect to its securities
which is inconsistent with the rights granted to RHI in this Agreement; except
that holders of piggy-back registration rights with respect to 9,458 shares of
Common Stock have such registration rights without allowance for cut-back.
14. RECAPITALIZATIONS, ETC. In the event that any capital stock or
other securities are issued in respect of, in exchange for, or in substitution
of, any Registrable Securities by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Registrable Securities or any other
change in the Company's capital structure, appropriate adjustments shall be made
in this Agreement so as to fairly and equitably preserve, as far as practicable,
the original rights and obligations of the parties hereto under this Agreement.
15. ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement by a party hereto, or where any provision hereof is
validly asserted as a defense by such party, such party, if successful, shall be
entitled to recover reasonably attorneys' fees in addition to any other
available remedy.
16. SPECIFIC PERFORMANCE. The parties hereto agree that the Registrable
Securities of the Company cannot be purchased or sold in the open market and
that, for these reasons, among others, the parties will be irreparably damaged
in the event that this Agreement is not specifically enforceable. Accordingly,
in the event of any controversy concerning the Registrable Securities which is
the subject of this Agreement, or any right or obligation to register such
securities, such right or obligation shall be enforceable in a court of equity
by specific performance. The
-20-
rights granted in this Section 16 shall be cumulative and not exclusive, and
shall be in addition to any and all other rights which the parties hereto may
have hereunder, at law or in equity.
-21-
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
SHARED TECHNOLOGIES INC.
By: /s/ Vincent DiVincenzo
---------------------------
Name: Vincent DiVincenzo
Title:
RHI HOLDINGS, INC.
By: /s/ John Flynn
---------------------------
Name: John Flynn
Title:
THE FAIRCHILD CORPORATION
By: /s/ John Flynn
---------------------------
Name: John Flynn
Title: