EXHIBIT 10.6
PLEDGE AGREEMENT
PLEDGE AGREEMENT (the "Agreement"), dated as of March 13,
1996, made by RHI HOLDINGS, INC., a Delaware corporation ("Pledgor"), in favor
of Gadsby & Hannah (the "Pledgee").
R E C I T A L S :
A. Pursuant to the terms of an Agreement to Exchange 6%
Cumulative Convertible Preferred Stock and Special Preferred Stock dated as of
March 1, 1996 (the "Exchange Agreement") among Shared Technologies Inc. ("Shared
Technologies"), The Fairchild Corporation ("TFC"), RHI and Fairchild Industries,
Inc. (a wholly-owned subsidiary of RHI), RHI has received 250,000 shares of
Series I 6% Cumulative Convertible Preferred Stock, par value $.01 per share
(the "Convertible Preferred Stock"), of Shared Technologies and 200,000 shares
of Series J Special Preferred Stock, par value $.01 per share (the "Special
Preferred Stock" and, together with the Convertible Preferred Stock, the
"Preferred Stock").
B. This Agreement is given by Pledgor in favor of Pledgee for
the benefit of Shared Technologies to secure the payment and performance by the
Indemnifying Parties (as hereinafter defined) of Indemnification Agreements
dated the date hereof (the "Indemnification Agreements") between Shared
Technologies and each of TFC, RHI, and Fairchild Holding Corp. (collectively,
the "Indemnifying Parties").
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Pledgor and Pledgee hereby agree as follows:
SECTION 1. Pledge. As collateral security for the payment and
performance when due of all of the Indemnifying Parties' obligations to Shared
Technologies under the Indemnification Agreements (the "Secured Obligations"),
Pledgor hereby pledges, assigns and grants to Pledgee for the benefit of and as
agent for Shared Technologies, until this Agreement terminates, a continuing
first priority security interest in and to all of the right, title and interest
of Pledgor in shares of Preferred Stock of Shared Technologies described in
Schedule I hereto (the "Pledged Shares"). The term "Pledged Collateral" shall
mean (i) the Pledged Shares and all other securities or property
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issued in exchange or as replacement for (by reason of merger, reorganization or
otherwise) the Pledged Shares by the Company or a third party ("New Pledged
Shares") and (ii) all other assets or property substituted for the Pledged
Shares in accordance with Section 6 of this Agreement.
SECTION 2. Delivery of Pledged Shares. The certificates
representing the Pledged Shares, together with stock powers, are, concurrently
with the execution of this Agreement, being delivered to Pledgee (and with
respect to any New Pledged Shares will be promptly delivered to Pledgee when
received by Pledgor) and will be held by Pledgee pursuant to and in accordance
with the terms of this Agreement.
SECTION 3. Voting Rights; Distributions; etc.
(a) Pledgor shall be entitled to exercise any and all voting
and other consensual rights (including rights to exercise) pertaining to the
Pledged Collateral or any part thereof for any purpose not inconsistent with the
terms or purpose of this Agreement.
(b) Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all dividends or
distributions made with respect to the Pledged Collateral, provided, however, if
a Dispute Notice (as hereinafter defined) has been delivered, until there has
been a resolution of the dispute to which such Dispute Notice relates, all
dividends and distributions on the portion of Pledged Collateral required to
satisfy Shared Technologies' claims under the relevant Dispute Notice, shall be
delivered to and held by the Pledge Agent. Upon resolution of the dispute which
is the subject of the Dispute Notice all dividends and distributions shall
forthwith be delivered to the party in whose favor the dispute was resolved.
(c) Pledgee shall be deemed without further action or
formality to have granted to Pledgor all necessary consents relating to voting
rights and shall, if necessary, upon written request of Pledgor, from time to
time execute and deliver (or cause to be executed and delivered) to Pledgor all
such instruments as Pledgor may reasonably request in order to permit Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to Section 3(a) hereof and to receive the dividends and distributions which it
is authorized to receive and retain pursuant to Section 3(b) hereof.
SECTION 4. Other Liens. Pledgor shall not (i) sell, convey,
assign or otherwise dispose of (except pursuant to Section 6), or grant any
option, right or warrant with respect to,
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any of the Pledged Collateral, or (ii) create or permit to exist any lien upon
or with respect to any Pledged Collateral other than the lien and security
interest granted to Pledgee for the benefit of Shared Technologies under this
Agreement.
SECTION 5. Cancellation of Pledged Shares upon Payment
Default. In the event that Shared Technologies claims it is entitled to a
payment from an Indemnifying Party in accordance with the terms of an
Indemnification Agreement because of a payment that Shared Technologies has made
or is then obligated to make to a third party and for which it is entitled to
indemnification under the Indemnification Agreements, such Indemnifying Party
shall have 30 days (the "Notice Period") from its receipt of written notice of
such claim to pay to Shared Technologies the amount of such claim in cash or
dispute responsibility for indemnification of such claim by delivering a written
notice thereof to Shared Technologies (a "Dispute Notice"). In the event that
such Indemnifying Party fails to pay any such claim or deliver a Dispute Notice
within such 30- day period, Pledgee shall deliver to Shared Technologies, at
Shared Technologies' request (a "Pledge Notice"), Pledged Shares or, if
applicable, New Pledged Shares (in each case valued at their liquidation
preference) in an amount equal to such claimed amount and Shared Technologies
shall cancel the same and they will cease to be Pledged Collateral for all
purposes of this Agreement. In the event of a claim subject to a Dispute Notice,
upon settlement of such dispute, if the Indemnifying Party fails to pay the
amount owing to Shared Technologies, if any, as a result of such settlement (the
"Undisputed Claim Amount"), within 30 days thereof, Pledgee shall deliver to
Shared Technologies, upon delivery to Pledgee of a Pledge Notice, Pledged Shares
or, if applicable, New Pledged Shares (in each case valued at their liquidation
preference) equal to the Undisputed Claim Amount and Shared Technologies shall
cancel the same. Any such cancellation of Pledged Shares or New Pledged Shares
pursuant to this Section 5 will be deemed to have satisfied the Indemnifying
Party's obligations under the Indemnification Agreements for the claim to the
extent of the liquidation preference of the Pledged Shares or New Pledged Shares
so cancelled. The foregoing rights of Shared Technologies shall not obviate
Shared Technologies' other available rights to seek indemnification payments
from the Indemnifying Parties.
SECTION 6. Substitution of Collateral. At its election,
Pledgor may substitute property or assets owned by it for all or a portion of
the Pledged Shares (or New Pledged Shares) so long as (i) the fair market value
of such substitute property or assets is at least equal to the fair market value
of the Pledged Shares (or New Pledged Shares) for which substitution is sought,
as evidenced by the written opinion of an investment banking firm of nationally
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recognized standing reasonably acceptable to Shared Technologies, (ii) such
substitute property or assets are not subject to any other lien or security
interest at the time of such substitution, (iii) Pledgor delivers to Pledgee
such instruments and documents which are necessary for Pledgee to perfect a
first priority lien on and security interest in such substitute property or
assets and (iv) Pledgor, Pledgee and Shared Technologies shall have entered into
such amendments or supplements to this Agreement as are reasonably requested by
Pledgee and Shared Technologies in order to ensure Pledgee's rights and remedies
hereunder with respect to such substituted property or assets.
SECTION 7. Termination of Agreement; Release of Pledged
Collateral. On the Termination Date, this Agreement shall terminate and
Pledgee's and Shared Technologies' rights with respect to the Pledged Collateral
shall terminate and Pledgee shall promptly deliver the certificates (or other
property or assets) representing the Pledged Collateral to Pledgor, free and
clear of any lien or encumbrance thereon. "Termination Date" means the later to
occur of (i) the third anniversary of the date of this Agreement and (ii) the
date on which the consolidated net worth (computed in accordance with generally
accepted accounting principles) of The Fairchild Corporation at such time (as
evidenced by an audited balance sheet delivered to Pledgee by Pledgor) is at
least (x) $25 million greater than such net worth at September 30, 1995
(excluding for such purpose any value attributed to the Preferred Stock on such
balance sheet) and (y) $225 million (including for such purpose the value of the
Preferred Stock); provided that in the event of any outstanding claims under the
Indemnification Agreements that are subject to a Dispute Notice, the Termination
Date shall not be deemed to occur with respect to an amount of Pledged
Collateral equal to the claim which is the subject of such Dispute Notice, until
such dispute is resolved unless, as to any such claim, the appropriate
Indemnifying Parties accept, by written agreement reasonably satisfactory to
Shared Technologies, full and unconditional liability for such claim and agree
to assume the defense thereof and full responsibility therefor (an
"Assumption"). The foregoing provisions notwithstanding, in the event that a
Pledge Notice has been delivered as to which Pledgor has not yet responded and
the Notice Period has not yet expired, such claims shall be subject to the terms
of the proviso of the preceding sentence until the earlier to occur of the
payment by Pledgor of the Undisputed Claim Amount or delivery by Pledgor to
Shared Technologies of an Assumption.
SECTION 8. Continuing Security Interest; Assignment. This
Agreement shall create a continuing security interest in the Pledged Shares and
shall (i) be binding upon Pledgor, its successors and assigns, and (ii) inure,
together with the rights
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and remedies of each of Pledgee and Shared Technologies hereunder, to the
benefit of each of Pledgee and Shared Technologies and their respective
successors, transferees and assigns; no other Person (including, without
limitation, any other creditor of Pledgor or Shared Technologies) shall have any
interest herein or any right or benefit with respect hereto.
SECTION 9. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT
TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PROPERTY ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 10. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 11. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
SECTION 12. Headings. The Section headings used in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.
SECTION 13. Arbitration. Any controversy, dispute or question
arising out of or in connection with this Agreement, or the interpretation,
performance or non-performance of this Agreement or any breach hereof, shall be
determined by arbitration held in New York, in accordance with the then existing
rules of the American Arbitration Association. Any decision or award of such
arbitration shall be final, conclusive and binding on the parties hereto.
Nothing contained herein shall in any way deprive either party of its right to
obtain injunctions or other equitable relief, including preliminary relief
pending arbitration. All costs and expenses (including counsel and expert
witness fees) associated with any such arbitration shall be paid by the party
adjudged by the arbitrator to be responsible for the costs. Any award rendered
by an arbitrator shall be enforceable in any court of competent jurisdiction.
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SECTION 14. Pledgee. Shared Technologies hereby appoints
Gadsby & Hannah as its agent to act as its pledge agent with respect to the
Pledged Collateral pursuant to this Agreement. The actions of Pledgee hereunder
are subject to the provisions of this Agreement. Pledgee shall have the right
hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking action (including,
without limitation, the release or substitution of Pledged Collateral), in
accordance with this Agreement. Pledgee may resign as long as Pledgee is
replaced by a successor Pledgee approved by Pledgor and Shared Technologies.
Upon the acceptance of any appointment as Pledgee by a successor Pledgee, that
successor Pledgee shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Pledgee under this
Agreement, and the retiring Pledgee shall thereupon be discharged from its
duties and obligations under this Agreement. After any retiring Pledgee's
resignation, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement while it was
Pledgee.
SECTION 15. Notices.
(a) Any notice or communication to any party hereto shall be
duly given if in writing and delivered in person or mailed by first class mail
(registered or certified, return 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.
with a copy to:
James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
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If to Shared Technologies Inc.:
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Facsimile No.: (203) 258-2401
Attention: Legal Department
with a copy to:
Walter D. Wekstein, Esq.
Harold J. Carroll, Esq.
Gadsby & Hannah
125 Summer Street
Boston, MA 02110
Facsimile No.: (617) 345-7050
If to Gadsby & Hannah:
125 Summer Street
Boston, MA 02110
Facsimile No.: (617) 345-7050
Walter D. Wekstein, Esq.
Harold J. Carroll, Esq.
Gadsby & Hannah
125 Summer Street
Boston, MA 02110
Facsimile No.: (617) 345-7050
(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 sent, if sent
by facsimile; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
SECTION 16. Entire Agreement. This Agreement constitutes the
entire agreement among the parties 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.
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IN WITNESS WHEREOF, Pledgor has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first above
written.
RHI HOLDINGS, INC.,
as Pledgor
By: /s/ John Flynn
----------------------
Name:
Title:
GADSBY & HANNAH
as Pledgee
By: /s/ Marianne Gilleran
----------------------
Name:
Title:
SHARED TECHNOLOGIES INC.
By: /s/ Vincent DiVincenzo
----------------------
Name:
Title:
SCHEDULE I
Pledged Shares
CLASS PAR CERTIFICATE NUMBER
ISSUER OF STOCK VALUE NO(S). 0F SHARES
- ------ -------- ----- ------ ---------
Shared Technologies Series I 6% $.01 1 235,000
Fairchild Inc. Cumulative
Convertible
Preferred
Shared Technologies Series $.01 1 200,000
Fairchild Inc. Special
Preferred