EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 9, 1995, by
and among Fairchild Industries, Inc., a Delaware corporation ("Fairchild"), RHI
Holdings, Inc., a Delaware corporation ("RHI"), The Fairchild Corporation, a
Delaware corporation ("TFC"), and Shared Technologies Inc., a Delaware
corporation ("Shared Technologies").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Fairchild and Shared
Technologies have approved the merger of Fairchild with and into Shared
Technologies (the "Merger") upon the terms and subject to the conditions set
forth herein and in accordance with the laws of the State of Delaware;
WHEREAS, RHI, which is a wholly owned subsidiary of TFC, is
the sole owner of all of the outstanding common stock of Fairchild and has
approved the Merger upon the terms and subject to the conditions set forth
herein, and RHI has received an irrevocable proxy from the holder of
approximately 9.84% of Shared Technologies' common stock (based on the shares
outstanding as of the date hereof) agreeing to vote for the Merger;
WHEREAS, Fairchild is the sole owner of 100% of the issued and
outstanding capital stock of VSI Corporation ("VSI");
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto, intending
to be legally bound, agree as follows:
ARTICLE I
MERGER
1.1 The Merger. At the Effective Time (as hereinafter
defined), Fairchild shall be merged with and into Shared Technologies as
provided herein. Thereupon, the corporate existence of Shared Technologies, with
all its purposes, powers and objects, shall continue unaffected and unimpaired
by the
Merger, and the corporate identity and existence, with all the purposes, powers
and objects, of Fairchild shall be merged with and into Shared Technologies and
Shared Technologies as the corporation surviving the Merger shall be fully
vested therewith and shall change its name to "Shared Technologies Fairchild
Inc." The separate existence and corporate organization of Fairchild shall cease
upon the Merger becoming effective as herein provided and thereupon Fairchild
and Shared Technologies shall be a single corporation, Shared Technologies
Fairchild Inc. (herein sometimes called the "Surviving Corporation"). Prior to
the Effective Time, Fairchild and its subsidiaries will undergo a corporate
reorganization (the "Fairchild Reorganization") pursuant to which all the assets
of Fairchild and its subsidiaries (other than certain indebtedness and preferred
stock) will be transferred to, and liabilities of Fairchild and its subsidiaries
will be assumed by, RHI except for the assets and liabilities comprising the
telecommunications systems and service business of Fairchild Communications
Services Company, which as a result of said reorganization, will reside in VSI,
all as described on Schedule 9.1. Except where indicated to the contrary, all
references herein to "Fairchild" shall be deemed to refer to Fairchild as it
will exist following the Fairchild Reorganization and, accordingly, none of the
representations, warranties, restrictions or covenants contained in this
Agreement apply to the businesses, operations, assets or liabilities of
Fairchild Industries, Inc. and its subsidiaries other than as they relate to the
telecommunications systems and service business of Fairchild, and each of TFC,
RHI and Fairchild may operate such other businesses and assets (including
without limitation selling assets and businesses and incurring liabilities) as
it deems appropriate in the exercise of its business judgment.
1.2 Filing. As soon as practicable after the requisite
approval of the Merger by the stockholders of Shared Technologies and the
fulfillment or waiver of the conditions set forth in Sections 9.1, 9.2 and 9.3
or on such later date as may be mutually agreed to between Fairchild and Shared
Technologies, the parties hereto will cause to be filed with the office of the
Secretary of State of the State of Delaware, a certificate of merger (the
"Certificate of Merger"), in such form as required by, and executed in
accordance with, the relevant provisions of the Delaware General Corporation Law
(the "DGCL").
1.3 Effective Time of the Merger. The Merger shall be
effective at the time that the filing of the Certificate of
Merger with the office of the Secretary of State of the State of Delaware is
completed, or at such later time specified in such Certificate of Merger, which
time is herein sometimes referred to as the "Effective Time" and the date
thereof is herein sometimes referred to as the "Effective Date."
ARTICLE II
CERTIFICATE OF INCORPORATION; BY-LAWS;
SHAREHOLDERS AGREEMENT
2.1 Certificate of Incorporation. The Certificate of
Incorporation of Shared Technologies, as amended in accordance with this
Agreement, shall be the Certificate of Incorporation of the Surviving
Corporation.
2.2 By-Laws. The By-Laws of Shared Technologies, as amended in
accordance with this Agreement, shall be the By-Laws of the Surviving
Corporation until the same shall thereafter be altered, amended or repealed in
accordance with law, the Certificate of Incorporation of the Surviving
Corporation or said By-Laws.
2.3 Shareholders Agreement. At the Effective Time, Shared
Technologies, RHI and Anthony D. Autorino shall enter into a shareholders
agreement in the form of Exhibit A hereto (the "Shareholders Agreement")
providing for the election of directors and officers of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion. At the Effective Time the issued shares of
capital stock of Fairchild shall, by virtue of the Merger and without any action
on the part of the holders thereof, become and be converted as follows: (A) each
outstanding share of Common Stock, $100.00 par value per share, of Fairchild
(the "Fairchild Common Stock") shall be converted into and become the right to
receive a Pro Rata Amount (as defined below) of the Merger Consideration (as
defined below); and (B) each outstanding share of Series A Preferred Stock,
without par value, of Fairchild (the "Series A Preferred Stock") and each
outstanding
share of Series C Preferred Stock, without par value, of Fairchild (the "Series
C Preferred Stock") shall be converted into the right to receive an amount in
cash equal to $45.00 per share ($44,237,745 in the aggregate for all such shares
of Series A Preferred Stock and Series C Preferred Stock) plus accrued and
unpaid dividends thereon to the Effective Time. "Merger Consideration" means (x)
6,000,000 shares of Common Stock, $.004 par value per share, of Shared
Technologies (the "Technologies Common Stock"), (y) shares of Convertible
Preferred Stock of Shared Technologies (the "Convertible Preferred Stock")
having an initial aggregate liquidation value of $25,000,000 and the other terms
set forth on the attached Schedule 3.1(a) and (z) shares of Special Preferred
Stock of Shared Technologies (the "Special Preferred Stock") having an initial
aggregate liquidation value of $20,000,000 and the other terms set forth on the
attached Schedule 3.1(b). The Convertible Preferred Stock and Special Preferred
Stock are collectively referred to as the "Preferred Stock." With respect to any
share of capital stock, "Pro Rata Amount" means the product of the Merger
Consideration multiplied by a fraction, the numerator of which is one and the
denominator of which is the aggregate number of all issued and outstanding
shares of such capital stock on the Effective Date.
3.2 Preferred Stock Pledge. Immediately after the Effective
Time, RHI shall pledge all of the shares of Preferred Stock then issued to it
(other than shares of Convertible Preferred Stock having an aggregate
liquidation preference of $1,500,000) to secure RHI's and Fairchild's
obligations under the Indemnification Agreement of TFC and RHI (the form of
which is attached as Exhibit B-1 hereto) pursuant to the terms of a Pledge
Agreement (the form of which is attached as Exhibit C hereto) and with a pledge
agent mutually agreed upon by the parties. Such shares will be released from
such pledge on the later to occur of (i) third anniversary of the Effective Time
and (ii) the date on which the consolidated net worth (computed in accordance
with generally accepted accounting principles) of The Fairchild Corporation at
such time (or evidenced by any audited balance sheet) is at least (x) $25
million greater than such net worth at September 30, 1995 (excluding for such
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).
ARTICLE IV
CERTAIN EFFECTS OF THE MERGER
4.1 Effect of the Merger. On and after the Effective Time and
pursuant to the DGCL, the Surviving Corporation shall possess all the rights,
privileges, immunities, powers, and purposes of each of Fairchild and Shared
Technologies; all the property, real and personal, including subscriptions to
shares, causes of action and every other asset (including books and records) of
Fairchild and Shared Technologies, shall vest in the Surviving Corporation
without further act or deed; and the Surviving Corporation shall assume and be
liable for all the liabilities, obligations and penalties of Fairchild and
Shared Technologies; provided, however, that this shall in no way impair or
affect the indemnification obligations of any party pursuant to indemnification
agreements entered into in connection with this Agreement. No liability or
obligation due or to become due and no claim or demand for any cause existing
against either Fairchild or Shared Technologies, or any stockholder, officer or
director thereof, shall be released or impaired by the Merger, and no action or
proceeding, whether civil or criminal, then pending by or against Fairchild or
Shared Technologies, or any stockholder, officer or director thereof, shall
abate or be discontinued by the Merger, but may be enforced, prosecuted, settled
or compromised as if the Merger had not occurred, and the Surviving Corporation
may be substituted in any such action or proceeding in place of Fairchild or
Shared Technologies.
4.2 Further Assurances. If at any time after the Effective
Time, any further action is necessary or desirable to carry out the purposes of
this Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
either of Fairchild or Shared Technologies, the officers of such corporation are
fully authorized in the name of their corporation or otherwise to take, and
shall take, all such further action and TFC will, and cause each of its
subsidiaries (direct or indirect) to, take all actions reasonably requested by
the Surviving Corporation (at the Surviving Corporation's expense) in
furtherance thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SHARED TECHNOLOGIES
Shared Technologies represents and warrants to Fairchild that:
5.1 Organization and Qualification. Each of Shared
Technologies and its subsidiaries (which for purposes of this Agreement, unless
indicated to the contrary, shall not include Shared Technologies Cellular, Inc.)
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Shared Technologies and its
subsidiaries is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except for failures to be so qualified or in good standing which
would not, individually or in the aggregate, have a material adverse effect on
the general affairs, management, business, operations, condition (financial or
otherwise) or prospects of Shared Technologies and its subsidiaries taken as a
whole (a "Shared Technologies Material Adverse Effect"). Neither Shared
Technologies nor any of its subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation (or other applicable charter
document) or By-Laws. Shared Technologies has delivered to Fairchild accurate
and complete copies of the Certificate of Incorporation (or other applicable
charter document) and By-Laws, as currently in effect, of each of Shared
Technologies and its subsidiaries.
5.2 Capital Stock of Subsidiaries. The only direct or indirect
subsidiaries of Shared Technologies are those listed in Section 5.2 of the
Disclosure Statement previously delivered by Shared Technologies to Fairchild
(the "Disclosure Statement"). Shared Technologies is directly or indirectly the
record (except for directors' qualifying shares) and beneficial owner (including
all qualifying shares owned by directors of such subsidiaries as reflected in
Section 5.2 of the Disclosure Statement) of all of the outstanding shares of
capital stock of each of its subsidiaries, there are no proxies with respect to
such shares, and no equity securities of any of such subsidiaries are or may be
required to be issued by reason of any options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any such subsidiary is bound to issue additional shares of
its capital stock or securities convertible into or exchangeable for such
shares. Other than as set forth in Section 5.2 of the Disclosure Statement, all
of such shares so owned by Shared Technologies are validly issued, fully paid
and nonassessable and are owned by it free and clear of any claim, lien or
encumbrance of any kind with respect thereto. Except as disclosed in Section 5.2
of the Disclosure Statement, Shared Technologies does not directly or indirectly
own any interest in any corporation, partnership, joint venture or other
business association or entity.
5.3 Capitalization. The authorized capital stock of Shared
Technologies consists of 20,000,000 shares of Common Stock, par value $.004 per
share, and 10,000,000 shares of Preferred Stock, par value $.01 per share. As of
the date hereof, 8,495,815 shares of Common Stock were issued and outstanding
and 1,527,970 shares of Preferred Stock were issued and outstanding. All of such
issued and outstanding shares are validly issued, fully paid and nonassessable
and free of preemptive rights. As of the date hereof 5,022,083 shares of Common
Stock were reserved for issuance upon exercise of outstanding convertible
securities, warrants, options, and options which may be granted under the stock
option plans of Shared Technologies (the "Stock Option Plans"), all of which
warrants, options and Stock Option Plans are listed and described in Section 5.3
of the Disclosure Statement. Other than the Stock Option Plans, Shared
Technologies has no other plan which provides for the grant of options to
purchase shares of capital stock, stock appreciation or similar rights or stock
awards. Except as set forth above, there are not now, and at the Effective Time,
except for shares of Common Stock issued after the date hereof upon the
conversion of convertible securities and the exercise of warrants and options
outstanding on the date hereof or issued after the date hereof pursuant to the
Stock Option Plans, there will not be, any shares of capital stock of Shared
Technologies issued or outstanding or any subscriptions, options, warrants,
calls, claims, rights (including without limitation any stock appreciation or
similar rights), convertible securities or other agreements or commitments of
any character obligating Shared Technologies to issue, transfer or sell any of
its securities.
5.4 Authority Relative to This Agreement. Shared Technologies
has full corporate power and authority to execute and deliver this Agreement and
to consummate the Merger and other transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the Merger and
other transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Shared Technologies and no other corporate proceedings
on the part of Shared Technologies are necessary to authorize this Agreement or
to consummate the Merger or other transactions contemplated hereby (other than,
with respect to the Merger, the approval of Shared Technologies' stockholders
pursuant to Section 251(c) of the DGCL). This Agreement has been duly and
validly executed and delivered by Shared Technologies and, assuming the due
authorization, execution and delivery hereof by Fairchild, constitutes a valid
and binding agreement of Shared Technologies, enforceable against Shared
Technologies in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
5.5 No Violations, etc.
(a) Assuming that all filings, permits, authorizations,
consents and approvals or waivers thereof have been duly made or obtained as
contemplated by Section 5.5(b) hereof, except as listed in Section 5.5 of the
Disclosure Statement, neither the execution and delivery of this Agreement by
Shared Technologies nor the consummation of the Merger or other transactions
contemplated hereby nor compliance by Shared Technologies with any of the
provisions hereof will (i) violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
or suspension of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Shared Technologies or any of its subsidiaries under, any of the
terms, conditions or provisions of (x) their respective charters or by-laws, (y)
except as set forth in Section 5.5 of the Disclosure Statement, any note, bond,
mortgage, indenture or deed of trust, or (z) any license, lease, agreement or
other instrument or obligation to which Shared Technologies or any such
subsidiary is a party or to which they or any of their respective properties or
assets may be subject, or (ii) subject to compliance with the statutes and
regulations referred to in the next paragraph, violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to
Shared Technologies or any of its subsidiaries or any of their respective
properties or assets, except, in the case of clauses (i)(z) and (ii) above, for
such violations, conflicts, breaches, defaults, terminations, suspensions,
accelerations, rights of termination or acceleration or creations of liens,
security interests, charges or encumbrances which would not, individually or in
the aggregate, either have a Shared Technologies Material Adverse Effect or
materially impair Shared Technologies' ability to consummate the Merger or other
transactions contemplated hereby.
(b) No filing or registration with, notification to and no
permit, authorization, consent or approval of any governmental entity is
required by Shared Technologies in connection with the execution and delivery of
this Agreement or the consummation by Shared Technologies of the Merger or other
transactions contemplated hereby, except (i) in connection with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, (iii) the approval of Shared
Technologies' stockholders pursuant to the DGCL, (iv) filings with applicable
state public utility commissions and (v) such other filings, registrations,
notifications, permits, authorizations, consents or approvals the failure of
which to be obtained, made or given would not, individually or in the aggregate,
either have a Shared Technologies Material Adverse Effect or materially impair
Shared Technologies' ability to consummate the Merger or other transactions
contemplated hereby.
(c) As of the date hereof, Shared Technologies and its
subsidiaries are not in violation of or default under (x) their respective
charter or bylaws, and (y) except as set forth in Section 5.5 of the Disclosure
Statement, any note, bond, mortgage, indenture or deed of trust, or (z) any
license, lease, agreement or other instrument or obligation to which Shared
Technologies or any such subsidiary is a party or to which they or any of their
respective properties or assets may be subject, except, in the case of clauses
(y) and (z) above, for such violations or defaults which would not, individually
or in the
aggregate, either have a Shared Technologies Material Adverse Effect or
materially impair Shared Technologies' ability to consummate the Merger or other
transactions contemplated hereby.
5.6 Commission Filings; Financial Statements.
(a) Shared Technologies has filed all required forms, reports
and documents during the past three years (collectively, the "SEC Reports") with
the Securities and Exchange Commission (the "SEC"), all of which complied when
filed in all material respects with all applicable requirements of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act") and the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "Exchange
Act"). As of their respective dates the SEC Reports (including all exhibits and
schedules thereto and documents incorporated by reference therein) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of Shared Technologies and its subsidiaries included or
incorporated by reference in such SEC Reports have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto),
and fairly present the consolidated financial position of Shared Technologies
and its subsidiaries as of the dates thereof and the consolidated results of
operations and consolidated cash flows for the periods then ended (subject, in
the case of any unaudited interim financial statements, to normal year-end
adjustments and to the extent they may not include footnotes or may be condensed
or summary statements).
(b) Shared Technologies will deliver to Fairchild as soon as
they become available true and complete copies of any report or statement mailed
by it to its securityholders generally or filed by it with the SEC, in each case
subsequent to the date hereof and prior to the Effective Time. As of their
respective dates, such reports and statements (excluding any information therein
provided by Fairchild, as to which Shared Technologies makes no representation)
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in
light of the circumstances under which they are made, not misleading and will
comply in all material respects with all applicable requirements of law. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of Shared Technologies and its subsidiaries to be included
or incorporated by reference in such reports and statements (excluding any
information therein provided by Fairchild, as to which Shared Technologies makes
no representation) will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and will fairly
present the consolidated financial position of Shared Technologies and its
subsidiaries as of the dates thereof and the consolidated results of operations
and consolidated cash flows for the periods then ended (subject, in the case of
any unaudited interim financial statements, to normal year-end adjustments and
to the extent they may not include footnotes or may be condensed or summary
statements).
5.7 Absence of Changes or Events. Except as set forth in
Shared Technologies' Form 10-K for the fiscal year ended December 31, 1994, as
filed with the SEC, since December 31, 1994:
(a) there has been no material adverse change, or any
development involving a prospective material adverse change, in the general
affairs, management, business, operations, condition (financial or
otherwise) or prospects of Shared Technologies and its subsidiaries taken
as a whole;
(b) there has not been any direct or indirect redemption,
purchase or other acquisition of any shares of capital stock of Shared
Technologies or any of its subsidiaries, or any declaration, setting aside
or payment of any dividend or other distribution by Shared Technologies or
any of its subsidiaries in respect of its capital stock (except for the
distribution of the shares of Shared Technologies Cellular, Inc.);
(c) except in the ordinary course of its business and
consistent with past practice neither Shared Technologies nor any of its
subsidiaries has incurred any indebtedness for borrowed money, or assumed,
guaranteed, endorsed or otherwise as an accommodation become responsible
for the obligations of any other individual, firm or corporation, or
made any loans or advances to any other individual, firm or corporation;
(d) there has not been any change in accounting methods,
principles or practices of Shared Technologies or its subsidiaries;
(e) except in the ordinary course of business and for amounts
which are not material, there has not been any revaluation by Shared
Technologies or any of its subsidiaries of any of their respective assets,
including, without limitation, writing down the value of inventory or
writing off notes or accounts receivables;
(f) there has not been any damage, destruction or loss,
whether covered by insurance or not, except for such as would not,
individually or in the aggregate, have a Shared Technologies Material
Adverse Effect; and
(g) there has not been any agreement by Shared Technologies or
any of its subsidiaries to (i) do any of the things described in the
preceding clauses (a) through (f) other than as expressly contemplated or
provided for in this Agreement or (ii) take, whether in writing or
otherwise, any action which, if taken prior to the date of this Agreement,
would have made any representation or warranty in this Article V untrue or
incorrect.
5.8 Proxy Statement. None of the information supplied by
Shared Technologies for inclusion in the proxy statement to be sent to the
shareholders of Shared Technologies in connection with the Special Meeting (as
hereinafter defined), including all amendments and supplements thereto (the
"Proxy Statement"), shall on the date the Proxy Statement is first mailed to
shareholders, at the time of the Special Meeting or at the Effective Time, be
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Special
Meeting which has become false or misleading. None of the information to be
filed by Fairchild and Shared Technologies with the SEC in connection with the
Merger or in any other documents to be filed with the SEC or any other
regulatory or governmental
agency or authority in connection with the transactions contemplated hereby,
including any amendments thereto (the "Other Documents"), insofar as such
information was provided or supplied by Shared Technologies, will contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy Statement
shall comply in all material respects with the requirements of the Exchange Act.
5.9 Litigation. Except as set forth in Section 5.9 of the
Disclosure Statement, there is no (i) claim, action, suit or proceeding pending
or, to the best knowledge of Shared Technologies or any of its subsidiaries,
threatened against or relating to Shared Technologies or any of its subsidiaries
before any court or governmental or regulatory authority or body or arbitration
tribunal, or (ii) outstanding judgment, order, writ, injunction or decree, or
application, request or motion therefor, of any court, governmental agency or
arbitration tribunal in a proceeding to which Shared Technologies, any
subsidiary of Shared Technologies or any of their respective assets was or is a
party except, in the case of clauses (i) and (ii) above, such as would not,
individually or in the aggregate, either have a Shared Technologies Material
Adverse Effect or materially impair Shared Technologies' ability to consummate
the Merger.
5.10 Insurance. Section 5.10 of the Disclosure Statement lists
all insurance policies in force on the date hereof covering the businesses,
properties and assets of Shared Technologies and its subsidiaries, and all such
policies are currently in effect. True and complete copies of all such policies
have been delivered to Fairchild. Except as set forth in Section 5.10 of the
Disclosure Statement, Shared Technologies has not received notice of the
cancellation of any such insurance policy.
5.11 Title to and Condition of Properties. Except as set forth
in Section 5.11 of the Disclosure Statement, Shared Technologies and its
subsidiaries have good title to all of the real property and own outright all of
the personal property (except for leased property or assets) which is reflected
on Shared Technologies' and its subsidiaries' December 31, 1994 audited
consolidated balance sheet contained in Shared Technologies' Form 10-K for the
fiscal year ended December 31, 1994 filed with the SEC (the "Balance Sheet")
except for property
since sold or otherwise disposed of in the ordinary course of business and
consistent with past practice. Except as set forth in Section 5.11 of the
Disclosure Statement, no such real or personal property is subject to claims,
liens or encumbrances, whether by mortgage, pledge, lien, conditional sale
agreement, charge or otherwise, except for those which would not, individually
or in the aggregate, have a Shared Technologies Material Adverse Effect. Section
5.11 of the Disclosure Statement contains a true and complete list of all real
properties owned by Shared Technologies and its subsidiaries.
5.12 Leases. There has been made available to Fairchild true
and complete copies of each lease requiring the payment of rentals aggregating
at least $35,000 per annum pursuant to which real or personal property is held
under lease by Shared Technologies or any of its subsidiaries, and true and
complete copies of each lease pursuant to which Shared Technologies or any of
its subsidiaries leases real or personal property to others. A true and complete
list of all such leases is set forth in Section 5.12 of the Disclosure
Statement. All of the leases so listed are valid and subsisting and in full
force and effect and are subject to no default with respect to Shared
Technologies or its subsidiaries, as the case may be, and, to Shared
Technologies' knowledge, are in full force and effect and subject to no default
with respect to any other party thereto, and the leased real property is in good
and satisfactory condition.
5.13 Contracts and Commitments. Other than as disclosed in
Section 5.13 of the Disclosure Statement, no existing contract or commitment
contains an agreement with respect to any change of control that would be
triggered by the Merger. Other than as set forth in Section 5.13 of the
Disclosure Statement, neither this Agreement, the Merger nor the other
transactions contemplated hereby will result in any outstanding loans or
borrowings by Shared Technologies or any subsidiary of Shared Technologies
becoming due, going into default or giving the lenders or other holders of debt
instruments the right to require Shared Technologies or any of its subsidiaries
to repay all or a portion of such loans or borrowings.
5.14 Labor Matters. Each of Shared Technologies and its
subsidiaries is in compliance in all material respects with all applicable laws
respecting employment and employment
practices, terms and conditions of employment and wages and hours, and neither
Shared Technologies nor any of its subsidiaries is engaged in any unfair labor
practice. There is no labor strike, slowdown or stoppage pending (or, to the
best knowledge of Shared Technologies, any labor strike or stoppage threatened)
against or affecting Shared Technologies or any of its subsidiaries. No petition
for certification has been filed and is pending before the National Labor
Relations Board with respect to any employees of Shared Technologies or any of
its subsidiaries who are not currently organized.
5.15 Compliance with Law. Except for matters set forth in the
Disclosure Statement, neither Shared Technologies nor any of its subsidiaries
has violated or failed to comply with any statute, law, ordinance, regulation,
rule or order of any foreign, federal, state or local government or any other
governmental department or agency, or any judgment, decree or order of any
court, applicable to its business or operations, except where any such violation
or failure to comply would not, individually or in the aggregate, have a Shared
Technologies Material Adverse Effect; the conduct of the business of Shared
Technologies and its subsidiaries is in conformity with all foreign, federal,
state and local energy, public utility and health requirements, and all other
foreign, federal, state and local governmental and regulatory requirements,
except where such nonconformities would not, individually or in the aggregate,
have a Shared Technologies Material Adverse Effect. Shared Technologies and its
subsidiaries have all permits, licenses and franchises from governmental
agencies required to conduct their businesses as now being conducted, except for
such permits, licenses and franchises the absence of which would not,
individually or in the aggregate, have a Shared Technologies Material Adverse
Effect.
5.16 Board Recommendation. The Board of Directors of Shared
Technologies has, by a majority vote at a meeting of such Board duly held on, or
by written consent of such Board dated, November 9, 1995, approved and adopted
this Agreement, the Merger and the other transactions contemplated hereby,
determined that the Merger is fair to the holders of shares of Shared
Technologies Common Stock and recommended that the holders of such shares of
Common Stock approve and adopt this Agreement, the Merger and the other
transactions contemplated hereby.
5.17 Employment and Labor Contracts. Neither Shared
Technologies nor any of its subsidiaries is a party to any employment,
management services, consultation or other similar contract with any past or
present officer, director, employee or other person or, to the best of Shared
Technologies' knowledge, any entity affiliated with any past or present officer,
director or employee or other person other than those set forth in Section 5.17
of the Disclosure Statement and other than those which (x) have a term of less
than one year and (y) involve payments of less than $30,000 per year, in each
case true and complete copies of which contracts have been delivered to
Fairchild, and other than the agreements executed by employees generally, the
forms of which have been delivered to Fairchild.
5.18 Patents and Trademarks. Shared Technologies and its
subsidiaries own or have the right to use all patents, patent applications,
trademarks, trademark applications, trade names, inventions, processes, know-how
and trade secrets necessary to the conduct of their respective businesses,
except for those which the failure to own or have the right to use would not,
individually or in the aggregate, have a Shared Technologies Material Adverse
Effect ("Proprietary Rights"). All issued patents and trademark registrations
and pending patent and trademark applications of the Proprietary Rights have
previously been delivered to Fairchild. No rights or licenses to use Proprietary
Rights have been granted by Shared Technologies or its subsidiaries except those
listed in Section 5.18 of the Disclosure Statement; and no contrary assertion
has been made to Shared Technologies or any of its subsidiaries or notice of
conflict with any asserted right of others has been given by any person except
those which, even if correct, would not, individually or in the aggregate, have
a Shared Technologies Material Adverse Effect. Shared Technologies has not given
notice of any asserted claim or conflict to a third party with respect to Shared
Technologies' Proprietary Rights. True and complete copies of all material
license agreements under which Shared Technologies or any of its subsidiaries is
a licensor or licensee have been delivered to Fairchild.
5.19 Taxes. "Tax" or "Taxes" shall mean all federal, state,
local and foreign taxes, duties, levies, charges and assessments of any nature,
including social security payments and deductibles relating to wages, salaries
and benefits and payments to subcontractors (to the extent required under
applicable Tax law), and also including all interest, penalties and additions
imposed with respect to such amounts. Except as set forth in Section 5.19 of the
Disclosure Statement: (i) Shared Technologies and its subsidiaries have prepared
and timely filed or will timely file with the appropriate governmental agencies
all franchise, income and all other material Tax returns and reports required to
be filed for any period ending on or before the Effective Time, taking into
account any extension of time to file granted to or obtained on behalf of Shared
Technologies and/or its subsidiaries; (ii) all material Taxes of Shared
Technologies and its subsidiaries in respect of the pre-Merger period have been
paid in full to the proper authorities, other than such Taxes as are being
contested in good faith by appropriate proceedings and/or are adequately
reserved for in accordance with generally accepted accounting principles; (iii)
all deficiencies resulting from Tax examinations of federal, state and foreign
income, sales and franchise and all other material Tax returns filed by Shared
Technologies and its subsidiaries have either been paid or are being contested
in good faith by appropriate proceedings; (iv) to the best knowledge of Shared
Technologies, no deficiency has been asserted or assessed against Shared
Technologies or any of its subsidiaries, and no examination of Shared
Technologies or any of its subsidiaries is pending or threatened for any
material amount of Tax by any taxing authority; (v) no extension of the period
for assessment or collection of any material Tax is currently in effect and no
extension of time within which to file any material Tax return has been
requested, which Tax return has not since been filed; (vi) no material Tax liens
have been filed with respect to any Taxes; (vii) Shared Technologies and each of
its subsidiaries will not make any voluntary adjustment by reason of a change in
their accounting methods for any pre-Merger period that would affect the taxable
income or deductions of Shared Technologies or any of its subsidiaries for any
period ending after the Effective Date; (viii) Shared Technologies and its
subsidiaries have made timely payments of the Taxes required to be deducted and
withheld from the wages paid to their employees; (ix) the Tax Sharing Agreement
under which Shared Technologies or any subsidiary will have any obligation or
liability on or after the Effective Date is attached as Exhibit E; (x) Shared
Technologies has foreign losses as defined in Section 904(f)(2) of the Code
listed in Section 5.19 of the Disclosure Statement; (xi) Shared Technologies and
its subsidiaries have unused foreign tax credits set forth in Section 5.19 of
the Disclosure Statement; and (xii) to the best knowledge of Shared
Technologies, there are no
transfer pricing agreements made with any taxation authority involving Shared
Technologies and its subsidiaries.
5.20 Employee Benefit Plans; ERISA.
(a) Except as set forth in Section 5.20 of the Disclosure
Statement, there are no "employee pension benefit plans" as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), covering employees employed in the United States, maintained or
contributed to by Shared Technologies or any of its subsidiaries, or to which
Shared Technologies or any of its subsidiaries contributes or is obligated to
make payments thereunder or otherwise may have any liability ("Pension Benefits
Plans").
(b) Shared Technologies has furnished Fairchild with a true
and complete schedule of all "welfare benefit plans" (as defined in Section 3(1)
of ERISA) covering employees employed in the United States, maintained or
contributed to by Shared Technologies or any of its subsidiaries ("Welfare
Plans"), all multiemployer plans as defined in Section 3(37) of ERISA covering
employees employed in the United States to which Shared Technologies or any of
its subsidiaries is required to make contributions or otherwise may have any
liability, and, to the extent covering employees employed in the United States,
all stock bonus, stock option, restricted stock, stock appreciation right, stock
purchase, bonus, incentive, deferred compensation, severance and vacation plans
maintained or contributed to by Shared Technologies or a subsidiary.
(c) Shared Technologies and each of its subsidiaries, and each
of the Pension Benefit Plans and Welfare Plans, are in compliance with the
applicable provisions of ERISA (the "Code") and other applicable laws except
where the failure to comply would not, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect.
(d) All contributions to, and payments from, the Pension
Benefit Plans which are required to have been made in accordance with the
Pension Benefit Plans and, when applicable, Section 302 of ERISA or Section 412
of the Code have been timely made except where the failure to make such
contributions or payments on a timely basis would not, individually or in the
aggregate, have a Shared Technologies Material Adverse Effect. All contributions
required to have been made in accordance with
Section 302 of ERISA or Section 412 of the Code to any employee pension benefit
plan (as defined in Section 3(2) of ERISA) maintained by an ERISA Affiliate of
Shared Technologies or any of its subsidiaries have been timely made except
where the failure to make such contributions on a timely basis would not
individually or in the aggregate have a Shared Technologies Material Adverse
Effect. For purposes of this Agreement, "ERISA Affiliate" shall mean any person
(as defined in Section 3(9) of ERISA) that is a member of any group of persons
described in Section 414(b), (c), (m) or (o) of the Code of which Shared
Technologies or a subsidiary is a member.
(e) The Pension Benefit Plans intended to qualify under
Section 401 of the Code are so qualified and have been determined by the
Internal Revenue Service ("IRS") to be so qualified and nothing has occurred
with respect to the operation of such Pension Benefit Plans which would cause
the loss of such qualification or exemption or the imposition of any material
liability, penalty or tax under ERISA or the Code. Such plans have been or will
be, on a timely basis, (i) amended to comply with changes to the Code made by
the Tax Reform Act of 1986, the Unemployment Compensation Amendments of 1992,
the Omnibus Budget Reconciliation Act of 1993, and other applicable legislative,
regulatory or administrative requirements; and (ii) submitted to the Internal
Revenue Service for a determination of their tax qualification, as so amended;
and no such amendment will adversely affect the qualification of such plans.
(f) Each Welfare Plan that is intended to qualify for
exclusion of benefits thereunder from the income of participants or for any
other tax-favored treatment under any provisions of the Code (including, without
limitation, Sections 79, 105, 106, 125 or 129 of the Code) is and has been
maintained in compliance with all pertinent provisions of the Code and Treasury
Regulations thereunder.
(g) Except as disclosed in Shared Technologies' Form 10-K for
the fiscal year ended December 31, 1994, there are (i) no investigations
pending, to the best knowledge of Shared Technologies, by any governmental
entity involving the Pension Benefit Plans or Welfare Plans, (ii) no termination
proceedings involving the Pension Benefit Plans and (iii) no pending or, to the
best of Shared Technologies' knowledge, threatened claims (other than routine
claims for benefits), suits or proceedings against any Pension Benefit or
Welfare Plan, against the assets
of any of the trusts under any Pension Benefit or Welfare Plan or against any
fiduciary of any Pension Benefit or Welfare Plan with respect to the operation
of such plan or asserting any rights or claims to benefits under any Pension
Benefit or Welfare Plan or against the assets of any trust under such plan,
which would, in the case of clause (i), (ii) or (iii) of this paragraph (f),
give rise to any liability which would, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect, nor, to the best of Shared
Technologies' knowledge, are there any facts which would give rise to any
liability which would, individually or in the aggregate, have a Shared
Technologies Material Adverse Effect in the event of any such investigation,
claim, suit or proceeding.
(h) None of Shared Technologies, any of its subsidiaries or
any employee of the foregoing, nor any trustee, administrator, other fiduciary
or any other "party in interest" or "disqualified person" with respect to the
Pension Benefit Plans or Welfare Plans, has engaged in a "prohibited
transaction" (as such term is defined in Section 4975 of the Code or Section 406
of ERISA) which would be reasonably likely to result in a tax or penalty on
Shared Technologies or any of its subsidiaries under Section 4975 of the Code or
Section 502(i) of ERISA which would, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect.
(i) Neither the Pension Benefit Plans subject to Title IV of
ERISA nor any trust created thereunder has been terminated nor have there been
any "reportable events" (as defined in Section 4043 of ERISA and the regulations
thereunder) with respect to either thereof which would, individually or in the
aggregate, have a Shared Technologies Material Adverse Effect nor has there been
any event with respect to any Pension Benefit Plan requiring disclosure under
Section 4063(a) of ERISA or any event with respect to any Pension Benefit Plan
requiring disclosure under Section 4041(c)(3)(C) of ERISA which would,
individually or in the aggregate, have a Shared Technologies Material Adverse
Effect.
(j) Neither Shared Technologies nor any subsidiary of Shared
Technologies has incurred any currently outstanding liability to the Pension
Benefit Guaranty Corporation (the "PBGC") or to a trustee appointed under
Section 4042(b) or (c) of ERISA other than for the payment of premiums, all of
which have been paid when due. No Pension Benefit Plan has applied for, or
received, a waiver of the minimum funding standards imposed by Section 412 of
the Code. The information supplied to the actuary by Shared Technologies or any
of its subsidiaries for use in preparing the most recent actuarial report for
Pension Benefit Plans is complete and accurate in all material respects.
(k) Neither Shared Technologies, any of its subsidiaries nor
any of their ERISA Affiliates has any liability (including any contingent
liability under Section 4204 of ERISA) with respect to any multiemployer plan,
within the meaning of Section 3(37) of ERISA, covering employees employed in the
United States.
(l) Except as disclosed in Section 5.20 of the Disclosure
Statement, with respect to each of the Pension Benefit and Welfare Plans, true,
correct and complete copies of the following documents have been delivered to
Fairchild: (i) the current plans and related trust documents, including
amendments thereto, (ii) any current summary plan descriptions, (iii) the most
recent Forms 5500, financial statements and actuarial reports, if applicable,
(iv) the most recent IRS determination letter, if applicable; and (v) if any
application for an IRS determination letter is pending, copies of all such
applications for determination including attachments, exhibits and schedules
thereto.
(m) Neither Shared Technologies, any of its subsidiaries, any
organization to which Shared Technologies is a successor or parent corporation,
within the meaning of Section 4069(b) of ERISA, nor any of their ERISA
Affiliates has engaged in any transaction, within the meaning of Section 4069(a)
of ERISA, the liability for which would, individually or in the aggregate, have
a Shared Technologies Material Adverse Effect.
(n) Except as disclosed in Section 5.20 of the Disclosure
Statement, none of the Welfare Plans maintained by Shared Technologies or any of
its subsidiaries are retiree life or retiree health insurance plans which
provide for continuing benefits or coverage for any participant or any
beneficiary of a participant following termination of employment, except as may
be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), or except at the expense of the participant or the
participant's beneficiary. Shared Technologies and each of its subsidiaries
which maintain a "group health plan" within the meaning of Section 5000(b)(1) of
the Code
have complied with the notice and continuation requirements of Section 4980B of
the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder except where the failure to comply would not, individually or in the
aggregate, have a Shared Technologies Material Adverse Effect.
(o) No liability under any Pension Benefit or Welfare Plan has
been funded nor has any such obligation been satisfied with the purchase of a
contract from an insurance company as to which Shared Technologies or any of its
subsidiaries has received notice that such insurance company is in
rehabilitation.
(p) Except pursuant to the agreements listed in Section 5.20
of the Disclosure Statement, the consummation of the transactions contemplated
by this Agreement will not result in an increase in the amount of compensation
or benefits or accelerate the vesting or timing of payment of any benefits or
compensation payable to or in respect of any employee of Shared Technologies or
any of its subsidiaries.
(q) Shared Technologies has disclosed to Fairchild in Section
5.20 of the Disclosure Statement each material Foreign Plan to the extent the
benefits provided thereunder are not mandated by the laws of the applicable
foreign jurisdiction. Shared Technologies and each of its subsidiaries and each
of the Foreign Plans are in compliance with applicable laws and all required
contributions have been made to the Foreign Plans, except where the failure to
comply or make contributions would not, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect. For purposes hereof, the term
"Foreign Plan" shall mean any plan, with respect to benefits voluntarily
provided by Shared Technologies or any subsidiary with respect to employees of
any of them employed outside the United States.
5.21 Environmental Matters.
(a) Except as set forth in Section 5.21 of the Disclosure
Statement:
(i) each of Shared Technologies and its subsidiaries,
and the properties and assets owned by them, and to the actual
knowledge of Shared Technologies, all properties operated, leased,
managed or used by Shared Technologies and its subsidiaries are in
compliance with all applicable Environmental Laws except where the
failure to be
in compliance would not, individually or in the aggregate, have a
Shared Technologies Material Adverse Effect;
(ii) there is no Environmental Claim that is (1) pending
or threatened against Shared Technologies or any of its subsidiaries or
(2) pending or threatened against any person or entity or any assets
owned by Shared Technologies or its subsidiaries whose liability for
such Environmental Claim has been retained or assumed by contract or
otherwise by Shared Technologies or any of its subsidiaries or can be
imputed or attributed by law to Shared Technologies or any of its
subsidiaries, the effect of any of which would, individually or in the
aggregate, have a Shared Technologies Material Adverse Effect;
(iii) there are no past or present actions, activities,
circumstances, conditions, events or incidents arising out of, based
upon, resulting from or relating to the ownership, operation or use of
any property or assets currently or formerly owned, operated or used by
Shared Technologies or any of its subsidiaries (or any predecessor in
interest of any of them), including, without limitation, the
generation, storage, treatment or transportation of any Hazardous
Materials, or the emission, discharge, disposal or other Release or
threatened Release of any Hazardous Materials into the Environment
which is presently expected to result in an Environmental Claim;
(iv) no lien has been recorded under any Environmental
Law with respect to any material property, facility or asset owned by
Shared Technologies or any of its subsidiaries; and to the actual
knowledge of Shared Technologies, no lien has been recorded under any
Environmental Law with respect to any material property, facility or
asset, operated, leased or managed or used by Shared Technologies or
its subsidiaries and relating to or resulting from Shared Technologies
or its subsidiaries operations, lease, management or use for which
Shared Technologies or its subsidiaries may be legally responsible;
(v) neither Shared Technologies nor any of its
subsidiaries has received notice that it has been identified as a
potentially responsible party or any request for information under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended
("CERCLA"), the Resource Conservation and Recovery Act, as amended
("RCRA"), or any comparable state law nor has Shared Technologies or
any of its subsidiaries received any notification that any Hazardous
Materials that it or any of their respective predecessors in interest
has used, generated, stored, treated, handled, transported or disposed
of, or arranged for transport for treatment or disposal of, or arranged
for disposal or treatment of, has been found at any site at which any
person is conducting or plans to conduct an investigation or other
action pursuant to any Environmental Law;
(vi) to the actual knowledge of Shared Technologies,
there has been no Release of Hazardous Materials at, on, upon, under,
from or into any real property in the vicinity of any property
currently or formerly owned by Shared Technologies or any of its
subsidiaries that, through soil, air, surface water or groundwater
migration or contamination, has become located on, in or under such
properties and, to the actual knowledge of Shared Technologies, there
has been no release of Hazardous Materials at, on, upon, under or from
any property currently or formerly operated, leased, managed or used by
Shared Technologies or any of its subsidiaries that through soil, air,
surface water or groundwater migration or contamination has become
located on, in or under such properties as resulting from or relating
to Shared Technologies or any of its subsidiaries operations, lease,
management or use thereof of for which Shared Technologies and any of
its subsidiaries may be legally responsible;
(vii) no asbestos or asbestos containing material or any
polychlorinated biphenyls are contained within products presently
manufactured and, to the best knowledge of Shared Technologies
manufactured at any time by Shared Technologies or any of its
subsidiaries and, to the actual knowledge of Shared Technologies there
is no asbestos or asbestos containing material or any polychlorinated
biphenyl in, on or at any property or any facility or equipment owned,
operated, leased, managed or used by Shared Technologies or any of its
subsidiaries;
(viii) no property owned by Shared Technologies or any of
its subsidiaries and to the actual knowledge of Shared Technologies, no
property operated, leased, managed
or used by Shared Technologies and any of its subsidiaries is (i)
listed or proposed for listing on the National Priorities List under
CERCLA or (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to
CERCLA, or on any comparable list published by any governmental
authority;
(ix) no underground storage tank or related piping is
located at, under or on any property owned by Shared Technologies or
any of its subsidiaries or to the actual knowledge of Shared
Technologies, any property operated, leased, managed or used by Shared
Technologies, nor to the actual knowledge of Shared Technologies, has
any such tank or piping been removed or decommissioned from or at such
property;
(x) all environmental investigations, studies, audits,
assessments or reviews conducted of which Shared Technologies has
actual knowledge in relation to the current or prior business or assets
owned, operated, leased, managed or used of Shared Technologies or any
of its subsidiaries or any real property, assets or facility now or
previously owned, operated, leased, managed or used by Shared
Technologies or any of its subsidiaries have been delivered to
Fairchild; and
(xi) each of Shared Technologies and its subsidiaries has
obtained all permits, licenses and other authorizations
("Authorizations") required under any Environmental Law with respect to
the operation of its assets and business and its use, ownership and
operation of any real property, and each such Authorization is in full
force and effect.
(b) For purposes of Section 5.21(a):
(i) "Actual Knowledge of Shared Technologies" means the
actual knowledge of individuals at the corporate management level of
Shared Technologies and its subsidiaries.
(ii) "Environment" means any surface water, ground water,
drinking water supply, land surface or subsurface
strata, ambient air and including, without limitation, any indoor
location;
(iii) "Environmental Claim" means any notice or claim by
any person alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs,
governmental costs, or harm, injuries or damages to any person,
property or natural resources, and any fines or penalties) arising out
of, based upon, resulting from or relating to (1) the emission,
discharge, disposal or other release or threatened release in or into
the Environment of any Hazardous Materials or (2) circumstances forming
the basis of any violation, or alleged violation, of any applicable
Environmental Law;
(iv) "Environmental Laws" means all federal, state, and
local laws, codes, and regulations relating to pollution, the
protection of human health, the protection of the Environment or the
emission, discharge, disposal or other release or threatened release of
Hazardous Materials in or into the Environment;
(v) "Hazardous Materials" means pollutants, contaminants
or chemical, industrial, hazardous or toxic materials or wastes, and
includes, without limitation, asbestos or asbestos-containing
materials, PCBs and petroleum, oil or petroleum or oil products,
derivatives or constituents; and
(vi) "Release" means any past or present spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of Hazardous Materials into
the Environment or within structures (including the abandonment or
discarding of barrels, containers or other closed receptacles
containing any Hazardous Materials).
5.22 Disclosure. No representation or warranty by Shared
Technologies herein, or in any certificate furnished by or on behalf of Shared
Technologies to Fairchild in connection herewith, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
5.23 Absence of Undisclosed Liabilities. Neither Shared
Technologies nor any of its subsidiaries has any liabilities or obligations
(including without limitation any liabilities or obligations related to Shared
Technologies Cellular, Inc.) of any nature, whether absolute, accrued,
unmatured, contingent or otherwise, or any unsatisfied judgments or any leases
of personalty or realty or unusual or extraordinary commitments, except the
liabilities recorded on the Balance Sheet and the notes thereto, and except for
liabilities or obligations incurred in the ordinary course of business and
consistent with past practice since December 31, 1994 that would not
individually or in the aggregate have a Shared Technologies Material Adverse
Effect.
5.24 Finders or Brokers. Except as set forth in Section 5.24
of the Disclosure Statement, none of Shared Technologies, the subsidiaries of
Shared Technologies, the Board of Directors or any member of the Board of
Directors has employed any investment banker, broker, finder or intermediary in
connection with the transactions contemplated hereby who might be entitled to a
fee or any commission in connection with the Merger, and Section 5.24 of the
Disclosure Statement sets forth the maximum consideration (present and future)
agreed to be paid to each such party.
5.25 State Antitakeover Statutes. Shared Technologies has
granted all approvals and taken all other steps necessary to exempt the Merger
and the other transactions contemplated hereby from the requirements and
provisions of Section 203 of the DGCL and any other applicable state
antitakeover statute or regulation such that none of the provisions of such
Section 203 or any other "business combination," "moratorium," "control share"
or other state antitakeover statute or regulation (x) prohibits or restricts
Shared Technologies' ability to perform its obligations under this Agreement or
its ability to consummate the Merger and the other transactions contemplated
hereby, (y) would have the effect of invalidating or voiding this Agreement any
provision hereof, or (z) would subject Fairchild to any material impediment or
condition in connection with the exercise of any of its rights under this
Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TFC, RHI AND FAIRCHILD
Each of TFC, RHI and Fairchild represents and warrants to
Shared Technologies that:
6.1 Organization and Qualification. Each of Fairchild and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of Fairchild and its
subsidiaries is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except for failures to be so qualified or in good standing which
would not, individually or in the aggregate, have a material adverse effect on
the general affairs, management, business, operations, condition (financial or
otherwise) or prospects of Fairchild and its subsidiaries taken as a whole (a
"Fairchild Material Adverse Effect"). Neither Fairchild nor any of its
subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation (or other applicable charter document) or By-Laws. Fairchild has
delivered to Shared Technologies accurate and complete copies of the Certificate
of Incorporation (or other applicable charter document) and By-Laws, as
currently in effect, of each of Fairchild and its subsidiaries.
6.2 Capital Stock of Subsidiaries. The only direct or indirect
subsidiaries of Fairchild are those listed in Section 6.2 of the Disclosure
Statement previously delivered by Fairchild to Shared Technologies (the
"Disclosure Statement"). Fairchild is directly or indirectly the record (except
for directors' qualifying shares) and beneficial owner (including all qualifying
shares owned by directors of such subsidiaries as reflected in Section 6.2 of
the Disclosure Statement) of all of the outstanding shares of capital stock of
each of its subsidiaries, there are no proxies with respect to such shares, and
no equity securities of any of such subsidiaries are or may be required to be
issued by reason of any options, warrants, scrip, rights to subscribe for, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any such subsidiary is
bound to issue additional shares of its capital stock or securities convertible
into or exchangeable for such shares. Other than as set forth in Section 6.2 of
the Disclosure Statement, all of such shares so owned by Fairchild are validly
issued, fully paid and nonassessable and are owned by it free and clear of any
claim, lien or encumbrance of any kind with respect thereto. Except as disclosed
in Section 6.2 of the Disclosure Statement, Fairchild does not directly or
indirectly own any interest in any corporation, partnership, joint venture or
other business association or entity.
6.3 Capitalization. The authorized capital stock of Fairchild
consists of 1,400 shares of Common Stock, par value $100.00 per share, and
3,000,000 shares of Preferred Stock, without par value. As of the date hereof,
1,400 shares of Common Stock are issued and outstanding (all of which are owned
by RHI), 424,701 shares of Series A Preferred Stock are issued and outstanding,
2,278 shares of Series B Preferred Stock are issued and outstanding (which will
be extinguished immediately prior to the Effective Time) and 558,360 shares of
Series C Preferred Stock are issued and outstanding. All of such issued and
outstanding shares are validly issued, fully paid and nonassessable and free of
preemptive rights. Except as set forth above, there are not now, and at the
Effective Time, there will not be, any shares of capital stock of Fairchild
issued or outstanding or any subscriptions, options, warrants, calls, claims,
rights (including without limitation any stock appreciation or similar rights),
convertible securities or other agreements or commitments of any character
obligating Fairchild to issue, transfer or sell any of its securities.
6.4 Authority Relative to This Agreement. Each of TFC and RHI
is a corporation duly organized, validly existing and in good standing under the
laws of Delaware. Each of TFC, RHI and Fairchild has full corporate power and
authority to execute and deliver this Agreement and to consummate the Merger and
other transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and other transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of each
of TFC (which owns all of the outstanding common stock of RHI), RHI and
Fairchild and no other corporate proceedings on the part of TFC, RHI or
Fairchild are necessary to authorize this Agreement or to consummate the Merger
or other transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered
by each of TFC (which owns all of the outstanding common stock of RHI), RHI and
Fairchild and, assuming the due authorization, execution and delivery hereof by
Shared Technologies, constitutes a valid and binding agreement of each of TFC,
RHI and Fairchild, enforceable against each of TFC, RHI and Fairchild in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable or fiduciary principles.
6.5 No Violations, etc.
(a) Assuming that all filings, permits, authorizations,
consents and approvals or waivers thereof have been duly made or obtained as
contemplated by Section 6.5(b) hereof, neither the execution and delivery of
this Agreement by TFC, RHI or Fairchild nor the consummation of the Merger or
other transactions contemplated hereby nor compliance by Fairchild with any of
the provisions hereof will (i) violate, conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or suspension of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of TFC, RHI or Fairchild or any of their respective
subsidiaries under, any of the terms, conditions or provisions of (x) their
respective charters or by-laws, (y) except as set forth in Section 6.5 of the
Disclosure Statement, any note, bond, mortgage, indenture or deed of trust, or
(z) any license, lease, agreement or other instrument or obligation, to which
TFC, RHI or Fairchild or any such subsidiary is a party or to which they or any
of their respective properties or assets may be subject, or (ii) subject to
compliance with the statutes and regulations referred to in the next paragraph,
violate any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to TFC, RHI or Fairchild or any of their respective
subsidiaries or any of their respective properties or assets, except, in the
case of clauses (i)(z) and (ii) above, for such violations, conflicts, breaches,
defaults, terminations, suspensions, accelerations, rights of termination or
acceleration or creations of liens, security interests, charges or encumbrances
which would not, individually or in the aggregate, either have a Fairchild
Material Adverse Effect or materially impair Fairchild's ability
to consummate the Merger or other transactions contemplated hereby.
(b) No filing or registration with, notification to and no
permit, authorization, consent or approval of any governmental entity is
required by TFC, RHI or Fairchild or any of their respective subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
by Fairchild of the Merger or other transactions contemplated hereby, except (i)
in connection with the applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware, (iii) filings with applicable state public utility commissions, and
(iv) such other filings, registrations, notifications, permits, authorizations,
consents or approvals the failure of which to be obtained, made or given would
not, individually or in the aggregate, either have a Fairchild Material Adverse
Effect or materially impair Fairchild's ability to consummate the Merger or
other transactions contemplated hereby.
(c) As of the date hereof, Fairchild and its subsidiaries are
not in violation of or default under (x) their respective charter or bylaws, and
(y) except as set forth in Sections 6.5 and 6.9 of the Disclosure Statement, any
note, bond, mortgage, indenture or deed of trust, or (z) any license, lease,
agreement or other instrument or obligation to which Fairchild or any such
subsidiary is a party or to which they or any of their respective properties or
assets may be subject, except, in the case of clauses (y) and (z) above, for
such violations or defaults which would not, individually or in the aggregate,
either have a Fairchild Material Adverse Effect or materially impair Fairchild's
ability to consummate the Merger or other transactions contemplated hereby.
6.6 Commission Filings; Financial Statements.
(a) Fairchild has filed all required forms, reports and
documents during the past three years (collectively, the "SEC Reports") with the
Securities and Exchange Commission (the "SEC"), all of which complied when filed
in all material respects with all applicable requirements of the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act") and the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder
(the "Exchange Act"). As of their respective dates the SEC Reports (including
all exhibits and schedules thereto and documents incorporated by reference
therein) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements of Fairchild and its subsidiaries
included or incorporated by reference in such SEC Reports were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto), and fairly presented the consolidated financial position of Fairchild
and its subsidiaries (before giving effect to the Fairchild Reorganization) as
of the dates thereof and the consolidated results of operations and consolidated
cash flows for the periods then ended (subject, in the case of any unaudited
interim financial statements, to normal year-end adjustments and to the extent
they may not include footnotes or may be condensed or summary statements).
(b) Fairchild will deliver to Shared Technologies as soon as
they become available true and complete copies of any report or statement mailed
by it to its securityholders generally or filed by it with the SEC, in each case
subsequent to the date hereof and prior to the Effective Time. As of their
respective dates, such reports and statements (excluding any information therein
provided by Shared Technologies, as to which Fairchild makes no representation)
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not misleading
and will comply in all material respects with all applicable requirements of
law. The audited consolidated financial statements and unaudited consolidated
interim financial statements of Fairchild and its subsidiaries to be included or
incorporated by reference in such reports and statements (excluding any
information therein provided by Shared Technologies, as to which Fairchild makes
no representation) will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and will fairly
present the consolidated financial position of Fairchild and its subsidiaries
(before giving effect to the Fairchild Reorganization unless otherwise specified
therein) as
of the dates thereof and the consolidated results of operations and consolidated
cash flows for the periods then ended (subject, in the case of any unaudited
interim financial statements, to normal year-end adjustments and to the extent
they may not include footnotes or may be condensed or summary statements).
(c) Fairchild has delivered to Shared Technologies audited
financial statements for the three years ended June 30, 1995 (the "Fairchild
Financial Statements") which were prepared in accordance with generally accepted
accounting principles applied on a consistent basis and which fairly present the
consolidated financial position, results of operations and cash flows of
Fairchild and its subsidiaries as if the Fairchild Reorganization had occurred
at the beginning of such three-year period. In addition, Fairchild has delivered
to Shared Technologies an unaudited pro forma balance sheet of each of D-M-E
Inc., Fairchild Fasteners Inc. and RHI as of June 30, 1995 which was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and which fairly presents the consolidated financial position of such
entities if the Fairchild Reorganization had occurred at such date.
(d) Fairchild will deliver to Shared Technologies within 45
days of the end of each fiscal quarter subsequent to the date hereof and prior
to the Effective Time unaudited consolidated interim financial statements for
such quarter prepared in accordance with generally accepted accounting
principles on the same basis as the Fairchild Financial Statements were
prepared.
6.7 Absence of Changes or Events. Except as set forth in
Fairchild's Form 10-K for the fiscal year ended June 30, 1995, as filed with the
SEC, since June 30, 1995:
(a) there has been no material adverse change, or any
development involving a prospective material adverse change, in the general
affairs, management, business, operations, condition (financial or otherwise) or
prospects of Fairchild and its subsidiaries taken as a whole; (it being
understood that no such material adverse change shall be deemed to have occurred
with respect to Fairchild and VSI, taken as a whole, if the pro forma
consolidated net worth of Fairchild, as evidenced by a pro forma closing date
balance sheet to be delivered to Shared Technologies on the Effective Date, is
at least $80,000,000);
(b) except as contemplated by Schedule 9.1 and except for
dividends by Fairchild to RHI in an amount not exceeding capital contributions
made to Fairchild by RHI since June 30, 1995 plus $4,000,000, there has not been
any direct or indirect redemption, purchase or other acquisition of any shares
of capital stock of Fairchild or any of its subsidiaries, or any declaration,
setting aside or payment of any dividend or other distribution by Fairchild or
any of its subsidiaries in respect of their capital stock;
(c) except in the ordinary course of its business and
consistent with past practice neither Fairchild nor any of its subsidiaries has
incurred any indebtedness for borrowed money, or assumed, guaranteed, endorsed
or otherwise as an accommodation become responsible for the obligations of any
other individual, firm or corporation, or made any loans or advances to any
other individual, firm or corporation;
(d) there has not been any change in accounting methods,
principles or practices of Fairchild or its subsidiaries;
(e) except in the ordinary course of business and for amounts
which are not material, there has not been any revaluation by Fairchild or any
of its subsidiaries of any of their respective assets, including, without
limitation, writing down the value of inventory or writing off notes or accounts
receivables;
(f) there has not been any damage, destruction or loss,
whether covered by insurance or not, except for such as would not, individually
or in the aggregate, have a Fairchild Material Adverse Effect; and
(g) there has not been any agreement by Fairchild or any of
its subsidiaries to (i) do any of the things described in the preceding clauses
(a) through (f) other than as expressly contemplated or provided for in this
Agreement or (ii) take, whether in writing or otherwise, any action which, if
taken prior to the date of this Agreement, would have made any representation or
warranty in this Article VI untrue or incorrect.
6.8 Proxy Statement. None of the information supplied by
Fairchild or any of its subsidiaries for inclusion in the
proxy statement to be sent to the shareholders of Shared Technologies in
connection with the Special Meeting (as hereinafter defined), including all
amendments and supplements thereto (the "Proxy Statement"), shall on the date
the Proxy Statement is first mailed to shareholders, and at the time of the
Special Meeting or at the Effective Time, be false or misleading with respect to
any material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they are made, not misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Special Meeting which has become false or
misleading. None of the information to be filed by Fairchild and Shared
Technologies with the SEC in connection with the Merger or in any other
documents to be filed with the SEC or any other regulatory or governmental
agency or authority in connection with the transactions contemplated hereby,
including any amendments thereto (the "Other Documents"), insofar as such
information was provided or supplied by Fairchild or any of its subsidiaries,
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement shall comply in all material respects with the
requirements of the Exchange Act.
6.9 Litigation. Except as set forth in Section 6.9 of the
Disclosure Statement, there is no (i) claim, action, suit or proceeding pending
or, to the best knowledge of TFC, RHI, Fairchild or any of their subsidiaries,
threatened against or relating to Fairchild or any of its subsidiaries before
any court or governmental or regulatory authority or body or arbitration
tribunal, or (ii) outstanding judgment, order, writ, injunction or decree, or
application, request or motion therefor, of any court, governmental agency or
arbitration tribunal in a proceeding to which Fairchild, any subsidiary of
Fairchild or any of their respective assets was or is a party except, in the
case of clauses (i) and (ii) above, such as would not, individually or in the
aggregate, either have a Fairchild Material Adverse Effect or materially impair
Fairchild's ability to consummate the Merger or other transactions contemplated
hereby.
6.10 Insurance. Section 6.10 of the Disclosure Statement lists
all insurance policies in force on the date hereof covering the businesses,
properties and assets of
Fairchild and its subsidiaries, and all such policies are currently in effect.
True and complete copies of all such policies have been delivered to Shared
Technologies. Except as set forth in Section 6.10 of the Disclosure Statement,
Fairchild has not received notice of the cancellation of any such insurance
policy.
6.11 Title to and Condition of Properties. Except as set forth
in Section 6.11 of the Disclosure Statement, Fairchild and its subsidiaries have
good title to all of the real property and own outright all of the personal
property (except for leased property or assets) which is reflected on
Fairchild's and its subsidiaries' June 30, 1995 audited consolidated balance
sheet contained in the Fairchild Financial Statements (the "Balance Sheet")
except for property since sold or otherwise disposed of in the ordinary course
of business and consistent with past practice. Except as set forth in Sections
6.9 and 6.11 of the Disclosure Statement, no such real or personal property is
subject to claims, liens or encumbrances, whether by mortgage, pledge, lien,
conditional sale agreement, charge or otherwise, except for those which would
not, individually or in the aggregate, have a Fairchild Material Adverse Effect.
Section 6.11 of the Disclosure Statement contains a true and complete list of
all real properties owned by Fairchild and its subsidiaries.
6.12 Leases. There has been made available to Shared
Technologies true and complete copies of each lease requiring the payment of
rentals aggregating at least $35,000 per annum pursuant to which real or
personal property is held under lease by Fairchild or any of its subsidiaries,
and true and complete copies of each lease pursuant to which Fairchild or any of
its subsidiaries leases real or personal property to others. A true and complete
list of all such leases is set forth in Section 6.12 of the Disclosure
Statement. All of the leases so listed are valid and subsisting and in full
force and effect and subject to no default with respect to Fairchild or its
subsidiaries, as the case may be, and, to Fairchild's knowledge, are in full
force and effect and subject to no default and subject to no default with
respect to any other party thereto, and the leased real property is in good and
satisfactory condition.
6.13 Contracts and Commitments. Other than as disclosed in
Section 6.13 of the Disclosure Statement, no existing contract or commitment
contains an agreement with
respect to any change of control that would be triggered as a result of the
Merger. Other than as set forth in Section 6.13 of the Disclosure Statement,
neither this Agreement, the Merger nor the other transactions contemplated
hereby will result in any outstanding loans or borrowings by Fairchild or any
subsidiary of Fairchild becoming due, going into default or giving the lenders
or other holders of debt instruments the right to require Fairchild or any of
its subsidiaries to repay all or a portion of such loans or borrowings.
6.14 Labor Matters. Each of Fairchild and its subsidiaries is
in compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and neither Fairchild nor any of its subsidiaries is engaged in
any unfair labor practice. There is no labor strike, slowdown or stoppage
pending (or, to the best knowledge of Fairchild, any labor strike or stoppage
threatened) against or affecting Fairchild or any of its subsidiaries. No
petition for certification has been filed and is pending before the National
Labor Relations Board with respect to any employees of Fairchild or any of its
subsidiaries who are not currently organized.
6.15 Compliance with Law. Except for matters set forth in the
Disclosure Statement, neither Fairchild nor any of its subsidiaries has violated
or failed to comply with any statute, law, ordinance, regulation, rule or order
of any foreign, federal, state or local government or any other governmental
department or agency, or any judgment, decree or order of any court, applicable
to its business or operations, except where any such violation or failure to
comply would not, individually or in the aggregate, have a Fairchild Material
Adverse Effect; the conduct of the business of Fairchild and its subsidiaries is
in conformity with all foreign, federal, state and local energy, public utility
and health requirements, and all other foreign, federal, state and local
governmental and regulatory requirements, except where such nonconformities
would not, individually or in the aggregate, have a Fairchild Material Adverse
Effect. Fairchild and its subsidiaries have all permits, licenses and franchises
from governmental agencies required to conduct their businesses as now being
conducted, except for such permits, licenses and franchises the absence of which
would not, individually or in the aggregate, have a Fairchild Material Adverse
Effect.
6.16 Board Recommendation. The Board of Directors of Fairchild
has, by a unanimous vote at a meeting of such Board duly held on, or by
unanimous written consent of such Board dated, November 9, 1995, approved and
adopted this Agreement, the Merger and the other transactions contemplated
hereby.
6.17 Employment and Labor Contracts. Neither Fairchild nor any
of its subsidiaries is a party to any employment, management services,
consultation or other similar contract with any past or present officer,
director, employee or other person or, to the best of Fairchild's knowledge, any
entity affiliated with any past or present officer, director or employee or
other person other than those set forth in Section 6.17 of the Disclosure
Statement and other than those which (x) have a term of less than one year and
(y) involve payments of less than $30,000 per year, in each case true and
complete copies of which contracts have been delivered to Shared Technologies,
and other than the agreements executed by employees generally, the forms of
which have been delivered to Shared Technologies.
6.18 Patents and Trademarks. Fairchild and its subsidiaries
own or have the right to use all patents, patent applications, trademarks,
trademark applications, trade names, inventions, processes, know-how and trade
secrets necessary to the conduct of their respective businesses, except for
those which the failure to own or have the right to use would not, individually
or in the aggregate, have a Fairchild Material Adverse Effect ("Proprietary
Rights"). All issued patents and trademark registrations and pending patent and
trademark applications of the Proprietary Rights have previously been delivered
to Shared Technologies. No rights or licenses to use Proprietary Rights have
been granted by Fairchild or its subsidiaries except those listed in Section
6.18 of the Disclosure Statement; and no contrary assertion has been made to
Fairchild or any of its subsidiaries or notice of conflict with any asserted
right of others has been given by any person except those which, even if
correct, would not, individually or in the aggregate, have a Fairchild Material
Adverse Effect. Fairchild has not given notice of any asserted claim or conflict
to a third party with respect to Fairchild's Proprietary Rights. True and
complete copies of all material license agreements under which Fairchild or any
of its subsidiaries is a licensor or licensee have been delivered to Shared
Technologies.
6.19 Taxes. "Tax" or "Taxes" shall mean all federal, state,
local and foreign taxes, duties, levies, charges and assessments of any nature,
including social security payments and deductibles relating to wages, salaries
and benefits and payments to subcontractors (to the extent required under
applicable Tax law), and also including all interest, penalties and additions
imposed with respect to such amounts. Except as set forth in Sections 6.9 and
6.19 of the Disclosure Statement: (i) Fairchild and its subsidiaries have
prepared and timely filed or will timely file with the appropriate governmental
agencies all franchise, income and all other material Tax returns and reports
required to be filed for any period ending on or before the Effective Time,
taking into account any extension of time to file granted to or obtained on
behalf of Fairchild and/or its subsidiaries; (ii) all material Taxes of
Fairchild and its subsidiaries in respect of the pre-Merger period have been
paid in full to the proper authorities, other than such Taxes as are being
contested in good faith by appropriate proceedings and/or are adequately
reserved for in accordance with generally accepted accounting principles; (iii)
all deficiencies resulting from Tax examinations of federal, state and foreign
income, sales and franchise and all other material Tax returns filed by
Fairchild and its subsidiaries have either been paid or are being contested in
good faith by appropriate proceedings; (iv) to the best knowledge of Fairchild,
no deficiency has been asserted or assessed against Fairchild or any of its
subsidiaries, and no examination of Fairchild or any of its subsidiaries is
pending or threatened for any material amount of Tax by any taxing authority;
(v) no extension of the period for assessment or collection of any material Tax
is currently in effect and no extension of time within which to file any
material Tax return has been requested, which Tax return has not since been
filed; (vi) no material Tax liens have been filed with respect to any Taxes;
(vii) Fairchild and each of its subsidiaries will not make any voluntary
adjustment by reason of a change in their accounting methods for any pre-Merger
period that would affect the taxable income or deductions of Fairchild or any of
its subsidiaries for any period ending after the Effective Date; (viii)
Fairchild and its subsidiaries have made timely payments of the Taxes required
to be deducted and withheld from the wages paid to their employees; (ix) the Tax
Sharing Agreement under which Fairchild or any subsidiary will have any
obligation or liability on or after the Effective Date is attached as Exhibit E;
(x) Fairchild has foreign losses as defined in Section 904(f)(2) of the Code
listed in Section 6.19 of the
Disclosure Statement; (xi) Fairchild and its subsidiaries have unused foreign
tax credits set forth in Section 6.19 of the Disclosure Statement; and (xii) to
the best knowledge of Fairchild, there are no transfer pricing agreements made
with any taxation authority involving Fairchild and its subsidiaries.
6.20 Employee Benefit Plans; ERISA.
(a) Except as set forth in Section 6.20 of the Disclosure
Statement, there are no "employee pension benefit plans" as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), covering employees employed in the United States, maintained or
contributed to by Fairchild or any of its subsidiaries, or to which Fairchild or
any of its subsidiaries contributes or is obligated to make payments thereunder
or otherwise may have any liability ("Pension Benefits Plans").
(b) Fairchild has furnished Shared Technologies with a true
and complete schedule of all "welfare benefit plans" (as defined in Section 3(1)
of ERISA) covering employees employed in the United States, maintained or
contributed to by Fairchild or any of its subsidiaries ("Welfare Plans"), all
multiemployer plans as defined in Section 3(37) of ERISA covering employees
employed in the United States to which Fairchild or any of its subsidiaries is
required to make contributions or otherwise may have any liability, and, to the
extent covering employees employed in the United States, all stock bonus, stock
option, restricted stock, stock appreciation right, stock purchase, bonus,
incentive, deferred compensation, severance and vacation plans maintained or
contributed to by Fairchild or a subsidiary.
(c) Fairchild and each of its subsidiaries, and each of the
Pension Benefit Plans and Welfare Plans, are in compliance with the applicable
provisions of ERISA and other applicable laws except where the failure to comply
would not, individually or in the aggregate, have a Fairchild Material Adverse
Effect.
(d) All contributions to, and payments from, the Pension
Benefit Plans which are required to have been made in accordance with the
Pension Benefit Plans and, when applicable, Section 302 of ERISA or Section 412
of the Code have been timely made except where the failure to make such
contributions or payments on a timely basis would not, individually or in the
aggregate, have a Fairchild Material Adverse Effect. All
contributions required to have been made in accordance with Section 302 of ERISA
or Section 412 of the Code to any employee pension benefit plan (as defined in
Section 3(2) of ERISA) maintained by an ERISA Affiliate of Fairchild or any of
its subsidiaries have been timely made except where the failure to make such
contributions on a timely basis would not individually or in the aggregate have
a Fairchild Material Adverse Effect. For purposes of this Agreement, "ERISA
Affiliate" shall mean any person (as defined in Section 3(9) of ERISA) that is a
member of any group of persons described in Section 414(b), (c), (m) or (o) of
the Code of which Fairchild or a subsidiary is a member.
(e) The Pension Benefit Plans intended to qualify under
Section 401 of the Code are so qualified and have been determined by the
Internal Revenue Service ("IRS") to be so qualified and nothing has occurred
with respect to the operation of such Pension Benefit Plans which would cause
the loss of such qualification or exemption or the imposition of any material
liability, penalty or tax under ERISA or the Code. Such plans have been or will
be, on a timely basis, (i) amended to comply with changes to the Code made by
the Tax Reform Act of 1986, the Unemployment Compensation Amendments of 1992,
the Omnibus Budget Reconciliation Act of 1993, and other applicable legislative,
regulatory or administrative requirements; and (ii) submitted to the Internal
Revenue Service for a determination of their tax qualification, as so amended;
and no such amendment will adversely affect the qualification of such plans.
(f) Each Welfare Plan that is intended to qualify for
exclusion of benefits thereunder from the income of participants or for any
other tax-favored treatment under any provisions of the Code (including, without
limitation, Sections 79, 105, 106, 125, or 129 of the Code) is and has been
maintained in compliance with all pertinent provisions of the Code and Treasury
Regulations thereunder.
(g) Except as disclosed in Fairchild's Form 10-K for the
fiscal year ended June 30, 1995, there are (i) no investigations pending, to the
best knowledge of Fairchild, by any governmental entity involving the Pension
Benefit Plans or Welfare Plans, (ii) no termination proceedings involving the
Pension Benefit Plans and (iii) no pending or, to the best of Fairchild's
knowledge, threatened claims (other than routine claims for benefits), suits or
proceedings against any Pension Benefit or Welfare Plan, against the assets of
any of the trusts
under any Pension Benefit or Welfare Plan or against any fiduciary of any
Pension Benefit or Welfare Plan with respect to the operation of such plan or
asserting any rights or claims to benefits under any Pension Benefit or Welfare
Plan or against the assets of any trust under such plan, which would, in the
case of clause (i), (ii) or (iii) of this paragraph (f), give rise to any
liability which would, individually or in the aggregate, have a Fairchild
Material Adverse Effect, nor, to the best of Fairchild's knowledge, are there
are any facts which would give rise to any liability which would, individually
or in the aggregate, have a Fairchild Material Adverse Effect in the event of
any such investigation, claim, suit or proceeding.
(h) None of Fairchild, any of its subsidiaries or any employee
of the foregoing, nor any trustee, administrator, other fiduciary or any other
"party in interest" or "disqualified person" with respect to the Pension Benefit
Plans or Welfare Plans, has engaged in a "prohibited transaction" (as such term
is defined in Section 4975 of the Code or Section 406 of ERISA) which would be
reasonably likely to result in a tax or penalty on Fairchild or any of its
subsidiaries under Section 4975 of the Code or Section 502(i) of ERISA which
would, individually or in the aggregate, have a Fairchild Material Adverse
Effect.
(i) Neither the Pension Benefit Plans subject to Title IV of
ERISA nor any trust created thereunder has been terminated nor have there been
any "reportable events" (as defined in Section 4043 of ERISA and the regulations
thereunder) with respect to either thereof which would, individually or in the
aggregate, have a Fairchild Material Adverse Effect nor has there been any event
with respect to any Pension Benefit Plan requiring disclosure under Section
4063(a) of ERISA or any event with respect to any Pension Benefit Plan requiring
disclosure under Section 4041(c)(3)(C) of ERISA which would, individually or in
the aggregate, have a Fairchild Material Adverse Effect.
(j) Neither Fairchild nor any subsidiary of Fairchild has
incurred any currently outstanding liability to the Pension Benefit Guaranty
Corporation (the "PBGC") or to a trustee appointed under Section 4042(b) or (c)
of ERISA other than for the payment of premiums, all of which have been paid
when due. No Pension Benefit Plan has applied for, or received, a waiver of the
minimum funding standards imposed by Section 412 of the Code. The information
supplied to the actuary by Fairchild or any of its subsidiaries for use in
preparing the most recent actuarial
report for Pension Benefit Plans is complete and accurate in all material
respects.
(k) Except as set forth in Section 6.20 of the Disclosure
Statement, neither Fairchild, any of its subsidiaries nor any of their ERISA
Affiliates has any liability (including any contingent liability under Section
4204 of ERISA) with respect to any multiemployer plan, within the meaning of
Section 3(37) of ERISA, covering employees employed in the United States.
(l) Except as disclosed in Section 6.20 of the Disclosure
Statement, with respect to each of the Pension Benefit and Welfare Plans, true,
correct and complete copies of the following documents have been delivered to
Shared Technologies: (i) the current plans and related trust documents,
including amendments thereto, (ii) any current summary plan descriptions, (iii)
the most recent Forms 5500, financial statements and actuarial reports, if
applicable, (iv) the most recent IRS determination letter, if applicable; and
(v) if any application for an IRS determination letter is pending, copies of all
such applications for determination including attachments, exhibits and
schedules thereto.
(m) Neither Fairchild, any of its subsidiaries, any
organization to which Fairchild is a successor or parent corporation, within the
meaning of Section 4069(b) of ERISA, nor any of their ERISA Affiliates has
engaged in any transaction, within the meaning of Section 4069(a) of ERISA, the
liability for which would, individually or in the aggregate, have a Fairchild
Material Adverse Effect.
(n) Except as disclosed in Section 6.20 of the Disclosure
Statement, none of the Welfare Plans maintained by Fairchild or any of its
subsidiaries are retiree life or retiree health insurance plans which provide
for continuing benefits or coverage for any participant or any beneficiary of a
participant following termination of employment, except as may be required under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), or except at the expense of the participant or the participant's
beneficiary. Fairchild and each of its subsidiaries which maintain a "group
health plan" within the meaning of Section 5000(b)(1) of the Code have complied
with the notice and continuation requirements of Section 4980B of the Code,
COBRA, Part 6 of Subtitle B of Title I of ERISA and the
regulations thereunder except where the failure to comply would not,
individually or in the aggregate, have a Fairchild Material Adverse Effect.
(o) No liability under any Pension Benefit or Welfare Plan has
been funded nor has any such obligation been satisfied with the purchase of a
contract from an insurance company as to which Fairchild or any of its
subsidiaries has received notice that such insurance company is in
rehabilitation.
(p) Except pursuant to the agreements listed in Section 6.20
of the Disclosure Statement, the consummation of the transactions contemplated
by this Agreement will not result in an increase in the amount of compensation
or benefits or accelerate the vesting or timing of payment of any benefits or
compensation payable to or in respect of any employee of Fairchild or any of its
subsidiaries.
(q) Fairchild has disclosed to Shared Technologies in Section
6.20 of the Disclosure Statement each material Foreign Plan to the extent the
benefits provided thereunder are not mandated by the laws of the applicable
foreign jurisdiction. Fairchild and each of its subsidiaries and each of the
Foreign Plans are in compliance with applicable laws and all required
contributions have been made to the Foreign Plans, except where the failure to
comply or make contributions would not, individually or in the aggregate, have a
Fairchild Material Adverse Effect. For purposes hereof, the term "Foreign Plan"
shall mean any plan with respect to benefits voluntarily provided by Fairchild
or any subsidiary with respect to employees of any of them employed outside the
United States.
6.21 Environmental Matters.
(a) Except as set forth in Section 6.21 of the Disclosure
Statement:
(i) each of Fairchild and its subsidiaries, and the
properties and assets owned by them, and to the actual knowledge of
Fairchild, all properties operated, leased, managed or used by
Fairchild and its subsidiaries are in compliance with all applicable
Environmental Laws except where the failure to be in compliance would
not, individually or in the aggregate, have a Fairchild Material
Adverse Effect;
(ii) there is no Environmental Claim that is (1) pending or
threatened against Fairchild or any of its subsidiaries or (2) pending
or threatened against any person or entity or any assets owned by
Fairchild or its subsidiaries whose liability for such Environmental
Claim has been retained or assumed by contract or otherwise by
Fairchild or any of its subsidiaries or can be imputed or attributed by
law to Fairchild or any of its subsidiaries, the effect of any of which
would, individually or in the aggregate, have a Fairchild Material
Adverse Effect;
(iii) there are no past or present actions, activities,
circumstances, conditions, events or incidents arising out of, based
upon, resulting from or relating to the ownership, operation or use of
any property or assets currently or formerly owned, operated or used by
Fairchild or any of its subsidiaries (or any predecessor in interest of
any of them), including, without limitation, the generation, storage,
treatment or transportation of any Hazardous Materials, or the
emission, discharge, disposal or other Release or threatened Release of
any Hazardous Materials into the Environment which is presently
expected to result in an Environmental Claim;
(iv) no lien has been recorded under any Environmental Law
with respect to any material property, facility or asset owned by
Fairchild or any of its subsidiaries, and to the actual knowledge of
Fairchild, no lien has been recorded under any Environmental Law with
respect to any material property, facility or asset, operated, leased
or managed or used by Fairchild or its subsidiaries and relating to or
resulting from Fairchild or its subsidiaries operations, lease,
management or use for which Fairchild or its subsidiaries may be
legally responsible;
(v) neither Fairchild nor any of its subsidiaries has
received notice that it has been identified as a potentially
responsible party or any request for information under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), the Resource Conservation and Recovery
Act, as amended ("RCRA"), or any comparable state law nor has Fairchild
or any of its subsidiaries received any notification that any Hazardous
Materials that it or any of their respective predecessors in interest
has used, generated, stored, treated, handled, transported or disposed
of, or arranged for transport for treatment or disposal of, or arranged
for disposal or treatment of, has been found at any site at which any
person is conducting or plans to conduct an investigation or other
action pursuant to any Environmental Law;
(vi) to the actual knowledge of Fairchild, there has been no
Release of Hazardous Materials at, on, upon, under, from or into any
real property in the vicinity of any property currently or formerly
owned by Fairchild or any of its subsidiaries that, through soil, air,
surface water or groundwater migration or contamination, has become
located on, in or under such properties and, to the actual knowledge of
Fairchild, there has been no release of Hazardous Materials at, on,
upon, under or from any property currently or formerly operated,
leased, managed or used by Fairchild or any of its subsidiaries that
through soil, air, surface water or groundwater migration or
contamination has become located on, in or under such properties as
resulting from or relating to Fairchild or any of its subsidiaries
operations, lease, management or use thereof of for which Fairchild and
any of its subsidiaries may be legally responsible;
(vii) no asbestos or asbestos containing material or any
polychlorinated biphenyls are contained within products presently
manufactured and, to the best knowledge of Fairchild manufactured at
any time by Fairchild or any of its subsidiaries and, to the actual
knowledge of Fairchild there is no asbestos or asbestos containing
material or any polychlorinated biphenyl in, on or at any property or
any facility or equipment owned, operated, leased, managed or used by
Fairchild or any of its subsidiaries;
(viii) no property owned by Fairchild or any of its
subsidiaries and to the actual knowledge of Fairchild, no property
operated, leased, managed or used by Fairchild and any of its
subsidiaries is (i) listed or proposed for listing on the National
Priorities List under CERCLA or (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to CERCLA, or on any comparable list published by
any governmental authority;
(ix) no underground storage tank or related piping is located
at, under or on any property owned by Fairchild or any of its
subsidiaries or, to the actual knowledge of Fairchild, any property
operated, leased, managed or used by Fairchild and any of its
subsidiaries, nor, to the actual knowledge of Fairchild, has any such
tank or piping been removed or decommissioned from or at such property;
(x) all environmental investigations, studies, audits,
assessments or reviews conducted of which Fairchild has actual
knowledge in relation to the current or prior business or assets owned,
operated, leased managed or used by Fairchild or any of its
subsidiaries or any real property, assets or facility now or previously
owned operated, managed, leased or used by Fairchild or any of its
subsidiaries have been delivered to Shared Technologies; and
(xi) each of Fairchild and its subsidiaries has obtained all
permits, licenses and other authorizations ("Authorizations") required
under any Environmental Law with respect to the operation of its assets
and business and its use, ownership and operation of any real property,
and each such Authorization is in full force and effect.
(b) For purposes of Section 6.21(a):
(i) "Actual Knowledge of Fairchild" means the actual
knowledge of individuals at the corporate management level of Fairchild
and its subsidiaries.
(ii) "Environment" means any surface water, ground water,
drinking water supply, land surface or subsurface strata, ambient air
and including, without limitation, any indoor location;
(iii) "Environmental Claim" means any notice or claim by any
person alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs,
governmental costs, or harm, injuries or damages to any person,
property or natural resources, and any fines or penalties) arising out
of, based upon, resulting from or relating to (1) the emission,
discharge, disposal or other release or threatened release in or into
the Environment of any Hazardous Materials or
(2) circumstances forming the basis of any violation, or alleged
violation, of any applicable Environmental Law;
(iv) "Environmental Laws" means all federal, state and local
laws, codes and regulations relating to pollution, the protection of
human health, the protection of the Environment or the emission,
discharge, disposal or other release or threatened release of Hazardous
Materials in or into the Environment;
(v) "Hazardous Materials" means pollutants, contaminants or
chemical, industrial, hazardous or toxic materials or wastes, and
includes, without limitation, asbestos or asbestos-containing
materials, PCBs and petroleum, oil or petroleum or oil products,
derivatives or constituents; and
(vi) "Release" means any past or present spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of Hazardous Materials into the
Environment or within structures (including the abandonment or
discarding of barrels, containers or other closed receptacles
containing any Hazardous Materials).
6.22 Disclosure. No representation or warranty by Fairchild
herein, or in any certificate furnished by or on behalf of Fairchild to Shared
Technologies in connection herewith, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
6.23 Absence of Undisclosed Liabilities. Except as set forth
in Section 6.9 of the Disclosure Statement, neither Fairchild nor any of its
subsidiaries has any liabilities or obligations of any nature, whether absolute,
accrued, unmatured, contingent or otherwise, or any unsatisfied judgments or any
leases of personalty or realty or unusual or extraordinary commitments, except
the liabilities recorded on the Balance Sheet and the notes thereto, and except
for liabilities or obligations incurred in the ordinary course of business and
consistent with past practice since June 30, 1995 that would not individually or
in the aggregate have a Fairchild Material Adverse Effect.
6.24 Finders or Brokers. Except as set forth in Section 6.24
of the Disclosure Statement, none of Fairchild, the subsidiaries of Fairchild,
the Board of Directors or any member of the Board of Directors has employed any
investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or any
commission in connection with of the Merger, and Section 6.24 of the Disclosure
Statement sets forth the maximum consideration (present and future) agreed to be
paid to each such party.
ARTICLE VII
CONDUCT OF BUSINESS OF FAIRCHILD AND
SHARED TECHNOLOGIES PENDING THE MERGER
7.1 Conduct of Business of Fairchild and Shared Technologies
Pending the Merger. Except as contemplated by this Agreement or as expressly
agreed to in writing by Fairchild and Shared Technologies, during the period
from the date of this Agreement to the Effective Time, each of Fairchild and its
subsidiaries and Shared Technologies and its subsidiaries will conduct their
respective operations according to its ordinary course of business consistent
with past practice, and will use all commercially reasonable efforts to preserve
intact its business organization, to keep available the services of its officers
and employees and to maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it and
will take no action which would materially adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, neither Fairchild nor
Shared Technologies will nor will they permit any of their respective
subsidiaries to, without the prior written consent of the other party:
(a) amend its certificate of incorporation or by-laws, except
Shared Technologies may amend its certificate of incorporation and
bylaws as required by the terms of this Agreement;
(b) authorize for issuance, issue, sell, deliver, grant any
options for, or otherwise agree or commit to
issue, sell or deliver any shares of any class of its capital stock or
any securities convertible into shares of any class of its capital
stock, except (i) pursuant to and in accordance with the terms of
currently outstanding convertible securities, warrants and options, and
(ii) options granted under the Stock Option Plans of Shared
Technologies, in the ordinary course of business consistent with past
practice;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock or purchase, redeem or otherwise acquire
any shares of its own capital stock or of any of its subsidiaries,
except as otherwise expressly provided in this Agreement (including,
without limitation, Section 6.7(b)) and except for the distribution of
the shares of Shared Technologies Cellular Inc. to the shareholders of
Shared Technologies;
(d) except in the ordinary course of business, consistent with
past practice (i) create, incur, assume, maintain or permit to exist
any long-term debt or any short-term debt for borrowed money other than
under existing lines of credit; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently
or otherwise) for the obligations of any other person except its wholly
owned subsidiaries in the ordinary course of business and consistent
with past practices; or (iii) make any loans, advances or capital
contributions to, or investments in, any other person;
(e) except as otherwise expressly contemplated by this
Agreement (including without limitation as set forth in Schedule 6.17
to the Disclosure Statement) or in the ordinary course of business,
consistent with past practice, (i) increase in any manner the
compensation of any of its directors, officers or other employees; (ii)
pay or agree to pay any pension, retirement allowance or other employee
benefit not required, or enter into or agree to enter into any
agreement or arrangement with such director, officer or employee,
whether past or present, relating to any such pension, retirement
allowance or other employee benefit, except as required under currently
existing agreements, plans or arrangements; (iii) grant any severance
or
termination pay to, or enter into any employment or severance agreement
with, any of its directors, officers or other employees; or (iv) except
as may be required to comply with applicable law, become obligated
(other than pursuant to any new or renewed collective bargaining
agreement) under any new pension plan, welfare plan, multiemployer
plan, employee benefit plan, benefit arrangement, or similar plan or
arrangement, which was not in existence on the date hereof, including
any bonus, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay,
retirement or other benefit plan, agreement or arrangement, or
employment or consulting agreement with or for the benefit of any
person, or amend any of such plans or any of such agreements in
existence on the date hereof;
(f) except as otherwise expressly contemplated by this
Agreement, enter into any other agreements, commitments or contracts,
except agreements, commitments or contracts for the purchase, sale or
lease of goods or services in the ordinary course of business,
consistent with past practice;
(g) except in the ordinary course of business, consistent with
past practice, or as contemplated by this Agreement, authorize,
recommend, propose or announce an intention to authorize, recommend or
propose, or enter into any agreement in principle or an agreement with
respect to, any plan of liquidation or dissolution, any acquisition of
a material amount of assets or securities, any sale, transfer, lease,
license, pledge, mortgage, or other disposition or encumbrance of a
material amount of assets or securities or any material change in its
capitalization, or any entry into a material contract or any amendment
or modification of any material contract or any release or
relinquishment of any material contract rights; or
(h) agree to do any of the foregoing.
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1 Approval of Stockholders; SEC and Other Filings.
(a) Shared Technologies shall cause a special meeting of its
stockholders (the "Special Meeting") to be duly called and held as soon as
reasonably practicable for the purpose of (i) voting on this Agreement, (ii)
authorizing Shared Technologies' Board of Directors, to the extent permitted by
law, to make modifications of or amendments to this Agreement as Shared
Technologies' Board of Directors deems proper without further stockholder
approval and (iii) voting on all other actions contemplated hereby which require
the approval of Shared Technologies' stockholders, including without limitation
any such approval needed to amend Shared Technologies' Certificate of
Incorporation and Bylaws as required by this Agreement. Shared Technologies
shall comply with all applicable legal requirements in connection with the
Special Meeting.
(b) Shared Technologies and Fairchild shall cooperate with
each other and use their best efforts to file with the SEC or other applicable
regulatory or governmental agency or authority, as the case may be, as promptly
as practicable the Proxy Statement and the Other Documents. The parties shall
use their best efforts to have the Proxy Statement cleared by the SEC as
promptly as practicable after filing and, as promptly as practicable after the
Proxy Statement has been so cleared, shall mail the Proxy Statement to the
stockholders of Shared Technologies as of the record date for the Special
Meeting. Subject to the fiduciary obligations of Shared Technologies' Board of
Directors under applicable law as advised by Gadsby & Hannah or other nationally
recognized counsel, the Proxy Statement shall contain the recommendation of the
Board in favor of the Merger and for approval and adoption of this Agreement. In
addition to the irrevocable proxy received from a stockholder of Shared
Technologies prior to the date hereof, Shared Technologies shall use its best
efforts to solicit from stockholders of Shared Technologies proxies or consents
in favor of such approval and to take all other action necessary or, in the
reasonable judgment of Fairchild, helpful to secure the vote of stockholders
required by law to effect the Merger. Shared Technologies and Fairchild each
shall use its best efforts to obtain and furnish the information required to be
included in the Proxy Statement and any Other Document, and Shared Technologies,
after consultation with Fairchild, shall use its best efforts to respond as
promptly as is reasonably practicable to any comments made by the SEC or any
other applicable regulatory or governmental agency or authority with respect to
any of the foregoing (or any preliminary version thereof). Shared
Technologies will promptly notify Fairchild of the receipt of the comments of
the SEC or any other applicable regulatory or governmental agency or authority,
as the case may be, and of any request by any of the foregoing for amendments or
supplements to the Proxy Statement or any Other Document, as the case may be, or
for additional information, and will supply Fairchild with copies of all
correspondence between Shared Technologies and its representatives, on the one
hand, and the SEC, any other applicable regulatory or governmental agency or
authority or the members of the staff of any of the foregoing, on the other
hand, with respect to the Proxy Statement or any Other Document, as the case may
be. If at any time prior to the Special Meeting any event should occur relating
to Shared Technologies or any of its subsidiaries or Fairchild or any of its
affiliates or associates, or relating to the Financing (as hereinafter defined)
which should be set forth in an amendment of or a supplement to, the Proxy
Statement or any Other Document, Shared Technologies will promptly inform
Fairchild or Fairchild will promptly inform Shared Technologies, as the case may
be. Whenever any event occurs which should be set forth in an amendment of, or a
supplement to, the Proxy Statement or any Other Document, as the case may be,
Fairchild and Shared Technologies will upon learning of such event, cooperate
and promptly prepare, file and mail such amendment or supplement.
(c) Fairchild shall use its best efforts to file with and
obtain from the Internal Revenue Service a favorable ruling to the effect set
forth in Schedule 9.2(d) hereto. Fairchild and Shared Technologies shall
cooperate with each other and use their best efforts to effect a tender offer
and consent solicitation for the outstanding 12 1/4% Senior Notes due 1999 of
Fairchild and, if the Merger is consummated, to retire all such Notes tendered
in such offer.
8.2 Additional Agreements; Cooperation.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate with each other in
connection with the foregoing, including using its best efforts (i) to obtain
all necessary waivers, consents and approvals from other parties to loan
agreements, leases and
other contracts that are specified on Schedule 8.2 to the Disclosure Statement,
(ii) to obtain all necessary consents, approvals and authorizations as are
required to be obtained under any federal, state or foreign law or regulations,
(iii) to defend all lawsuits or other legal proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby, (iv) to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby, (v) to effect all necessary registrations and filings, including, but
not limited to, filings under the HSR Act and any pre-merger notifications
required in any other country, if any, and submissions of information requested
by governmental authorities, (vi) provide all necessary information for the
Proxy Statement and (vii) to fulfill all conditions to this Agreement. In
addition, Fairchild agrees to use its best efforts (subject to compliance with
all applicable securities laws) to solicit and receive the irrevocable proxies
from shareholders of Shared Technologies contemplated by Section 10.1(b). Shared
Technologies agrees to use its best efforts to cause the distribution to its
shareholders of all shares of capital stock of Shared Technologies Cellular,
Inc. ("STCI") owned by Shared Technologies and its subsidiaries to be completed
prior to the Effective Time and, prior to such distribution to cause STCI, to
enter into an agreement preventing STCI from competing in the telecommunications
systems and service business.
(b) Shared Technologies will supply Fairchild with copies of
all correspondence, filings or communications (or memoranda setting forth the
substance thereof) between Shared Technologies or its representatives, on the
one hand, and the Federal Trade Commission, the Antitrust Division of the United
States Department of Justice, the SEC and any other regulatory or governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Agreement, the Merger and the other transactions
contemplated hereby. Each of the parties hereto agrees to furnish to the other
party hereto such necessary information and reasonable assistance as such other
party may request in connection with its preparation of necessary filings or
submissions to any regulatory or governmental agency or authority, including,
without limitation, any filing necessary under the provisions of the HSR Act or
any other applicable Federal or state statute.
(c) Fairchild will supply Shared Technologies with copies of
all correspondence, filings or communications (or memoranda setting forth the
substance thereof) between Fairchild or its representatives, on the one hand,
and the Federal Trade Commission, the Antitrust Division of the United States
Department of Justice, the SEC or any other regulatory or governmental agency or
authority or members of their respective staffs, on the other hand, with respect
to this Agreement, the Merger and the other transactions contemplated hereby.
8.3 Publicity. Shared Technologies and Fairchild agree to
consult with each other in issuing any press release and with respect to the
general content of other public statements with respect to the transactions
contemplated hereby, and shall not issue any such press release prior to such
consultation, except as may be required by law.
8.4 No Solicitation.
(a) Each of Shared Technologies and Fairchild agrees that,
prior to the Effective Time, it shall not, and shall not authorize or permit any
of its subsidiaries or any of its or its subsidiaries' directors, officers,
employees, agents or representatives to, directly or indirectly, solicit,
initiate, facilitate or encourage (including by way of furnishing or disclosing
non-public information) any inquiries or the making of any proposal with respect
to any merger, consolidation or other business combination involving Shared
Technologies or its subsidiaries or Fairchild or its subsidiaries or acquisition
of any kind of all or substantially all of the assets or capital stock of Shared
Technologies and its subsidiaries taken as a whole or Fairchild and its
subsidiaries taken as a whole (an "Acquisition Transaction") or negotiate,
explore or otherwise communicate in any way with any third party (other than
Shared Technologies or Fairchild, as the case may be) with respect to any
Acquisition Transaction or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by this Agreement; provided that
Shared Technologies or Fairchild may, in response to an unsolicited written
proposal with respect to an Acquisition Transaction from a financially capable
third party that contains no financing condition, (i) furnish or disclose
non-public information to such third party and (ii) negotiate, explore or
otherwise communicate with such third party, in each case only if the Board of
Directors of
such party determines in good faith by a majority vote, after consultation with
its legal and financial advisors, and after receipt of the written opinion of
outside legal counsel of such party that failing to take such action would
constitute a breach of the fiduciary duties of such Board of Directors, that
taking such action is reasonably likely to lead to an Acquisition Transaction
that is more favorable to the stockholders of such party than the Merger and
that failing to take such action would constitute a breach of the Board's
fiduciary duties.
(b) Each of Shared Technologies and Fairchild shall
immediately advise the other in writing of the receipt of any inquiries or
proposals relating to an Acquisition Transaction and any actions taken pursuant
to Section 8.4(a).
8.5 Access to Information.
(a) From the date of this Agreement until the Effective Time,
each of Shared Technologies and Fairchild will give the other party and its
authorized representatives (including counsel, environmental and other
consultants, accountants and auditors) full access during normal business hours
to all facilities, personnel and operations and to all books and records of it
and its subsidiaries, will permit the other party to make such inspections as it
may reasonably require and will cause its officers and those of its subsidiaries
to furnish the other party with such financial and operating data and other
information with respect to its business and properties as such party may from
time to time reasonably request.
(b) Each of the parties hereto will hold and will cause its
consultants and advisors to hold in strict confidence pursuant to the
Confidentiality Agreement dated October 1995 between the parties (the
"Confidentiality Agreement") all documents and information furnished to the
other in connection with the transactions contemplated by this Agreement as if
each such consultant or advisor was a party thereto, and the provisions of the
Confidentiality Agreement shall survive any termination of this Agreement but
will be extinguished at the Effective Time if the Merger occurs.
8.6 Financing. Fairchild will cooperate with Shared
Technologies to assist Shared Technologies in obtaining the financing required
for Shared Technologies to effect the Merger
(including the funds necessary to repay the indebtedness referred to on Exhibit
9.1 and to pay the amounts owing to the holders of the Series A and Series C
Preferred Stock) (the "Financing"). Immediately prior to the Effective Time,
Fairchild will certify the aggregate amount of accrued and unpaid dividends on
the Series A Preferred Stock and Series C Preferred Stock to be paid by Shared
Technologies pursuant to the Merger.
8.7 Notification of Certain Matters. Shared Technologies or
Fairchild, as the case may be, shall promptly notify the other of (i) its
obtaining of actual knowledge as to the matters set forth in clauses (x) and (y)
below, or (ii) the occurrence, or failure to occur, of any event which
occurrence or failure to occur would be likely to cause (x) any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time, or (y)
any material failure of Shared Technologies or Fairchild, as the case may be, or
of any officer, director, employee or agent thereof, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement; provided, however, that no such notification shall affect
the representations or warranties of the parties or the conditions to the
obligations of the parties hereunder.
8.8 Board of Directors of Shared Technologies. The Shared
Technologies Board of Directors shall take such corporate action as may be
necessary to cause the directors comprising its full board to be changed at the
Effective Time to include, subject to the requisite vote of the shareholders of
Shared Technologies, immediately after the Effective Time on the Surviving
Corporation Board of Directors the persons specified pursuant to the
Shareholders Agreement.
8.9 Indemnification.
(a) The Surviving Corporation shall indemnify, defend and hold
harmless the present and former officers, directors, employees and agents of
Fairchild and its subsidiaries against all losses, claims, damages, expenses or
liabilities arising out of actions or omissions or alleged actions or omissions
occurring at or prior to the Effective Time to the same extent and on the same
terms and conditions (including with respect to advancement of expenses)
provided for in Fairchild's Certificate of Incorporation and By-Laws and
agreements in effect at the date
hereof (to the extent consistent with applicable law); provided that such
actions or omissions or alleged actions or omissions are exclusively related to
the business of the Fairchild Communications Services Company; and, provided,
further, that in no event will this indemnity extend to the transactions
effected pursuant to this Agreement, including but not limited to the Fairchild
Reorganization.
(b) The provisions of this Section 8.9 are intended to be for
the benefit of and shall be enforceable by each indemnified party hereunder, his
or her heirs and his or her representatives.
8.10 Fees and Expenses.
(a) Except as set forth in Section 8.10(b), in the event this
Agreement is terminated, Shared Technologies and Fairchild shall bear their
respective expenses incurred in connection with the Merger, including, without
limitation, the preparation, execution and performance of this Agreement and the
transactions contemplated hereby, and all fees and expenses of investment
bankers, finders, brokers, agents, representatives, counsel and accountants,
except that the fees and expenses of CS First Boston shall be shared equally by
Shared Technologies and Fairchild. If the Merger occurs, then the Surviving
Corporation shall be responsible, and reimburse Fairchild, for all of such
expenses incurred by Shared Technologies and Fairchild in connection with the
Merger (but Fairchild's expenses shall only be borne by the Surviving
Corporation to the extent set forth in Schedule 8.10).
(b) If this Agreement is terminated pursuant to Section
10.1(d), (e) or (h), then Shared Technologies shall promptly, but in no event
later than the next business day after the date of such termination, pay
Fairchild, in immediately available funds, the amount of any and all fees and
expenses incurred by Fairchild (including, but not limited to, fees and expenses
of Fairchild's counsel, investment banking fees and expenses and printing
expenses) in connection with this Agreement, the Merger and the other
transactions contemplated hereby and, in addition, if such termination is
pursuant to Section 10.1(h), a fee of $5,000,000. If this Agreement is
terminated pursuant to Section 10.1(f) or (i) or pursuant to Section 10.1(c)
solely due to the failure of Fairchild to satisfy the condition in Section
9.2(d) or to obtain tenders and
consents from at least 51% of the outstanding principal amount of Fairchild's 12
1/4% Senior Notes due 1999 as contemplated by Schedule 9.1, then Fairchild shall
promptly, but in no event later than the next business day after the date of
such termination, pay Shared Technologies, in immediately available funds, the
amount of any and all fees and expenses incurred by Shared Technologies
(including, but not limited to, fees and expenses of Shared Technologies'
counsel, investment banking fees and expenses and printing expenses) in
connection with this Agreement, the Merger and the other transactions
contemplated hereby and in addition, if such termination is pursuant to Section
10.1(i), a fee of $5,000,000.
8.11 Post-Merger Cooperation. After the Effective Time, the
Surviving Corporation shall cooperate with RHI and permit RHI to take all
actions (including without limitation the right to endorse checks and enter into
agreements) reasonably required by RHI to allow RHI to assert title (and
prosecute claims against and defend claims brought by third parties), whether in
its own name or in the name of Fairchild, with respect to all assets, claims and
privileges of Fairchild that were owned by it, and defend against all
liabilities and claims attributable to it, in each case, immediately prior to
the Fairchild Reorganization and that did not relate to the telecommunications
systems and service business. After the Effective Time, RHI will cooperate with
the Surviving Corporation and permit the Surviving Corporation to take all
actions (including without limitation the right to endorse checks and enter into
agreements) reasonably required by the Surviving Corporation to allow the
Surviving Corporation to assert title (and prosecute claims against third
parties) whether in its own name or in the name of Fairchild, with respect to
all assets, claims and privileges of Fairchild's telecommunications systems and
service business.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment or waiver by the Board of Directors of the waiving
party (subject to applicable law) at or prior to the Effective Date of each of
the following conditions:
(a) Shared Technologies' shareholders shall have duly approved
and adopted the Merger, this Agreement and any other transactions
contemplated hereby which require the approval of such shareholders by
law as required by applicable law;
(b) any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired
or been terminated;
(c) no order, statute, rule, regulation, executive order,
injunction, stay, decree or restraining order shall have been enacted,
entered, promulgated or enforced by any court of competent jurisdiction
or governmental or regulatory authority or instrumentality that
prohibits the consummation of the Merger or the transactions
contemplated hereby;
(d) all necessary consents and approvals of any United States
or any other governmental authority or any other third party required
for the consummation of the transactions contemplated by this Agreement
shall have been obtained except for such consents and approvals the
failure to obtain which individually or in the aggregate would not have
a material adverse effect on the Surviving Corporation and any waiting
period applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated;
(e) each of the transactions set forth on the attached
Schedule 9.1 shall have been consummated;
(f) the parties shall have received the written opinion of
Donaldson, Lufkin & Jenrette Securities Corporation or another
investment banking firm of nationally recognized standing selected by
Fairchild that the fair market value of the Preferred Stock is at least
equal to the positive difference between $47.5 million and the value of
the Shared Technologies Common Stock to be received as Merger
Consideration (based upon the closing price thereof on the date
preceding the Effective Time); and
(g) Mel D. Borer shall have been offered an employment
agreement on terms satisfactory to both Fairchild and Shared
Technologies.
9.2 Additional Conditions to Obligations of Fairchild. The
obligations of Fairchild to effect the Merger shall be subject to the
fulfillment or waiver (subject to applicable law), at or prior to the Effective
Date, of each of the following conditions:
(a) Shared Technologies shall have furnished Fairchild with
certified copies of resolutions duly adopted by its Board of Directors
approving the execution and delivery of this Agreement and the Merger
and all other necessary corporate action to enable Shared Technologies
to comply with the terms of this Agreement;
(b) Shared Technologies shall have performed or complied in
all material respects with all its agreements, obligations and
covenants required by this Agreement to be performed by it on or prior
to the Effective Date, and Shared Technologies shall have delivered to
Fairchild a certificate, dated the Effective Date, of its President and
its Secretary to such effect;
(c) the representations and warranties of Shared Technologies
contained herein shall be true and correct in all material respects on
the date of this Agreement and the Effective Date as though such
representations and warranties were made at and on such date, and
Shared Technologies shall have delivered to Fairchild a certificate,
dated the Effective Date, of its President and its Secretary to such
effect;
(d) Fairchild shall have received a favorable ruling of the
Internal Revenue Service to the effect set forth in Schedule 9.2(d)
hereto;
(e) Shared Technologies shall have amended its Certificate of
Incorporation and Bylaws to the extent set forth in Schedule 9.2(e);
(f) there shall not have occurred since December 31, 1994 any
material adverse change in the business,
operations, assets, financial condition or results of operations of
Shared Technologies and its subsidiaries taken as a whole;
(g) Shared Technologies shall have executed and delivered a
registration rights agreement in the form of Exhibit D hereto;
(h) Shared Technologies shall have entered into a Tax Sharing
Agreement with RHI in the form of Exhibit E hereto; and
(i) Shared Technologies shall have, prior to the Effective
Time, completed the distribution to its shareholders of all of the
capital stock of Shared Technologies Cellular, Inc. owned by Shared
Technologies and Shared Technologies Cellular, Inc. shall have executed
a non-competition agreement with Shared Technologies, in form and
substance satisfactory to Fairchild.
9.3 Additional Conditions to Obligations of Shared
Technologies. The obligations of Shared Technologies to effect the Merger shall
be subject to the fulfillment or waiver (subject to applicable law), at or prior
to the Effective Date, of each of the following conditions:
(a) Each of TFC, RHI and Fairchild shall have furnished Shared
Technologies with certified copies of resolutions duly adopted by its
Board of Directors approving the execution and delivery of this
Agreement and the Merger and all other necessary corporate action to
enable Fairchild to comply with the terms of this Agreement;
(b) Fairchild shall have performed or complied in all material
respects with all its agreements, obligations and covenants required by
this Agreement to be performed by it on or prior to the Effective Date
and Fairchild shall have delivered to Shared Technologies a
certificate, dated the Effective Date, of its President and its
Secretary to such effect;
(c) the representations and warranties of TFC, RHI and
Fairchild contained herein shall be true and correct in all material
respects on the date of this Agreement and the Effective Date as though
such representations and warranties
were made at and on such date and Fairchild shall have delivered to
Shared Technologies a certificate, dated the Effective Date, of its
President and its Secretary to such effect;
(d) there shall not have occurred since June 30, 1995 any
material adverse change in the business, operations, assets, financial
condition or results of operations of Fairchild and its wholly owned
subsidiary, VSI, taken as a whole (it being understood that no such
material adverse change shall be deemed to have occurred with respect
to Fairchild and VSI, taken as a whole, if the pro forma consolidated
net worth of Fairchild, as evidenced by a pro forma closing date
balance sheet to be delivered to Shared Technologies on the Effective
Date, is at least $80,000,000); and
(e) RHI, The Fairchild Corporation, D-M-E Inc. and Fairchild
Fasteners Inc. shall have entered into Indemnification Agreements with
Shared Technologies in the forms of Exhibits B1-3 hereto; and RHI shall
have delivered to Shared Technologies an executed Pledge Agreement in
the form of Exhibit C hereto, as well as the Preferred Stock required
to be pledged thereby.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time whether before or after approval by the
stockholders of Shared Technologies:
(a) by mutual written consent of Fairchild and Shared
Technologies;
(b) by Fairchild if RHI has not received within 10 business
days after the date of this Agreement irrevocable proxies from holders
of more than 50% of Shared Technologies common stock (on a fully
diluted basis) agreeing to vote for the Merger; provided, that such
right of termination must be exercised, if at all, within 13 business
days after the date of this Agreement;
(c) by either Fairchild or Shared Technologies if the
Effective Time has not occurred on or prior to January 31, 1996 unless
the Merger has not occurred at such time solely by reason of the
condition set forth in Section 9.2(d) having not yet been satisfied or
because of the failure of the Securities and Exchange Commission to
give timely approval to the proxy materials for Shared Technologies
shareholders, in which case February 28, 1996 or such other date, if
any, as Fairchild and Shared Technologies shall agree upon, unless the
absence of such occurrence shall be due to the failure of the party
seeking to terminate this Agreement (or its subsidiaries or affiliates)
to perform in all material respects each of its obligations under this
Agreement required to be performed by it at or prior to the Effective
Time;
(d) by either Fairchild or Shared Technologies if, at the
Special Meeting (including any adjournment thereof), the stockholders
of Shared Technologies fail to adopt and approve this Agreement, the
Merger and any of the other transactions contemplated hereby in
accordance with Delaware law;
(e) by Fairchild if Shared Technologies fails to perform in
any material respect any of its obligations under this Agreement;
(f) by Shared Technologies if Fairchild fails to perform in
any material respect any of its obligations under this Agreement;
(g) by Fairchild or Shared Technologies if a court of
competent jurisdiction or a governmental, regulatory or administrative
agency or commission shall have issued an order, decree, or ruling or
taken any other action, in each case permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have
become final and nonappealable;
(h) by Shared Technologies if its Board of Directors shall
have withdrawn, modified or amended in an adverse manner its
recommendation of the Merger as a result of its exercise of its
fiduciary duties; or
(i) by Fairchild if its Board of Directors shall have
withdrawn, modified or amended in an adverse manner its recommendation
of the Merger as a result of its exercise of its fiduciary duties; or
(j) by either Shared Technologies or Fairchild if either of
their respective Board of Directors reasonably determine that market
conditions will not permit the completion of the Financing contemplated
by Section 8.6 in a timely manner or on acceptable terms or it becomes
obvious that the necessary marketing activities or filings necessary
for such Financing have not been completed in a timely manner necessary
to complete the Merger.
10.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to the foregoing provisions of this Article X, this
Agreement shall become void and have no effect, with no liability on the part of
any party or its stockholders or directors or officers in respect thereof except
for agreements which survive the termination of this Agreement and except for
liability that TFC, RHI, Fairchild or Shared Technologies might have arising
from a breach of this Agreement.
ARTICLE XI
SURVIVAL AND INDEMNIFICATION
11.1 Survival of Representations and Warranties. All
representations and warranties made in this Agreement shall survive from the
Effective Time until March 31, 1997 and shall not be extinguished by the Merger
or any investigation made by or on behalf of any party hereto.
11.2 Indemnification by TFC and RHI. Each of TFC and RHI
hereby agrees, jointly and severally, to indemnify and hold harmless Shared
Technologies against any and all losses, liabilities and damages or actions (or
actions or proceedings, whether commenced or threatened) or claims (including,
without limitation, counsel fees and expenses of Shared Technologies in the
event that TFC or RHI fail to assume the defense thereof) in respect thereof
(hereinafter referred to collectively as "Losses") resulting from any breach of
the representations and warranties made by TFC, RHI or Fairchild in this
Agreement;
provided, however, that TFC's and RHI's obligations under this Section 11.2 is
to the extent that the Losses exceed $4,000,000. Notwithstanding the foregoing,
in no event shall Shared Technologies be entitled to indemnification for, and
the term "Losses" shall not include any consequential damages or damages which
are speculative, remote or conjectural (except to the extent represented by a
successful claim by a third party).
If any action, proceeding or claim shall be brought or
asserted against Shared Technologies by any third party, which action,
proceeding or claim, if determined adversely to the interests of Shared
Technologies would entitle Shared Technologies to indemnity pursuant to this
Agreement, Shared Technologies shall promptly but in no event later than 10 days
from the date Shared Technologies receives written notice of such action,
proceeding or claim, notify TFC and RHI of the same in writing specifying in
detail the basis of such claim and the facts pertaining thereto (but the failure
to give such notice in a timely fashion shall not affect TFC's and RHI's
obligations under this Section 11.2 except to the extent it prejudiced or
damaged their ability to defend, settle or compromise such claim or to pay any
Losses resulting therefrom), and TFC and RHI shall be entitled (but not
obligated) to assume the defense thereof by giving written notice thereof within
10 days after TFC and RHI received notice of the claim from Shared Technologies
to Shared Technologies and have the sole control of defense and settlement
thereof (but only, with respect to any settlement, if such settlement involves
an unconditional release of Shared Technologies and its subsidiaries in respect
of such claim), including the employment of counsel and the payment of all
expenses.
11.3 Indemnification by Shared Technologies. Shared
Technologies hereby agrees to indemnify and hold harmless TFC and RHI against
any and all losses, liabilities and damages or actions (or actions or
proceedings, whether commenced or threatened) or claims (including, without
limitation, counsel fees and expenses of TFC and RHI in the event that Shared
Technologies fails to assume the defense thereof) in respect thereof hereinafter
referred to as the "Shared Technologies' Losses") resulting from the breach of
the representations and warranties made by Shared Technologies in this
Agreement; provided, however, that Shared Technologies' obligation under this
Section 11.3 is to the extent that the Shared Technologies' Losses exceed
$4,000,000. Notwithstanding the foregoing, in no
event shall TFC or RHI be entitled to indemnification for, and the term "Shared
Technologies' Losses" shall not include any consequential damages or damages
which are speculative, remote or conjectural (except to the extent represented
by a successful claim by a third party).
Shared Technologies at its option may make any indemnification
pursuant to this Section 11.3 in cash or in shares of Common Stock of Shared
Technologies having a fair market value at the time of issuance in an amount
equal to the amount of such loss. In the event that Shared Technologies makes a
payment in cash in fulfillment of its obligation under this Section 11.3, the
term "Shared Technologies' Losses" shall also include the diminution as a result
of such payment in the value of the shares of Common Stock and Preferred Stock
as a result of such payment. In the event that Shared Technologies issues Common
Stock in fulfillment of its obligation under this Section 11.3, the term "Shared
Technologies' Losses" shall also include the diminution as a result of such
issuance in the value of the shares of Common Stock and Preferred Stock of
Shared Technologies owned by RHI prior to such issuance.
If any action, proceeding or claim shall be brought or
asserted against TFC or RHI by any third party, which action, proceeding or
claim, if determined adversely to the interests of TFC or RHI would entitle TFC
or RHI to indemnity pursuant to this Agreement, TFC or RHI shall, promptly but
in no event later than 10 days from the date TFC or RHI receives written notice
of such action, proceeding or claim, notify Shared Technologies of the same in
writing specifying in detail the basis of such claim and the facts pertaining
thereto (but the failure to give such notice in a timely fashion shall not
affect Shared Technologies' obligations under this Section 11.3 except to the
extent it prejudiced or damaged Shared Technologies' ability to defend, settle
or compromise such claim or to pay any Losses resulting therefrom), and Shared
Technologies shall be entitled (but not obligated) to assume the defense thereof
by giving written notice thereof within 10 days after Shared Technologies
received notice of the claim from TFC or RHI to TFC or RHI and have the sole
control of defense and settlement thereof (but only, with respect to any
settlement, if such settlement involves an unconditional release of TFC and RHI
and their respective subsidiaries in respect of such claim), including the
employment of counsel and the payment of all expenses.
11.4 Set-Off. In the event that either TFC, RHI or Shared
Technologies fails to make any payment required by Section 11.2 or 11.3 hereof,
the party entitled to receive such payment may set off the amount thereof
against any other payments owed by it to the party failing to make such payment.
ARTICLE XII
MISCELLANEOUS
12.1 Closing and Waiver.
(a) Unless this Agreement shall have been terminated in
accordance with the provisions of Section 10.1 hereof, a closing (the "Closing"
and the date and time thereof being the "Closing Date") will be held as soon as
practicable after the conditions set forth in Sections 9.1, 9.2 and 9.3 shall
have been satisfied or waived. The Closing will be held at the offices of Cahill
Gordon & Reindel, 80 Pine Street, New York, New York or at such other places as
the parties may agree. Immediately thereafter, the Certificate of Merger will be
filed.
(b) At any time prior to the Effective Date, any party hereto
may (i) extend the time for the performance of any of the obligations or other
acts of any other party hereto, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
duly authorized by and signed on behalf of such party.
12.2 Notices.
(a) Any notice or communication to any party hereto shall be
duly given if in writing and delivered in person or mailed by first class mail
(registered or certified, return receipt requested), facsimile or overnight air
courier guaranteeing next day delivery, to such other party's address.
If to The Fairchild Corporation, RHI Holdings, Inc. or
Fairchild Industries, 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
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
(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.
12.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.4 Interpretation. The headings of articles and sections
herein are for convenience of reference, do not
constitute a part of this Agreement, and shall not be deemed to limit or affect
any of the provisions hereof. As used in this Agreement, "person" means any
individual, corporation, limited or general partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof; "subsidiary" of any
person means (i) a corporation more than 50% of the outstanding voting stock of
which is owned, directly or indirectly, by such person or by one or more other
subsidiaries of such person or by such person and one or more subsidiaries
thereof or (ii) any other person (other than a corporation) in which such
person, or one or more other subsidiaries of such person or such person and one
or more other subsidiaries thereof, directly or indirectly, have at least a
majority ownership and voting power relating to the policies, management and
affairs thereof; and "voting stock" of any person means capital stock of such
person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
12.5 Variations and Amendment. This Agreement may be varied or
amended only by written action of Shared Technologies and Fairchild, before or
after the Special Meeting at any time prior to the Effective Time.
12.6 No Third Party Beneficiaries. Except for the provisions
of Sections 8.9 (which are intended to be for the benefit of the persons
referred to therein, and may be enforced by such persons) and 8.11, nothing in
this Agreement shall confer any rights upon any person or entity which is not a
party or permitted assignee of a party to this Agreement.
12.7 Use of Fairchild Name. RHI hereby grants a royalty free
license in perpetuity to Shared Technologies for the use of the Fairchild name
to Shared Technologies for exclusive use by Shared Technologies as a trade name
in the telecommunications system and services business but not for any other
use. In no event may Shared Technologies assign the right to use the Fairchild
name to any other person.
12.8 Governing Law. Except as the laws of the State of
Delaware are by their terms applicable, this Agreement shall be governed by, and
construed in accordance with, the laws of the
State of New York without regard to principles of conflicts of laws.
12.9 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the 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.
12.10 No Recourse Against Others. No director, officer or
employee, as such, of Shared Technologies, TFC, RHI or any of their respective
subsidiaries shall have any liability for any obligations of Shared
Technologies, TFC or RHI, respectively, under this Agreement for any claim based
on, in respect of or by reason of such obligations or their creation.
12.11 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Merger
Agreement to be executed by their duly authorized officers all as of the day and
year first above written.
SHARED TECHNOLOGIES INC.
By: /s/ Anthony D. Autorino
Title: Chairman of the Board,
Chief Executive Officer
and President
FAIRCHILD INDUSTRIES, INC.
By: /s/ Jeffrey J. Steiner
Title: Chairman of the Board,
Chief Executive Officer
and President
THE FAIRCHILD CORPORATION
By: /s/ Jeffrey J. Steiner
Title: Chairman of the Board,
Chief Executive Officer
and President
RHI HOLDINGS, INC.
By: /s/ Jeffrey J. Steiner
Title: Chairman of the Board,
Chief Executive Officer
and President
Schedule 9.1
The steps comprising the Fairchild Recapitalization are as
follows:
1. Fairchild Industries, Inc., as it exists on the date of the
Merger Agreement ("FII"), will cause Fairchild Communications Services Company,
a Delaware partnership ("FCSC") to merge into FII's wholly owned subsidiary, VSI
Corporation ("VSI").
2. FII will then cause VSI to transfer all of VSI's assets and
liabilities (other than those of the former FCSC, but excluding from those real
estate owned by FCSC, and other than the Assumed Indebtedness described below)
to one or more wholly owned subsidiaries.
3. FII (or Shared Technologies) will make a cash tender offer
to purchase all of the outstanding 12 1/4% Senior Notes due 1999 (the "12 1/4%
Notes") of FII and, in connection therewith, will obtain such Noteholders'
consent (representing at least 51% of the outstanding principal amount of the 12
1/4% Notes) to the transfer by FII of all of the assets of FII (other than the
stock of VSI) to RHI and to amend the indenture under which the 12 1/4% Notes
were issued to remove all covenants which can be amended or deleted by majority
vote. The aggregate amount needed to be paid to consummate such tender offer and
consent solicitation is herein called the "Note Purchase Amount".
4. Prior to the Effective Time, FII will transfer (in one or
more transactions) all of its assets to RHI, and RHI will assume all
liabilities, except for (i) the stock of VSI (which will only have in it the
assets and liabilities of the former FCSC), (ii) the 12 1/4% Senior Notes, (iii)
the Series A and C Preferred Stock and (iv) an amount of bank and other
indebtedness (the "Assumed Indebtedness") equal to $223,500,000 minus (x) the
Note Purchase Amount and (y) $44,237,745 (the aggregate redemption price of the
Series A and C Preferred Stock) plus accrued dividends thereon through the
Effective Time, and RHI will contribute all of the outstanding Series B
Preferred Stock to FII.
5. Concurrently with the consummation of the Merger, the
Surviving Corporation will (i) purchase the 12 1/4% Notes tendered for the Note
Purchase Amount, (ii) repay the Assumed Indebtedness in full and (iii) deposit
in escrow the funds
necessary to pay the holders of the Series A and Series C Preferred Stock the
amounts owed to them under the Merger Agreement.
Schedule 9.2(d)
TAX RULINGS REQUESTED BY FAIRCHILD
Fairchild requests the following rulings be issued regarding
the mergers of the three corporate subsidiaries of VSI into VSI:
1. The mergers will qualify as a complete liquidation of each
of the three corporate subsidiaries (FCSII, FCSI, and FCNMC, which are
the partners in FCSC) underss. 332(a) of the Internal Revenue Code of
1986, as amended (the "Code");
2. No gain or loss will be recognized by VSI on its receipt of
the assets from each of the three corporate subsidiaries underss.
332(a);
3. No gain or loss will be recognized by the three corporate
subsidiaries on the distribution of their respective assets to VSI in
complete liquidation underss. 336 andss. 337(a).
Fairchild requests the following rulings regarding the
formation of Subsidiary 1, the distribution of the stock of Subsidiary 1 by VSI
to FII, and the distribution of the stock of Subsidiary 1 by FII to RHI:
4. VSI will recognize no gain or loss on its transfer of
assets (except the Telecommunications business) to Subsidiary 1 in
exchange for common stock of Subsidiary 1 and assumption of liabilities
by Subsidiary 1 (ss.ss. 351 and 357(a) of the Code and Rev. Rul.
77-449, 1977-2 C.B. 110).
VSI's basis in the stock of Subsidiary 1 received in the
transaction will equal the basis of the property transferred in exchange
therefor, reduced by the sum of the liabilities assumed by Subsidiary 1, or to
which assets transferred are taken subject (ss. 358(a) and (d)).
5. Subsidiary 1 will recognize no gain or loss on its transfer
of assets to Subsidiaries 2, 3, 4, 5, 6 and 7 in exchange for the
common stock of Subsidiaries 2, 3, 4, 5, 6 and 7 and the assumption of
liabilities by Subsidiaries 2 to 7 (ss.ss. 351 and 357(a) and Rev. Rul.
77-449).
Subsidiary 1's basis in the stock of Subsidiaries 2 to 7
received in the transaction will equal the basis of the property transferred to
Subsidiaries 2 to 7, respectively, in exchange therefor, reduced by the sum of
the liabilities assumed by Subsidiaries 2 to 7 or to which assets transferred
are taken subject (ss. 358(a) and (d)).
6. No income, gain or loss will be recognized by Subsidiary 1
upon the receipt of the assets of Fastener and D-M-E businesses, stock
of FDC, plus real estate held for sale in exchange for stock of
Subsidiary 1 and Subsidiary 1's assumption of liabilities (ss.
1032(a)).
7. The basis of the assets received by Subsidiary 1 will be
the same as the basis of such assets in the hands of VSI immediately
prior to the Distribution (ss. 362(b)).
8. No income, gain or loss will be recognized by FII as the
Shareholder of VSI on its receipt of the Subsidiary 1 common stock
pursuant to the Distribution (ss. 355(a)).
9. No income, gain or loss will be recognized by RHI as the
Shareholder of FII on its receipt of Subsidiary 1 common stock pursuant
to the Distribution (ss. 355(a)).
10. No income, gain or loss will be recognized by VSI and FII
upon the distributions to their respective Shareholders of all of the
Subsidiary 1's common stock pursuant to the Distribution (ss. 355(c)).
Schedule 9.2(e)
The Restated Certificate of Incorporation of Shared
Technologies (the "Certificate") shall be amended in the following manner:
(a) Article Four of the Certificate shall be amended to (i)
increase the authorized common shares of the Corporation, $.004 par value, to
50,000,000 and (ii) to increase the authorized shares of preferred stock of the
Corporation, $.01 par value, to 25,000,000; and
(b) The Certificate shall be amended or a certificate of
designation shall be filed to reflect the terms of the Convertible Preferred
Stock and the [Special] Preferred Stock in form and substance satisfactory to
RHI and consistent with Schedules 3.1 (c) and (b) hereof; and
The Amended and Restated Bylaws of the Corporation (the
"Bylaws") shall be amended in the following manner:
(a) Article II, Section 11 of the Bylaws is deleted in its
entirety and is replaced by the following paragraph:
"No action requiring shareholder approval may be taken without
a meeting of the shareholders entitled to vote thereon."
(b) Article III, Section 1 of the Bylaws shall be amended to
include the following sentences at the end of such section:
"So long as The Fairchild Corporation and its affiliates
(collectively, "TFC") owns 25% or more of the common stock of the Corporation
that TFC owned on the [Date of Merger] TFC shall have the irrevocable right to
appoint four (4) members of the Board of Directors; provided, that so long as
Mel D. Borer is President and a Director of the Corporation, TFC shall only be
entitled to appoint three (3) directors."
"The Board of Directors may not grant any options for, or any
other rights to acquire, common stock of the Corporation, except for options
issued pursuant to a plan approved by the shareholders or in a transaction with
non-affiliates where such party pays cash for such option or right, unless such
transaction is approved by a majority of the shareholders."
(c) Article III, Section 10 of the Bylaws shall be deleted in
its entirety and replaced with the following paragraph:
"Executive Committee. The Board of Directors of the
Corporation shall have an executive committee consisting of the President, a
director appointed by TFC as long as TFC owns at least 25% of the common stock
of the Corporation that TFC owned on the [Date of Merger], and a third director
appointed by the Board of Directors of the Corporation. All actions taken by the
Executive Committee may only be taken pursuant to a unanimous vote by the
members thereof."
(d) Article III, Sections 11, 12 and 13 shall be amended to
include the following sentence as the second sentence of each such section:
"As long as TFC owns at least 25% of the common stock of the
Corporation, TFC will be entitled to appoint one director to such committee."
(e) Article IV, Section 5 shall be amended to include the
following sentence at the end of such section:
"The Corporation shall have a Vice Chairman of the Board of
Directors who shall have such duties as are designated by the Board of
Directors."
(f) Article IV, Section 6 shall be deleted in its entirety and
replaced with the following paragraph:
"Executive Officers. The Chairman of the Board of the
Corporation shall also be the Chief Executive Officer of the Corporation and
shall be the senior executive of the Corporation and shall have overall
supervision of the affairs of the Corporation. The President of the Corporation
shall also be the Chief Operating Officer of the Company and he shall be
responsible for the day-to-day business operations of the Corporation under the
direction of the Chief Executive Officer. Each of the Chief Executive Officer
and the President shall see that all orders and resolutions of the Board of
Directors of the Corporation are carried into effect, subject, however, to the
right of the Board of Directors to delegate any specific powers, except as may
be exclusively conferred on the President by law, to the Chairman or any other
officer of the Corporation. Each of
the Chief Executive Officer and the President may execute bonds, mortgages, and
other contracts requiring a signature under the seal of the Corporation.
(g) Article VIII, Section 1 shall be deleted in its entirety
and replaced with the following paragraph:
"By Directors or Shareholders. The bylaws of the Corporation
may be altered, amended or repealed at any validly called and convened meeting
of the shareholders by the affirmative vote of the holders of a majority of the
voting power of shares entitled to vote thereon represented at such meeting in
person or by proxy and at any validly called and convened meeting of the board
of directors by the affirmative vote of at least a majority of the directors
(unless such alteration, amendment or repeal in any way adversely affects the
rights granted to TFC hereunder or in Article II, Section 11, Article III,
Section 10 or Article IV, Section 6 of these bylaws, in which event a vote of
80% of the directors shall be required); provided, however, that the notice of
such meeting shall state that such alteration, amendment or repeal will be
proposed."