EXHIBIT 10.12 INDEMNIFICATION AGREEMENT This Indemnification Agreement (the "Agreement") is made and entered into this 13th day of March, 1996 by and between Shared Technologies Inc. ("Shared Technologies"), a Delaware corporation, and Fairchild Holding Corp. ("FHC"), a Delaware corporation. W I T N E S S E T H : WHEREAS, Shared Technologies, The Fairchild Corporation, RHI Holdings Inc. and Fairchild Industries, Inc. ("Fairchild") have entered into an Agreement and Plan of Merger (the "Merger Agreement") dated as of November 9, 1995, as amended; and WHEREAS, FHC owns the assets and liabilities, and conducts the operations, of the aerospace and industrial fasteners business previously owned and conducted by Fairchild and its subsidiaries; and WHEREAS, capitalized terms used herein without definition shall have the respective meanings ascribed to such terms in the Merger Agreement; and WHEREAS, the execution and delivery of this Agreement is a condition to effecting the Merger at the Closing and the parties to the Merger Agreement have agreed to effect the Merger in reliance upon the execution and delivery of this Agreement; NOW, THEREFORE, in consideration of the transactions contemplated by the Merger Agreement and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Indemnification by FHC. FHC hereby agrees to indemnify and hold harmless Shared Technologies against any and all losses, liabilities and damages or actions or claims (or actions or proceedings whether commenced or threatened) in respect thereof (hereinafter referred to collectively as "Losses") resulting from any liability or claims (including without limitation counsel fees and expenses for Shared Technologies in the event FHC fails to assume the defense thereof) which related to the aerospace and industrial fasteners business as previously owned and conducted by Fairchild and its subsidiaries prior to the Effective Time, including without limitation those which have directly and indirectly been assumed by FHC pursuant to -2- the Fairchild Reorganization described in Schedule 9.1 to the Merger Agreement and including all Taxes (including but not limited to Taxes related to the Fairchild Reorganization). 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 FHC 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 FHC' obligations under this Section 1 except to the extent it prejudiced or damaged FHC' ability to defend, settle or compromise such claim or to pay any Losses resulting therefrom), and FHC shall be entitled (but not obligated) to assume the defense thereof by giving written notice thereof within 10 days after FHC 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 or any of its subsidiaries), including the employment of counsel and the payment of all expenses. 2. Indemnification by Shared Technologies. Shared Technologies hereby agrees to indemnify and hold harmless FHC against any and all losses, liabilities and damages or actions or claims (or actions or proceedings whether commenced or threatened) in respect thereof (hereinafter referred to collectively as "STI Losses") resulting from (x) losses related to or arising out of the telecommunications systems and service business of Fairchild Communication Services Company and (y) the other obligations of Fairchild expressly assumed by Shared Technologies as specified on Schedule 9.1 to the Merger Agreement (including without limitation counsel fees and expenses of FHC in the event Shared Technologies fails to assume the defense thereof). Notwithstanding the foregoing, in no event shall FHC be entitled to indemnification for, and the term "STI Losses" shall not include, any consequential damages or damages which are speculative, remote -3- 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 FHC by any third party, which action, proceeding or claim, if determined adversely to the interests of FHC would entitle FHC to indemnity pursuant to this Agreement, FHC shall promptly, but in no event later than 10 days from the date FHC 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 2 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 FHC to FHC 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 FHC or any of its subsidiaries), including the employment of counsel and the payment of all expenses. 3. Miscellaneous 3.1 Modification; Waivers. This Agreement may be modified or amended only with the written consent of each party hereto. No party hereto shall be released from its obligations hereunder without the written consent of the other party. The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the party entitled to enforce such term, but any such waiver shall be effective only if in a writing signed by the party against which such waiver is to be asserted. Except as otherwise specifically provided herein, no delay on the part of any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party hereto of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. 3.2 Entire Agreement. This Agreement represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersedes all other prior -4- agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. 3.3 Severability. If any provision of this Agreement, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Agreement or the application of such provision to other Persons or circumstances shall not be affected thereby; provided that the parties shall negotiate in good faith with respect to an equitable modification of the provision or application thereof held to be invalid. 3.4 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 Fairchild Holding Corp.: 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. Gadsby & Hannah 125 Summer Street Boston, Massachusetts 02110 Facsimile No. (617) 345-7050 -5- (b) All notices and communications will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, if mailed; when receipt acknowledged, if sent by facsimile; and the next business day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. 3.5 Successors and Assigns. This Agreement shall inure to the benefit of and shall be binding upon FHC and Shared Technologies and their respective successors and assigns. 3.6 Counterparts. This Agreement may be executed in one or more counterparts, each of which for all purposes shall be deemed to be an original and all of which together shall constitute the same agreement. 3.7 Headings. The Section headings in this Agreement are for convenience of reference only, and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. 3.8 Construction. This Agreement shall be governed, construed and enforced with the laws of the state of New York, without regard to principles of conflict of laws. -6- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the date first written above. FAIRCHILD FASTENERS, INC. By: /s/ John C. Flynn ---------------------------- Name: Title: SHARED TECHNOLOGIES INC. By: /s/ Vincent DiVincenzo ---------------------------- Name: Title: