EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of November 20, 1997 (this "Agreement"),
among INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("Purchaser"), and
the individuals and entities whose names and addresses are set forth at the foot
of this Agreement (collectively, the "Stockholders", and each, individually, a
"Stockholder"), it being understood that the Stockholders are executing this
Agreement in their capacity as stockholders of the Company (as defined below)
and not in their capacity as directors or officers of the Company.
WHEREAS, Purchaser and its wholly owned subsidiary, Moonlight Acquisition
Corp. (the "Subsidiary"), propose to enter into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"), with Shared Technologies
Fairchild, Inc., a Delaware corporation (the "Company"), which Merger Agreement
provides, among other things, for the acquisition of the Company by Subsidiary
through a merger pursuant to which Subsidiary will merge with and into the
Company (the "Merger") and all outstanding shares of Common Stock of the
Company, par value $.01 per share ("Company Common Stock") other than shares
held by Purchaser and Subsidiary will be converted into the right to receive
$15.00 per share (the "Per Share Amount") and each outstanding share of
Preferred Stock of the Company, par value, $.01 per share ("Company Preferred
Stock") which is convertible into Common Stock and is not owned by Purchaser
will be converted into the right to receive the Per Share Amount multiplied by
the number of shares of Company Common Stock into which such share of Company
Preferred Stock is convertible which would have been received had such share of
Preferred Stock been converted immediately prior to the Merger (the "Preferred
Stock Per Share Amount"), in each case, net to the holder thereof in cash; and
WHEREAS, as of the date hereof, the Stockholders own (both beneficially and
of record) the number of shares of Company Common Stock, options to purchase
Company Common Stock ("Options") and Company Preferred Stock set forth opposite
their respective names at the foot of this Agreement; and
WHEREAS, as a condition to the willingness of Purchaser and the Subsidiary
to enter into the Merger Agreement, Purchaser and the Subsidiary have required
that the Stockhold-
ers agree, and in order to induce Purchaser and the Subsidiary to enter into the
Merger Agreement, the Stockholders have agreed, to enter into this Agreement
governing the voting and disposition of the shares of Company Common Stock,
Company Common Stock issuable upon exercise of Options and Company Preferred
Stock now owned and which may hereafter be acquired by any of the Stockholders
(the "Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
1. Grant of Option. Each Stockholder hereby grants to Purchaser an exclusive
and irrevocable option (each an "Option", and together the "Options") to
purchase from such Stockholder any and all Shares held by such Stockholder
(the "Option Shares") at a price equal to the Per Share Amount, net to the
Seller in cash, for each Share which is a share of Company Common Stock and
a price equal to the Preferred Stock Per Share Amount, net to the Seller in
cash, for each Share which is a share of Company Preferred Stock. Purchaser
may assign to any subsidiary or affiliate of Purchaser (including
Subsidiary) the right to exercise the Options. Each Option may be exercised
individually from each Stockholder, in whole or in part, at any time or
from time to time, on or after the date hereof and prior to the Termination
Date (as defined below). No Stockholder shall, prior to the termination of
the Option, take, or refrain from taking, any action which would have the
effect of preventing or disabling such Stockholder from delivering the
Option Shares or otherwise performing its obligations under this Agreement.
In the event Purchaser wishes to exercise any Option, in whole or in part,
the following procedures shall be followed:
(a) Purchaser shall send a written notice to such Stockholder specifying
the number and kind of Option Shares Purchaser will purchase and the
place and date on or before the later of (x) ten business days from
the date such notice is mailed, (y) two days after the date of
expiration or termination of any applicable waiting period under Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act") and (z) two days after
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the receipt of any necessary approvals from the Federal Communications
Commission (the "FCC") or any applicable State regulatory authority
for the closing of such purchase. If such closing is to occur sooner
than ten business days from the date such notice is mailed, notice
shall also be given at the time such written notice is given by
telephone or telecopy. To the extent such notice provides for the
purchase of Option Shares issuable upon exercise of Options, the
Stockholder hereby agrees to exercise the option relating to such
Option Shares sufficiently prior to such closing to permit
certificates for such Option Shares to be delivered at such closing.
(b) At the closing of such purchase, (i) Purchaser (or any affiliate or
subsidiary of Purchaser) shall pay to such Stockholder the aggregate
price for the Option Shares so purchased by certified or cashier's
check or wire transfer of immediately available funds and (ii) such
Stockholder shall deliver to Purchaser (or, at the option of
Purchaser, an affiliate or subsidiary of Purchaser) a certificate or
certificates, duly endorsed in blank or accompanied by stock powers
duly executed in blank, representing the number of Option Shares
purchased.
(c) To the extent any Stockholder has sold any Option Shares to Purchaser
pursuant to that certain purchase agreement dated the date hereof or
pursuant to the Lender offer to be made pursuant to the Merger
Agreement prior to the exercise of the Option, such Option Shares
shall cease to be Option Shares subject to this Agreement.
2. Voting of Shares. Each Stockholder, until the Termination Date, shall cause
the Shares owned by such Stockholder to be voted at any meeting of the
stockholders of the Company or in any consent in lieu of such a meeting in
favor of the consummation of the transactions contemplated by the Merger
Agreement, against any transactions inconsistent therewith, and as
otherwise reasonably requested by Purchaser in or-
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der to carry out the purposes of the Merger Agreement. For the purposes of
this Agreement, "Termination Date" shall mean the earlier of (i) two days
after the termination of the Merger Agreement in accordance with its terms,
(ii) the Effective Time (as defined in the Merger Agreement), and (iii) the
termination of this Agreement by the mutual written agreement of the
parties hereto or pursuant to the terms of Section 9 of this Agreement.
3. Irrevocable Proxy. Each Stockholder hereby irrevocably appoints Purchaser,
until the Termination Date, as its attorney and proxy pursuant to the
provisions of Section 212 of the General Corporation Law of the State of
Delaware, with full power of substitution, to vote and take other actions
(by written consent or otherwise) in favor of the consummation of the
transactions contemplated by the Merger Agreement, against any transactions
inconsistent therewith, and as otherwise reasonably required in order to
carry out the purposes of the Merger Agreement, with respect to the Shares
(and all other securities issued to the Stockholder in respect of the
Shares) which each Stockholder is entitled to vote at any meeting of
stockholders of the Company (whether annual or special and whether or not
an adjourned or postponed meeting) or in respect of any consent in lieu of
any such meeting or otherwise. This proxy and power of attorney is
irrevocable and coupled with an interest in favor of Purchaser. Each
Stockholder hereby revokes all other proxies and powers of attorney with
respect to the Shares (and all other securities issued to the Stockholder
in respect of the Shares) which it may have heretofore appointed or
granted, and no subsequent proxy or power of attorney shall be given or
written consent executed (and if given or executed, shall not be effective)
by the Stockholder with respect thereto.
4. No Disposition or Encumbrance of Shares. Each Stockholder hereby covenants
and agrees that, until the expiration of the Options as provided in Section
1 of this Agreement, except as contemplated by this Agreement, the
Stockholder shall not, and shall not offer or agree to, sell, transfer,
tender, assign, hypothecate or otherwise dispose of, or create or permit to
exist any security interest, lien, claim, pledge, option, right of first
refusal, agreement, limitation
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on the Stockholder's voting rights, charge or other encumbrance of any
nature whatsoever with respect to the Shares, except for the security
interest arising from that certain Pledge Agreement dated as of March 13,
1996 between RHI Holdings, Inc. and Gadsby & Hannah (the "Pledge Agent")
and except for the security interest arising from that certain Amended and
Restated Pledge Agreement dated as of July 18, 1997 between RHI Holdings,
Inc. and Citicorp USA, Inc. (the "Citicorp Pledge Agreement").
5. No Solicitation of Transactions. Each Stockholder shall not, directly or
indirectly, through any agent or representative or otherwise, (i) solicit,
initiate or encourage the submission of any proposal or offer from any
individual, corporation, partnership, limited partnership, syndicate,
person (including, without limitation, a "person" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934 as amended), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government (collectively, other than Purchaser and any
affiliate of Purchaser, a "Person") relating to (a) any acquisition or
purchase of all or any of the Shares or (b) any acquisition or purchase of
all or any portion of the assets of, or any equity interest in, the Company
or any subsidiary of the Company or any business combination with the
Company or any subsidiary of the Company or (ii) participate in any
negotiations regarding, or furnish to any Person any information with
respect to, or otherwise cooperate in any way with, or assist or
participate or facilitate or encourage, any effort or attempt by any Person
to do or seek any of the foregoing. Each Stockholder immediately shall
cease and cause to be terminated all existing discussions or negotiations
of the Stockholder and its agents or other representatives with any Person
conducted heretofore with respect to any of the foregoing. Each Stockholder
shall notify Purchaser promptly if any such proposal or offer, or any
inquiry or contact with any Person with respect thereto, is made and shall,
in any such notice to Purchaser, indicate in reasonable detail the identity
of the Person making such proposal, offer, inquiry or contact and the terms
and conditions of such proposal, offer, inquiry or contact. The provisions
of this Section 3 shall not apply to or restrict any ac-
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tion that may be taken by the Stockholder in its capacity as an officer or
director of the Company.
6. Legend on Certificates. The certificate(s) evidencing the Shares and the
agreements evidencing the Options shall be endorsed with a restrictive
legend substantially as follows:
The shares [options] evidenced by this certificate [agreement] are
subject to a stock option agreement dated as of November 20, 1997
between the registered holder hereof and Intermedia Communications
Inc., a copy of which is on file at the principal office of the
Company. The holder of this certificate [agreement], by his acceptance
hereof, agrees to be bound by all the terms of such agreement, as the
same is in effect from time to time.
7. Representations and Warranties of the Stockholders. Each Stockholder hereby
severally represents and warrants with respect to itself and its ownership
of the Shares to Purchaser and the Subsidiary as follows:
(a) Authority Relative to this Agreement. The Stockholder has all
necessary power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by the Stockholder and the consummation by the Stockholder
of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of the Stockholder.
This Agreement has been duly and validly executed and delivered by the
Stockholder and, assuming the due authorization, execution and
delivery by Purchaser, constitutes a legal, valid and binding
obligation of the Stockholder, enforceable against the Stockholder in
accordance with its terms, except that such enforceability may be
limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally.
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(b) No Conflict. The execution and delivery of this Agreement by the
Stockholder does not, and the performance of this Agreement by the
Stockholder will not, (i) require any consent, approval, authorization
or permit of, or filing with or notification to (other than pursuant
to the HSR Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the Other Regulatory Approvals), any governmental
or regulatory authority, domestic or foreign, (ii) conflict with or
violate the Certificate of Incorporation or By-laws (or comparable
organizational documents) of the Stockholder, (iii) conflict with or
violate any law, rule, regulation, order, judgment or decree
applicable to the Stockholder or by which any property or asset of the
Stockholder is bound, or (iv) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation
of a lien or other encumbrance of any nature whatsoever on any
property or asset of the Stockholder pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Stockholder
is a party or by which the Stockholder or any property or asset of the
Stockholder is bound except that a consent pursuant to that certain
Shareholders' Agreement dated March 13, 1996 by and among Shared
Technologies Inc., RHI Holdings Inc. and Anthony D. Autorino (the
"Shareholders Agreement") may be required and have been obtained.
(c) Title to the Shares. The Shares and Options owned by the Stockholder
(as set forth on the signature pages hereto) are all the Shares and
Options of the Company owned, either of record or beneficially, by the
Stockholder. The Stockholder owns all such Shares free and clear of
all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on the Stock-
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holder's voting rights, charges and other encumbrances of any nature
whatsoever (except for the liens granted to the Pledge Agent and
pursuant to the Citicorp Pledge Agreement), and, except as provided in
this Agreement, other than the Shareholders Agreement, the Pledge
Agreement and the Citicorp Pledge Agreement, the Stockholder has not
appointed or granted any proxy, which appointment or grant is still
effective, with respect to the Shares. RHI hereby agrees to obtain a
release from their limitation on voting rights in the Citicorp Pledge
Agreement within 10 days after the date of this Agreement.
(d) Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on
behalf of the Stockholder.
8. Representations and Warranties of Purchaser. Purchaser hereby represents
and warrants to the Stockholders as follows:
(a) Purchaser has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary action on the part of Purchaser. This Agreement has been
duly and validly executed and delivered by Purchaser and, assuming the
due authorization, execution and delivery by the Stockholders,
constitutes a legal, valid and binding obligation of Purchaser,
enforceable against the Purchaser in accordance with its terms, except
that such enforceability may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally.
(b) No Conflict. The execution and delivery of this Agreement by Purchaser
does not, and the performance of this Agreement by Purchaser
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will not, (i) require any consent, approval, authorization or permit
of, or filing with or notification to (other than pursuant to the HSR
Act, the Exchange Act and the Other Regulatory Approvals), any
governmental or regulatory authority, domestic or foreign, (ii)
conflict with or violate the Certificate of Incorporation or By-laws
of Purchaser, (iii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Purchaser or by
which any property or asset of Purchaser is bound, or (iv) result in
any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to
others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other
encumbrance of any nature whatsoever on any property or asset of
Purchaser pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Purchaser is a party or by which Purchaser or any
property or asset of Purchaser is bound.
(c) Brokers. Other than Bear, Stearns & Co., Inc., no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of Purchaser.
9. Termination of Agreement. Purchaser reserves the right in its sole
discretion at any time hereafter to terminate this Agreement, the Options
and all irrevocable proxies granted to it hereunder.
10. Miscellaneous.
(a) Expenses. Except as otherwise provided herein or in the Merger
Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
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(b) Further Assurances. Purchaser and the Stockholders will execute and
deliver all such further documents and instruments and take all such
further action as may be necessary in order to consummate the
transactions contemplated hereby.
(c) Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were
not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof (without
establishing the likelihood of irreparable injury or posting bond or
other security) in addition to any other remedy to which they may be
entitled at law or in equity.
(d) Entire Agreement. This Agreement constitutes the entire agreement
between Purchaser and the Stockholders with respect to the subject
matter hereof and supersedes all prior agreements and understandings,
both written and oral, between Purchaser and the Stockholders with
respect to the subject matter hereof.
(e) Assignment. This Agreement shall not be assigned by operation of law
or otherwise, except that Purchaser may assign all or any of its
rights and obligations hereunder to any affiliate of Purchaser,
provided that no such assignment shall relieve Purchaser of its
obligations hereunder if such assignee does not perform such
obligations.
(f) Obligations of Successors; Parties in Interest. This Agreement shall
be binding upon, inure solely to the benefit of, and be enforceable
by, the successors and permitted assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
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(g) Amendment; Waiver. This Agreement may not be amended or changed except
by an instrument in writing signed by the parties hereto. Any party
hereto may (i) extend the time for the performance of any obligation
or other act of the other party hereto, (ii) waive any inaccuracy in
the representations and warranties contained herein or in any document
delivered pursuant hereto and (iii) waive compliance with any
agreement or condition contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
(h) Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
(i) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in
person, by cable, telecopy, telegram or telex or by registered or
certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other
address for a party as shall be specified in a notice given in
accordance with this Section 7(i)):
if to Purchaser:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attention: Chief Financial Officer
Telecopy: (813) 829-2470
with a copy to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036
Attention: Ralph J. Sutcliffe, Esq.
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Telecopy: (212) 997-3527
if to any Stockholder:
at the respective addresses of such Stockholder set forth at the foot of
this Agreement.
(j) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State.
(k) Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
(l) Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the
same agreement.
(m) The obligations of the Stockholders hereunder are several and no
Stockholder shall be liable for any breach by any other Stockholder if
his or its obligations hereunder.
(n) WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT IT MIGHT HAVE
TO A JURY TRIAL OF ANY DISPUTE ARISING IN CONNECTION WITH THIS
AGREEMENT.
11. Consents. Each of the Stockholders, the Company and RHI Holdings, Inc.
hereby consents to the execution and delivery of this Agreement by all
parties hereto and the grants of voting rights and Options pursuant hereto
and agrees that all Option Shares purchased by Purchasers pursuant hereto
shall be acquired free and clear of any obligation under the Shareholders
Agreement.
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IN WITNESS WHEREOF, Purchaser has caused this Agreement to be executed by
its officers thereunto duly authorized and the Stockholders and the Company have
duly executed or caused this Agreement to be executed by its officers thereunto
duly authorized as of the date first written above.
PURCHASER:
INTERMEDIA COMMUNICATIONS INC.
By:
-------------------------------------
Name: Robert M. Manning
Title: Senior Vice President and
Chief Financial Officer
SHAREHOLDERS: NUMBER OF SHARES OWNED:
RHI HOLDINGS, INC. 6,225,000 Company Common Stock
250,000 Company Preferred Stock
By:
-------------------------------
Name:
Title:
Address: c/o The Fairchild Corporation
300 West Service
PO Box 10803
Chantilly, Virginia
Attention: Donald Miller, Esq.
Telecopy: (703) 478-5775
[Signature Pages Continue on Next Page]
Anthony D. Autorino 870,416 Company Common Stock
Options to purchase 296,667
shares of Company Common Stock
Address: c/o Shared Technologies Fairchild, Inc.
100 Great Meadow Road
Wethersfield, Connecticut 06109
Attention: Kenneth Doros
Telecopy: (860) 258-2455
Jeffrey J. Steiner up to 47,500 Company Common Stock
Options to purchase 116,667 shares
of Company Common Stock
_________________________________
Address: c/o The Fairchild Corporation
300 West Service
PO Box 10803
Chantilly, Virginia
Attention: Donald Miller, Esq.
Telecopy: (703) 478-5775
SHARED TECHNOLOGIES FAIRCHILD INC.
By:
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