This Settlement Agreement (the "Agreement"), dated as of November 20, 1997,
by and among Intermedia Communications, Inc. ("ICI"), Moonlight Acquisition
Corp. ("Moonlight"), Tel-Save Holdings, Inc. ("Tel-Save"), Shared Technologies
Fairchild Inc., ("STF") and TSHCo, Inc. ("TSH") (collectively, the "Parties").
R E C I T A L S
WHEREAS, on July 16, 1997, Tel-Save, TSH and STF entered into an Agreement
and Plan of Merger (the "Tel-Save Merger Agreement") and certain other
agreements and arrangements;
WHEREAS, on November 17, 1997, ICI and Moonlight commenced a litigation
against Tel-Save, STF and certain other parties, styled Intermedia
Communications, Inc. and Moonlight Acquisition Corp. v. Shared Technologies
Fairchild, Inc., et al., C.A. No. 16038, Del. Ch. 1997 (the "Litigation") and
offered to acquire STF (the "ICI Proposal"); and
WHEREAS, the Parties desire to terminate the Litigation and settle all
disputes among them arising from, or relating in any way to, the Tel-Save Merger
Agreement (and all agreements and arrangements contemplated therein or relating
thereto) and the ICI Proposal, and to enter into certain other arrangements
among them, including, but not limited to, an Agreement and Plan of Merger,
dated the date hereof, by and among STF, ICI and Moonlight (the "ICI Merger
Agreement");
NOW, THEREFORE, for good and valuable consideration, including the mutual
promises, releases, representations, covenants and obligations contained herein
or contemplated hereby, the sufficiency of which is hereby acknowledged, the
Parties hereby agree as follows:
1. Settlement of Dispute.
1.1 Promptly after the execution and delivery hereof, each of the Parties
hereto shall cause their respective attorneys to execute a stipulation of
dismissal, in the form annexed hereto as Exhibit A, dismissing the Litigation
with prejudice. Immediately upon execution of said stipulation of dismissal, ICI
and Moonlight shall cause their attorneys to file said stipulation of dismissal
with the Court of Chancery of the State of Delaware, in and for New Castle
County. Each party to the Litigation shall take all steps necessary to
effectuate the dismissal with prejudice of the Litigation, and shall pay its own
expenses, including attorneys' fees, incident to the Litigation and to the
preparation and performance of this Agreement.
1.2 (a) Subject to the provisions of paragraph 1.2(c) hereof, each of the
Parties, for itself and its respective officers, directors, affiliates, parent
and subsidiary corporations, partners, agents, attorneys, successors, assigns,
and anyone claiming any right through it or under it, mutually, irrevocably and
unconditionally releases and forever discharges each of the other Parties and
their present and former officers, directors, affiliates, parent and subsidiary
corporations, partners, agents, representatives, employees, controlling persons,
and their respective successors and assigns (collectively, the "Releasees"),
from any and all claims, actions, causes of action, suits, debts, dues, rights,
offsets, demands, sums of money, accounts, damages, judgments, reckonings,
bonds, bonuses, charges, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, extents, executions,
and complaints whatsoever, in law, equity or otherwise, under federal law, state
law or otherwise, whether known or unknown, which such Party and/or its
officers, directors, affiliates, parent and subsidiary corporations, partners,
agents, attorneys, successors, assigns, and anyone claiming any right through it
or under it, ever had, now has, or hereafter may have, for, upon, or by any
matter, cause or thing whatsoever, from the beginning of the world to the day of
this Agreement, based on, relating or with respect to, or arising out of:
(i) the facts, underlying claims, or affirmative defenses that were
asserted, or could have been asserted, in the Litigation;
(ii) the filing or prosecution of the Litigation, or any process or
proceedings therein;
(iii) the Tel-Save Merger Agreement, the STF Voting Agreements (as
defined below), the Option (as defined below), the ICI Proposal or the LD
Agreement, as originally executed and delivered (as defined below), or the
negotiation or execution of any thereof;
(iv) the negotiation or execution of this Agreement, the ICI Merger
Agreement, the Amended LD Agreement (as defined below), the Option
Agreement, of even date herewith, among ICI and certain stockholders of STF
(the "Option Agreement"), the Stock Purchase Agreement to be entered,
between ICI and RHI (the "Stock Purchase Agreement"), the Loan Agreement to
be entered between ICI and STF (the "Loan Agreement"), or any other
agreement contemplated by such agreements to be executed on or after the
date hereof; or
(v) any acts, facts, transactions, occurrences, conduct, statements or
representations on the part of the
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Parties or their respective present or former officers, directors,
affiliates, parent and subsidiary corporations, partners, agents,
representatives, employees or controlling persons with regard to, or
directly or indirectly related to, the merger or sale of, or failure to
merge or sell, or any offer or proposal to merge or sell, or failure to
include any particular term in any agreement to merge or sell, STF, or any
statement or omission in the Joint Proxy Statement of Tel-Save and STF of
October 30, 1997.
(b) Subject to the provisions of paragraph 1.2(c) hereof, each of the
Parties, for itself and its respective officers, directors, affiliates, parent
and subsidiary corporations, partners, agents, attorneys, successors, assigns,
and anyone claiming any right through it or under it, covenants not to sue or
bring any claim or action, of any nature whatsoever, against the Releasees, or
any one or more of them, in any forum, based on, relating to or arising out of:
(i) the facts, underlying claims, or affirmative defenses that were
asserted, or could have been asserted, in the Litigation;
(ii) the filing or prosecution of the Litigation, or any proceedings
therein;
(iii) the Tel-Save Merger Agreement, the STF Voting Agreements (as
defined below), the Option (as defined below), the ICI Proposal or the LD
Agreement, as originally executed and delivered (as defined below);
(iv) the negotiation or execution of this Agreement, the ICI Merger
Agreement, the Amended LD Agreement (as defined below), the Option
Agreement, the Stock Purchase Agreement, the Loan Agreement, or any other
agreement contemplated by such agreements to be executed on or after the
date hereof; or
(v) any acts, facts, transactions, occurrences, conduct, statements or
representations on the part of the Parties or their respective present or
former officers, directors, affiliates, parent and subsidiary corporations,
partners, agents, representatives, employees or controlling persons with
regard to, or directly or indirectly related to, the merger or sale of, or
failure to merge or sell, or any offer or proposal to merge or sell, or
failure to include any particular term in any agreement to merge or sell,
STF, or any statement or omission in the Joint Proxy Statement of Tel-Save
and STF of October 30, 1997.
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(c) Nothing in paragraphs 1.2(a) or 1.2(b) hereof shall alter, modify,
release or apply to:
(i) the rights, obligations, covenants, representations or warranties
of the Parties under or in this Agreement;
(ii) the rights, obligations, covenants, representations or warranties
of STF, ICI and Moonlight under or in the ICI Merger Agreement, the Option
Agreement, the Stock Purchase Agreement, the Loan Agreement, or any other
agreement contemplated by such agreements to be executed on or after the
date hereof;
(iii) the rights, obligations, consents, representations or warranties
of STF and Tel-Save, Inc. under or in the Amended LD Agreement (as defined
below); or
(iv) the rights, obligations, covenants, representations, or
warranties of STF and ICI under or in the Notes (as defined below).
(d) Simultaneously with the execution of this Agreement, ICI, Moonlight,
STF, RHI Holdings, Inc. ("RHI") and The Fairchild Corporation ("TFC") are
executing and delivering a release in favor of Daniel Borislow ("Borislow"), and
Borislow is executing and delivering a release in favor of ICI, Moonlight, STF,
RHI, and TFC, in each case in the forms attached as Exhibit B and Exhibit C,
respectively. Simultaneously with the execution of this Agreement, ICI,
Moonlight, Tel-Save and TSH are executing and delivering a release in favor of
RHI and TFC, and RHI and TFC are executing and delivering a release in favor of
ICI, Moonlight, Tel-Save and TSH, in each case in the forms attached as Exhibit
D and Exhibit E, respectively.
1.3 Neither this Agreement nor any of the terms hereof nor any
negotiations, proceedings or agreements in connection herewith shall constitute,
or be construed as or be deemed to be evidence of, an admission on the part of
any Party of any liability or wrongdoing whatsoever, or of the truth or untruth
of any of the claims made by any party in the Litigation, or of the merit or any
lack of merit of any of the defenses thereto; nor shall this Agreement, or any
of the terms hereof, or any negotiations or proceedings in connection herewith,
be offered or received in evidence, or used in any proceeding against any of the
Parties, or used in any proceeding for any purpose whatsoever, except with
respect to the effectuation and enforcement of this Agreement, the ICI Merger
Agreement, the Option Agreement, the Stock Purchase Agreement, the Loan
Agreement, the Amended LD Agreement (as defined below), the Notes (as defined
below), any other agreement contemplated by such agreement to be executed on or
after the date
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hereof, the discontinuance with prejudice of the Litigation, or the releases
referred to in paragraph 1.2(d) hereof.
2. Termination of the Tel-Save Merger Agreement and Certain Related
Agreements. (a) (i) Tel-Save, TSH and STF hereby terminate the Tel-Save Merger
Agreement, (ii) Tel-Save and STF hereby terminate the Option Agreement, dated as
of July 16, 1997 (the "Option"), between Tel-Save and STF, (iii) the agreements,
dated as of July 16, 1997 (the "STF Voting Agreements"), by Tel-Save with each
of RHI Holdings, Inc., J.J. Cramer & Co., Mentor Partners, L.P. and Anthony D.
Autorino, and the voting agreement, dated as of July 16, 1997, between STF and
Borislow (the "Borislow Voting Agreement") by their own terms shall be
terminated upon termination of the Tel-Save Merger Agreement, and Tel-Save
hereby agrees and confirms that it shall have no rights under the STF Voting
Agreements, and STF hereby agrees and confirms that it shall have no rights
under the Borislow Voting Agreement, and (iv) except for the Long Distance
Agreement, dated as of November 13, 1997 (the "LD Agreement"), between Tel-Save,
Inc. and STF, as amended as described herein, and except for this Agreement (and
the releases and other instruments contemplated herein), each of Tel-Save, TSH
and STF hereby terminates all other agreements and arrangements of any kind
arising from or relating to the Tel-Save Merger Agreement and the transactions
contemplated thereby (the Tel-Save Merger Agreement, the Option, the STF Voting
Agreements, the Borislow Voting Agreement and such other agreements,
collectively, the "Terminated Agreements")). Except as expressly provided
herein, the termination of the Terminated Agreements shall be without liability
to any party to any such Terminated Agreement and shall release each party
thereto from any and all further obligations thereunder, including, but not
limited to, any obligation to pay any termination fees described in the Tel-Save
Merger Agreement.
(b) In consideration for the termination of the Tel-Save Merger Agreement,
the Option and the STF Voting Agreements, STF hereby pays to Tel-Save $26.250
million by certified check drawn on a bank reasonably acceptable to Tel-Save or
wire transfer of immediately available funds.
3. Additional Transactions. (a) ICI hereby transfers to Tel-Save $211
million by certified check drawn on a bank reasonably acceptable to Tel-Save or
wire transfer of immediately available funds.
(b) Tel-Save hereby sells, assigns and transfers to ICI all of its right,
title and interest in and to all of the $163,637,000 face amount of the 12 1/4%
Senior Subordinated Discount Notes Due 2006 of STF (the "Notes") held by it on
the date hereof. Tel-Save represents and warrants to ICI that: (i) Tel-Save owns
the Notes, free and clear of all liens, encum-
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brances, restrictions and defects of title of any kind ("Liens") imposed or
incurred by it and, to Tel-Save's knowledge, Tel-Save owns the Notes free and
clear of all Liens whatsoever; (ii) Tel-Save has the right to transfer such
Notes to ICI without (x) violating any contract, agreement or arrangement to
which it is a party or by which it or its assets may be bound, and (y) the
imposition of any Lien on the Notes arising from such transfer; and (iii)
Tel-Save paid approximately $167 million to acquire the Notes. From time to time
after the date hereof, at the request of ICI, and without any additional
consideration therefor, Tel-Save shall execute and deliver to ICI such
instruments and documents of conveyance and transfer, and do and cause to be
done such acts or things, as ICI may reasonably request in order to more
effectively transfer and assign to ICI, or perfect or record, ICI's interest in
or title to, the Notes.
(c) Simultaneously with the execution of this Agreement, Tel-Save, Inc. and
STF are amending the LD Agreement by executing and delivering an amendment in
the form attached as Exhibit F (the LD Agreement as so amended, the "Amended LD
Agreement").
4. Standstill. For a period from the date hereof to the earlier of the
first anniversary of the date hereof and the date the ICI Merger Agreement shall
have been terminated, none of Tel-Save nor any of its affiliates (as defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) will (and none will assist or encourage others to), directly or
indirectly:
(i) acquire or agree, offer, seek or propose to acquire (or request
permission to do so), ownership (including, but not limited to, beneficial
ownership as defined in Rule 13d-3 under the Exchange Act) of all or
substantially all of the assets or businesses of STF, or any securities
issued by STF, or any rights or options to acquire such ownership
(including from a third party), or
(ii) seek or propose to acquire control of the management or policies
of STF (or request permission to do so), or
(iii) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing.
5. Representations and Warranties. Each of the Parties hereby represents
and warrants to each other Party hereto as follows:
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(a) It has full corporate power and authority to execute and deliver this
Agreement and any agreements and documents contemplated hereunder (the "Related
Agreements") to which it is a party and to perform its obligations hereunder and
thereunder. The execution, delivery and performance by it of this Agreement and
the Related Agreements to which it is a party have been duly authorized by all
necessary corporate action on its part, and this Agreement and each of the
Related Agreements to which it is a party constitutes a valid and binding
obligation of it, enforceable against it in accordance with its terms.
(b) Neither the execution and delivery of this Agreement and the Related
Agreements to which it is a party nor the consummation of the transactions
contemplated hereby or thereby constitutes a violation or breach of the
certificate of incorporation or by-laws (or other governing instrument) of it or
any provision of any contract, license or franchise or other instrument to which
it is a party or by which it may be bound.
6. Notices. All notices, requests, demands, consents and other
communications required or permitted under this Agreement (collectively,
"Notice") shall be effective only if given in writing and shall be considered to
have been duly given when (i) delivered by hand, (ii) sent by telecopier (with
receipt confirmed), provided that a copy is mailed (on the same date) by
certified or registered mail, return receipt requested, postage prepaid, or
(iii) received by the addressee, if sent by Express Mail, Federal Express or
other reputable express delivery service (receipt requested), or by first class
certified or registered mail, return receipt requested, postage prepaid. Notice
shall be sent in each case to the appropriate addresses or telecopier numbers
set forth below (or to such other addresses and telecopier numbers as a Party
may from time to time designate as to itself by notice similarly given to the
other Parties in accordance herewith, which shall not be deemed given until
received by the addressee). Notice shall be given:
(i) to ICI and Moonlight at:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attn: Chief Financial Officer
Telecopier: (813) 829-2470
copy to: Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036-7798
Attn: Ralph J. Sutcliffe, Esq.
Telecopier: (212) 479-6275
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(ii) to STF at:
Shared Technologies, Inc.
100 Great Meadow Road, Suite 104
Wethersfield, CT 06109
Attn: Kenneth M. Dorros, Esq.
Telecopier: (860) 258-2455
copy to: Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: James J. Clark, Esq.
Telecopier: (212) 269-5420
and
The Fairchild Corporation
300 West Service Road
P.O. Box 10803
Chantilly, VA 22021
Attn: Donald E. Miller, Esq.
Telecopier: (703) 478-5775
(iii) to Tel-Save and TSH at:
6805 Route 202
New Hope, Pennsylvania 18938
Attn: Chief Executive Officer
Telecopier: (215) 862-1083
copy to: Arnold & Porter
399 Park Avenue
New York, New York 10022
Attn: Jonathan C. Stapleton, Esq.
Telecopier: (212) 715-1399
and
Aloysius T. Lawn, IV, Esq.
General Counsel
Tel-Save Holdings, Inc.
6805 Route 202
New Hope, Pennsylvania 18938
Telecopier: (215) 862-1083
7. Further Assurances. Each of the Parties shall, at any time and from time
to time after the date hereof, fairly and in good faith, do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney, receipts, acknowledgments, acceptances and assurances as may
be reasonably required to procure for each of
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the Parties and their respective successors and assigns, the consideration to be
delivered to them as provided for herein or otherwise to carry out the intent
and purposes of this Agreement or to consummate any of the transactions
contemplated hereby.
8. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9. Miscellaneous Provisions.
9.1 This Agreement may not be amended, modified, discharged or terminated,
nor may the rights of any Party hereunder be waived, except by a written
document that is executed by each Party hereto. No waiver of any provision of
this Agreement shall be deemed to constitute a waiver of any other provision
hereof, nor shall any waiver constitute a continuing waiver.
9.2 This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument.
9.3 The Exhibits referred to herein are a part of this Agreement for all
purposes. Terms used in this Agreement shall have the same meanings when used in
such Exhibits.
9.4 Captions and headings are employed herein for convenience of reference
only and shall not affect the construction or interpretation of any provision
hereof.
9.5 This Agreement is made under and shall be governed by and construed in
accordance with the substantive laws of the State of New York applicable to
contracts made and to be performed entirely within that state.
9.6 This Agreement and the agreements and instruments contemplated herein
constitute the entire agreement between Tel-Save and TSH, on the one hand, and
the other Parties hereto, on the other hand, with respect to the subject matter
hereof.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day
and year first above written.
INTERMEDIA COMMUNICATIONS INC.
By:
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MOONLIGHT ACQUISITION CORP.
By:
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TEL-SAVE HOLDINGS, INC.
By:
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SHARED TECHNOLOGIES FAIRCHILD INC.
By:
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TSHCO. INC.
By:
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