EXHIBIT 4
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 Stockholders agree, and in order to induce Purchaser and the Subsidiary
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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:
I. 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 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
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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.
II. 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 order
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.
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III. 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.
IV. 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
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").
V. NO SOLICITATION OF TRANSACTIONS. Each Stockholder shall not, directly
or indirectly, through any agent or
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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 action that may be taken by the Stockholder in its
capacity as an officer or director of the Company.
VI. 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
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bound by all the terms of such agreement, as the same is in
effect from time to time.
VII. 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:
65535.VII1. 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.
65535.VII2. 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
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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.
65535.VII3. 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 Stockholder'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.
65535.VII4. 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.
VIII. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to the Stockholders as follows:
65535.VIII1. 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
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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.
65535.VIII2. NO CONFLICT. The execution and delivery of this
Agreement by Purchaser does not, and the performance of this
Agreement by Purchaser 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.
65535.VIII3. 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.
IX. 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.
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X. MISCELLANEOUS.
65535.X1. 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.
65535.X2. 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.
65535.X3. 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.
65535.X4. 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.
65535.X5. 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.
65535.X6. 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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65535.X7. 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.
65535.X8. 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.
65535.X9. 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.
Telecopy: (212) 997-3527
if to any Stockholder:
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at the respective addresses of such Stockholder set forth at the foot
of this Agreement.
65535.X10. 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.
65535.X11. 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.
65535.X12. 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.
65535.X13. 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.
65535.X14. 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.
XI. 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.
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:
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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]
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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:_________________________________