-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JMetChTZxkQAzhgckyCZln9z/9q/WWegJdmiZ4gGOi0dYuPHb6khX/AD5HksBae2 QSFXnhq6nbDs1ErzuHjLfA== 0000950130-97-005313.txt : 19971127 0000950130-97-005313.hdr.sgml : 19971127 ACCESSION NUMBER: 0000950130-97-005313 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 19971126 SROS: NASD GROUP MEMBERS: INTERMEDIA COMMUNICATIONS OF FLORIDA INC GROUP MEMBERS: MOONLIGHT ACQUISITION CORP. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SHARED TECHNOLOGIES FAIRCHILD INC CENTRAL INDEX KEY: 0000817632 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TELEPHONE INTERCONNECT SYSTEMS [7385] IRS NUMBER: 870424558 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-40041 FILM NUMBER: 97728801 BUSINESS ADDRESS: STREET 1: 100 GREAT MEADOW RD STREET 2: STE 104 CITY: WETHERSFIELD STATE: CT ZIP: 06109 BUSINESS PHONE: 8602582400 MAIL ADDRESS: STREET 1: 100 GREAT MEADOW ROAD SUITE 104 STREET 2: 100 GREAT MEADOW ROAD SUITE 104 CITY: WETHERSFIELD STATE: CT ZIP: 06109 FORMER COMPANY: FORMER CONFORMED NAME: SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP /CT DATE OF NAME CHANGE: 19960430 FORMER COMPANY: FORMER CONFORMED NAME: SHARED TECHNOLOGIES INC DATE OF NAME CHANGE: 19920703 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SHARED TECHNOLOGIES FAIRCHILD INC CENTRAL INDEX KEY: 0000817632 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TELEPHONE INTERCONNECT SYSTEMS [7385] IRS NUMBER: 870424558 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-40041 FILM NUMBER: 97728802 BUSINESS ADDRESS: STREET 1: 100 GREAT MEADOW RD STREET 2: STE 104 CITY: WETHERSFIELD STATE: CT ZIP: 06109 BUSINESS PHONE: 8602582400 MAIL ADDRESS: STREET 1: 100 GREAT MEADOW ROAD SUITE 104 STREET 2: 100 GREAT MEADOW ROAD SUITE 104 CITY: WETHERSFIELD STATE: CT ZIP: 06109 FORMER COMPANY: FORMER CONFORMED NAME: SHARED TECHNOLOGIES FAIRCHILD COMMUNICATIONS CORP /CT DATE OF NAME CHANGE: 19960430 FORMER COMPANY: FORMER CONFORMED NAME: SHARED TECHNOLOGIES INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: INTERMEDIA COMMUNICATIONS OF FLORIDA INC CENTRAL INDEX KEY: 0000885067 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 592913586 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 3625 QUEEN PALM DR STREET 2: STE 720 CITY: TAMPA STATE: FL ZIP: 33619 BUSINESS PHONE: 8138290011 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: INTERMEDIA COMMUNICATIONS OF FLORIDA INC CENTRAL INDEX KEY: 0000885067 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 592913586 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 3625 QUEEN PALM DR STREET 2: STE 720 CITY: TAMPA STATE: FL ZIP: 33619 BUSINESS PHONE: 8138290011 SC 14D1 1 SCHEDULE 14D-1 & SCHEDULE 13D - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SCHEDULE 13D PURSUANT TO SECTION 13(D) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------------- SHARED TECHNOLOGIES FAIRCHILD INC. (SUBJECT COMPANY) ---------------- INTERMEDIA COMMUNICATIONS INC. MOONLIGHT ACQUISITION CORP. (BIDDERS) ---------------- COMMON STOCK, PAR VALUE $.004 PER SHARE (TITLE OF CLASS OF SECURITIES) ---------------- 8189050 (CUSIP NUMBER OF CLASS OF SECURITIES) ---------------- ROBERT M. MANNING SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER INTERMEDIA COMMUNICATIONS INC. 3625 QUEEN PALM DRIVE TAMPA, FLORIDA 33619 (813) 829-0011 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS) ---------------- COPY TO: RALPH J. SUTCLIFFE, ESQ. KRONISH, LIEB, WEINER & HELLMAN LLP 1114 AVENUE OF AMERICAS NEW YORK, NEW YORK 10036-7798 (212) 479-6170 EXHIBIT INDEX IS LOCATED ON PAGE 9 THIS FILING SHALL BE DEEMED TO CONSTITUTE AN ORIGINAL FILING ON SCHEDULE 13D ON BEHALF OF INTERMEDIA COMMUNICATIONS INC. PURSUANT TO SECTION 13(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
TRANSACTION VALUATION AMOUNT OF FILING FEE - -------------------------------------------------------------------------------- $60,000,000.00* $12,000.00** - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
* For purposes of calculating fee only. Transaction valuation assumes the purchase of 4,000,000 shares of Common Stock of the Subject Company at $15.00 in cash per share. ** The amount of the filing fee, calculated in accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934, equals 1/50 of one percent of the value of the shares to be purchased. [_]Check Box if any part of the fee is offset as provided by Rule O-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the provisions filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Not applicable. Filing Party: Intermedia Communication Inc. Form or Registration No.: Moonlight Acquisition Corp. Date Filed: November 26, 1997 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SCHEDULE 14D-1 - --------------------- --------------------- CUSIP NO. 8189050 PAGE 2 OF 9 PAGES - --------------------- --------------------- NAME OF REPORTING PERSONS: 1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Moonlight Acquisition Corp. Not Assigned - -------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] 2 (See Instructions) (b) [_] - -------------------------------------------------------------------------------- SEC USE ONLY 3 - -------------------------------------------------------------------------------- SOURCES OF FUNDS (See Instructions) 4 AF - -------------------------------------------------------------------------------- CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED 5 PURSUANT TO ITEMS 2(e) or 2(f) [_] - -------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - -------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH 7 REPORTING PERSON 12,859,039 shares of Common Stock, par value $.004 par value - -------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES 8 CERTAIN SHARES (See Instructions) [_] - -------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 9 58.7% of the outstanding Common Stock, $.004 par value - -------------------------------------------------------------------------------- TYPE OF REPORTING PERSON (See Instructions) 10 CO 2 SCHEDULE 14D-1 - --------------------- --------------------- CUSIP NO. 8189050 PAGE 3 OF 9 PAGES - --------------------- --------------------- NAME OF REPORTING PERSONS: 1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Intermedia Communications Inc. 59-291-3586 - -------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] 2 (See Instructions) (b) [_] - -------------------------------------------------------------------------------- SEC USE ONLY 3 - -------------------------------------------------------------------------------- SOURCES OF FUNDS (See Instructions) 4 WC - -------------------------------------------------------------------------------- CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED 5 PURSUANT TO ITEMS 2(e) or 2(f) [_] - -------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - -------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH 7 REPORTING PERSON 12,859,039 shares of Common Stock, $.004 par value - -------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES 8 CERTAIN SHARES (See Instructions) [_] - -------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 9 58.7% of the outstanding Common Stock, $.004 par value - -------------------------------------------------------------------------------- TYPE OF REPORTING PERSON (See Instructions) 10 HC, CO 3 INTRODUCTION This Tender Offer Statement on Schedule 14D-1 and Schedule 13D relates to a tender offer by Moonlight Acquisition Corp., a Delaware corporation ("Purchaser"), and a wholly owned subsidiary of Intermedia Communications Inc., a Delaware corporation ("Parent"), to purchase up to 4,000,000 shares of Common Stock, par value $.004 per share (the "Shares"), of Shared Technologies Fairchild Inc., a Delaware corporation (the "Company"), at $15.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated November 26, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2) hereto, respectively and are incorporated herein by reference. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The subject company to which this Statement on Schedule 14D-1 relates is Shared Technologies Fairchild Inc., a Delaware corporation, which has its principal executive offices at 100 Great Meadow Road, Wethersfield, Connecticut 06109. (b) This statement relates to a tender offer by Purchaser, a wholly owned subsidiary of Parent, to purchase up to 4,000,000 outstanding shares of Common Stock, par value $.004 per share, of the Company at $15.00 per share, net to the seller in cash. As of November 20, 1997, there were 17,187,605 Shares outstanding (25,357,259 Shares on a fully diluted basis including all Shares issuable upon the exercise of certain outstanding options and warrants and the conversion of convertible securities). The information set forth in "Introduction" and "Section 1. Terms of the Offer; Expiration" of the Offer to Purchase is incorporated herein by reference. (c) The information regarding the principal market for, and price of, the Shares set forth in "Section 6. Price Range of the Shares; Dividends" of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d), (g) The persons filing this statement are Purchaser and Parent. Purchaser, a Delaware corporation, was incorporated on November 14, 1997 for the purpose of entering into the Merger Agreement and consummating the transactions contemplated thereby. It has conducted no business other than transactions related to its formation and the transactions contemplated by that certain Agreement and Plan of Merger (the "Merger Agreement") dated as of November 20, 1997, by and among Parent, Purchaser and the Company. All the outstanding capital stock of Purchaser is owned by Parent. Parent is a publicly held Delaware corporation. Parent, directly and through its subsidiaries, is a rapidly growing integrated communications services provider, offering a full suite of local, long distance and enhanced data telecommunications services to business and government end user customers, long distance carriers, Internet service providers, resellers and wireless communications companies. The principal office of Purchaser and parent is located at 3625 Queen Palm Drive, Tampa, Florida 33619. The information set forth in "Section 9. Certain Information Concerning Purchaser and Parent" of the Offer to Purchase is incorporated herein by reference. The names, business addresses, present principal occupations or employment, material occupations, positions, offices or employments during the last five years and citizenship of the directors and executive officers of Purchaser and Parent are set forth in "Annex I-Directors and Executive Officers of Purchaser and Parent" of the Offer to Purchase, which Annex is incorporated herein by reference. (e)-(f) During the last five years, neither Purchaser nor Parent nor, to the best knowledge of Purchaser or Parent, any persons listed in "Annex I- Directors and Executive Officers of Purchaser and Parent" of the Offer to Purchase, (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining 4 future violations of, or prohibiting activities subject to, Federal or State securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) Except as set forth in the "Introduction", "Section 8. Certain Information Concerning the Company", "Section 9. Certain Information Concerning Purchaser and Parent" and "Section 11. Background of the Transaction" of the Offer to Purchase, which are incorporated herein by reference, neither Purchaser nor Parent nor, to the best knowledge of Purchaser or Parent, any of the persons listed on "Annex I- Directors And Executive Officers of Purchaser and Parent" to the Offer to Purchase, has engaged in any transaction since January 1, 1994 with the Company, any corporation affiliated with the Company, or any of the Company's executive officers, directors or affiliates that would be required to be disclosed under this Item 3(a). (b) Except as set forth in the "Introduction", "Section 8. Certain Information Concerning the Company", "Section 9. Certain Information Concerning Purchaser and Parent", "Section 11. Background of the Transaction" and "Section 12. Purpose of the Offer; The Merger Agreement, The Stock Purchase Agreement, The Loan Agreement and The Stock Option Agreement; Plans for the Company" of the Offer to Purchase, which are incorporated herein by reference, there have been no contacts, negotiations or transactions since January 1, 1994 between Purchaser or Parent or their subsidiaries or, to the best knowledge of the Purchaser and Parent, any of the persons listed in "Annex I-Directors and Executive Officers of the Purchaser and Parent" to the Offer to Purchase, which is incorporated herein by reference, on the one hand, and the Company or any of the Company's executive officers, directors or affiliates, on the other hand, concerning: a merger, consolidation or acquisition; a tender offer or other acquisition of securities; an election of directors; or a sale or other transfer of a material amount of assets. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION (a) The total amount of funds required by Purchaser to purchase 4,000,000 outstanding Shares and to pay related fees and expenses in connection with the Offer and the Merger is estimated to be approximately $395 million. Purchaser expects to obtain the necessary funds directly from Parent from Parent's existing cash reserves. The information set forth in "Section 10. Source and Amount of Funds" of the Offer to Purchase is incorporated herein by reference. (b)-(c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS. (a)-(e) The purpose of the Offer is to enable Purchaser to as promptly as practicable acquire as many Shares as possible, and transfer the consideration for such Shares to the respective stockholders without needing to obtain any Federal Communication Commission or state regulatory consents. Such consents are a condition to the consummation of the Merger. The information concerning the purpose of the Offer set forth in the "Introduction", "Section 8. Certain Information Concerning the Company" and "Section 12. Purpose of the Offer; The Merger Agreement, The Stock Purchase Agreement, The Loan Agreement and The Stock Option Agreement; Plans for the Company" of the Offer to Purchase is incorporated herein by reference. (f)-(g) The information set forth in "Section 7. Certain Effects of the Transaction" of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) On November 13, 1997, Parent purchased 4,500 Shares, representing approximately .03% of outstanding Shares, from the market at a price of 11.4306 per Share. On November 14, 1997, Parent purchased 5 130,000 Shares, representing .76% of the outstanding Shares, from the market at a price of 11.7138 per Share. On November 20, 1997, Parent purchased from Mentor Partners, L.P., a limited partnership, 1,000,000 Shares, representing approximately 5.8% of outstanding Shares, for an aggregate purchase price of $14,750,000. On November 24, 1997, Parent entered into a stock purchase agreement with RHI Holdings, Inc. ("RHI"), pursuant to which RHI agreed to sell, and Parent agreed to buy from RHI all right, title and interest in and to 250,000 shares of the 6% Cumulative Convertible Preferred Stock, par value $.01 per share (the "Convertible Preferred"), representing 100% of the outstanding shares of the Convertible Preferred, for an aggregate purchase price of $62,627,425 plus any accrued dividends from November 24, 1997 to the closing date of such purchase. The closing of such transaction occurred on November 25, 1997. A summary of Parent's and Purchaser's transactions involving the Company's equity securities as set forth in "Introduction", "Section 12. Purpose of the Offer; The Merger Agreement, The Stock Purchase Agreement, The Loan Agreement and The Stock Option Agreement; Plans for the Company" and "Annex II--Transactions by Parent and Purchaser Involving Equity Securities of the Company" of the Offer to Purchase is incorporated herein by reference. Concurrently with execution of the Merger Agreement, Parent entered into a Stock Option Agreement (the "Stock Option Agreement"), with certain stockholders (collectively, "Investors") who owned an aggregate of approximately 41.3% of the outstanding shares (approximately 29.7% of the Shares on a fully diluted basis). Under the Stock Option Agreement, each Investor granted Parent the option to purchase all Shares, options to acquire Shares and shares of Series D Preferred Stock, par value $.01 per share (the "Series D Preferred"), owned by such Investor at a price of $15.00 per Share, $15.00 minus the exercise price of the options for each of the options to purchase Shares and $15.00 per share of Series D Preferred, respectively. As of the date of the Stock Option Agreement, the Investors in aggregate owned 7,095,415 Shares, options to purchase an additional 413,334 Shares and 45,000 shares of the Series D Preferred. As a result of the transactions described above, on the date hereof, Parent owns 1,134,500 Shares and 250,000 shares of the Convertible Preferred, which are convertible into 4,186,790 Shares. Under the Stock Option Agreement, Parent has the option to acquire 7,095,415 Shares, options to acquire 413,334 Shares and 29,000 shares of the Series D Preferred, which are convertible into 29,000 Shares. If Parent exercises its right under the Stock Option Agreement (and converts the shares of Series D Preferred and exercises all of its options to purchase Shares), Parent and Purchaser will own an aggregate amount of Shares, shares of Series D Preferred and options, which if converted and exercised, would constitute 12,859,039 Shares (or 50.7% of the issued and outstanding Shares on a fully diluted basis). As determined pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended, Parent and Purchaser beneficially own 58.7% of the issued and outstanding Shares. The information set forth in "Section 9. Certain Information Concerning Purchaser and Parent" and "Section 12. Purpose of the Offer; The Merger Agreement, The Stock Purchase Agreement, The Loan Agreement and The Stock Option Agreement; Plans for the Company" of the Offer to Purchase is incorporated herein by reference. Except as set forth in said Sections 9 and 12 of the Offer to Purchase, none of the Purchaser or Parent or, to the best knowledge of Purchaser or Parent any of the persons listed in "Annex I- Directors and Executive Officers of Purchaser and Parent" to the Offer to Purchase or any associate or majority-owned subsidiary of Purchaser or Parent or any of the persons so listed, owns beneficially or has any right to acquire, directly or indirectly, any Shares; and neither Purchaser nor Parent nor, to the best knowledge of the Purchaser or Parent, any of the persons or entities referred to above nor any director executive officer or subsidiary of any of the foregoing, has effected any transaction in the Shares during the past sixty days. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The description of all contracts, arrangements, understandings or relationships between Purchaser or Parent or, to the best knowledge of Purchaser or Parent, any of the persons listed in "Annex I- Directors and Executive Officers of Purchaser and Parent" to the Offer to Purchase and any person with respect to any securities of the Company set forth in "Introduction", "Section 1. Terms of the Offer; Expiration", "Section 9. Certain 6 Information Concerning Purchaser and Parent", "Section 10. Source and Amount of Funds", "Section 11. Background of the Transaction" and "Section 12. Purpose of the Offer; The Merger Agreement, The Stock Purchase Agreement, The Loan Agreement and The Stock Option Agreement; Plans for the Company" of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information with respect to persons employed, retained or to be compensated by Purchaser or by any person on its behalf to make solicitations or recommendations in connection with the Offer and the terms of such employment, retention and compensation set forth in the "Introduction" and in "Section 16. Fees and Expenses" of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. Reference is hereby made to the financial information set forth in "Section 9. Certain Information Concerning Purchaser and Parent" of the Offer to Purchase which is incorporated herein by reference. The financial statements of Parent contained in the Offer to Purchase do not constitute an admission that such information is material to a decision by a security holder of the Company to sell, tender or hold the securities being sought in the Offer. ITEM 10. ADDITIONAL INFORMATION. (a) The information with respect to present or proposed material contracts, arrangements, understandings or relationships between Purchaser or Parent, any of their subsidiaries, or, to the best knowledge of the Purchaser and Parent any of the persons listed on "Annex I-Directors and Executive Officers of Purchaser and Parent" to the Offer to Purchase, set forth in "Section 8. Certain Information Concerning the Company", "Section 9. Certain Information Concerning Purchaser and Parent", "Section 11. Background of the Transaction" and "Section 12. Purpose of the Offer; The Merger Agreement The Stock Purchase Agreement, The Loan Agreement and The Stock Option Agreement; Plans for the Company" of the Offer to Purchase are incorporated herein by reference. (b)-(c) The information relating to regulatory requirements and regulatory approvals that may be required and the applicability of antitrust laws set forth in "Section 15. Certain Legal Matters" of the Offer to Purchase is incorporated herein by reference. (d) Not applicable. (e) None. (f) Additional information with respect to the Offer contained in Exhibits (a)(1) and (a)(2) hereto is incorporated by reference herein in its entirety. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. See Exhibit Index. 7 SIGNATURES After due inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. INTERMEDIA COMMUNICATIONS INC. /s/ Robert M. Manning By: _________________________________ Name: Robert M. Manning Title: Senior Vice President, Chief Financial Officer & Secretary MOONLIGHT ACQUISITION CORP. /s/ Robert M. Manning By: _________________________________ Name: Robert M. Manning Title: President, Secretary and Treasurer Dated: November 26, 1997 8 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO. ------- ----------- -------- (a)(1) Offer to Purchase dated November 26, 1997................... (a)(2) Form of Letter of Transmittal............................... (a)(3) Form of Notice of Guaranteed Delivery....................... (a)(4) Form of Letter from Bear, Stearns & Co. Inc. to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.................................................... (a)(5) Form of Letter to Clients from Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees................... (a)(6) Summary Advertisement published November 26, 1997........... (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9............................... (a)(8) Text of Press Release issued on November 21, 1997........... (a)(9) Text of Press Release issued on November 26, 1997........... (c)(1) Agreement and Plan of Merger dated as of November 20, 1997 among Shared Technologies Fairchild Inc., Intermedia Communications Inc. and Moonlight Acquisition Corp. ........ (c)(2) Stock Purchase Agreement dated as of November 24, 1997 among Intermedia Communications Inc. and RHI Holdings, Inc. ...... (c)(3) Loan Agreement dated as of November 20, 1997 between Intermedia Communications Inc. and Shared Technologies Fairchild Inc. ............................................. (c)(4) Confidentiality Agreement, dated as of September 18, 1996, between Parent and Shared Technologies Fairchild Inc. ...... (c)(5) Settlement Agreement dated as of November 20, 1997 by and among Intermedia Communications Inc., Moonlight Acquisition Corp., Tel-Save Holdings, Inc., Shared Technologies Fairchild Inc. and TSHCo., Inc. ............................ (c)(6) Amendment dated November 20, 1997 to Agreement for Provision of Telecommunications Services dated November 13, 1997 between Tel-Save, Inc. and Shared Technologies Fairchild Inc. ....................................................... (c)(7) Stock Option Agreement dated as of November 20, 1997 among Intermedia Communications Inc. and Certain Specified Stockholders................................................ (d) Not applicable (e) Not applicable (f) Not applicable
9 EX-99.A.1 2 OFFER TO PURCHASE DATED NOVEMBER 26, 1997 EXHIBIT (a)(1) OFFER TO PURCHASE FOR CASH UP TO 4,000,000 SHARES OF COMMON STOCK OF SHARED TECHNOLOGIES FAIRCHILD INC. BY MOONLIGHT ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF INTERMEDIA COMMUNICATIONS INC. AT $15.00 NET PER SHARE THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE OFFER AND THE MERGER (AS DEFINED HEREIN) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND HAS RECOMMENDED THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. ON THE DATE HEREOF, INTERMEDIA COMMUNICATIONS INC. OWNS 1,134,500 SHARES OF COMMON STOCK OF THE COMPANY AND 250,000 SHARES OF SERIES I 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK, CONSTITUTING APPROXIMATELY 6.6% OF THE OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK (APPROXIMATELY 21.0% OF THE OUTSTANDING COMMON STOCK OF THE COMPANY ON A FULLY DILUTED BASIS ASSUMING CONVERSION OF THE CONVERTIBLE PREFERRED STOCK). INTERMEDIA COMMUNICATIONS INC. ENTERED INTO A STOCK OPTION AGREEMENT WITH CERTAIN STOCKHOLDERS WHO OWNED AN AGGREGATE OF APPROXIMATELY 41.3% OF THE OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK (APPROXIMATELY 29.7% OF THE OUTSTANDING COMMON STOCK OF THE COMPANY ON A FULLY DILUTED BASIS INCLUDING THE CONVERTIBLE PREFERRED STOCK NOW OWNED BY INTERMEDIA COMMUNICATIONS INC.). PURSUANT TO THE STOCK OPTION AGREEMENT, AMONG OTHER THINGS, SUCH STOCKHOLDERS HAVE AGREED TO VOTE ALL SHARES OF COMMON STOCK BENEFICIALLY OWNED BY THEM IN FAVOR OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND HAVE GRANTED INTERMEDIA COMMUNICATIONS INC. AN OPTION TO PURCHASE ALL SHARES OF COMMON STOCK, OPTIONS TO ACQUIRE COMMON STOCK AND SHARES OF SERIES D PREFERRED STOCK OWNED BY THEM AT A PRICE EQUAL TO $15.00 PER SHARE OF COMMON STOCK AND PER SHARE OF SERIES D PREFERRED STOCK AND $15.00 MINUS THE EXERCISE PRICE OF THE OPTIONS FOR EACH OF THE OPTIONS TO PURCHASE SHARES OF COMMON STOCK. SEE SECTION 12. THE OFFER IS SUBJECT TO CERTAIN CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE INTRODUCTION AND SECTIONS 1 AND 14. THIS OFFER IS NOT SUBJECT TO ANY MINIMUM NUMBER OF SHARES BEING VALIDLY TENDERED AND NOT WITHDRAWN AT THE EXPIRATION OF THE OFFER. THIS OFFER IS NOT BEING MADE FOR, AND TENDER WILL NOT BE ACCEPTED OF, SHARES OF SERIES D PREFERRED STOCK. HOLDERS OF SHARES OF SERIES D PREFERRED STOCK THAT WISH TO TENDER THEIR SHARES INTO THE OFFER MUST EXERCISE THEIR RIGHTS TO CONVERT SUCH SHARES INTO SHARES OF COMMON STOCK AND THEN TENDER SUCH SHARES OF COMMON STOCK ISSUABLE UPON SUCH EXERCISE PRIOR TO THE EXPIRATION OF THE OFFER. -------------- IMPORTANT Any stockholder desiring to tender all or a portion of such stockholder's Shares should either (i) complete and sign the Letter of Transmittal or a facsimile thereof in accordance with the instructions in the Letter of Transmittal, mail or deliver it and any other required documents to the Depositary and either deliver the Certificates for such Shares to the Depositary along with the Letter of Transmittal or deliver such Shares pursuant to the procedures for book-entry transfer set forth in Section 3 or (ii) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Any stockholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such stockholder desires to tender such Shares. Any stockholder who desires to tender Shares and whose Certificates representing such Shares are not immediately available, or who cannot comply with the procedure for book-entry transfer on a timely basis, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance may be directed to the Information Agent or Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer documents may be obtained at Purchaser's expense from the Information Agent or from brokers, dealers, commercial banks or trust companies. -------------- The Dealer Manager for the Offer is: BEAR, STEARNS & CO. INC. November 26, 1997 TABLE OF CONTENTS
PAGE ---- INTRODUCTION.............................................................. 1 THE OFFER................................................................. 4 1. Terms of Offer; Expiration............................................ 4 2. Acceptance for Payment and Payment for Shares......................... 5 3. Procedure for Tendering Shares........................................ 7 4. Withdrawal Rights..................................................... 10 5. Certain Federal Income Tax Consequences............................... 10 6. Price Range of the Shares; Dividends.................................. 11 7. Certain Effects of the Transaction.................................... 11 8. Certain Information Concerning the Company............................ 13 9. Certain Information Concerning Purchaser and Parent................... 15 10. Source and Amount of Funds............................................ 16 11. Background of the Transaction......................................... 16 12. Purpose of the Offer; The Merger Agreement, The Stock Purchase Agreement, The Loan Agreement and The Stock Option Agreement; Plans for the Company........ 19 13. Dividends and Distributions........................................... 27 14. Conditions of the Offer............................................... 27 15. Certain Legal Matters................................................. 28 16. Fees and Expenses..................................................... 31 17. Miscellaneous......................................................... 31
Annex I--Directors And Executive Officers of Purchaser and Parent Annex II--Transactions by Parent or Purchaser Involving Equity Securities of the Company To the Holders of Common Stock of Shared Technologies Fairchild Inc.: INTRODUCTION Moonlight Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly owned subsidiary of Intermedia Communications Inc., a Delaware corporation ("Parent"), hereby offers to purchase up to 4,000,000 shares of the common stock, $.004 par value (the "Shares"), of Shared Technologies Fairchild Inc. a Delaware corporation (the "Company"), at a purchase price of $15.00 per Share (the "Offer Price"), net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any supplements or amendments thereto, collectively constitute the "Offer"). The Offer is not being made for shares of Series D Preferred Stock and tenders of shares of Series D Preferred Stock, par value $.01 per share (the "Series D Preferred Stock"), will not be accepted. Holders of shares of Series D Preferred Stock must exercise their conversion rights in order to participate in the Offer. See Section 9 for additional information concerning Parent and Purchaser. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 to the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. However, any tendering stockholder or other payee who fails to complete and sign the Substitute Form W-9 that is included in the Letter of Transmittal may be subject to a required backup U.S. federal income tax withholding of 31% of the gross proceeds payable to such holder or other payee pursuant to the Offer. See Section 5. Purchaser will pay all charges and expenses of Bear, Stearns & Co. Inc. ("Bear Stearns"), as the dealer manager (in such capacity, the "Dealer Manager"), Continental Stock Transfer & Trust Company, as the depositary (the "Depositary"), and Georgeson & Company, Inc., as the information agent (the "Information Agent"), incurred in connection with the Offer. See Section 16. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES. CREDIT SUISSE FIRST BOSTON CORPORATION ("FIRST BOSTON"), THE COMPANY'S INDEPENDENT FINANCIAL ADVISOR, HAS ADVISED THE COMPANY'S BOARD OF DIRECTORS THAT, IN ITS OPINION, THE CONSIDERATION TO BE PAID IN THE OFFER AND THE MERGER TO THE COMPANY'S STOCKHOLDERS IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH STOCKHOLDERS. A COPY OF THE OPINION OF FIRST BOSTON IS CONTAINED IN THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 ("SCHEDULE 14D-9") FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN CONNECTION WITH THE OFFER, A COPY OF WHICH, WITHOUT CERTAIN EXHIBITS, IS BEING FURNISHED TO STOCKHOLDERS CONCURRENTLY HEREWITH. The Offer is subject to certain conditions contained in this Offer to Purchase. See "Introduction" and Sections 1 and 14. The Offer is not subject to any minimum number of Shares being validly tendered and not withdrawn at the expiration of the Offer. On the date hereof, Parent owns 1,134,500 Shares and 250,000 shares of Convertible Preferred Stock, constituting approximately 6.6% of the outstanding Shares (approximately 21.0% of the outstanding Shares on a fully diluted basis, assuming conversion of the Company's Series I Cumulative Convertible Preferred Stock par value $.01 per share (the "Convertible Preferred Stock") owned by Parent). Concurrently with the execution of 1 the Merger Agreement (as defined herein) Parent entered into a Stock Option Agreement (as defined herein) with certain stockholders who own an aggregate of approximately 41.3% of the outstanding Shares (approximately 29.7% of the outstanding Shares on a fully diluted basis, assuming conversion of the Convertible Preferred Stock now owned by Parent). Pursuant to the Stock Option Agreement, among other things, such stockholders have agreed to vote all Shares beneficially owned by them in favor of the Merger Agreement and the transactions contemplated thereby and have granted Parent an option to purchase all Shares, options to acquire Shares and shares of Series D Preferred Stock owned by them at a price equal to $15.00 per Share and per share of Series D Preferred Stock and $15.00 minus the exercise price of the options for each of the options to purchase Shares, in cash, exercisable at any time and from time to time on or after November 20, 1997 and prior to the Termination Date (as defined herein). The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of November 20, 1997 (the "Merger Agreement"), among Purchaser, Parent and the Company. The purpose of the Offer is, as promptly as practicable, to acquire as many Shares as possible, and transfer the consideration for such Shares to the respective stockholders, without needing to obtain any Federal Communications Commission ("FCC") or state regulatory consents, as a step in Parent's acquisition of the Company. The obtaining of such consents is a condition to the consummation of the Merger. The Merger Agreement provides, among other things, for the making of the Offer by Purchaser and further provides that, following the Offer and subject to the satisfaction or waiver of certain conditions and in accordance with the General Corporation Law of the State of Delaware (the "GCL"), Purchaser will be merged with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent (the "Surviving Corporation"). Upon consummation of the Merger (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than Shares owned by Parent or Purchaser or any of their subsidiaries or held in the treasury of the Company (which shares shall be cancelled) or by stockholders who have properly exercised their appraisal rights under the GCL) will be converted into the right to receive $15.00 per Share, in cash without interest. Additionally, at the Effective Time, each issued and outstanding share of Series D Preferred Stock (other than, in each case, shares owned by Parent or Purchaser or any of their subsidiaries or held in the treasury of the Company (which shares shall be cancelled)) will be converted into the right to receive $15.00 without interest (the amounts to be paid in the Merger for Shares and shares of Series D Preferred Stock, "Merger Consideration"). For a description of the Merger Agreement, see Section 12. Certain federal income tax consequences of the sale of Shares pursuant to the Offer and the conversion of Shares and Preferred Shares for cash pursuant to the Merger (whether as Merger Consideration or pursuant to the proper exercise of appraisal rights) are described in Section 5. Concurrently with the execution of the Merger Agreement, Parent entered into a Stock Option Agreement (the "Stock Option Agreement") with the following stockholders of the Company: RHI Holdings, Inc. ("RHI"), Anthony Autorino ("Autorino") and Jeffrey J. Steiner ("Steiner"; RHI, Autorino and Steiner collectively, the "Investors"). Under the Stock Option Agreement, each Investor granted Parent the option (an "Investor Option") to purchase all Shares, options to acquire Shares and any shares of preferred stock of the Company (including Convertible Preferred Stock and Series D Preferred Stock, collectively the "Preferred Shares") owned by such Investor at a price of $15.00 per Share, $15.00 minus the exercise price of the options for each of the options to purchase Shares and $15.00 per share for each Share into which the Preferred Shares are convertible, respectively. As of the date of the Stock Option Agreement, RHI owned 6,225,000 Shares and 250,000 shares of Convertible Preferred Stock, Autorino owned 870,415 Shares, 29,000 shares of Series D Preferred Stock and options to purchase an aggregate of 296,667 Shares and Steiner owned up to 47,500 options to purchase 116,667 Shares (all such Shares, options to acquire Shares and Preferred Shares collectively, the "Option Shares"). On November 24, 1997, Parent and the Company entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant to which, on November 25, 1997, Parent purchased 250,000 shares of Convertible Preferred Stock, constituting all of the Company's issued and outstanding shares of the Convertible Preferred Stock, from RHI for an aggregate purchase price of $62,827,425 plus accrued dividends from November 24, 1997 to the closing date. The terms of the Stock Option Agreement and the Stock Purchase Agreement are further described in Section 12. 2 Each of the Investors has expressed its or his commitment to both the Offer and the Merger. Parent has been advised that each Investor intends to tender all of its or his Shares pursuant to the Offer, and, pursuant to the Stock Option Agreement, will vote any remaining Shares in favor of the Merger. Concurrently with the execution of the Merger Agreement, Parent entered into a Loan Agreement (the "Loan Agreement") with the Company. Under the Loan Agreement, at the Company's election, it may require Parent to extend a loan of $21,918,000 to Company in order for the Company to redeem its issued and outstanding shares of Series J Redeemable Special Preferred Stock, par value $.01 per share (the "Special Preferred Stock"), pursuant to the terms of the Loan Agreement and a corresponding Promissory Note to be issued by the Company (the "Promissory Note"). The terms of the Loan Agreement are further described in Section 12. On November 25, 1997 the Company elected to require Parent to extend the loan and Parent so lent such funds to the Company. The Company has informed Parent that it has redeemed all shares of Special Preferred Stock previously outstanding. On November 20, 1997, Parent purchased 1,000,000 Shares from Mentor Partners, L.P. for an aggregate purchase price of $14,750,000. The Company has represented pursuant to the Merger Agreement that as of November 20, 1997, 17,187,605 Shares were issued and outstanding (all of which are validly issued, fully paid and nonassessable) and that, as of that date no more than 25,357,259 Shares were outstanding on a fully diluted basis (including 2,051,364 Shares reserved for issuance upon the exercise of outstanding stock options granted to employees or directors of the Company, 1,873,550 Shares for issuance upon exercise of currently outstanding warrants and 4,244,740 Shares for issuance upon conversion of the Series D Preferred Stock and Convertible Preferred Stock). Parent, Purchaser and their affiliates currently own 1,134,500 Shares and have the right to acquire 7,095,415 Shares, options to purchase an aggregate of 413,334 Shares and 29,000 shares of the Series D Preferred Stock pursuant to the Stock Option Agreement. If Parent exercises its rights under the Stock Option Agreement (and converts the shares of Convertible Preferred Stock it owns and exercises all of its options to purchase Shares), Parent and Purchaser will own an aggregate amount of Shares, Preferred Shares and options, which if converted and exercised, would constitute approximately 50.7% of the issued and outstanding Shares on a fully diluted basis (or approximately 52.8% of the issued and outstanding Shares on a fully diluted basis with respect to options to purchase Shares that are currently exercisable). The consummation of the Merger is subject to the satisfaction or waiver of a number of conditions, including the approval of the Merger by the requisite vote or consent of the stockholders of the Company and the receipt of regulatory approvals. Under the GCL the stockholder vote necessary to approve the Merger will be the affirmative vote of a majority of the outstanding Shares, including any Shares held by Parent and Purchaser as a result of the purchase of Shares pursuant to the Offer and the Stock Option Agreement. IF, FOLLOWING RECEIPT OF NECESSARY REGULATORY APPROVALS, ALL OPTION SHARES NOT ACQUIRED IN THE OFFER ARE PURCHASED PURSUANT TO THE STOCK OPTION AGREEMENT (AND PARENT CONVERTS THE SHARES OF CONVERTIBLE PREFERRED STOCK AND EXERCISES ALL OF ITS OPTIONS TO PURCHASE SHARES), PARENT AND PURCHASER WILL BE ABLE TO APPROVE THE MERGER WITHOUT REGARD TO THE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY. See Sections 12 and 14. In connection with the Merger, holders of Shares who have not sold their Shares pursuant to the Offer (or otherwise) will have certain rights under the GCL to demand appraisal of, and payment in cash of the fair value (as judicially determined) of, their Shares. See Section 12. The Offer is not being made for the Company's outstanding shares of the Series D Preferred Stock. Holders of the Series D Stock who wish to participate in the Offer must exercise their rights to convert such shares of the Series D Stock and tender the Shares issued upon such exercise prior to expiration of the Offer. THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL AND THE SCHEDULE 14D-9 CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BY STOCKHOLDERS BEFORE THEY MAKE ANY DECISION WHETHER TO TENDER THEIR SHARES PURSUANT TO THE OFFER. 3 THE OFFER 1. TERMS OF THE OFFER; EXPIRATION Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will, and Parent has agreed in the Merger Agreement to cause Purchaser to, accept for payment, and pay for, up to 4,000,000 Shares validly tendered and not properly withdrawn as provided in Section 4 prior to the Expiration Date. As used herein, the term "Expiration Date" shall mean 12:00 midnight, New York City time, on Friday, December 26, 1997, unless and until Purchaser shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. Pursuant to the Merger Agreement, Parent and Purchaser may, without the consent of the Company, (i) extend the Offer, if at any scheduled expiration date of the Offer any of the conditions of the Offer shall not be satisfied or waived, until such time as such conditions are satisfied or waived, (ii) extend the Offer for any period required by statute, rule, regulation, interpretation or position of the Securities and Exchange Commission (the "Commission") or any other governmental authority or agency thereof applicable to the Offer, and (iii) extend the Offer for any reason for an aggregate of not more than 20 business days beyond the latest expiration date of the Offer that would otherwise be permitted under clauses (i) and (ii) of this sentence. In addition, Purchaser and Parent have agreed that if at any scheduled expiration date of the Offer any of the conditions of the Offer are not satisfied or waived by Parent or Purchaser, Purchaser will extend the Offer until such time as all of the conditions of the Offer are satisfied or have been waived; provided, however, in no event will Purchaser be required to extend the Offer beyond February 28, 1998. As used in this Offer to Purchase, "business day" means any day other than a Saturday, Sunday or a U.S. federal holiday, and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York City time. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, EXPIRATION OR TERMINATION OF ALL WAITING PERIODS APPLICABLE TO THE OFFER IMPOSED BY THE HART-SCOTT- RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTIONS 14 AND 15. THE OFFER IS NOT SUBJECT TO ANY MINIMUM NUMBER OF SHARES BEING VALIDLY TENDERED AND NOT WITHDRAWN AT THE EXPIRATION OF THE OFFER. Purchaser reserves the right (but will not be obligated), in accordance with applicable rules and regulations of the Commission, to waive any condition to the Offer. If any of the conditions set forth in Section 14 has not been satisfied by the scheduled expiration date of the Offer, Purchaser may elect (1) to extend the Offer and, subject to applicable withdrawal rights, retain all tendered Shares until the expiration of the Offer, as extended, subject to the terms of the Offer, (2) subject to complying with applicable rules and regulations of the Commission, to waive the unsatisfied conditions and accept for payment all Shares so tendered and not extend the Offer, (3) subject to the terms of the Merger Agreement, to terminate the Offer and not accept for payment any Shares and return all tendered Shares to tendering stockholders, or (4) subject to the terms of the Merger Agreement, to amend the Offer. If more than 4,000,000 Shares are validly tendered and not withdrawn prior to the Expiration Date, the Shares so tendered shall, upon the terms and subject to the conditions of the Offer, be accepted for payment on a pro rata basis (adjusted to avoid acceptance for payment of fractional Shares) in accordance with Rule 14d-8 under the Exchange Act (as defined herein). Because of the difficulty of determining the precise number of Shares validly tendered, the Purchaser does not expect to be able to announce the final proration factor or to pay for any Shares until at least five business days after the Expiration Date. However, the Purchaser will announce the preliminary proration factor as soon as practicable after the Expiration Date. THE PURCHASER WILL NOT PAY FOR ANY SHARES ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER UNTIL THE FINAL PRORATION FACTOR IS KNOWN. Subject to the limitations set forth in the Merger Agreement as described above, Purchaser reserves the right (but will not be obligated), at any time or from time to time in its sole discretion, to extend the period during 4 which the Offer is open by giving oral or written notice of such extension to the Depositary and by making a public announcement of such extension. There can be no assurance that Purchaser will exercise its right to extend the Offer. Subject to the applicable rules and regulations of the Commission, Purchaser also expressly reserves the right, in its sole discretion at any time and from time to time, (1) to delay payment for any Shares regardless of whether such Shares were theretofore accepted for payment, or, subject to the limitations set forth in the Merger Agreement, to terminate the Offer and not to accept for payment or pay for any Shares not theretofore accepted for payment or paid for, if any condition to the Offer is not satisfied or waived, by giving oral or written notice of such delay or termination to the Depositary, and (2) subject to the limitations set forth in the Merger Agreement, at any time or from time to time, to amend the Offer in any respect. However, pursuant to the Merger Agreement, Purchaser has agreed that it will not, without the consent of the Company, (1) decrease or change the form of consideration payable in the Offer, (2) decrease the number of Shares sought pursuant to the Offer, (3) impose additional conditions of the Offer other than those set forth in Section 14, or (4) change the conditions of the Offer (provided that Parent or Purchaser in its sole discretion may waive any such conditions). Purchaser's right to delay payment for any Shares or not to pay for any Shares theretofore accepted for payment is subject to the applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), relating to Purchaser's obligation to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer. The obligation of Purchaser to consummate the Offer and to accept for payment and to pay for any Shares tendered pursuant to the Offer will be subject to the conditions of the Offer. See Section 14. Any extension of the period during which the Offer is open, delay in acceptance for payment or payment, or termination or amendment of the Offer will be followed, as promptly as practicable, by public announcement thereof, such announcement in the case of an extension to be issued not later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date in accordance with the public announcement requirements of Rule 14d-4(c) under the Exchange Act. Without limiting the obligation of Purchaser under such rule or the manner in which Purchaser may choose to make any public announcement, Purchaser currently intends to make announcements by issuing a press release to the Dow Jones News Service and making any appropriate filing with the Commission. If Purchaser makes a material change in the terms of the Offer or the information concerning the Offer or if it waives a material condition of the Offer, Purchaser will disseminate additional tender offer materials and extend the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which a tender offer must remain open following a material change in the terms of the Offer or information concerning the Offer, other than a change in the price or in the number of Shares sought, will depend on the facts and circumstances then existing, including the relative materiality of the change. With respect to a change in the price or number of Shares sought, a minimum of ten business days is generally required to permit adequate disclosure to stockholders. The Company has provided Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to stockholders. This Offer to Purchase, the related Letter of Transmittal and certain other relevant materials will be mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will, and Parent has agreed to cause Purchaser to, accept for payment, and pay for, up to 4,000,000 Shares validly tendered and not properly 5 withdrawn prior to the Expiration Date, promptly after the later to occur of (i) the Expiration Date and (ii) subject to compliance with Rule 14e-1(c) under the Exchange Act, the date of satisfaction or waiver of all of the conditions of the Offer set forth in Section 14 (including expiration or termination of the waiting period under the HSR Act) applicable to the acquisition of Shares pursuant to the Offer. Subject to compliance with Rule 14e-1(c) under the Exchange Act and the terms and conditions of the Merger Agreement, Purchaser expressly reserves the right, in its discretion, to delay acceptance for payment of or payment for Shares in order to comply, in whole or in part, with any applicable law or government regulation or any condition contained herein. See Sections 14 and 15. No payment for Shares will be made until the final proration factor is determined. See Section 1. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates evidencing such Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with respect to such Shares), (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed with all required signature guarantees or an Agent's Message, as defined below, in connection with a book-entry transfer, and (iii) all other documents required by the Letter of Transmittal. See Section 3. The term "Agent's Message" means a message transmitted by a Book-Entry Transfer Facility (as defined in Section 3) to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares which are the subject of such Book-Entry Confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against such participant. Parent and the Company each anticipates that it will make its filings on November 28, 1997 with the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division") its Premerger Notification and Report Forms under the HSR Act with respect to the Offer, the Stock Agreement Option and the Merger. Accordingly, it is anticipated that the waiting period under the HSR Act with respect to the Offer will expire at 11:59 p.m., New York City time, on December 12, 1997 and with respect to the Stock Option Agreement and the Merger on December 28, 1997. Prior to the expiration or termination of such waiting periods, the FTC or the Antitrust Division may extend such waiting periods by requesting additional information from Parent and/or the Company with respect to the Offer, the Stock Option Agreement or the Merger. If such a request is made, the waiting periods will expire at 11:59 p.m., New York City time, on the tenth calendar day (or on the twentieth calendar day, in the case of the filing required with respect to the Option Agreement and the Merger) after substantial compliance by Parent with such a request. Thereafter, the waiting periods may only be extended by court order. The waiting periods under the HSR Act may be terminated by the FTC and the Antitrust Division prior to the expiration thereof. Parent and the Company have requested early termination of the waiting periods, although there can be no assurance that this request will be granted. See Section 15 for additional information regarding the HSR Act. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not withdrawn as, if and when Purchaser gives oral or written notice to the Depositary of Purchaser's acceptance of such Shares for payment. In all cases, payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from Purchaser and transmitting payment to tendering stockholders whose Shares have theretofore been accepted for payment. If, for any reason, acceptance for payment of any Shares tendered pursuant to the Offer is delayed, including without limitation delay in the final determination of the final proration factor, or Purchaser is unable to accept for payment Shares tendered pursuant to the Offer, then, without prejudice to Purchaser's rights under Section 14, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that the tendering stockholders are entitled to withdrawal rights as described in Section 4 and as otherwise required by Rule 14e-1(c) under the Exchange Act. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE BE PAID BY PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. 6 If any tendered Shares are not purchased for any reason or if certificates are submitted for more Shares than are tendered, certificates for such Shares not purchased or tendered will be returned pursuant to the instructions of the tendering stockholder without expense to the tendering stockholder (or, in the case of Shares delivered by book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility (as defined in Section 3) pursuant to the procedures set forth in Section 3, such Shares will be credited to an account maintained at the appropriate Book-Entry Transfer Facility) as promptly as practicable following the expiration, termination or withdrawal of the Offer. If, prior to the Expiration Date, Purchaser (in its sole discretion) increases the consideration to be paid per Share pursuant to the Offer, Purchaser will pay such increased consideration for all such Shares purchased pursuant to the Offer, whether or not such Shares were tendered prior to such increase in consideration. Purchaser reserves the right to transfer or assign, in whole or in part, to Parent or one or more of Parent's subsidiaries the right to purchase Shares tendered pursuant to the Offer; provided, however, that no such transfer or assignment will release Purchaser from its obligations under the Offer or prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURE FOR TENDERING SHARES Valid Tenders. For Shares to be validly tendered pursuant to the Offer, a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other required documents, must be received by the Depositary at its address set forth on the back cover of this Offer to Purchase prior to the Expiration Date, and either (i) certificates representing Shares must be received by the Depositary at such address on or prior to the Expiration Date, (ii) such Shares must be delivered pursuant to the procedures for book-entry transfer set forth below and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Date, or (iii) the tendering stockholder must comply with the guaranteed delivery procedures set forth below. No alternative, conditional or contingent tenders will be accepted. Book-Entry Transfer. The Depositary will make a request to establish an account with respect to the Shares at The Depository Trust Company (the "Book- Entry Transfer Facility") for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedure for such transfer. However, although delivery of Shares may be effected through book- entry transfer into the Depositary's account at the Book-Entry Transfer Facility, the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or an Agent's Message in connection with a book-entry transfer), and any other required documents must, in any case, be transmitted to, and received by, the Depositary at its address set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, or the tendering stockholder must comply with the guaranteed delivery procedures described below. The confirmation of a book-entry transfer of Shares into the Depositary's account at the Book-Entry Transfer Facility as described above is referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS (INCLUDING AN EXECUTED LETTER OF TRANSMITTAL) TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. Signature Guarantees. Signatures on all Letters of Transmittal must be guaranteed by a member in good standing of the Securities Transfer Agent's Medallion Program, or by any other bank, broker, dealer, credit union, savings association or other entity that is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing constituting an "Eligible Institution") unless the Shares tendered thereby are tendered (i) by a registered holder (which term, for purposes of this Section, includes any participant in the Book-Entry Transfer Facility's system whose name appears on a security position listing as the owner of the Shares) of Shares who has not completed either the box labeled "Special Delivery 7 Instructions" or the box labeled "Special Payment Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If the certificates representing Shares are registered in the name of a person or persons other than the signer of the Letter of Transmittal, or if payment is to be made or certificates for Shares not accepted for payment or not tendered are to be issued or returned to a person other than the registered holder, then the certificates representing Shares must be endorsed or accompanied by appropriate stock powers, in each case signed exactly as the name or names of the registered holder or holders appear on the certificates, with the signatures on the certificates or stock powers guaranteed as described above and as provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's certificates are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such Shares may nevertheless be tendered if all of the following guaranteed delivery procedures are complied with: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser herewith, is received by the Depositary, as provided below, prior to the Expiration Date; and (iii) the certificates for all tendered Shares in proper form for transfer, or a Book-Entry Confirmation with respect to all tendered Shares, in either case together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any requested signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal, are received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery. A "trading day" is any day on which the New York Stock Exchange, Inc. is open for business. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary and must include an endorsement by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer in all cases will be made only after timely receipt by the Depositary of (i) certificates for (or a Book-Entry Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message, and (iii) all other documents required by the Letter of Transmittal. Backup Withholding. In order to avoid "backup withholding" of U.S. federal income tax on payments of cash pursuant to the Offer, a stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on a Substitute Form W-9 and certify under penalties of perjury that such TIN is correct and that such stockholder is not subject to backup withholding. If a stockholder does not provide such stockholder's correct TIN or fails to provide the certifications described above, the Internal Revenue Service (the "IRS") may impose a penalty on such 8 stockholder and payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 31%. All stockholders surrendering Shares pursuant to the Offer should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the Purchaser and the Depositary). Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Noncorporate foreign stockholders should complete and sign the main signature form and a Form W-8 (Certificate of Foreign Status), a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See Instruction 10 to the Letter of Transmittal. Determination of Validity. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares pursuant to any of the procedures described above will be determined by Purchaser in its sole discretion, which determination shall be final and binding on all parties. Purchaser reserves the absolute right to reject any or all tenders of Shares that are determined by it not to be in proper form or the acceptance of or payment for which, in the opinion of Purchaser, may be unlawful. Purchaser also reserves the absolute right to waive any defect or irregularity in any tender of Shares. Subject to the terms of the Merger Agreement, Purchaser also reserves the absolute right to waive or to amend any of the conditions of the Offer. Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding on all parties. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Appointment as Proxy. By executing a Letter of Transmittal, a tendering stockholder irrevocably appoints designees of Purchaser as such stockholder's attorneys-in-fact and proxies, each with full power of substitution, in the manner set forth in the Letter of Transmittal, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by Purchaser (and with respect to any and all other Shares or other securities issued or issuable in respect of such Shares on or after the date hereof). All such powers of attorney and proxies shall be considered coupled with an interest in the tendered Shares. Such powers of attorney and proxies shall be irrevocable and shall be effective when, and only to the extent that, Purchaser accepts such Shares for payment. Upon such acceptance for payment, all prior powers of attorney and proxies given by such stockholder with respect to such Shares (and any other Shares or other securities so issued in respect of such purchased Shares) will be revoked, without further action, and no subsequent powers of attorney and proxies may be given (and, if given, will not be deemed effective) by such stockholder. The designees of Purchaser will be empowered to exercise all voting and other rights of such stockholder with respect to such Shares (and any other Shares or securities so issued in respect of such accepted Shares) as they in their sole discretion may deem proper, including, without limitation, in respect of any annual or special meeting of the Company's stockholders, or any adjournment or postponement thereof, or in connection with any action by written consent in lieu of any such meeting or otherwise (including any such meeting or action by written consent to approve the Merger). Purchaser reserves the absolute right to require that, in order for Shares to be validly tendered, immediately upon Purchaser's acceptance for payment of such Shares, Purchaser must be able to exercise full voting and other rights with respect to such Shares (and any other Shares or securities so issued in respect of such accepted Shares), including voting at any meeting of stockholders then scheduled or giving or withdrawing written consents as to which the record date has passed. Binding Agreement. The tender of Shares pursuant to any one of the procedures described above will constitute the tendering stockholder's acceptance of the terms and conditions of the Offer, as well as the tendering stockholder's representation and warranty that such stockholder has full power and authority to tender, assign and transfer such stockholder's Shares tendered in the Offer. The valid tender of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and Purchaser upon the terms and subject to the conditions of the Offer. 9 4. WITHDRAWAL RIGHTS Except as otherwise provided in this Section 4, tenders of Shares pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by Purchaser as provided herein, may also be withdrawn at any time after January 24, 1998. If Purchaser extends the Offer, is delayed in its purchase of or payment for Shares or is unable to purchase or pay for Shares for any reason, then, without prejudice to the rights of Purchaser hereunder, tendered Shares may be retained by the Depositary on behalf of Purchaser and may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as set forth in this Section 4. The reservation by Purchaser of the right to delay the acceptance or purchase of, or payment for, Shares is subject to the provisions of Rule 14e-1(c) under the Exchange Act, which requires Purchaser to pay the consideration offered or return Shares deposited by or on behalf of stockholders promptly after the termination or withdrawal of the Offer. For a withdrawal of tendered Shares to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at its address set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares. If certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, the tendering stockholder must also submit the serial numbers shown on such certificates, and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (except in the case of Shares tendered for the account of an Eligible Institution). If Shares have been tendered pursuant to the procedure for book-entry transfer set forth in Section 3, any notice of withdrawal with respect to such Shares must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. ALL QUESTIONS AS TO THE FORM AND VALIDITY (INCLUDING TIME OF RECEIPT) OF NOTICES OF WITHDRAWAL WILL BE DETERMINED BY PURCHASER, IN ITS SOLE DISCRETION, WHOSE DETERMINATION SHALL BE FINAL AND BINDING ON ALL PARTIES. NO WITHDRAWAL OF SHARES SHALL BE DEEMED TO HAVE BEEN PROPERLY MADE UNTIL ALL DEFECTS AND IRREGULARITIES HAVE BEEN CURED OR WAIVED. NONE OF PURCHASER, PARENT, THE DEALER MANAGER, THE DEPOSITARY, THE INFORMATION AGENT OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR INCUR ANY LIABILITY FOR FAILING TO GIVE SUCH NOTIFICATION. Any Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer, but may be retendered at any subsequent time prior to the Expiration Date by following any of the procedures described in Section 3. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a summary of the principal U.S. federal income tax consequences of the Offer and the Merger to holders who receive cash pursuant to the Offer or in connection with the Merger (including pursuant to the exercise of appraisal rights). The discussion applies only to holders in whose hands Shares are capital assets, and may not apply to holders who received Shares pursuant to the exercise of employee stock options or otherwise as compensation, or to holders who are not citizens or residents of the United States of America. THE TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND IS BASED UPON PRESENT LAW. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH HOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS. 10 The receipt of cash in exchange for a holder's Shares pursuant to or in connection with the Offer or the Merger will be a taxable transaction for U.S. federal income tax purposes (and also may be a taxable transaction under applicable state, local and other income tax laws). In general, for U.S. federal income tax purposes, a holder of Shares will recognize gain or loss equal to the difference between such holder's adjusted tax basis in the Shares sold pursuant to the Offer or converted to cash in the Merger and the amount of cash received therefor. Gain or loss must be determined separately for each block of shares (i.e., Shares acquired at the same cost in a single transaction) sold pursuant to the Offer or converted to cash in the Merger. Such gain or loss will be capital gain or loss and will be long-term gain or loss if, on the date of sale (or, if applicable, the date of the Merger), the holder has held the Shares for more than one year. Long-term capital gains recognized by a non-corporate holder who has held the Shares for more than 18 months on the date of sale (or, if applicable, the date of the Merger) will be eligible for the most favorable capital gains tax rate. Payments in connection with the Offer or the Merger may be subject to backup withholding at a 31% rate. Backup withholding on sale proceeds may apply if a stockholder fails to furnish such stockholder's taxpayer identification number ("TIN") or furnishes an incorrect TIN. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax. Certain persons generally are exempt from backup withholding, including corporations and financial institutions. Certain penalties apply for failure to furnish correct information and for failure to include the reportable payments in income. Each stockholder should consult with such stockholder's own tax advisor as to such stockholder's qualification for exemption from backup withholding and the procedure for obtaining such exemption. 6. PRICE RANGE OF THE SHARES; DIVIDENDS According to publicly available information, the Shares commenced trading on The Nasdaq National Market System ("Nasdaq") under the symbol FTCH on December 30, 1988. The following table sets forth, for the periods indicated, the high and low sales prices per Share on Nasdaq, as reported in published financial sources.
HIGH LOW ------- ------ Fiscal Year Ended December 31, 1996.......................... $ 9.500 $3.750 First Quarter............................................... $ 6.313 $3.750 Second Quarter.............................................. $ 9.125 $4.375 Third Quarter............................................... $ 7.875 $5.375 Fourth Quarter.............................................. $ 9.500 $6.875 Fiscal Year Ended December 31, 1997: First Quarter............................................... $ 9.125 $5.125 Second Quarter.............................................. $ 7.750 $5.000 Third Quarter............................................... $12.188 $6.875
On November 20, 1997, the last full day of trading prior to the announcement of the execution of the Merger Agreement and of Purchaser's intention to commence the Offer, the closing price per share on Nasdaq was $14.188. On November 25, 1997, the last full trading day before the commencement of the Offer, the closing price per Share on Nasdaq was $14.500. STOCKHOLDERS ARE ENCOURAGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. 7. CERTAIN EFFECTS OF THE TRANSACTION The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by the public. Based on information provided by the Company, as of November 25, 1997, there were 226 stockholders of record of the Shares (not taking into account ownership through nominees and depositaries). The extent of the public market for the Shares and, according to the published guidelines of The Nasdaq Stock Market, Inc., the continued trading of the Shares on Nasdaq after the purchase of Shares pursuant to the 11 Offer, will depend upon the number of holders of Shares remaining at such time, the interest in maintaining a market in such Shares on the part of securities firms, the possible termination of registration of such Shares under the Exchange Act, as described below, and other factors. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements for continued inclusion on Nasdaq, which require that an issuer have at least 200,000 publicly held shares, held by at least 400 shareholders or 300 shareholders of round lots, with a market value of at least $51,000,000 and have net tangible assets of at least $1,000,000, $2,000,000 or $4,000,000, depending on profitability levels during the issuer's four most recent fiscal years. If these standards are not met, the Shares might nevertheless continue to be included in the National Association of Securities Dealers, Inc.'s ("NASD") Nasdaq Stock Market with quotations published in the Nasdaq "additional list" or in one of the "local lists," but if the number of holders of the Shares were to fall below 300, or if the number of publicly held Shares were to fall below 100,000 or there were not at least two registered and active market makers for the Shares, the NASD's rules provide that the Shares would no longer be "qualified" for Nasdaq Stock Market reporting and the Nasdaq Stock Market would cease to provide any quotations. Shares held directly or indirectly by directors, officers or beneficial owner of more than 10% of the Shares are not considered as being publicly held for this purpose. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the requirements of the NASD for continued inclusion in Nasdaq or in any other tier of the Nasdaq Stock Market and Shares are no longer included in Nasdaq or in any other tier of the Nasdaq Stock Market, as the case may be, the market for Shares could be adversely affected. In the event that the Shares will no longer be listed or traded on Nasdaq or meet the requirements of the NASD for continued inclusion in any tier of the Nasdaq Stock Market, it is possible that the Shares would be reported by other sources. The extent of the public market for the Shares and the availability of such quotations would, however, depend upon the number of holders of Shares remaining, at such time, the interests in maintaining a market in Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act, as described below, and other factors. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, trading of the Shares on Nasdaq is discontinued, the liquidity of and market for the Shares could be adversely affected. Purchaser cannot predict whether or to what extent the reduction in the number of Shares that might otherwise trade publicly would result in the suspension of trading of the Shares on Nasdaq or would have an adverse or beneficial effect on the market price for or marketability of the Shares or whether it would cause future prices to be greater or less than the Offer Price. The Shares are currently "margin securities", as such term is defined under the rules of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Depending upon factors similar to those described above regarding listing and market quotations, following consummation of the Offer it is possible that the Shares might no longer constitute "margin securities" for purposes of the margin regulations of the Federal Reserve Board, in which event such Shares could no longer be used as collateral for loans made by brokers. The Shares are currently registered under the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon application of the Company to the Commission if the Shares are not listed on a national securities exchange or quoted on Nasdaq and there are fewer than 300 record holders of the Shares. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and to the Commission and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement in connection with stockholders' meetings pursuant to Section 14(a) of the Exchange Act, and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Company. In addition, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (the "Securities Act"). If registration of the Shares under the Exchange Act is terminated, the Shares would no longer be "margin securities" or be eligible for Nasdaq reporting. If registration of the Shares is not terminated prior to 12 the Merger, the registration of the Shares under the Exchange Act will be terminated following consummation of the Merger. See Section 12. 8. CERTAIN INFORMATION CONCERNING THE COMPANY Except as otherwise stated in this Offer to Purchase, the information concerning the Company contained herein has been taken from or based upon publicly available documents and records on file with the Commission and other public sources including, but not limited to, the Company's Registration Statement on Form S-4 dated October 29, 1997 (the "Company Proxy Statement") and the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (the "Company 10-Q"). Although neither Parent nor Purchaser has any knowledge that any statements contained herein based on such documents and records are untrue, neither Parent nor Purchaser takes any responsibility for the accuracy or completeness of the information concerning the Company, furnished by the Company or contained in such documents and records, or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information. The Company is a Delaware corporation with its principal executive offices and facilities located at 100 Great Meadow Road, Suite 104, Wethersfield, Connecticut 06109. The Company is engaged in providing shared telecommunications services and telecommunications systems to tenants of modern, multi-tenant office systems. Set forth below are selected historical financial data and other historical operating data of the Company as of and for the periods indicated that have been taken or derived from the audited financial statements contained in the Company Proxy Statement and the unaudited financial statements contained in the Company 10-Q. More comprehensive financial information and other information is included in the Company Proxy Statement, the Company 10-Q and other documents filed by the Company with the Commission, and the following summary financial information is qualified in its entirety by reference to such reports and other documents including the financial statements and related notes contained therein. The reports may be examined and copies may be obtained at the office of the Commission in the manner set forth below. SHARED TECHNOLOGIES FAIRCHILD INC. SELECTED CONSOLIDATED FINANCIAL DATA ($ IN THOUSANDS)
NINE MONTHS YEAR ENDED DECEMBER 31, ENDED ------------------------ SEPTEMBER 1994 1995 1996 30, 1997 ------- ------- -------- ----------- STATEMENT OF OPERATIONS DATA: Revenues............................ $45,367 $47,086 $157,241 $141,779 Income (Loss) before Extraordinary Item............................... 2,286 927 (8,258) (3,000) Net Income (Loss)................... 2,286 927 (8,569) (3,000) Net Income (Loss) Per Share......... $ 0.27 $ 0.06 $ (0.79) $ (0.42)
DECEMBER 31, DECEMBER 31, SEPTEMBER 30, 1995 1996 1997 ------------ ------------ ------------- (AUDITED) (AUDITED) (UNAUDITED) BALANCE SHEET DATA: Total Assets....................... $42,863 $369,566 $370,242 Total Liabilities.................. 20,019 326,357 331,640 Stockholders' Equity............... 22,844 43,209 38,602
13 CERTAIN COMPANY PROJECTIONS During the course of early discussions between the Company and Parent, the Company provided Parent with financial projections for the years ended December 31, 1996, 1997, 1998, 1999, and 2000 (which do not reflect consummation of the Offer and the Merger) and were as follows:
YEAR ENDED DECEMBER 31, ---------------------------------- 1996 1997 1998 1999 2000 ------ ------ ------ ------ ------ Revenue................................... $198.3 $217.9 $239.6 $259.1 $280.3 Gross Profit.............................. 73.6 81.8 90.4 97.8 105.7 Operating Income.......................... 24.8 30.7 37.2 42.3 48.6 EBITDA.................................... 46.7 53.8 61.5 67.6 74.4
As discussions between the companies approached the end of 1996, the Company through its normal course of business, conducted its annual budgeting process, which resulted in revised projections for the year ending December 31, 1997. These projections were also provided to Parent and were as follows:
YEAR ENDED ---------- 1997 ---------- Revenue........................... $205.7 Gross Profit...................... 103.1 EBITDA............................ 56.2
These projections are based on a variety of estimates and assumptions, which involve judgments with respect to future economic and competitive conditions, inflation rates and technology trends. The Company does not as a matter of course make public any projections as to future performance or earnings, and the projections set forth above are included in this Offer to Purchase only because the information was made available to Parent by the Company. Parent understands that the projections were not prepared with a view to public disclosure or compliance with the published guidelines of the Commission or the guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts. Projected information of this type is based on estimates and assumptions that are inherently subject to significant economic and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of the Company and Parent. Accordingly, actual results may vary materially from such projections and none of the Company, Parent, Purchaser or their respective financial advisors assumes any responsibility for the accuracy or validity of any of the projections. The inclusion of the foregoing projections should not be regarded as an indication that the Company, Parent or any other person who received such information considers it an accurate prediction of future events, and Parent has not relied on them as such. Available Information. The Company is subject to the informational filing requirements of the Exchange Act. In accordance therewith, the Company files periodic reports, proxy statements and other information with the Commission under the Exchange Act relating to its business, financial condition and other matters. The Company is required to disclose in such proxy statements certain information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company. Such reports, proxy statements and other information may be inspected at the Commission's office at 450 Fifth Street, N.W., Washington, D.C. 20549, and also should be available for inspection and copying at the regional offices of the Commission located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661- 2511; and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such reports, proxy statements and other information should be obtainable upon payment of the Commission's prescribed fees by writing to the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The 14 Commission also maintains a World Wide Web site on the internet at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the Commission. 9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT Purchaser, a Delaware corporation, was incorporated on November 14, 1997 for the purpose of entering into the Merger Agreement and consummating the transactions contemplated thereby. It has conducted no business other than related to its formation and the transactions contemplated by the Merger Agreement. All the outstanding capital stock of Purchaser is owned by Parent. Since Purchaser is newly formed and, except as described in this Offer, has minimal assets, no meaningful financial information is available. Parent is a publicly held Delaware corporation. Parent, directly and through its subsidiaries, is a rapidly growing integrated communications services provider, offering a full suite of local, long distance and enhanced data telecommunications services to business and government end user customers, long distance carriers, Internet service providers, resellers and wireless communications companies. The common stock of Parent is listed for trading on the Nasdaq National Market under the symbol ICIX. For the year ended December 31, 1996, Parent had revenues of $103.4 million. For the nine months ended September 30, 1997, Parent had revenues of $165.3 million. The principal executive offices of Parent and Purchaser are located at 3625 Queen Palm Drive, Tampa, Florida 33619. See Annex I to this Offer to Purchase for information concerning the executive officers and directors of Purchaser and Parent. Except as described in this Offer to Purchase, (i) none of Purchaser or Parent or, to the best knowledge of Purchaser or Parent, any of the persons listed in Annex I or any associate or majority-owned subsidiary of any such persons beneficially owns or has a right to acquire any equity security of the Company and (ii) none of Purchaser or Parent, or to the best knowledge of Purchaser or Parent, any of the other persons referred to above, or any of the respective directors, executive officers or subsidiaries of any of the foregoing, has effected any transaction in any equity security of the Company during the past 60 days. A summary of Parent's and Purchaser's transactions during the past 60 days involving any equity securities of the Company is listed on Annex II. Except as described in this Offer to Purchase, (i) none of Purchaser or Parent or, to the best knowledge of Purchaser or Parent, any of the persons listed in Annex I, has any contract, arrangement, understanding or relationship (whether or not legally enforceable) with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, or the giving or withholding of proxies; (ii) there have been no contacts, negotiations or transactions between Purchaser, Parent or any of their respective subsidiaries or, to the best knowledge of Purchaser or Parent, any of the persons listed in Annex I on the one hand, and the Company or any of its directors, officers or affiliates on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, election of directors or a sale or transfer of a material amount of assets, that are required to be disclosed pursuant to the rules and regulations of the Commission. Set forth below are selected historical financial data and other historical operating data of Parent as of and for the periods indicated that have been taken or derived from the audited financial statements contained in Parent's Annual Report on Form 10-K for the year ended December 31, 1996 ("Parent 10- K") and the unaudited financial statements contained in Parent's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 ("Parent 10-Q"). More comprehensive financial information and other information is included in the Parent 10-K, the Parent 10-Q and other documents filed by Parent with the Commission, and the following summary financial information is qualified in its entirety by reference to such reports and other documents 15 including the financial statements and related notes contained therein. The reports may be examined and copies may be obtained at the offices of the Commission in the manner set forth in Section 8. INTERMEDIA COMMUNICATIONS INC. SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA
NINE MONTHS YEAR ENDED DECEMBER 31, ENDED --------------------------------------- SEPTEMBER 30, 1994 1995 1996 1997 ----------- ------------ ------------ ------------- CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenues................ $14,272,396 $ 38,630,574 $103,396,887 $ 165,317,000 Loss Before Extraordinary Item..... (3,067,379) (19,253,549) (57,198,711) (157,385,000) Net Loss................ (3,067,379) (20,748,642) (57,198,711) (201,219,000) Net Loss Per Share...... $ (.34) $ (2.07) $ (4.08) $ (13.87)
DECEMBER 31, DECEMBER 31, SEPTEMBER 30, 1995 1996 1997 ------------ ------------ -------------- (UNAUDITED) (UNAUDITED) (UNAUDITED) CONDENSED CONSOLIDATED BALANCE SHEET DATA: Cash and Cash Equivalents....... $ 50,996,919 $189,545,939 $ 471,101,000 Working Capital................. 70,352,692 206,029,316 449,649,000 Total Assets.................... 216,018,125 512,940,377 1,086,185,000 Total Liabilities (and Preferred Stock)......................... 175,763,762 398,710,167 1,176,956,000 Total Stockholders' Equity...... 40,254,363 114,230,210 (90,771,000)
Loss per share is based on the weighted average shares outstanding. Common Stock equivalents are not considered in Parent's calculation of loss per share as all are antidilutive and would have no impact on the results. On October 24, 1997, the Company issued debt and sold preferred stock, resulting in net proceeds to the Company of $243.3 million and $193.2 million, respectively. These amounts were recorded in the balance sheet subsequent to the dates referred to above. 10. SOURCE AND AMOUNT OF FUNDS The total amount of funds required by Purchaser to purchase all outstanding Shares (including the Option Shares) and to pay related fees and expenses in connection with the Offer, the Merger Agreement and the Stock Option Agreement, is estimated to be approximately $395 million. Purchaser expects to obtain the necessary funds directly from Parent from existing cash reserves of the Parent. Such cash reserves amounted to approximately $505 million at November 25, 1997. 11. BACKGROUND OF THE TRANSACTION In the fall of 1996, the Company, through its financial advisors, CS First Boston Corporation ("First Boston"), initiated a marketing process for the sale of the Company or a strategic merger with a third party in the telecommunications industry. First Boston approached Parent and its financial advisors, Bear Stearns, to explore the possibility of a merger transaction. Parent entered into a confidentiality agreement with the Company on September 18, 1996 and visited the Company's facilities on a number of occasions. Parent concluded a series of due diligence meetings and investigations during the weeks of October 29, November 11 and December 9, 1996. A substantial amount of information and documents were exchanged during this period. 16 In December 1996, in discussions with the Company, Parent raised the possibility of a stock merger at a ratio of approximately .4 shares of Intermedia common stock for every share of STF Common Stock. Under the Intermedia proposal, the conversion ratio would have resulted in an exchange of $12 of Intermedia stock (then trading at $30 per share) for every share of STF Common Stock. Parent and the Company were unable to reach agreement on such a transaction. On January 22, 1997, a meeting was held between Mr. Autorino and others on behalf of the Company and Mr. Ruberg and others on behalf of Parent. At the meeting, Parent revised their proposal such that one-half of the consideration would be in common stock of Parent and one-half in a form of preferred stock.Parent and the Company were unable to reach agreement on such a transaction. In March 1997, a discussion took place between Mr. Steiner, Vice-Chairman of the Company's board of Directors and Mr. Ruberg in which Mr. Steiner invited the Company to make a further proposal. None was made at the meeting. In May 1997, Salomon Brothers, which had a relationship with both the Company and Tel-Save Holdings, Inc. ("Tel-Save"), introduced Tel-Save to the Company, and in June 1997, the Company and Tel-Save began discussions regarding a merger. On July 14, 1997, following the Company's public announcement that it was engaged in discussions for a sale or merger of the Company, Robert M. Manning, Senior Vice President and Chief Financial Officer of Parent, called Mr. Autorino, Chief Executive Officer of the Company expressing renewed interest on the part of Parent in a transaction with the Company. Parent proposed a transaction in which Parent would acquire the Company for a purchase price, in cash or stock or any combination thereof, of $12.00 per Share. On July 15, 1997, Mr. Manning and others from Parent met with representatives of the Company. Mr. Steiner spoke on the telephone with David C. Ruberg, Chairman and Chief Executive Officer of Parent, who did not attend the meetings in which conversation Mr. Ruberg advised Mr. Steiner that Mr. Manning was fully authorized to negotiate on behalf of Parent. Later in the evening of July 15, 1997, representatives of Parent and the Company met again. Parent proposed an all stock acquisition transaction, priced at $12.00 per Share. The Company rejected this offer. On July 16, 1997, Tel-Save, TSHCo Inc. ("TSHCo"), a subsidiary of Tel-Save and the Company entered into an Agreement and Plan of Merger (the "Tel-Save Merger Agreement"), pursuant to which, upon the approval of the merger by the stockholders of the Company and Tel-Save, the Company would be merged with and into TSHCo, with TSHCo continuing as the surviving corporation and as a wholly-owned subsidiary of Tel-Save. In the merger pursuant to the Tel-Save Merger Agreement, the stockholders of the Company would receive, for each Share owned by them, Tel-Save common stock valued at $11.25 plus 30 percent of the amount by which the "Closing Date Market Price" of Tel-Save common stock exceeds $20 per share. The "Closing Date Market Price" was defined as the average trading price of Tel-Save common stock over the fifteen consecutive trading days ending on the trading day three trading days immediately prior to the date of the proposed merger. On November 14, 1997, Parent's board of directors held an informal meeting to discuss the making by Parent of an offer to acquire the Company pursuant to a cash merger that would provide to the Company's common stockholders an amount equal to $15.00 per share. Following the close of business on November 14, 1997, Mr. Ruberg attempted, but failed, to reach Mr. Autorino to inform him that Parent would be making such acquisition proposal. Over the ensuing weekend, Mr. Autorino returned Mr. Ruberg's call, and Mr. Ruberg advised Mr. Autorino that Parent was considering making an offer and if such offer occurred, it likely would be made Monday morning, November 17, before the opening of business. On November 16, 1997, Parent held a meeting of its board of directors to discuss further the making of the offer. At such meeting, Parent's board of directors unanimously approved the offer and gave management permission to proceed forward. On November 17, 1997, Mr. Ruberg delivered a written offer from Parent to acquire STF by means of a merger in which the holders of common stock of STF would receive $15.00 per share, net to such holders, in cash, and the holders of the Series D Preferred Stock, the Convertible Preferred Stock and the Special Preferred 17 Stock would receive $15.00, $251.49 and $109.59 per share in cash, respectively. Outstanding options and warrants would be cashed-out at the value of the option "spread". Parent indicated that it was prepared to enter into a merger agreement with the Company containing substantially the same representations, warranties, covenants and conditions as the merger agreement with Tel-Save, except that the consideration to be offered to the Company's stockholders would be as set forth above, and enclosed execution counterparts of the Merger Agreement and the Stock Option Agreement. Parent's offer was subject to approval by the Company's Board of Directors, the termination of the existing merger agreement with Tel-Save, the execution of the Merger Agreement, the execution of the Stock Option Agreement and the receipt of all required antitrust and other regulatory approvals. This offer was not contingent upon any additional due diligence by Parent. Parent issued a press release setting forth the terms of the offer. Also on November 17, 1997, Parent and Purchaser commenced an action in the Court of Chancery of the State of Delaware in and for New Castle County against the Company, each member of the Company's Board of Directors, Tel-Save and TSHCo styled Intermedia Communications Inc., and Moonlight Acquisition Corp. v. Shared Technologies Fairchild Inc., et al., C.A. No. 16038, Del. Ch. 1997 (the "Litigation"). The Litigation, among other things, sought to enjoin the meeting of the Company's stockholders scheduled for December 1, 1997, invalidate certain portions of the Tel-Save Merger Agreement and certain related agreements and arrangements, and compel the Company's Board of Directors to terminate the Tel-Save Merger Agreement and commence negotiations with Parent. During the evening of November 17, a conference call was held between representatives of Parent and representatives of the Company in which Parent was advised that the board of directors of the Company had concluded that the directors of the Company had a fiduciary obligation to negotiate with Parent regarding the terms of Parent's offer. Discussion ensued regarding changes that would be required to be made in Parent's offer, and the parties agreed to meet the next day at the offices of counsel to Parent to continue such discussions. On November 18, negotiations were held regarding proposed changes (other than price) that would be required to be made to Parent's offer. During the evening of November 18, 1997, Messrs. Ruberg and Manning met with Mr. Jeffrey Steiner, the chief executive officer of The Fairchild Corporation, the largest stockholder of the Company. Mr. Steiner undertook to arrange a meeting between Parent and Mr. Daniel Borislow, the chief executive officer of Tel- Save, to explore a resolution of the competing offers by Tel-Save and Parent and a possible settlement of the Litigation. During the evening of November 19, representatives of Parent, Tel-Save and The Fairchild Corporation met at The Fairchild Corporation's offices in New York City. Private discussions were then held between representatives of Parent and Tel-Save, and an agreement in principle for the settlement of the Litigation and withdrawal of Tel-Save's competitive offer was reached. During the evening of November 19 and throughout the day on November 20, counsel to Parent drafted documents to reflect the agreement in principle and various revised terms (other than price) of Parent's acquisition offer. On the evening of November 20, 1997, representatives of Parent, the Company, certain stockholders of the Company, Tel-Save, and their respective legal and financial advisors met at the offices of Kronish, Lieb, Weiner & Hellman LLP, legal counsel to Parent and Purchaser. These representatives continued to negotiate the terms and conditions of the Merger Agreement and the settlement of the Litigation. That evening, the Board of Directors of the Company met and approved and adopted the Merger Agreement and approved the Stock Option Agreement, the Purchase Agreement, the Loan and a Settlement Agreement (the "Settlement Agreement") by and among Parent, Purchaser, the Company, Tel-Save and TSHCo, whereby, in return for certain payments and the execution of certain releases and documents, Parent and Purchaser agreed to execute a stipulation of dismissal, dismissing the Litigation with prejudice. Such stipulation was filed in the Delaware Court of Chancery on November 21, 1997. In addition, the Settlement Agreement provided for (i) the amendment to an agreement between the Company and Tel-Save for the provision of long distance communications services, (ii) the purchase by Parent of $163,367,000 face amount of the 12 1/4% Senior Subordinated Notes Due 2006 of the Company that were owned by Tel-Save, and (iii) Tel-Save to be bound by certain covenants restricting it for up to one year from acquiring or seeking to acquire control of the Company, any securities of the Company, substantially all of the assets of the Company. 18 12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT, THE STOCK PURCHASE AGREEMENT, THE LOAN AGREEMENT AND THE OPTION AGREEMENT; PLANS FOR THE COMPANY General The purposes of the Offer and the Stock Option Agreement is, as promptly as practicable, to acquire as many Shares as possible, and transfer the consideration for such Shares to the Company's stockholders, without needing to obtain any FCC or state regulatory consents. Such consents are a condition to the consummation of the Merger. The purpose of the Merger is for Purchaser to acquire all Shares not purchased pursuant to the Offer and the Stock Option Agreement. Upon consummation of the Merger, the Company will become a wholly owned subsidiary of Parent. The Offer is being made in accordance with the Merger Agreement. Under the GCL, the approval of the Board of Directors of the Company and the affirmative vote of the holders of a majority of the outstanding Shares is required to approve and adopt the Merger Agreement. The Board of Directors of the Company has approved and adopted the Merger Agreement and the transactions contemplated thereby and the only remaining required corporate action of the Company is the approval and adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding Shares. ACCORDINGLY, IF FOLLOWING RECEIPT OF NECESSARY REGULATORY APPROVALS, THE OPTION SHARES NOT ACQUIRED IN THE OFFER ARE PURCHASED PURSUANT TO THE STOCK OPTION AGREEMENT (AND PARENT CONVERTS THE SHARES OF CONVERTIBLE PREFERRED STOCK AND EXERCISES ALL OF ITS OPTIONS PURCHASED PURSUANT TO THE STOCK OPTION AGREEMENT) PARENT AND PURCHASER WILL HAVE SUFFICIENT VOTING POWER TO CAUSE THE APPROVAL AND ADOPTION OF THE AGREEMENT OF MERGER CONTAINED IN THE MERGER AGREEMENT WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER. In the Merger Agreement, the Company has agreed to convene a meeting of its stockholders as soon as practicable after the consummation of the Offer for the purpose of adopting the agreement of merger contained in the Merger Agreement and the transactions contemplated thereby, and, subject to the fiduciary duties of its Board of Directors under applicable law, to include in the proxy statement with respect to such meeting the recommendation of its Board of Directors that stockholders of the Company vote in favor of the adoption of the Merger Agreement. The Merger Agreement The following is a summary of the material terms of the Merger Agreement. This summary is not a complete description of the terms and conditions thereof and is qualified in its entirety by reference to the full text thereof, which is incorporated herein by reference and a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Schedule 14D-1 (including the Merger Agreement and other exhibits) may be examined, and copies thereof may be obtained, as set forth in Section 17. The Offer. The Merger Agreement provides for the making of the Offer. Without the prior written consent of the Company, Purchaser has agreed that it will not (i) decrease or change the form of consideration payable in the Offer, (ii) decrease the number of Shares sought pursuant to the Offer, (iii) impose additional conditions to the Offer other than those set forth in Section 14, or (iv) change the conditions of the Offer (provided that Parent or Purchaser in its sole discretion may waive any such conditions). The obligation of Purchaser to consummate the Offer and to accept for payment and to pay for any Shares tendered pursuant to the Offer will be subject only to the conditions set forth in Section 14. The Offer may not be extended for more than 20 days beyond its original scheduled expiration date unless any of the conditions to the Offer shall not have been satisfied, in which case the Offer shall remain open until such time as all of the conditions to the Offer have been satisfied; provided, however, in no event will Purchaser be required to extend the Offer beyond February 28, 1998. The Merger. The Merger Agreement provides that upon the terms and subject to the conditions of the Merger Agreement, and in accordance with relevant law, Purchaser shall be merged with and into the Company 19 as soon as practicable following the satisfaction or waiver, if permissible, of the conditions to the Merger. The Company shall be the Surviving Corporation and shall continue its existence under the laws of Delaware, and the Certificate of Incorporation and the Bylaws of Purchaser as in effect immediately prior to the Effective Time shall be the Certificate of Incorporation and Bylaws of the Surviving Corporation (except the name of the Surviving Corporation shall be Shared Technologies Fairchild, Inc.). The directors of Purchaser immediately prior to the Effective Time and the officers of the Company immediately prior to the Effective Time shall be the directors and officers, respectively, of the Surviving Corporation. Each share of the common stock of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into and become one share of common stock of the Surviving Corporation, which will thereupon become a direct wholly owned subsidiary of Parent. The parties to the Merger Agreement shall cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware a duly executed and verified certificate of merger, as required by the GCL. The Merger will become effective upon such filing or at such time thereafter as is provided under applicable law. Consideration to be Paid in the Merger. In the Merger, each Share issued and outstanding immediately prior to the Effective Time (other than Shares held by Purchaser, Parent or any subsidiary of Purchaser or Parent or in the treasury of the Company, all of which shall be canceled, and other than Dissenting Shares (as defined in the Merger Agreement)) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive in cash an amount per Share (subject to any applicable withholding tax) equal to $15.00, without interest. Additionally, each share of the Series D Preferred Stock and Convertible Preferred Stock issued and outstanding immediately prior to the Effective Time (other than the Preferred Shares held by Purchaser, Parent or any subsidiary of Purchaser or Parent or in the treasury of the Company, all of which shall be canceled, and other than Dissenting Shares (as defined in the Merger Agreement)) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive in cash an amount per Share (subject to any applicable withholding tax) equal to $15.00 per share of Series D Preferred Stock and $251.21 per share of Convertible Preferred Stock. Company Stock Options and Warrants. Prior to the Effective Time, the Company shall take all actions necessary (and Parent and Purchaser consent to the taking of such actions) so that all options and warrants outstanding immediately prior to the Effective Time under any option plan or warrant including, without limitation, the 1994 Director's Option Plan (with respect to which the term of office of each director shall be deemed to have been terminated on May 1, 1998), the 1996 Equity Incentive Plan and Shared Technologies, Inc.'s 1987 Stock Option Plan (all such warrants and options collectively, the "Company Stock Option Plans") shall be cancelled and terminated at the Effective Time and that each holder of such options and warrants shall receive in the Merger a cash payment equal to the difference between (A) the Merger Consideration times the number of Shares subject to such outstanding options or warrants (to the extent then exercisable at prices not in excess of the Merger Consideration) and (B) the aggregate exercise price of all such outstanding options and warrants. From and after the date hereof, no additional options or warrants shall be granted under the Company Stock Option Plans. Stockholder Meeting. The Merger Agreement provides that the Company will, as soon as practicable following consummation of the Offer, duly call a meeting of its stockholders for the purpose of adopting the plan of merger contained in the Merger Agreement and the transactions contemplated thereby. The Merger Agreement also provides that, subject to the fiduciary duties of its Board of Directors under applicable law as set forth in a written opinion of outside counsel, the Company shall recommend that stockholders of the Company vote in favor of the adoption of the agreement of merger set forth in the Merger Agreement. Voting of Shares Acquired by Purchaser. During the period beginning on the date on which the Offer is consummated and ending on the later of (a) the date on which the Merger Agreement is terminated, and (b) the date on which the Purchaser receives any regulatory approvals necessary to consummate the Merger (as more fully described in Section 15), Purchaser hereby agrees to exercise its voting rights in respect of any Shares it 20 owns for the election of directors to the Board in the same proportion as the voting rights of any Shares not owned by Purchaser have been exercised. Representations and Warranties. The Merger Agreement contains various representations and warranties of the parties thereto. These include representations and warranties by the Company with respect to corporate existence and good standing, capital structure, subsidiaries, corporate authorization, absence of changes, Commission filings, consents and approvals, no violations of other agreements, investment banking fees and opinions, employee benefits, labor relations, litigation, taxes, compliance with applicable laws, intellectual property, real property, insurance, material contracts, related party transactions, liens, title to and condition of properties, environmental matters, absence of undisclosed liabilities, pending transactions, certain indemnification agreements and other matters. Purchaser and Parent have also made certain representations and warranties with respect to corporate existence and good standing, corporate authorization, Commission filings, consents and approvals, no violations of other agreements, investment banking fees and other matters. Conduct of Business and Other Covenants Pending the Merger. Pursuant to the Merger Agreement, the Company has agreed that, during the period from the date of the Merger Agreement until the Effective Time, except as otherwise consented to in writing by Purchaser or Parent or as contemplated by the Merger Agreement, it and each of its respective subsidiaries will carry on its business in the ordinary course in substantially the same manner as previously conducted. Specifically, the Company has agreed not to (a) amend its certificate of incorporation or bylaws, (b) issue or sell any shares of capital stock or securities convertible into shares of capital stock, subject to certain exceptions, (c) effect a stock split or declare or make any dividends or other distribution on any shares of its capital stock, (d) incur or assume any new debt or make any loans or capital investments in any other person or entity, (e) adopt or amend any employee benefit plan or severance arrangement or increase the compensation of its directors or officers or employees generally, subject to certain exceptions, (f) enter into, amend, modify or relinquish any material rights under any material contract, (g) sell, lease, mortgage, pledge or otherwise dispose of any assets or property other than in the ordinary course of business, (h) make or commit to make any material capital expenditure, (i) change its accounting methods, (j) settle any material claim or (k) make any election under the Code that would have a material adverse effect on the Company or the Merger. Pursuant to the Merger Agreement, Parent will appoint a senior executive as a management consultant (the "Consultant") to the Company. The Consultant will liaise directly with the executive officers of the Company and shall be informed of and participate in all management decisions. As more fully described in the Merger Agreement, if the Company does not comply with the management decisions and the recommendations of the Consultant, the Purchaser, under certain circumstances, may have the right to terminate the Merger Agreement. Parent, Purchaser and the Company have also entered into covenants regarding the preparation of the Company's proxy statement, press releases, access to information, notification if any of the representations and warranties are materially untrue, the designation of the directors of the Company, indemnification of directors and officers of the Company, fees and expenses relating to the Merger and stockholder litigation. No Solicitation. Pursuant to the Merger Agreement, the Company has agreed that it will not, and it will not permit any of its subsidiaries, officers, directors, employees, representatives and agents to, directly or indirectly, (i) solicit any Company Takeover Proposal (as defined below) or (ii) participate in any discussions or negotiations regarding any Company Takeover Proposal; provided, however, that if at any time prior to the Company Meeting (as defined in the Merger Agreement), the Company Board determines in good faith, after consultation with outside counsel that it is necessary to do so in order to comply with its fiduciary duties to the Company stockholders under applicable law the Company may, in response to a Company Takeover Proposal that was not solicited, furnish confidential information with respect to the Company and participate in negotiations regarding such Company Takeover Proposal. "Company Takeover Proposal" means any inquiry, proposal or offer from any person relating to any direct or indirect acquisition or purchase of 20% or more of the 21 assets of the Company or its subsidiaries or 20% or more of any class of equity securities of the Company or any of its subsidiaries, any tender offer or exchange offer that if consummated would result in any person beneficially owning 20% or more of any class of equity securities of the Company or any of its subsidiaries, any merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its subsidiaries, other than the transactions contemplated by the Merger Agreement, or any other transaction the consummation of which would reasonably be expected to impede, interfere with, prevent or materially delay the Merger or that would reasonably be expected to dilute materially the benefits to Parent or Purchaser of the transactions contemplated by the Merger Agreement. In the event that prior to the Company Meeting the Company Board determines in good faith, after consultation with outside counsel, that it is necessary to do so in order to comply with its fiduciary duties to the Company's stockholders under applicable law, the Company Board may (subject to this and the following sentences) (x) withdraw or modify its approval or recommendation of the merger or (y) approve or recommend a Company Superior Proposal (as defined below) or terminate the Merger Agreement (and concurrently with or after such termination, if it so chooses, cause the Company to enter into any Acquisition Agreement with respect to a Company Superior Proposal), but in each of the cases set forth in this clause (y) until a time that is after the fifth business day following the Parent's or Purchaser's receipt of written notice advising Parent or Purchaser that the Company Board has received a Company Superior Proposal, specifying the material terms and conditions of such Company Superior Proposal and identifying the person making such Company Superior Proposal, to the extent that such identification of such person making such proposal does not breach the fiduciary duties of the Company Board as advised by outside legal counsel. A "Company Superior Proposal" means any bona fide proposal made by a third party to acquire, directly or indirectly, for consideration consisting of cash and/or securities, more than 50% of the combined voting power of the shares of the Company's Common Stock and Company preferred stock then outstanding or all or substantially all the assets of Company and otherwise on terms that the Company Board of Directors determines in its good faith judgment to be more favorable to the Company's stockholders than the Merger. Fees and Expenses. The Merger Agreement provides that all costs and expenses incurred in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement shall be paid by the party incurring such expenses, except that the Company will be required to pay a termination fee and reimburse certain expenses of Parent and Purchaser to Parent or Purchaser under certain circumstances described in "Termination" below. Conditions to the Merger. Pursuant to the Merger Agreement, the respective obligations of each party to effect the Merger are subject to the satisfaction or waiver, prior to the proposed Effective Time, of the following conditions: (a) the Merger and the Merger Agreement shall have been validly approved and adopted by the affirmative votes of the holders of a majority of the outstanding Shares entitled to vote thereon; (b) the waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired; and (c) no judgment, order, decree, statute, law ordinance, rule or regulation entered, enacted, promulgated, enforced or issued by any court legal restraint or prohibition shall be in effect preventing the consummation of the Offer or the Merger. The obligations of Purchaser and Parent to effect the Merger are further subject to the satisfaction or waiver, where permissible, on or prior to the proposed Effective Time of the following conditions: (a) all of the representations and warranties of the Company set forth in the Merger Agreement shall be true and correct as of July 16, 1997, and the representations and warranties set forth in Sections 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23 and 3.29 of the Merger Agreement shall be true and correct as of the date of the Merger Agreement and the Closing Date, as if made at and as of such time, except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to "materiality" or "material adverse effect" set forth therein) does not have, and is not likely to have, individually or in the aggregate, a Company Material Adverse Effect (as defined in the Merger Agreement) or cause any material increase in the consideration required to be paid by Parent and Purchaser effectively to consummate the Merger; (b) the Company shall have performed 22 in all material respects all obligations required to be performed by it under the Merger Agreement at or prior to the Closing Date (as defined in the Merger Agreement); and (c) all necessary consents and approvals of any federal, state or local governmental authority or any other third party required for the consummation of the transactions contemplated by the Merger 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 or a Parent Material Adverse Effect (as defined in the Merger Agreement). The obligations of the Company to effect the Merger are further subject to the satisfaction or waiver, where permissible, on or prior to the proposed Effective Time of the following conditions: (a) the representations and warranties of Parent and Purchaser set forth herein shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such date, except whether the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to "materiality" or "material adverse effect" set forth therein) does not have, and is not likely to have, individually or in the aggregate, a Parent Material Adverse Effect; and (b) Parent and Purchaser shall have performed in all material respects all obligations required to be performed by them under the Merger Agreement at or prior to the Closing Date. For a description of conditions of the Offer, see Section 14. Termination. The Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after approval by the stockholders of the Company: (a) by consent of the Boards of Directors of the Company, Parent and Purchaser; (b) by Parent and Purchaser upon notice to the Company if any material default under or material breach of any covenant or agreement in the Merger Agreement by the Company shall have occurred and shall not have been cured within ten days after receipt of such notice, or any representation or warranty contained herein on the part of the Company shall not have been true and correct in any material respect at and as of the date made; (c) by the Company upon notice to Parent and Purchaser if any material default under or material breach of any covenant or agreement in the Merger Agreement by Parent or Purchaser shall have occurred and shall not have been cured within ten days after receipt of such notice, or any representation or warranty contained herein on the part of Parent or Purchaser shall not have been true and correct in any material respect at and as of the date made; (d) by Parent and Purchaser, on the one hand, or the Company, on the other, upon notice to the other if the Merger shall not have become effective on or before September 30, 1998, unless such date is extended by the consent of the Boards of Directors of the Company, Parent and Purchaser evidenced by appropriate resolutions; provided, however, that the right to terminate the Merger Agreement under Section 7.1(d) of the Merger Agreement shall not be available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before such date; (e) by any of Parent, Purchaser and the Company if the approval of the stockholders of the Company required for consummation of the Merger shall not have been obtained by reason of the failure to obtain the required vote at a duly held meeting of stockholders or any adjournment thereof; (f) by Parent or Purchaser, if Section 5.5 of the Merger Agreement shall be breached by the Company or any of its officers, directors or employees or any investment banker, financial advisor, attorney, accountant or other representative of the Company, in any material respect and the Company shall have failed promptly to terminate the activity giving rise to such breach and use best efforts to cure such breach upon notice thereof from Parent or Purchaser, or the Company shall breach Section 5.5 of the Merger Agreement by failing to promptly notify Parent or Purchaser as required thereunder; (g) by Parent or Purchaser if, at any time, (i) the Company shall have withdrawn or modified in any manner adverse to Parent or Purchaser its approval or recommendation of the Merger Agreement or the Merger or failed to reconfirm its recommendation within 15 business days after a written request to do so, or recommended any Company Takeover Proposal or (ii) the Board of Directors of Company or any committee thereof shall have resolved to take any of the foregoing actions; (h) by the Company if it elects to terminate the Merger Agreement in accordance with Section 5.5(b) of the Merger Agreement; provided that it has complied with all provisions thereof, including the notice provisions therein, and that it complies with applicable requirements relating to the payment (including the timing of the payment) of the termination fee required by Section 7.3 of the Merger Agreement; or (i) by Parent or Purchaser in accordance with the provisions of the last paragraph of Section 5.1 of the Merger Agreement; provided that it has complied with all provisions thereof, including the notice provisions therein. 23 Effect of Termination. In the event of the termination of the Merger Agreement pursuant to the provisions of Section 7.1, the provisions of the Merger Agreement (other than Sections 5.10, 7.2, 7.3 and 7.4 thereof) shall become void and have no effect, with no liability on the part of any party hereto or its stockholders or directors or officers in respect thereof, except as set forth in Sections 7.3 and 7.4 of the Merger Agreement provided that nothing contained herein shall be deemed to relieve any party of any liability it may have to any other party with respect to a breach of its obligations under the Merger Agreement. Termination Payment. As compensation for entering into the Merger Agreement, taking action to consummate the transactions hereunder and incurring the related costs and expenses related thereto and other losses and damages, including the foregoing of other opportunities, Company and Parent have agreed that the Company shall pay to Parent the sum of $10.0 million plus all reasonably documented out-of-pocket expenses (including, but not limited to, the reasonable fees and expenses of counsel and its other advisers) of Parent and Purchaser incurred in connection with the transactions contemplated by the Merger Agreement (including the preparation and negotiation of the Merger Agreement) promptly after, but in no event later than two days following, whichever of the following first occurs: (i) Parent or Purchaser shall have exercised its right to terminate the Merger Agreement pursuant to (b), (f), (g) or (i) of the "Termination" section above; or (ii) the Company shall have exercised its right to terminate the Merger Agreement pursuant to (e) or (h) of the "Termination" section above. The Company shall not be obligated to make any such payment if at the time such payment becomes due Parent or Purchaser is in material breach of its obligations under the Merger Agreement. Pursuant to the Merger Agreement, Parent has paid to the Company $26,250,000 as a "Good Faith Deposit." The Company has paid from the proceeds of the Good Faith Deposit an amount equal to $15,000,000 to Tel-Save to satisfy termination fees arising from Company's termination of the Tel-Save Merger Agreement. Company has paid an amount equal to $11,250,000 to Tel-Save in exchange for the termination of any options to purchase Company Common Stock held by Tel-Save under that certain Option Agreement dated as of July 16, 1997 by and between Tel-Save and Company. In the event that Parent or Purchaser terminates the Merger Agreement pursuant to Section (a), (b), (f), (g) or (i) of the "Termination" section above or Company terminates the Merger Agreement other than pursuant to Section (c) or (d) of the "Termination" section above, then Company must repay all such amounts to Purchaser. Parties in Interest. Nothing in the Merger Agreement is intended to confer upon any person, other than the parties thereto, any rights or remedies. Timing. The exact timing and details of the Merger will depend upon legal requirements and a variety of other factors. Although Parent has agreed to cause the Merger to be consummated on the terms and subject to the conditions set forth above, there can be no assurance as to the timing of the Merger. Public Announcements. Parent and the Company agreed to consult with each other before issuing any press release or otherwise making any public statements with respect to the Merger Agreement or any transaction contemplated therein and not to issue any such press release or make any such public statement prior to such consultation, except as may be required by law or any listing agreement with a national securities exchange or the NASDAQ National Market System to which Parent or the Company is a Party. Non-survival of Representations, Warranties and Agreements. No representations, warranties or agreements in the Merger Agreement or in any instrument delivered by Parent, Purchaser or the Company pursuant to the Merger Agreement will survive the Merger. Delaware Law. The Board of Directors of the Company has approved the Merger Agreement and the transactions contemplated thereby, including the Offer, the Stock Purchase Agreement and the Merger. Accordingly, the restrictions of Section 203 do not apply to the transactions contemplated by the Offer, the Stock Purchase Agreement and the Merger Agreement. Section 203 of the GCL prevents an "interested stockholder" (generally, a stockholder owning or having the right to acquire 15% or more of a corporation's outstanding 24 voting stock or an affiliate or associate thereof) from engaging in a "business combination" (defined to include a merger and certain other transactions) with a Delaware corporation for a period of three years following the date on which such stockholder became an interested stockholder unless (i) prior to such time, the corporation's board of directors approved either the business combination or the transaction which resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction which resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the corporation's voting stock outstanding at the time the transaction commenced (excluding shares owned by certain employee stock plans and persons who are directors and also officers of the corporation) or (iii) at or subsequent to such time the business combination is approved by the corporation's board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock not owned by the interested stockholder. As described above, the foregoing description of Section 203 of the GCL does not apply to the Offer, the Stock Purchase Agreement or the Merger. Appraisal Rights. No appraisal rights are available to holders of Shares in connection with the Offer. However, if the Merger is consummated, holders of Shares will have certain rights under Section 262 of the GCL to demand appraisal of, and payment in cash for the fair value of, their Shares. Such rights, if the statutory procedures are complied with, could lead to a judicial determination of the fair value (excluding any element of value arising from accomplishment or expectation of the Merger) required to be paid in cash to such holders for their Shares. Any such judicial determination of the fair value of Shares could be based upon considerations other than or in addition to the Offer Price and the market value of the Shares, including asset values and the investment value of the Shares. The value so determined could be more or less than the Offer Price or the Merger Consideration. If any holder of Shares who demands appraisal under Section 262 of the GCL fails to perfect, or effectively withdraws or loses such stockholder's right to appraisal, as provided in the GCL, the Shares of such holder will be converted into the Merger Consideration in accordance with the Merger Agreement. A stockholder may withdraw such stockholder's demand for appraisal by delivery to Purchaser of a written withdrawal of such stockholder's demand for appraisal and acceptance of the Merger. Failure to follow the steps required by Section 262 of the GCL for perfecting appraisal rights may result in the loss of such rights. Stock Purchase Agreement The following is a summary of the material terms of the Stock Purchase Agreement. This summary is not a complete description of the terms and conditions thereof and is qualified in its entirety by reference to the full text thereof which is incorporated herein by reference and a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Stock Purchase Agreement may be examined, and copies thereof may be obtained, as set forth in Section 8. Pursuant to the terms of the Stock Purchase Agreement, Parent purchased all of the shares of the Convertible Preferred Stock owned by RHI, consisting of 250,000 shares of the Convertible Preferred Stock, for an aggregate purchase price of $62,827,425. The 250,000 shares of the Convertible Preferred Stock which were sold to Parent by RHI constitute all of the issued and outstanding shares of the Convertible Preferred Stock. Loan Agreement The following is a summary of the material terms of the Loan Agreement. This summary is not a complete description of the terms and conditions thereof and is qualified in its entirety by reference to the full text thereof which is incorporated herein by reference and a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Loan Agreement may be examined, and copies thereof may be obtained, as set forth in Section 8. 25 Pursuant to the terms of the Loan Agreement, if the Company elects to redeem the Special Preferred Stock, Parent will lend to the Company $21,918,000 in accordance with the terms of the Promissory Note to be issued by the Company. Payments of the principal amount on the Promissory Note shall be made at the same time and on the same terms as payments of the liquidation preference were required to be made under the terms of the Special Preferred Stock issued by the Company. Interest on the Promissory Note shall accrue and be payable on the same terms as dividends were payable under the terms of the Special Preferred Stock. In the event that the Company does not elect to redeem the Special Preferred Stock pursuant to the terms of the Loan Agreement, then all issued and outstanding shares of the Special Preferred Stock will be converted in the Merger pursuant to the terms of the Merger Agreement. The Company has informed Parent that it has elected to exercise its right to receive the loan under the Loan Agreement, and has redeemed all issued and outstanding shares of the Special Preferred Stock as of November 25, 1997. Stock Option Agreement The following is a summary of the material terms of the Stock Option Agreement. This summary is not a complete description of the terms and conditions thereof and is qualified in its entirety by reference to the full text thereof which is incorporated herein by reference and a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Stock Option Agreement may be examined, and copies thereof may be obtained, as set forth in Section 8. Option. To induce Parent and Purchaser to enter into the Merger Agreement and subject to the terms and conditions set forth in the Stock Option Agreement, each of the Investors has granted Parent an option to purchase its respective Option Shares at $15.00 per Share, $15.00 minus the exercise price of any options to purchase Shares or $15.00 per share of Series D Preferred Stock, as the case may be. Parent may assign to any subsidiary or affiliate of Parent (including Purchaser) the right to exercise the options. Each option may be exercised individually from each Investor, in whole or in part, at any time or from time to time, on or after November 20, 1997 and prior to the close of business on the earlier of (i) the second business day after the termination of the Merger Agreement; (ii) the Effective Time; and (iii) the date of the termination of the Stock Option Agreement (such earliest date, the "Termination Date"). Voting of Shares. Each Investor, until the Termination Date, shall cause the Shares owned by such Investor 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 Purchase in order to carry out the purposes of the Merger Agreement. Irrevocable Proxy. Each Investor has irrevocably appointed Parent, until the Termination Date, as its attorney and proxy pursuant to the provisions of Section 212 of the GCL, 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 Option Shares (and all other securities issued to such Investor in respect of the Shares) which each Investor 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 Parent. Each Investor has revoked all other proxies and powers of attorney with respect to the Option Shares (and all other securities issued to such Investor in respect of the Option Shares) which it may have heretofore appointed or granted. No subsequent proxy or power of attorney may be given or written consent executed (and if given or executed, will not be effective) by the Investors with respect thereto. 26 Restrictions on Transfer. Each Investor has covenanted and agreed that, until the expiration of the Investor Options as provided in the Stock Option Agreement, except as contemplated or permitted by the Stock Option Agreement, the Investor 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 Investor's voting rights, charge or other encumbrance of any nature whatsoever with respect to the Option Shares. No Solicitation. Except as provided in the Stock Option Agreement, each Investor 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 Parent and any affiliate of Parent, a "Person") relating to (a) any acquisition or purchase of all or any of the Option 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 Investor immediately shall cease and cause to be terminated all existing discussions or negotiations of the Investor and its agents or other representatives with any Person conducted heretofore with respect to any of the foregoing. Each Investor shall notify Parent 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 Parent, 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. Plans for the Company It is expected that, initially following the Offer and the Merger, the business and operations of the Company will, except as set forth in this Offer to Purchase, be continued by the Company substantially as they are currently being conducted, and that the Company's current management, under the direction of the Board of Directors of Parent, will continue to manage the Company. Following consummation of the Merger, however, Parent intends to conduct a review of the Company and its assets, its corporate structure, operations, properties, management and personnel and consider what, if any, changes would be desirable in light of the circumstances which then exist. Such changes could include the acquisition or disposition of assets or other changes in the Company's capitalization, dividend policy, corporate structure, business, certificate of incorporation, bylaws, board of directors or management. Except as noted in this Offer to Purchase, neither Parent nor Purchaser has any present plans or proposals that would result in an extraordinary corporate transaction, such as a merger, reorganization, liquidation, or sale or transfer of a material amount of assets, involving the Company, or any material changes in the Company's capitalization, dividend policy, corporate structure, business or composition of its management. 13. DIVIDENDS AND DISTRIBUTIONS Pursuant to the terms of the Merger Agreement, the Company is prohibited from declaring or paying any dividends (cash or otherwise) or making any distribution on, directly or indirectly redeeming, purchasing or otherwise acquiring, any shares of its outstanding capital stock or effecting any stock split or other reclassification. 14. CONDITIONS OF THE OFFER Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or pay for any Shares tendered pursuant to the Offer, and may terminate or amend the Offer and may postpone the 27 acceptance for payment of and payment for Shares tendered, if (i) any waiting period applicable to the Offer under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer, or (ii) at any time on or after the date of the Merger Agreement, and prior to the acceptance for payment of Shares, any of the following conditions shall exist: (a) any judgment, order, decree, statute, law, ordinance, rule or regulation entered, enacted, promulgated, enforced or issued by any court or other governmental entity of competent jurisdiction or other legal restraint or prohibition shall be in effect preventing the consummation of the Offer; (b) all necessary consents and approvals of any federal, state or local governmental authority or any other third party required for the consummation of the Offer shall not 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 or a Parent Material Adverse Effect; (c) any of the representations and warranties of Company set forth in the Merger Agreement shall not be true and correct as of July 16, 1997 or any of the representations and warranties set forth in Sections 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23 and 3.29 of the Merger Agreement relating to capital stock of the Company's subsidiaries, capitalization of the Company, authority relative to the Merger Agreement, title to and condition of properties, Board recommendations, finders or brokers, state antitakeover statutes, opinion of financial advisor and commercial arrangements with Tel- Save shall not be true as of the date Parent shall first accept Shares for payment, where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to "materiality" or "material adverse effect" set forth therein) has, or is likely to have, individually or in the aggregate, a Company Material Adverse Effect or cause any material increase in the consideration required to be paid by Parent and Purchaser effectively to consummate the Offer or the Merger; (d) the Company shall not have performed any obligation required to be performed by it under the Merger Agreement as of the date Parent shall first accept Shares for payment, where the non-performance of such obligation has, or is likely to have, individually or in the aggregate, a Company Material Adverse Effect or cause any material increase in the consideration required to be paid by Parent and Purchaser effectively to consummate the Offer; (e) the Merger Agreement shall have been terminated in accordance with its terms; or (f) Purchaser and the Company shall have agreed that Purchaser shall terminate the Offer or postpone the acceptance for payment of or payment for Shares thereunder; which, in the reasonable judgment of Purchaser in any such case, and regardless of the circumstances (including any action or inaction by Parent or any of its affiliates) giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment or payment. The foregoing conditions are for the sole benefit of Purchaser and Parent and may be asserted by Purchaser or Parent regardless of the circumstances giving rise to any such condition or may be waived by Purchaser or Parent in whole or in part at any time and from time to time in their sole discretion. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances; and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. 15. CERTAIN LEGAL MATTERS Except as described in this Section 15, Purchaser is not aware of any license or regulatory permit that appears to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by Purchaser's acquisition of Shares as contemplated herein or of any approval or other action by any governmental authority that would be required for the acquisition or ownership of Shares by Purchaser as contemplated herein. Should any such approval or other action be required, Purchaser currently contemplates that such approval or other action will be sought, except as described below under "State Takeover Laws." While, except as otherwise expressly described in this Section 15, Purchaser does not presently intend to delay the acceptance for payment of or payment for Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that failure to obtain any such approval or other action might not result in consequences adverse to the Company's business or that certain parts of the Company's business might not have to be disposed of if such approvals were not obtained or such other actions were not taken or in 28 order to obtain any such approval or other action. If certain types of adverse action are taken with respect to the matters discussed below, Purchaser could decline to accept for payment or pay for any Shares tendered. See Section 14 for certain conditions of the Offer. State Takeover Laws. A number of states throughout the United States have enacted takeover statutes that purport, in varying degrees, to be applicable to attempts to acquire securities of corporations that are incorporated or have assets, stockholders, executive offices or places of business in such states. In Edgar v. MITE Corp., the Supreme Court of the United States held that the Illinois Business Takeover Act, which involved state securities laws that made the takeover of certain corporations more difficult, imposed a substantial burden on interstate commerce and therefore was unconstitutional. In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the United States held that a state may, as a matter of corporate law and, in particular, those laws concerning corporate governance, constitutionally disqualify a potential acquirer from voting on the affairs of a target corporation without prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions. Section 203 of the GCL limits the ability of a Delaware corporation to engage in business combinations with "interested stockholders" (defined as any beneficial owner of 15% or more of the outstanding voting stock of the corporation) unless, among other things, the corporation's board of directors has given its prior approval to either the business combination or the transaction which resulted in the stockholder becoming an "interested stockholder." The Company has represented in the Merger Agreement that it properly approved, among other things, the Offer, the Stock Option Agreement and the Merger for purposes of Section 203 of the GCL. Based on information supplied by the Company, Purchaser does not believe that any other state takeover statutes apply to the Offer or the Merger. Purchaser has not currently complied with any state takeover statute or regulation. Purchaser reserves the right to challenge the applicability or validity of any state law purportedly applicable to the Offer, the Stock Option Agreement or the Merger and nothing in this Offer to Purchase or any action taken in connection with the Offer, the Stock Option Agreement, the Stock Purchase Agreement or the Merger is intended as a waiver of such right. If it is asserted that any state takeover statute is applicable to the Offer, the Stock Option Agreement, the Stock Purchase Agreement or the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, the Stock Option Agreement, the Stock Purchase Agreement or the Merger, Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities, and Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in consummating the Offer or the Merger. In such case, Purchaser may not be obligated to accept for payment or pay for any Shares tendered pursuant to the Offer. Antitrust. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares under the Offer may be consummated following the expiration of a 15-calendar-day waiting period following the filing by Parent as the "ultimate parent entity" of Purchaser of a Notification and Report Form with respect to the Offer, unless Parent receives a request for additional information or documentary material from the Antitrust Division of the Department of Justice (the "Antitrust Division") or the Federal Trade Commission (the "FTC") or unless early termination of the waiting period is granted. The applicable waiting period for the purchase of Shares pursuant to the Stock Option Agreement and the Merger is 30 days (which shall commence on the date of filing and run concurrently with the waiting period applicable to the Offer). The Company's filing under the HSR Act will also be made with respect to the Purchaser's acquisition of Shares under the Stock Option Agreement. Parent is expected to make its filing with the Antitrust Division and the FTC on or about November 28, 1997. If, within the initial 15-day waiting period applicable to the Offer, either the Antitrust Division or the FTC requests additional information or documentary material from Parent, the waiting period will be extended and would expire at 11:59 P.M., New York City time, on the tenth calendar day after the date of substantial compliance by Parent with such request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the HSR Act. Thereafter, such waiting period may be extended only by court order or with the consent of Parent. The waiting period applicable to the Stock Option Agreement and the Merger may be extended in the same manner as the waiting period applicable to the Offer. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary 29 material pursuant to the HSR Act, the Offer may, at the discretion of Purchaser (subject to the terms of the Merger Agreement), be extended and, in any event, the purchase of or any payment for Shares will be deferred until ten days (or, in the case of the filing applicable to the Stock Option Agreement and the Merger, twenty days) following the date the request is complied with by Parent, unless the waiting period is sooner terminated by the FTC and the Antitrust Division. Unless the Offer is extended, any extension of the waiting period will not give rise to any additional withdrawal rights. See Section 4. Although the Company is required to file certain information and documentary material with the FTC and the Antitrust Division in connection with the Offer, neither the Company's failure to make such filings nor a request from the FTC or the Antitrust Division for additional information or documentary material made to the Company will extend the waiting period with respect to the Offer. In practice, complying with a request for additional information or documentary material can take a significant amount of time. In addition, if the Antitrust Division or the FTC raises substantive issues in connection with a proposed transaction, the parties frequently engage in negotiations with the relevant governmental agency concerning possible means of addressing those issues and may agree to delay consummation of the transaction while such negotiations continue. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions such as Purchaser's proposed acquisition of the Company. At any time before or after Purchaser's purchase of Shares pursuant to the Offer, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or the Stock Option Agreement or the consummation of the Merger or seeking the divestiture of Shares acquired by Purchaser or the divestiture of substantial assets of Purchaser or its subsidiaries, or the Company or its subsidiaries. Private parties or state officials may also bring legal action under the antitrust laws under certain circumstances. There can be no assurance that a challenge to the Offer, the Stock Option Agreement or the Merger on antitrust grounds will not be made or, if such a challenge is made, of the result thereof. If any such action by the FTC, the Antitrust Division or any other person should be threatened or commenced, Purchaser may extend, terminate or amend the Offer. See Section 14. Purchaser believes that consummation of the Offer and the Merger would not violate any antitrust laws; there can be no assurance, however, that a challenge to the Offer or the Merger on antitrust grounds will not be made or, if a challenge is made, what the result will be. Although the parties to the Merger Agreement are required to remove or satisfy, if reasonably practicable, any objections to the validity or legality of the Merger, Parent is not required to satisfy any legal requirement that it divest or hold separate any assets or business operations of Parent or the Company. Government Regulations. The Company's services business is subject to specific regulations in several states. Within various states, such regulations may include limitations on the number of lines or PBX switches per system, limitations of shared telecommunications systems to single buildings or building complexes, requirements that such building complexes be under common ownership or common ownership, management and control and the imposition of local exchange access rates that may be higher than those for similar single-user PBX systems. The Company's systems business is generally exempt from governmental regulation with respect to marketing and sales. However, various regulatory bodies, including the FCC, require that manufacturers of equipment obtain certain certifications. The Company holds an authorization issued by the FCC to provide international telecommunications services and it also holds authorizations from various state public utility commissions permitting it to provide intrastate telecommunications services. The FCC and many of these state public utility commissions require their prior approval in the event control of the company is transferred to another party. Consummation of the Offer, however, involves the acquisition by Purchaser of a minority interest in the Company, and even when added to the Shares owned by Parent or Purchaser (but not including any Shares obtainable upon conversion of the Convertible Preferred Stock owned by Parent), would not result in a transfer of control of the Company. Accordingly, no approval by the FCC or state public utility commissions is required in connection with the Offer. 30 Prior approval of the FCC and notification to or approval by various state public utility commissions will be required for consummation of the Merger or the acquisition by Parent or Purchaser of sufficient additional Shares (pursuant to the Stock Option Agreement, conversion of the Convertible Preferred Stock or otherwise) to effect a de jure or de facto transfer of control of the Company. Purchaser intends, together with the Company, promptly to make any required notifications and to seek all necessary approvals required to consummate the Merger or such acquisition. Purchaser believes that all necessary approvals may be obtained within approximately ninety days, but there can be no assurance that Purchaser and Company can obtain all necessary approvals or, if they can be obtained, that the process can be completed on a timely basis. The Merger will require permission or consents from certain state regulatory agencies. There can be no assurance that Parent and the Company can obtain such permissions or consents, or, if they can be obtained, that the process can be completed on a timely basis. 16. FEES AND EXPENSES Bear Stearns is acting as Dealer Manager in connection with the Offer and is acting as financial advisor to Parent with respect to the proposed acquisition of the Company. Parent has agreed to pay Bear Stearns for its services a financial advisory fee of $5.5 million, $1 million of which is currently payable and the remainder of which is payable upon consummation of the Merger. Parent has also agreed to reimburse Bear Stearns for all of its reasonable out-of-pocket expenses. In addition, Parent has agreed to indemnify Bear Stearns and certain related persons against certain liabilities and expenses in connection with its services, including certain liabilities under the U.S. federal securities laws. In the ordinary course of its business, Bear Stearns engages in securities trading, market-making and brokerage activities and may, at any time, hold long or short positions and may trade or otherwise effect transactions in securities of the Company. As of November 25, 1997, Bear Stearns did not hold a long or a short position in the Shares for its own account. Purchaser has retained Georgeson & Company, Inc. to act as the Information Agent and Continental Stock Transfer & Trust Company to act as the Depositary in connection with the Offer. The Information Agent and the Depositary each will receive reasonable and customary compensation for their services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under the U.S. federal securities laws. Except as set forth above, Purchaser will not pay any fees or commissions to any broker or dealer or other person for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will be reimbursed by Purchaser for customary mailing and handling expenses incurred by them in forwarding the offering materials to their customers. 17. MISCELLANEOUS Purchaser is not aware of any jurisdiction where the making of the Offer is prohibited by any administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good faith effort to comply with any such state statute. If, after such good faith effort, Purchaser cannot comply with any such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser or by one or more registered brokers or dealers licensed under the laws of such jurisdiction. Parent and Purchaser have filed with the Commission a Tender Offer Statement on Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange Act containing certain additional information 31 with respect to the Offer and may file amendments thereto. The Company has filed with the Commission the Schedule 14D-9 (including exhibits) containing the Company's recommendation with respect to the Offer and other information required to be disseminated to stockholders of the Company pursuant to Rule 14d-9. Such Statements and any amendments thereto, including exhibits, may be examined and copies may be obtained from the Commission in the manner set forth in Section 8 (except that they will not be available at the regional offices of the Commission). NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. Moonlight Acquisition Corp. November 26, 1997 32 ANNEX I DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT The following information sets forth the name, age, citizenship, business address, present principal occupation or employment, and the material occupation, positions, offices or employment for the past five years of each director and executive officer of Parent. Unless otherwise indicated below, the address of each director and executive officer is c/o Intermedia Communications Inc., 3625 Queen Palm Drive, Tampa, Florida 33619 and each director and executive officer is a citizen of the United States of America. David C. Ruberg, age 51, has been a director, President, and Chief Executive Officer of Parent since May 1993 and Chairman of the Board since March 1994. He was an independent consultant to the computer and telecommunications industries from September 1991 to May 1993. Mr. Ruberg was a Vice President and General Manager of Data General Corporation form 1989 until September 1991. John C. Baker, age 47, has been a director of Parent since February 1988. Mr. Baker has been the principal of Baker Capital Corp., a private equity investment firm, since October 1995. He was a Senior Vice President of Patricof & Co. Ventures, Inc., a multi-national venture capital firm from 1988 until September 1995. Mr. Baker is currently a director of Xpedite Systems, Inc., FORE Systems, Inc. and Resource Bancshares Mortgage Group, Inc., all of which are publicly traded corporations. George F. Knapp, age 65, has been a director of Parent since February 1988. He has been a principal of Communications Investment Group, an investment banking firm, since June 1990. From January 1988 until June 1990, Mr. Knapp was an associate at MBW Management, Inc., a venture capital firm. Prior to that time, he held various executive positions at ITT Corporation and its subsidiaries, most recently as Corporate Vice President of ITT Corporation. Mr. Knapp is currently a member of the Manhattan College Board of Trustees and Chairman of its Finance Committee. Philip A. Campbell, age 60, has been a director of Parent since September 1996. Mr. Campbell retired from Bell Atlantic Inc. as director, Vice Chairman and Chief Financial Officer in 1991. Previously, he was President of New Jersey Bell, Indiana Bell, and Bell Atlantic Network Services. Mr. Campbell is currently a director of Xpedite Systems, Inc., a publicly traded corporation. Robert A. Rouse, age 48, has served as Executive Vice President, Operations and Systems of Parent since October 1996. Prior to joining Parent, Mr. Rouse was Senior Vice President of Concert, a joint venture company of British Telecommunications and MCI Communications Company where he managed the engineering and operations of the Concert Global Networks from 1991 to 1996. Mr. Rouse held various executive management positions at MCI from 1986 to 1991, with responsibilities including product and network design, network and systems development, network planning, operations, provisioning, and customer services. From 1969 to 1986, he managed several subsidiaries of Rochester Telephone, now a part of Frontier Corporation. Mr. Rouse received his B.A. from the University of Rochester in 1971. James F. Geiger, age 38, has served as Senior Vice President, Sales of Parent since August 1995. Mr. Geiger served as the Vice President of Alternate Channel Sales from March 1995 through August 1995 and as the President of each of FiberNet USA, Inc. and FiberNet Telecommunications Cincinnati, Inc. (collectively, "FiberNet") since their inception. Mr. Geiger was one of the founding principals of FiberNet, initially serving as Vice President of Sales & Marketing and subsequently serving as President. From April 1989 to April 1990, Mr. Geiger served as Director of Marketing for Associated Communications, a cellular telephone company. Mr. Geiger received his B.S. in accounting from Clarkson University. 33 Robert M. Manning, age 37, has served as Senior Vice President, Chief Financial Officer of Parent since September 1996. Mr. Manning joined Parent from DMX Inc., a Los Angeles-based cable programmer, where he was Executive Vice President, Senior Financial Executive and a director of DMX-Europe from October 1991 to September 1996. Prior to his tenure at DMX, Mr. Manning spent ten years in the investment banking field in corporate finance and mergers and acquisitions, most recently with Oppenheimer and Co., Inc. as Vice President, Corporate Finance, managing their Entertainment/Leisure Time Group from October 1988 to October 1991. Mr. Manning is a graduate of Williams College, Williamstown, Massachusetts. Robert A. Ruh, age 52, has served as Senior Vice President, Human Resources of Parent since March 1, 1996. From January 1991 through February 1996, Dr. Ruh was an independent consultant, specializing in executive and organization development. From 1975 to 1990, Dr. Ruh held executive positions in human resources with Baxter Healthcare Corporation and American Hospital Supply Corporation. From 1973 to 1975, Dr. Ruh served as a consulting psychologist for Medina and Thompson, specializing in executive assessment, selection, and development. From 1970 to 1972, Dr. Ruh was on the corporate organization development staff at Coming Glass Works. Dr. Ruh served as Assistant Professor of psychology at Michigan State University from 1970 to 1972. Dr. Ruh received a B.A. in psychology from Valparaiso University in 1966. He received an M.A. (1967) and a Ph.D. (1970) in industrial/organizational psychology from Michigan State University. Michael A. Viren, age 55, has served as Senior Vice President, Strategic Planning, Regulatory, and Industry Relations of Parent since October 1996. Prior to his present position, he was Senior Vice President, Engineering and Information Systems from January 1996 to October 1996 and served as Vice President, Product Development from December 1992 through January 1996. Dr. Viren joined Parent in February 1991 as Director of Product Development. Dr. Viren worked for GTE Corporation from August 1986 to February 1991 as a specialist in wide and local area networking. Prior to that he operated his own consulting firm concentrating in WAN and LAN design; was Senior Vice President of Criterion, Inc., an Economic Consulting Firm in Dallas, Texas; and served as the Director of the Utility Division of the Missouri Public Service Commission. Dr. Viren taught economics for 10 years, most recently as an Associate Professor of Economics at the University of Missouri-Columbia and prior to that at the University of Kansas. Dr. Viren received a Ph.D. in economics from the University of California-Santa Barbara and a B.S. in mechanical engineering from the California State University at Long Beach. Patricia A. Kurlin, age 43, has served as Vice President, General Counsel of Parent since June 1996. From September 1995 until June 1996, Ms. Kurlin served as Corporate Counsel and served as Director of Governmental and Legal Affairs for Parent from September 1993 to September 1995. Prior to joining Parent, Ms. Kurlin served as Senior Telecommunications Attorney at the Florida Public Service Commission from May 1990 to September 1993. Ms. Kurlin received her J.D. from the Florida State University and a B.S. degree from the University of South Florida. Jeanne M. Walters, age 34, has served as Controller and Chief Accounting Officer of Parent since May 1993. From November 1992 until May 1993 she served as Assistant Controller. From June 1988 to November 1992, Ms. Walters was an auditor at Ernst & Young LLP, a certified public accounting firm in Tampa, Florida. Ms. Walters received her B.S. in accounting and an M.B.A. from Wilkes University. She is licensed in the State of Florida as a certified public accountant. B. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER The following table sets forth the name, age, citizenship, business address, present principal occupation or employment, and the material occupation, positions, offices or employment for the past five years of each director and executive officer of Purchaser. Unless otherwise indicated below, the address of each director and executive officer is c/o Intermedia Communications Inc., 3625 Queen Palm Drive, Tampa, Florida 33619 and each director and executive officer is a citizen of the United States of America. 34 Robert M. Manning, age 38, has been a director, President, Secretary and Treasurer of Purchaser since November 14, 1997. Mr. Manning has served as Senior Vice President, Chief Financial Officer and Secretary of Parent since September 1996. Mr. Manning joined Parent from DMX Inc., a Los Angeles-based cable programmer, where he was Executive Vice President, Senior Financial Executive and a director of DMX-Europe from October 1991 to September 1996. Prior to his tenure at DMX, Mr. Manning spent ten years in the investment banking field in corporate finance and mergers and acquisitions, most recently with Oppenheimer and Co., Inc. as Vice President, Corporate Finance managing their Entertainment/Leisure Time Group from October 1988 to October 1991. Mr Manning is a graduate of Williams College, Williamstown, Massachusetts. George Lawrence Sledge, Jr., age 30, has been Vice President and Assistant Secretary of Purchaser since November 14, 1997. Mr. Sledge has served as Senior Director of Corporate Planning and Development of Parent since March 1997. Prior to his present position, Mr. Sledge held managerial positions in Intermedia's corporate finance, strategic planning, and treasury departments. Mr. Sledge joined Intermedia in November, 1991. Mr. Sledge received a B.A. in history from Davidson College and an MBA from the University of South Florida. 35 ANNEX II TRANSACTIONS BY PARENT AND PURCHASER INVOLVING EQUITY SECURITIES OF THE COMPANY
DATE EQUITY/SECURITY SELLER NUMBER OF SHARES PRICE PER SHARE ---- --------------- ------ ---------------- --------------- 11/13/97 Common Stock Market 4,500 11.4306 11/14/97 Common Stock Market 130,000 11.7138 11/20/97 Common Stock Mentor Partners, L.P. 1,000,000 14.75 11/24/97 Convertible Preferred Stock RHI Holdings, Inc. 250,000 251.31
36 Manually signed facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each stockholder of the Company or such stockholder's broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below. The Depositary for the Offer is: CONTINENTAL STOCK TRANSFER & TRUST COMPANY By Mail: By Facsimile Transmission By Hand or Overnight (For Eligible Institutions Only): Courier: 2 Broadway 2 Broadway New York, NY 10004 New York, NY (212) 509-5150 Attn: Reorganization 10004 Dept. Attn: Confirm Receipt of Reorganization Notice of Guaranteed Delivery: Dept. (212) 509-4000 ext. 535 -------------- DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONES LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. Questions and requests for assistance may be directed to the Information Agent and the Dealer Manager at the telephone numbers and locations listed below. You may also contact your broker, dealer, commercial bank or trust company or other nominee. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery and other tender documents may be obtained at Purchaser's expense from the Information Agent or from brokers, dealers, commercial banks or trust companies. The Information Agent for the Offer is: GEORGESON & COMPANY INC. -------------- Wall Street Plaza New York, NY 10005 Phone: (212) 440-9800 (Banks and Brokers Call Collect) CALL TOLL-FREE: (800) 223-2064 The Dealer Manager for the Offer is: BEAR, STEARNS & CO. INC. 245 Park Avenue New York, NY 10167 Phone: (888) 517-7578 EX-99.A.2 3 FORM OF LETTER OF TRANSMITTAL EXHIBIT (a)(2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF SHARED TECHNOLOGIES FAIRCHILD INC. PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 26, 1997 BY MOONLIGHT ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF INTERMEDIA COMMUNICATIONS INC. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: CONTINENTAL STOCK TRANSFER & TRUST COMPANY By Mail: By Facsimile By Hand or Overnight Transmission (For Courier: Eligible Institutions Only): 2 Broadway New York, NY 10004 2 Broadway Attn: Reorganization New York, NY 10004 Dept. (212) 509-5150 Attn: Reorganization Dept. Confirm Receipt of Notice of Guaranteed Delivery: (212) 509-4000 ext. 535 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN THE NUMBER LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by holders (the "Stockholders") of Shares (as defined below) of Shared Technologies Fairchild Inc. if certificates evidencing Shares ("Certificates") are to be forwarded herewith or if delivery of Shares is to be made by book-entry transfer to an account maintained by Continental Stock Transfer & Trust Company (the "Depository") with The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3 of the Offer to Purchase (as defined below). Stockholders whose Certificates are not immediately available or who cannot deliver either their Certificates for, or a Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase) with respect to, their Shares and all other required documents to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2 hereof. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. 1 DESCRIPTION OF SHARES TENDERED - --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON THE SHARES TENDERED(2) CERTIFICATE(S) (ATTACH ADDITIONAL LIST IF NECESSARY) - ----------------------------------------------------------------------- NUMBER OF SHARES NUMBER CERTIFICATE REPRESENTED BY OF SHARES NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2) ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- TOTAL SHARES TENDERED
- -------------------------------------------------------------------------------- (1) Need not be completed by holders of Shares delivering Shares by Book- Entry Transfer. (2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to the Depositary are being tendered. See Instruction 4. [_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER). Name of Tendering Institution: _____________________________________________ Account Number: ____________________________________________________________ Transaction Code Number: ___________________________________________________ [_]CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY. Name(s) of Registered Holder(s): ___________________________________________ Window Ticket Number (if any): _____________________________________________ Date of Execution of Notice of Guaranteed Delivery: ________________________ Name of Institution which Guaranteed Delivery: _____________________________ Account Number: ____________________________________________________________ Transaction Code Number: ___________________________________________________ 2 NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY LADIES AND GENTLEMEN: The undersigned hereby tenders to Moonlight Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly owned subsidiary of Intermedia Communications Inc., a Delaware corporation ("Parent"), the above-described shares of common stock, $.004 par value (the "Shares"), of Shared Technologies Fairchild Inc., a Delaware corporation (the "Company"), for $15.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated November 26, 1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with any supplements or amendments thereto, constitute the "Offer"). The undersigned understands that (i) the Purchaser has only offered to purchase up to 4,000,000 shares and if more than 4,000,000 Shares are validly tendered and not withdrawn prior to the Expiration Date, the Shares so tendered shall, upon the terms and subject to the conditions of the Offer, be accepted for payment on a pro rata basis (adjusted to avoid acceptance for payment of fractional Shares) in accordance with Rule 14d-8 under the Securities Exchange Act of 1934, as amended; (ii) because of the difficulty of determining the precise number of Shares validly tendered, the Purchaser does not expect to be able to announce the final proration factor or to pay for any Shares until at least 5 business days after the Expiration Date, however, the Purchaser will announce the preliminary proration factor as soon as practicable after the Expiration Date; and (iii) the Purchaser will not pay for any Shares accepted for payment pursuant to the Offer until the final proration factor is known. The undersigned recognizes that the Offer is not being made for the Company's outstanding shares of Series D Preferred Stock, $.01 par value (the "Series D Preferred Stock"), and that holders of the Series D Preferred Stock who wish to participate in the Offer must exercise their rights to convert such shares of Series D Stock and tender the Shares issued upon such exercise prior to expiration of the Offer. The undersigned understands that Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to Parent or one or more of Parent's subsidiaries, the right to purchase Shares tendered pursuant to the Offer; provided, however, that no such transfer or assignment will release Purchaser from its obligations under the Offer or prejudice the rights of tendering Stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. Subject to, and effective upon, acceptance for payment of, or payment for, Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms or conditions of any such extension or amendment), the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby and any and all other Shares or other securities issued or issuable in respect of such Shares on or after the date hereof (a "Distribution"), and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and any Distributions), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver Certificates evidencing such Shares (and any Distributions), or transfer ownership of such Shares (and any Distributions) on the account books maintained by the Book-Entry Transfer Facility together, in any such case, with all accompanying evidences of transfer and authenticity to, or upon the order of, Purchaser, upon receipt by the Depositary, as the undersigned's agent, of the purchase price with respect to such Shares, (ii) present such Shares (and any Distributions) for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any Distributions), all in accordance with the terms and subject to the conditions of the Offer. The undersigned hereby irrevocably appoints the designees of Purchaser as the attorney-in-fact and proxy of the undersigned, each with full power of substitution, to the full extent of the undersigned's rights with respect to all Shares tendered hereby and accepted for payment and paid for by Purchaser (and any Distributions), including, without limitation, the right to vote such Shares (and any Distributions) in such manner as each such attorney and proxy or his substitute shall, in his or her sole discretion, deem proper. All such powers of attorney and proxies, being deemed to be irrevocable, shall be considered coupled with an interest in the Shares tendered 3 herewith. Such appointment will be effective when, and only to the extent that, Purchaser accepts such Shares for payment. Upon such acceptance for payment, all prior powers of attorney and proxies given by the undersigned with respect to such Shares (and any Distributions) will be revoked, without further action, and no subsequent powers of attorneys and proxies may be given with respect thereto (and, if given, will be deemed ineffective). The designees of Purchaser will, with respect to the Shares (and any Distributions) for which such appointment is effective, be empowered to exercise all voting and other rights of the undersigned with respect to such Shares (and any Distributions) as they in their sole discretion may deem proper including, without limitation, in respect of any annual or special meeting of the Stockholders, or any adjournment or postponement thereof, or in connection with any action by written consent in lieu of such meeting or otherwise (including any such meeting or action by written consent to approve the Merger (as defined in the Offer to Purchase)). Purchaser reserves the absolute right to require that, in order for Shares to be deemed validly tendered, immediately upon the acceptance for payment of such Shares, Purchaser or its designees are able to exercise full voting rights with respect to such Shares (and any Distributions). All authority conferred or agreed to be conferred in this Letter of Transmittal shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any Distributions) and that, when the same are accepted for payment and paid for by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances, and that the Shares tendered hereby (and any Distributions) will not be subject to any adverse claim. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of Shares tendered hereby (and any Distributions). In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of Purchaser any and all Distributions issued to the undersigned on or after November 20, 1997, in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer; and pending such remittance and transfer or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of any such Distributions and may withhold the entire purchase price of the Shares tendered hereby, or deduct from the purchase price the amount or value of any such Distribution, as determined by Purchaser in its sole discretion. The undersigned understands that the valid tender of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and Purchaser with respect to such Shares upon the terms and subject to the conditions of the Offer. The undersigned recognizes that, under certain circumstances set forth in the Offer to Purchase, Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or any Certificates evidencing Shares not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and/or return any Certificates evidencing Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered." In the event that both the "Special Payment Instructions" and the "Special Delivery Instructions" are completed, please issue the check for the purchase price and/or any such Certificates evidencing Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) in the name(s) of, and deliver such check and/or return such certificates to, the person(s) so indicated. Unless otherwise indicated herein under "Special Payment Instructions," in the case of a book-entry delivery of Shares, please credit the account maintained at the Book-Entry Transfer Facility indicated above with respect to any Shares not accepted for payment. The undersigned recognizes that Purchaser has no obligation pursuant to the "Special Payment Instructions" to transfer any Shares from the name of the registered holder thereof if Purchaser does not accept for payment any of the Shares tendered hereby. 4 SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 5, 6 AND 7) (SEE INSTRUCTIONS 5, 6 AND 7) To be completed ONLY if Certif- To be completed ONLY if Certif- icates for Shares not tendered icates for Shares not tendered or not accepted for payment or not accepted for payment and/or the check for the pur- and/or the check for the pur- chase price of Shares accepted chase price of Shares accepted for payment are to be issued in for payment are to be sent to the name of someone other than someone other than the under- the undersigned, or if Shares signed, or to the undersigned at delivered by book-entry transfer an address other than that that are not accepted for pay- above. ment are to be returned by credit to an account maintained at the Book-Entry Transfer Fa- cility other than the account indicated above. Mail: (check appropriate box(es)) [_] Check to: [_] Certificate(s) to: Name_____________________________ Issue: [_] Check [_] Certificate(s) (PLEASE TYPE OR PRINT) to: Address _________________________ _________________________________ Name ____________________________ (INCLUDE ZIP CODE) (PLEASE TYPE OR PRINT) _________________________________ Address _________________________ (TAX IDENTIFICATION OR SOCIAL _________________________________ SECURITY NUMBER) (INCLUDE ZIP CODE) (SEE SUBSTITUTE FORM W-9) _________________________________ (TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER) (SEE SUBSTITUTE FORM W-9) [_Credit]unpurchased Shares delivered by book-entry transfer to The Depository Trust Company. _________________________________ (ACCOUNT NUMBER) 5 STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE _____________________________________________________________ _____________________________________________________________ (SIGNATURE(S) OF STOCKHOLDER(S)) Dated: _______________________________________________ , 1997 (Must be signed by registered holder(s) as name(s) appear(s) on the Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by Certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please provide the following information. See Instruction 5.) Name(s)______________________________________________________ _____________________________________________________________ (PLEASE TYPE OR PRINT) Capacity (Full Title)________________________________________ (SEE INSTRUCTION 5) Address______________________________________________________ _____________________________________________________________ (INCLUDE ZIP CODE) Area Codes and Telephone Numbers: ___________________________ (HOME) --------------------------------- (BUSINESS) Tax Identification or Social Security No. _________________________________________ Also Complete Substitute Form W-9 on Reverse GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature_________________________________________ Name_________________________________________________________ _____________________________________________________________ (PLEASE TYPE OR PRINT) Name of Firm_________________________________________________ Address______________________________________________________ _____________________________________________________________ (INCLUDE ZIP CODE) Area Code and Telephone Number ______________________________ Dated: _______________________________________________ , 1997 6 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, signatures on this Letter of Transmittal must be guaranteed by a member in good standing of the Securities Transfer Association's Medallion Program, or by any other bank, broker, dealer, credit union, savings association or other entity that is an "eligible guarantor institution," as such term is defined in Rule 17Ad- 15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (each of the foregoing constituting an "Eligible Institution"), unless the Shares tendered hereby are tendered (i) by the registered holder (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) of such Shares who has completed neither the box entitled "Special Payment Instructions" nor the box entitled "Special Delivery Instructions" hereby or (ii) for the account of an Eligible Institution. See Instruction 5. If the Certificates are registered in the name of a person other than the signer of this Letter of Transmittal, or if payment is to be made or delivered to, or Certificates evidencing unpurchased Shares are to be issued or returned to, a person other than the registered owner, then the tendered Certificates must be endorsed or accompanied by duly executed stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the Certificates, with the signatures on the Certificates or stock powers guaranteed by an Eligible Institution as provided herein. See Instruction 5. 2. REQUIREMENT OF TENDER. This Letter of Transmittal is to be completed by Stockholders if Certificates evidencing Shares are to be forwarded herewith or if delivery of Shares is to be made pursuant to the procedures for book-entry transfer set forth in Section 3 of the Offer to Purchase. For a Stockholder to validly tender Shares pursuant to the Offer, (i) a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any required signature guarantees or an Agent's message (as defined in the Offer to Purchase) in connection with a book-entry delivery of Shares and any other documents required by this Letter of Transmittal must be received by the Depositary at its address set forth herein prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) and (a) Certificates for tendered Shares must be received by the Depositary at such address prior to the Expiration Date or (b) Shares must be delivered pursuant to the procedures for book-entry transfer set forth in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must be received by the Depositary on or prior to the Expiration Date or (ii) the tendering Stockholder must comply with the guaranteed delivery procedures set forth below and in Section 3 of the Offer to Purchase. Stockholders whose Certificates are not immediately available or who cannot deliver their Certificates and all other required documents to the Depositary or complete the procedures for book-entry transfer prior to the Expiration Date may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by Purchaser, must be received by the Depositary prior to the Expiration Date, and (iii) the Certificates representing all tendered Shares in proper form for transfer, or a Book-Entry Confirmation with respect to all tendered Shares, in either case, together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange, Inc. trading days after the date of such Notice of Guaranteed Delivery. If Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) must accompany each such delivery. THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. 7 No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering Stockholders, by execution of this Letter of Transmittal (or a facsimile thereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the information required under "Description of Shares Tendered" should be listed on a separate signed schedule attached hereto. 4. PARTIAL TENDERS. If fewer than all of the Shares represented by any Certificates delivered to the Depositary herewith are to be tendered hereby, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such case, if Purchaser accepts the tendered Shares for payment, a new Certificate for the remainder of the Shares that were evidenced by the old Certificate(s) will be sent, without expense, to the person(s) signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Certificate(s) delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of Certificates. If this Letter of Transmittal or any Certificates or instruments of transfer are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to Purchaser of such person's authority to so act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of Certificates or separate instruments of transfer are required unless payment is to be made, or Certificates not tendered or not purchased are to be issued or returned, to a person other than the registered holder(s). Signatures on such Certificates or instruments of transfer must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares evidenced by the Certificate(s) listed and transmitted hereby, the Certificate(s) must be endorsed or accompanied by appropriate instruments of transfer, in either case signed exactly as the name(s) of the registered holder(s) appear on the Certificate(s). Signatures on such Certificate(s) or instruments of transfer must be guaranteed by an Eligible Institution. 6. TRANSFER TAXES. Except as set forth in this Instruction 6, Purchaser will pay or cause to be paid any transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or (in the circumstances permitted hereby) Certificates for Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s), or if tendered Certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any transfer taxes (whether imposed on the registered holder(s) or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Certificate(s) listed in this Letter of Transmittal. 8 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or Certificates for unpurchased Shares are to be issued in the name of a person other than the signer of this Letter of Transmittal or if a check is to be sent and/or such Certificates are to be returned to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. If any tendered Shares are not purchased for any reason and such Shares are delivered by Book-Entry Transfer Facility, such Shares will be credited to an account maintained at the appropriate Book-Entry Transfer Facility. 8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses or telephone numbers listed below. Additional copies of this Letter of Transmittal, the Offer to Purchase and the Notice of Guaranteed Delivery and other related materials may be obtained at Purchaser's expense from the Information Agent or from brokers, dealers, commercial banks or trust companies. 9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by Purchaser, in whole or in part, at any time or from time to time, in Purchaser's sole discretion subject to the conditions described in the Offer to Purchase. 10. BACKUP WITHHOLDING TAX. Each tendering Stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax Information" below and to certify that the stockholder is not subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering Stockholder to 31% federal income tax backup withholding on the payment of the purchase price for the Shares. The tendering Stockholder should indicate in the box in Part III of the Substitute Form W-9 if the tendering Stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the Stockholder has indicated in the box in Part III that a TIN has been applied for and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% of all payments of the purchase price, if any, made thereafter pursuant to the Offer until a TIN is provided to the Depositary. 11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing Shares has been lost or destroyed, the holders should promptly notify the Company's transfer agent, Continental Stock Transfer & Trust Company. The holders will then be instructed as to the procedure to be followed in order to replace the Certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed Certificates have been followed. Lost or destroyed Certificates must be replaced prior to the Expiration Date to validly tender such shares pursuant to the Offer. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF) OR AN AGENT'S MESSAGE IN CONNECTION WITH A BOOK-ENTRY DELIVERY OF SHARES (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, PRIOR TO THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Under federal income tax law, a Stockholder whose tendered Shares are accepted for payment is required to provide the Depositary (as payor) with such Stockholder's correct TIN on Substitute Form W-9 below. If such Stockholder is an individual, the TIN is his or her social security number. If such Stockholder is a resident alien and does not have and is not eligible to get a social security number, the TIN is his or her IRS individual taxpayer identification number. If the tendering Stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, such Stockholder should so indicate on the Substitute Form W-9. See Instruction 10. If the Depositary is not provided with the correct TIN, the Stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such Stockholder with respect to Shares purchased pursuant to the Offer may be subject to backup federal income tax withholding. 9 Certain Stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, such Stockholder must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Forms for such statements can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the Stockholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup federal income tax withholding with respect to payment of the purchase price for Shares purchased pursuant to the Offer, a Stockholder must provide the Depositary with his or her correct TIN by completing the Substitute Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such Stockholder is awaiting a TIN) and that (1) such Stockholder has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of failure to report all interest or dividends or (2) the Internal Revenue Service has notified the Stockholder that he or she is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE DEPOSITARY The Stockholder is required to give the Depositary the social security number or employer identification number of the record holder of the Shares tendered hereby. If the Shares are registered in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. 10 PAYOR'S NAME: CONTINENTAL STOCK TRANSFER & TRUST COMPANY - ------------------------------------------------------------------------------- PART 1--PLEASE PROVIDE YOUR TIN ------------------- SUBSTITUTE IN THE BOX AT RIGHT AND CERTIFY Social Security FORM W-9 BY SIGNING AND DATING BELOW. Number DEPARTMENT OF ------------------- THE TREASURY Employer INTERNAL Identification Number REVENUE SERVICE ---------------------------------------------------------- PART 2--CERTIFICATION--Under penalties of perjury, I certify that: (1) the number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding because (i) I am exempt from backup withholding, (ii) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has notified me that I am no longer subject to backup withholding. PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN") PART III Certification Instructions--You must cross Awaiting out item (2) in Part 2 above if you have been TIN notified by the IRS that you are subject to [_] backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2). ---------------------------------------------------------- Signature: ____________________ Date: _, 1997 Name (Please Print): __________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I have not provided a taxpayer identification number, 31% of all reportable payments made to me will be withheld until I provide a number. Signature ________________________________ ___________________, 199 Date Name (Please Print): _____________________ The Information Agent for the Offer is: GEORGESON & COMPANY INC. -------------- Wall Street Plaza New York, NY 10005 Bankers and Brokers call collect: (212) 440-9800 CALL TOLL FREE: (800) 223-2064 The Dealer Manager for the Offer is: BEAR, STEARNS & CO. INC. 245 Park Avenue New York, NY 10167 CALL TOLL-FREE (888) 517-7578 November 26, 1997 EX-99.A.3 4 FORM OF NOTICE OF GUARANTEED DELIVERY EXHIBIT (a)(3) NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF SHARED TECHNOLOGIES FAIRCHILD INC. This Notice of Guaranteed Delivery or one substantially equivalent hereto must be used to accept the Offer (as defined below) if certificates representing the common stock, par value $.004 (the "Shares"), of Shared Technologies Fairchild Inc., a Delaware corporation, are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach Continental Stock Transfer & Trust Company (the "Depositary") prior to the Expiration Date (as defined in the Offer to Purchase (as defined below)). This Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary. See Section 3 of the Offer to Purchase. The Depositary for the Offer is: CONTINENTAL STOCK TRANSFER & TRUST COMPANY By Mail: By Facsimile By Hand or Overnight Transmission Delivery: 2 Broadway (For Eligible New York, NY 10004 Institutions Only): 2 Broadway New York, NY 10004 Attn: Reorganization Attn: Reorganization (212) 509-5150 Dept. Dept. Confirm Receipt of Notice of Guaranteed Delivery: (212) 509-4000 ext. 535 ---------------- DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED LADIES AND GENTLEMEN: The undersigned hereby tenders to Moonlight Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Intermedia Communications Inc., upon the terms and subject to the conditions set forth in the Offer to Purchase dated November 26, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any supplements or amendments thereto, collectively constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares indicated below pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Number of Shares: ___________________ Name(s) of Record Holder(s): _______ Certificate No (if available): ______ ------------------------------------ (PLEASE TYPE OR PRINT) ------------------------------------- Address(es): _______________________ Check box if Shares will be tendered by book-entry transfer: ------------------------------------ (INCLUDE ZIP CODE) [_] The Depositary Trust Company Area Code and Tel. No.: ____________ Account Number: _____________________ Signature: _________________________ Dated: ______________________________ Dated: _____________________________ GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEES) The undersigned, an Eligible Institution (as such term is defined in Section 3 of the Offer to Purchase), hereby guarantees to deliver to the Depositary the certificates representing the Shares tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase) with respect to such Shares, in either case together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any required signature guarantees, and any other documents required by the Letter of Transmittal, all within three trading days (as defined in Section 3 of the Offer to Purchase) after the date hereof. Name of Firm: _______________________ ------------------------------------- (AUTHORIZED SIGNATURE) Address: ____________________________ Name: _______________________________ - ------------------------------------- (PLEASE TYPE OR PRINT) (INCLUDE ZIP CODE) Title: ______________________________ Area Code and Tel. No.: _____________ Dated: ______________________________ NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH OUR LETTER OF TRANSMITTAL. 2 EX-99.A.4 5 FORM OF LETTER FROM BEAR STEARNS & CO. TO BROKERS EXHIBIT (a)(4) OFFER TO PURCHASE FOR CASH UP TO 4,000,000 SHARES OF COMMON STOCK OF SHARED TECHNOLOGIES FAIRCHILD INC. BY MOONLIGHT ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF INTERMEDIA COMMUNICATIONS INC. AT $15.00 NET PER SHARE THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED. November 26, 1997 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by Moonlight Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly owned subsidiary of Intermedia Communications Inc., a Delaware corporation ("Parent"), to act as Dealer Manager in connection with Purchaser's offer to purchase up to 4,000,000 shares of common stock, $.004 par value (the "Shares"), of Shared Technologies Fairchild Inc., a Delaware corporation (the "Company"), at $15.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated November 26, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any supplements or amendments thereto, collectively constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whom you hold Shares in your name or in the name of your nominee. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Offer to Purchase. 2. The Letter of Transmittal to tender Shares for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares. 3. A letter to stockholders of the Company from Anthony D. Autorino, Chairman of the Board and Chief Executive Officer of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D- 9 filed with the Securities and Exchange Commission by the Company and mailed to the stockholders of the Company. 4. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if neither of the two procedures for tendering Shares set forth in Section 3 of the Offer to Purchase can be completed on a timely basis. 5. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 7. A return envelope addressed to Continental Stock Transfer & Trust Company of New York, the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED. In order to take advantage of the Offer, (i) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined in Section 2 of the Offer to Purchase) and any other required documents, should be sent to the Depositary and (ii) certificates representing the tendered Shares or a timely Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase) should be delivered to the Depositary in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for (or a Book-Entry Confirmation with respect to) such Shares, (ii) Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message, and (iii) all other documents required by the Letter of Transmittal. If holders of the Shares wish to tender, but it is impracticable for them to forward their certificates or other required documents or complete the procedures for book-entry transfer prior to the Expiration Date (as defined in the Offer to Purchase), a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. The Offer is not being made for, and tenders will not be accepted of, shares of the Company's outstanding Series D Preferred Stock, $.01 par value (the "Series D Preferred Stock"). Holders of Series D Preferred Stock who wish to participate in the Offer must exercise their rights to convert such Series D Preferred Stock and tender the Shares issued upon such exercise prior to the expiration of the Offer. If more than 4,000,000 Shares are validly tendered and not withdrawn prior to the Expiration Date, the Shares so tendered shall, upon the terms and subject to the conditions of this Offer, be accepted for payment on a pro rata basis (adjusted to avoid acceptance for payment of fractional Shares) in accordance with Rule 14d-8 under the Securities Exchange Act of 1934, as amended. If less than 4,000,000 Shares are tendered pursuant to the Offer, the Purchaser will purchase all Shares validly tendered. Purchaser will not pay any fees or commission to any broker, dealer or other person (other than the Dealer Manager, the Depositary and the Information Agent, as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. Purchaser will pay or will cause to be paid any transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to Georgeson & Company Inc., the Information Agent for the Offer, at Wall Street Plaza, New York, NY 10005, (212) 440-9800, Toll Free (800) 223-2064 or Bear, Stearns & Co. Inc., the Dealer Manager, 245 Park Avenue, New York, NY 10167, (888) 517-7578. Requests for copies of the enclosed materials may be directed to the Information Agent at the above address and telephone number. Very truly yours, Bear, Stearns & Co. Inc. as Dealer Manager 245 Park Avenue New York, New York 10167 Call Toll Free: (888) 517-7578 NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF PURCHASER, PARENT, THE COMPANY, THE DEPOSITARY, THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 2 EX-99.A.5 6 FORM OF LETTER TO CLIENTS FROM BROKERS EXHIBIT (a)(5) OFFER TO PURCHASE FOR CASH UP TO 4,000,000 SHARES OF COMMON STOCK OF SHARED TECHNOLOGIES FAIRCHILD INC. BY MOONLIGHT ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF INTERMEDIA COMMUNICATIONS INC. AT $15.00 NET PER SHARE THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED. November 26, 1997 To Our Clients: Enclosed for your consideration are the Offer to Purchase dated November 26, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any supplements or amendments thereto, collectively constitute the "Offer") relating to the offer by Moonlight Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly owned subsidiary of Intermedia Communications Inc., a Delaware corporation ("Parent"), to purchase up to 4,000,000 shares of common stock, $.004 par value (the "Shares"), of Shared Technologies Fairchild Inc., a Delaware corporation (the "Company"), at a purchase price of $15.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer. Holders of Shares whose certificates for such Shares (the "Certificates") are not immediately available or who cannot deliver their Certificates and all other required documents to the depositary, Continental Stock Transfer & Trust Company (the "Depositary"), or complete the procedures for book-entry transfer prior to the Expiration Date (as defined in the Offer to Purchase), must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. Accordingly, we request instructions as to whether you wish to have us tender on your behalf any or all Shares held by us for your account pursuant to the terms and conditions set forth in the Offer. Please note the following: 1. The tender price is $15.00 per Share, net to the seller in cash, without interest thereon. 2. The Offer is being made for up to 4,000,000 Shares. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of November 20, 1997 (the "Merger Agreement") among Purchaser, Parent and the Company. 3. If more than 4,000,000 Shares are validly tendered and not withdrawn prior to the Expiration Date, the Shares so tendered shall, upon the terms and subject to the conditions of the Offer, be accepted for payment on a pro rata basis (adjusted to avoid acceptance for payment of fractional Shares) in accordance with Rule 14d-8 under the Securities Exchange Act of 1934, as amended. Because of the difficulty in determining the precise number of Shares validly tendered, Purchaser does not expect to be able to announce the final proration factor or to pay for any Shares until at least 5 business days after the Expiration Date. However, Purchaser will announce the preliminary proration factor as soon as practicable after the Expiration Date. Purchaser will not pay for any Shares accepted for payment pursuant to the Offer until the final proration factor is known. 4. The Offer is subject to certain conditions contained in the Offer to Purchase. See Sections 1 and 14 of the Offer to Purchase. The Offer is not subject to any minimum number of Shares being validly tendered and not withdrawn at the expiration of the Offer. 5. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE OFFER AND THE MERGER (AS DEFINED IN THE MERGER AGREEMENT) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. 6. The Offer, proration period and withdrawal rights will expire at 12:00 midnight, New York City time, Friday, December 26, 1997, unless the Offer is extended. 7. The Offer is not being made for, and tender will not be accepted of, shares of the Company's outstanding Series D Preferred Stock, $.01 par value (the "Series D Preferred Stock"). Holders of Series D Preferred Stock who wish to participate in the Offer must exercise their rights to convert such Series D Preferred Stock and tender Shares issuable upon such exercise prior to the expiration of the Offer. 8. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes with respect to the transfer and sale of Shares pursuant to the Offer. However, any tendering stockholder or other payee who fails to complete and sign the Substitute Form W-9 that is included in the Letter of Transmittal may be subject to a required backup federal income tax withholding of 31% of the gross proceeds payable to such holder or other payee pursuant to the Offer. See Sections 3 and 5 of the Offer to Purchase. 9. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) Certificates evidencing such Shares (or a timely Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase) with respect to such Shares), (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed with all required signature guarantees or an Agent's Message (as defined in Section 2 of the Offer to Purchase), and (iii) all other documents required by the Letter of Transmittal. If you wish to have us tender any or all of the Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form set forth below. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified below. An envelope to return your instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal. Purchaser is not aware of any jurisdiction where the making of the Offer is prohibited by administrative or judicial action or pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good faith effort to comply with any such state statute. If, after such good faith effort, Purchaser cannot comply with any such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by Bear, Stearns & Co. Inc. or one or more registered brokers or dealers licensed under the laws of such jurisdiction. INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH UP TO 4,000,000 SHARES OF COMMON STOCK OF SHARED TECHNOLOGIES FAIRCHILD INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated November 26, 1997 (the "Offer to Purchase") and the related Letter of Transmittal (which, together with any supplements or amendments thereto, collectively constitute the "Offer"), in connection with the offer by Moonlight Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly owned subsidiary of Intermedia Communications Inc., a Delaware corporation, to purchase up to 4,000,000 shares of common stock, par value $.004 (the "Shares"), of Shared Technologies Fairchild Inc., a Delaware corporation. This will instruct you to tender to Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Dated: , 1997 NUMBER OF SHARES TO BE TENDERED:* SHARES ------------------------------------- Signature(s) ------------------------------------- ------------------------------------- Print Name(s) ------------------------------------- ------------------------------------- Print Address(es) ------------------------------------- Area Code(s) and Telephone Number(s) ------------------------------------- Taxpayer Identification or Social Security Number(s) - -------- * Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. 2 EX-99.A.6 7 SUMMARY ADVERTISEMENT PUBLISHED NOVEMBER 26, 1997 EXHIBIT (a)(6) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is being made solely by the Offer to Purchase dated November 26, 1997 and the related Letter of Transmittal and is being made to all holders of Shares. Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares tendered pursuant thereto, Purchaser will make a good faith effort to comply with such statute. If, after such good faith effort, Purchaser cannot comply with any such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed made on behalf of Purchaser by Bear, Stearns & Co. Inc. (the "Dealer Manager") or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash Up to 4,000,000 Shares of Common Stock of Shared Technologies Fairchild Inc. at $15.00 Net Per Share by Moonlight Acquisition Corp. a wholly owned subsidiary of Intermedia Communications Inc. Moonlight Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly owned subsidiary of Intermedia Communications Inc., a Delaware corporation ("Parent"), is offering to purchase up to 4,000,000 shares of Common Stock, $.004 par value per share (the "Shares"), of Shared Technologies Fairchild Inc., a Delaware corporation (the "Company"), at a price of $15.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated November 26, 1 997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). The Offer is not being made for, and tenders will not be accepted of shares of, Series D Preferred Stock, $.01 par value (the "Series D Preferred Stock") or Series J Redeemable Special Preferred Stock, $.01 par value (the "Special Preferred Stock"). Holders of Series D Preferred Stock who wish to participate in the Offer must exercise the ir rights to convert such shares of Series D Preferred Stock and tender the Shares issued upon such exercise prior to the expiration of the Offer. Following consummation of the Offer, Purchaser intends to effect the Merger (as defined below). - ------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED. - ------------------------------------------------------------------------------- The Board of Directors of the Company unanimously has determined that the Offer and the Merger are fair to, and in the best interests of, the Company and its stockholders, has approved and adopted the Merger Agreement (as defined below) and the transactions contemplated thereby, and recommends that the Company's stockholders accept the Offer and tender their Shares pursuant to the Offer. The Offer is subject to certain conditions. See Section 14 of the Offer to Purchase. The Offer is not subject to any minimum number of Shares being validly tendered and not withdrawn at the expiration of the Offer. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of November 20, 1997 (the "Merger Agreement"), among Parent, Purchaser and the Company. The Merger Agreement provides that following the Offer and subject to the satisfaction or waiver of certain conditions contained in the Merger Agreement, and in accordance with the relevant provisions of the General Corporation Law of the State of Delaware (the "DGCL"), Purchaser will be merged with and into the Company (the "Merger"). The Com pany will continue as the surviving corporation (the "Surviving Corporation") and as a wholly owned subsidiary of Parent following consummation of the Merger. At the effective time of the Merger, each Share issued and outstanding (other than Shares owned by Parent or Purchaser or any of their subsidiaries or held in the treasury of the Company or by stockholders, if any, who are entitled to and who properly exercise appraisal rights under the DGCL) will be converted into the right to receive $15.00 in cash , without interest. Additionally, at the effective time of the Merger, each issued and outstanding share of Series D Preferred Stock and Special Preferred Stock will be converted into the right to receive $15.00 and $109.44, respectively, in cash without interest. On the date hereof, Parent owns 1,134,500 Shares and 250,000 shares of Series I 6% Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock"), constituting approximately 6.6% of the outstanding Shares (or 21.0% on a fully diluted basis, assuming conversion of the Convertible Preferred Stock owned by Parent). Concurrently with execution of the Merger Agreement, Parent entered into a Stock Option Agreement (the "Stock Option Agreement") with certain stockholders (collectively, "Investors") wh o owned an aggregate of approximately 41.3% of the outstanding Shares (approximately 29.7% of the Shares on a fully diluted basis including the Convertible Preferred Stock now owned by Parent). Under the Stock Option Agreement, Parent has the option to purchase all Shares, options to acquire Shares and Series D Preferred Stock owned by the Investors at a price of $15.00 per Share and per share of Series D Preferred Stock and $15.00 minus the exercise price of the options for each of the options to purchase Shares. For purposes of the Offer, Purchaser shall be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not withdrawn as, if and when Purchaser gives oral or written notice to Continental Stock Transfer and Trust Company (the "Depositary") of Purchaser's acceptance of such Shares for payment. In all cases, payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockhol ders for the purpose of receiving payment from Purchaser and transmitting payment to tendering stockholders whose Shares have theretofore been accepted for payment. Payment for Shares accepted for payment pursuant to the Offer in all cases will be made only after timely receipt by the Depositary of (i) certificates for (or a book-entry transfer with respect to) such Shares, (ii) a Letter of Transmittal (or a manually signed facsimile thereof) properly completed and duly executed, with any required signatur e guarantees, or an Agent's Message (as defined in the Offer to Purchase), and (iii) all other documents required by the Letter of Transmittal. Under no circumstances will interest be paid by Purchaser on the purchase price of the Shares, regardless of any extension of the Offer or any delay in making such payment. If more than 4,000,000 Shares are validly tendered and not withdrawn prior to the Expiration Date, the Shares so tendered shall, upon the terms and subject to the conditions of the Offer, be accepted for payment on a pro rata basis (adjusted to avoid acceptance for payment of fractional Shares). Because of the difficulty in determining the precise number of Shares validly tendered, the Purchaser does not expect to be able to announce the final proration factor or to pay for any Shares until at least five b usiness days after the Expiration Date. However, the Purchaser will announce the preliminary proration factor as soon as practicable after the Expiration Date. The Purchaser will not pay for any Shares accepted for payment pursuant to the Offer until the final proration factor is known. The term "Expiration Date" means 12:00 midnight, New York City time, on Friday, December 26, 1997, unless and until Purchaser shall have extended the period during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. Subject to the limitations set forth in the Merger Agreement, Purchaser reserves the right (but will not be obligated), at any time or from time to time in its sole discretion, to e xtend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary and by making a public announcement of such extension. There can be no assurance that Purchaser will exercise its right to extend the Offer. Any such extension will be followed by a public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. If Purchaser extends the Offer, then without prejudice to the rights of Purchaser, tendered Shares may be retained by the Depositary on behalf of Purchaser and may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights, as set forth below. Except as otherwise provided below, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn at any time after January 24, 1998. For a withdrawal of tendered Shares to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at its addres s as set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, if different from the name of the person who tendered such Shares. If certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, the tendering stockholder must a lso submit the serial numbers shown on such certificates, and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in the Offer to Purchase), except in the case of Shares tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal with respect to such Shares must specify the name and number of the account at th e Book-Entry Transfer Facility (as defined in the Offer to Purchase) to be credited with the withdrawn Shares. Any Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer, but may be retendered at any subsequent time prior to the Expiration Date by following any of the procedures described in Section 3 of the Offer to Purchase. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by Purchaser, in its s ole discretion, whose determination shall be final and binding on all parties. The Offer to Purchase and the related Letter of Transmittal and certain other relevant materials will be mailed to record holders of Shares and furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. The information required to be disclosed by Rule 14d-6(e)(1)(vii) under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Offer to Purchase and Letter of Transmittal contain important information which should be read before any decision is made with respect to the Offer. No fees or commissions will be payable to brokers, dealers or other persons other than the Information Agent and the Dealer Manager for soliciting tenders of Shares pursuant to the Offer. Questions and requests for assistance may be directed to the Information Agent and the Dealer Manager at the telephone numbers and locations listed below. Copies of the Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other Offer documents may be obtained at Purchaser's expense from the Information Agent or from your broker, dealer, commercial bank or trust company. The Information Agent for the Offer is: [Georgeson Logo] Wall Street Plaza New York, New York 10005 Banks and Brokers call collect: (212) 440-9800 All Others Call Toll Free: (800) 223-2064 The Dealer Manager for the Offer is: Bear, Stearns & Co. Inc. 245 Park Avenue New York, New York 10167 Call Toll Free: (888) 517-7578 November 26, 1997 EX-99.A.7 8 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFIC EXHIBIT (a)(7) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. - -------------------------------------------------------------------------------
GIVE THE FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY NUMBER OF -- - -------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner (joint account) of the account or, if combined funds, any one of the individuals(1) 3. Husband and wife (joint The actual owner account) of the account or, if joint funds, either person(1) 4. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if account) the minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, guardian or committee for a or incompetent designated ward, minor, or person(3) incompetent person 7. a. The usual revocable sav- The grantor- ings trust account trustee(1) (grantor is also trustee) b. So-called trust account The actual that is not a legal or owner(1) valid trust under State law 8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
GIVE THE EMPLOYER FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF -- - ------------------------------------------------------------------------------ 9. A valid trust, estate, or pension trust Legal entity (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, charitable, or educational organization The organization account 12. Partnership account held in the name of the business The partnership 13. Association, club, or other tax-exempt organization The organization 14. A broker or registered nominee The broker or nominee 15. Account with the Department of Agriculture in the name The public of a public entity (such as a State or local government, entity school district, or prison) that receives agricultural program payments
- ------------------------------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and ap- ply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: . A corporation. . A financial institution. . An organization exempt from tax under section 501(a), or an individual re- tirement plan. . The United States or any agency or instrumentality thereof. . A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. . A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. . An international organization or any agency or instrumentality thereof. . A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. . A real estate investment trust. . A common trust fund operated by a bank under section 584(a) . An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). . An entity registered at all times under the Investment Company Act of 1940. . A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: . Payments to nonresident aliens subject to withholding under section 1441. . Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. . Payments of patronage dividends where the amount received is not paid in money. . Payments made by certain foreign organizations. . Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: . Payments of interest on obligations issued by indi- viduals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not pro- vided your correct taxpayer identification number to the payer. . Payments of tax-exempt interest (including exempt-interest dividends under section 852). . Payments described in section 6049(b)(5) to non-resident aliens. . Payments on tax-free covenant bonds under section 1451. . Payments made by certain foreign organizations. . Payments of mortgage interest to you. Exempt payees described above should file Form W-9 to avoid possible errone- ous backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE.-- Section 6109 requires most recipients of dividend, in- terest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are re- quired to file tax returns. Beginning January 1, 1993, payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Cer- tain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are sub- ject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to include any portion of an includable payment for interest, dividends, or pat- ronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 20% on any portion of an under- payment attributable to that failure unless there is clear and convincing evi- dence to the contrary. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or im- prisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-99.A.8 9 TEXT OF PRESS RELEASE DATED NOVEMBER 21, 1997 EXHIBIT (a)(8) NEWS RELEASE [LETTERHEAD OF INTERMEDIA COMMUNICATIONS] INTERMEDIA AND SHARED TECHNOLOGIES FAIRCHILD SIGN CASH MERGER AGREEMENT -------------------------------------------- TRANSACTION WOULD CREATE NATION'S SECOND LARGEST CLEC ------------------------------------------- EXPECTED TO CLOSE IN FIRST QUARTER 1998 Tampa, Florida and Wethersfield, Connecticut (November 21, 1997) - Intermedia Communications (Nasdaq/NM: ICIX) and Shared Technologies Fairchild, Inc. ("Shared Technologies") Nasdaq/NM:STCH) today announced that they have signed a definitive merger agreement pursuant to which holders of Shared Technologies' common stock would receive $15.00 per share in cash upon consummation of the merger. In connection with the merger agreement, Intermedia was granted irrevocable stock options to purchase stock from various holders of Shared Technologies' stock which, together with common stock purchased from another shareholder of Shared Technologies, gives Intermedia control over approximately 52.8% of the outstanding common stock of Shared Technologies, calculated on a fully diluted basis. "The business that the board and management of Shared has built is a valuable asset, one whose potential is on the verge of realization. I believe this transaction is very timely," commented David C. Ruberg, Intermedia's Chairman, President, and Chief Executive Officer. "Though the process over the last several days has at times been awkward, I have nothing but appreciation for the efforts of Jeffrey Steiner and Dan Borislow, who have worked diligently with us to find the best resolution for all parties involved. "The combination of these two well positioned telecommunications companies creates maximum value for our stockholders and greatly enhances Intermedia's position in this dynamic industry," said Anthony D. Autorino, Chairman and Chief Executive Officer of Shared Technologies Fairchild, Incoporated. --MORE-- ICIX and Shared Technologies Sign Cash Merger Agreement Page 2 November 21, 1997 As part of the agreement, Intermedia agreed to commence promptly a cash tender for 4 million additional shares of Shared Technologies at $15 per share. Intermedia also agreed to purchase all of Shared Technologies' Series 1 Convertible Preferred Stock from a subsidiary of Fairchild Incorporated for a cash price equal to approximately $63 million. These securities are convertible into approximately 4.2 million shares of Shared Technologies common stock. Intermedia also agreed to lend Shared Technologies approximately $22 million to be used by Shared Technologies to redeem, at its redemption price, its outstanding Special Preferred Stock, owned by a subsidiary of Fairchild Incorporated. The total implied enterprise value for the transaction is an estimated $640 million, including an equity value of approximately $366 million on a fully diluted basis. In connection with the proposed transaction, intermedia paid $237 million to Tel-Save Holdings, Inc. ("Tel-Save") including approximately $174 million for the purchase of the Shared Technologies 12 1/4% subordinated discount notes plus accrued interest which were owned by Tel-Save, to terminate the merger and related agreements between Tel-Save and Shared Technologies, to amend the long distance agreement between Tel-Save and Shared Technologies in various respects to, among other things, make it terminable without penalty by either party after February 28, 1998. In addition intermedia settled the litigation brought by intermedia against Shared Technologies, its directors and Tel-Save. The merger agreement is expected to be consummated during the first quarter of Intermedia's 1998 fiscal year. Consummation of the merger agreement is subject to various customary conditions, including approval by Shared Technologies's shareholders and receipt of necessary regulatory approvals. Intermedia Communications is one of the nation's fastest growing telecommunications companies, providing integrated telecommunications solutions to business and government customers. These solutions include voice and data, local and long distance, and advanced network access services in major U.S. markets. Intermedia's enhanced data portfolio, including frame relay networking, ATM, and a ful range of business internet connectivity and web hosting services, offers seamless end-to-end service virtually anywhere in the world. Intermedia is headquartered in Tampa with sales offices in over 40 cities. Intermedia is on the World Wide Web at http://www.intermedia.com. ------------------------- Headquartered in Wethersfield, Connecticut, Shared Technologies Fairchild Inc. is the nation's largest provider of shared telecommunications services and systems. Through its technical infrastructure and 800 employees, Shared Technologies Fairchild acts as a single point of contact for business telecommunications services at more than 465 buildings throughout the United States and Canada. -END- EX-99.A.9 10 TEXT OF PRESS RELEASE DATED NOVEMBER 26, 1997 EXHIBIT (a)(9) [ICI LOGO] NEWS RELEASE INTERMEDIA COMMUNICATIONS CONTACTS: Chris Brown Senior Vice President, 3625 Queen Palm Drive Investor Relations Tampa, Florida 33619 813/829-2408 (813) 829-0011 http://www.icix.com Fax: (813) 829-2913 INTERMEDIA COMMENCES CASH TENDER OFFER Tampa, Florida (November 26, 1997) - Intermedia Communications (Nasdaq/NM: ICIX) ("Intermedia") announced that Moonlight Acquisition Corp. (the "Purchaser"), a wholly owned subsidiary of Intermedia, today commenced its cash tender offer for up to 4,000,000 shares of common stock of Shared Technologies Fairchild Inc. (Nasdaq/NM: STCH), pursuant to the previously announced merger agreement with Shared Technologies Fairchild Inc. Under the tender offer, stockholders who tender their shares will be entitled to receive $15 in cash per share. The offer, proration and withdrawal rights will expire at 12:00 midnight, New York City time, on Friday, December 26, 1997, unless extended. Following completion of the tender offer, the Purchaser will be merged into Shared Technologies Fairchild Inc. and any remaining stockholders will receive $15 per share in cash. If more than 4,000,000 shares are validly tendered and not withdrawn prior to the expiration of the offer, the shares so tendered shall, upon the terms and subject to the conditions of the offer, be accepted on a pro rata basis (adjusted to avoid acceptance for payment of fractional shares). The offer is not being made for, and tender will not be accepted of, shares of Series D Preferred Stock of Shared Technologies Fairchild. Holders of Series D Preferred Stock who wish to participate in the offer must exercise their rights to convert such shares into shares of common stock of Shared Technologies Fairchild and tender such shares of common stock pursuant to the offer. -MORE- ICIX Commences Cash Tender Offer for 4,000,000 Shares of Shared Page 2 November 26, 1997 Bear, Stearns & Co. Inc. is the Dealer-Manager for the offer. Georgeson & Company Inc. is the Information Agent for the offer. Intermedia Communications is one of the nation's fastest growing telecommunications companies, providing integrated telecommunications solutions to business and government customers. These solutions include voice and data, local and long distance, and advanced network access services in major U.S. markets. Intermedia's enhanced data portfolio, including frame relay networking, ATM, and a full range of business internet connectivity and web hosting services, offers seamless end-to-end service virtually anywhere in the world. Intermedia is headquartered in Tampa with sales offices in over 40 cities. Intermedia is on the World Wide Web at http://www.intermedia.com. ------------------------- Headquartered in Wethersfield, Connecticut, Shared Technologies Fairchild Inc. is the nation's largest provider of shared telecommunications services and systems. Through its technical infrastructure and 800 employees, Shared Technologies Fairchild acts as a single point of contact for business telecommunications services at more than 465 buildings throughout the United States and Canada. -END- EX-99.C.1 11 AGREEMENT AND PLAN OF MERGER DATED 11/20/1997 EXHIBIT (c)(1) ================================================================================ PRIVILEGED AND CONFIDENTIAL --------------------------- AGREEMENT AND PLAN OF MERGER ---------------------------- Among INTERMEDIA COMMUNICATIONS INC., MOONLIGHT ACQUISITION CORP. and SHARED TECHNOLOGIES FAIRCHILD INC. Dated November 20, 1997 ================================================================================ TABLE OF CONTENTS -----------------
Page I. THE OFFER............................................................. 1 1.1. The Offer............................................................. 1 1.2. Company Action........................................................ 2 1.3. Voting of Shares Acquired by Purchaser................................ 4 II. THE MERGER............................................................ 4 2.1. Merger; Surviving Corporation......................................... 4 2.2. Certificate of Incorporation.......................................... 4 2.3. Bylaws................................................................ 5 2.4. Directors and Officers................................................ 5 2.5. Effective Time........................................................ 5 2.6. Conversion of Shares.................................................. 5 2.7. Purchaser Common Stock................................................ 7 2.8. Surrender of Shares................................................... 7 2.9. Company Stock Options and Warrants.................................... 9 2.10. Good Faith Deposit.................................................... 9 2.11. Termination of the Pledge Agreement................................... 9 III. REPRESENTATIONS AND WARRANTIES OF COMPANY............................. 9 3.1. Organization and Qualification........................................ 9 3.2. Capital Stock of Subsidiaries......................................... 10 3.3. Capitalization........................................................ 10 3.4. Authority Relative to This Agreement.................................. 11 3.5. No Violations, etc.................................................... 12 3.6. Commission Filings; Financial Statements.............................. 13 3.7. Absence of Changes or Events.......................................... 13 3.8. Proxy Statement....................................................... 14 3.9. Litigation............................................................ 14 3.10. Title to and Condition of Properties.................................. 14 3.11. Contracts and Commitments............................................. 15 3.12. Labor Matters......................................................... 15 3.13. Compliance with Law................................................... 15 3.14. Board Recommendation.................................................. 16 3.15. Patents and Trademarks................................................ 16 3.16. Taxes................................................................. 16 3.17. Employee Benefit Plans; ERISA......................................... 17 3.18. Environmental Matters................................................. 21 3.19. Disclosure............................................................ 22 3.20. Absence of Undisclosed Liabilities.................................... 22 3.21. Finders or Brokers.................................................... 22 3.22. State Antitakeover Statutes........................................... 22 3.23. Opinion of Financial Advisor.......................................... 23 3.24. Insurance............................................................. 23 3.25. Employment and Labor Contracts........................................ 23 3.26. Pending Transactions.................................................. 23 3.27. Indemnification Agreements............................................ 23 3.28. Indemnified Liabilities............................................... 24
i 3.29. Commercial Arrangements with Tel-Save Holdings, Inc............................................... 24 IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER........................................................ 24 4.1. Organization and Qualification....................................... 24 4.2. Authority Relative to This Agreement................................. 25 4.3. No Violations, etc................................................... 25 4.4. Proxy Statement...................................................... 26 4.5. Finders or Brokers................................................... 26 4.6. Offer Documents...................................................... 27 V. COVENANTS............................................................ 27 5.1. Conduct of Business of Company Pending the Merger........................................................... 27 5.2. Preparation of the Proxy Statement; Stockholders Meetings................................................ 30 5.3. Additional Agreements; Cooperation................................... 31 5.4. Publicity............................................................ 32 5.5. No Solicitation...................................................... 32 5.6. Access to Information................................................ 34 5.7. Notification of Certain Matters...................................... 34 5.8. Resignation of Directors............................................. 35 5.9. Indemnification...................................................... 35 5.10. Fees and Expenses.................................................... 36 5.11. Stockholder Litigation............................................... 36 VI. CONDITIONS........................................................... 36 6.1. Conditions to the Merger............................................. 36 6.2. Conditions to Obligations of Parent.................................. 37 6.3. Conditions to Obligations of Company................................. 37 VII. TERMINATION, AMENDMENT AND WAIVER.................................... 38 7.1. Termination.......................................................... 38 7.2. Effect of Termination................................................ 39 7.3. Termination Payment.................................................. 39 7.4 Proceeds of the Good Faith Deposit................................... 40 7.5 Amendment............................................................ 40 7.6 Waiver............................................................... 41 VIII. GENERAL PROVISIONS................................................... 41 8.1. Definitions.......................................................... 41 8.2. Non-Survival of Representations, Warranties and Agreements............................................ 44 8.3. Notices.............................................................. 44 8.4. Severability......................................................... 45 8.5. Miscellaneous........................................................ 46 8.6. Specific Performance................................................. 46 8.7. WAIVER OF JURY TRIAL................................................. 46
ii AGREEMENT AND PLAN OF MERGER ---------------------------- AGREEMENT AND PLAN OF MERGER (the "Agreement") being made and entered --------- into as of this 20/th/ day of November, 1997 by and among INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("Parent"), MOONLIGHT ACQUISITION ------ CORP., a Delaware corporation which is wholly owned by Parent ("Purchaser"), and --------- SHARED TECHNOLOGIES FAIRCHILD INC., a Delaware corporation ("Company"). ------- WHEREAS, the Boards of Directors of Parent, Purchaser and Company have each determined that it is in the best interests of their respective stockholders for Parent to acquire Company upon the terms and subject to the conditions set forth herein; and WHEREAS, in furtherance of such acquisition, it is proposed that Purchaser shall make a cash tender offer (the "Offer") to acquire 4,000,000 of ----- the issued and outstanding shares of Common Stock, par value $.004 per share, of Company ("Company Common Stock") (shares of Company Common Stock being -------------------- hereinafter collectively referred to as "Shares") for $15.00 per Share (such ------ amount being hereinafter referred to as the "Per Share Offer Amount") net to the ---------------------- seller in cash, upon the terms and subject to the conditions of this Agreement and the Offer; and WHEREAS, the Board of Directors of Company (the "Board") has ----- unanimously approved the making of the Offer and resolved and agreed to recommend that holders of Shares tender their Shares pursuant to the Offer; and WHEREAS, also in furtherance of such acquisition, the Boards of Directors of Parent, Purchaser and Company have each approved the merger (the "Merger") of Purchaser with and into Company in accordance with the General - ------- Corporation Law of the State of Delaware (the "GCL") and upon the terms and --- subject to the conditions set forth herein. NOW, THEREFORE, the parties hereto agree as follows: I. THE OFFER --------- 1.1. The Offer. (a) Provided that this Agreement shall not have --------- been terminated in accordance with Section 7.1 and none of the events set forth in Annex A hereto shall have occurred or be existing, Purchaser shall commence the Offer as promptly as reasonably practicable after the date hereof, but in no event later than five business days after the initial public announcement of Purchaser's intention to commence the Offer. The Offer shall, unless extended as provided below, expire 20 business days after the commencement of the Offer. The obligation of Purchaser to accept for payment and pay for Shares tendered pursuant to the Offer shall be subject to the satisfaction of the conditions set forth in Annex A hereto. The number of Shares that Purchaser will accept in the Offer shall be 4,000,000 Shares. Purchaser expressly reserves the right to waive any such condition, to increase the price per Share payable in the Offer, to increase the maximum number of Shares to be purchased in the Offer and to make any other changes in the terms and conditions of the Offer; provided, however, that, without the consent of -------- ------- Company, no change may be made which decreases the price per Share payable in the Offer, which reduces the maximum number of Shares to be purchased in the Offer or which imposes conditions to the Offer in addition to those set forth in Annex A hereto or modifies such conditions, or which changes the form of consideration payable in the Offer. The Per Share Offer Amount shall, subject to applicable withholding of taxes, be net to the seller in cash, upon the terms and subject to the conditions of the Offer. Subject to the terms and conditions of the Offer, Purchaser shall pay, as promptly as practicable after expiration of the Offer, for all Shares validly tendered and not withdrawn. The Offer may not be extended for more than 20 days beyond its original scheduled expiration date unless any of the conditions to the Offer shall not have been satisfied, in which case the Offer shall remain open until such time as all of the conditions to the Offer have been satisfied; provided, however, in no event will Purchaser -------- ------- be required to extend the Offer beyond February 28, 1998. (b) As soon as reasonably practicable on the date of commencement of the Offer, Purchaser shall file with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments --- and supplements thereto, the "Schedule 14D-1") with respect to the Offer. The -------------- Schedule 14D-1 shall contain or shall incorporate by reference an offer to purchase (the "Offer to Purchase") and forms of the related letter of ----------------- transmittal and any related summary advertisement (the Schedule 14D-1, the Offer to Purchase and such other documents, together with all supplements and amendments thereto, being referred to herein collectively as the "Offer ----- Documents"). Company and its counsel shall be given an opportunity to review - --------- the Offer Documents prior to their filing with the SEC. Parent, Purchaser and Company agree to correct promptly any information provided by any of them for use in the Offer Documents which shall have become false or misleading, and Parent and Purchaser further agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer Documents as so corrected to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. 1.2. Company Action. (a) Company hereby approves of and consents to -------------- the Offer and represents that (i) the Board, at a meeting duly called and held on November 20, 1997, has unanimously (A) determined that this Agreement and the 2 transactions contemplated hereby, including each of the Offer and the Merger, are fair to and in the best interests of the holders of Shares, (B) approved and adopted this Agreement and the transactions contemplated hereby and (C) recommended that the stockholders of Company accept the Offer and approve and adopt this Agreement and the transactions contemplated hereby, and (ii) Credit Suisse First Boston Corporation ("First Boston") has rendered to the Board its ------------ opinion that the consideration to be received by the holders of Shares pursuant to each of the Offer and the Merger is fair to the holders of Shares from a financial point of view, subject to the assumptions and qualifications contained in such opinion, and which shall be confirmed promptly in writing. Company hereby consents to the inclusion in the Offer Documents of the recommendation of the Board described in the immediately preceding sentence. Assuming that neither Parent nor Purchaser are Interested Stockholders (as such term is defined in Section 203 of the GCL) immediately prior to the Board taking the action described in this Section 1.2, the approval set forth in clause (a)(i) shall, among other things, satisfy the restrictions on business combinations contained in Section 203 of the GCL with respect to the transactions contemplated hereby. Company has been advised by each of its directors and executive officers that they intend to vote all Shares beneficially owned by them in favor of the approval and adoption by the stockholders of Company of this Agreement and the transactions contemplated hereby. (b) As soon as reasonably practicable on or after the date of commencement of the Offer, Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the "Schedule 14D-9") containing the -------------- recommendation of the Board described in Section 1.2(a) and shall disseminate the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other ------------ applicable federal securities laws. Company, Parent and Purchaser agree to correct promptly any information provided by any of them for use in the Schedule 14D-9 which shall have become false or misleading, and Company further agrees to take all steps reasonably necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. (c) Company shall promptly furnish Purchaser with mailing labels containing the names and addresses of all record holders of Shares and with security position listings of Shares held in stock depositories, each as of a recent date, together with all other available listings and computer files containing names, addresses and security position listings of record holders and beneficial owners of Shares. Company shall furnish Purchaser with such additional information, including, without limitation, 3 updated listings and computer files of stockholders, mailing labels and security position listings, and such other assistance as Parent, Purchaser or their agents may reasonably request. Subject to the requirements of applicable law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer or the Merger, Parent and Purchaser shall hold in confidence the information contained in such labels, listings and files, shall use such information only in connection with the Offer and the Merger, and, if this Agreement shall be terminated in accordance with Section 7.1, shall deliver to Company all copies of such information then in their or their agents' possession. 1.3. Voting of Shares Acquired by Purchaser. During the period -------------------------------------- beginning on the date on which the Offer is consummated and ending on the later of (a) the date on which this Agreement is terminated, and (b) the date on which Purchaser receives any regulatory approvals necessary to consummate the Merger (as more fully described in Section 6.2(c)), Purchaser hereby agrees to exercise its voting rights in respect of any Shares it owns for the election of directors to the Board in the same proportion as the voting rights of any Shares not owned by Purchaser have been exercised. II. THE MERGER ---------- 2.1. Merger; Surviving Corporation. In accordance with the ----------------------------- provisions of this Agreement and the GCL, at the Effective Time (as such term is defined in Section 2.5; other capitalized terms used herein without definition are defined in Section 8.1), Purchaser shall be merged with and into Company, and Company shall be the surviving corporation (hereinafter sometimes called the "Surviving Corporation") and shall continue its corporate existence under the --------------------- laws of the State of Delaware. At the Effective Time the separate corporate existence of Purchaser shall cease. All properties, franchises and rights belonging to Company and Purchaser, by virtue of the Merger and without further act or deed, shall be deemed to be vested in the Surviving Corporation, which shall thenceforth be responsible for all the liabilities and obligations of each of Purchaser and Company. 2.2. Certificate of Incorporation. At the Effective Time, the ---------------------------- Certificate of Incorporation of Company shall be the Certificate of Incorporation of the Surviving Corporation; provided, however, that, at the -------- ------- Effective Time, the Certificate of Incorporation of the Surviving Corporation shall be amended in its entirety so that it will read as Purchaser's Certificate of Incorporation, except that the name of the Surviving Corporation shall be "SHARED TECHNOLOGIES FAIRCHILD INC.". As so amended, the Certificate of Incorporation of Company as in effect immediately prior to the Effective Time shall thereafter continue 4 in full force and effect as the Certificate of Incorporation of the Surviving Corporation until further altered or amended as provided therein or by law. 2.3. Bylaws. The Bylaws of Purchaser in effect immediately prior to ------ the Effective Time shall be the Bylaws of the Surviving Corporation until altered, amended or repealed as provided therein and in the Certificate of Incorporation of the Surviving Corporation. 2.4. Directors and Officers. The Directors of Purchaser prior to the ---------------------- Effective Time shall be the directors of the Surviving Corporation. The officers of Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation. Each of such directors and officers shall hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation. 2.5. Effective Time. The Merger shall become effective at the time -------------- of filing of a certificate of merger with the Secretary of State of the State of Delaware in accordance with the provisions of Sections 251 or 253, as the case may be, of the GCL (the "Certificate of Merger"), or at a later time specified --------------------- as the effective time in the Certificate of Merger, which Certificate of Merger shall be so filed as soon as practicable after the meeting of stockholders contemplated in Section 5.2 and the satisfaction or, if permissible, waiver of the conditions set forth in Article VI. The date and time when the Merger shall become effective are referred to herein as the "Effective Time." -------------- Contemporaneously with such filing, a closing shall be held at the offices of Kronish, Lieb, Weiner & Hellman LLP, 1114 Avenue of the Americas, New York, New York 10036, or such other place as shall be agreed to by the parties, for the purpose of confirming the satisfaction or waiver, as the case may be, of the conditions set forth in Article VI. 2.6. Conversion of Shares. (a) Each issued and outstanding share of -------------------- Company Common Stock immediately prior to the Effective Time (other than shares of Company Common Stock to be cancelled as set forth in Section 2.6(b) and 2.6(c)) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into, exchanged for and represent the right to receive an amount equal to $15.00 per Share (the "Per Share Amount") in cash ---------------- (the "Shares Consideration"), payable, without interest, to the holder of such -------------------- Share, upon surrender, in the manner described below, of the certificate that formerly evidenced such Share. (b) Each Share and Preferred Share (as defined below) issued and outstanding immediately prior to the Effective Time which is then owned beneficially or of record by Parent or any Subsidiary of Parent shall, by virtue of the Merger and without 5 any action on the part of the holder thereof, be cancelled and retired and cease to exist, without any conversion thereof. (c) Each Share and Preferred Share (as defined below) held in Company's treasury immediately prior to the Effective Time shall, by virtue of the Merger, be cancelled and retired and cease to exist, without any conversion thereof. (d) Each issued and outstanding share of Series D Preferred Stock, par value $.01 per share (the "Series D Stock"), Series I 6% Cumulative -------------- Convertible Preferred Stock, par value $.01 per share (the "Convertible ----------- Preferred Stock"), and Series J Special Preferred Stock, par value $.01 per - --------------- share (the "Special Preferred Stock"), of Company (all such shares of Preferred ----------------------- Stock being hereafter collectively referred to as the "Preferred Shares") ---------------- immediately prior to the Effective Time (other than the Preferred Shares to be cancelled as set forth in Section 2.6(b) and 2.6(c)) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into, exchanged for and represent the right to receive an amount equal to $15.00 per share of the Series D Stock, $251.21 per share of the Convertible Preferred Stock and $109.44 per share of the Special Preferred Stock (all such amounts collectively, the "Preferred Per Share Amount") in cash (the "Preferred Shares -------------------------- ---------------- Consideration"; the Shares Consideration and the Preferred Shares Consideration - ------------- collectively, the "Merger Consideration"), payable, without interest, to the -------------------- holder of such Preferred Share, upon surrender in the manner described above of the certificate that formerly evidenced such Preferred Share. (e) Notwithstanding anything in this Section 2.6 to the contrary, Shares which are issued and outstanding immediately prior to the Effective Time and which are held by any stockholder of Company who has not voted such shares in favor of the Merger and who shall have properly exercised its rights of appraisal for such shares in the manner provided by the GCL (the "Dissenting ---------- Shares") shall not be converted into or be exchangeable for the right to receive - ------ the Merger Consideration, unless and until such holder shall have failed to perfect or shall have effectively withdrawn or lost his right to appraisal and payment, as the case may be. If such holder shall have so failed to perfect or shall have effectively withdrawn or lost such right, his shares shall thereupon be deemed to have been converted into and to have become exchangeable for, at the Effective Time, the right to receive the Merger Consideration, without any interest thereon. Company shall give Parent prompt notice of any Dissenting Shares (and shall also give Parent prompt notice of any withdrawals of such demands for appraisal rights) and Parent shall have the right to direct all negotiations and proceedings with respect to any such demands. Neither Company nor the Surviving Corporation shall, except with the prior written consent of Parent, voluntarily make any payment with respect to, or settle or offer 6 to settle, any such demand for appraisal rights. Stockholders of Company who shall have perfected their right of appraisal and not withdrawn or otherwise lost such right of appraisal, shall be entitled to receive payment of the appraised value of the shares of Company Common Stock held by them in accordance with the provisions of Section 262 of the GCL. 2.7. Purchaser Common Stock. Each share of common stock of Purchaser ---------------------- issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of Purchaser or the holder thereof, be converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation. From and after the Effective Time, each outstanding certificate theretofore representing shares of Purchaser common stock shall be deemed for all purposes to evidence ownership of and to represent the number of shares of Surviving Corporation common stock into which such shares of Purchaser common stock shall have been converted. Promptly after the Effective Time, the Surviving Corporation shall issue to Parent a stock certificate or certificates representing 100 shares of Surviving Corporation common stock in exchange for the certificate or certificates that formerly represented shares of Purchaser common stock, which shall be surrendered by Parent and cancelled. 2.8. Surrender of Shares. (a) Prior to the Effective Time, Parent ------------------- shall make available, by transferring to the Exchange Agent for the benefit of the stockholders of Company, such amount of cash as shall be payable in exchange for outstanding Shares or Preferred Shares pursuant to Section 2.6 hereof. Such funds shall be invested by the Exchange Agent as directed by Parent, provided -------- that such investments shall be in obligations of or guaranteed by the United States of America or of any agency thereof and backed by the full faith and credit of the United States of America, or in deposit accounts, certificates of deposit or banker's acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar time deposits purchased from, commercial banks with capital, surplus and undivided profits aggregating in excess of $50 million (based on the most recent financial statements of such bank which are then publicly available at the SEC or otherwise). (b) As soon as practicable after the Effective Time, the Exchange Agent shall mail to each holder of record (other than to holders of Shares or Preferred Shares to be cancelled as set forth in Section 2.6(b) or 2.6(c) or Dissenting Shares) of a certificate or certificates that immediately prior to the Effective Time represented outstanding Shares or Preferred Shares (the "Certificates") (i) a form letter of transmittal (which shall be in customary - ------------- - form and shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the 7 Exchange Agent) and (ii) instructions for effecting the surrender of the -- Certificates in exchange for the Merger Consideration. (c) Upon surrender of a Certificate for cancellation to the Exchange Agent, together with such letter of transmittal, duly executed, and such other agreements as the Exchange Agent shall reasonably request, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration, and the Certificate so surrendered shall forthwith be cancelled. Until surrendered as contemplated by this Section 2.8, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration with respect to the Shares or Preferred Shares formerly represented thereby. No interest shall accrue or be paid on the Merger Consideration payable upon the surrender of any Certificate. (d) Any amounts of cash delivered or made available to the Exchange Agent pursuant to this Section 2.8 and not exchanged for Certificates within six months after the Effective Time pursuant to this Section 2.8 shall be returned by the Exchange Agent to Parent, which thereafter shall act as Exchange Agent subject to the rights of holders of unsurrendered Certificates under this Article II. Thereafter such holders shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat and other similar laws) only as general creditors thereof with respect to any Merger Consideration that may be payable upon due surrender of the Certificates held by them. Notwithstanding the foregoing, neither the Surviving Corporation nor the Exchange Agent shall be liable to any holder of Shares or Preferred Shares for any Merger Consideration delivered in respect of such Share or Preferred Share to a public official pursuant to any abandoned property, escheat or other similar law. (e) If any payment of the Merger Consideration is to be made to a person other than that in which the Certificate surrendered is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer and that the person requesting such payment shall pay any transfer or other taxes re quired by reason of the payment to a person other than the registered holder of the Certificate surrendered or establish to the satisfaction of the Surviving Corporation that such tax has been paid or is not applicable. (f) After the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the Shares or Preferred Shares which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates representing such shares are presented to the Surviving Corporation, they shall be 8 cancelled and exchanged for the Merger Consideration as provided in this Article II. 2.9. Company Stock Options and Warrants. Prior to the Effective ---------------------------------- Time, Company shall take all actions necessary (and Parent and Purchaser consent to the taking of such actions) so that all options and warrants outstanding immediately prior to the Effective Time under any option plan or warrant including, without limitation, the 1994 Director's Option Plan (with respect to which the term of office of each director shall be deemed to have been terminated on May 1, 1998), the 1996 Equity Incentive Plan and Shared Technologies, Inc.'s 1987 Stock Option Plan (all such warrants and options collectively, the "Company Stock Option Plans") shall be cancelled and -------------------------- terminated at the Effective Time and that each holder of such options and warrants shall receive in the Merger a cash payment equal to the difference between (A) the Per Share Amount times the number of Shares subject to such outstanding options or warrants (to the extent then exercisable at prices not in excess of the Per Share Amount) and (B) the aggregate exercise price of all such outstanding options and warrants. From and after the date hereof, no additional options or warrants shall be granted under the Company Stock Option Plans. 2.10. Good Faith Deposit. Concurrently with the execution and ------------------ delivery of this Agreement, Purchaser shall pay to Company $26,250,000 (the "Good Faith Deposit"). The proceeds of the Good Faith Deposit shall be - ------------------- disbursed in accordance with Section 7.4. 2.11. Termination of the Pledge Agreement. If the Merger is ----------------------------------- consummated, then Parent and Purchaser shall terminate the Pledge Agreement, and the Pledge Agent shall return to RHI any collateral which has been pledged pursuant to the Pledge Agreement. III. REPRESENTATIONS AND WARRANTIES OF COMPANY ----------------------------------------- Company hereby makes the following representations and warranties to Parent and Purchaser, which representations and warranties (except for those contained in Sections 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23 and 3.29) shall be deemed to have been made on July 16, 1997: 3.1. Organization and Qualification. Each of Company 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 Company and its subsidiaries is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the 9 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 Company and its subsidiaries taken as a whole (a "Company Material Adverse Effect"). Section 3.1 of the ------------------------------- Disclosure Statement sets forth, with respect to Company and each of its subsidiaries, the jurisdictions in which they are qualified or otherwise licensed as a foreign corporation to do business. Neither Company nor any of its subsidiaries is in violation of any of the provisions of its Certificate of Incorporation (or other applicable charter document) or Bylaws. Company has delivered to Parent accurate and complete copies of the Certificate of Incorporation (or other applicable charter document) and Bylaws, as currently in effect, of each of Company and its subsidiaries. 3.2. Capital Stock of Subsidiaries. The only direct or indirect ----------------------------- subsidiaries of Company are those listed in Section 3.2 of the Disclosure Statement previously delivered by Company to Parent (the "Disclosure ---------- Statement"). Company 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 3.2 of the Disclosure Statement) of all 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 3.2 of the Disclosure Statement, all of such shares so owned by Company 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 3.2 of the Disclosure Statement, Company does not directly or indirectly own any interest in any corporation, partnership, joint venture or other business association or entity. 3.3. Capitalization. The authorized capital stock of Company -------------- consists of 50,000,000 shares of Company Common Stock, and 25,000,000 shares of preferred stock, $.01 par value per share, of which 1,000,000 shares have been designated Series D Stock, 250,000 shares have been designated Convertible Preferred Stock, and 200,000 shares have been designated Special Preferred Stock. As of the close of business on November 20, 1997, 10 17,187,605 shares of Company Common 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 November 20, 1997, (x) 2,051,364 shares of Company Common Stock were reserved for issuance upon exercise of outstanding options and 4,244,740 shares of Company Common Stock were reserved for issuance upon exercise of outstanding convertible preferred securities and (y) 1,873,550 shares of Company Common Stock were reserved for issuance upon exercise of the warrants, all of which warrants, options and Company Stock Option Plans are listed and described in Section 3.3 of the Disclosure Statement. Other than the Company Stock Option Plans and the warrants, Company has no other plan which provides for the grant of options or warrants 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 Company 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 pursuant to Company's 401(k) Plan, there will not be, any shares of capital stock of Company 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 Company to issue, transfer or sell any of its securities. Company has paid all dividends payable through November 28, 1997 in respect of each of the Series D Preferred Stock and the Convertible Preferred Stock. 3.4. Authority Relative to This Agreement. Company is a corporation ------------------------------------ duly organized, validly existing and in good standing under the laws of Delaware. Company has full corporate power and authority to execute and deliver this Agreement and to consummate the Merger and other transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the consummation of the Merger and other transactions contemplated hereby and thereby have been duly and validly authorized by the Board of Directors of Company and no other corporate proceedings on the part of Company are necessary to authorize this Agreement or to consummate the Merger or other transactions contemplated hereby or thereby (other than, with respect to the Merger, the approval of Company's stockholders pursuant to Section 251(c) of the GCL). This Agreement has been duly and validly executed and delivered by Company and, assuming the due authorization, execution and delivery hereof by Parent and Purchaser, constitutes a valid and binding agreement of Company, enforceable against Company 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. 11 3.5. 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 3.5(b) hereof, except as listed in Section 3.5 of the Disclosure Statement, neither the execution and delivery of this Agreement by Company nor the consummation of the Merger or other transactions contemplated hereby or thereby nor compliance by Company with any of the provisions hereof will (i) violate, conflict with, or result in a breach of any provisions 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 Company or any of its subsidiaries under, any of the terms, conditions or provisions of (x) their respective charters or bylaws, (y) except as set forth in Section 3.5 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 Company 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 Company 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, securities interests, charges or encumbrances which would not, individually or in the aggregate, either have a Company Material Adverse Effect or materially impair Company'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 (including, without limitation, any federal, state or local regulatory authority or agency) is required by Company in connection with the execution and delivery of this Agreement or the consummation by Company of the Merger or other transactions contemplated hereby or thereby, 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 Company's stockholders pursuant to the GCL, (iv) filings with applicable state public utility commissions identified in Section 2.5 of the Disclosure Statement, (v) filings with the SEC and (vi) such other filings, registrations, notifications, permits, authorizations, consents or approvals the failure of which to be 12 obtained, made or given would not, individually or in the aggregate, either have a Company Material Adverse Effect or materially impair Company's ability to consummate the Merger or other transactions contemplated hereby or thereby. (c) Company and its subsidiaries are not in violation of or default under, except as set forth in Section 3.5 of the Disclosure Statement, (x) any note, bond, mortgage, indenture or deed of trust, or (y) and license, lease, agreement or other instrument or obligation to which Company 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 (x) and (y) above, for such violations or defaults which would not, individually or in the aggregate, either have a Company Material Adverse Effect or materially impair Company's ability to consummate the Merger or other transactions contemplated hereby. It is understood that Company has certain covenants in its bank facilities which Company from time to time may violate and that such violations shall not be deemed a breach so long as Company promptly seeks, and in a reasonable period time obtains, waivers of such violations from the lenders under such facilities (unless such lenders have accelerated the indebtedness under such facilities). 3.6. Commission Filings; Financial Statements. Company has filed all ---------------------------------------- forms, reports, schedules, statements and other documents required to be filed by it since December 31, 1994 (as supplemented and amended since the time of filing collectively, the "SEC Reports") with the SEC, each 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 Exchange Act. The audited -------------- consolidated financial statements and unaudited consolidated interim financial statements of Company 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 present fairly, in all material respects, the financial position and results of operations and cash flows of Company and its subsidiaries on a consolidated basis at the respective dates and for the respective periods indicated (and in the case of all such financial statements that are interim financial statements, contain all adjustments so to present fairly). None of the SEC Reports contained at the time filed any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 3.7. Absence of Changes or Events. Except as set forth in Section 3.7 ---------------------------- of the Disclosure Statement and in Company's Form 13 10-K for the fiscal year ended December 31, 1996, as filed with the SEC, since December 31, 1996, Company and its subsidiaries have not incurred any material liability, except in the ordinary course of their businesses consistent with their past practices, and there has not been any change, or any event involving a prospective change, in the business, financial condition or results of operations of Company or any of its subsidiaries which has had, or is reasonably likely to have, a Company Material Adverse Effect and Company and its subsidiaries have conducted their respective businesses in the ordinary course consistent with their past practices. 3.8. Proxy Statement. None of the information supplied or to be --------------- supplied by or on behalf of Company for inclusion or incorporation by reference in the proxy statement, in definitive form, relating to Company Stockholder Meeting (as hereinafter defined), or in the related proxy and notice of meeting, or soliciting material used in connection therewith (referred to herein collectively as the "Proxy Statement") will, at the dates mailed to stockholders --------------- and at the time of Company Stockholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Proxy Statement (except for information relating solely to Parent and Purchaser) will comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. 3.9. Litigation. Except as set forth in Section 3.9 of the Disclosure ---------- Statement, there is no (i) claim, action, suit or proceeding pending or, to the best knowledge of Company or any of its subsidiaries, threatened against or relating to Company 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 Company, any subsidiary of Company 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 Company Material Adverse Effect or materially impair Company's ability to consummate the Merger. 3.10. Title to and Condition of Properties. Except as set forth in ------------------------------------ Section 3.10 of the Disclosure Statement, Company 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 Company's and its subsidiaries' December 31, 1996 audited consolidated balance sheet contained in Company's Form 10-K for the fiscal year ended December 31, 1996 filed with the SEC except for property since 14 sold or otherwise disposed of in the ordinary course of business and consistent with past practice. 3.11. Contracts and Commitments. Other than as disclosed in Section ------------------------- 3.11 of the Disclosure Statement, no existing material contract or material commitment of Company or any of its subsidiaries, or as to which any thereof is a party or their respective assets are bound, contains an agreement with respect to any change of control that would be triggered by the Merger. Other than as set forth in Section 3.11 of the Disclosure Statement, neither this Agreement, the Merger nor the other transactions contemplated hereby will result in any outstanding loans or borrowings by Company or any subsidiary of Company becoming due, going into default or giving the lenders or other holders of debt instruments the right to require Company or any of its subsidiaries to repay all or a portion of such loans or borrowings; provided that it is expressly understood and agreed that Company is not making any representations or warranties with respect to the effect of the financial condition or results of operation of Parent and Purchaser. 3.12. Labor Matters. Each of Company 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 Company 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 Company, any labor strike or stoppage threatened) against or affecting Company 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 Company or any of its subsidiaries who are not currently organized. 3.13. Compliance with Law. Except for matters set forth in Section ------------------- 3.13 of the Disclosure Statement, neither Company 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 Company Material Adverse Effect; the conduct of the business of Company 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 non- conformities would not, individually or in the aggregate, have a Company Material Adverse Effect. Company 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, 15 licenses and franchises the absence of which would not, individually or in the aggregate, have a Company Material Adverse Effect. 3.14. Board Recommendation. The Board of Directors of Company has, by -------------------- a majority vote at a meeting of such Board duly held on November 20, 1997, approved and adopted this Agreement, the Merger and the other transactions contemplated hereby, determined that the Merger is fair to the stockholders of Company and recommended that the stockholders of Company approve and adopt this Agreement, the Merger and the other transactions contemplated hereby. 3.15. Patents and Trademarks. Company 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 Company Material Adverse Effect. 3.16. 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 3.16 of the Disclosure Statement: (i) Company 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 Company and/or its subsidiaries; (ii) all material Taxes of Company 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 Company and its subsidiaries have either been paid or are being contested in good faith by appropriate proceedings; (iv) to the best knowledge of Company, no deficiency has been asserted or assessed against Company or any of its subsidiaries, and no examination of Company 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 16 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) Company 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 Company or any of its subsidiaries for any period ending after the Effective Date; (viii) Company and its subsidiaries have made timely payments of the Taxes required to be deducted and withheld from the wages paid to their employees; and (ix) Company and its subsidiaries are not parties to any tax sharing or tax matters agreement other than the tax sharing agreement dated March 13, 1996 by and among TFC, RHI and Company. 3.17. Employee Benefit Plans; ERISA. Except as set forth in ----------------------------- Section 3.17 of the Disclosure Statement: (a) 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"), maintained or contributed to by Company or any of its subsidiaries, ----- or with respect to which Company or any of its subsidiaries contributes or is obligated to make payments thereunder or otherwise may have any liability ("Pension Benefits Plans"). - ------------------------ (b) Company has furnished Purchaser with a true and complete schedule of all "welfare benefit plans" (as defined in Section 3(1) of ERISA), maintained or contributed to by Company or any of its subsidiaries or with respect to which Company or any of its subsidiaries otherwise may have any liability ("Welfare ------- Plans"), all multiemployer plans as defined in Section 3(37) of ERISA covering - ----- employees employed in the United States to which Company or any of its subsidiaries is required to make contributions or otherwise may have any liability, all stock bonus, stock option, restricted stock, stock appreciation right, stock purchase, bonus, incentive, deferred compensation, severance and vacation or other employee benefit plans, programs or arrangements that are not Pension Benefit Plans or Welfare Plans maintained or contributed to by Company or a subsidiary or with respect to which Company or any subsidiary otherwise may have any liability ("Other Plans"). ----------- (c) Company and each of its subsidiaries, and each of the Pension Benefit Plans, Welfare Plans and Other Plans (collectively, the "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 Company Material Adverse Effect. (d) All contributions to, and payments from, the Plans which are required to have been made in accordance with the Plans and, when applicable, Section 302 of ERISA or Section 412 of the 17 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 Company 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 Company or any ERISA Affiliate 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 Company 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 Company or a subsidiary of Company 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 in all material respects with all pertinent provisions of the Code and Treasury Regulations thereunder. (g) Except as disclosed in Company's Form 10-K for the fiscal year ended December 31, 1996, there are (i) no investigations, audits or examinations pending, or to the best knowledge of Company, threatened by any governmental entity involving any of the Plans, (ii) no termination proceedings involving the Plans and (iii) no pending or, to the best of Company's knowledge, threatened claims (other than routine claims for benefits), suits or proceedings against any Plan, against the assets of any of the trusts under any Plan or against any fiduciary of any Plan with respect to the operation of such plan or asserting any rights or claims to benefits under any 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 (g), give 18 rise to any liability which would, individually or in the aggregate, have a Company Material Adverse Effect, nor, to the best of Company's knowledge, are there any facts which would give rise to any liability which would, individually or in the aggregate, have a Company Material Adverse Effect in the event of any such investigation, audit, examination, claim, suit or proceeding. (h) None of Company, 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" (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which presents a material risk of resulting in a tax or penalty on Company 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 Company 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 Company 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 Company Material Adverse Effect. (j) Neither Company nor any ERISA Affiliate of Company 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 Company 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 Company, 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 (a "Multiemployer Plan"), covering employees employed in ------------------ the United States. (l) With respect to each of the Plans, true, correct and complete copies of the following documents have been made 19 available to Parent (i) the current plans and related trust documents, including amendments thereto, (ii) any current summary plan descriptions, (iii) the most recent Forms 5500 (if any) filed with respect to each such Plan, (iv) the three most recent financial statements and actuarial reports, if applicable (v) the most recent IRS determination letter, if applicable, (vi) if any application for an IRS determination letter is pending, copies of all such applications for determination including attachments, exhibits and schedules thereto, (vii) all material agreements (including settlement agreements or other similar agreements relating to any Plan); and (viii) all material correspondence between Company and any of its subsidiaries and the IRS, PBGC, Department of Labor or any other governmental entity relating to any of the Plans. (m) Neither Company, any of its subsidiaries, any organization to which Company 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 described in Section 4069(a) of ERISA, the liability for which would, individually or in the aggregate, have a Company Material Adverse Effect. (n) Except as disclosed in Section 2.17 of the Disclosure Statement, none of the Welfare Plans maintained by Company 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 where the full expense of such coverage or benefits is paid by the participant or the participant's beneficiary. Company 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 Company Material Adverse Effect. (o) No liability under any Plan has been funded nor has any such obligation been satisfied with the purchase of a contract from an insurance company as to which Company or any of its subsidiaries has received notice that such insurance company is in rehabilitation. (p) The consummation of the transactions contemplated by this Agreement will not either alone or in connection with an employee's termination of employment or other event result in an increase in the amount of compensation or benefits or accelerate the vesting or timing of payment of any benefits or compensation 20 payable to or in respect of any employee of Company or any of its subsidiaries. 3.18. Environmental Matters. Except as set forth in Section 3.18 of --------------------- the Disclosure Statement and except for such matters as would not, individually or in the aggregate, have a Company Material Adverse Effect: (a) Company and its subsidiaries have obtained all Environmental Permits and all licenses and other authorizations and have made all registrations and given all notifications that are required under any applicable Environmental Law. (b) Except as set forth in Section 3.18 of the Disclosure Statement, there is no Environmental Claim pending against Company and its subsidiaries under an Environmental Law. (c) Except as set forth in Section 3.18 of the Disclosure Statement, Company and its subsidiaries are in compliance with all terms and conditions of their Environmental Permits, and are in compliance with all applicable Environmental Laws. (d) Except as set forth in Section 3.18 of the Disclosure Statement, Company and its subsidiaries did not generate, treat, store, transport, discharge, dispose of or release any Hazardous Materials on or from any property now or previously owned, leased or used by Company and its subsidiaries. (e) For purposes of Section 3.18(a): (i) "Environment" shall mean any surface water, ground water, or drinking water supply, land surface or subsurface strata, or ambient air and includes, without limitation, any indoor location; (ii) "Environmental Claim" means any written notice or written 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; (iii) "Environmental Laws" means any federal, state, and local laws, codes, and regulations as now or previously in effect relating to pollution, the protection of human health, the protection of the Environment or the emission, 21 discharge, disposal or other release or threatened release of Hazardous Materials in or into the Environment; (iv) "Environmental Permit" shall mean a permit, identification number, license or other written authorization required under any applicable Environmental Law; and (v) "Hazardous Materials" shall mean all pollutants, contaminants, or chemical, hazardous or toxic materials, substances, constituents or wastes, including, without limitation, asbestos or asbestos-containing materials, polychlorinated biphenyls and petroleum, oil, or petroleum or oil derivatives or constituents, including, without limitation, crude oil or any fraction thereof. 3.19. Disclosure. All of the facts and circumstances not required to ---------- be disclosed as exceptions under or to any of the foregoing representations and warranties made by Company, in this Article III by reason of any minimum disclosure requirement in any such representation and warranty would not, in the aggregate, have a Company Material Adverse Effect. 3.20. Absence of Undisclosed Liabilities. Except as set forth in ---------------------------------- Section 3.20 of the Disclosure Statement, neither Company 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 personality or realty or unusual or extraordinary commitments, except the liabilities recorded on Company's consolidated balance sheet at December 31, 1996 included in the financial statements referred in Section 3.6 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, 1996 that would not individually or in the aggregate have a Company Material Adverse Effect. 3.21. Finders or Brokers. Except as set forth in Section 3.21 of the ------------------ Disclosure Statement, none of Company, the subsidiaries of Company, the Board of Directors of Company or any member of the Board of Directors of Company 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 3.21 of the Disclosure Statement sets forth the maximum consideration (present and future) agreed to be paid to each such party. 3.22. State Antitakeover Statutes. Company 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 GCL and any other applicable state antitakeover statute or regulation such 22 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 Company's 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 or any provision hereof, or (z) would subject Parent to any material impediment or condition in connection with the exercise of any of its rights under this Agreement. 3.23. Opinion of Financial Advisor. Company has received the opinion ---------------------------- of First Boston dated the date of this Agreement, to the effect that, as of such date, the Merger Consideration is fair from a financial point of view to the holders of shares of Company Common Stock. 3.24. Insurance. Section 3.24 of the Disclosure Statement lists all --------- insurance policies in force on the date hereof covering the businesses, properties and assets of Company and its subsidiaries, and all such policies are currently in effect. 3.25. Employment and Labor Contracts. Neither Company nor any of its ------------------------------ subsidiaries is a party to any employment contract or other similar contract or any other contract for the provision of management or consulting services to Company or any of its subsidiaries with any past or present officer, director, employee or, to the best of Company's knowledge, any entity affiliated with any past or present officer, director or employee other than the agreements executed by employees generally, the forms of which have been delivered to Parent. 3.26. Pending Transactions. Section 3.26 of the Disclosure -------------------- Statement lists the status of the Pending Transactions. 3.27. Indemnification Agreements. Each of the RHI Indemnification -------------------------- Agreement, the FHC Indemnification Agreement and the Pledge Agreement is a valid and binding agreement of Company and, to the knowledge of Company, each of such agreements is enforceable against RHI Holdings, Inc. ("RHI") and The Fairchild Corporation ("TFC"), Fairchild Holding Corp. ("FHC"), and RHI, respectively, --- --- except to the extent that such 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. Each of the RHI Indemnification Agreement, the FHC Indemnification Agreement and the Pledge Agreement shall inure to the benefit of the Surviving Corporation and shall be enforceable by the Surviving Corporation except to the extent that such enforceability may be limited by applicable bankruptcy, 23 insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors' rights generally or by general equitable or fiduciary principles. As of the date hereof, Company has no knowledge of any liabilities or claims for which Company is indemnified under the RHI Indemnification Agreement and FHI Indemnification Agreement (other than (i) the contingent liabilities related to a dispute with the United States Government under government contract accounts rules concerning potential liability arising out of the use of and accounting for approximately $50.0 million in excess pension funds relating to certain government contracts in the discontinued aerospace business of Fairchild Industries, Inc. ("FII"), the nonsurviving constituent corporation in their --- merger of March 13, 1996, with Shared Technologies, Inc.; (ii) all non- telecommunications environmental liabilities of FII; and (iii) approximately $50.0 million (at June 30, 1995 of costs associated with post-retirement healthcare benefits of FII) as such items are described in Company's Annual Report on Form 10-K for the year ended December 31, 1996) that would (were the indemnification under the RHI Indemnification Agreement and FHI Indemnification Agreement not available), individually or in the aggregate, have a Company Material Adverse Effect. 3.28. Indemnified Liabilities. Notwithstanding all of the ----------------------- representations and warranties contained in this Article III (except for Section 3.27), it is hereby agreed that Company need not disclose as exceptions to any of the foregoing representations and warranties any losses, liabilities and damages or actions or claims for which Company is indemnified under each of the FHI Indemnification Agreement and the RHI Indemnification Agreement. 3.29. Commercial Arrangements with Tel-Save Holdings, Inc. Except as ---------------------------------------------------- disclosed in Schedule A attached hereto, neither Company nor any of its subsidiaries or affiliates has entered into, or is a party to, any commercial contracts, agreements, leases, plans, instruments, registrations, licenses, permits, commitments, arrangements or undertakings with Tel-Save Holdings, Inc. or any of its subsidiaries or affiliates, whether written or oral. IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER ------------------------------------------------------ Each of Parent and Purchaser jointly and severally represents and warrants to Company as follows: 4.1. Organization and Qualification. Each of Parent and Purchaser ------------------------------ 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 24 business as now being conducted. Each of Parent and Purchaser 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 Parent's or Purchaser's ability to consummate the Offer, the Merger or the other transactions contemplated hereby (a "Parent Material Adverse Effect"). Neither Parent nor Purchaser is in ------------------------------ violation of any of the provisions of its Certificate of Incorporation (or other applicable charter document) or Bylaws. 4.2. Authority Relative to This Agreement. Each of Parent and ------------------------------------ Purchaser has full corporate power and authority to execute and deliver this Agreement and to consummate the Offer, the Merger and other transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Offer, the Merger and other transactions contemplated hereby have been duly and validly authorized by the Board of Directors of Parent and Purchaser and no other corporate proceedings on the part of Parent and Purchaser are necessary to authorize this Agreement or to consummate the Offer, the Merger or other transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of Parent and Purchaser and, assuming the due authorization, execution and delivery hereof by Company, constitutes a valid and binding agreement of Parent and Purchaser, enforceable against Parent and Purchaser 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. 4.3. 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 4.3(b) hereof, neither the execution and delivery of this Agreement by Parent and Purchaser nor the consummation of the Offer, the Merger or other transactions contemplated hereby nor compliance by Parent and Purchaser 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 Parent and Purchaser under, any of the terms, conditions or provisions of (x) their respective charters or bylaws or (y) any note, bond, mortgage, indenture or 25 deed of trust, 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 Parent or Purchaser or any of their respective properties or assets, except, in the case of clause (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, have a Parent Material Adverse Effect. (b) No filing or registration with, notification to and no permit, authorization, consent or approval of any governmental entity is required by Parent or Purchaser in connection with the execution and delivery of this Agreement or the consummation by Parent and Purchaser of the Offer, the Merger or other transactions contemplated hereby, except (i) in connection with the applicable requirements of the HSR Act, (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (iii) filings with the SEC and state securities administrators, (iv) filings with the Federal Communications Commission or any applicable state public utility commissions or applicable state or local regulatory agency or authority, 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, have a Parent Material Adverse Effect. (c) As of the date hereof (x) Parent and Purchaser are not in violation of or default under any note, bond, mortgage, indenture or deed of trust, or (y) any license, lease, agreement or other instrument or obligation to which Parent is a party or to which they or any of their respective properties or assets may be subject, except, in the case of clauses (x) and (y) above, for such violations or defaults which would not, individually or in the aggregate, have a Parent Material Adverse Effect. 4.4. Proxy Statement. None of the information supplied or to be --------------- supplied by or on behalf of Parent and Purchaser for inclusion or incorporation by reference in the Proxy Statement will, at the dates mailed to stockholders and at the time of Company Stockholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. 4.5. Finders or Brokers. None of Parent, Purchaser, the Board of ------------------ Directors of Parent or Purchaser or any member of the Board of Directors of Parent or Purchaser has employed any investment banker, broker, finder or intermediary in connection 26 with the transactions contemplated hereby who might be entitled to a fee or any commission in connection with the Offer or the Merger other than Bear, Stearns & Co., Inc., whose fees shall be paid by Parent. 4.6. Offer Documents. The Offer Documents will not, at the time the ---------------- Offer Documents are filed with the SEC or are first published, sent or given to stockholders of Company, as the case may be, contain any untrue statement of a 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 the light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, Parent and Purchaser make no representation or warranty with respect to any information supplied by Company or any of its representatives which is contained in any of the foregoing documents or the Offer Documents. The Offer Documents shall comply in all material respects as to form with the requirements of the Exchange Act and the rules and regulations thereunder. V. COVENANTS --------- 5.1. Conduct of Business of Company Pending the Merger. Except as ------------------------------------------------- contemplated by this Agreement or as expressly agreed to in writing by Parent, during the period from the date of this Agreement to the Effective Time, each of Company 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, Company will not, nor will it permit any of its subsidiaries to, without the prior written consent of Parent, which consent shall not be unreasonably withheld: (a) amend its certificate of incorporation or bylaws; (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) shares granted to employees as matching 27 contributions pursuant to Company's 401(k) Plan in an aggregate amount not to exceed 40,000 shares; (c) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend (other than a dividend of stock of Shared Technologies Cellular, Inc. owned by Company) 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; (d) (i) create, incur, assume, maintain or permit to exist any debt for borrowed money other than under existing lines of credit in the ordinary course of business consistent with past practice; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person except for (a) its wholly owned subsidiaries, and (b) STF Canada, Inc. 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 except for STF Canada, Inc. in an aggregate amount not to exceed $1,000,000; (e) (i) increase in any manner the compensation of (x) any employee except in the ordinary course of business consistent with past practice or (y) any of its directors or officers; (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 any director or 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, (x) any employee except in the ordinary course of business consistent with past practice or (y) any of its directors or officers except for honorarium payments to outside directors of Company in an amount not to exceed $300,000 in the aggregate; 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; provided, however, that this clause (iv) shall not prohibit -------- ------- Company from renewing any such plan, agreement or 28 arrangement already in existence on terms no more favorable to the parties to such plan, agreement or arrangement; (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 involving payments or receipts by Company or its subsidiaries not in excess of $50,000, other than (i) customer agreements, (ii) leases for rental space in an amount not to exceed $250,000 for any lease or (iii) developer agreements in an amount not to exceed $250,000 for any agreement; provided, however, that Company -------- ------- will not enter into agreements with any local exchange carriers, competitive local exchange carriers or incumbent local exchange companies which require a financial commitment by Company or any of its subsidiaries or which limit the ability of Company or any of its subsidiaries to conduct their respective business; (g) 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; (h) authorize or commit to make capital expenditures in excess of $200,000 for any one order in Company's service business (other than purchases by Company's systems business in the ordinary course of business consistent with past practice); (i) make any change in the accounting methods or accounting practices followed by Company; (j) settle any action, suit, claim, investigation or proceeding (legal, administrative or arbitrative) in excess of $50,000 without the consent of the Parent; provided, however, that Company may settle the matter set forth -------- ------- in item 2 of Section 3.9 of the Disclosure Statement as previously discussed with Parent; (k) make any election under the Code which would have a Company Material Adverse Effect; (l) amend, change or alter in any respect any of the RHI Indemnification Agreement, the FHC Indemnification Agreement or the Pledge Agreement (except as specifically contemplated by this Agreement); or 29 (m) agree to do any of the foregoing. Promptly following execution and delivery of this Agreement, Parent shall appoint a senior executive (the "Consultant") to act as a management ---------- consultant and advisor to the Company relative to the conduct of its business in the ordinary course, including the activities described in clauses (d)-(j) of this Section 5.1. The Consultant shall liaise directly with the chief executive officer and chief operating officer of the Company and shall be informed of, and participate as a consultant in, all management decisions made by such officers. In the event that the Company determines to implement management decisions contrary to the advice of the Consultant, and the Consultant determines in his good faith judgment, that such management decisions either alone or taken together with other management decisions implemented against the advice of the Consultant, could lead to a Company Material Adverse Effect, the Consultant shall promptly notify the Executive Committee of the Board of Directors of the Company in writing of his determination and his contrary recommendation (the "Consultant Notice"). In the event the Executive Committee of the Board of - ------------------ Directors does not cause management of the Company to act in accordance with the recommendations of the Consultant set forth in the Consultant Notice by directing management so to act in writing within five days of receipt of the Consultant Notice, Parent and Purchaser may, by delivery of written notice to the Company within 30 days following the expiration of such five day period, terminate this Agreement in accordance with the provisions of Section 7.1(i) hereof. The written consent or recommendation of the Consultant with respect to any matter shall be deemed to be the consent of Parent thereto. 5.2. Preparation of the Proxy Statement; Stockholders Meetings. --------------------------------------------------------- (a) As soon as practicable following the date hereof, Company shall prepare and file the Proxy Statement with the SEC under the Exchange Act, and shall use its reasonable best efforts to have the Proxy Statement cleared by the SEC. Parent, Purchaser and Company shall cooperate with each other in the preparation of the Proxy Statement, and Company shall notify Parent of the receipt of any comments of the SEC with respect to the Proxy Statement and of any requests by the SEC for any amendment or supplement thereto or for additional information and shall provide to Parent promptly copies of all correspondence between Company or any representative of Company and the SEC. Company shall give Parent and its counsel the opportunity to review the Proxy Statement prior to its being filed with the SEC and shall give Parent and its counsel the opportunity to review all amendments and supplements to the Proxy Statement and all responses to requests for additional information and replies to comments prior to their being filed with, or sent to, the SEC, 30 and prior to the filing of the Proxy Statement, any amendments or supplements to the Proxy Statement or any other correspondence to the SEC (collectively, the "Proxy Filings"), the Proxy Filings shall be reasonably satisfactory to Parent. - -------------- Each of Company, Parent and Purchaser agrees to use its reasonable best efforts, after consultation with the other parties hereto, to respond promptly to all such comments of and requests by the SEC and to cause the Proxy Statement and all required amendments and supplements thereto to be mailed to the holders of Shares entitled to vote at the Stockholders' Meeting at the earliest practicable time. (b) Company shall, as soon as practicable after the date hereof, duly call, give notice of, convene and hold a meeting of its stockholders (the "Company Stockholder Meeting"), as promptly as practicable after the date - ---------------------------- hereof, for the purpose of obtaining the approval (the "Company Stockholder ------------------- Approval") of a majority of the stockholders of Company of this Agreement and - -------- shall, through its Board of Directors, recommend to its stockholders the approval and adoption of this Agreement, the Merger and the other transactions contemplated hereby, and shall use all commercially reasonable efforts to solicit from its stockholders proxies in favor of approval and adoption of this Agreement; provided, however, that such recommendation is subject to any action -------- ------- required by the fiduciary duties of the Board of Directors. 5.3. 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, material leases and other material contracts that are specified on Schedule 5.3 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 submissions of information requested by governmental authorities, (vi) provide all necessary information 31 for the Proxy Statement and (vii) to fulfill all conditions to this Agreement. (b) 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. At any time upon the written request of Parent, Company shall advise Parent of the number of shares of Company Common Stock or any series of Preferred Stock outstanding on such date. 5.4. Publicity. Company, Parent and Purchaser 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. 5.5. No Solicitation. (a) Company shall not, nor shall it permit --------------- any of its subsidiaries to, nor shall it authorize or permit any of its officers, directors or employees or any investment banker, financial advisor, attorney, accountant or other representative retained by it or any of its subsidiaries to, directly or indirectly, (i) solicit any Company Takeover Proposal (as hereinafter defined) or (ii) participate in any discussions or negotiations regarding any Company Takeover Proposal; provided, however, that -------- ------- if, at any time prior to Company Stockholders Meeting, the Board of Directors of Company determines in good faith, after consultation with outside counsel, that it is necessary to do so in order to comply with its fiduciary duties to Company's stockholders under applicable law the Company may, in response to a Company Takeover Proposal that was not solicited, and subject to compliance with Section 5.5(c), (x) furnish information with respect to Company to any person pursuant to a customary confidentiality agreement (as determined by Company after consultation with its outside counsel) and (y) participate in negotiations regarding such Company Takeover Proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding sentence by any director or executive officer of Company or any of its subsidiaries, whether or not such person is purporting to act on behalf of Company or any of its subsidiaries or otherwise, shall be deemed to be a breach of this Section 5.5(a) by Company. For purposes of this Agreement, "Company ------- Takeover Proposal" means any inquiry, proposal or offer from any person relating - ----------------- to any direct or indirect acquisition or purchase of 20% or more of the assets of Company or its subsidiaries or 20% or more of any class of equity securities of Company or any of its subsidiaries, any tender offer or exchange offer that if 32 consummated would result in any person beneficially owning 20% or more of any class of equity securities of Company or any of its subsidiaries, any merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving Company or any of its subsidiaries, other than the transactions contemplated by this Agreement, or any other transaction the consummation of which would reasonably be expected to impede, interfere with, prevent or materially delay the Merger or which would reasonably be expected to dilute materially the benefits to Parent of the transactions contemplated by this Agreement. (b) Except as set forth in this Section 5.5, neither the Board of Directors of Company nor any committee thereof shall (i) withdraw or modify, or propose publicly to withdraw or modify, in a manner adverse to Parent, the approval or recommendation by such Board of Directors or such committee of the Merger or this Agreement, (ii) approve or recommend, or propose publicly to approve to recommend, any Company Takeover Proposal or (iii) cause Company to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, a "Company Acquisition Agreement") related to ----------------------------- any Company Takeover Proposal. Notwithstanding the foregoing, in the event that prior to the Company Stockholders Meeting the Board of Directors of Company determines in good faith, after consultation with outside counsel, that it is necessary to do so in order to comply with its fiduciary duties to Company's stockholders under applicable law, the Board of Directors of Company may (subject to this and the following sentences) (x) withdraw or modify its approval or recommendation of the Merger and this Agreement or (y) approve or recommend a Company Superior Proposal (as defined below) or terminate this Agreement (and concurrently with or after such termination, if it so chooses, cause Company to enter into any Company Acquisition Agreement with respect to any Company Superior Proposal) but in each of the cases set forth in this clause (y), no action shall be taken by Company pursuant to clause (y) until a time that is after the fifth business day following Parent's receipt of written notice advising Parent that the Board of Directors of Company has received a Company Superior Proposal, specifying the material terms and conditions of such Company Superior Proposal and identifying the person making such Company Superior Proposal, to the extent such identification of the person making such proposal does not breach the fiduciary duties of the Board of Directors as advised by outside legal counsel. For purposes of this Agreement, a "Company ------- Superior Proposal" means any bona fide proposal made by a third party to - ----------------- acquire, directly or indirectly, for consideration consisting of cash and/or securities, more than 50% of the combined voting power of the shares of Company Common Stock and Company Preferred Stock then outstanding or all or substantially all the assets of Company and otherwise on terms that the Board of Directors of Company 33 determines in its good faith judgment (based on the advice of a financial advisor of nationally recognized reputation) to be more favorable to Company's stockholders than the Merger. (c) In addition to the obligations of Company set forth in paragraphs (a) and (b) of this Section 5.5, Company shall immediately advise Parent orally and in writing of any request for information or of any Company Takeover Proposal, the material terms and conditions of such request or Company Takeover Proposal, and to the extent such disclosure is not a breach of the fiduciary duties of the Board of Directors as advised by outside legal counsel, the identity of the person making such request or Company Takeover Proposal. (d) Nothing contained in this Section 5.5 shall prohibit Company from taking and disclosing to its stockholders a position contemplated by Rule 14e- 2(a) promulgated under the Exchange Act, or from making any disclosure to Company's stockholders if, in the good faith judgment of the Board of Directors of Company, after consultation with outside counsel, failure so to disclose would be inconsistent with its fiduciary duties to Company's stockholders under applicable law; provided, however, neither Company nor its Board of Directors -------- ------- nor any committee thereof shall, except as permitted by Section 5.5(b), withdraw or modify, or propose publicly to withdraw or modify, its position with respect to this Agreement or the Merger or approve or recommend, or propose publicly to approve or recommend, a company Takeover Proposal. 5.6. Access to Information. From the date of this Agreement until --------------------- the Effective Time, Company shall provide Parent 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 Parent to make such inspections as it may reasonably require and will cause its officers and those of its subsidiaries to furnish Parent with such financial and operating data and with respect to its business and properties as Parent may from time to time reasonably request. 5.7. Notification of Certain Matters. Company or Parent, 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 Section 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23 or 3.29 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 Company or Parent, as the case may be, or of any officer, director, employee or agent thereof, to comply with 34 or satisfy any covenant, condition or agreement to be complied with or satisfied by its 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. 5.8. Resignation of Directors. At or prior to the Effective Time, ------------------------ Company shall take all commercially reasonable efforts to deliver to Parent the resignations of such directors of Company and its subsidiaries as Parent shall specify, effective at the Effective Time. 5.9. Indemnification. (a) As of the date of this Agreement and for a --------------- period of six years following the Effective Time of the Merger, Parent and the Surviving Corporation will indemnify and hold harmless any persons who were directors or officers of Company or a subsidiary of Company prior to the Effective Time of the Merger (the "Indemnified Persons") to the fullest extent ------------------- such person could have been indemnified under the GCL or under the certificate of incorporation or bylaws of Company or the certificate of incorporation or bylaws of any subsidiary of Company in effect immediately prior to the Effective Time of the Merger, with respect to any act or failure to act by any such Indemnified Person prior to the Effective Time of the Merger. (b) Any determination required to be made with respect to whether an Indemnified Person's conduct complies with the standards set forth under the GCL or other applicable corporate law shall be made by independent counsel selected by the Indemnified Persons and reasonably acceptable to Parent and the Surviving Corporation. Parent or the Surviving Corporation shall pay such counsel's fees and expenses (it being agreed that neither the Indemnified Persons, Parent nor the Surviving Corporation shall challenge any such determination by such independent counsel). (c) The provisions of this Section 5.9 are for the benefit of the Indemnified Persons, any of whom shall have all rights at law and in equity to enforce the rights hereunder. (d) In the event that Parent or the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other person and Parent or the Surviving Corporation or such successor or assign is not the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each case, proper provision shall be made so that such person or the continuing or surviving corporation assumes the obligations set forth in this Section 5.9. 35 (e) Parent shall cause the Surviving Corporation to maintain in effect for not less than five years from the Effective Time the current policies of directors' and officers' liability insurance maintained by Company and its subsidiaries (provided that Parent may substitute therefor policies of at least the same coverage containing terms and conditions which are no less advantageous to the Indemnified Parties in all material respects so long as no lapse in coverage occurs as a result of such substitution) with respect to all matters, including the transactions contemplated hereby, occurring prior to, and including the Effective Time, provided that, in the event that any claim is asserted or made within such five year period, such insurance shall be continued in respect of any such claim until final disposition of any and all such claims, provided, further, that Parent shall not be obligated to make annual premium payments for such insurance to the extent such premiums exceed 200% of the premiums paid as of the date hereof by Company for such insurance. 5.10. Fees and Expenses. Whether or not the Merger is consummated, ----------------- Company and Parent 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. 5.11. Stockholder Litigation. Each of Company and Parent shall give ---------------------- the other the reasonable opportunity to participate in the defense of any stockholder litigation against or in the name of Company or Parent, as applicable, and/or their respective directors relating to the transactions contemplated by this Agreement. VI. CONDITIONS ---------- 6.1. Conditions to the Merger. The obligations of each party to ------------------------ effect the Merger shall be subject to the satisfaction or waiver, at or prior to the Effective Time, of each of the following conditions: (a) The Merger and this Agreement shall have been validly approved and adopted by the affirmative votes of the holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon. (b) The waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired. 36 (c) No judgment, order, decree, statute, law, ordinance, rule or regulation entered, enacted, promulgated, enforced or issued by any court or other governmental entity of competent jurisdiction or other legal restraint or prohibition shall be in effect preventing the consummation of the Offer or the Merger. 6.2. Conditions to Obligations of Parent. The obligation of Parent to ----------------------------------- effect the Merger is further subject to satisfaction or waiver of the following conditions: (a) All of the representations and warranties of Company set forth herein shall be true and correct as of July 16, 1997, and the representations and warranties set forth in Sections 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23 and 3.29 shall be true and correct as of the date hereof and the Closing Date, as if made at and as of such time, except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to "materiality" or "material adverse effect" set forth therein) does not have, and is not likely to have, individually or in the aggregate, a Company Material Adverse Effect or cause any material increase in the consideration required to be paid by Parent and Purchaser effectively to consummate the Merger. (b) Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date. (c) All necessary consents and approvals of any federal, state or local 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 material adverse effect on the Surviving Corporation or a Parent Material Adverse Effect. 6.3. Conditions to Obligations of Company. The obligation of Company ------------------------------------ to effect the Merger is further subject to satisfaction or waiver of the following conditions: (a) The representations and warranties of Parent and Purchaser set forth herein shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such date, except whether the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to "materiality" or "material adverse effect" set forth therein) does not have, and is not likely to have, individually or in the aggregate, a Parent Material Adverse Effect. 37 (b) Parent and Purchaser shall have performed in all material respects all obligations required to be performed by them under this Agreement at or prior to the Closing Date. VII. TERMINATION, AMENDMENT AND WAIVER --------------------------------- 7.1. Termination. This Agreement may be terminated at any time prior ----------- to the Effective Time, whether before or after approval by the stockholders of Company: (a) by consent of the Boards of Directors of Company, Parent and Purchaser; (b) by Parent and Purchaser upon notice to Company if any material default under or material breach of any covenant or agreement in this Agreement by Company shall have occurred and shall not have been cured within ten days after receipt of such notice, or any representation or warranty contained herein on the part of Company shall not have been true and correct in any material respect at and as of the date made; (c) by Company upon notice to Parent and Purchaser if any material default under or material breach of any covenant or agreement in this Agreement by Parent or Purchaser shall have occurred and shall not have been cured within ten days after receipt of such notice, or any representation or warranty contained herein on the part of Parent or Purchaser shall not have been true and correct in any material respect at and as of the date made; (d) by Parent and Purchaser, on the one hand, or Company, on the other, upon notice to the other if the Merger shall not have become effective on or before September 30, 1998, unless such date is extended by the consent of the Boards of Directors of Company, Parent and Purchaser evidenced by appropriate resolutions; provided, however, that the right to -------- ------- terminate this Agreement under this Section 7.1(d) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before such date; (e) by any of Parent, Purchaser and Company if the approval of the stockholders of Company required for consummation of the Merger shall not have been obtained by reason of the failure to obtain the required vote at a duly held meeting of stockholders or any adjournment thereof; (f) by Parent or Purchaser, if Section 5.5 shall be breached by Company or any of its officers, directors or employees or any investment banker, financial advisor, 38 attorney, accountant or other representative of Company, in any material respect and Company shall have failed promptly to terminate the activity giving rise to such breach and use best efforts to cure such breach upon notice thereof from Parent or Purchaser, or Company shall breach Section 5.5 by failing to promptly notify Parent or Purchaser as required thereunder; (g) by Parent or Purchaser if, at any time, (i) Company shall have withdrawn or modified in any manner adverse to Parent or Purchaser its approval or recommendation of this Agreement or the Merger or failed to reconfirm its recommendation within 15 business days after a written request to do so, or recommended any Company Takeover Proposal or (ii) the Board of Directors of Company or any committee thereof shall have resolved to take any of the foregoing actions; (h) by the Company if it elects to terminate this Agreement in accordance with Section 5.5(b); provided that it has complied with all -------- provisions thereof, including the notice provisions therein, and that it complies with applicable requirements relating to the payment (including the timing of the payment) of the termination fee required by Section 7.3; or (i) by Parent or Purchaser in accordance with the provisions of the last paragraph of Section 5.1 of this Agreement; provided that it has complied with all provisions thereof, including the notice provisions therein. 7.2. Effect of Termination. In the event of the termination of this --------------------- Agreement pursuant to the provisions of Section 7.1, the provisions of this Agreement (other than Sections 5.10, 7.2, 7.3 and 7.4 hereof) shall become void and have no effect, with no liability on the part of any party hereto or its stockholders or directors or officers in respect thereof, except as set forth in Sections 7.3 and 7.4, provided that nothing contained herein shall be deemed to -------- relieve any party of any liability it may have to any other party with respect to a breach of its obligations under this Agreement. 7.3. Termination Payment. As compensation for entering into this ------------------- Agreement, taking action to consummate the transactions hereunder and incurring the costs and expenses related thereto and other losses and damages, including the foregoing of other opportunities, Company and Parent agree as follows: (a) Company shall pay to Parent the sum of $10.0 million plus all reasonably documented out-of-pocket expenses (including, but not limited to, the reasonable fees and expenses 39 of counsel and its other advisers) of Parent and Purchaser incurred in connection with the transactions contemplated by this Agreement (including the preparation and negotiation of this Agreement) promptly after, but in no event later than two days following, whichever of the following first occurs: (i) Parent or Purchaser shall have exercised its right to terminate this Agreement pursuant to Sections 7.1(b), 7.1(f), 7.1(g) or 7.1(i) hereof. (ii) Company shall have exercised its right to terminate this Agreement pursuant to Section 7.1(e) or Section 7.1(h). (b) Company shall not be obligated to make any payment pursuant to this Section 7.3, if at the time such payment becomes due Parent or Purchaser is in material breach of its obligations under this Agreement. 7.4 Proceeds of the Good Faith Deposit. (a) Subject to Section ---------------------------------- 7.4(c), Company shall pay out from the proceeds of the Good Faith Deposit an amount equal to $15,000,000 (the "Termination Fee") to Tel-Save Holdings, Inc. --------------- ("Tel-Save") to satisfy termination fees arising from Company's termination of -------- that certain Agreement and Plan of Merger dated as of July 16, 1997 among Tel- Save, TSHCo, Inc. and Company. (b) Subject to Section 7.4(c), Company shall pay the Good Faith Deposit (less the Termination Fee) to Tel-Save in exchange for the termination of any options to purchase Company Common Stock held by Tel-Save under that certain Option Agreement dated as of July 16, 1997 by and between Tel-Save and Company. (c) In the event that Parent or Purchaser terminates this Agreement pursuant to Section 7.1(a), 7.1(b), 7.1(f), 7.1(g) or 7.1(i) or Company terminates this Agreement other than pursuant to Section 7.1(c) or Section 7.1(d), then Company must repay to Purchaser the Good Faith Deposit (including any Termination Fee which has been paid to Tel-Save). 7.5 Amendment. This Agreement may be amended by the parties hereto --------- only in a writing signed on behalf of each of them, at any time before or after approval of the Agreement by the stockholders of Company, but after such approval no amendment shall be made which alters the Merger Consideration without the further approval of the stockholders of Company other than Parent; provided that no amendment or consent given or made on behalf of Company shall be effective unless approved by a majority of the members of the Board as constituted as of the date hereof (or of any successor directors duly elected by such members). 40 7.6 Waiver. Any term or provision of this Agreement (other than the ------ requirements for approval by the stockholders of Company) may be waived in writing at any time by the party which is, or whose stockholders are, entitled to the benefits thereof. VIII. GENERAL PROVISIONS ------------------ 8.1. Definitions. As used in the Agreement, the following terms ----------- have the following respective meanings: Agreement: as defined in the recitals. --------- Board: as defined in the recitals. ----- Certificate of Merger: as defined in Section 2.5. --------------------- Certificates: as defined in Section 2.8(b). ------------ Closing Date: means the date on which the Effective Time occurs. ------------ COBRA: as defined in Section 3.17(n). ----- Code: means the Internal Revenue Code of 1986, as amended. ---- Company: as defined in the first paragraph of this Agreement. ------- Company Acquisition Agreement: as defined in Section 5.5(b). ----------------------------- Company Common Stock: means issued and outstanding shares of Common -------------------- Stock, par value $.004 per share, of Company. Company Material Adverse Effect: as defined in Section 3.1. ------------------------------- Company Stockholder Approval: as defined in Section 5.2(b). ---------------------------- Company Stockholder Meeting: as defined in Section 5.2(b). --------------------------- Company Stock Option Plans: as defined in Section 2.9. -------------------------- Company Superior Proposal: as defined in Section 5.5(b). ------------------------- 41 Company Takeover Proposal: as defined in Section 5.5(a). ------------------------- Consultant: as defined in Section 5.1. ---------- Consultant Notice: as defined in Section 5.1. ----------------- Convertible Preferred Stock: as defined in Section 2.6(d). --------------------------- Disclosure Statement: as defined in Section 3.2. -------------------- Dissenting Shares: as defined in Section 2.6(e). ----------------- Effective Time: as defined in Section 2.5. -------------- ERISA: the Employee Retirement Income Security Act of 1974, as ----- amended. ERISA Affiliate: as defined in Section 3.17(d). --------------- Exchange Act: as defined in Section 1.2(b). ------------ Exchange Agent: Continental Stock Transfer & Trust Company or such -------------- other a bank or trust company to be designated by Parent prior to the Effective Time to act as exchange agent. FHC: means Fairchild Holding Corp. --- FHC Indemnification Agreement: means the Indemnification Agreement ----------------------------- between FHC and Company dated March 13, 1996. FII: as defined in Section 3.27. --- First Boston: as defined in Section 1.2(a). ------------ GCL: as defined in the recitals. --- Good Faith Deposit: as defined in Section 2.10. ------------------ HSR Act: as defined in Section 3.5(b). ------- Indemnified Persons: as defined in Section 5.9(a). ------------------- IRS: as defined in Section 3.17(e). --- Merger: as defined in the recitals. ------ Merger Consideration: as defined in Section 2.6(d). -------------------- Multiemployer Plan: as defined in Section 3.17(k). ------------------ 42 Offer Documents: as defined in Section 1.1(b). --------------- Offer to Purchase: as defined in Section 1.1(b). ----------------- Other Plans: as defined in Section 3.17(b). ----------- Parent: as defined in the first paragraph of this Agreement. ------ Parent Material Adverse Event: as defined in Section ----------------------------- 4.1. PBGC: as defined in Section 3.17(j). ---- Pending Transactions: means the pending transactions regarding ICS -------------------- Communications, Inc. and GE Capital-Rescum, L.L.P. Pension Benefit Plans: as defined in Section 3.17(a). --------------------- Per Share Amount: as defined in Section 2.6(a). ---------------- Per Share Offer Amount: as defined in the recitals. ---------------------- Person: an individual, partnership, joint venture, corporation, ------ trust, unincorporated organization and a government or any department or agency thereof. Plans: as defined in Section 3.17(c). ----- Pledge Agent: shall mean Gadsby & Hannah. ------------ Pledge Agreement: means the Pledge Agreement dated as of March 13, ---------------- 1996 by RHI in favor of Gadsby & Hannah as pledge agent. Preferred Per Share Amount: as defined in Section 2.6(d). -------------------------- Preferred Shares: as defined in Section 2.6(d). ---------------- Proxy Filings: as defined in Section 5.2(a). ------------- Proxy Statement: as defined in Section 3.8. --------------- Purchaser: as defined in the first paragraph of this Agreement. --------- RHI: means RHI Holdings, Inc. --- RHI Indemnification Agreement: means the Indemnification Agreement ----------------------------- dated March 13, 1996 by and among TFC, RHI and Company. 43 Schedule 14D-1: as defined in Section 1.1(b). -------------- Schedule 14D-9: as defined in Section 1.2(b). -------------- SEC: as defined in Section 1.1(b). --- SEC Reports: as defined in Section 3.6. ----------- Securities Act: as defined in Section 3.6. -------------- Series D Stock: as defined in Section 2.6(d). -------------- Shares: means collectively, all shares of Company Common Stock. ------ Shares Consideration: as defined in Section 2.6(a). -------------------- Special Preferred Stock: as defined in Section 2.6(d). ----------------------- Subsidiary: with respect to any Person, any corporation or other ---------- business entity, a majority (by number of votes) of the shares of capital stock (or other voting interests) of which at the time outstanding is owned by such Person directly or indirectly through Subsidiaries. Surviving Corporation: as defined in Section 2.1. --------------------- Tel-Save: as defined in Section 7.4(a). -------- Termination Fee: as defined in Section 7.4(a). --------------- TFC: means The Fairchild Corporation. --- Tax or Taxes: as defined in Section 3.16. --- ----- Welfare Plans: as defined in Section 3.17(b). ------------- 8.2. Non-Survival of Representations, Warranties and Agreements. No ---------------------------------------------------------- representations, warranties or agreements in this Agreement or in any instrument delivered by Parent, Purchaser or Company pursuant to this Agreement shall survive the Merger. 8.3. Notices. All notices, requests, claims, demands, consents and ------- other communications hereunder shall be in writing and shall be deemed given if delivered personally or by fax or mailed by registered or certified mail (return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): 44 if to Parent or Purchaser, a copy to: 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, NY 10036 Attention: Ralph J. Sutcliffe, Esq. Telecopy: (212) 479-6275 if to Company, a copy to: Shared Technologies Fairchild Inc. 100 Great Meadow Road, Suite 104 Wethersfield, CT 06109 Telecopy No.: (860) 258-2455 Attention: Kenneth M. Dorros, Esq. with a copy to: Cahill Gordon & Reindel 80 Pine Street New York, NY 10005 Telecopy No.: (212) 269-5420 Attention: James J. Clark, Esq.. and The Fairchild Corporation 300 West Service Road P.O. Box 10803 Chantilly, VA 22021 Telecopy No.: (703) 478-5775 Attention: Donald E. Miller, Esq. 8.4. Severability. If any term or other provision of this Agreement ------------ is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated thereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually 45 acceptable manner in order that the transactions contemplated by this Agreement including the Merger, be consummated as originally contemplated to the fullest extent possible. 8.5. Miscellaneous. This Agreement (including the exhibits, ------------- documents and instruments referred to herein or therein) (a) constitutes the - entire agreement and supersedes all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof; (b) is not intended to confer upon any other - person other than the parties hereto any rights or remedies hereunder; (c) shall - not be assigned by operation of law or otherwise, except that each of Parent and Purchaser may assign its rights and obligations hereunder without the consent of Company to one or more direct or indirect Subsidiaries of Parent (it being recognized that such an assignment shall not release or discharge the assignor from its obligations under this Agreement); and (d) shall be governed in all - respects, including validity, interpretation and effect, by the laws of the State of Delaware. 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. This Agreement may be executed in two or more counterparts which together shall constitute a single instrument. 8.6. Specific Performance. The parties agree that due to the unique -------------------- subject matter of this transaction, monetary damages will be insufficient to compensate the non-breaching party in the event of a breach of any part of this Agreement. Accordingly, the parties agree that the non-breaching party shall be entitled (without prejudice to any other right or remedy to which it may be entitled) to an appropriate decree of specific performance, or an injunction restraining any violation of this Agreement or other equitable remedies to enforce this Agreement (without establishing the likelihood of irreparable injury or posting bond or other security), and the breaching party waives in any action or proceeding brought to enforce this Agreement the defense that there exists an adequate remedy at law. 8.7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES -------------------- TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT. [Remainder of Page Intentionally Left Blank] 46 IN WITNESS WHEREOF, Parent, Purchaser and Company have caused this Agreement to be executed by their respective duly authorized officers on the date first above written. INTERMEDIA COMMUNICATIONS INC. By:/s/ Robert M. Manning --------------------- Name: Robert M. Manning Title: Senior Vice President MOONLIGHT ACQUISITION CORP. By:/s/ Robert M. Manning --------------------- Name: Robert M. Manning Title: Senior Vice President SHARED TECHNOLOGIES FAIRCHILD INC. By: /s/ Anthony Autorino -------------------- Name: Anthony Autorino Title: Chief Executive Officer SCHEDULE A ---------- Long Distance Services Agreement, dated November 13, 1997, between Company and Tel-Save Holdings, Inc. ANNEX A Conditions to the Offer ----------------------- Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or pay for any Shares tendered pursuant to the Offer, and may terminate or amend the Offer and may postpone the acceptance for payment of and payment for Shares tendered, if (i) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer, or (ii) at any time on or after the date of this Agreement, and prior to the acceptance for payment of Shares, any of the following conditions shall exist: (a) any judgment, order, decree, statute, law, ordinance, rule or regulation entered, enacted, promulgated, enforced or issued by any court or other governmental entity of competent jurisdiction or other legal restraint or prohibition shall be in effect preventing the consummation of the Offer; (b) all necessary consents and approvals of any federal, state or local governmental authority or any other third party required for the consummation of the Offer and the transactions contemplated by this Agreement shall not 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 or a Parent Material Adverse Effect; (c) any of the representations and warranties of Company set forth in the Agreement shall not be true and correct as of July 16, 1997 or any of the representations and warranties set forth in Sections 3.2, 3.3, 3.4, 3.10, 3.14, 3.21, 3.22, 3.23 and 3.29 of the Agreement shall not be true as of the date Parent shall first accept Shares for payment, where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to "materiality" or "material adverse effect" set forth therein) has, or is likely to have, individually or in the aggregate, a Company Material Adverse Effect or cause any material increase in the consideration required to be paid by Parent and Purchaser effectively to consummate the Offer or the Merger; (d) Company shall not have performed any obligation required to be performed by it under this Agreement as of the date Parent shall first accept Shares for payment, where the non-performance of such obligation has, or is likely to have, individually or in the aggregate, a Company Material Adverse Effect or cause any material increase in the consideration required to be paid by Parent and Purchaser effectively to consummate the Offer; (e) the Merger Agreement shall have been terminated in accordance with its terms; or (f) Purchaser and Company shall have agreed that Purchaser shall terminate the Offer or postpone the acceptance for payment of or payment for Shares thereunder; which, in the reasonable judgment of Purchaser in any such case, and regardless of the circumstances (including any action or inaction by Parent or any of its affiliates) giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment or payment. The foregoing conditions are for the sole benefit of Purchaser and Parent and may be asserted by Purchaser or Parent regardless of the circumstances giving rise to any such condition or may be waived by Purchaser or Parent in whole or in part at any time and from time to time in their sole discretion. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances; and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. EX-99.C.2 12 STOCK PURCHASE AGREEMENT EXHIBIT (c)(2) STOCK PURCHASE AGREEMENT ------------------------ STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of November 24, 1997, --------- between INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("Buyer"), RHI ----- HOLDINGS, INC., a Delaware corporation (the "Seller") and Shared Technologies ------ Fairchild Inc., a Delaware corporation (the "Company"). ------- R E C I T A L S : - - - - - - - - Seller desires to sell to Buyer and Buyer desires to purchase from Seller, all right, title and interest in and to 250,000 shares of Series I 6% Cumulative Convertible Preferred Stock, par value $.01 per share (the "Preferred Stock") --------------- issued by the Company and owned by Seller, all upon the terms and subject to conditions contained herein. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, the parties hereto hereby agree as follows: 1. PURCHASE AND SALE ----------------- 1.1 Purchase and Sale. In consideration of the payment by Buyer of the ----------------- Convertible Purchase Price (as defined in Section 1.2(a) below), Seller hereby agrees to sell, assign, transfer, convey and deliver to Buyer, and Buyer hereby agrees to purchase, acquire and take assignment and delivery of, all the right, title and interest of Seller on the day designated by Seller (the "Closing Date") in and to the Preferred Stock. 1.2 Purchase Price. The aggregate purchase price for the Convertible -------------- Preferred Stock (the "Convertible Purchase Price") shall be $62,827,425 plus any -------------------------- accrued dividends from November 24, 1997 to the Closing Date. The Convertible Purchase Price is payable on the Closing Date in cash, by certified or bank check or by wire transfer of immediately available funds to such accounts as the Seller may designate in writing. 1.3. DELIVERY OF THE PREFERRED STOCK. On the Closing Date, Seller shall ------------------------------- deliver to Buyer certificate(s) representing the Preferred Stock duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly endorsed in blank, and bearing or accompanied by all requisite stock transfer stamps. 2. REPRESENTATIONS AND WARRANTIES OF SELLER. ---------------------------------------- Seller hereby represents and warrants to Buyer and the Company as follows: 2.1. ORGANIZATION OF SELLER. Seller is a corporation duly organized, ---------------------- validly existing and in good standing under the laws of its jurisdiction of incorporation. 2.2. AUTHORITY. Seller has all requisite power and authority to execute --------- and deliver this Agreement and to carry out its obligations hereunder. Seller has obtained all necessary corporate approvals for the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered by Seller and (assuming due authorization, execution and delivery by the other parties hereto) constitutes Seller's legal, valid and binding obligation, enforceable against it in accordance with its terms. 2.3. AUTHORIZED CAPITAL. Seller owns the Preferred Stock beneficially and ------------------ of record, free and clear of all liens, pledges, security interests, claims, voting restrictions and agreements, proxies or other encumbrances ("Liens"), ----- except as may be otherwise provided for (i)in that certain Shareholder's Agreement, dated March 13, 1996, among Seller, the Company and Anthony D. Autorino and that certain Pledge Agreement dated as of March 13, 1996 by RHI in favor of Gadsby & Hannah as pledge agent (the "Pledge Agreement") and (ii) that ---------------- certain Amended and Restated Pledge Agreement dated as of July 18, 1997 between RHI and Citicorp USA Inc. (the "Citicorp Pledge Agreement"). Upon consummation ------------------------- of the transactions contemplated hereby, Buyer will acquire good and marketable title to the Convertible Preferred Stock free and clear of any Liens. 2.4. BROKERS, FINDERS, ETC. All negotiations relating to this Agreement --------------------- and the transactions contemplated hereby have been carried on without the participation of any person or entity acting on behalf of Seller in such manner as to give rise to any valid claim against Buyer for any brokerage or finder's fee, commission or similar compensation. 2.5. NO MISSTATEMENTS OR OMISSIONS. No representation or warranty made in ----------------------------- this Agreement by Seller is false or misleading as to any material fact, or omits to state a material fact required to make any of the statements made herein not misleading in any material respect. 2 3. REPRESENTATIONS AND WARRANTIES OF BUYER. --------------------------------------- Buyer hereby represents and warrants to Seller and the Company as follows: 3.1. ORGANIZATION OF BUYER. Buyer is a corporation duly organized, --------------------- validly existing and in good standing under the laws of Delaware. 3.2. AUTHORITY. Buyer has all requisite power and authority to execute --------- and deliver this Agreement and to carry out its obligations hereunder. Buyer has obtained all necessary corporate approvals for the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered by Buyer and (assuming due authorization, execution and delivery by the other parties hereto) constitutes Buyer's legal, valid and binding obligation, enforceable against it in accordance with its terms. 3.3. BROKERS, FINDERS, ETC. All negotiations relating to this Agreement ---------------------- and the transactions contemplated hereby have been carried on without the participation of any person or entity acting on behalf of Buyer in such manner as to give rise to any valid claim against Seller for any brokerage or finder's fee, commission or similar compensation, other than Bear, Stearns & Co. Inc., whose fees shall be paid by Buyer. 3.4. NO MISSTATEMENTS OR OMISSIONS. No representation or warranty made in ----------------------------- this Agreement by Buyer is false or misleading as to any material fact stated therein, or omits to state a material fact required to make any of the statements made therein not misleading in any material respect. 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. --------------------------------------------- The Company hereby represents and warrants to Seller and Buyer as follows: 4.1. ORGANIZATION OF THE COMPANY. The Company is a corporation duly --------------------------- organized, validly existing and in good standing under the laws of Delaware. 4.2. AUTHORITY. The Company has all requisite power and authority to --------- execute and deliver this Agreement and to carry out its obligations hereunder. The Company has obtained all necessary corporate approvals for the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered by the Company and (assuming due authorization, execution and delivery by the other parties hereto) constitutes the Company's legal, valid and binding obligation, enforceable against it in accordance with its terms. 3 4.3. NO MISSTATEMENTS OR OMISSIONS. No representation or warranty made in ----------------------------- this Agreement by the Company is false or misleading as to any material fact stated therein, or omits to state a material fact required to make any of the statements made therein not misleading in any material respect. 5. INDEMNIFICATION --------------- 5.1. INDEMNIFICATION BY SELLER. Seller agrees to defend, indemnify ------------------------- and hold harmless Buyer, any subsidiary or affiliate thereof and its officers, directors, shareholders and controlling persons, employees, agents, successors and assigns from and against any and all liabilities, losses, damages, claims, costs, expenses, judgments, interest and penalties (including, without limitation, attorneys', accountants' and outside advisors' fees and disbursements) (collectively, "Losses") incurred as a result of, arising out of ------ or resulting from (i) the breach of any representation or warranty made by Seller and contained in this Agreement or (ii) the breach of any covenant or agreement made by Seller and contained in this Agreement. 5.2. INDEMNIFICATION BY BUYER. Buyer agrees to defend, indemnify and ------------------------ hold harmless Seller, any subsidiary or affiliate thereof and its officers, directors, shareholders and controlling persons, employees, agents, successors and assigns from and against any and all Losses incurred as a result of, arising out of or resulting from (i) the breach of any representation or warranty made by Buyer and contained in this Agreement or (ii) the breach of any covenant or agreement made by Buyer and contained in this Agreement. 5.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The ------------------------------------------ representations, warranties, covenants and agreements made by Buyer and Seller shall survive the signing and consummation of this Agreement. All representations, covenants and warranties made by Seller in this Agreement will be deemed to have been relied upon by Buyer (notwithstanding any investigation by Buyer). All representations, covenants and warranties made by Buyer in this Agreement will be deemed to have been relied upon by Seller (notwithstanding any investigation by Seller). 5.4. NOTICE OF CLAIMS. An indemnified party shall give prompt ---------------- written notice to the indemnifying party of any claim against the indemnified party which might give rise to a claim by the indemnified party against the indemnifying party under the indemnification provisions contained herein, stating the nature and basis of the claim and the actual or estimated amount thereof, provided, however, that failure to give such notice will not effect the -------- ------- obligation of the indemnifying party to provide indemnification in accordance with the terms of Section 5.1 or 4 5.2 unless, and only to the extent that, the indemnifying party is actually prejudiced thereby. In the event that any action, suit or proceeding is brought against any indemnified party with respect to which the indemnifying party may have liability under the indemnification provisions contained herein, the indemnifying party shall, upon written acknowledgement by the indemnifying party that such action, suit or proceeding is an indemnifiable Loss pursuant to Section 5.1 or 5.2, have the right, at the cost and expense of the indemnifying party, to defend such action in the name and on behalf of the indemnified party (using counsel satisfactory to the indemnified party), and, in connection with any such action, the indemnified party and the indemnifying party agree to render to each other such assistance as may reasonably be required in order to ensure proper and adequate defense of such action, provided, however, that an -------- ------- indemnified party shall have the right to retain its own counsel, with fees and expenses paid by the indemnifying party, if representation of such indemnified party by counsel retained by the indemnifying party would be inappropriate because of actual or potential differing interests between such indemnified party and the indemnifying party. If the indemnifying party shall fail to defend such action, suit or proceeding, then the indemnified party shall have the right to defend such action without prejudice to its rights to indemnification under Section 5.1 or 5.2 and, in connection therewith, the indemnified party and the indemnifying party agree to render to each other such assistance as may reasonably be required in order to ensure proper and adequate defense of such action. Neither the indemnified party nor the indemnifying party shall make any settlement of any claim which might give rise to liability of the indemnifying party under the indemnification provisions contained herein without the written consent of each party, which consent shall not be unreasonably withheld, delayed or conditioned. 6. OTHER AGREEMENTS ---------------- 6.1. TERMINATION OF PLEDGE. Each of Buyer and the Company hereby --------------------- consents to the termination of the Pledge Agreement and the release of the proceeds from the sale of the Preferred Stock to Seller pursuant hereto, subject to any claims of Citicorp USA Inc. pursuant to the Citicorp Pledge Agreement. 7. GENERAL ------- 7.1. EXPENSES. All expenses of the preparation, execution and -------- consummation of this Agreement and of the transactions contemplated hereby including, without limitation, attorneys', accountants' and outside advisors' fees and disbursements, shall be borne by the party incurring such expense. 5 7.2. ENTIRE AGREEMENT. This Agreement contains the entire ---------------- understanding of the parties and supersede all prior agreements and understandings relating to the subject matter hereof and this Agreement shall not be amended except by a written instrument hereafter signed by all of the parties hereto. 7.3. ASSIGNMENT. None of the parties hereto may assign its rights or ---------- delegate its obligations under this Agreement without the written consent of the other parties hereto. This Agreement and all of the provisions hereof shall be binding upon and inure only to the benefit of the parties hereto and their respective heirs, executors, personal representatives and successors. 7.4. FURTHER ACTION. Each of the parties hereto shall use all -------------- reasonable efforts to do, or cause to be done, all things necessary, proper or advisable under applicable law to carry out the provisions of this Agreement and shall execute and deliver such documents and other papers as may be required to carry out the provisions of this Agreement. 7.5. NOTICES. All notices, requests, claims, demands and other ------- communications hereunder shall be in writing and shall be deemed given if delivered personally or by fax or mailed by registered or certified mail (return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): if to Buyer, a copy to: 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, NY 10036 Attention: Ralph J. Sutcliffe, Esq. Telecopy: (212) 479-6275 6 if to Seller, a copy to: RHI Holdings, Inc. c/o The Fairchild Corporation 300 West Service Road P.O. Box 10803 Chantilly, VA 22021 Telecopy No.: (703) 478-5775 Attention: Donald E. Miller, Esq. if to the Company, a copy to: Shared Technologies, Inc. 100 Great Meadow Road, Suite 104 Wethersfield, CT 06109 Telecopy No.: (860) 258-2455 Attention: Kenneth M. Dorros, Esq. with a copy to: Cahill Gordon & Reindel 80 Pine Street New York, NY 10005 Telecopy No.: (212) 269-5420 Attention: James J. Clark, Esq. 7.6. SPECIFIC PERFORMANCE. The parties agree that due to the unique -------------------- subject matter of this transaction, monetary damages will be insufficient to compensate the non-breaching party in the event of a breach of any part of this Agreement. Accordingly, the parties agree that the non-breaching party shall be entitled (without prejudice to any other right or remedy to which it may be entitled) to an appropriate decree of specific performance, or an injunction restraining any violation of this Agreement or other equitable remedies to enforce this Agreement (without establishing the likelihood of irreparable injury or posting bond or other security), and the breaching party waives in any action or proceeding brought to enforce this Agreement the defense that there exists an adequate remedy at law. 7.7. SEVERABILITY. If any term or other provision of this Agreement ------------ is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated thereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by 7 this Agreement be consummated as originally contemplated to the fullest extent possible. 7.8. HEADINGS. The headings of Sections and Subsections are for -------- reference only and shall not limit or control the meaning thereof. 7.9. COUNTERPARTS. This Agreement may be executed in multiple ------------- counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 7.10. GOVERNING LAW. THE VALIDITY AND CONSTRUCTION OF THIS AGREEMENT ------------- SHALL BE GOVERNED BY THE INTERNAL LAWS (AND NOT THE PRINCIPLES OF CONFLICT OF LAWS) OF THE STATE OF DELAWARE. 7.11. VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS ----- AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF DELAWARE OR OF THE UNITED STATES OF AMERICA RESIDING IN THE STATE OF DELAWARE AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY ACCEPT FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY WAIVES, AND AGREES NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT OF THIS AGREEMENT THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SAID COURTS OR THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR (PROVIDED THAT PROCESS SHALL BE SERVED IN ANY MANNER REFERRED TO IN THE FOLLOWING SENTENCE) THAT SERVICE OF PROCESS UPON SUCH PARTY IS INEFFECTIVE. EACH PARTY AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION, SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO THIS AGREEMENT MAY BE MADE UPON IT IN ANY MANNER PERMITTED BY THE LAWS OF THE STATE OF DELAWARE OR THE FEDERAL LAWS OF THE UNITED STATES. SERVICE OF PROCESS IN ANY MANNER REFERRED TO IN THE PRECEDING SENTENCE SHALL BE DEEMED, IN EVERY RESPECT, EFFECTIVE SERVICE OF PROCESS UPON SUCH PARTY. [SIGNATURE PAGE FOLLOWS] 8 7.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TRIAL -------------------- BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT. IN WITNESS WHEREOF, and intending to be legally bound thereby, the parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date and year first above written. INTERMEDIA COMMUNICATIONS INC. By: /s/ Robert M. Manning --------------------- Name: Robert M. Manning Title: Senior Vice President SHARED TECHNOLOGIES FAIRCHILD INC. By: /s/ Anthony Autorino -------------------- Name: Anthony Autorino Title: Chief Executive Officer RHI HOLDINGS, INC. By: /s/ Donald Miller ----------------- Name: Donald Miller Title: Vice President 9 By signing below each of Shared Technologies Fairchild Inc. (formerly known as Shared Technologies, Inc.), RHI Holdings, Inc. and Anthony D. Autorino hereby consent to the transactions contemplated by this Agreement and hereby amend the terms of that certain Shareholder's Agreement, dated March 13, 1996, to the extent necessary to permit the transactions contemplated by the terms of this Agreement. SHARED TECHNOLOGIES FAIRCHILD INC. By: /s/ Anthony Autorino -------------------- Name: Anthony Autorino Title: Chief Executive Officer RHI HOLDINGS, INC. By: /s/ Donald Miller ----------------- Name: Donald Miller Title: Vice President /s/ Anthony D. Autorino ----------------------- ANTHONY D. AUTORINO 10 EX-99.C.3 13 LOAN AGREEMENT DATED AS OF 11/20/97 EXHIBIT (c)(3) LOAN AGREEMENT -------------- LOAN AGREEMENT (this "Agreement"), dated as of November 20, 1997, between --------- INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("Buyer") and SHARED ----- TECHNOLOGIES FAIRCHILD INC., a Delaware corporation (the "Company"). ------- R E C I T A L S : - - - - - - - - The Company desires to redeem 200,000 shares of Series J Special Preferred Stock, par value $.01 per share (the "Special Preferred Stock") issued by the ----------------------- Company and owned by RHI Holdings, Inc. ("RHI"), and Buyer agrees to loan to the Company certain funds to facilitate such redemption, all upon the terms and subject to conditions contained herein. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, the parties hereto hereby agree as follows: 1. REPRESENTATIONS AND WARRANTIES OF BUYER. --------------------------------------- Buyer hereby represents and warrants to the Company as follows: 1.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized, validly --------------------- existing and in good standing under the laws of Delaware. 1.2 AUTHORITY. Buyer has all requisite power and authority to execute and --------- deliver this Agreement and to carry out its obligations hereunder. Buyer has obtained all necessary corporate approvals for the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered by Buyer and (assuming due authorization, execution and delivery by the Company) constitutes Buyer's legal, valid and binding obligation, enforceable against it in accordance with its terms. 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. --------------------------------------------- The Company hereby represents and warrants to Buyer as follows: 2.1 ORGANIZATION OF THE COMPANY. The Company is a corporation duly --------------------------- organized, validly existing and in good standing under the laws of Delaware. 2.2 AUTHORITY. The Company has all requisite power and authority to --------- execute and deliver this Agreement and the Promissory Note (as defined below) and to carry out its obligations hereunder. The Company has obtained all necessary corporate approvals for the execution and delivery of this Agreement and the Promissory Note and the performance of its obligations hereunder and thereunder. This Agreement has been duly executed and delivered by the Company and (assuming due authorization, execution and delivery by Buyer) constitutes the Company's legal, valid and binding obligation, enforceable against it in accordance with its terms. 3. THE LOAN -------- If the Company elects to redeem the Special Preferred Stock, Buyer shall lend to Company $21,918,000 in accordance with the terms of the Promissory Note attached hereto as Exhibit A (the "Promissory Note"), the Company shall borrow --------------- such amount from Buyer and execute the Promissory Note and Buyer shall execute a Subordination Agreement in the form attached hereto as Exhibit B. 4. GENERAL ------- 4.1 EXPENSES. All expenses of the preparation, execution and -------- consummation of this Agreement and of the transactions contemplated hereby including, without limitation, attorneys', accountants' and outside advisors' fees and disbursements, shall be borne by the party incurring such expense. 4.2 ENTIRE AGREEMENT. This Agreement contains the entire ---------------- understanding of the parties and supersede all prior agreements and understandings relating to the subject matter hereof and this Agreement shall not be amended except by a written instrument hereafter signed by all of the parties hereto. 4.3 ASSIGNMENT. None of the parties hereto may assign its rights or ---------- delegate its obligations under this Agreement without the written consent of the other parties hereto. This Agreement and all of the provisions hereof shall be binding upon and inure only to the benefit of the parties hereto and their respective heirs, executors, personal representatives and successors. 4.4 FURTHER ACTION. Each of the parties hereto shall use all -------------- reasonable efforts to do, or cause to be done, all things necessary, proper or advisable under applicable law to carry out the provisions of this Agreement and shall execute and deliver such documents and other papers as may be required to carry out the provisions of this Agreement. 4.5 NOTICES. All notices, requests, claims, demands and other ------- communications hereunder shall be in writing and shall 2 be deemed given if delivered personally or by fax or mailed by registered or certified mail (return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): if to Buyer, a copy to: 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, NY 10036 Attention: Ralph J. Sutcliffe, Esq. Telecopy: (212) 479-6275 if to the Company, a copy to: Shared Technologies, Inc. 100 Great Meadow Road, Suite 104 Wethersfield, CT 06109 Telecopy No.: (860) 258-2455 Attention: Kenneth M. Dorros, Esq. with a copy to: Cahill Gordon & Reindel 80 Pine Street New York, NY 10005 Telecopy No.: (212) 269-5420 Attention: James J. Clark, Esq. 4.6 SEVERABILITY. If any term or other provision of this Agreement ------------ is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated thereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible. 3 4.7 HEADINGS. The headings of Sections and Subsections are for -------- reference only and shall not limit or control the meaning thereof. 4.8 COUNTERPARTS. This Agreement may be executed in multiple ------------- counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 4.9 GOVERNING LAW. THE VALIDITY AND CONSTRUCTION OF THIS AGREEMENT ------------- SHALL BE GOVERNED BY THE INTERNAL LAWS (AND NOT THE PRINCIPLES OF CONFLICT OF LAWS) OF THE STATE OF DELAWARE. 4.10 VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS ----- AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF DELAWARE OR OF THE UNITED STATES OF AMERICA RESIDING IN THE STATE OF DELAWARE AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY ACCEPT FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY WAIVES, AND AGREES NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT OF THIS AGREEMENT THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SAID COURTS OR THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR (PROVIDED THAT PROCESS SHALL BE SERVED IN ANY MANNER REFERRED TO IN THE FOLLOWING SENTENCE) THAT SERVICE OF PROCESS UPON SUCH PARTY IS INEFFECTIVE. EACH PARTY AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION, SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO THIS AGREEMENT MAY BE MADE UPON IT IN ANY MANNER PERMITTED BY THE LAWS OF THE STATE OF DELAWARE OR THE FEDERAL LAWS OF THE UNITED STATES. SERVICE OF PROCESS IN ANY MANNER REFERRED TO IN THE PRECEDING SENTENCE SHALL BE DEEMED, IN EVERY RESPECT, EFFECTIVE SERVICE OF PROCESS UPON SUCH PARTY. [SIGNATURE PAGE FOLLOWS] 4 4.11 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES -------------------- TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT. IN WITNESS WHEREOF, and intending to be legally bound thereby, the parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date and year first above written. INTERMEDIA COMMUNICATIONS INC. By: /s/ Robert M. Manning --------------------- Name: Robert M. Manning Title: Senior Vice President SHARED TECHNOLOGIES FAIRCHILD INC. By: /s/ Anthony Autorino -------------------- Name: Anthony Autorino Title: Chief Executive Officer 5 EXHIBIT A --------- PROMISSORY NOTE $21,918,000.00 New York, New York __________ __, 1997 FOR VALUE RECEIVED, the undersigned, SHARED TECHNOLOGIES FAIRCHILD INC., a Delaware corporation (the "Company"), hereby promises to pay to the order of INTERMEDIA COMMUNICATIONS INC., a Delaware corporation (the "Lender"), the principal sum of TWENTY ONE MILLION NINE HUNDRED EIGHTEEN THOUSAND DOLLARS AND NO CENTS ($21,918,000.00), together with interest thereon from the date hereof until the date such amounts are paid in accordance with the terms hereof at the rate set forth below. Payments of the principal amount hereof shall be made at the same time and on the same terms as payments of the liquidation preference were required to made under the terms of the Series J Special Preferred Stock, par value $.01 per share (the "Special Preferred Stock") issued by the Company. Interest on this Note shall accrue and be payable on the same terms as dividends were payable under the terms of the Special Preferred Stock. In no event shall the interest rate applicable at any time to this Note exceed the maximum rate permitted by law. The principal of and the interest on this Note shall be payable in lawful money of the United States of America at the offices of the Lender, at 3625 Queen Palm Drive, Tampa, Florida, 33619, or at such other location as the Lender may designate by written notice to the Company. Any payment which is required to be made on a day which is a legal holiday for banking institutions generally, at the place where payment is to be made, shall be made on the next succeeding day which is not a legal holiday without additional interest and with the same force and effect as if made on the date specified herein for such payment. To induce the Lender to make the loan evidenced by this Note, the Company represents and warrants to the Lender that (i) the Company is duly incorporated and validly existing in good standing under the laws of the jurisdiction of its incorporation, with full power and authority to make, deliver and perform this Note; (ii) the execution, delivery and performance by the Company of this Note have been duly authorized by all necessary corporate action and does not and will not violate or conflict with its charter or by-laws or any law, rule, regulation or order binding on the Company or any agreement or instrument to which the Company is a party or which may be binding on the Company; (iii) this Note has been fully executed by an authorized officer of the Company and constitutes a legal, valid, binding and 6 enforceable obligation of the Company; and (iv) no authorization, consent, approval, license, exemption of or filing or registration with, any court or government or governmental agency is or will be necessary to the valid execution, delivery or performance by the Company of this Note. The Company agrees to pay all costs and expenses including reasonable attorneys' fees, incurred by Lender in investigating and enforcing any of Lender's rights and remedies hereunder, whether or not suit is instituted. The Company hereby waives presentment, notice of dishonor, protest and notice of protest, and any or all other notices or demands (other than demand for payment) in connection with the delivery, acceptance, performance, default, endorsement or guarantee of this Note. The liability of the Company hereunder shall be unconditional and shall not be in any manner affected by any indulgence whatsoever granted or consented to by Lender, including, but not limited to any extension of time, renewal, waiver or other modification. Any failure of Lender to exercise any right hereunder shall not be construed as a waiver of the right to exercise the same or any other right at any time and from time to time thereafter. The Lender may accept late payments, or partial payments, even though marked "payment in full" or containing words of similar import or other conditions, without waiving any of its rights. No amendment, modification or waiver of any provision of this Note or consent to any departure by the Company therefrom shall be effective, irrespective of any course of dealing, unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. This Note cannot be changed or terminated orally or by estoppel or waiver or by any alleged oral modification regardless of any claimed partial performance referable thereto. Any notice from the Lender to the Company shall be deemed given when delivered to the Company by hand or when deposited in the United States mail and addressed to the Company at the last address of the Company appearing on the Lender's records. This Note is non-negotiable and may not be pledged, sold, transferred or assigned by the Lender. This Note shall be governed by and construed in accordance with the laws of the State of Delaware applicable to instruments made and to be performed wholly within that state. If any provision of this Note is held to be illegal or unenforceable for any reason whatsoever, such illegality or unenforceability shall not affect the validity of any other provision hereof. 7 EACH OF THE LENDER AND THE COMPANY AGREES THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE MAY BE INITIATED AND PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN THE STATE OF DELAWARE. EACH OF THE LENDER AND THE COMPANY CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS PERSON BY ANY SUCH COURT HAVING JURISDICTION OVER THE SUBJECT MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE LENDER AT ITS ADDRESS SET FORTH ABOVE, AND TO THE COMPANY AT ITS ADDRESS SET FORTH BELOW OR TO ANY OTHER ADDRESS AS MAY APPEAR IN THE LENDER'S RECORDS AS THE ADDRESS OF THE COMPANY. IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE, EACH OF THE LENDER AND THE COMPANY WAIVES (I) TRIAL BY JURY, (II) ANY OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE AND (III) ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES. The Lender is authorized to fill in any blank spaces and to otherwise complete this Note and correct any patent errors herein. IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by its proper corporate officers thereunto duly authorized. SHARED TECHNOLOGIES FAIRCHILD INC. By: _____________________________ Name: Title: 100 Great Meadow Road, Suite 104 Wethersfield, CT 06109 8 EX-99.C.4 14 CONFIDENTIALITY AGREEMENT EXHIBIT (c)(4) September 18, 1996 Personal and Confidential - ------------------------- Mr. Anthony Autorino Chief Executive Officer Shared Technologies Inc. 100 Great Meadow Road Wethersfield, Connecticut 06109 Dear Mr. Autorino: The undersigned (the "Company") and you ("ST") are about to engage in exploratory discussions regarding a possible acquisition by the Company of ST or a similar transaction (any of the foregoing, a "Transaction"). The Company and ST have each requested the right to review various non-public information regarding the other (any such information, written or oral, regarding the Company, including any of its direct or indirect subsidiaries, "Company Evaluation Material" and any such information, written or oral, regarding ST, including any of its direct or indirect subsidiaries, "ST Evaluation Material"). The Company hereby undertakes with respect to the ST Evaluation Material, and ST hereby undertakes with respect to the Company Evaluation Material, and each of the Company and ST otherwise agrees as follows: 1. The Evaluation Material will be used solely for the purpose of evaluating a possible Transaction, and until two (2) years from the date hereof, such Evaluation Material will be kept strictly confidential by the Company or ST, as the case may be, and their respective affiliates, directors, officers, employees, advisors (including Bear, Stearns & Co. Inc., who has been retained by the Company to act on its behalf), agents or controlling persons (such affiliates and other persons being herein referred to collectively as "Representatives", except that the Evaluation Material or portions thereof may be disclosed to Representatives who need to know such information for the purpose of evaluating a possible Transaction (it being understood that prior to such disclosure Representatives will be informed of the confidential nature of the Evaluation Material and shall agree to be bound by this Agreement). The Company and ST agree to be responsible for any breach of this Agreement by their respective Representatives. 2. The term "Evaluation Material" does not include any information which (i) at the time of disclosure or thereafter is generally known by the public (other than as a result of its disclosure by the Company or ST or their respective Representatives) or (ii) was or becomes available to the Company or ST, as the case may be, on a nonconfidential bases from a person not to the knowledge of the Company or ST, as the case may be, otherwise bound by a confidentiality agreement with the other and who is not, to the knowledge of the Company or ST, as the case may be, otherwise prohibited from transmitting the information to the Company or ST, as the case may be, or (iii) is independently developed by the Company or ST, as the case may be, or their respective Representatives. As used in this Agreement, the term "person" shall be broadly interpreted to include, without limitation, any corporation, company, joint venture, partnership or individual and the term "affiliate" shall have the meaning set forth in Rule 144 issued under the Securities Act of 1933. 3. In the event the Company, ST or their respective Representatives are required by applicable law or regulation or by legal process to disclose any Evaluation Material, each agrees to (i) immediately notify the other of the existence, terms and circumstances surrounding such a request, and (ii) consult with the other on the advisability of taking legally available steps to resist or narrow such request. 4. Prior to the earlier of two (2) years from the date hereof or the completion of a Transaction, unless otherwise required by law in the opinion of outside counsel, neither the Company nor ST will, without the prior written consent of the other, disclose to any person either the fact that discussions or negotiations are taking place concerning a possible Transaction, or any of the terms, conditions or other facts with respect to any such possible Transaction, including the status thereof and the fact that the Evaluation Material has been made available to the Company or ST. 2 5. The Company and ST each hereby acknowledges that it is aware, and that it will advise its Representatives who receive the Evaluation Material, that the United States securities laws prohibit any person who has material, non-public information concerning the matters which are the subject of this Agreement from purchasing or selling securities of the other (and options, warrants and rights relating thereto) or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person including, without limitation any of its Representatives, is likely to purchase or sell such securities. 6. Neither the Company nor any of its Representatives, on the one hand, nor ST or any of its Representatives, on the other hand, is making any representation or warranty hereunder, express or implied, as to the accuracy or completeness of the Company Evaluation Material or ST Evaluation Material, respectively, or any other information provided pursuant hereto. Neither party, nor any of their respective affiliates, Representatives, officers, directors, employees, agents or controlling persons (within the meaning of the 1934 Act) shall have any liability hereunder to the other or any other person (including, without limitation, any of its Representatives) resulting from use of the Evaluation Material. 7. The Company and ST agree that unless and until a definitive agreement with respect to any Transaction has been executed and delivered, neither party will be under any legal obligation of any kind whatsoever with respect to such a Transaction by virtue of (i) this Agreement or (ii) any written or oral expression with respect to such a Transaction except, in the case of this Agreement, for the matters specifically agreed to herein. 8. Neither party has granted the other any license, copyright, or similar right with respect to any of the Evaluation Material or any other information provided pursuant hereto. 9. Upon determining not to proceed with a Transaction, the Company or ST, as the case may be, will promptly advise the other of that determination in writing. In that event or at any time requested by either the Company or ST, all 3 Evaluation Material, including all copies, reproductions, summaries, extracts thereof or based thereon, previously provided to the other shall be returned or be certified in writing to have been destroyed. 10. In consideration of the due diligence effort to be performed by the Company and the expenses to be incurred by the Company in connection therewith, ST hereby agrees that for the period from the date of this letter through December 31, 1996 and, if a definitive agreement for a Transaction is executed prior thereto, through the date such definitive agreement is consummated or abandoned in accordance with its terms without default by ST, neither ST nor any of its officers, directors or shareholders on behalf of ST will solicit any offer for a sale of ST, all or any substantial part of its business or assets or any equity securities issued by ST or any subsidiary of ST nor engage in any negotiations or permit exploratory due diligence regarding any such offer, other than with the Company. 11. The Company and ST shall be entitled to equitable relief by way of injunction for any breach or threatened breach of any of the provisions of this Agreement by the other. 12. The validity and interpretation of this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York applicable to agreements made and to be fully performed therein (excluding the conflicts of laws rules). The Company and ST irrevocably submit to the jurisdiction of any court of the State of New York or the United States District Court of the Southern District of the State of New York for the purpose of any suit, action, or other proceeding arising out of this Agreement, or any of the agreements or transactions contemplated hereby, which is brought by or against it and (i) hereby irrevocably agree that all claims in respect of any such suit, action or proceeding may be heard and determined in any such court, (ii) to the extent that either the Company or ST has acquired, or hereafter may acquire, any immunity from jurisdiction of any such court or from any legal process therein, it hereby waives to the fullest extent permitted by law, such immunity and (iii) agrees not co commence any action, suit or proceeding relating to this Agreement or any 4 Transaction except in such court. Each of the Company and ST hereby waives, and agrees not to assert in any such suit, action or proceeding, in each case, to the fullest extent permitted by applicable law, any claim that (a) it is not personally subject to the jurisdiction of any such court, (b) it is immune from any legal process (whether through service or notice, attachment prior to judgment attachment in aid of execution, execution or otherwise) with respect to it or its property or (c) any such suit, action or proceeding is brought in an inconvenient forum. 13. The benefits of this Agreement shall inure to the respective successors and assigns of the parties and the obligations and liabilities assumed in this Agreement by the parties hereto shall be binding upon their respective successors and assigns. 14. If it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that any term or provision hereof is invalid or unenforceable, (i) the remaining terms and provisions hereof shall be unimpaired and shall remain in full force and effect and (ii) the invalid or unenforceable provision or term shall be replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of such invalid or unenforceable term or provision. 15. This Agreement embodies the entire agreement and understanding of the parties hereto and supersedes any and all prior agreements, arrangements and understandings relating to the matters provided for herein. No alteration, waiver, amendment, change or supplement hereto shall be binding or effective unless the same is set forth in writing signed by a duly authorized Representative of each party. 16. For the convenience of the parties, any number of counterparts of this Agreement may be executed by the parties hereto. Each such counterpart shall be, and shall be deemed to be, an original instrument, but all such counterparts taken together shall constitute one and the same Agreement. 5 This Agreement is being delivered to you in duplicate. Kindly execute and return one copy of this letter which will constitute our Agreement with respect to the subject matter of this letter. Very truly yours, INTERMEDIA COMMUNICATIONS INC. By: /s/ David C. Ruberg ------------------- David C. Ruberg, Chairman and Chief Executive Officer Confirmed and agreed to this 18th day of September, 1996 SHARED TECHNOLOGIES INC. By: /s/ Anthony Autorino -------------------- Anthony Autorino, Chief Executive Officer 6 EX-99.C.5 15 SETTLEMENT AGREEMENT EXHIBIT (c)(5) 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 1 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 2 (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. (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. 3 (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 4 agreement to be executed on or after the date 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, 5 encumbrances, 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: 6 (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 7 (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 the Parties 8 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. 9 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written. INTERMEDIA COMMUNICATIONS INC. By: /s/ Robert M. Manning --------------------- MOONLIGHT ACQUISITION CORP. By: /s/ Robert M. Manning --------------------- TEL-SAVE HOLDINGS, INC. By: /s/ Aloysius T. Lawn IV ----------------------- SHARED TECHNOLOGIES FAIRCHILD INC. By: /s/ Anthony Autorino -------------------- TSHCO. INC. By: /s/ Aloysius T. Lawn IV ----------------------- 10 EX-99.C.6 16 AMENDMENT DATED NOVEMBER 20, 1997 EXHIBIT (c)(6) AMENDMENT (the "Amendment"), dated November 20, 1997 to Agreement for Provision of Telecommunications Services dated November 13, 1997 (as heretofore amended, the "Agreement"), between Tel-Save, Inc., a Pennsylvania corporation ("Tel-Save") and Shared Technologies Fairchild Inc., a Delaware corporation ("STF"). FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, the Agreement is hereby amended in the following respects, with terms defined in the Agreement and used herein having the respective meanings assigned to such terms in the Agreement: 1. Section 2.b. of the Agreement is hereby amended by deleting the first sentence thereof and substituting therefor the following sentence: "The "Term" of this Agreement begins on the Commencement Date and ends on the day 30 days following receipt of written notice of termination from either Party to the other that is delivered at any time after February 28, 1998." 2. Section 5 of the Agreement is hereby deleted in its entirety. 3. Section 9 of the Agreement is hereby deleted in its entirety. 4. Section 11 of the Agreement is hereby deleted in its entirety. Except as amended hereby, the Agreement shall continue in full force and effect. Notwithstanding the foregoing, in the event that the Agreement and Plan of Merger dated November 20, 1997 among Intermedia Communications Inc., Moonlight Acquisition Corp. and STF is terminated by the parties thereto, then upon written notice by STF to Tel-Save, the amendments and deletions to the Agreement shall be rescinded and the Agreement shall be reinstated and remain in full force and effect as originally entered into between Tel-Save and STF. This Amendment may be executed in any number of counterparts, and all such counterparts together shall constitute one and the same instrument. This Amendment shall be governed by and construed in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under applicable principles of conflicts of law). IN WITNESS WHEREOF, the parties hereto have executed this Amendment this 20th day of November, 1997. TEL-SAVE, INC. By: /s/ Aloysius T. Lawn IV ----------------------- SHARED TECHNOLOGIES FAIRCHILD INC. By: /s/ Anthony Autorino -------------------- 2 EX-99.C.7 17 STOCK OPTION AGREEMENT DATED 11/20/97 EXHIBIT (c)(7) 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 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 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 2 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 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. 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 3 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 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 4 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. 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 5 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. (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. 6 (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 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. (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. 7 (b) 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. (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. (b) Further Assurances. Purchaser and the Stockholders will execute and ------------------ deliver all such further documents and instruments and take all 8 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. (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 9 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. Telecopy: (212) 997-3527 10 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. 11 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: /s/ Robert M. Manning ------------------------ 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: /s/ Donald Miller ----------------- Name: Donald Miller Title: Vice President 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 ------------------------------ /s/ Anthony D. Autorino - ----------------------- 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 ----------------------- /s/ Jeffrey J. Steiner - ---------------------- 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: /s/ Anthony Autorino -------------------- Name: Anthony Autorino Title: Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----