EXHIBIT (c)(7)
EXECUTION COPY
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STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of November 20, 1997 (this "Agreement"),
among INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("Purchaser"), and
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the individuals and entities whose names and addresses are set forth at the foot
of this Agreement (collectively, the "Stockholders", and each, individually, a
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"Stockholder"), it being understood that the Stockholders are executing this
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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,
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dated as of the date hereof (the "Merger Agreement"), with Shared Technologies
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Xxxxxxxxx, Inc., a Delaware corporation (the "Company"), which Merger Agreement
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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
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Company, par value $.01 per share ("Company Common Stock") other than shares
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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
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Preferred Stock of the Company, par value, $.01 per share ("Company Preferred
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Stock") which is convertible into Common Stock and is not owned by Purchaser
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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
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Stock Per Share Amount"), in each case, net to the holder thereof in cash; and
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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").
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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
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exclusive and irrevocable option (each an "Option", and together the
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"Options") to purchase from such Stockholder any and all Shares held
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by such Stockholder (the "Option Shares") at a price equal to the Per
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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 Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000
(xxx "XXX Xxx") and (z) two days after the receipt of any
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necessary approvals from the Federal Communications
Commission (the "FCC") or any applicable State regulatory
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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
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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
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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)
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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
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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
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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
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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 Xxxxxx & 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
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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
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of Purchaser, a "Person") relating to (a) any acquisition or purchase
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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
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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
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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
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necessary power and authority to execute and deliver this Agreement,
to perform
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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
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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 Xxxxxxx X. Xxxxxxxx (the
"Shareholders Agreement") may be required and have been obtained.
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(c) Title to the Shares. The Shares and Options owned by the Stockholder
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(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
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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
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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.
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(b) No Conflict. The execution and delivery of this Agreement by
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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, Xxxxxxx & Co., Inc., no broker, finder or
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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
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discretion at any time hereafter to terminate this Agreement, the
Options and all irrevocable proxies granted to it hereunder.
10. Miscellaneous.
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(a) Expenses. Except as otherwise provided herein or in the Merger
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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
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deliver all such further documents and instruments and take all
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such further action as may be necessary in order to consummate the
transactions contemplated hereby.
(c) Specific Performance. The parties hereto agree that irreparable
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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
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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
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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
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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
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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
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instrument in writing signed by the party or parties to be bound
thereby.
(h) Severability. The invalidity or unenforceability of any provision of
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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
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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.
0000 Xxxxx Xxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Kronish, Lieb, Weiner & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
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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
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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
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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
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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
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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,
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Inc. hereby consents to the execution and delivery of this Agreement
by all parties hereto and the grants of voting rights and Options
pursuant hereto and agrees that all Option Shares purchased by
Purchasers pursuant hereto shall be acquired free and clear of any
obligation under the Shareholders Agreement.
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IN WITNESS WHEREOF, Purchaser has caused this Agreement to be executed by
its officers thereunto duly authorized and the Stockholders and the Company have
duly executed or caused this Agreement to be executed by its officers thereunto
duly authorized as of the date first written above.
PURCHASER:
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INTERMEDIA COMMUNICATIONS INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
SHAREHOLDERS: NUMBER OF SHARES OWNED:
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RHI HOLDINGS, INC. 6,225,000 Company Common Stock
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250,000 Company Preferred Stock
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By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Vice President
Address: c/o The Xxxxxxxxx Corporation
000 Xxxx Xxxxxxx
XX Xxx 00000
Xxxxxxxxx, Xxxxxxxx
Attention: Xxxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
[Signature Pages Continue on Next Page]
Xxxxxxx X. Xxxxxxxx 870,416 Company Common Stock
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Options to purchase 296,667
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shares of Company Common Stock
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/s/ Xxxxxxx X. Xxxxxxxx
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Address: c/o Shared Technologies Xxxxxxxxx, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telecopy: (000) 000-0000
Xxxxxxx X. Xxxxxxx up to 47,500 Company Common Stock
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Options to purchase 116,667 shares
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of Company Common Stock
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/s/ Xxxxxxx X. Xxxxxxx
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Address: c/o The Xxxxxxxxx Corporation
000 Xxxx Xxxxxxx
XX Xxx 00000
Xxxxxxxxx, Xxxxxxxx
Attention: Xxxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
SHARED TECHNOLOGIES XXXXXXXXX INC.
By: /s/ Xxxxxxx Xxxxxxxx
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Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer
