<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
IPC COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
[LOGO]
DEAR STOCKHOLDER,
You are cordially invited to attend the Annual Meeting of Stockholders on
Thursday, March 2, 2000 at 9:00 a.m. at the Citicorp Center, 153 East 53rd
Street, 14th Floor, Room J, New York, New York.
At this year's Annual Meeting, you will be asked to vote for the election of
nine directors, each to hold office until the next annual meeting or until their
successors have been elected and qualified, the approval of an amendment to
increase by 300,000 the shares reserved for the IPC Communications, Inc. 1999
Stock Incentive Plan and the ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors for the fiscal year ending
September 30, 2000.
Please take the time to read carefully each of the proposals for stockholder
action described in the proxy materials.
Thank you for your support of our Company.
Very truly yours,
<TABLE>
<S> <C>
[/S/ RICHARD W. SMITH] [/S/ GERALD E. STARR]
Richard W. Smith Gerald E. Starr
CHAIRMAN OF THE BOARD PRESIDENT AND CHIEF
EXECUTIVE OFFICER
</TABLE>
PLEASE VOTE BY USING THE INTERNET,
THE TELEPHONE OR BY SIGNING, DATING, AND RETURNING
THE ENCLOSED PROXY CARD
<PAGE>
IPC COMMUNICATIONS, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 2, 2000
------------------------
TO THE STOCKHOLDERS OF
IPC COMMUNICATIONS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of IPC
Communications, Inc. ("IPC Communications" or the "Company") will be held on
Thursday, March 2, 2000 at 9:00 a.m., New York City time, at the Citicorp
Center, 153 East 53rd Street, 14th Floor, Room J, New York, New York for the
following purposes:
1. To elect nine directors, each to hold office until the next annual
meeting or until their successors have been elected and qualified.
2. To approve an amendment to increase by 300,000 the shares reserved for
the IPC Communications, Inc. 1999 Stock Incentive Plan.
3. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors of the Company for the fiscal year ending September 30, 2000.
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof. Except with respect
to procedural matters incident to the conduct of the Annual Meeting,
management of the Company is not aware of any other matters which may
properly come before the Annual Meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on January 28, 2000 are
entitled to notice of and to vote at the Annual Meeting and at any adjournment
or postponement thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. REGISTERED
STOCKHOLDERS (THOSE WHO HOLD SHARES DIRECTLY OR THROUGH COMPANY PLANS RATHER
THAN THROUGH A BANK OR BROKER) MAY VOTE THEIR SHARES VIA THE INTERNET OR BY
USING A TOLL-FREE TELEPHONE NUMBER. INSTRUCTIONS FOR USING THESE ELECTRONIC
SERVICES ARE PROVIDED ON THE PROXY CARD. WHETHER OR NOT YOU EXPECT TO ATTEND THE
ANNUAL MEETING, IN ORDER TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING
PLEASE VOTE VIA THE INTERNET, BY USING THE TELEPHONE OR BY SIGNING, DATING AND
RETURNING THE ENCLOSED PROXY IN THE POSTAGE PREPAID ENVELOPE PROVIDED AS
PROMPTLY AS POSSIBLE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN
PERSON AT THE ANNUAL MEETING. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
AT ANY TIME PRIOR TO OR AT THE ANNUAL MEETING.
By Order of the Board of Directors,
[SIG]
Alexander Russo
VICE PRESIDENT AND GENERAL COUNSEL
New York, New York
February 4, 2000
<PAGE>
[LOGO]
IPC COMMUNICATIONS, INC.
WALL STREET PLAZA
88 PINE STREET
NEW YORK, NEW YORK 10005
212-825-9060
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 2, 2000
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of IPC
Communications, Inc. ("IPC Communications" or the "Company") for use at the
Annual Meeting of Stockholders to be held on Thursday, March 2, 2000 at 9:00
a.m., New York City time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth therein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held at the Citicorp
Center, 153 East 53rd Street, 14th Floor, Room J, New York, New York.
IPC Communications became the holding company for IPC Information Systems,
Inc. ("IPC Information Systems") on May 21, 1999. Accordingly, unless otherwise
indicated, all references in this Proxy Statement to "IPC" or the "Company"
refer to IPC Information Systems for periods through May 20, 1999 and to IPC
Communications and its subsidiaries, including IPC Information Systems, for
periods thereafter. All references to "IXnet" in this Proxy Statement refer to
the Company's subsidiary, IXnet, Inc. and its subsidiaries.
The proxy solicitation materials were mailed on or about February 4, 2000 to
all stockholders entitled to vote at the Annual Meeting. All properly executed
proxies received in time for the Annual Meeting and not revoked will be voted as
specified. If no instructions are specified, a properly executed proxy will be
voted for each of the nominees for election as directors, for the approval of an
amendment to increase by 300,000 the shares reserved for the IPC Communications,
Inc. 1999 Stock Incentive Plan and for the ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors of the Company for the fiscal
year ending September 30, 2000.
If any other matters are properly presented for consideration at the Annual
Meeting, the persons named in the enclosed proxy card and acting thereunder, or
their duly constituted substitutes acting at the Annual Meeting, will have
discretion to vote on such matters in accordance with their judgment.
1
<PAGE>
RECORD DATE AND SHARE OWNERSHIP
Only stockholders of record at the close of business on January 28, 2000
(the "Record Date") are entitled to notice of the Annual Meeting and to vote at
the Annual Meeting. As of the Record Date, 8,797,743 shares of the Company's
Common Stock (the "Common Stock") were issued and outstanding. Each stockholder
is entitled to one vote for each share held. See "Security Ownership of Certain
Beneficial Owners and Management" below for information regarding beneficial
owners of more than five percent of the Company's Common Stock.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by: (i) delivering to the Secretary of the
Company a written notice of revocation; (ii) by executing a later-voted proxy
via the Internet, by the telephone or by the mail; or (iii) by attending and
voting at the Annual Meeting or any adjournment or postponement thereof, if a
written revocation is filed with the Secretary of the Annual Meeting prior to
the voting of such proxies. Proxies solicited hereby may be exercised only at
the Annual Meeting and any adjournment thereof and will not be used for any
other meeting.
VOTING AND SOLICITATION
The required quorum for the Annual Meeting, which must be represented in
person or by proxy, is a majority of the outstanding shares of Common Stock on
the Record Date. All votes will be tabulated by the inspectors of election
appointed for the Annual Meeting who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes. Abstentions will be counted
towards the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes, whereas broker non-votes are
not counted for any purpose. The vote required for each proposal is set forth in
the discussion of such proposal.
CABLE SYSTEMS HOLDING, LLC, WHICH IN THE AGGREGATE BENEFICIALLY OWNS 53.3%
OF THE VOTING POWER OF THE COMPANY, INTENDS TO VOTE IN FAVOR OF PROPOSALS 1, 2
AND 3. ACCORDINGLY, APPROVAL OF PROPOSALS 1, 2 AND 3 IS ASSURED.
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
card, any associated costs of voting via the Internet or telephone and any
additional information furnished to stockholders. Copies of the solicitation
material will be furnished to banks, brokerage firms, fiduciaries and custodians
holding in their names shares of Common Stock beneficially owned by others to
forward to such beneficial owners. In addition, the Company may reimburse
persons representing beneficial owners of shares for their expenses in
forwarding the solicitation material to such beneficial owners.
ELECTRONIC VOTING
Registered stockholders (those who hold shares directly or through Company
plans rather than a bank or broker) can simplify their voting and save the
Company expense by calling 1-800-840-1208 or voting via the Internet at
http://www.eproxy.com/IPI. Information pertaining to Internet voting and
telephone is provided on the proxy card. A Control Number is designed to verify
stockholders' identities and allow them to vote their shares and confirm that
their voting instructions have been properly recorded. The Control Number is
located in the box in the lower right hand corner of the proxy card.
Stockholders that do not choose to vote via the Internet or by using the
telephone may still return their proxy card, properly signed, and the shares
represented will be voted in accordance with the stockholder's directions.
Stockholders whose shares are held in the name of a bank or broker should follow
2
<PAGE>
the voting instructions on the form you receive. Although most banks and brokers
now offer telephone and Internet voting, availability and specific processes
will depend on their voting arrangements.
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Stockholders are being asked to approve an amendment to the IPC
Communications, Inc. 1999 Stock Incentive Plan (the "Stock Incentive Plan") to
authorize an increase in the number of shares reserved for issuance upon
exercise of stock options. If approved, this amendment will increase the total
number of stock options that may be granted to officers, employees, consultants
and directors. Accordingly, all of the directors and executive officers of the
Company, each of whom is eligible for option grants under the Stock Incentive
Plan, may be deemed to have an interest in this proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BY MANAGEMENT
The following table sets forth certain information, as of October 31, 1999
or as of a date specified in the footnotes below, as the case may be, with
respect to the beneficial ownership of Common Stock and the stock of the
Company's subsidiaries by: (i) each director; (ii)(a) the Company's Chief
Executive Officer and (b) each of the other four most highly compensated
executive officers of the Company who were serving as executive officers at the
end of the last completed fiscal year and whose aggregate salary plus bonus for
the fiscal year ended September 30, 1999 was at least $100,000 (collectively,
the "Named Executive Officers"); and (iii) all executive officers and directors
as a group.
Except as otherwise noted, the persons named in the table have sole voting
and investment power with respect to all shares of common stock shown as
beneficially owned by them, subject to community property laws where applicable.
Unless otherwise indicated, the address for each stockholder listed below is c/o
IPC Communications, Inc., 88 Pine Street, 15th Floor, New York, New York 10005.
All share information is based on shares of Common Stock outstanding as of
January 28, 2000.
3
<PAGE>
<TABLE>
<CAPTION>
(D)
(C) EXERCISABLE
(B) AMOUNT & STOCK (E)
TITLE AND NATURE OF OPTIONS APPROXIMATE
(A) CLASS OF BENEFICIAL INCLUDED PERCENT OF
NAME OF BENEFICIAL OWNER SECURITY OWNERSHIP(1) IN COLUMN(C)(2) CLASS(3)
------------------------ ----------------------- ------------ --------------- ------------------------
<S> <C> <C> <C> <C>
Richard M. Cashin, Jr......... Company Common Stock 119,055 0 1.36%
IXnet Common Stock 0 -- --
James M. Demitrieus........... Company Common Stock 0 -- --
IXnet Common Stock 13,000(4) 0 *
David Y. Howe................. Company Common Stock 4,761 0 *
IXnet Common Stock 0 -- --
Richard P. Kleinknecht........ Company Common Stock 877,344(5) 115,440 9.98%
IXnet Common Stock 0 -- --
William Lavery................ Company Common Stock 46,176 46,176 *
IXnet Common Stock 750(7) -- --
Robert J. McInerney........... Company Common Stock 0 -- --
IXnet Common Stock 2,500 0 *
Richard W. Smith.............. Company Common Stock 381,904(6) 0 4.34%
IXnet Common Stock 0 -- --
Gerald E. Starr............... Company Common Stock 92,352 82,829 1.05%
IXnet Common Stock 3,000(8) 0 *
David A. Walsh................ Company Common Stock 446,798(9) 175,181 5.08%
IXnet Common Stock 1,763,352 1,763,352 3.45%
John Wayt, III................ Company Common Stock 15,395 5,472 *
IXnet Common Stock 100 0 *
Peter A. Woog................. Company Common Stock 47,489(10) 0 *
IXnet Common Stock 500(11) 0 *
All executive officers and
directors as a group
(14 persons)................ Company Common Stock 2,041,024 425,098 23.20%
IXnet Common Stock 1,784,302 1,763,352 3.45%
</TABLE>
- ------------------------
* Less than 1%
(1) Based upon information supplied by officers and directors and by filings
under Sections 13 and 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(2) The figures in this column represent the number of shares which the
individual and group could have acquired upon exercise of stock options
granted under the Stock Incentive Plan and the IXnet, Inc. 1999 Stock
Option Plan that, as of October 31, 1999, were exercisable or were expected
to become exercisable within 60 days.
(3) For the Company, percentage of ownership is based on 8,797,743 shares of
IPC Common Stock outstanding on January 28, 2000. For IXnet, percentage of
ownership is based on 51,103,160 shares of IXnet Common Stock outstanding
on January 28, 2000. The percentages also include, in the case of each
individual and the group, the additional number of shares listed in column
(d).
4
<PAGE>
(4) Includes 11,000 shares owned jointly with spouse and 2,000 shares owned
jointly with minor children. Mr. Demitrieus has shared voting and
investment power with regard to all 13,000 shares.
(5) Includes 761,904 shares owned directly by Richard P. Kleinknecht and
115,440 shares that could be acquired upon exercise of stock options. Does
not include 6,258,802 shares owned as of August 12, 1999 by other
signatories of the Amended and Restated Investors Agreement, dated as of
April 9, 1998 (the "Investors Agreement"), among the Company, Cable Systems
Holding, LLC ("CSH LLC"), Cable Systems International, Inc ("CSI"),
Lawrence, Smith & Horey III, L.P. (now known as Allegra Capital Partners
III, L.P. and hereinafter "Allegra"), Richard P. Kleinknecht, David A.
Walsh, Anthony Servidio and Charles F. Auster, who became a party to the
Investors Agreement on May 1, 1998. The Investors Agreement contains
provisions concerning the voting and transfer of shares of Common Stock.
Under SEC rules, this group of investors may be deemed to beneficially own
more than 5% of our Common Stock.
(6) Includes 381,904 shares beneficially owned by Allegra of which Mr. Smith is
a general partner. Mr. Smith has shared voting and investment power over
all 381,904 shares. Does not include 6,051,628 shares owned as of
August 12, 1999 by other signatories of the Investors Agreement.
(7) Includes 750 shares held by minor children over which Mr. Lavery has shared
voting and investment power.
(8) Held in trust for the benefit of minor children. Mr. Starr has shared
voting and investment power with respect to all of these shares.
(9) Does not include 6,171,438 shares owned, as of August 12, 1999, by other
signatories to the Investors Agreement.
(10) Includes 1,000 shares over which Mr. Woog has sole investment and voting
power and 46,489 shares over which Mr. Woog has shared investment and
voting power. The 46,489 shares over which Mr. Woog has shared power
include 3,000 shares held jointly by Peter A. Woog and Helene S. Woog and
43,489 shares held in the name of the Woog Family Limited Partnership.
(11) Mr. Woog has shared voting and investment power over all 500 shares owned
by his children.
5
<PAGE>
BY OTHERS
The following table sets forth certain information, as of the dates
indicated in the footnotes below, with respect to the beneficial ownership of
Common Stock by each person known by the Company to own beneficially more than
5% of its outstanding shares of Common Stock. Unless indicated otherwise, each
person listed has sole voting and investment power over the shares beneficially
owned.
<TABLE>
<CAPTION>
(B) (C)
(A) AMOUNT & NATURE OF APPROXIMATE PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS(1)
- ------------------------ -------------------- -------------------
<S> <C> <C>
Cable Systems Holding, LLC
505 North 51st Avenue
Phoenix, Arizona 85043-2701............................ 4,686,985(2) 53.3%
Chesapeake Partners Management Co., Inc.................. 535,300(3) 6.09%
Chesapeake Partners Limited Partnership
1829 Reisterstown Road
Suite 220
Baltimore, Maryland 21208.............................. 498,000(3) 5.66%
</TABLE>
- ------------------------
(1) Percentage of ownership is based on 8,797,743 shares of Common Stock
outstanding on January 28, 2000.
(2) Based on Amendment No. 6 to Schedule 13D filed on August 23, 1999.
(3) Based on Amendment No. 2 to Schedule 13G filed on July 2, 1999.
LEGAL PROCEEDINGS
There are no legal proceedings to which any director, officer or affiliate
of the Company, any owner of record or beneficially of more than five percent of
Common Stock, or any associate of any such director, officer, affiliate of the
Company or security holder is a party adverse to the Company or any of its
subsidiaries or has a material interest adverse to the Company or any of its
subsidiaries.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
The Company proposes to elect nine directors at the Annual Meeting, each to
hold office until the next annual meeting or until their successors have been
elected and qualified. It is the intention of the persons named in the enclosed
proxy, unless authorization to do so is withheld, to vote the proxies received
by them for the election of the nominees named below. If prior to the Annual
Meeting any of the nominees should become unavailable for election, an event
which is not now anticipated by the Board, the proxies would be voted for the
election of such substitute nominee as the Board of Directors may propose. Each
person nominated for election has agreed to serve if elected, and management has
no reason to believe that any nominee will be unable to serve.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the Annual Meeting. Stockholders
may not vote their shares cumulatively in the election of directors.
6
<PAGE>
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE(1) POSITION SINCE
- ---- -------- ---------------------------------- ---------
<S> <C> <C> <C>
Richard W. Smith(2)(3)(4)............. 47 Chairman of the Board and Director 1998
Richard P. Kleinknecht................ 61 Vice Chairman and Director 1991
Gerald E. Starr(4).................... 46 Chief Executive Officer, President 1998
and Director
David A. Walsh(4)..................... 38 Chief Executive Officer of IXnet 1998
and Director
James M. Demitrieus................... 52 Vice President, Chief Financial 1999
Officer and Director
Richard M. Cashin, Jr.(3)(4).......... 46 Director 1998
David Y. Howe(2)...................... 35 Director 1998
Robert J. McInerney(2)................ 54 Director 1994
Peter A. Woog(3)(4)................... 57 Director 1998
</TABLE>
- ------------------------
(1) As of January 28, 2000
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Executive Committee
Set forth below is biographical information for the persons nominated:
RICHARD W. SMITH has been Chairman of the Board of the Company since
January 2000 and a director of the Company since May 1998. Mr. Smith has also
served as Chairman of the Board and a director of IXnet since May 1999. He has
served as an individual general partner of the general partners of Allegra
Capital Partners III, L.P. since May 1995, of Lawrence, Tyrrell, Ortale & Smith,
L.P. since December 1985 and of Lawrence, Tyrrell, Ortale & Smith II, L.P. since
July 1990. He is also a director of many private companies. He has participated
in the private equity industry since 1979 and was formerly employed by Citicorp
Venture Capital, Ltd.
RICHARD P. KLEINKNECHT has been the Vice Chairman of the Company since
April 1998 and, until that date, served as Chairman and a director of the
Company since its acquisition from Contel Corporation in October 1991. Prior to
December 1995, Mr. Kleinknecht also served as Chief Executive Officer of the
Company. Mr. Kleinknecht has also served as Chairman of various companies
(collectively, the "Kleinknecht Organization") since 1968 and has worked for the
Kleinknecht Organization since 1960.
GERALD E. STARR has served as Chief Executive Officer, President and a
director of the Company since December 1998. Effective May 1999, Mr. Starr also
became President and a director of IXnet. From January 1997 until December 1998,
he was Executive Vice President, Turret Systems and from February 1996 to
January 1997 he was Vice President of Manufacturing and Engineering. Since April
1995, Mr. Starr has also served as President of IPC Bridge, Inc., a wholly owned
subsidiary of the Company which acquired the assets of Bridge Electronics, Inc.
in April 1995. Mr. Starr founded Bridge Electronics, Inc. in 1987 and built it
into the leading provider of digital open line speaker systems to the foreign
exchange trading industry. Mr. Starr was the President and a director of Bridge
Electronics, Inc. from its founding until it ended its operations in April 1995.
Previously, Mr. Starr founded Turret Equipment Corporation in 1980 and sold it
to Tie Communications in 1984, where he remained until 1990.
DAVID A. WALSH has served as a director and the Chief Executive Officer of
IXnet and a director of the Company since May 1998. Mr. Walsh served as
President of International Exchange Networks, Ltd. from its founding in 1993
until May 1999. In addition, Mr. Walsh has served as a technology consultant to
the New York Commodities Exchange and had been employed by Garban/Garvin
Guybutler and Drexel Burnham Lambert Trading Corporation.
JAMES M. DEMITRIEUS has served as Vice President and Chief Financial
Officer of the Company since September 1999 and a director of the Company since
December 1999. Mr. Demitrieus has also
7
<PAGE>
served as Executive Vice President and Chief Financial Officer of IXnet since
July 1999. Mr. Demitrieus negotiated the acquisition of Ecoban Finance Limited
by SKGlobal America, Inc. in September 1990, and served as Ecoban's President
and Chief Executive Officer from its acquisition to June 1999. From September
1993 to June 1998, Mr. Demitrieus served as the President and Chief Executive
Officer of SK Global America, Inc., and from September 1990 to September 1993,
he served as its Executive Vice President and Chief Financial Officer. From 1986
to 1990, he served as First Vice President and then as Senior Vice President and
Chief Operating Officer for Drexel Burnham Lambert, Inc.'s commodity division.
Prior to 1986, Mr. Demitrieus served as a controller and Chief Accounting
Officer at Freeport-McMoRan, Inc. and a manager of financial controls at ITT
Corporation.
RICHARD M. CASHIN, JR. has been a director since 1998. Mr. Cashin has been
employed by Citicorp Venture Capital, Ltd. since September 1980 and has been
President since December 1994. Mr. Cashin is also a director of IXnet, Cable
Systems International, Delco Remy International, Levitz Furniture Incorporated,
Lifestyle Furnishings International, Ltd., Euromax International plc, Fairchild
Semiconductor, Freedom Forge, Gerber Children's Wear, Hoover Group, MSX
International, Inc., Thermal Engineering International Corporation, Delta
Terminal Services, Inc., FFC Holding, Inc. and Titan Wheel International.
DAVID Y. HOWE is a Vice President of Citicorp Venture Capital, Ltd. where
he has been employed since 1993. He is also a director of American-Italian Pasta
Company, Aetna Industries, Inc., Bob's Stores, Inc., C&H Sugar Company, Formica
Corp., Insilco Holding Co., Interface Solutions, Inc., Pen-Tab Industries, Inc.
and several other private companies.
ROBERT J. MCINERNEY has served as the President and Chief Operating Officer
of Kleinknecht Organization, Inc. since March 1999. From February 1997 through
February 1999, he was employed by Merisel, Inc., a leading distributor of
computer hardware, networking equipment and software, where he was responsible
for U.S. and Canadian operations. He was previously employed as Executive Vice
President of United Capital Corporation, a multi-national holding corporation
and parent to Dorne & Margolin, Ancom Corporation, Metex Corporation and AFP
Corporation, from 1995. Prior to joining United Capital Corporation, from 1981
Mr. McInerney was employed by Arrow Electronics, Inc., the largest electronic
component distributor in the world, and served as President of Arrow's
Commercial Systems Group from 1987 to 1994.
PETER A. WOOG the former Chairman of the Board of the Company, has been a
director of the Company since April 1998. Mr. Woog is also a director of IXnet.
Mr. Woog served as a director, President and Chief Executive Officer of Cable
Systems International and Cable Systems Holding Company from October 1995 until
June 1999. From May 1989 to October 1995, Mr. Woog was AT&T's Copper Cable
Products Vice President, responsible for the copper cable products business
unit. He is currently the manager of Cable Systems Holding, LLC, a director of
CreaMiser Products Corporation, a director of gComData, Inc., a director of
Banner Health Systems-Arizona and a trustee of the Arizona Science Centers.
CABLE SYSTEMS HOLDING, LLC, WHICH IN THE AGGREGATE BENEFICIALLY OWNS 53.3%
OF THE VOTING POWER OF THE COMPANY, INTENDS TO VOTE IN FAVOR OF PROPOSAL 1.
ACCORDINGLY, APPROVAL OF PROPOSAL 1 IS ASSURED.
8
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE NOMINEES FOR ELECTION AS DIRECTORS
BOARD MEETINGS AND COMMITTEES
The Company's Board of Directors maintains standing Audit, Compensation and
Executive Committees. During fiscal 1999, the Company's Board of Directors met
in person or by teleconference on five occasions, the Audit Committee met two
times and the Compensation Committee met one time. The Executive Committee did
not meet during this period. Each director attended, in person or by telephone,
not less than 75% of the meetings of the Board of Directors and the committees
of which he was a member.
The Audit Committee reviews with the Company's management and independent
auditors the financial statements and internal financial reporting system and
controls of the Company, reports to the Board of Directors on the results of its
examination and makes recommendations to the Board of Directors regarding the
employment of accountants and independent auditors. As of the date of this Proxy
Statement, the members of the Audit Committee are David Y. Howe, Robert J.
McInerney and Richard W. Smith.
The Compensation Committee oversees the development, implementation and
conduct of the Company's employment and personnel practices, including the
administration of the Company's compensation and benefit programs. The
Compensation Committee also makes recommendations to the Board of Directors
concerning executive officers' compensation and the granting of stock options.
As of the date of this Proxy Statement, the members of the Compensation
Committee are Richard M. Cashin, Jr., Richard W. Smith and Peter A. Woog.
The Executive Committee has the power and authority of the Board of
Directors to act in accordance with, and subject to, Section 141(c)(1) of the
Delaware General Corporation Law. As of the date of this Proxy Statement, the
members of the Executive Committee are Richard M. Cashin, Jr., Gerald E. Starr,
David A. Walsh, Richard W. Smith and Peter A. Woog.
DIRECTORS' COMPENSATION
Mr. McInerney receives compensation for his services as a director and
attendance at board and committee meetings. Each other member of the Board of
Directors is either an employee of the Company or a principal of a signatory to
the Investors Agreement and has forgone director's compensation. Payment to
Mr. McInerney consists of an annual retainer of $5,000, contingent upon
attending at least 75% of the aggregate total number of meetings of the Board
and of each committee of which he is a member. Additionally, he receives a fee
of $3,000 for each day in which he attends a Board or committee meeting. There
are no provisions in the Company's Certificate of Incorporation or Bylaws that
have the effect of, nor has the Board adopted any policy that has the effect of,
imposing a maximum limitation on the total compensation payable in any year to
any director. Directors are eligible to receive grants of stock options under
the Stock Incentive Plan. To date, no stock options have been granted to a
director who is not also an executive officer of the Company.
COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION
During fiscal 1999, the Compensation Committee consisted of Richard W.
Smith, Richard M. Cashin, Jr. and Peter A. Woog. Richard W. Smith is Chairman of
the Board and a director of the Company and is Chairman of the Board and a
director of IXnet. Richard M. Cashin, Jr. is neither an executive officer of the
Company nor of any of its subsidiaries. Peter A Woog is the former Chairman of
the Board of the Company, a director of the Company and a director of IXnet.
Other than Richard W. Smith, Gerald E. Starr and David A. Walsh, none of the
Company's executive officers served as a director or member of the compensation
committee (or equivalent body) of another entity of which any director of the
Company or a member of the Company's Compensation Committee was an executive
officer.
9
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning all
compensation earned by the Named Executive Officers, including compensation
earned from IXnet:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS
---------------------------------------------------- ---------------------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND BONUS OTHER ANNUAL OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR SALARY$(1) $ COMPENSATION$(2) SARS GRANTED#(3) $
- ------------------ -------- ---------- -------- ----------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald E. Starr................ 1999 277,473 354,083(4) 10,509(5) 377,976 4,800(6)
Chief Executive Officer 1998 238,269 484,750 11,319(5) 92,352 283,750(6)(7)
and President 1997 217,789 28,325 11,700(5) 40,000 3,200(6)
David A. Walsh................. 1999 242,107 206,250(4) 7,000(5) 1,763,352 --
Chief Executive Officer 1998 199,423 281,250(4) 44,745(8) 184,704 195,000(6)(7)
of IXnet and Director 1997 190,000 -- -- -- --
Richard P. Kleinknecht......... 1999 420,000 -- 5,964(5) -- 4,800(6)
Vice Chairman 1998 420,000 -- -- 115,440 94,814(6)
1997 420,000 -- -- -- 87,250(6)
William Lavery................. 1999 195,038 182,188(4) 9,000(5) 170,000 400,388(6)(9)
Managing Director and 1998 179,081 160,105 9,000(5) 46,476 140,839(6)(9)
President of Trading Systems 1997 141,197 73,677 -- 0 3,451(6)(9)
John Wayt, III................. 1999 140,961 123,850(10) -- 15,354 38,239(6)(9)
Vice President, 1998 129,135 18,432 -- 4,618 79,484(6)(9)
Product Development 1997 118,574 37,838 -- 0 3,250(6)(9)
Brian L. Reach................. 1999 202,975 136,000(11) 7,700(5) 0 4,800(6)
Former Vice President and 1998 186,153 370,000(11) 8,400(5) 92,352 4,800(6)
Chief Financial Officer(12) 1997 58,462 23,100 2,000(5) -- 2,000(6)
</TABLE>
- ------------------------------
(1) Includes any pre-tax deferrals made under the IPC 401(k) plan with respect
to the year ended September 30, 1999.
(2) Column does not include certain perquisites and other personal benefits,
securities or property where the aggregate value does not exceed the lesser
of $50,000 or 10% of the officer's salary and bonus.
(3) Column includes options granted under both the Company Stock Incentive Plan
and the IXnet, Inc. 1999 Stock Option Plan in the amounts set forth in the
"Aggregate Options/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option SAR Values" table contained in this Proxy Statement.
(4) The cash bonus payments include, except for Mr. Wayt and Mr. Kleinknecht,
cash bonus payments awarded under the IPC Information Systems Management
Performance Plan. They also include portions of cash payments made in
connection with the successful completion of IPC's recapitalization
transaction.
(5) Consists of payments for automobile allowance.
(6) Consists of premiums paid by the Company for term or other life insurance
coverage under contracts affording the named individual dispositive control
over the death benefit proceeds and amounts paid by the Company as matching
and/or profit sharing contributions to the 401(k) Plan.
(7) Includes cash payments made in connection with IPC's recapitalization
transaction to settle outstanding stock option grants made under the IPC
Information Systems, Inc. 1994 Stock Option Plan.
(8) Includes $44,745 paid by IXnet on behalf of David A. Walsh and another
executive for legal fees incurred by him in connection with the negotiation
of his employment agreement and with respect to other IXnet related
matters. These amounts also include a tax gross-up payment made by the
Company to Mr. Walsh and the other executive in respect of the payment of
these legal fees.
(9) Includes miscellaneous expatriate expenses paid to Mr. Lavery, as well as
compensation paid to Mr. Wayt for expatriation reasons. Also, includes
amounts paid by the Company as matching and/or profit sharing contributions
to the 401(k) Plan.
10
<PAGE>
(10) Payment includes $40,000 paid upon return from overseas expatriate
assignment.
(11) The cash bonus payment includes a $60,000 cash payment made to Mr. Reach
in connection with the successful completion of IPC's recapitalization
transaction. In addition, in connection with IPC's recapitalization
transaction, Mr. Brian L. Reach received a payment of $204,000 in lieu of
a stock option grant by IPC. The cash bonus payment also includes cash
payments awarded to Mr. Reach under the IPC Information Systems Management
Performance Plan.
(12) Brian L. Reach resigned as an officer of the Company effective August 31,
1999.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The duties of the Compensation Committee (the "Committee") include approval
of salary and other compensation arrangements for the Company's executive
officers.
The Company has established a compensation philosophy around the principle
of having compensation reflect and reinforce the Company's strategic and
operational goals and enhance long-term stockholder value. The Company's
philosophy is to:
- Set compensation levels to attract, retain, reward and motivate executive
officers and employees;
- Align compensation with business objectives and performance;
- Position compensation to reflect the individual's performance as well as
the level of responsibility, skill and strategic value of the employee;
and
- Recognize the evolving organizational structure of the Company and
directly motivate executives to accomplish results within their spheres of
influence as well as foster a Company-wide team spirit.
The Company attempts to target its compensation programs to provide
compensation opportunities that are perceived by its executive officers to
justify continued service to the Company.
During the fiscal year ended September 30, 1996, the Company adopted a
formal Management Compensation Plan (the "Plan"). This Plan addresses three
major elements: salary, bonus and long-term incentives. Each of these elements
of compensation serves a unique role in meeting the Company's compensation
objectives.
Salary forms the basic building block of the executive compensation program.
It is the assured element of compensation that permits income predictability. In
general, it is intended that salary levels be set at the midpoint of a
prescribed range but that individual salaries may vary from that midpoint to
reflect each executive's strategic value, experience, proficiency and
performance.
The annual bonus plan is designed to play a number of roles in implementing
the Company's compensation philosophy. Annual bonuses provide a direct
pay-for-performance vehicle. The bonus plan also serves to focus executives on
those activities that most directly affect shareholder value which are within
their control and for which they should be held accountable. Therefore, it is
intended that an annual bonus reflect performance of the respective operating
unit, as well as the entire Company.
The long-term incentive program is also intended to play important roles in
implementing the Company's compensation philosophy. It directly links
executives' financial interests to the interests of the stockholder by tying a
portion of their overall compensation to share price appreciation. It also acts
as a motivation and reward system and as a device to attract and retain superior
management talent.
The Company has not established a specific peer group to use as a benchmark
in setting compensation levels, ranges and midpoints.
EXECUTIVE OFFICER COMPENSATION
During the fiscal year ended September 30, 1999, the Company continued to
address an enterprise-wide restructuring involving the redirection and expansion
of its market and its product orientation from a
11
<PAGE>
limited product and service provider to a broad-based global technology
integrator meeting the needs of the global financial community.
Compensation decisions for the fiscal year ended September 30, 1999 were
based on the following considerations:
- Existing contractual compensation commitments with certain executive
officers;
- Compensation opportunities perceived to be necessary to retain executive
officers;
- General industry compensation practices and levels where appropriate;
- The criticality of the executives to the Company's current and future
success;
- The significance of the executive's compensation cost relative to its
impact on the Company's financial success over the next few critical
years; and
- The maintenance, where practical, of internal compensation relationships
that provide rationale and flexibility in organizational staffing.
PRESIDENT AND CHIEF EXECUTIVE OFFICER COMPENSATION
During the fiscal year ended September 30, 1999, the Compensation Committee
based its compensation decisions for Gerald E. Starr, the Company's President
and Chief Executive Officer, on the following considerations:
- Existing contractual compensation commitments;
- His significant role in integrating the respective management and
operations of IXnet and the Company; and
- His strong leadership which resulted in the Company's strong financial
results for the fiscal year.
The Compensation Committee's decisions with respect to Mr. Starr's bonus
were further based on a formula which took into account the Company's earnings
and financial performance and Mr. Starr's performance as President and Chief
Executive Officer.
The compensation actions for executive officers and other executives during
the fiscal year ended September 30, 1999 were based on the considerations listed
earlier in this report.
The duties of the Compensation Committee include approval of salary and
other compensation arrangements for the Company's executive officers.
Respectfully Submitted,
COMPENSATION COMMITTEE
Richard W. Smith, Chairman
Richard M. Cashin, Jr.
Peter A. Woog
12
<PAGE>
EMPLOYMENT AGREEMENTS
GERALD E. STARR. Mr. Starr and IXnet entered into an Employment Agreement,
dated as of July 1, 1999, which superseded all prior employment agreements with
the Company and provides for an employment term of four years. Mr. Starr's
salary is $300,000 per year with a minimum bonus target of $175,000. Mr. Starr
is entitled to participate in all benefits plans and programs maintained by the
Company, including insurance, medical, retirement and other fringe benefits. If
Mr. Starr is terminated before the expiration of the term by reason of death,
cause, as defined in the Agreement, or resignation without good reason, the
Company will have no further liabilities under the contract. If Mr. Starr
terminates the Agreement for good reason, or the employment relationship
terminates due to his disability, the Company will pay him certain standard
termination entitlements, including earned but unpaid compensation, and certain
severance benefits, including one year of base salary, any pro-rated annual
bonus earned for the fiscal year, any bonus earned but payable to Mr. Starr
contingent on remaining employed until a date after the date of Mr. Starr's
termination, and certain health care premiums for one year after the date of
termination. In addition, if the termination precedes a Change in Control, as
defined in the Agreement, all stock options granted to Mr. Starr under the Stock
Incentive Plan will vest to the extent that such options would have otherwise
vested within one-year of such termination. A Change in Control does not,
however, accelerate the exercisability of the stock options. The contract also
contains certain non-disclosure, non-competition and non-solicitation clauses.
DAVID A. WALSH. David Walsh entered into an Amended and Restated Employment
Agreement with IXnet, dated as of December 18, 1997, which was amended on
June 1 and June 9, 1999. Under the Agreement, Mr. Walsh serves as Chief
Executive Officer and a director of IXnet. Mr. Walsh receives a base salary of
$300,000 plus a discretionary bonus with a minimum bonus target of $175,000 and
benefits consistent with past practice. He also received options to purchase
approximately 2% of the fully diluted shares of IXnet. He is entitled to lump
sum severance payments payable if he is terminated "without cause" or if he
resigns for "good reason," equal to his base salary, plus his average bonus, for
a period equal to the greater of three (3) years or the number of years (and
fractions thereof) in his then-remaining term of employment. The Company shall
pay Mr. Walsh any amounts imposed as excise tax upon excess "parachute payments"
(as defined in Section 280G(b)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code")) under Section 4999 of the Code. Mr. Walsh's benefits under
his Employment Agreement will continue during any such severance period. During
the term of the Agreement and for 2.5 years thereafter, Mr. Walsh is subject to
restrictions on (i) competition and (ii) the solicitation of customers and
employees, and, for all periods during and after the term, he is subject to
nondisclosure and confidentiality restrictions relating to confidential
information and trade secrets of the Company and its affiliates.
RICHARD P. KLEINKNECHT. As of December 18, 1997, Richard P. Kleinknecht
entered into an Amended and Restated Employment Agreement, which became
effective as of April 30, 1998 and which superseded Mr. Kleinknecht's
pre-existing Employment Agreement. The Amended and Restated Employment Agreement
provides for an initial term of two (2) years. Under the Agreement,
Mr. Kleinknecht serves as Vice-Chairman of the Board of Directors, reporting to
the Board and the Chairman and receives a minimum base salary of $420,000 per
annum. He may also receive, at the discretion of the Board, a bonus based upon
his performance and the performance of the Company. Mr. Kleinknecht was also
granted 57,720 stock options (adjusted to 115,440 stock options as a result of
the stock split by way of a stock dividend, distributed June 24, 1998), pursuant
to the Stock Incentive Plan. If Mr. Kleinknecht's employment terminates other
than by reason of resignation, death, disability or discharge for Cause, as
defined in the Agreement, the Company shall pay to Mr. Kleinknecht his base
salary for the remainder of the term.
WILLIAM LAVERY. The Company is a party to an Agreement with William Lavery,
dated March 1, 1999, which became effective on April 1, 1999. The Agreement
extended the term of Mr. Lavery's overseas
13
<PAGE>
assignment in London until June 30, 2001. Mr. Lavery receives an annual base
salary of $225,000 and an annual bonus under the Management Incentive Plan. The
target bonus for the 1999 fiscal year was $100,000. In addition to standard
benefits, the Agreement provides for certain premiums and additional payments to
offset the costs of living outside of the United States, including: a car or
auto allowance, up to $20,000 for the cost of selling the executive's United
States home, payment of additional housing costs, a differential for the higher
cost of goods and services, and a 15,000 pound (L) allowance for the education
of Mr. Lavery's minor child. IPC has promised to equalize the executive's tax
burden with that of his counterpart earning the same salary in the United
States. In addition to standard vacation time, IPC will pay for one "home leave"
(including airfare for the executive and his family) per year and one additional
flight for the executive's college aged children. The assignment may be extended
at the option of both parties at the close of the term. At the end of the
assignment, Mr. Lavery shall be offered a position in the United States. Should
Mr. Lavery decline to accept the offered position, it will be considered a
voluntary termination and he would be entitled to six months severance. IPC may
terminate the contract for cause as a result of gross misconduct by the
executive. IPC may also terminate the contract without cause, but must then pay
the executive his base salary for the remainder of the term (a minimum of at
least 26 weeks severance). Except in the case of termination for cause, IPC will
provide Mr. Lavery with six months of outplacement services.
JOHN WAYT, III. The Company is a party to an Agreement dated September 10,
1998 under which Mr. Wayt is retained as Vice President of Product Development.
Mr. Wayt's base salary is $150,800. Mr. Wayt also is entitled to a bonus under
the Management Incentive Plan. Mr. Wayt receives a monthly car allowance and
other benefits comparable to those received by other employees. The offer letter
was accepted by Mr. Wayt in satisfaction of all of the terms of the previous
Agreement (dated April 29, 1997) governing the executive's prior overseas
assignment, except those provisions requiring the Company to equalize
Mr. Wayt's tax bill with that of his domestic counterpart in the United States
and to prepare the executive's tax returns. IPC may terminate the executive for
gross misconduct. The Company may otherwise terminate the executive upon two
months notice and the payment of severance consistent with Company policy.
BRIAN L. REACH. Mr. Reach entered into a Agreement, dated April 24, 1997,
which provides that, if Mr. Reach's employment is terminated for reasons other
than a material violation of law or Company policy, the Company will pay him a
severance payment equal to six months of his then current base salary provided
he executes the Company's standard form of release agreement with respect to
claims which he may have against the Company relating to his period of
employment. Mr. Reach resigned as an officer of the Company effective on
August 31, 1999 and as a director effective December 9, 1999.
The Company's employment agreements with each of its Named Executive
Officers also provide each of them with continued benefit coverage in the event
that the Company terminates their employment without cause during the term of
the agreement, or if one of them terminates his employment for good reason, as
defined in the Agreement. The agreements also contain provisions preventing such
officer from competing with the Company or soliciting the Company's employees
during and, for specific periods, after the term of employment.
14
<PAGE>
OTHER
As of August 1, 1997, the Company entered into Employee Retention and
Incentive Agreements with eight senior officers, including one executive
officer, Daniel Utevsky, who was not a Named Executive Officer. In the event
that any of these individuals' employment with the Company were to be terminated
without cause prior to April 30, 1999, the Company would make severance payments
equal to such employee's target bonus plus base salary through April 30, 1999,
but not less than six months plus one week for each year of service.
Mr. Utevsky relinquished his position as an executive officer of the Company
effective April 23, 1999. In settlement of the relative rights and obligations
of the parties under his Employee Retention and Incentive Agreement,
Mr. Utevsky and the Company agreed that Mr. Utevsky's salary and insurance
benefits would continue through January 22, 2000 and that he would provide
services to the Company as a consultant for additional compensation at the rate
of $200 per hour. Mr. Utevsky served as a consultant until November 30, 1999.
STOCK OPTION GRANTS
The following table sets forth certain information with respect to options
granted during the fiscal year ended September 30, 1999 to the Named Executive
Officers of the Company under the Stock Incentive Plan and IXnet's Stock Option
Plan:
OPTION/SAR GRANTS IN FISCAL YEAR ENDED SEPTEMBER 30, 1999(1)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
SHARE
PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (2)
--------------------------------------------------------- -----------------------
(A) (B) (C) (D) (E) (F) (G)
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED EXERCISE OR
OPTIONS/SARS TO EMPLOYEES BASE PRICE EXPIRATION 5% 10%
NAME GRANTED IN FISCAL YEAR ($/SHARE) DATE ($) ($)
- ----------------------------------- ------------- -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gerald E. Starr
IPC Stock Incentive Plan......... 40,000 6% 44.75 8/18/09 1,125,721 2,852,799
IXnet Stock Option Plan.......... 337,976 5% 13.96 5/4/09 2,967,216 7,519,508
David A. Walsh
IPC Stock Incentive Plan......... 0 -- -- -- -- --
IXnet Stock Option Plan.......... 1,763,352 26% 13.96 5/4/09 15,481,118 39,232,192
William Lavery
IPC Stock Incentive Plan......... 20,000 3% 44.75 8/18/09 562,861 1,426,400
IXnet Stock Option Plan.......... 150,000 2% 13.96 5/4/09 1,316,905 3,337,297
Richard P. Kleinknecht
IPC Stock Incentive Plan......... 0 -- -- -- -- --
IXnet Stock Option Plan.......... 0 -- -- -- -- --
John Wayt, III
IPC Stock Incentive Plan......... 13,854 2% 10.50 12/03/08 91,483 231,837
IPC Stock Incentive Plan......... 1,500 0.2% 44.75 8/18/09 42,215 106,980
IXnet Stock Option Plan.......... 0 -- -- -- -- --
Brian L. Reach
IPC Stock Incentive Plan......... 0 -- -- -- -- --
IXnet Stock Option Plan.......... 60,836(3) 1% 13.96 5/4/09 -- --
</TABLE>
- ------------------------------
(1) All Options granted during the fiscal year ended September 30, 1999 were
granted under the Stock Incentive Plan or the IXnet Stock Option Plan.
Options granted under the Stock Incentive Plan provided a ten-year term,
vest in equal amounts on the first five anniversaries of their grant date
(with earlier vesting for 75% of the options if and when the average closing
price for the
15
<PAGE>
Company's Common Stock over any period of 30 consecutive trading days equals
or exceeds 300% of the exercise price and 100% of the options if and when
the average closing price for the Company's Common Stock over any period of
30 consecutive trading days equals or exceeds 450% of the exercise price)
and are exercisable at the fair market value of the Company's Common Stock
on the date of grant. Options granted under the IXnet Stock Option Plan are
incentive stock options for federal income tax purposes up to applicable
limits, have a term of 10 years and are subject to earlier expiration upon
the option holder's termination of employment. The options have an exercise
price of $13.96 per share. Mr. David A. Walsh's IXnet options were 100%
vested when granted. All other options vest at the rate of 25% on the first
anniversary of the grant date and an additional 2 1/12% per month for the
next 36 months. However, in the event of a change in control, 50% of those
options not yet vested shall become vested immediately. Options may not be
exercised until November, 4, 2001, unless prior to that date, IXnet stops
filing consolidated income tax returns with IPC or the IXnet's Board allows
the exercise.
(2) Represents the potential value of options granted at assumed 5% and 10%
rates of compounded annual stock appreciation for ten years from the date of
grant of each such option.
(3) All of Mr. Reach's options were cancelled upon his resignation.
The following table sets forth certain information with respect to options
held as of September 30, 1999 by the Named Executive Officers of the Company
under the Stock Incentive Plan and under IXnet's Stock Option Plan:
AGGREGATE OPTIONS/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS /SARS AT FISCAL IN-THE-MONEY OPTIONS/
SHARES ACQUIRED YEAR END (#) SARS AT FISCAL YEAR END
ON EXERCISE VALUE REALIZED EXERCISABLE/ ($)
NAME (#) ($) UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- -------------- ----------------------- -------------------------
<S> <C> <C> <C> <C>
Gerald E. Starr
IPC Stock Incentive Plan.... 9,523 499,958 82,829/40,000 4,224,279/670,000
IXnet Stock Option Plan..... 0 -- 0/337,976 0/393,742
David A. Walsh
IPC Stock Incentive Plan.... 9,523 515,432 175,181/0 8,934,231/0
IXnet Stock Option Plan..... 0 -- 1,763,352/0 2,054,305/0
Richard P. Kleinknecht
IPC Stock Incentive Plan.... 0 -- 115,440/0 5,887,440/0
IXnet Stock Option Plan..... 0 -- 0/0 0/0
William Lavery................
IPC Stock Incentive Plan.... 0 -- 46,176/20,000 2,354,976/335,000
IXnet Stock Option Plan..... 0 -- 0/150,000 0/174,750
John Wayt, III
IPC Stock Incentive Plan.... 13,000 0 5,472/1,500 279,072/25,125
IXnet Stock Option Plan..... 0 -- 0/0 0/0
Brian L. Reach
IPC Stock Incentive Plan.... 9,523 604,711 82,829/0 4,224,279/0
IXnet Stock Option
Plan (1).................... 0 -- 0/0 0/0
</TABLE>
- ------------------------------
(1) All of Mr. Reach's options were cancelled upon his resignation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Richard P. Kleinknecht, the Company's Vice Chairman and his brother, Peter
J. Kleinknecht, the Company's former Vice Chairman, are controlling stockholders
and executive officers of several entities that do business from time to time
with the Company and certain of its customers. These entities include
Kleinknecht Electric Company, Inc., a New York company ("KEC-NY"), Kleinknecht
Electric Company, Inc., a New Jersey company ("KEC-NJ"), both electrical
services companies and Humaco Leasing & Holding Corporation ("Humaco"), a tool
and vehicle leasing company.
16
<PAGE>
As of October 1, 1993, the Company and KEC-NY entered into a 20-year
contract with respect to a pool of field technicians and administrative
employees, who are members of the International Brotherhood of Electrical
Workers ("IBEW"), Local 3. The employees and technicians are utilized by either
the Company or KEC-NY on an ongoing or per project basis. The Company and KEC-NJ
also entered into a comparable 20-year agreement with respect to a similar pool
of employees who are members of IBEW, Local 164T. Effective April 30, 1998, the
Company and KEC-NY and KEC-NJ entered into amended and restated agreements with
respect to these labor pools. The Company, KEC-NY and KEC-NJ have benefitted
from these arrangements by allowing each company to draw from a larger pool of
field technicians and retaining the more highly trained and skilled technicians
for a broader range of projects. KEC-NY and KEC-NJ are responsible for
administering the payroll and related services for Company employees in these
pools. The Company pays all such compensation and benefits by reimbursement to
KEC-NY or KEC-NJ, as appropriate, plus an administration fee equal to 2.5% of
such costs. Effective October 3, 1996, the parties agreed to amend this
agreement to provide for a flat administrative fee of $50,000 per month
(apportioned between KEC-NY and KEC-NJ). The total amounts paid by the Company
for compensation and benefits under these arrangements in the fiscal years ended
September 30, 1999, 1998 and 1997 were $55.1, $53.7 and $54.9 million,
respectively. In addition, the Company paid $0.6 million in each of the fiscal
years ended September 30, 1999, 1998 and 1997, respectively, in related
administrative fees.
The Company periodically subcontracts certain work to KEC-NY or KEC-NJ.
Amounts charged to these companies under subcontracts with the Company for the
years ended September 30, 1999, 1998 and 1997 were approximately $3.1, $2.9 and
$0.1 million, respectively, while amounts charged to the Company under
subcontracts with these companies were approximately $0.1, $0.2 and $0.3
million, respectively.
The Company, KEC-NY and KEC-NJ entered into a 20-year agreement dated as of
May 9, 1994, and amended and restated as of April 30, 1998, with respect to
corporate opportunities regarding electrical and communications cable
infrastructures. KEC-NY and KEC-NJ have agreed not to bid for or accept any
communications cabling jobs in competition with the Company, if the Company
intends to bid or accept such work. The Company, which is not a licensed
electrical contractor, has agreed to refrain from bidding for or accepting,
without the consent of KEC-NY or KEC-NJ, opportunities that combine both
electrical and communications cabling work. IPC has also agreed to continue to
refer to KEC-NY and KEC-NJ certain electrical contracting bid opportunities
which may arise.
The Company has from time to time rented certain equipment from Humaco.
There were no equipment rentals from affiliated companies during fiscal 1999,
1998 or 1997. The Company, under month to month arrangements, has, in prior
fiscal years, rented facilities from entities controlled by Richard P.
Kleinknecht and Peter J. Kleinknecht. For the year ended September 30, 1997,
approximately $0.2 of such lease expense was incurred.
Effective as of June 1, 1998, the Company entered into a Consulting
Agreement with Little Knight Music, Inc., a corporation controlled by Russell G.
Kleinknecht (a former Named Executive Officer of the Company), for a term of
eighteen (18) months under which Mr. Kleinknecht may be required to perform
certain consulting services. In consideration of such consulting services, the
Company has and will make monthly payments equaling $37,324 and totaling
$707,832. As of the effective date of the Consulting Agreement, Mr. Kleinknecht
owed the Company a total of $267,893 (consisting of employee loans, advances and
accrued interest thereon). Payments under the Consulting Agreement were offset
by the Company against such outstanding loans, which loans were paid in full
prior to December 31, 1998. In addition to the foregoing, the Company agreed to
reimburse Mr. Kleinknecht for a portion of the costs incurred by him for
continuation of medical, dental and hospitalization benefits during the term of
such Consulting Agreement.
17
<PAGE>
PERFORMANCE GRAPH(1)
The Company's Common Stock began trading on the Nasdaq Stock Market
effective with the start of business on September 27, 1994. Beginning June 7,
1998, the Company's Common Stock began trading on the American Stock Exchange,
Inc. (the "AMEX"). The following graph provides a comparison of the 60 Month
Cumulative Total Return among IPC Communications, Inc., the AMEX Market Value
Index and the Nasdaq Telecommunications Index, assuming $100 invested on
September 26, 1994 in the Company's Common Stock or the respective Indices
(including reinvestment of dividends). These indices are provided for
comparative purposes only and do not necessarily reflect management's opinion
that such indices are an appropriate measure of the relative performance of the
stock involved and are not intended to forecast or be indicative of possible
future performance of the Common Stock.
COMPARISON OF 60 MONTH CUMULATIVE TOTAL RETURN*
AMONG IPC COMMUNICATIONS, INC., THE AMEX MARKET VALUE INDEX
AND THE NASDAQ TELECOMMUNICATIONS INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS 9/94 9/95 9/96 9/97 9/97 9/99
<S> <C> <C> <C> <C> <C> <C>
IPC COMMUNICATIONS, INC. 100.00 112.86 137.75 136.10 45.64 408.29
AMEX MARKET VALUE 100.00 118.72 124.56 156.82 141.00 182.04
NASDAQ TELECOMMUNICATIONS 100.00 119.32 123.72 167.00 215.82 365.23
</TABLE>
- ------------------------
* $100 INVESTED ON SEPTEMBER 30, 1994 IN STOCK OR INDEX--INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING SEPTEMBER 30.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
---------------------------------------------------------------
9/94 9/95 9/96 9/97 9/98 9/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
IPC COMMUNICATIONS, INC..................... 100.00 112.86 137.75 136.10 45.64 408.29
AMEX MARKET VALUE........................... 100.00 118.72 124.56 156.82 141.00 182.04
NASDAQ TELECOMMUNICATIONS................... 100.00 119.32 123.72 167.00 215.82 365.23
</TABLE>
- ------------------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Company under the Securities Act or Exchange
Act.
18
<PAGE>
PROPOSAL NUMBER TWO
APPROVAL OF AMENDMENT TO IPC COMMUNICATIONS, INC. 1999
STOCK INCENTIVE PLAN
GENERAL PLAN INFORMATION
Effective December 9, 1999, the IPC Communications, Inc. 1999 Stock
Incentive Plan will, subject to obtaining approval from stockholders at the
Annual Meeting, be amended to increase its share reserve from 1,538,322 to
1,838,322. The Stock Incentive Plan provides for the grant of options to
purchase Common Stock ("Options") to certain officers, employees, consultants
and directors of the Company and its subsidiaries. The Stock Incentive Plan is
not subject to ERISA and is not a tax-qualified plan under the Code.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to approve the Stock Incentive Plan.
DESCRIPTION OF THE STOCK INCENTIVE PLAN
ADMINISTRATION. The Option Committee administers the Stock Incentive Plan
and determines, within the limitations of the Stock Incentive Plan, the
employees, directors and consultants (of the Company and its subsidiaries) to
whom Options will be granted, the number of shares subject to each Option, the
terms of such Options (including provisions regarding exercisability and
acceleration of exercisability) and the procedures by which the Options may be
exercised. The Option Committee is comprised of the members of the Company's
Compensation Committee. Subject to certain specific limitations and restrictions
set forth in the Stock Incentive Plan, the Option Committee has full and final
authority to interpret the Stock Incentive Plan, to prescribe, amend and rescind
rules and regulations, if any, relating to the Stock Incentive Plan and to make
all determinations necessary or advisable for the administration of the Stock
Incentive Plan.
STOCK SUBJECT TO THE STOCK INCENTIVE PLAN. Currently, up to 1,538,322
shares of Common Stock may be issued under the Stock Incentive Plan. Effective
December 9, 1999, the IPC Communications, Inc. 1999 Stock Incentive Plan will,
subject to obtaining approval from stockholders at the Annual Meeting, be
amended to increase its share reserve from 1,538,322 to 1,838,322. Option Shares
may be authorized and unissued shares or shares previously issued and reacquired
by the Company. Any Option Shares subject to grants under the Stock Incentive
Plan which expire or are terminated, forfeited or canceled without having been
exercised or vested in full, shall again be available for purposes of the Stock
Incentive Plan.
TERMS AND CONDITIONS OF OPTIONS. The Stock Incentive Plan provides for the
grant of Options which qualify for favorable federal income tax treatment as
"incentive stock options" ("ISOs") and non-qualified stock options which do not
so qualify ("NQSOs"). All Options granted under the Stock Incentive Plan will
have an exercise price that is no less than the "fair market value" of a share
of common stock on the grant date. ISOs are subject to certain restrictions
under the Code. Options granted under the Stock Incentive Plan will be ISOs to
the maximum extent permitted by section 422(d) of the Code and will be
exercisable for a period of ten years after the date of grant (or for a shorter
period ending (i) 180 days after the option holder's termination of employment
for reasons other than death, disability or discharge for Cause, as defined in
the Agreement, (ii) one year after the option holder's termination of
employment, due to death or disability; (iii) immediately upon termination for
Cause or upon the consummation of a transaction in which the Company becomes the
wholly-owned subsidiary of any other corporation, unless such other corporation
assumes or continues the Stock Incentive Plan with respect to the Options then
outstanding under the Plan). An Option will generally become vested in five
equal installments, with 20% of the shares subject to the Option becoming
exercisable on each of the first five anniversaries of the date the Option is
granted. At the end of any period of 30 consecutive trading days, however,
during which the
19
<PAGE>
"fair market value" (as defined in the Stock Option Plan) of the Common Stock
subject to the Option (i) averages at least 300% of the fair market value on the
date the Option was granted, no less than 75% of the shares subject to the
Option will become vested and exercisable and (ii) averages at least 450% of the
fair market value on the date the Option was granted, no less than 100% of the
shares subject to the Option will become vested and exercisable. Each Option
will become fully vested and exercisable immediately prior to a Change in
Control (as defined in the Stock Incentive Plan).
Upon the exercise of an Option, the exercise price must be paid in full.
Payment may be made in cash or in such other consideration as the Option
Committee deems appropriate, including, but not limited to, Common Stock already
owned by the option holder or Option Shares to be acquired by the option holder
upon the exercise of the Option. Options may be transferred prior to exercise
only upon the death of the option holder unless the Option Committee permits
otherwise.
MERGERS AND REORGANIZATIONS; ADJUSTMENTS FOR EXTRAORDINARY DIVIDENDS. The
number of shares available under the Stock Incentive Plan and the outstanding
Options will be adjusted to reflect any merger, consolidation or business
reorganization and to reflect any stock split, stock dividend or other event
generally affecting the number of shares of Common Stock outstanding.
TERMINATION OR AMENDMENT OF THE STOCK INCENTIVE PLAN. Unless sooner
terminated, the Stock Incentive Plan will terminate automatically ten years
after its effective date. The Board may suspend or terminate the Stock Incentive
Plan in whole or in part at any time prior to the tenth anniversary of its
effective date by giving written notice of such suspension or termination to the
Option Committee. In the event of any suspension or termination of the Stock
Incentive Plan, all Options theretofore granted under the Stock Incentive Plan
that are outstanding on the date of such suspension or termination of the Stock
Incentive Plan will remain outstanding under the terms of the agreements
granting such Options.
The Board may amend or revise the Stock Incentive Plan in whole or in part
at any time, but the Company's policy is that if the amendment or revision
amends a material term of the Stock Incentive Plan, such amendment or revision
will be subject to approval by the stockholders of the Company to the extent
required to comply with Section 162(m) of the Code.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion is intended only
as a summary and does not purport to be a comprehensive description of the
federal tax laws, regulations and policies affecting the Company and recipients
of ISOs and NQSOs that may be granted under the Stock Incentive Plan. Any change
in applicable law or regulation or in the policies of various taxing authorities
may have a material effect on the discussion contained herein.
There are no federal income tax consequences for the Company or the option
holder at the time an ISO is granted or upon the exercise of an ISO. If there is
no sale or other disposition of the shares acquired upon the exercise of an ISO
within two years after the date the ISO was granted, or within one year after
the exercise of the ISO, then at no time will any amount be deductible by the
Company with respect to the ISO. If the option holder exercises an ISO and sells
or otherwise disposes of the shares so acquired after satisfying the foregoing
holding period requirements, then he will realize a capital gain or loss on the
sale or disposition. If the option holder exercises his ISO and sells or
disposes of his shares prior to satisfying the foregoing holding period
requirements, then an amount equal to the difference between the amount realized
upon the sale or other disposition of such shares and the price paid for such
shares upon the exercise of the ISO will be includible in the ordinary income of
such person, and such amount will ordinarily be deductible by the Company at the
time it is includible in such person's income.
With respect to the grant of NQSOs, there are no federal income tax
consequences for the Company or the option holder at the date of the grant. Upon
the exercise of a NQSO, an amount equal to the difference between the fair
market value of the shares to be purchased on the date of exercise and the
aggregate purchase price of such shares is generally includible in the ordinary
income of the person exercising such NQSO, although such inclusion may be at a
later date in the case of an option holder
20
<PAGE>
whose disposition of such shares could result in liability under Section 16(b)
of the Exchange Act. The Company will ordinarily be entitled to a deduction for
federal income tax purposes at the time the option holder is taxed on the
exercise of the NQSO equal to the amount which the option holder is required to
include as ordinary income.
Section 162(m) of the Code limits the Company's deductions of compensation
in excess of $1,000,000 per year for the chief executive officer and the four
other most highly paid executives named in its proxy statement, but provides for
certain exceptions for performance based compensation. The Company intends the
Stock Incentive Plan to comply with the requirements for an exception to Section
162(m) applicable to stock option plans so that the Company's deduction for
compensation related to the exercise of stock options would not be subject to
the $1,000,000 limitation. No executive of the Company currently receives
compensation that exceeds this limitation.
The foregoing statements are intended to summarize the general principles of
current federal income tax law applicable to Options that may be granted under
the Stock Incentive Plan. State and local tax consequences may also be
significant.
STOCK INCENTIVE PLAN BENEFITS TABLE. Due to the discretionary nature of
awards under the Stock Incentive Plan, the amount of stock options or other
awards that may be granted in the future under the Stock Incentive Plan to any
individual is not determinable.
CABLE SYSTEMS HOLDING, LLC, WHICH IN THE AGGREGATE BENEFICIALLY OWNS 53.3%
OF THE VOTING POWER OF THE COMPANY, INTENDS TO VOTE IN FAVOR OF PROPOSAL 2.
ACCORDINGLY, APPROVAL OF PROPOSAL 2 IS ASSURED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN
FAVOR OF PROPOSAL 2
PROPOSAL NUMBER THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the
Company's independent auditors for the year ending September 30, 2000 and has
further directed that management submit the appointment of independent auditors
for ratification by the stockholders at the Annual Meeting.
PricewaterhouseCoopers LLP (or its predecessor, Coopers & Lybrand) have audited
the Company's financial statements since 1991. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting,
will have an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions. In the event the stockholders
fail to ratify the appointment, the Board will reconsider whether or not to
retain that firm.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the appointment of PricewaterhouseCoopers LLP.
CABLE SYSTEMS HOLDING, LLC, WHICH IN THE AGGREGATE BENEFICIALLY OWNS 53.3%
OF THE VOTING POWER OF THE COMPANY, INTENDS TO VOTE IN FAVOR OF PROPOSAL 3.
ACCORDINGLY, APPROVAL OF PROPOSAL 3 IS ASSURED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS AUDITOR FOR THE COMPANY
OTHER MATTERS
As of the date of this Proxy Statement, management does not know of any
other matters to be brought before the stockholders at the Annual Meeting. If,
however, any other matters not now known are properly brought before the Annual
Meeting, the persons named in the accompanying proxy card and acting thereunder,
or their duly constituted substitutes acting at the Annual Meeting, will have
discretion to vote on such matters in accordance with their judgment.
21
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's directors,
executive officers and any person holding more than ten percent of the Company's
Common Stock are required to file initial reports of ownership of the Company's
Common Stock and reports of changes in that ownership at the Securities and
Exchange Commission and the AMEX. Specific due dates for these reports have been
established, and the Company is required to disclose in this Proxy Statement any
failure to file by these dates.
Form 3s are required to be filed within ten days after the event by which an
individual becomes a reporting person. Form 4s are required to be filed within
ten days after the end of the reporting month. Form 5s are required to be filed
on or before the forty-fifth day after the end of the issuer's fiscal year.
Based upon information available to it, the Company believes that, except for
inadvertent delays with respect to the filing of a Form 3 for James M.
Demitrieus and Form 4s for Gerald E. Starr and William Lavery, all Form 3s,
Form 4s and Form 5s required to be filed during the fiscal year ended
September 30, 1999 were filed on a timely basis.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 2001 Annual Meeting of Stockholders must
be received by the Company no later than October 7, 2000 in order to be included
in the 2001 Annual Meeting proxy materials. If a stockholder does not notify the
Company by December 21, 2000 of a proposal, then the persons named as proxies in
the proxy card for the 2001 Annual Meeting may use their discretionary voting
authority if the proposal is raised at the meeting.
FINANCIAL STATEMENTS
THE COMPANY IS REQUIRED TO FILE AN ANNUAL REPORT ON FORM 10-K FOR ITS FISCAL
YEAR ENDED SEPTEMBER 30, 1999 WITH THE SEC. THE ANNUAL REPORT CONTAINS FINANCIAL
STATEMENTS, AS OF SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998, PREPARED IN
CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. THE CONSOLIDATED
FINANCIAL STATEMENTS HAVE BEEN AUDITED BY PRICEWATERHOUSECOOPERS LLP WHOSE
REPORT THEREON APPEARS IN THE ANNUAL REPORT. A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR FISCAL 1999 ACCOMPANIES THIS PROXY STATEMENT.
STOCKHOLDERS MAY OBTAIN AN ADDITIONAL COPY OF SUCH ANNUAL REPORT BY WRITING TO
INVESTOR RELATIONS DEPARTMENT, IPC COMMUNICATIONS, INC., WALL STREET PLAZA, 88
PINE STREET, NEW YORK, NEW YORK 10005.
IN ORDER TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING PLEASE VOTE VIA
THE INTERNET, BY USING THE TELEPHONE OR BY SIGNING, DATING AND RETURNING THE
ENCLOSED PROXY IN THE POSTAGE PREPAID ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE.
By Order of the Board of Directors,
[SIG]
Alexander Russo
VICE PRESIDENT AND GENERAL COUNSEL
New York, New York
February 4, 2000
22
<PAGE>
- --------------------------------------------------------------------------------
IPC COMMUNICATIONS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, having duly received the Notice of Annual Meeting of
Stockholders and Proxy Statement, dated February 4, 2000, hereby appoints Gerald
E. Starr, James M. Demitrieus and Alexander Russo (each with full power to act
alone and with power of substitution and revocation), to represent the
undersigned and to vote, as designated on the reverse side, all shares of Common
Stock of IPC Communications, Inc. which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of IPC Communications, Inc. to be held at
9:00 a.m. on Thursday, March 2, 2000 at the Citicorp Center, 153 East 53rd
Street, 14th Floor, Room J, New York, New York and at any adjournment or
adjournments thereof.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder.
CABLE SYSTEMS HOLDINGS, L.L.C., WHICH IN THE AGGREGATE BENEFICIALLY
OWNS 53.3% OF THE VOTING POWER OF THE COMPANY, INTENDS TO VOTE IN FAVOR OF
PROPOSALS 1, 2 AND 3. ACCORDINGLY, APPROVAL OF PROPOSALS 1, 2 AND 3 IS ASSURED.
UNLESS YOU INDICATE OTHERWISE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3
AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Vote by internet at our Internet Address: http://www.eproxy.com/IPI
OR
2. Call toll free 1-800-840-1208 on a Touch-Tone Telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this
call.
OR
3. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
If you wish to view future IPC Communications, Inc. Annual Reports and Proxy
Statements on-line instead of receiving the printed documents, which will assist
the Corporation in reducing future printing and mailing costs, please
o visit ChaseMellon's web site registration page at
http://www.eproxy.com/IPI
OR
o call toll free 1-800-840-1208 on a Touch-Tone Telephone and follow the
instructions on the reverse side
OR
o check the box on the signature side of the enclosed proxy card and
return in the postage paid envelope provided.
- --------------------------------------------------------------------------------
<PAGE>
Please mark
your votes as /X/
indicated in
this example
1. To elect nine directors, each to hold office until the next annual meeting
or until their successors have been elected and qualified.
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed to the right
/ / / /
INSTRUCTION: To withhold authority to vote for any named nominees strike a line
through the nominee's name in the list below:
01 Richard W. Smith 02 Richard P. Kleinknecht 03 Richard M. Cashin, Jr.
04 David Y. Howe 05 Peter A. Woog 06 Robert J. McInerney
07 David A. Walsh 08 Gerald E. Starr 09 James M. Demitrieus
2. To approve an amendment to increase by 300,000 the shares reserved for the
IPC Communications, Inc. 1999 Stock Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors of IPC Communications, Inc. for the fiscal year ending September
30, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion upon such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.
I consent to future access to the Annual Reports and Proxy Statements
electronically via the Internet. I understand that the Corporation may no
longer distribute printed materials to me for any future shareowner meetings
until my consent is revoked. I understand that I may revoke my consent at
any time by giving written notice to the Corporation. / /
The undersigned acknowledges receipt of the
Notice of the 2000 Annual Meeting of
Stockholders and the Proxy Statement dated
February 4, 2000 for the Annual Meeting.
Shares held as of January 28, 2000:
--------------------------------------------
IMPORTANT: PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. THANK YOU.
Signature___________________ Signature____________________ Date ________________
NOTE: Please sign exactly as your name appears hereon. If acting as attorney,
executor, trustee or in other representative capacity, please include your full
title. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person. If held jointly, both parties must sign personally.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
VOTE BY INTERNET OR TELEPHONE
QUICK * * * EASY * * * IMMEDIATE
- --------------------------------------------------------------------------------
** IF YOU WISH TO VOTE YOUR SHARES BY INTERNET OR TELEPHONE,
PLEASE FOLLOW THE INSTRUCTIONS BELOW **
- --------------------------------------------------------------------------------
YOUR INTERNET OR TELEPHONE INSTRUCTION WILL AUTHORIZE THE NAMED PROXIES TO VOTE
YOUR SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY
CARD
o You will be asked to enter a Control Number which is located in the box
in the lower right hand corner of this form.
VOTE BY INTERNET: PLEASE VISIT OUR INTERNET VOTING WEBSITE AT:
http: //www.eproxy.com/IPI AND FOLLOW THE INSTRUCTIONS ON
THE SCREEN.
VOTE BY PHONE: THIS METHOD IS AVAILABLE FOR STOCKHOLDERS, PLEASE CALL
TOLL-FREE ON A TOUCH-TONE TELEPHONE 1-800-840-1208 ANYTIME.
THERE IS NO CHARGE TO YOU FOR THIS CALL.
After entering your Control Number you will hear these instructions.
-----------------------------------------------------------------------
OPTION #1: TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS:
PRESS 1
-----------------------------------------------------------------------
When asked, please confirm your vote by Pressing 1.
-----------------------------------------------------------------------
OPTION #2: IF YOU CHOOSE TO VOTE ON EACH ITEM SEPARATELY, PRESS 0. YOU
WILL HEAR THESE INSTRUCTIONS:
-----------------------------------------------------------------------
Item(1): To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen for
instructions
Items (2) and (3): To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0
When asked, please confirm your vote by Pressing 1.
-----------------------------------------------------------------------
CONSENT TO VIEW ANNUAL REPORTS AND PROXY STATEMENT ON-LINE.
-----------------------------------------------------------------------
Press 1 to consent to view future Annual Reports and Proxy Statements
for this account via the internet. You may revoke this consent at any
time by giving written notice to the Corporation.
When asked, please confirm your consent by Pressing 1.
- -----------------------------------------------------------------
If you vote by internet or telephone, there is no need for you to
mail in your proxy card.
THANK YOU FOR VOTING.
- -----------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
IPC COMMUNICATIONS, INC.
1999 STOCK INCENTIVE PLAN
Section 1. PURPOSE
The Plan authorizes the Compensation Committee of the Board to provide
employees, directors and consultants of the Corporation or its Subsidiaries, who
are in a position to contribute to the long-term success of the Corporation and
its Subsidiaries, with Options to acquire Common Stock of the Corporation. The
Corporation believes that this incentive program will cause those persons to
increase their interest in the welfare of the Corporation and its Subsidiaries,
and aid in attracting and retaining employees and consultants of outstanding
ability.
Section 2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms,
when used in the Plan, shall have the meanings set forth in this Section:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Cause" means any of the following: (i) commission of any act of
fraud or dishonesty with respect to the business of the Corporation or its
Subsidiaries, (ii) willful misconduct or gross negligence in connection with the
performance of a Grantee's duties to the Corporation and its Subsidiaries, (iii)
indictment for, or conviction of, any crime or an offence involving moral
turpitude, (iv) commission of any act injurious to the interest of the
Corporation, or (v) breach of any material provision of any applicable
employment or consulting agreement. Notwithstanding the foregoing, if any
Grantee is party to an employment or consulting agreement governing the terms of
his employment or consultancy with the Corporation or its Subsidiaries, and such
agreement includes a definition of cause, then for purposes hereof, cause shall
have the meaning ascribed thereto in such agreement.
(c) "Change in Control" shall mean (i) approval by the stockholders of
the Corporation of a transaction that would result in the reorganization, merger
or consolidation of the Corporation with one or more persons, and, upon
consummation thereof, would result in persons who, immediately prior to such
transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) at least 50% of the securities
entitled to vote generally in the election of directors of the Corporation,
beneficially owning (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) in the aggregate immediately after such
transaction less than 50% of the securities entitled to vote generally in the
election of directors of the entity resulting from such transaction; (ii) the
acquisition of all or substantially all of the assets of the Corporation or
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) of at least 50% of the outstanding securities
of the Corporation entitled to vote generally in the election of directors by
any person or by any persons acting in concert, or approval by the stockholder
of the Corporation of any transaction which would result in such an acquisition
(other than by any person or persons who
A-1
<PAGE>
beneficially own (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), immediately after the closing date of
transactions contemplated by the Merger Agreement at least 50% of the
outstanding securities of the Corporation entitled to vote generally in the
election of directors); or (iii) a complete liquidation or dissolution of the
Corporation, or approval of the Corporation of a plan for such liquidation or
dissolution; PROVIDED, HOWEVER, that in no event shall any of the transactions
contemplated by the Merger Agreement (or shareholder approval thereof)
constitute a Change in Control.
(d) "Committee" means the Compensation Committee of the Board;
PROVIDED, HOWEVER, that with respect to any Option granted or to be granted to
any member of the Compensation Committee, Committee shall mean the Board acting
through a majority of its members who are not members of the Compensation
Committee.
(e) "Common Stock" means the common stock par value $.01 per share, of
the Corporation.
(f) "Consultant" means any person who is engaged to perform services
for the Corporation or any of its Subsidiaries, or has agreed to perform
services for the Corporation or any of its Subsidiaries, other than as an
Employee or Director.
(g) "Code" means the Internal Revenue Code of 1986, as amended
(h) "Corporation" means IPC Communications, Inc., a Delaware
corporation.
(i) "Director" means any member of the Board.
(j) "Disability" means a physical or mental impairment that causes the
Grantee to be unable to engage in any substantial gainful activity and that is
expected to result in death or is expected to last for a continuous period of at
least 12 months. Notwithstanding the foregoing, if any Grantee is party to an
employment or consulting agreement governing the terms of his employment or
consultancy with the Corporation or its Subsidiaries, and such agreement
includes a definition of disability, then for purposes hereof, disability shall
have the meaning ascribed thereto in such agreement.
(k) "Employee" means any employee of the Corporation or any of its
Subsidiaries, or any person who has agreed to become an employee of the
Corporation or any of its Subsidiaries. The term Employee shall include
directors who are otherwise employed by the Corporation or any Subsidiary.
(l) "Fair Market Value" means, as of any date, the fair market value of
a share of Common Stock as determined by the Committee acting in good faith in
its sole discretion; PROVIDED, HOWEVER, that if the Common Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
fair market value shall be based on the last sales price or, if unavailable, the
average of the closing bid and asked prices per share of the Common Stock on
such date (or, if there was no trading or quotation in the Common Stock on such
date, on the next preceding date on which there was trading or quotation) as
provided by one of such organizations.
A-2
<PAGE>
Notwithstanding the foregoing, the Fair Market Value of a share of Common Stock
on the closing date of the transactions contemplated by the Merger Agreement
shall be deemed to be the "Cash Election Price" as defined in the Merger
Agreement.
(m) "Incentive Stock Option" means an Option designated by the
Committee as an Option that is intended to be an incentive stock option within
the meaning of Section 422(b) of the Code.
(n) "Grantee" means a person granted an Option under the Plan.
(o) "Merger Agreement" means the Agreement and Plan of Merger, dated as
of December 18, 1997 by and between the Corporation and Arizona Acquisition
Corp., a Delaware Corporation.
(p) "Nonqualified Stock Option" means an Option that is not an
Incentive Stock Option, or an Incentive Stock Option that, subsequent to the
date of grant thereof, fails to satisfy the requirements of Section 422(b) or
(d) of the Code.
(q) "Option" means an option granted pursuant to the Plan to purchase
shares of the Common Stock.
(r) "Plan" means this Stock Incentive Plan as set forth herein and as
amended from time to time.
(s) "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder as presently in effect or hereafter
amended.
(t) "Stock Option Agreement" shall mean a written agreement between the
Corporation and the Grantee, or a certificate accepted by the Grantee,
evidencing the grant of an Option hereunder and containing such terms and
conditions, not inconsistent with the Plan, as the Committee shall approve.
(u) "Subsidiary" shall mean (i) any corporation with respect to which
the Corporation owns, directly or indirectly, 50% or more of the total combined
voting power of all classes of stock of such corporation, or (ii) any entity
which the Committee reasonably expects to become a Subsidiary within the meaning
of clause (i).
Section 3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 7, the Common Stock which
may be issued pursuant to Options granted under the Plan shall not exceed
1,538,322 shares in the aggregate (16% of outstanding on fully diluted basis).
Common Stock issuable under the Plan may be authorized but unissued shares or
reacquired shares of Common Stock. Common Stock subject to Options that are
forfeited, lapse or terminate in whole or in part for any reason, shall be
available for issuance pursuant to other Options.
A-3
<PAGE>
Section 4. ADMINISTRATION OF THE PLAN
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select the Employees, Directors and Consultants to whom
Options may be granted;
(ii) to determine the number of shares of Common Stock subject
to each such Option; provided, HOWEVER, that during any calendar year,
no individual may be granted Options with respect to more than 250,000
shares of Common Stock;
(iii) to determine whether an Option shall be an Incentive
Stock Option or a Nonqualified Stock Option;
(iv) to determine the terms and conditions of any Option
granted under the Plan (including, but not limited to, the exercise
price, the period, if any, over which Options shall vest and become
exercisable (which period may be accelerated at any time in the
discretion of the Committee), and performance conditions relating to an
Option, based in each case on such considerations as the Committee
shall determine), and all other matters to be determined in connection
with an Option;
(v) to determine whether, to what extent and under what
circumstances an the exercise price of an Option may be paid, in cash,
Common Stock, or other property, or an Option may expire or be
canceled, forfeited, or surrendered;
(vi) to determine the restrictions or conditions related to
the delivery, holding and disposition of shares of Common Stock
received upon exercise of an Option;
(vii) to prescribe the form of each Stock Option Agreement,
which need not be identical for each Grantee;
(viii) to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary
or advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile
any inconsistency in the Plan and to construe and interpret the Plan
and any Option, Stock Option Agreement or other instrument hereunder;
and
(x) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
A-4
<PAGE>
The Committee may, at any time, grant new or additional options to any eligible
Employee, Director or Consultant who has previously received Options under the
Plan, or options under other plans, whether such prior Options or other options
are still outstanding, have been exercised previously in whole or in part, or
have been canceled. The exercise price of such new or additional Options may be
established by the Committee, without regard to such previously granted Options
or other options.
Other provisions of the Plan notwithstanding, the Board may perform any function
of the Committee under the Plan, including without limitation for the purpose of
ensuring that transactions under the Plan by Grantees who are then subject to
Section 16 of the Securities Exchange Act of 1934 in respect of the Corporation
are exempt under Rule 16b-3 thereunder. In any case in which the Board is
performing a function of the Committee under the Plan, each reference to the
Committee herein shall be deemed to refer to the Board.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. Any action of the
Committee with respect to the Plan shall be final, conclusive and binding on all
persons, including the Corporation, Subsidiaries, Grantees, any person claiming
any rights under the Plan from or through any Grantee and stockholders, except
to the extent the Committee may subsequently modify, or take further action not
consistent with, its prior action. If not specified in the Plan, the time at
which the Committee must or may make any determination shall be determined by
the Committee, and any such determination may thereafter by modified by the
Committee (subject to Section 10). The express grant of any specific power to
the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The Committee may
delegate to officers or managers of the Corporation or any subsidiary of the
Corporation the authority, subject to such terms as the Committee shall
determine, to perform such functions as the Committee may determine, to the
extent permitted under applicable law.
(c) LIMITATION OF LIABILITY. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Corporation or any
subsidiary, the Corporation's independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Corporation to assist in the administration of the Plan. To the fullest
extent permitted by applicable law, no member of the Committee, nor any officer
or employee of the Corporation acting on behalf of the Committee, shall be
personally liable for any action, determination or interpretation taken or made
in good faith with respect to the Plan, and all members of the Committee and any
officer or employee of the Corporation acting on its behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Corporation with
respect to any such action, determination or interpretation.
Section 5. OPTION TERMS
Unless otherwise determined by the Committee and set forth in a Stock
Option Agreement, Options granted under the Plan shall contain the following
terms and conditions:
(a) TYPE OF OPTION. Each Option shall be an Incentive Stock Option to
the maximum extent permitted by Section 422(d) of the Code, and any excess over
such maximum shall be a Nonqualified Stock Option.
A-5
<PAGE>
(b) EXERCISE PRICE. The exercise price per share of Common Stock
subject to each Option shall equal the Fair Market Value on the date the Option
is granted.
(c) VESTING. Each Option shall vest and become exercisable in five
equal installments on each of the first five anniversaries on the date the
Option is granted; PROVIDED, HOWEVER that the Option shall be vested and
exercisable as to no less than 75% of the shares of Common Stock subject thereto
as of the end of any period of 30 consecutive trading days during which the Fair
Market Value averages at least 300% of the Fair Market Value on the date the
Option is granted, and shall be vested and exercisable as to 100% of the shares
of Common Stock subject thereto as of the end of any period of 30 consecutive
trading days during which the Fair Market Value averages at least 450% of the
Fair Market Value on the date the Option is granted; AND PROVIDED FURTHER that
each Option shall become vested and exercisable in full immediately prior to a
Change in Control.
(d) TERMINATION. Options held by any Grantee shall terminate upon the
earliest of:
(i) the termination of the Grantee's employment, directorship
or consultancy with the Corporation and its Subsidiaries for Cause;
(ii) the later of (x) 180 days after the Grantee's termination
of employment, directorship or consultancy with the Corporation and its
Subsidiaries (which shall be deemed to include the sale of any Subsidiary of the
Corporation that employs such Grantee) for any reason other than Cause, death or
Disability, or (y) 180 days following the end of any "blackout period" imposed
by the Corporation's general counsel that is in effect on the date of such
termination; PROVIDED, HOWEVER, that during any such 180-day period, the Options
shall be exercisable only to the extent vested and exercisable as of the date of
such termination;
(iii) one year after the Grantee's termination of employment,
directorship or consultancy with the Corporation and its Subsidiaries by reason
of death or Disability; PROVIDED, HOWEVER, that during any such one year period,
the Options shall be exercisable to the extent such Options would have been
vested and exercisable pursuant to Section 5(c) (but without regard to the
provisos contained therein) as of the anniversary of the date of grant next
following such termination, assuming such termination had not occurred;
(iv) the tenth anniversary of the date of grant; and
(v) upon the consummation of any transaction whereby the
Corporation (or any successor to the Corporation or substantially all of its
business) becomes a wholly-owned subsidiary of any other corporation (but after
giving effect to Section 5(c)), unless such other corporation shall continue or
assume the Plan as it relates to Options then outstanding (in which case such
other corporation shall be treated as the Corporation for all purposes
hereunder, and, pursuant to Section 7, the Committee of such other corporation
shall make appropriate adjustment in the number and kind of shares of Common
Stock subject thereto and the exercise price per share thereof to reflect
consummation of such transaction). If the Plan is not to be so assumed, the
Corporation shall notify
A-6
<PAGE>
the Grantee of consummation of such transaction at least ten days in advance
thereof. If such other corporation is an affiliate of the Corporation
immediately prior to consummation of any such transaction, Options shall not
terminate and shall remain Options to purchase Common Stock of the Corporation
unless the Plan is in fact so continued or assumed by such other corporation.
Section 6. EXERCISE OF OPTIONS
A Grantee shall exercise an Option by delivery of written notice to the
Corporation setting forth the number of shares with respect to which the Option
is to be exercised, together with cash, certified check, bank draft, wire
transfer, or postal or express money order payable to the order of the
Corporation for an amount equal to the exercise price of such shares and any
income tax required to be withheld. The Committee may, in its sole discretion,
permit a Grantee to pay all or a portion of the exercise price or tax
withholding obligation by delivery of Common Stock or other property (including
notes or other contractual obligations of the Grantee to make payment on a
deferred basis, such as through "cashless exercise" arrangements, to the extent
permitted by applicable law), and the methods by which Common Stock will be
delivered or deemed to be delivered by the Grantee.
Section 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event any recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
exchange of Common Stock or other securities, Common Stock dividend or other
special and nonrecurring dividend or distribution (whether in the form of cash,
securities or other property), liquidation, dissolution, or other similar
corporate transaction or event, affects the Common Stock such that an adjustment
is appropriate in order to prevent dilution or enlargement of the rights of
Grantees under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (i) the number and kind of shares of Common
Stock deemed to be available thereafter for grants of Options under Section 3,
(ii) the number and kind of shares of Common Stock that may be delivered or
deliverable in respect of outstanding Options, (iii) the number of shares with
respect to which Options may be granted to a given Grantee in the specified
period as set forth in Section 4(a)(ii), and (iv) the exercise price. In
addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Options (including, without
limitation, cancellation of Options in exchange for the in-the-money value, if
any, of the vested portion thereof, or substitution of Options using stock of a
successor or other entity) in recognition of unusual or nonrecurring events
(including, without limitation, events described in the preceding sentence)
affecting the Corporation or any Subsidiary or the financial statements of the
Corporation or any Subsidiary, or in response to changes in applicable laws,
regulations, or accounting principles.
Section 8. RESTRICTIONS ON ISSUANCE OF SHARES.
The Corporation shall not be obligated to deliver Common Stock upon the
exercise or settlement of any Option or take any other action under the Plan
until the Corporation shall have determined that applicable federal and state
laws, rules, and regulations have been complied with and such approvals of any
regulatory or governmental agency have been obtained and contractual
A-7
<PAGE>
obligations to which the Option may be subject have been satisfied. The
Corporation, in its discretion, may postpone the issuance or delivery of Common
Stock under any Option until completion of such stock exchange listing or
registration or qualification of Common Stock or other required action under any
federal or state law, rule, or regulation as the Corporation may consider
appropriate, and may require any Grantee to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of Common Stock under the Plan. The Corporation shall file
a registration statement on Form S-8 (or other appropriate form) with respect to
the Common Stock to be issued pursuant to the Plan and shall use its best
efforts to maintain the effectiveness of such registration statement (and
maintain the currency of any related prospectus) for so long as Options are
outstanding or may be granted under the Plan.
Section 9. GENERAL PROVISIONS
(a) Each Option grant shall be evidenced by a Stock Option
Agreement.
(b) The grant of an Option in any year shall not give the Grantee any
right to similar grants in future years or any right to continue such Grantee's
employment relationship with the Corporation. All Grantees shall remain subject
to discharge to the same extent as if the Plan were not in effect.
(c) No Grantee, and no beneficiary or other persons claiming under or
through the Grantee shall have any right, title or interest by reason of any
Option to any particular assets of the Corporation, or any shares of Common
Stock allocated or reserved for the purposes of the Plan or subject to any
Option except as set forth herein. The Corporation shall not be required to
establish any fund or make any other segregation of assets to assure the payment
of any Option.
(d) Unless otherwise permitted in the discretion of the Committee with
respect to Nonqualified Stock Options, no Option or other right under the Plan
may be sold, transferred, assigned, pledged or otherwise encumbered, except by
will or the laws of descent and distribution, and an Option shall be exercisable
during the Grantee's lifetime only by the Grantee.
(e) The Corporation shall have the right to require that the Grantee
make such provision, or furnish the Corporation such authorization, necessary or
desirable so that the Corporation may satisfy its obligation, under applicable
laws, to withhold or otherwise pay for income or other taxes of the Grantee
attributable to the grant, exercise or cancellation of Options granted under the
Plan or the sale of Common Stock issued with respect to Options. This authority
shall include authority to withhold or receive Common Stock or other property
and to make cash payments in respect thereof in satisfaction of a Grantee's tax
obligations.
Section 10. AMENDMENT OR TERMINATION
The Board may alter, amend, suspend, discontinue or terminate the Plan
at any time; PROVIDED, HOWEVER, that no such action shall adversely affect the
rights of Grantees of Options previously granted hereunder and, PROVIDED
FURTHER, HOWEVER, that any stockholder approval
A-8
<PAGE>
necessary or desirable in order to comply with applicable law, regulation or
listing requirement shall be obtained in the manner required therein.
Section 11. EFFECTIVE DATE OF PLAN
The Plan shall be effective immediately after the closing of the
transactions contemplated by the Merger Agreement, subject to the approval of
the Plan by the Corporation's shareholders either before or after such effective
date.
