<PAGE>
Page 1 of 15 Pages
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________
Amendment No. 1
to
SCHEDULE 13D
Under the Securities Exchange Act of 1934
IPC Information Systems, Inc.
(Name of Issuer)
Common Stock
$.01 par value
(Title of Class of Securities)
__________
44980K100
(CUSIP Number)
Cable Systems Holding, LLC
(Name of Person Filing Statement)
Philip H. Werner, Esq.
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Tel. No.: 212- 309-6000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 18, 1997
(Date of Event which Requires Filing of this Statement)
__________
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this statement because of Rule 13d-1(b)(3) or (4), check the following: / /
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CUSIP No. 44980K100 13D Page 2 of 15 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Arizona Acquisition Corp.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /x/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DE
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7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY ------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 6,952,768
PERSON WITH ------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,952,768 - See Item 5
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65 % - See Item 5
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 44980K100 13D Page 3 of 15 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Cable Systems Holding, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /x/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY ------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 6,952,768
PERSON WITH ------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,952,768 - See Item 5
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65 % - See Item 5
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14 TYPE OF REPORTING PERSON*
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 44980K100 13D Page 4 of 15 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David Kirby
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /x/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
US
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY ------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 6,952,768
PERSON WITH ------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,952,768 - See Item 5
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65 % - See Item 5
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 44980K100 13D Page 5 of 15 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John O'Mara
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /x/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
US
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY ------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 6,952,768
PERSON WITH ------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,952,768 - See Item 5
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65 % - See Item 5
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14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
The class of equity securities to which this statement relates is the
common stock, $0.01 par value per share (the "Shares"), of IPC Information
Systems, Inc., a Delaware corporation ("IPC"). The principal executive offices
of IPC Information Systems, Inc. are located at 88 Pine Street, New York, New
York 10005.
Item 2. Identity and Background.
This Schedule 13D is being filed jointly on behalf of the following persons
(collectively, the "Reporting Persons"): (i) Arizona Acquisition Corp., a
Delaware corporation ("AAC"); (ii) Cable Systems Holding, LLC, a Delaware
limited liability company ("CSH"); (iii) David Kirby ("Kirby"); and (iv) John
O'Mara ("O'Mara").
AAC is a Delaware corporation formed for purposes of the transaction
described in Item 4 below. As of the date hereof, CSH owns five (5) shares of
AAC Common Stock , constituting all of the outstanding capital stock of AAC.
CSH is a Delaware limited liability company which engages in certain
telecommunication businesses through its subsidiaries. Members of CSH owning
units of CSH attributable to CSH's ownership of AAC (the "IPC Units"), acting
directly or through their designees, make all of the investment decisions on
behalf of CSH. Kirby and O'Mara each own 50% of the IPC Units.
The name, business address, citizenship, present principal occupation or
employment and the name and business address of any corporation or organization
in which each such employment is conducted of each executive officer or member
of the Board of Directors of AAC and CSH are set forth on Schedules A through B,
respectively, attached hereto. Kirby resides at 24 Father Peter's Lane, New
Canaan, CT, 06840 and is a U.S. citizen. His present principal occupation is a
private investor/financial advisor. O'Mara resides at 623 Lake Avenue,
Greenwich, CT, 06830 and is a U.S. citizen. His present principal occupation is
a private investor/consultant. He serves on the Board of Directors of Baldwin
& Lyons Inc., The Midland Company, Plantronics Inc., Glenoit Inc., The Garden
Companies, Condere Inc., and Purcell Industries.
During the past five (5) years, neither any of the Reporting Persons nor,
to the best knowledge of any of the Reporting Persons, any of the other persons
listed on Schedules A through B attached hereto, has been (i) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to United States federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
AAC has entered into the Stockholders Agreement, dated as of December 18,
1997 (the "Stockholders Agreement"), and the Investors Agreement, dated as of
December 18, 1997 (the "Investors Agreement") described in the response to Item
4. Neither AAC nor any of the other persons listed in the response to Item 2
have expended any funds in connection with the Stockholders Agreement or the
Investors Agreement.
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Item 4. Purpose of Transaction.
On December 18, 1997, IPC and AAC entered into the Agreement and Plan of
Merger (the "Merger Agreement", a copy of which is attached hereto and made a
part hereof as Exhibit 3). The Merger Agreement provides, among other things,
for the merger of AAC with and into IPC (the "Merger"), with IPC as the
surviving corporation (the "Surviving Corporation"). Under the terms of the
Merger Agreement, which is subject to majority shareholder approval and
regulatory review, CSH and certain of its affiliates will purchase a minimum of
54 percent and as much as 90 percent of the outstanding Shares for $21 per
Share. IPC shareholders will have the option to receive $21 per Share in cash,
or to retain a portion of their Shares, not to exceed 46 percent of the
outstanding common stock of the Surviving Corporation at the Effective Time.
Total cash consideration to IPC shareholders in the event of a purchase of 90%
of the total equity outstanding would be $204 million. The Merger will become
effective at such time as the certificate of merger is duly filed with the
Secretary of State of the State of Delaware or at such later time as is
specified in the certificate of merger (the "Effective Time"). From and after
the Effective Time, the Surviving Corporation will possess all the rights,
privileges, powers and franchises and be subject to all of the restrictions,
disabilities and duties of IPC and AAC, all as provided under Delaware Law. The
Merger is subject to customary conditions, including the approval and adoption
of the Merger Agreement by the stockholders of IPC.
In connection with the Merger, Richard Kleinknecht and Peter Kleinknecht
and certain family members and trusts associated with Richard Kleinknecht and
Peter Kleinknecht (each, a "Stockholder") have entered into the Stockholders
Agreement with AAC dated as of December 18, 1997 (a copy of which is attached
hereto and made a part hereof as Exhibit 4). Pursuant to the Stockholders
Agreement, the Stockholders have agreed to vote 6,952,768 Shares, or
approximately 65% of the outstanding Shares, in favor of approval and adoption
of the Merger Agreement.
During the period (the "Agreement Period") beginning on December 18, 1997
and ending on the Termination Date (as defined in the Merger Agreement), each of
the Stockholders has agreed not to directly or indirectly (i) except pursuant to
the terms of the Merger Agreement or the Stockholders Agreement, offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
enforce or permit the execution of the provisions of any redemption agreement
with IPC or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, or exercise any
discretionary powers to distribute, any or all of such Stockholder's Shares or
any interest therein, including any trust income or principal, except in each
case to a permitted transferee (a "Permitted Transferee"), who is or agrees to
become bound by the Stockholders Agreement; (ii) except as contemplated by the
Stockholders Agreement, grant any proxies or powers of attorney with respect to
any Shares, deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of such Stockholder contained in the Stockholders
Agreement untrue or incorrect or have the effect of preventing or disabling such
Stockholder from performing such Stockholder's obligations under the
Stockholders Agreement.
Each Stockholder has waived any rights of appraisal or rights to dissent
from the Merger that such Stockholder may have. The Stockholders have
represented that no beneficiary who is a beneficial owner of Shares under any
trust has any right of appraisal or right to dissent from the Merger which has
not been so waived.
Subject to the terms and provisions of the Merger Agreement, in connection
with the Merger, Richard Kleinknecht has agreed to elect to retain an aggregate
of 380,952 shares of Surviving Corporation Common Stock upon conversion of, and
with respect to, 380,952 shares owned by Richard
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Kleinknecht immediately prior to the Effective Time (the "Rollover Shares")
unless otherwise agreed with AAC.
Unless the Shares held by any trust which are presently subject to the
terms of the Stockholders Agreement are transferred to one or more Stockholders
(and remain subject in all respects to the terms of the Stockholders Agreement)
or other Permitted Transferees who upon receipt of such Shares become
signatories to the Stockholders Agreement, the Stockholders who are trustees
shall not take any action to terminate, close or liquidate any such trust and
shall take all steps necessary to maintain the existence thereof at least until
the first to occur of (i) the Effective Time and (ii) the Termination Date.
Richard Kleinknecht has agreed to take all actions necessary to cause any
Rollover Shares that constitute Pledged Shares (as defined in the Stockholders
Agreement) prior to the Effective Time to be free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever.
Each Stockholder under the Stockholders Agreement has agreed that, until
the Termination Date, such Stockholder shall vote (or cause to be voted) the
Shares held of record or beneficially by such Stockholder (i) in favor of the
Merger, the execution and delivery by IPC of the Merger Agreement and the
approval of the terms thereof and each of the other actions contemplated by the
Merger Agreement and the Stockholders Agreement and any actions required in
furtherance thereof; (ii) against any action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of IPC under the Merger Agreement or the Stockholders Agreement; (iii)
in favor of the new IPC incentive stock option plan, a copy of which is attached
hereto as Exhibit 5 and (iv) against the following actions (other than the
Merger and the transactions contemplated by the Merger Agreement or any such
actions identified in writing to AAC in advance): (A) any extraordinary
corporate transaction, including, without limitation, a merger, consolidation or
other business combination involving IPC or its subsidiaries; (B) a sale, lease
or transfer of a material amount of assets of IPC or its subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of IPC or its
subsidiaries; (C) any change in the majority of the board of directors of IPC;
(D) any material change in the present capitalization of IPC or any amendment of
IPC's Certificate of Incorporation or By-Laws; (E) any other material change in
IPC's corporate structure or business; or (F) any other action which is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, discourage or materially adversely affect the Merger or the
transactions contemplated by the Merger Agreement or the Stockholders Agreement.
Each Stockholder has appointed AAC and any designee of AAC, each of them
individually, such Stockholder's irrevocable (until the Termination Date) proxy
and attorney-in-fact (with full power of substitution) to vote such
Stockholder's Shares as described above. The proxy is irrevocable (until the
Termination Date) and coupled with an interest. Each Stockholder has agreed to
take such further action and execute such other instruments as may be necessary
to effectuate the intent of the proxy and has revoked any proxy previously
granted by such Stockholder with respect to such Stockholder's Shares.
The Stockholders Agreement will terminate upon the expiration of the
Agreement Period.
In addition, IPC, CSH, Richard Kleinknecht ("Kleinknecht"), David
Walsh ("Walsh"), and Anthony Servidio ("Servidio" and collectively with
Kleinknecht and Walsh, the "Management Shareholders"), have entered into an
Investors Agreement, dated as of December 18, 1997
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(a copy of which is attached hereto and made a part hereof as Exhibit 6), to
be effective only upon the consummation of the transactions contemplated by
the Merger Agreement.
Pursuant to the Investors Agreement, the Board of Directors of the
Surviving Corporation will consist of 9 members, (i) three of whom shall be
nominated by CSH and its Permitted Transferees ("CSH Shareholders"); (ii) two of
whom shall be nominated by the CSH Shareholders and shall be individuals who are
not "Affiliates" or "Associates" (as those terms are used within the meaning of
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) of any party to the Investors
Agreement or any Affiliate thereof; (iii) two of whom shall be nominated by the
CSH Shareholders and shall be individuals who are executive officers of IPC or
its subsidiaries and (iv) two of whom shall be nominated by Kleinknecht and his
Permitted Transferees (the "Kleinknecht Shareholders"). Each of the parties to
the Investors Agreement and their Permitted Transferees has agreed to vote its
Shares in favor of the persons so nominated, provided that none of the parties
will be required to vote for another party's nominees if the number of Shares
held by the person or group making the nomination is (A) in the case of the CSH
Shareholders, less than 5% of the then outstanding number of shares of common
stock of IPC, par value $.01 per share ("New Common Shares") or (B) in the case
of the Kleinknecht Shareholders, less than 50% of such person's or group's
Initial Ownership (defined as the number of New Common Shares held by such
person or group as of the date of the Investors Agreement).
Pursuant to the Investors Agreement, the CSH Shareholders and the
Management Shareholders have agreed that they will not, directly or indirectly,
sell, assign, transfer, grant a participation in, pledge or otherwise dispose of
any New Common Shares (or solicit any offers to buy or otherwise acquire, or
take a pledge of any New Common Shares) except in compliance with the Securities
Act of 1933, as amended, and the terms and conditions of the Investors
Agreement.
Any CSH Shareholder or Management Shareholder may at any time transfer
any or all of its New Common Shares of IPC to one or more of its Permitted
Transferees without the consent of IPC or any CSH Shareholder or Management
Shareholder, as the case may be, so long as (i) such Permitted Transferee shall
have executed a Joinder Agreement substantially in the form of Exhibit A to the
Investors Agreement and thereby agreed to be bound by the terms of the Investors
Agreement and (ii) the transfer to such Permitted Transferee is not in violation
of applicable federal or state securities laws.
Aside from a transfer to a Permitted Transferee as discussed above,
the Kleinknecht Shareholders may transfer their New Common Shares only as
follows: (i) pursuant to the Tag-Along Rights described below; (ii) pursuant to
the Drag-Along Rights described below; (iii) in a public offering in connection
with the exercise of their registration rights under Article 5 of the Investors
Agreement; or (iv) following the earlier to occur of (A) the date on which the
number of New Common Shares held by the Kleinknecht Shareholders is less than 5%
of the outstanding number of New Common Shares and (B) the fifth anniversary of
the Effective Time, to any person other than any Adverse Person (as defined in
the Investors Agreement). The above-described restrictions on the Kleinknecht
Shareholders shall terminate at such time as the aggregate number of New Common
Shares held by the CSH Shareholders is less than 50% of the CSH Shareholders'
aggregate Initial Ownership of New Common Shares (defined as the number of New
Common Shares held by such person or group as of the date of the Investors
Agreement).
Aside from a transfer to a Permitted Transferee as discussed above,
Walsh and his Permitted Transferees and Servidio and his Permitted Transferees
may transfer their New Common Shares only as follows: (i) pursuant to the
Tag-Along Rights described below; (ii) pursuant to the Drag-Along Rights
described below; (iii) in any public offering; (iv) following the 30th month
anniversary of
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the Effective Time, to any person other than any Adverse Person (as defined
in the Investors Agreement); or (v) to any person, in a transfer through a
broker or dealer in compliance with Rule 144 (or any successor rule).
The Investors Agreement also provides that if the CSH Shareholders
propose to sell New Common Shares, the Management Shareholders will have the
right to participate in the sale ("Tag-Along Rights"), provided that no such
rights shall apply (i) to sales of up to 3% in the aggregate of the outstanding
New Common Shares; (ii) to sales to Permitted Transferees of CSH Shareholders;
or (iii) in public offerings. If Tag-Along Rights apply, the CSH Shareholders
will inform the Management Shareholders (collectively, the "Tag Shareholders")
of the terms and conditions of the proposed sale and offer each Tag Shareholder
the opportunity to participate. If the number of New Common Shares that CSH
Shareholders and the Tag Shareholders propose to sell exceeds the number that
can be sold on the terms and conditions proposed by the buyer, the CSH
Shareholders and each Tag Shareholder who has exercised Tag-Along Rights will be
entitled to sell up to his or her Tag Along Portion. Tag Along Portion shall
mean the number of New Common Shares owned by such Tag Shareholder (on a fully
diluted basis) (and in the case of the CSH Shareholders, owned by CSH
Shareholders on a fully diluted basis) multiplied by a fraction, the numerator
of which shall be the number of New Common Shares proposed to be sold by CSH
Shareholders and the denominator of which shall be the total number of New
Common Shares (on a fully diluted basis) held by parties to the Investors
Agreement. The CSH Shareholders and the Tag Shareholders who have exercised
Tag-Along Rights may sell their New Common Shares on substantially the same
terms and conditions set forth in the notice (subject to an increase in the
amount of consideration of up to 5%) within 120 days of the date all Tag-Along
Rights are waived, exercised or expire.
The Investors Agreement contemplates that if the CSH Shareholders (i)
propose to sell Shares constituting not less than 50% of their Initial Ownership
(defined as the number of New Common Shares held by such person or group as of
the date of the Investors Agreement) in a bona fide third party sale, or
(ii) propose a sale in which the New Common Shares to be sold by CSH
Shareholders and the Management Shareholders constitute 50% or more of the
outstanding New Common Shares held by all such Shareholders, the CSH
Shareholders will be entitled to compel the Management Shareholders to
participate in the sale ("Drag-Along Rights") with respect to the New Common
Shares owned by each Management Shareholder which constitute the Drag-Along
Portion of the number of New Common Shares that such person owns. Drag-Along
Portion shall mean as to any Management Shareholder, the number of New Common
Shares such person owns (on a fully diluted basis) multiplied by a fraction the
numerator of which is the number of New Common Shares to be sold by the seller
and proposed sellers and the denominator of which is the total number of New
Common Shares owned by the seller and proposed sellers.
Pursuant to the Investors Agreement, CSH also has the right to request
the Surviving Corporation to register for sale its New Common Shares on five
occasions if the aggregate proceeds expected to be received from any such sale
exceeds $7,500,000. Once the Surviving Corporation has effected one such
registration for the CSH Shareholders, the Kleinknecht Shareholders may request
two registrations of their New Common Shares. Each party to the Investors
Agreement has the right, subject to certain limitations, to request the
Surviving Corporation to include its New Common Shares in any registration
undertaken by the Surviving Corporation. All requests for registration are
subject to certain other customary terms and conditions.
The Investors Agreement also provides that until the earlier to occur
of (i) the fifth anniversary of the Effective Time or (ii) the occurrence of a
Change in Control (defined as the date on which the CSH Shareholders own less
than 20% of the outstanding New Common Shares or the
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transfer of all or substantially all of the assets of the Surviving
Corporation or a liquidation of the Surviving Corporation), no Kleinknecht
Shareholder shall acquire any New Common Shares or securities convertible
into or exercisable or exchangeable for New Common Shares except (A) as a
Permitted Transferee in a transfer from any other Kleinknecht Shareholder
which is otherwise permitted under the terms of the Investors Agreement or
(B) pursuant to stock options granted by the Surviving Corporation.
In addition to the transactions contemplated by the Merger Agreement,
subject to market conditions and other factors, CSH or other affiliates of CSH
may acquire or dispose of shares of IPC from time to time in future open-market,
privately negotiated or other transactions, may enter into agreements with third
parties relating to acquisitions of securities issued or to be issued by the
Surviving Corporation, may enter into agreements with the management of IPC
relating to acquisitions of shares of the Surviving Corporation by members of
management, issuances of options to management or their employment by the
Surviving Corporation, or may effect other similar agreements or transactions.
Citicorp Venture Capital, Ltd. ("CVC") has issued to CSH and AAC a
commitment letter, dated December 17, 1997, pursuant to which CVC (together with
its Affiliates as defined in the Merger Agreement) has committed, subject to the
terms and conditions set forth therein, to purchase securities of CSH not
exceeding $72 million in the aggregate, the proceeds of which shall be invested
by CSH in AAC in furtherance of the consummation by AAC of the transactions
contemplated by the Merger Agreement.
At the consummation of the Merger, it is contemplated that Peter Woog,
a manager of CSH and President of its subsidiary, Cable Systems International
Inc., will become Chairman of the Board of the Surviving Corporation, and that
Richard Kleinknecht will become Vice-Chairman of the Surviving Corporation.
A provision in the Limited Liability Company Operating Agreement of CSH
(the "LLC Agreement") provides that any action to be taken by CSH with respect
to its subsidiary, AAC, including decisions regarding the voting of shares of
common stock of AAC ("AAC Common Stock") and the exercise of all rights as
shareholder of AAC, shall be taken with the approval of the holders of a
majority of the IPC Units.
The LLC Agreement further provides that the IPC Units may be exchanged by
any holder thereof for shares of AAC Common Stock at any time following December
17, 1999. In addition (i) if a Bankruptcy Event (as defined in the LLC
Agreement) occurs with respect to CSH, AAC or any material subsidiary of AAC, or
(ii) a holder of an IPC Unit dies, is disabled, or purports to make a transfer
of its IPC Units in violation of the LLC Agreement, then all of the IPC Units,
in the case of an event described under clause (i) of this paragraph or the
relevant IPC Units in the case of an event described under clause (ii) of this
paragraph, shall be deemed automatically exchanged for the corresponding number
of shares of AAC Common Stock.
Finally, at any time prior to December 17, 1999, in the event of a Change
of Control (as defined in the LLC Agreement) with respect to CSH or AAC or a
material judgment (i.e., in excess of $5,000,000) against CSH, AAC or any
material subsidiary of AAC, the holders of a majority of the IPC Units may elect
either (i) to require the exchange of all IPC Units for the corresponding number
of shares of AAC Common Stock or (ii) to permit each holder of IPC Units, at its
discretion, to effect such exchange.
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<PAGE>
Item 5. Interest in Securities of the Issuer.
Pursuant to the Stockholders Agreement, AAC has acquired the right to vote
in favor of the adoption and approval of the Merger Agreement, and, for purposes
of Rule 13d-3 promulgated under the Exchange Act, may be deemed to beneficially
own, 6,952,768 Shares (the "Kleinknecht Shares"), representing approximately 65%
of the outstanding Shares of IPC. AAC disclaims beneficial ownership of the
Kleinknecht Shares.
CSH, as shareholder of AAC, may be deemed, for purposes of Rule 13d-3
promulgated under the Exchange Act, to beneficially own indirectly the
Kleinknecht Shares that may be deemed to be owned beneficially by AAC. However,
CSH disclaims beneficial ownership of the Kleinknecht Shares.
Because of their ownership interest in CSH, Kirby and O'Mara may be deemed,
for purposes of Rule 13d-3 promulgated under the Exchange Act, to beneficially
own indirectly the Kleinknecht Shares that may be deemed to be owned
beneficially by CSH. Each of Kirby and O'Mara disclaims beneficial ownership of
the Kleinknecht Shares.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
See response to Item 4.
A copy of each of the Merger Agreement, the Stockholders Agreement, the new
IPC Stock Option Plan and Investors Agreement are attached hereto as Exhibits 3,
4, 5 and 6 and are incorporated herein by reference.
Except for the agreements described in the response to Item 4, to the best
knowledge of the Reporting Persons, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) between the persons
enumerated in Item 2, and any other person, with respect to any securities of
IPC, including, but not limited to, transfer or voting arrangements, puts or
calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Joint Filing Agreement among the Reporting Persons
Exhibit 2: Powers of Attorney
Exhibit 3: Agreement and Plan of Merger, dated as of December 18, 1997,
between IPC Information Systems, Inc. and Arizona Acquisition Corp.
Exhibit 4: Stockholders Agreement, dated as of December 18, 1997, by and
between Arizona Acquisition Corp., Richard Kleinknecht, Peter Kleinknecht and
other parties named therein.
Exhibit 5: New IPC Stock Option Plan
Exhibit 6: Investors Agreement, dated as of December 18, 1997, by and
among IPC Information Systems, Inc., Cable Systems Holding, LLC, Richard
Kleinknecht, David Walsh and Anthony Servidio.
-12-
<PAGE>
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: December 29, 1997
Arizona Acquisition Corp.
By: /s/ Peter Woog
---------------------------
Name: Peter Woog
Title: President
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: December 29, 1997
Cable Systems Holding, LLC
By: /s/ Peter Woog
---------------------------
Name: Peter Woog
Title: Manager
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: December 29, 1997
By: /s/ David Kirby
---------------------------
Name: David Kirby
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: December 29, 1997
By: /s/ John O'Mara
---------------------------
Name: John O'Mara
-13-
<PAGE>
Schedule A
Executive Officers and Directors
of
Arizona Acquisition Corp.
The names of the Directors and the names and titles of the Executive
Officers of Arizona Acquisition Corp. ("AAC") and their business addresses and
principal occupations are set forth below. If no address is given, the
Director's or Executive Officer's business address is that of AAC at 505 North
51st Avenue, Phoenix, Arizona 85043-2701. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to AAC and each
individual is a United States citizen.
Name, Business Address Present Principal Occupation
- ------------------------------ -------------------------------
Peter Woog President; President of Cable Systems
International Inc.
* Bruce Burkett Secretary and Treasurer; Chief Financial
Officer of Cable Systems International
Inc.
- ------------------
* Director
-14-
<PAGE>
Schedule B
Managers
of
Cable Systems Holding, LLC
The names and titles of the Managers of Cable Systems Holding, LLC ("CSH")
and their business addresses and principal occupations are set forth below. If
no address is given, the Manager's business address is that of CSH at 505 North
51st Avenue, Phoenix, Arizona 85043-2701. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to CSH and each
individual is a United States citizen.
Name, Business Address Present Principal Occupation
- ------------------------------- -----------------------------------
Peter Woog Manager; President of Cable Systems
International Inc.
- ------------------
-15-
<PAGE>
Exhibit 1
Joint Filing Agreement
In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934,
as amended, each of the persons named below agrees to the joint filing of a
Statement on Schedule 13D (including amendments thereto) with respect to the
common stock, par value $0.01, of IPC Information Systems, Inc., a Delaware
corporation, and further agrees that this Joint Filing Agreement be included as
an exhibit to such filings provided that, as contemplated by Section
13d-1(f)(1)(ii), no person shall be responsible for the completeness or accuracy
of the information concerning the other persons making the filing, unless such
person knows or has reason to believe that such information is inaccurate. This
Joint Filing may be executed in any number of counterparts, all of which
together shall constitute one and the same instrument.
Arizona Acquisition Corp.
By: /s/ Peter Woog
----------------------------
Name: Peter Woog
Title: President
Cable Systems Holding, LLC
By: /s/ Peter Woog
----------------------------
Name: Peter Woog
Title: Manager
By: /s/ David Kirby
----------------------------
Name: David Kirby
By: /s/ John O'Mara
----------------------------
Name: John O'Mara
<PAGE>
Exhibit 2
Power of Attorney
Arizona Acquisition Corp., a Delaware corporation (the "Corporation"),
hereby constitutes and appoints each of Peter Woog and Bruce Burkett, acting
singly, as the true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for the Corporation and in the name, place and
stead of the Corporation, in any and all capacities, to execute for and on
behalf of the Corporation, all Schedules 13D and Schedules 13G as required by
the Securities Exchange Act of 1934, as amended, and any and all amendments
thereto, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, the issuer
and relevant stock exchanges.
The undersigned acknowledges that the foregoing attorneys-in-fact and
agents of the Corporation, in serving in such capacity at the request of the
undersigned, are not assuming any of the undersigned's responsibilities to
comply with Section 13(d) of the Securities Exchange Act of 1934.
The powers hereby conferred upon the said attorneys-in-fact and agents
shall continue in force until notice of the revocation of this Power of Attorney
has been received by the said attorneys-in-fact and agents of the Corporation.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this Power of
Attorney this 29th day of December, 1997.
ARIZONA ACQUISITION CORP.
By: /s/ Peter Woog
---------------------------
Name: Peter Woog
Title: President
Power of Attorney
Cable Systems Holding, LLC, a Delaware limited liability company (the
"LLC"), hereby constitutes and appoints each of Peter Woog, David Kirby and John
O'Mara, acting singly, as the true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for the LLC and in the name,
place and stead of the LLC, in any and all capacities, to execute for and on
behalf of the LLC, all Schedules 13D and Schedules 13G as required by the
Securities Exchange Act of 1934, as amended, and any and all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, the issuer
and relevant stock exchanges.
The undersigned acknowledges that the foregoing attorney-in-fact and agent
of the LLC, in serving in such capacity at the request of the undersigned, is
not assuming any of the undersigned's responsibilities to comply with Section
13(d) of the Securities Exchange Act of 1934.
<PAGE>
The powers hereby conferred upon the said attorneys-in-fact and agents
shall continue in force until notice of the revocation of this Power of Attorney
has been received by the said attorneys-in-fact and agent of the LLC.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this Power of
Attorney this 29th day of December, 1997.
CABLE SYSTEMS HOLDING, LLC
By: /s/ Peter Woog
---------------------------
Name: Peter Woog
Title: Manager
<PAGE>
Exhibit 3
EXECUTION COPY
-------------------------------------------
AGREEMENT AND PLAN OF MERGER
BETWEEN
ARIZONA ACQUISITION CORP.
AND
IPC INFORMATION SYSTEMS, INC.
December 18, 1997
-------------------------------------------
<PAGE>
CONTENTS
--------
(Continued)
CONTENTS
PAGE
----
1. Definitions.......................................................1
2. Basic Transaction................................................10
(a) The Merger..............................................10
(b) The Closing.............................................10
(c) Actions at the Closing..................................11
(d) Effect of Merger........................................11
(e) Elections...............................................13
(f) Proration...............................................14
(g) Procedure for Payment...................................15
(h) Dissenting Shares.......................................17
(i) Fractional Shares.......................................18
(j) Closing of Transfer Records.............................18
3. Representations and Warranties of the Company....................18
(a) Organization, Qualification, and Corporate Power........18
(b) Capitalization..........................................19
(c) Authorization of Transaction............................19
(d) Noncontravention........................................20
(e) Filings with the SEC....................................20
(f) Financial Statements....................................20
(g) [Intentionally left blank.].............................20
(h) Undisclosed Liabilities.................................20
(i) Brokers' Fees...........................................21
(j) Absence of Certain Changes..............................21
(k) Litigation..............................................22
(l) Taxes...................................................22
(m) Compliance with Laws....................................23
(n) Permits.................................................23
(o) Contracts...............................................23
(p) Intellectual Property Rights............................24
(q) Board Approval; Fairness Opinion........................25
(r) ERISA...................................................25
(s) Labor and Employment Matters............................26
(t) Real Estate.............................................27
(u) Environmental Matters...................................27
4. Representations and Warranties of AAC............................28
(a) Organization............................................28
(b) Financing...............................................28
(c) Authorization of Transaction............................29
(i)
<PAGE>
CONTENTS
(Continued)
PAGE
----
(d) Noncontravention........................................29
(e) Brokers' Fees...........................................30
(f) Capitalization..........................................30
5. Covenants........................................................30
(a) General.................................................30
(b) Notices and Consents....................................30
(c) Regulatory Matters and Approvals........................30
(d) Financing...............................................32
(e) Accounting Treatment....................................32
(f) Cooperation.............................................32
(g) Operation of the Company's Business.....................33
(h) Full Access.............................................34
(i) Notice of Developments..................................34
(j) No Solicitation.........................................34
(k) Insurance and Indemnification...........................35
(l) Employees...............................................36
(m) Disclosure..............................................37
(n) Comfort Letters.........................................37
(o) Affiliate Letters.......................................37
(p) Continued Registration..................................38
(q) Operation of AAC's Business.............................38
(r) No Amendment of Ancillary Agreements....................38
(s) Solvency Opinion........................................38
6. Conditions to Obligation to Close................................38
(a) Conditions to Obligation of AAC.........................38
(b) Conditions to Obligation of the Company.................40
7. Termination......................................................41
(a) Termination of Agreement................................41
(b) Effect of Termination...................................42
(c) Termination Fee; Expenses...............................42
8. Miscellaneous....................................................42
(a) Survival................................................42
(b) Press Releases and Public Announcements.................43
(c) No Third Party Beneficiaries............................43
(d) Entire Agreement........................................43
(e) Succession and Assignment...............................43
(f) Counterparts............................................43
(ii)
<PAGE>
CONTENTS
(Continued)
PAGE
----
(g) General Interpretive Principles.........................43
(h) Notices.................................................44
(i) Governing Law; Forum Selection; and
Waiver of Jury Trial....................................45
(j) Amendments and Waivers..................................46
(k) Severability............................................47
(l) Expenses................................................47
(m) Incorporation of Exhibits, Schedule
and Disclosure Schedules................................47
(n) Transfer Taxes..........................................47
(o) Limited Recourse........................................47
Company Disclosure Schedule
AAC Disclosure Schedule
Schedule A List of Directors of the Surviving Corporation
Exhibit A-1 Amended and Restated Certificate of Incorporation
Exhibit A-2 Restated Certificate of Incorporation
Exhibit B Bylaws
Exhibit C Stock Option Plan
Exhibit D Affiliate Letters
(iii)
<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (the "Agreement") entered into as of
December 18, 1997, by and between Arizona Acquisition Corp., a Delaware
corporation ("AAC"), and IPC Information Systems, Inc., a Delaware corporation
(the "Company"). AAC and the Company are referred to collectively herein as the
"Parties."
This Agreement contemplates the merger of AAC with and into the
Company.
Concurrently with the execution of this Agreement, and as an inducement
to AAC and the Company to enter into this Agreement, (i) AAC and certain
principal stockholders of the Company have entered into the Stockholders
Agreement pursuant to which such stockholders have agreed, among other things,
not to sell, transfer, pledge, assign or otherwise dispose of any shares of
Company Common Stock owned or held by them, or enter into any agreement to
accomplish any of the foregoing prior to the Closing, with certain exceptions
and (ii) one or more of the parties thereto and/or others have entered into the
other Ancillary Agreements.
It is intended that the Merger be recorded as a recapitalization for
financial reporting purposes, and both Parties, after discussion with their
auditors, believe that the Merger is eligible for such accounting treatment.
It is intended that the Merger constitute a tax-free reorganization
within the meaning of Section 368(a)(1)(E) of the Code.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
------------
"AAC" has the meaning set forth in the preface above.
"AAC Disclosure Schedule" has the meaning set forth in ss.4.
"AAC-owned Share" means any Company Common Stock that AAC beneficially
owns.
"AAC Comfort Letter" has the meaning set forth in ss.5(n).
"AAC Common Stock" has the meaning set forth in ss.4(f).
"AAC Shareholder Agreement" means the AAC Shareholder Agreement, dated
as of the date hereof between CSH LLC, as shareholder of AAC, and the Company.
"Acquisition Proposal" has the meaning set forth in ss.5(j).
1
<PAGE>
"Acquisition Transaction" has the meaning set forth in ss.5(j).
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Agent" has the meaning set forth in ss.8(i).
"Agreement" has the meaning set forth in the preface above.
"Ancillary Agreements" means the Stockholders Agreement, the Investors
Agreement, the Share Exchange and Termination Agreement, the Starr Termination
Agreement, the Walsh Employment Agreement, the Servidio Employment Agreement,
the KEC-NY Labor Pool Agreement, the KEC-NJ Labor Pool Agreement, the Corporate
Opportunity Agreement, the Richard P. Kleinknecht Employment Agreement, the
Peter J. Kleinknecht Employment Agreement and the AAC Shareholder Agreement.
"Benefit Plan" means any Plan, other than a Multiemployer Plan,
existing at the Closing Date or prior thereto, established or to which
contributions have at any time been made by the Company or any Subsidiary, or
any predecessor of the Company or any Subsidiary, under which any employee,
former employee or director of the Company or any Subsidiary, or any beneficiary
thereof is covered, is eligible for coverage or has benefit rights in respect of
service to the Company or any Subsidiary.
"Business Day" means any day on which the principal offices of the SEC
in Washington, D.C., are open to accept filings or, in the case of determining a
date when any payment is due, any day other than a day on which banks in New
York, New York, are required or authorized to be closed.
"Capital Lease" means a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
"Cash Electing Shares" has the meaning set forth in ss.2(d)(viii).
"Cash Election Price" has the meaning set forth in ss.2(d)(viii).
"Cash Proration Factor" has the meaning set forth in ss.2(f)(iii).
"Certificate of Merger" has the meaning set forth in ss.2(c).
"Closing" has the meaning set forth in ss.2(b).
"Closing Date" has the meaning set forth in ss.2(b).
2
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Comfort Letter" has the meaning set forth in ss.5(n).
"Company Common Stock" means any share of the common stock, $0.01 par
value per share, of the Company.
"Company Disclosure Schedule" has the meaning set forth in ss.3.
"Company Stockholder" means any Person who or which holds any shares of
Company Common Stock.
"Confidential Information" means any information concerning the
businesses and affairs of the Company and its Subsidiaries that is not already
generally available to the public or is otherwise required to be disclosed by
law or court order.
"Confidentiality/Standstill Letter Agreement" means the
confidentiality/standstill letter agreement, dated as of November 13, 1997,
between AAC and the Company.
"Contracts" means, with respect to any Person, any agreement, contract,
obligation, note, bond, mortgage, indenture, option, Lease, promise or
undertaking that is legally binding on such Person or to which such Person is a
party.
"Corporate Opportunity Agreement" means the Amended and Restated
Corporate Opportunity Agreement dated as of the date hereof, among the Company,
KEC-NY and KEC-NJ.
"CSH LLC" means Cable Systems Holdings, LLC, a Delaware limited
liability company.
"CSI" means Cable Systems International, Inc., a Delaware corporation.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"Debt" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable preferred stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the Ordinary Course of Business but including all liabilities created
or arising under any conditional sale or other title retention
agreement with respect to any such property);
3
<PAGE>
(c) all Capital Lease Obligations of such Person;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not such
Person has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swap Obligations of such Person; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) hereof.
"Debt Financing Commitments" has the meaning set forth in ss.4(b).
"Definitive Proxy Materials" means the definitive proxy materials
relating to the Special Meeting.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Dissenting Shares" has the meaning set forth in ss.2(h).
"Election Date" has the meaning set forth in ss.2(e)(i).
"Effective Time" has the meaning set forth in ss.2(d)(i).
"Environmental Law" means any and all current federal, state, local,
foreign and provincial statutes, ordinances, rules and regulations relating to
the protection of the environment, and/or governing the generation, treatment,
storage, transportation, disposal, manufacture, or release of Hazardous
Materials, and any common law doctrine, including but not limited to,
negligence, nuisance, trespass, personal injury, or property damage related to,
or arising out of, the presence, release, or exposure to a Hazardous Material.
"Equity Financing Commitment" has the meaning set forth in ss.4(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person who is, or was, a member of a
controlled group (within the meaning of Section 412(n)(6) of the Code) that
includes, or at any time included, the Company or any Subsidiary, or any
predecessor of any of the foregoing.
4
<PAGE>
"Exchange Agent" has the meaning set forth in ss.2(e)(ii).
"Exchange Fund" has the meaning set forth in ss.2(g).
"Form of Election" has the meaning set forth in ss.2(e)(iii).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time consistently applied.
"Governmental Body" means any government or political subdivision
thereof, whether foreign or domestic, federal, state, provincial, county, local,
municipal or regional, or any other governmental entity, any agency, authority,
department, division or instrumentality of any such government, political
subdivision, or other governmental entity, any court, arbitral tribunal or
arbitrator, and any non-governmental regulating body, to the extent that the
rules, regulations or orders of such body have the force of law.
"Guaranties" by any Person means all obligations (other than
endorsements in the Ordinary Course of Business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Debt, cash dividend or other monetary obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Debt or obligation or any
property or assets constituting security therefor; (ii) to advance or supply
funds for the purchase or payment of such Debt or obligation; (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring the owner of such Debt or obligation of the ability of
the primary obligor to make payment of the Debt or obligation; or (iv) otherwise
to assure the owner of the Debt or obligation of the primary obligor against
loss in respect thereof. For the purposes of all computations made under this
Agreement, a Guaranty in respect of any Debt for borrowed money shall be deemed
to be Debt equal to the principal amount of such Debt for borrowed money which
has been guaranteed, and a Guaranty in respect of any other obligation or
liability or any dividend shall be deemed to be Debt equal to the maximum
aggregate amount of such obligation, liability or dividend unless such Guaranty
is limited.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Hazardous Material" means any materials, substances or wastes defined
as or included in the definition of "hazardous substances," "hazardous
materials," "hazardous wastes," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "pollutants,"
"regulated substances," or "contaminants" or words of similar import, under any
Environmental Law.
"Intellectual Property" shall mean all trademarks and trademark rights,
trade names and trade name rights, service marks and service mark rights,
service names and service name rights, copyrights and copyright rights, patents
and patent rights, brand names, trade dress, business and
5
<PAGE>
product names, logos, slogans, trade secrets, inventions, processes, formulae,
industrial models, processes, designs, specifications, data, technology,
methodologies, computer programs (including all source codes), confidential and
proprietary information, whether or not subject to statutory registration, and
all related technical information, manufacturing, engineering and technical
drawings, know-how and all pending applications for and registrations of
patents, trademarks, service marks and copyrights, and the right to sue for past
infringement, if any, in connection with any of the foregoing, and all
documents, disks and other media on which any of the foregoing is stored.
"Investors Agreement" means the Investors Agreement, dated as of the
date hereof, by and among the Company, CSH LLC, CSI and certain other persons
named therein.
"IXNET" means International Exchange Networks, Ltd., a Delaware
corporation.
"Joint Disclosure Document" means the disclosure document combining the
Prospectus and the Definitive Proxy Materials.
"KEC-NJ" means Kleinknecht Electric Company, Inc., a New Jersey
corporation.
"KEC-NJ Labor Pool Agreement" means the Amended and Restated Labor Pool
Agreement, dated as of the date hereof, between KEC-NJ and the Company.
"KEC-NY" means Kleinknecht Electric Company, Inc., a New York
corporation.
"KEC-NY Labor Pool Agreement" means the Amended and Restated Labor Pool
Agreement, dated as of the date hereof, between KEC-NY and the Company.
"Kleinknechts" means Richard P. Kleinknecht and Peter J. Kleinknecht.
"Knowledge" means actual or constructive knowledge without independent
investigation of any current director or current executive officer.
"Lease" means any lease of real property made under which the Company
or a Subsidiary thereof is a tenant.
"Lien" means any lien, claim, restriction, security interest,
preemptive right, covenant, easement, mortgage, other encumbrance or any claim
of any third party other than (a) mechanic's, materialman's, and similar liens,
(b) liens for taxes not yet due and payable or for taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Material Adverse Effect" means any material adverse effect on the
financial condition or operations, business, assets, or results of operations of
the Company and its Subsidiaries taken as
6
<PAGE>
a whole, or AAC, as the context in this Agreement requires, but excluding any
change resulting from general industry or economic conditions.
"Maximum Stock Election Number" has the meaning set forth in
ss.2(f)(i).
"Merger" has the meaning set forth in ss.2(a).
"Merger Consideration" has the meaning set forth in ss.2(d)(viii).
"Minimum Stock Election Number" has the meaning set forth in
ss.2(f)(i).
"Most Recent Fiscal Year End" has the meaning set forth in ss.3(f).
"MSCI" has the meaning set forth in ss.4(b).
"Multiemployer Plan" means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA with respect to which the Company or any ERISA
Affiliate has an obligation to contribute or has or could have withdrawal
liability under ss.4201 of ERISA.
"Non-Stock Electing Shares" has the meaning set forth in ss.2(f)(iii).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Owned Real Property" has the meaning set forth in ss.3(t).
"Party" has the meaning set forth in the preface above.
"Permits" means each material license (other than with respect to
Intellectual Property), franchise, permit, certificate, approval, consent or
other similar authorization affecting, or relating in any way to, the assets or
business of the Company and its Subsidiaries.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, an
estate, a joint venture, an unincorporated organization, or other entity or a
Governmental Body.
"Peter J. Kleinknecht Employment Agreement" means the Amended and
Restated Employment Agreement dated as of the date hereof between the Company
and Peter J.
Kleinknecht.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether
7
<PAGE>
written or oral, or whether for the benefit of a single individual or more than
one individual including, but not limited to, without limitation, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA (whether or not
subject thereto).
"Predecessor Site" means any of the real properties of any predecessors
of the Company or any Subsidiary thereof or any entities previously owned by the
Company or any Subsidiary thereof.
"Preliminary Proxy Materials" has the meaning set forth in ss.5(c)(i).
"Prospectus" means the final prospectus relating to the registration of
the Surviving Corporation Common Stock under the Securities Act.
"Proceeding" has the meaning set forth in ss.8(i).
"Public Reports" has the meaning set forth in ss.3(e).
"Registration Statement" has the meaning set forth in ss.5(c)(i).
"Requisite Stockholder Approval" means the affirmative vote of at least
a majority of the shares of Company Common Stock, but less than 80% of the
shares of the Company Common Stock, in favor of this Agreement and the Merger in
accordance with the Delaware General Corporation Law.
"Requisite Super-Majority Stockholder Approval" means the affirmative
vote of at least 80% of the shares of Company Common Stock in favor of the
Merger and this Agreement in accordance with Delaware General Corporation Law.
"Richard P. Kleinknecht Employment Agreement" means the Amended and
Restated Employment Agreement dated as of the date hereof between the Company
and Richard P.
Kleinknecht.
"Schedule 13E-3" has the meaning set forth in ss.5(c)(i).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Servidio" means Anthony Servidio.
"Servidio Employment Agreement" means the Amended and Restated
Employment Agreement, dated as of the date hereof, between Servidio and IXNET.
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"Share Exchange and Termination Agreement" means the Share Exchange and
Termination Agreement, dated as of the date hereof, among Walsh, Servidio, IXNET
and the Company.
"Site" means any of the real properties currently or previously owned,
leased or operated by the Company or any Subsidiary thereof, including all soil,
subsoil, surface waters and groundwater thereat.
"Solvency Opinion" means the opinion from an independent advisor
confirming that, upon the consummation of the transactions contemplated hereby,
the Surviving Corporation (on a consolidated basis) (i) will not be insolvent,
(ii) will not be left with unreasonably small capital, (iii) will not have
incurred debts beyond its ability to pay such debts as they mature, and (iv)
will have a fair value and present fair salable value of its assets in excess of
its stated liabilities and identified contingent liabilities by at least the
total par value of its capital stock.
"Special Meeting" has the meaning set forth in ss.5(c)(ii).
"Starrs" mean Gerald and Robert Starr.
"Starr Termination Agreement" means the Termination Agreement, dated as
of the date hereof, among the Starrs and the Company.
"Stock Electing Shares" has the meaning set forth in ss.2(d)(viii).
"Stock Election" has the meaning set forth in ss.2(e)(i).
"Stock Election Price" has the meaning set forth in ss.2(d)(viii).
"Stock Proration Factor" has the meaning set forth in ss.2(f)(ii).
"Stockholders Agreement" means the Stockholders Agreement, dated as of
the date hereof, by and among, inter alia, the Kleinknechts, AAC and Russell G.
Kleinknecht.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Superior Acquisition Proposal" has the meaning set forth in
ss.7(a)(iv).
"Surviving Corporation" has the meaning set forth in ss.2(a).
"Surviving Corporation Common Stock" has the meaning set forth in
ss.2(d)(vi).
"Swap Obligations" means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps and similar
obligations obligating such Person to make payments, whether periodically or
upon the happening of a contingency. For the purposes of this
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Agreement, the amount of any Swap Obligation shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap Obligation had terminated at
the end of such fiscal quarter, and, in making such determination, if any
agreement relating to such Swap Obligation provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then, in each such
case, the amount of such obligation shall be the net amount so determined.
"Taxes" means all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax.
"Tax Returns" means all returns and reports (including elections,
claims, declarations, disclosures, schedules, estimates, computations and
information returns) required to be supplied to a Tax authority in any
jurisdiction relating to Taxes.
"Termination Fee" has the meaning set forth in ss.7(c).
"Third Party" means any "group," as described in Rule 13d-5(b)
promulgated under the Securities Exchange Act, or Person, other than AAC or any
of its Affiliates.
"Walsh" means David Walsh.
"Walsh Employment Agreement" means the Amended and Restated Employment
Agreement, dated as of the date hereof, between Walsh and IXNET.
2. BASIC TRANSACTION.
(a) THE MERGER. Subject to the terms and conditions of this Agreement
and in accordance with the Delaware General Corporation Law, AAC will merge with
and into the Company (the "Merger") at the Effective Time. Upon the Effective
Time, the separate existence of AAC shall cease and the Company shall be the
corporation surviving the Merger and shall continue under the name IPC
Information Systems, Inc. (the "Surviving Corporation").
(b) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Morgan, Lewis &
Bockius LLP in New York City commencing at 9:00 a.m., local time, on the second
Business Day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) or such other date as the Parties may mutually determine
(the "Closing Date").
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(c) ACTIONS AT THE CLOSING. On the day of the Closing (which Closing
satisfies the requirements of ss.2(b)), immediately following the satisfaction
or waiver of the conditions to the obligations of the Parties to consummate the
transactions contemplated hereby, (i) the Company will file with the Secretary
of State of the State of Delaware a Certificate of Merger (the "Certificate of
Merger"), and (ii) AAC will cause the Exchange Fund to be delivered to the
Exchange Agent in the manner provided below in this ss.2.
(d) EFFECT OF MERGER.
(i) GENERAL. The Merger shall become effective at the time
(the "Effective Time") the Company duly files the Certificate of Merger with the
Secretary of State of the State of Delaware or at such later time as is
specified in the Certificate of Merger. The Merger shall have the effect set
forth in the Delaware General Corporation Law. The Surviving Corporation may, at
any time after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either the Company or AAC
in order to carry out and effectuate the transactions contemplated by this
Agreement.
(ii) CERTIFICATE OF INCORPORATION. At the Effective Time, and
without any further action on the part of the Company or AAC, the certificate of
incorporation of the Company in effect immediately prior to the Effective Time
shall be amended as of the Effective Time, (i) in the event that the Requisite
Super-Majority Stockholder Approval is obtained, to read as set forth in Exhibit
A-1, or (ii) in the event that the Requisite Stockholder Approval is obtained,
to read as set forth in the Exhibit A-2, and as so amended shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended in accordance with applicable law.
(iii) BYLAWS. At the Effective Time and without any further
action on the part of the Company or AAC, the bylaws of the Company, as amended
and restated, a copy of which is set forth as Exhibit B, and in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation, until amended in accordance with applicable law.
(iv) (A) DIRECTORS. (1) Subject to applicable law, in the
event that the Requisite Super-Majority Stockholder Approval is obtained, the
directors of the Surviving Corporation at the Effective Time shall be the
directors as set forth on Schedule A hereto; provided, that in the event any
such director is unable, or becomes unable to serve, a replacement director
shall be designated by AAC.
(2) In the event that the Requisite Stockholder Approval
is obtained:
(a) Subject to applicable law, (i) the vacancies on
the board of directors of the Company created by the
resignations of directors at the Closing and (ii) the
vacancies created by an increase in the size of the board of
directors of the Company from six to nine in accordance with
the bylaws of the Surviving Corporation, in each case, shall
be filled by the individuals set forth on Schedule A hereto;
provided, that in the event any such individual is unable, or
becomes unable to serve, a replacement director shall be
designated by AAC.
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(b) AAC will supply to the Surviving Corporation in
writing and be solely responsible for any information provided
by AAC with respect to itself and its nominees, officers,
directors and Affiliates required by Section 14(f) of the
Securities Exchange Act and Rule 14f-1 promulgated thereunder.
(B) OFFICERS. Subject to applicable law and the provisions of
applicable Ancillary Agreements, the officers of the Surviving
Corporation at the Effective Time shall be the officers of the Company
immediately prior to the Effective Time.
(v) TREASURY STOCK AND AAC-OWNED SHARES. At and as of the
Effective Time, by virtue of the Merger and without any action on the part of
the Company or AAC or any holder of shares of Company Common Stock or AAC Common
Stock, each share of Company Common Stock owned by the Company or any subsidiary
as treasury stock and each AAC-owned Share held immediately prior to the
Effective Time shall be canceled and cease to exist, and no consideration shall
be delivered or deliverable with respect thereto.
(vi) CONVERSION OF AAC COMMON STOCK. At and as of the
Effective Time, by virtue of the Merger and without any action on the part of
the Company or AAC or any holder of shares of Company Common Stock or AAC Common
Stock, each share of AAC Common Stock shall be converted into one share of
common stock, $0.01 par value per share, of the Surviving Corporation (the
"Surviving Corporation Common Stock").
(vii) COMPANY STOCK OPTIONS. Each option to purchase shares of
Company Common Stock that is outstanding immediately prior to the Effective Time
(whether or not vested or exercisable) shall, at the Effective Time, be
cancelled, and in exchange therefor, each option holder shall receive a cash
payment which, prior to deduction for applicable withholding taxes, is in an
amount equal to the product of (A) the excess, if any, of the Cash Election
Price over the per share exercise price of the option and (B) the number of
shares subject to the option (whether or not vested). AAC shall make such
payment on or after the Closing Date immediately upon receipt of a written
agreement from the option holder to accept such payment in full settlement of
such option holder's rights with respect to the option. If the per share
exercise price of any option equals or exceeds the Cash Election Price, such
option shall be cancelled without any payment required thereunder.
(viii) CONVERSION OPTION (OR RETENTION) OF COMPANY COMMON
STOCK. At and as of the Effective Time, by virtue of the Merger and without any
action on the part of the Company or AAC or any holder of shares of Company
Common Stock or AAC Common Stock, each share of Company Common Stock outstanding
immediately prior to the Effective Time shall, except as otherwise provided in
ss.2(d)(v)-(vii) or as provided in ss.2(h) with respect to Dissenting Shares as
to which appraisal rights have been exercised, be converted into the following
(the "Merger Consideration"), subject to ss.2(f):
(A) for each such share with respect to which an
election to retain Surviving Corporation Common Stock has been
effectively made and not revoked or lost
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pursuant to ss. 2(e)(iii), (iv) and (v) (the "Stock Electing Shares"),
the right to retain one share of Surviving Corporation Common Stock
(the "Stock Election Price"); and
(B) for each such share ("Cash Electing Shares")
(other than Stock Electing Shares), the right to receive in cash from
the Surviving Corporation following the Merger an amount equal to $21
(the "Cash Election Price").
(e) ELECTIONS.
----------
(i) Each Person who, on or prior to the Business Day next
preceding the date of the Special Meeting (the "Election Date"), is a record
holder of shares of Company Common Stock will be entitled, with respect to such
shares, to make an unconditional election on or prior to such Election Date to
retain the Stock Election Price (a "Stock Election") on the basis hereinafter
set forth.
(ii) Prior to the mailing of the Joint Disclosure Document,
the Company shall appoint an agent reasonably acceptable to AAC (the "Exchange
Agent") for the purpose of exchanging certificates representing shares of
Company Common Stock for the Merger Consideration.
(iii) The Company shall prepare and mail a form of election,
which form shall be subject to the reasonable approval of AAC (the "Form of
Election"), with the Joint Disclosure Document to the record holders of shares
of Company Common Stock as of the record date for the Special Meeting, which
Form of Election shall be used by each record holder of shares who makes a Stock
Election with respect to any or all such holder's shares. The Company will use
its reasonable best efforts to make the Form of Election and the Joint
Disclosure Document available to all persons who become holders of shares during
the period between such record date and the Election Date. Any such holder's
Stock Election shall have been properly made only if the Exchange Agent shall
have received at its designated office, by 5:00 p.m., New York City time on the
Election Date, a Form of Election properly completed and signed and accompanied
by certificates for the shares of Company Common Stock to which such Form of
Election relates, duly endorsed in blank or otherwise in form acceptable for
transfer on the books of the Company (or by an appropriate guarantee of delivery
of such certificates as set forth in such Form of Election from a firm which is
a member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States, provided such
certificates are in fact delivered to the Exchange Agent within five New York
Stock Exchange trading days after the date of execution of such guarantee of
delivery).
(iv) Any Form of Election may be revoked by the holder
submitting it to the Exchange Agent only by written notice received by the
Exchange Agent (i) prior to 5:00 p.m., New York City time, on the Election Date
or (ii) after the Election Date, if (and to the extent that) the Exchange Agent
is legally required to permit revocations, and the Effective Time shall not have
occurred prior to such date. In addition, all Forms of Election shall
automatically be revoked if the Exchange Agent is notified in writing by AAC or
the Company that the Merger has been
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abandoned or this Agreement has been terminated. If a Form of Election is
revoked, the certificate or certificates (or guarantees of delivery, as
appropriate) for the shares to which such Form of Election relates shall be
promptly returned by the Exchange Agent to the stockholder submitting the same
to the Exchange Agent.
(v) The good faith determination of the Exchange Agent shall
be binding as to whether or not Stock Elections have been properly made or
revoked pursuant to this ss.2(e) with respect to shares and when elections and
revocations were received by it. If the Exchange Agent determines that any Stock
Election either (x) was not properly made or (y) was not submitted to or
received by the Exchange Agent with respect to any shares, such shares shall be
converted into Merger Consideration in accordance with ss.2(d)(viii)(B). The
Exchange Agent shall also make all computations as to the allocation and the
proration contemplated by ss.2(f), and any such computation shall be conclusive
and binding on the holders of shares. The Exchange Agent may, with the mutual
agreement of AAC and the Company, make such rules as are consistent with this
ss.2(e) for the implementation of the elections provided for herein as shall be
necessary or desirable fully to effect such elections.
(f) PRORATION.
---------
(i) Notwithstanding anything to the contrary contained in this
Agreement but subject to ss.2(d)(v) and ss.2(h),
(A) the minimum number of shares of Company Common
Stock to be converted into the right to retain Surviving Corporation
Common Stock shall be equal to 380,952 shares (the "Minimum Stock
Election Number"), and
(B) the maximum number of shares of Company Common
Stock to be converted into the right to retain Surviving Corporation
Common Stock shall be equal to 1,752,381 shares (the "Maximum Stock
Election Number").
(ii) If the number of Stock Electing Shares exceeds in the
aggregate the Maximum Stock Election Number, then the Stock Electing Shares for
each Stock Election shall be converted into the right to retain the Stock
Election Price or the right to receive the Cash Election Price in accordance
with the terms of ss.2(d)(viii) in the following manner:
(A) A stock proration factor (the "Stock Proration
Factor") shall be determined by dividing the Maximum Stock Election
Number by the total number of Stock Electing Shares.
(B) The number of Stock Electing Shares covered by
each Stock Election to be converted into the right to retain the Stock
Election Price shall be determined by multiplying the Stock Proration
Factor by the total number of Stock Electing Shares covered by such
Stock Election.
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(C) Each Stock Electing Share, other than any shares
converted into the right to receive the Stock Election Price in
accordance with ss.2(f)(ii)(B), shall be converted into the right to
receive the Cash Election Price as if such shares were not Stock
Electing Shares in accordance with the terms of ss.2(d)(viii)(B).
(iii) If the number of Stock Electing Shares is less in the
aggregate than the Minimum Stock Election Number, then:
(A) All Stock Electing Shares shall be converted into
the right to receive the Stock Election Price in accordance with
ss.2(d)(viii)(A).
(B) Such number of shares with respect to which a
Stock Election is not in effect ("Non-Stock Electing Shares") shall be
converted into the right to retain the Stock Election Price (and a
Stock Election shall be deemed to have been made with respect to such
shares) in accordance with ss.2(d)(viii)(A) in the following manner:
(1) a cash proration factor (the "Cash
Proration Factor") shall be determined by dividing (x) the
difference between the Minimum Stock Election Number and the
number of Stock Electing Shares by (y) the total number of
shares other than Stock Electing Shares and Dissenting Shares;
and
(2) the number of shares (in addition to
Stock Electing Shares) to be converted into the right to
retain the Stock Election Price shall be determined by
multiplying the Cash Proration Factor by the total number of
shares other than Stock Electing Shares and Dissenting Shares
so that the aggregate number of Stock Electing Shares and
Non-Stock Electing Shares converted into such right equals the
Minimum Stock Election Number.
(g) PROCEDURE FOR PAYMENT.
---------------------
(i) At the Closing, AAC will cause to be furnished to the
Exchange Agent a corpus (the "Exchange Fund") consisting of cash sufficient in
the aggregate for the Exchange Agent to make full payment of the cash portion of
the Merger Consideration to the holders of all of the issued and outstanding
shares of Company Common Stock (other than any Dissenting Shares and AAC-owned
Shares). Immediately after the Effective Time, the Company will cause the
Exchange Agent to mail a letter of transmittal (with instructions for its use)
to each record holder of issued and outstanding shares of Company Common Stock
who did not make a timely and valid Stock Election in order to permit the
Exchange Agent to pay such record holder the cash portion of the Merger
Consideration. No interest will accrue or be paid to the holder of any issued
and outstanding shares of Company Common Stock.
(ii) If any portion of the Merger Consideration is to be paid
to a Person other than the registered holder of the shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the
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Person requesting such payment shall pay to the Exchange Agent any transfer or
other Taxes required as a result of such payment to a Person other than the
registered holder of such shares or establish to the satisfaction of the
Exchange Agent that such Tax has been paid or is not payable.
(iii) After the Effective Time, there shall be no further
registration of transfers of shares of Company Common Stock. If, after the
Effective Time, certificates representing shares of Company Common Stock are
presented to the Surviving Corporation, they shall be canceled and exchanged for
the cash portion of the Merger Consideration provided for in accordance with the
procedures set forth herein.
(iv) Any portion of the Merger Consideration made available to
the Exchange Agent to pay for shares of Company Common Stock for which appraisal
rights have been perfected shall be paid to the Surviving Corporation, upon
demand.
(v) The Surviving Corporation may cause the Exchange Agent to
pay over to the Surviving Corporation any portion of the Exchange Fund
(including any earnings thereon) remaining 180 days after the Effective Time,
and thereafter each remaining Company Stockholder shall be entitled to look only
to the Surviving Corporation (subject to abandoned property, escheat, and other
similar laws) as a general creditor thereof with respect to the cash payable
upon surrender of such Company Stockholder's certificates. To the extent
permitted by applicable law, neither the Surviving Corporation nor the Exchange
Agent shall be liable to any Person in respect of any shares of Company Common
Stock (or dividends or distributions with respect thereto) or cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Any amounts remaining unclaimed by
holders of shares of Company Common Stock two years after the Effective Time (or
such earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Body) shall, to the extent
permitted by applicable law, become the property of Surviving Corporation free
and clear of any claims or interest of any Person previously entitled thereto.
(vi) No dividends or other distributions with respect to
Company Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered certificate for shares of Company Common
Stock with respect to the shares of Company Common Stock represented thereby,
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to ss.2(i) until the surrender of such certificate in accordance
with this Article 2. Subject to the effect of applicable laws, following
surrender of any such certificate, there shall be paid to the holder of the
certificate representing whole shares of Company Common Stock issued in exchange
therefor, without interest, (A) the amount of dividends and other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Company Common Stock, and (B) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such whole shares of Company Common
Stock.
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(vii) The Exchange Agent shall invest any cash included in the
Exchange Fund as directed by the Company or the Surviving Corporation, as the
case may be, provided that such investment shall be in (A) securities issued or
directly and fully guaranteed or insured by the United States Government or any
agency or instrumentality thereof having maturities not more than six months
from the Effective Time of the Merger, (B) certificates of deposit, Eurodollar
time deposits and bankers' acceptances with maturities not exceeding six months
and overnight bank deposits with any commercial bank, depository institution or
trust company incorporated or doing business under the laws of the United States
of America, any state thereof or the District of Columbia, provided that such
commercial bank, depository institution or trust company has, at the time of
investment, (1) capital and surplus exceeding $250 million and (2) outstanding
short-term debt securities which are rated at least A-1 by Standard & Poor's
Ratings Group, a Division of the McGraw-Hill Companies, Inc., or at least P-1 by
Moody's Investors Service, Inc. or carry an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies cease to
publish ratings of investment, (C) repurchase obligations with a term of not
more than 30 days for underlying securities of the types described in clauses
(A) and (B) above entered into with any financial institution meeting the
qualifications specified in clause (B) above, (D) commercial paper having a
rating in the highest rating categories from Standard & Poor's Ratings Group, a
Division of the McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc.,
or carrying an equivalent rating by a nationally recognized rating agency if
both of the two named rating agencies cease to publish ratings of investments
and in each case maturing within six months of the Effective Time and (E) money
market mutual or similar funds having assets in excess of $1 billion. Any
interest and other income resulting from such investments shall be paid to the
Company or the Surviving Corporation, as the case may be.
(viii) The Surviving Corporation shall pay all charges and
expenses of the Exchange Agent.
(h) DISSENTING SHARES. Notwithstanding ss.2(d), shares of Company
Common Stock which are issued and outstanding immediately prior to the Effective
Time and which are held by a Company Stockholder who has not voted such shares
in favor of the Merger, who shall have delivered a written demand for appraisal
of such shares in the manner provided by the Delaware General Corporation Law
and who, as of the Effective Time, shall not have effectively withdrawn or lost
such right to appraisal ("Dissenting Shares") shall not be converted into a
right to receive the Merger Consideration. The holders thereof shall be entitled
only to such rights as are granted by Section 262 of the Delaware General
Corporation Law. Each holder of Dissenting Shares who becomes entitled to
payment for such shares pursuant to Section 262 of the Delaware General
Corporation Law shall receive payment therefor from the Surviving Corporation in
accordance with the Delaware General Corporation Law; PROVIDED, HOWEVER, that
(i) if any such holder of Dissenting Shares shall have failed to establish his
entitlement to appraisal rights as provided in Section 262 of the Delaware
General Corporation Law, (ii) if any such holder of Dissenting Shares shall have
effectively withdrawn his demand for appraisal of such shares or lost his right
to appraisal and payment for his shares under Section 262 of the Delaware
General Corporation Law or (iii) if neither any holder of Dissenting Shares nor
the Surviving Corporation shall have filed a petition demanding a determination
of the value of all Dissenting Shares within the time provided in Section 262 of
the Delaware General Corporation Law, such holder shall forfeit the right to
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appraisal of such shares and each such share shall be treated as if it had been
a Non-Stock Electing Share and had been converted, as of the Effective Time,
into a right to receive the Merger Consideration, without interest thereon, from
the Surviving Corporation as provided in ss.2(d) hereof. The Company shall give
AAC prompt notice of any demands received by the Company for appraisal of
shares, and, until the Effective Time, AAC shall have the right to participate
in all negotiations and proceedings with respect to such demands. The Company
shall not, except with the prior written consent of AAC, make any payment with
respect to, or settle or offer to settle, any such demands.
(i) FRACTIONAL SHARES.
-----------------
(i) No certificates or scrip representing fractional shares of
Surviving Corporation Common Stock shall be issued upon the surrender for
exchange of certificates representing shares of Company Common Stock, and such
fractional interests shall not entitle the owner thereof to vote or to any
rights of a stockholder of the Surviving Corporation.
(ii) Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock exchanged pursuant to the Merger
who would otherwise be entitled to receive a fraction of a share of Surviving
Corporation Common Stock (after taking into account all shares of Company Common
Stock delivered by such holder) shall receive, in lieu thereof, a cash payment
(without interest) representing (A) the applicable fraction of Surviving
Corporation Common Stock multiplied by (B) $21, payable as soon as practicable
on or after the Effective Time.
(j) CLOSING OF TRANSFER RECORDS. After the close of business on the
Closing Date, transfers of Company Common Stock outstanding prior to the
Effective Time shall not be made on the stock transfer books of the Surviving
Corporation.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to AAC that the statements contained in this ss.3 are
correct and complete as of the date of this Agreement, except as set forth in
the disclosure schedule prepared by the Company accompanying this Agreement (the
"Company Disclosure Schedule"). The Company Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained in
this ss.3.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of the
Company and its Subsidiaries is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation.
Each of the Company and its Subsidiaries is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a Material Adverse Effect or a material adverse effect on the ability of
the Parties to consummate the transactions contemplated by this Agreement. Each
of the Company and its Subsidiaries has full corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. Each of the Company and its Subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where
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the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) CAPITALIZATION. The authorized capital stock of the Company
consists of 25,000,000 shares, $0.01 par value per share, of Company Common
Stock and 10,000,000 shares, $0.01 par value per share, of preferred stock (the
"Company Preferred Stock"). As of the date of this Agreement: (i) 10,715,119
shares of Company Common Stock were issued and outstanding, and no shares of
Company Preferred Stock were issued or outstanding, (ii) no shares of Company
Common Stock were reserved for issuance except that (A) 1,579,337 shares of
Company Common Stock have been reserved for issuance pursuant to the 1994
Company Stock Option and Incentive Plan, of which 1,082,334 may be issued in the
future upon the exercise of options currently outstanding and (B) 526,813 shares
of Company Common Stock have been reserved for issuance pursuant to the 1994
Company Employee Stock Purchase Plan, of which 19,037 shares are estimated to be
the number of shares of Company Common Stock which will be issued pursuant to
contributions by employees of the Company under the 1994 Company Employee Stock
Purchase Plan during calendar year 1997, and (C) 31,857 shares of Company Common
Stock have been reserved for issuance at par value on or about September 30,
1997 pursuant to an employment agreement with a former employee, (iii) no shares
of Company Preferred Stock were reserved for issuance and (iv) 242,185 shares of
Company Common Stock were held by the Company in its treasury. All of the issued
and outstanding shares of Company Common Stock have been duly authorized and are
validly issued, fully paid, and nonassessable. Except as indicated hereinabove,
there are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Company or any Subsidiary thereof to issue,
sell, or otherwise cause to become outstanding any of its capital stock or the
capital stock of any Subsidiary thereof. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to the Company or any of its Subsidiaries. After giving effect to the
transactions contemplated by the Share Exchange and Termination Agreement, all
shares of capital stock of Subsidiaries of the Company are wholly owned directly
or indirectly by the Company and have been duly authorized and are validly
issued, fully paid and nonassessable.
(c) AUTHORIZATION OF TRANSACTION. The Company has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder, subject to the
Requisite Stockholder Approval or Requisite Super-Majority Stockholder Approval,
as the case may be. The execution and delivery by the Company of this Agreement
and the Merger, and the performance of the Company's obligations hereunder, have
been duly authorized by all requisite corporate action, subject to the Requisite
Stockholder Approval or Requisite Super-Majority Stockholder Approval, as the
case may be, and this Agreement has been executed and delivered by the Company.
This Agreement constitutes the valid and legally binding obligation of the
Company, enforceable in accordance with its terms and conditions. The Company
has heretofore duly elected, pursuant to Section 203 of the Delaware General
Corporation Law, not to be governed by such Section.
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(d) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any Governmental Body or
court to which any of the Company and its Subsidiaries is subject or any
provision of the certificate of incorporation or bylaws of any of the Company
and its Subsidiaries or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
Contract to which any of the Company and its Subsidiaries is a party or by which
it is bound or to which any of its assets is subject, except where the
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice would not have a Material Adverse Effect
or a material adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement. Other than in connection with the
provisions of the Hart-Scott-Rodino Act, the Delaware General Corporation Law,
the Securities Exchange Act, the Securities Act, the state securities laws, the
Communications Act of 1934, as amended, and as set forth on ss. 3(d) of the
Company Disclosure Schedule, none of the Company and its Subsidiaries needs to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any Governmental Body in order for the Parties to consummate the
transactions contemplated by this Agreement or execute, deliver and perform its
obligations under this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
Material Adverse Effect or a material adverse effect on the ability of the
Parties to consummate the transactions contemplated by this Agreement.
(e) FILINGS WITH THE SEC. Since October 1, 1994, the Company has made
all filings with the SEC that it has been required to make under the Securities
Act and the Securities Exchange Act (collectively the "Public Reports"). Each of
the Public Reports has complied with the Securities Act and the Securities
Exchange Act and the rules and regulations promulgated thereunder in all
material respects. None of the Public Reports, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(f) FINANCIAL STATEMENTS. The Company has delivered to AAC a draft, in
substantially final form, of an Annual Report on Form 10-K for the fiscal year
ended September 30, 1997 (the "Most Recent Fiscal Year End"). The financial
statements included in or incorporated by reference into these Public Reports
(including the related notes and schedules) have been prepared in accordance
with GAAP and present fairly the financial condition of the Company and its
Subsidiaries as of the indicated dates and the results of operations of the
Company and its Subsidiaries for the indicated periods.
(g) [INTENTIONALLY LEFT BLANK.]
(h) UNDISCLOSED LIABILITIES. Except as set forth in the Public Reports
and except for (i) liabilities which have arisen after the Most Recent Fiscal
Year End in the Ordinary Course of Business and (ii) liabilities under this
Agreement, neither the Company nor any of its Subsidiaries has any material
liabilities of any nature (whether accrued, absolute, contingent or otherwise)
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required by GAAP to be set forth on a financial statement or in the notes
thereto and which individually or in the aggregate would have a Material Adverse
Effect. To the extent that any provision of this ss.3(h) conflicts with any
representation made by the Company having a Knowledge qualification contained in
any subsection of this ss.3, the provisions of that subsection shall apply.
(i) BROKERS' FEES. Other than fees related to financial advisory
services performed for the Company to be paid to the Persons set forth on
ss.3(i) of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has any liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement. The Company has furnished to AAC true, correct and complete
copies of engagement letters relating to such services.
(j) ABSENCE OF CERTAIN CHANGES. Since September 30, 1997, the Company
and its Subsidiaries have conducted their business in the Ordinary Course of
Business and there has not been:
(i) any event, occurrence or development of a state of facts
which, to the Company's Knowledge, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, except, however, any
event, occurrence or development related to, arising out of or resulting from
this Agreement and the transactions and activities contemplated hereby;
(ii) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of the
Company, or (other than (A) any retirement of, or issuance of Company Common
Stock pursuant to the exercise of options to acquire shares of Company Common
Stock granted to employees or directors, or (B) contemplated pursuant to this
Agreement), any repurchase, redemption or other acquisition by the Company or
any Subsidiary thereof of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any Subsidiary
thereof;
(iii) any amendment of any material term of any outstanding
equity security of the Company or any Subsidiary thereof;
(iv) any incurrence, assumption or guarantee by the Company or
any Subsidiary thereof of any indebtedness for borrowed money, other than in the
Ordinary Course of Business in amounts and on terms consistent with past
practices;
(v) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the Company or any
Subsidiary thereof which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
(vi) any material change in any method of accounting or
accounting practice by the Company or any Subsidiary thereof which, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect;
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(vii) any (A) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary thereof, (B)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any Subsidiary thereof, (C) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements or (D) increase in compensation, bonus or other benefits
payable to directors, officers or employees of the Company or any Subsidiary
thereof; in each case, other than in the Ordinary Course of Business; or
(viii) any cancellation of any Permits or Contracts to which
the Company or any Subsidiary thereof is a party, or any written or oral
notification to the Company or any Subsidiary thereof that any party to any such
arrangement intends to cancel or not renew such arrangement beyond its
expiration date as in effect on the date hereof, which cancellation or
notification, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
(k) LITIGATION. There is no action, suit or proceeding pending against,
or, to the Knowledge of the Company, any action, suit, investigation or
proceeding threatened against or affecting, the Company or any Subsidiary
thereof or any of their respective properties before any Governmental Body,
which could reasonably be expected to have a Material Adverse Effect or which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
Merger or any of the other transactions contemplated hereby.
(l) TAXES. (i) The Company and each of its Subsidiaries have duly and
timely filed (taking into account any extension of time within which to file)
all material Tax Returns required to be filed by any of them and all such filed
Tax Returns are complete and accurate in all material respects; (ii) the Company
and each of its Subsidiaries have paid all Taxes required to be paid by it
including Taxes that the Company and its Subsidiaries are obligated to withhold
from amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith or for such amounts that, individually or in
aggregate, could not reasonably be expected to have a Material Adverse Effect;
(iii) as of the date of this Agreement, there are no pending or, to the
Knowledge of the Company, threatened in writing audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters relating
to the Company or any of its Subsidiaries which, if determined adversely to the
Company or its Subsidiaries, could reasonably be expected to have a Material
Adverse Effect; (iv) there are no deficiencies or claims for any Taxes that have
been proposed, asserted or assessed against the Company or any of its
Subsidiaries which, if such deficiencies or claims were finally resolved against
the Company or any of its Subsidiaries, could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; (v) there
are no material Liens for Taxes upon the assets of the Company or any of its
Subsidiaries, other than Liens for current Taxes not yet due and payable and
Liens for Taxes that are being contested in good faith by appropriate
proceedings; (vi) none of the Company or any of its Subsidiaries has made an
election under Section 341(f) of the Code; (vii) except as set forth in ss.3(l)
of the Company Disclosure Schedule, no extension of the statute of limitations
on the assessment of any Taxes has been granted by the Company or any of its
Subsidiaries and is currently in effect; (viii) except as set forth in ss.3(l)
of the Company Disclosure Schedule none of the Company or its Subsidiaries is a
party to any agreement or arrangement that could reasonably
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be expected to result, separately or in the aggregate, in the actual or deemed
payment by the Company or a Subsidiary of any "excess parachute payments" within
the meaning of Section 280G or 162(m) of the Code; (ix) none of the Company or
its Subsidiaries has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; (x) all Taxes required to be
withheld, collected or deposited by or with respect to the Company and its
Subsidiaries have been timely withheld, collected or deposited, as the case may
be, and, to the extent required, have been paid to the relevant taxing
authority, except, in each case, to the extent that failing to so withhold,
collect, deposit or pay would not have a Material Adverse Effect; (xi) none of
the Company or its Subsidiaries has issued or assumed (A) any obligations
described in Section 279(b) of the Code, (B) any applicable high yield discount
obligations, as defined in Section 163(i) of the Code, or (C) any
registration-required obligations, within the meaning of Section 163(f)(2) of
the Code, that is not in registered form; (xii) there are no requests for
information currently outstanding that could affect the Taxes of the Company and
its Subsidiaries; and (xiii) there are no proposed reassessments of any property
owned by the Company or its Subsidiaries or other proposals that could increase
the amount of any Tax to which the Company, its Subsidiaries or any such Person
would be subject.
(m) COMPLIANCE WITH LAWS. Neither the Company nor any Subsidiary
thereof is in violation of, or has since September 30, 1997 violated, and, to
the Knowledge of the Company, none of them is under investigation with respect
to or has been threatened to be charged with or given notice of any violation by
any Governmental Body of any applicable law, rule, regulation, judgment,
injunction, order or decree, except for violations that could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(n) PERMITS. Except as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (i) the Permits are
valid and in full force and effect, (ii) neither the Company nor any Subsidiary
thereof is in default under, and no condition exists that with notice or lapse
of time or both would constitute a default under, the Permits and (iii) none of
the Permits will be terminated or impaired or become terminable, in whole or in
part, as a result of the transactions contemplated hereby. The Company and each
of its Subsidiaries have all Permits necessary to carry on its business as
currently conducted or as proposed to be conducted, except to the extent that
the failure to so have them would not have a Material Adverse Effect.
(o) CONTRACTS. ss.3(o) of the Company Disclosure Schedule sets forth a
list of the following Contracts to which the Company or any of its Subsidiaries
is a party or by or to which it or its assets are bound or subject: (i)
Contracts relating to the borrowing of money; (ii) Contracts with any current or
former officer or director of the Company; (iii) joint venture agreements
between the Company or any of its Subsidiaries and an unaffiliated third party;
(iv) any Contracts providing for two or more fiscal year payments to or from the
Company or any Subsidiary thereof of $200,000 or more; (v) any license
agreements (except with respect to Intellectual Property), distribution
agreements, franchise agreements or agreements in respect of similar rights
granted to or held by the Company or any of its Subsidiaries; (vi) any Contract
that materially limits the freedom of the Company or any Subsidiary thereof to
compete in any line of
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business or with any Person or in any geographical area or which would so
materially limit the freedom of the Company or any Subsidiary thereof so to
compete after the Effective Time; (vii) any other Contract not made in the
Ordinary Course of Business which Contract is material to the Company and the
Subsidiaries taken as a whole; or (viii) any Tax sharing agreement or other
arrangement. The Company has heretofore made available to AAC true and complete
copies of each of the Contracts set forth in ss.3(o) of the Company Disclosure
Schedule. Except for Contracts that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, all Contracts
disclosed in ss.3(o) of the Company Disclosure Schedule are valid and binding
Contracts of the Company or a Subsidiary thereof, are in full force and effect
(except for those that have terminated or will terminate by their own terms),
and neither the Company, any Subsidiary thereof nor, to the Knowledge of the
Company, any other party thereto, is in default in any material respect under
the terms of any such Contract.
(p) INTELLECTUAL PROPERTY RIGHTS.
----------------------------
(i) ss.3(p) of the Company Disclosure Schedule sets forth a
complete list of all (A) patents and patent applications, (B) trademarks,
trademark registrations and applications to register any trademarks, and (C)
copyright registrations and copyright applications of the Company and its
Subsidiaries, in each case, whether currently used or not used by the Company
and its Subsidiaries in connection with the business of the Company and its
Subsidiaries as currently conducted. ss.3(p) also sets forth a complete list of
all material licenses with respect to Intellectual Property owned or licensed by
the Company or any Subsidiary thereof and used in the operation of the current
products of the Company or any Subsidiary thereof.
(ii) The Company and its Subsidiaries own or have the right to
use all material Intellectual Property currently used by the Company and its
Subsidiaries in the business of the Company and its Subsidiaries as currently
conducted. To the Knowledge of the Company, the Company and its Subsidiaries own
or have the right to use all other Intellectual Property currently used by the
Company and its Subsidiaries in the business of the Company and its Subsidiaries
as currently conducted.
(iii) The Company has no Knowledge of any unresolved claims
made by any third party that the Company or any Subsidiary thereof is infringing
the Intellectual Property rights of any Person as a result of the Company's or
any Subsidiary's use of any Intellectual Property. To the Company's Knowledge,
the use of the Company's or any Subsidiary's Intellectual Property does not
infringe the rights of any third party.
(iv) The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of any trade
secret of the Company or any Subsidiary thereof necessary for the operation of
the Company's or any Subsidiary's business.
(v) To the Knowledge of the Company, the Company and its
Subsidiaries are not, nor have they received any notice that they are, in
default or, with the giving of notice or lapse of time or both, would be in
default under any material license to use any Intellectual Property listed in
ss.3(p) of the Disclosure Schedule.
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(vi) To the Company's Knowledge, (A) the Company or any
Subsidiary thereof is not infringing any Intellectual Property of any other
Person in connection with the conduct of the Company's or any Subsidiary's
business as presently conducted and (B) no Person is infringing any Intellectual
Property either owned or licensed by the Company or any Subsidiary thereof which
is material to the operation of the Company's or any Subsidiary's business.
(q) BOARD APPROVAL; FAIRNESS OPINION. The board of directors of the
Company has determined that, as of the date hereof, this Agreement and the
transactions contemplated hereby are fair to, and in the best interest of, the
Company Stockholders. Deutsche Morgan Grenfell Inc. has delivered to the board
of directors of the Company its opinion that, as of the date hereof, the
consideration to be paid to the Company Stockholders in the Merger is fair from
a financial point of view, to the Company Stockholders.
(r) ERISA. Each Benefit Plan and Multiemployer Plan with an annualized
cost to the Company in excess of $100,000 are listed in ss.3(r) of the Company
Disclosure Schedule, and copies of all material documentation relating to such
Benefit Plans during the last three (3) years have been delivered to AAC
(including copies of written Benefit Plans, written descriptions of oral Benefit
Plans, summary plan descriptions, trust agreements, the three most recent annual
returns, employee communications, and IRS determination letters). Except as
disclosed in ss.3(r) of the Disclosure Schedule:
(i) each Benefit Plan has at all times been maintained and
administered in accordance with its terms and with the requirements of all
applicable laws, including ERISA and the Code (except to the extent that a
failure to so maintain and administer would have a Material Adverse Effect), and
each Benefit Plan intended to qualify under section 401(a) of the Code has a
current determination letter on which the Company may rely;
(ii) no Benefit Plan is a "defined benefit plan" within the
meaning of section 414(j) of the Code, other than a Benefit Plan described in
Section 401(a)(1) of ERISA;
(iii) no direct, contingent or secondary liability has been
incurred or is expected to be incurred by the Company or any Subsidiary under
Title IV of ERISA to any party with respect to any Benefit Plan, or, to the
Company's Knowledge, with respect to any other Plan presently or heretofore
maintained or contributed to by any ERISA Affiliate;
(iv) with respect to each Multiemployer Plan (A) no withdrawal
liability has been incurred by the Company or, to the Company's Knowledge, any
ERISA Affiliate, and the Company or any Subsidiary thereof has no reason to
believe that any such liability will be incurred, prior to the Closing Date,
(B), to the Knowledge of the Company, no such plan is in "reorganization"
(within the meaning of Section 4241 of ERISA), (C) no notice has been received
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of an excise tax, or that the plan is or may become
"insolvent" (within the meaning of Section 4241 of ERISA), (D), to the Knowledge
of the Company, no proceedings have been instituted by the Pension Benefit
Guaranty Corporation against the plan, (E) there is no contingent liability for
withdrawal liability by reason of a sale of assets pursuant to Section 4204 of
ERISA, and (F)
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except as disclosed in ss.3(r) of the Company Disclosure Schedule, if the
Company or any ERISA Affiliate were to have a complete or partial withdrawal
under Section 4203 of ERISA as of the Closing, no obligation to pay withdrawal
liability would exist on the part of the Company or, to the Company's Knowledge,
any ERISA Affiliate.
(v) neither the Company nor, to the Company's Knowledge, any
ERISA Affiliate has incurred any liability for any tax imposed under section
4971 through 4980B of the Code or civil liability under section 502(i) or (l) of
ERISA;
(vi) no benefit under any Benefit Plan, including, without
limitation, any severance or parachute payment plan or agreement, will be
established or become accelerated, vested or payable by reason of any
transaction contemplated under this Agreement;
(vii) no tax has been incurred under section 511 of the Code
with respect to any Benefit Plan (or trust or other funding vehicle pursuant
thereto).
(viii) no Benefit Plan provides health or death benefit
coverage beyond the termination of an employee's employment, except as required
by Part 6 of Subtitle B of Title I of ERISA or section 4980B of the Code or any
State or local laws requiring continuation of benefits coverage following
termination of employment;
(ix) no suit, actions or other litigation (excluding claims
for benefits incurred in the ordinary course of plan activities) have been
brought or, to the Knowledge of the Company, threatened against or with respect
to any Benefit Plan, and there are no facts or circumstances to the Knowledge of
the Company that could reasonably be expected to give rise to any such suit,
action or other litigation; and
(x) all contributions to Benefit Plans and Multiemployer Plans
that were required to be made under such Plans by the Company or any Subsidiary
thereof have been made and each of the Company and each Subsidiary has performed
all material obligations required to be performed under all such Plans.
(s) LABOR AND EMPLOYMENT MATTERS.
(i) (A) No employee of the Company or any Subsidiary thereof
is represented by a labor union, no labor union has been certified or recognized
as a representative of any such employee, and neither the Company nor any
Subsidiary thereof has any obligation under any collective bargaining agreement
or other agreement with any labor union or any obligation to recognize or deal
with any labor union, and there are no such contracts or agreements pertaining
to or which determine the terms or conditions of employment of any employee of
the Company or any Subsidiary thereof; (B) there are no pending or threatened
representation campaigns, elections or proceedings; (C) the Company has no
Knowledge of any strikes, slowdowns, or work stoppages of any kind, or threats
thereof, and no such activities occurred during the 24-month period preceding
the date hereof; (D) neither the Company nor any Subsidiary thereof has engaged
in, admitted committing or been held to have committed any unfair labor
practice; and
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(E) there are no controversies or grievances between the Company or any
Subsidiary thereof and any of its employees or representatives thereof, the
outcome of which could result in a Material Adverse Effect.
(ii) ss.3(s) of the Company Disclosure Schedule sets forth all
Contracts under which the Company or any Subsidiary thereof has any obligation
to provide compensation or remuneration of any kind (other than obligations to
make current wage or salary payments that are terminable at will without notice
or that are less than $100,000 annually per person) to or on behalf of any
employee or consultant.
(iii) The Company and each of its Subsidiaries have at all
times complied in all material respects, and is in material compliance with, all
applicable laws, rules and regulations respecting employment, wages, hours,
compensation, benefits, occupational health and safety, and payment and
withholding of taxes in connection with employment, except to the extent that
failure to so comply would not have a Material Adverse Effect.
(t) REAL ESTATE.
-----------
(i) ss.3(t) of the Company Disclosure Schedule is a true and
complete list (including, without limitation, legal descriptions) of all real
property owned in fee by the Company or any Subsidiary thereof (together with
all buildings and improvements thereon, the "Owned Real Property"). Such Owned
Real Property is not subject to any Liens (including, without limitation,
Leases, occupancy agreements, possessory rights, options and rights of first
refusal) except as listed on ss.3(t) of the Company Disclosure Schedule. Neither
the Company nor any Subsidiary thereof leases all or any part of any Owned Real
Property.
(ii) Neither the Company nor any Subsidiary thereof has
assigned, pledged or otherwise transferred, or has sublet (as sublessor) the
premises demised by, any Lease. The Company or a Subsidiary thereof is in
possession of the premises demised by the Leases. No tenant or landlord under
any Lease has exercised any option or right to (i) cancel or terminate such
Lease or shorten the term thereof, (ii) lease additional premises, (iii) reduce
or relocate the premises demised by such Lease, or (iv) purchase any property.
All brokerage commissions payable by the Company or any Subsidiary thereof with
respect to any Lease have been fully paid.
(u) ENVIRONMENTAL MATTERS. To the Knowledge of the Company:
(i) Neither the Company nor any of its Subsidiaries is in
violation of any Environmental Laws such that the violation would have a
Material Adverse Effect;
(ii) The Company and each of its Subsidiaries have obtained
all permits and licenses that are required under Environmental Laws and are not
in violation of any applicable permit or license such that the failure to have
such permits or licenses or the violation thereof would have a Material Adverse
Effect;
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(iii) Neither the Company nor any of its Subsidiaries has
received any written notices that are currently pending or outstanding alleging
that the Company, any Subsidiary of the Company, any predecessor of the Company,
or any entity previously owned by the Company, is in violation of or has any
liabilities under any Environmental Laws, except for any violation or
liabilities that would not have a Material Adverse Effect; and
(iv) There have been no releases of any Hazardous Materials
at, from, in, to, on or under any Site or, to the Company's Knowledge, any
Predecessor Site, that would have a Material Adverse Effect.
4. REPRESENTATIONS AND WARRANTIES OF AAC. AAC represents and warrants
to the Company that the statements contained in this ss.4 are correct and
complete as of the date of this Agreement, except as set forth in the disclosure
schedule prepared by AAC (the "AAC Disclosure Schedule"). The AAC Disclosure
Schedule will be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this ss.4.
(a) ORGANIZATION. AAC is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. AAC is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a Material
Adverse Effect or a material adverse effect on the ability of the Parties to
consummate the transactions contemplated by this Agreement. AAC has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. AAC was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby. AAC has not engaged, nor prior to the Effective Time will
it engage, in any business activities other than the business activities
contemplated hereby (including business activities contemplated by or reasonably
incident to the Financing). AAC has conducted and, prior to the Effective Time,
will conduct its operations only as contemplated hereby (including activities
contemplated by or reasonably incident to the Financing). AAC has no
Subsidiaries and, during the period commencing with the date hereof and ending
at the Effective Time, AAC will have no Subsidiaries. AAC does not have, nor at
the Effective Time will it have, any liabilities or material obligations not
expressly contemplated pursuant to this Agreement or the transactions
contemplated hereby.
(b) FINANCING. AAC has delivered to the Company true and complete
copies of (i) a commitment letter, dated December 17, 1997, from Morgan Stanley
Senior Funding, Inc. relating to a $75 million senior secured revolving credit
facility, and (ii) a commitment letter, dated December 17, 1997, from Morgan
Stanley & Co. Incorporated ("MSCI") pursuant to which MSCI has committed,
subject to the terms and conditions set forth therein, to use its best efforts
to complete the public offering or the private placement of senior unsecured
notes of the Company for an aggregate amount equal to $157,000,000 or, under
certain circumstances set forth therein, to purchase such senior unsecured
notes. The commitment letters referred to in clauses (i) and (ii) above shall be
collectively referred to as the "Debt Financing Commitments" and the financing
under the Debt Financing Commitments shall be referred to as the "Financing". In
addition, AAC
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has delivered to the Company a true and complete copy of a commitment letter,
dated December 17, 1997, from CVC pursuant to which CVC (together with its
Affiliates) has committed, subject to the terms and conditions set forth
therein, to purchase securities of CSH LLC not exceeding $72 million in the
aggregate (the "Equity Financing Commitment"), the proceeds of which shall,
pursuant to the terms of the Equity Financing Commitment, be invested by CSH LLC
in AAC in furtherance of the consummation by AAC of the transactions
contemplated hereby. The aggregate proceeds to be made available pursuant to the
Debt Financing Commitments and the Equity Financing Commitment (including any
funds which may be made available to AAC by one or more Subsidiaries of CSH LLC
as contemplated by the Equity Financing Commitment) are in an amount sufficient
to consummate the transactions contemplated hereby. None of the Debt Financing
Commitments and the Equity Financing Commitment has been withdrawn and AAC knows
of no facts or circumstances that reasonably may be expected to result in any of
the conditions set forth in the Debt Financing Commitments and the Equity
Financing Commitment not being satisfied.
(c) AUTHORIZATION OF TRANSACTION. AAC has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
by AAC, and the performance of its obligations hereunder have been duly
authorized by all requisite corporate action other than the requisite
stockholder approval, and this Agreement has been duly executed and delivered by
AAC. This Agreement constitutes the valid and legally binding obligation of AAC,
enforceable in accordance with its terms and conditions.
(d) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any Governmental Body to
which AAC is subject or any provision of the certificate of incorporation or
bylaws of AAC or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under Contract,
or other arrangement to which AAC is a party or by which it is bound or to which
any of its assets is subject, except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation or failure to
give notice would not have a Material Adverse Effect or a material adverse
effect on the ability of the Parties to consummate the transactions contemplated
by this Agreement. Other than in connection with the provisions of the
Hart-Scott-Rodino Act, the Delaware General Corporation Law, the Securities
Exchange Act, the Securities Act, and the state securities laws, AAC is not
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Body in order for the
Parties to consummate the transactions contemplated by this Agreement, except
where the failure to give notice, to file, or to obtain any authorization,
consent, or approval would not have a material adverse effect on the ability of
the Parties to consummate the transactions contemplated by this Agreement.
Neither AAC nor any Affiliate or Subsidiary thereof is a "telecommunications
carrier" as defined in Section 3(44) of the Communications Act of 1934, as
amended, or a "foreign carrier" or any affiliate thereof as defined in Section
63.18(h) of the rules of the Federal Communications Commission.
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(e) BROKERS' FEES. AAC has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which any of the Company and its Subsidiaries
could become liable or obligated.
(f) CAPITALIZATION. The authorized capital stock of AAC consists of
4,000,000 shares, $.01 par value, of common stock (the "AAC Common Stock"). As
of the moment immediately prior to the Effective Time, the number of shares of
AAC Common Stock that will be outstanding will equal the sum of (A) 3,809,524
minus (B) the final aggregate number of Stock Electing Shares immediately prior
to the Effective Time (after giving effect to the provisions of ss.2(f)). All of
the issued and outstanding shares of AAC Common Stock have been duly authorized
and are validly issued, fully paid and nonassessable. AAC is a Subsidiary owned
by one or more of CSH LLC and its Subsidiaries. A majority of the membership
interests in CSH LLC are owned by CVC, officers and employees thereof, and
members of the management of CSH LLC, its wholly owned Subsidiary, Cable Systems
Holding Company, and CSI. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require AAC to issue, sell,
or otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to AAC. Except as otherwise
provided in the Ancillary Agreements, neither CSH LLC nor any of its
Subsidiaries has entered into any direct or indirect agreements related to the
voting or transferability of the Surviving Corporation Common Stock.
5. COVENANTS. The Parties agree as follows with respect to the period
from and after the execution of this Agreement.
(a) GENERAL. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ss.6 below); PROVIDED, HOWEVER, that no director or officer of the Company shall
be required either to violate any requirement imposed by law in connection
therewith or to take any action such director or officer deems, after
consultation with outside counsel, not consistent with such director's or
officer's fiduciary duty.
(b) NOTICES AND CONSENTS. The Company will give any notices (and will
cause each of its Subsidiaries to give any notices) to third parties, and will
use its reasonable best efforts to obtain (and will cause each of its
Subsidiaries to use its reasonable best efforts to obtain) any required third
party consents, that AAC reasonably may request in connection with the matters
referred to in ss.3(d) above.
(c) REGULATORY MATTERS AND APPROVALS. Each of the Parties will (and the
Company will cause each of its Subsidiaries to) give any notices to, make any
filings with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in ss.3(d) and ss.4(d) above.
Without limiting the generality of the foregoing:
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(i) SECURITIES ACT, SECURITIES EXCHANGE ACT, AND STATE
--------------------------------------------------
SECURITIES LAWS.
---------------
(A) The Company will prepare and file with the SEC
preliminary proxy materials ("Preliminary Proxy Materials") under the
Securities Exchange Act relating to the Special Meeting. The Company
will use its best efforts to respond to the comments of the SEC thereon
and will make any further filings (including amendments and
supplements) in connection therewith that may be necessary, proper or
advisable. AAC will provide the Company with whatever information and
assistance in connection with the foregoing filings that the Company
may request.
(B) The Company and AAC shall each use its reasonable
best efforts to take, or cause to be taken, (i) all actions necessary,
proper or advisable by such Party with respect to the prompt
preparation and filing with the SEC of a registration statement on Form
S-4 relating to the Surviving Corporation Common Stock (the
"Registration Statement") and a Rule 13e-3 Transaction Statement on
Schedule 13E-3 with respect to the Merger (together with any
supplements or amendments thereto, collectively, the "Schedule 13E-3"),
(ii) such actions as may be required to have the Registration Statement
declared effective under the Securities Act and to have the Preliminary
Proxy Materials cleared by the SEC, in each case as promptly as
practicable, and (iii) such actions as may be required to be taken
under state securities or applicable Blue Sky laws in connection with
the issuance of the securities contemplated hereby.
(C) As soon as practicable after the date of
announcement of the execution of this Agreement, AAC shall file with
the SEC a Schedule 13E-3. AAC and the Company each agrees to correct
any information provided by it for use in the Schedule 13E-3, if and to
the extent that it shall have become false and misleading in any
material respect. AAC agrees to take all steps necessary to cause the
Schedule 13E-3 as so corrected to be filed with the SEC and to be
disseminated to holders of the Company Common Stock, in each case as
and to the extent required by applicable federal securities laws. The
Company and its counsel shall be given reasonable opportunity to review
and comment on Schedule 13E-3 prior to its being filed with the SEC.
(ii) DELAWARE GENERAL CORPORATION LAW; SPECIAL MEETING. The
Company will (A) call a special meeting of its stockholders (the "Special
Meeting"), as soon as reasonably practicable in order that such stockholders may
consider and vote upon the adoption of this Agreement and the approval of the
Merger in accordance with the Delaware General Corporation Law and (B) mail the
Joint Disclosure Document to its stockholders as soon as reasonably practicable,
which Joint Disclosure Document will contain the affirmative recommendation of
the board of directors of the Company in favor of the adoption of this Agreement
and the approval of the Merger; PROVIDED, HOWEVER, that any provision of this
Agreement to the contrary notwithstanding, the Company will not have any
obligation to call the Special Meeting or mail the Joint Disclosure Document to
its stockholders (x) if such action would require any director or officer of the
Company either to violate any requirement imposed by law in connection therewith
or, after consultation with and advice from its outside counsel, any director or
officer of the Company determines in good faith that to take such action would
be inconsistent with such
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director's or officer's fiduciary duty or (y) until the board of directors of
the Company shall have received from Deutsche Morgan Grenfell Inc. a
supplemental written confirmation of its opinion that the consideration to be
paid in the Merger is fair to the Company Stockholders from a financial point of
view, such confirmation to be dated as of a date within two Business Days of the
date that the Joint Disclosure Document is to be mailed.
(iii) HART-SCOTT-RODINO ACT. Each of the Parties will file
(and the Company will cause each of its Subsidiaries to file) any Notification
and Report Forms and related material that it may be required to file with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the Hart-Scott-Rodino Act, will use its best efforts
to obtain (and the Company will cause each of its Subsidiaries to use its best
efforts to obtain) an early termination of the applicable waiting period, and
will make (and the Company will cause each of its Subsidiaries to make) any
further filings pursuant thereto that may be necessary, proper, or advisable.
(d) FINANCING. AAC will use its reasonable best efforts to (i) satisfy
all the conditions necessary to be satisfied by it and/or its Affiliates to
obtain the full proceeds under the Debt Financing Commitments and the Equity
Financing Commitment, (ii) assist the Company in obtaining the Financing, and
(iii) obtain the equity contributions contemplated under the Equity Financing
Commitment. Subject to the Company having received the proceeds, or the
immediate right to receive the proceeds, of the Financing, AAC at the Closing
will be capitalized with equity contributions in an amount at least equal to
$80,000,000 minus the product of (i) the final aggregate number of Stock
Electing Shares immediately prior to the Effective Time (after giving effect to
the provisions of ss.2(f)) and (ii) $21. AAC will not amend the Debt Financing
Commitments or the Equity Financing Commitment in any way materially adverse to
the Company, or the Company's interest as successor to AAC, without the written
consent of the Company, which consent shall not be unreasonably withheld.
(e) ACCOUNTING TREATMENT. The Company and AAC shall cooperate with any
reasonable requests of the other or the SEC related to the recording of the
Merger as a recapitalization for financial reporting purposes, including,
without limitation, to assist AAC and its Affiliates with any presentation to
the SEC with regard to such recording and to include appropriate disclosure with
regard to such recording in all filings with the SEC and all mailings to
shareholders made in connection with the Merger. In furtherance of the
foregoing, the Company shall provide to AAC for the prior review of AAC's
advisors any description of the transactions contemplated by this Agreement
which is meant to be filed with the SEC.
(f) COOPERATION. The Company agrees to provide, and will cause its
Subsidiaries and its and their respective officers, employees and advisors to
provide, all necessary and appropriate cooperation in connection with the
arrangement of the Financing. In conjunction with the obtaining of the
Financing, the Company agrees, at the request of AAC, (i) to call for prepayment
or redemption of all or a portion of the indebtedness disclosed in ss.3(o) of
the Company Disclosure Schedule, but, only to the extent that such call for
prepayment or redemption is permitted under the applicable agreement
representing such indebtedness, or (ii) to prepay or redeem all or a portion of
any then existing indebtedness of the Company or its Subsidiaries described in
ss.3(o)
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of the Company Disclosure Schedule, provided that no such prepayment or
redemption shall themselves actually be made (nor shall the Company be required
to incur any liability in respect of such prepayment or redemption) until
contemporaneously with the Effective Time.
(g) OPERATION OF THE COMPANY'S BUSINESS. Without the written consent of
AAC, the Company will not (and will not cause or permit any of its Subsidiaries
to) engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business, including, without limitation, the
following:
(i) authorizing or effecting any change in its charter or
bylaws (other than as contemplated by this Agreement);
(ii) granting any options, warrants, or other rights to
purchase or obtain any of its capital stock or issuing, selling, or otherwise
disposing of any of its capital stock (except upon the conversion or exercise of
options and other rights and obligations currently outstanding);
(iii) declaring, setting aside, or paying any dividend or
distribution with respect to its capital stock (whether in cash or in kind), or
redeeming, repurchasing, or otherwise acquiring any of its capital stock, in
either case, outside the Ordinary Course of Business;
(iv) issuing any note, bond, or other debt security or
creating, incurring, assuming, or guaranteeing any indebtedness for borrowed
money or capitalized lease obligation (except for inter-company loans or
advances from the Company to, or guarantees on behalf of, any one or more of its
Subsidiaries), outside the Ordinary Course of Business;
(v) imposing any Lien upon any of its assets outside the
Ordinary Course of Business;
(vi) other than pursuant to the transactions contemplated by
this Agreement, making any material change in employment terms for any of its
directors, officers and employees outside the Ordinary Course of Business;
(vii) except pursuant to existing agreements or arrangements
as of the date hereof, making any capital investment in, making any loan to, or
acquiring the securities or assets of any other Person outside the Ordinary
Course of Business;
(viii) adopting or amending any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or employee benefit plan, agreement, trust,
plan, fund or other arrangement for the benefit and welfare of any director,
officer or employee, except for normal increases in the Ordinary Course of
Business and that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company or any Subsidiary;
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(ix) revaluing in any material respect any significant portion
of its assets, including, without limitation, writing down the value of
inventory in any material amount or write-off of notes or accounts receivable in
any material amount;
(x) paying, discharging or satisfying any material liabilities
(whether matured, unmatured, absolute, accrued, asserted or unasserted,
contingent or otherwise) other than the payment, discharge or satisfaction in
the Ordinary Course of Business of liabilities reflected or reserved against in
the consolidated financial statements of the Company and set forth in the Public
Reports or incurred in the Ordinary Course of Business;
(xi) making any Tax election with respect to or settling or
compromising any material income Tax liability;
(xii) taking any action other than in the Ordinary Course of
Business with respect to accounting policies or procedures; and
(xiii) committing to any of the foregoing.
(h) FULL ACCESS. The Company will (and will cause each of its
Subsidiaries to) permit representatives of AAC to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company and its Subsidiaries, to all premises,
properties, personnel, books, records (including tax records), contracts, and
documents of or pertaining to each of the Company and its Subsidiaries. AAC will
keep confidential and hold as such any Confidential Information it receives from
any of the Company and its Subsidiaries in the course of the reviews
contemplated by this ss.5(h), will not use any of the Confidential Information
except in connection with this Agreement, and, if this Agreement is terminated
for any reason whatsoever, will return to the Company all tangible embodiments
(and all copies) thereof which are in AAC's possession, and AAC acknowledges
that it and its Representatives (as defined therein) will be bound to the
Confidentiality/Standstill Letter Agreement.
(i) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice
to the others of any event giving rise to a Material Adverse Effect and causing
a breach of any of its own representations and warranties in ss.3 and ss.4
above. No disclosure by any Party pursuant to this ss.5(i), however, shall be
deemed to amend or supplement the Company Disclosure Schedule, or the AAC
Disclosure Schedule, as the case may be, or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(j) NO SOLICITATION.
---------------
(i) The Company shall not, and shall not permit any of its
Subsidiaries to (whether directly or indirectly through advisors, agents or
other intermediaries), and
(ii) the Company shall not, and shall not permit any of its
Subsidiaries to, authorize or knowingly permit any of its or their officers,
directors, agents, representatives, advisors or Subsidiaries,
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<PAGE>
solicit, initiate or knowingly encourage the submission of inquiries, proposals
or offers from any Third Party relating to (A) any acquisition of 10% or more of
the consolidated assets of the Company and its Subsidiaries or of over 10% of
any class of equity securities of the Company or any of its Subsidiaries, (B)
any tender offer (including a self tender offer) or exchange offer that if
consummated would result in any Third Party beneficially owning 10% or more of
any class of equity securities of the Company or any of its Subsidiaries, (C)
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries whose assets, individually or in the aggregate, constitute more
than 10% of the consolidated assets of the Company, other than the transactions
contemplated by this Agreement or (D) any other transaction the consummation of
which would, or could reasonably be expected to impede, interfere with, prevent
or materially delay the Merger or which would, or could reasonably be expected
to, materially dilute the benefits to AAC of the transactions contemplated
hereby (collectively, the "Acquisition Proposals" and which, if consummated,
will be an "Acquisition Transaction") or enter into or participate in any
discussions (except as may be necessary to inform a Third Party of the
provisions of this ss.5(j)) or negotiations regarding any of the foregoing, or
furnish to any Third Party any information with respect to the business,
properties or assets of the Company in connection with the foregoing, or
otherwise cooperate in any way with, or knowingly assist or participate in,
facilitate or encourage, any effort or attempt by any Third Party to do or seek
any of the foregoing; PROVIDED, HOWEVER, that the provisions of this ss.5(j)
shall not limit or prohibit the Company or its board of directors from (i)
engaging in discussions or negotiations with such a Third Party who has made a
Superior Acquisition Proposal but only if the board of directors of the Company,
after consultation with and advice from its outside counsel, determines in good
faith that, in the exercise of its fiduciary responsibilities, such discussions
or negotiations should be commenced or such information should be furnished or
such facilitation undertaken; (ii) furnishing information pursuant to an
appropriate and customary confidentiality letter concerning the Company and its
businesses, properties or assets to a Third Party who has made a Superior
Acquisition Proposal as to which a prior determination of the board of directors
of the Company as contemplated under clause (i) above has been made; PROVIDED,
FURTHER, that (A) the board of directors of the Company shall not, and shall not
authorize any officers or representatives to, take any of the foregoing actions
until notice to AAC of the Company's intent to take such action shall have been
given; and (B) if the board of directors of the Company receives a Superior
Acquisition Proposal, to the extent it may do so without breaching its fiduciary
duties as determined in good faith after consultation with its outside counsel,
and without violating any of the conditions of such Superior Acquisition
Proposal, then the Company shall promptly inform AAC of the material terms and
conditions of such proposal and the identity of the Third Party making it; or
(iii) taking a position on a tender offer by a Third Party, as required by Rule
14e-2 under the Securities Exchange Act (provided no such position shall
constitute a recommendation of such transaction if it does not constitute a
Superior Acquisition Proposal), or complying with its duties of disclosure under
applicable state law. As of the date hereof, the Company shall immediately cease
and cause each of its Subsidiaries and its and their advisors, agents and other
intermediaries to cease, any and all existing activities, discussions or
negotiations with any Third Party conducted heretofore with respect to any of
the foregoing.
(k) INSURANCE AND INDEMNIFICATION.
-----------------------------
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(i) For a period of 6 years after the Effective Time, the
Surviving Corporation shall indemnify and hold harmless the present and former
officers and directors of the Company and its Subsidiaries in respect of acts or
omissions occurring prior to the Effective Time to the maximum extent provided
under the Company's certificate of incorporation and bylaws, or any Subsidiary's
certificate of incorporation or bylaws, in either case, as in effect on the date
hereof; provided that such indemnification shall be subject to any limitation
imposed from time to time under applicable law.
(ii) For a period of 6 years after the Effective Time, the
Surviving Corporation shall provide officers' and directors' liability insurance
in respect of acts or omissions occurring prior to the Effective Time covering
each such Person currently covered by the Company's or any Subsidiary's
officers' and directors' liability insurance policy on terms with respect to
coverage and amount no less favorable than those of such policy in effect on the
date hereof (or, if such insurance policy cannot be obtained, such insurance
policy on terms with respect to coverage and amount as favorable as can be
obtained, subject to the proviso at the conclusion of this sentence), provided
that, in satisfying its obligation under this Section, the Surviving Corporation
shall not be obligated to pay premiums in excess of, 150% of the amount per
annum the Company paid in its last full fiscal year, which amount has been
disclosed to AAC.
(l) EMPLOYEES.
---------
(i) For a period of one year following the Effective Time, the
Surviving Corporation will not adopt or make effective any change in any
"employee benefit plan" (within the meaning of Section 3(3) of ERISA) that would
terminate or substantially reduce any benefits provided thereunder or materially
increase the cost to any employee of participation thereunder without any notice
to all affected employees at least 60 days in advance.
(ii) The Surviving Corporation shall assume and perform the
obligations of the Company and its Subsidiaries under the employment and
severance contracts specified in ss.3(h) of the Company Disclosure Schedule.
(iii) Prior to the Effective Time, the Company shall adopt,
effective at the Effective Time, a stock incentive plan substantially in the
form attached as Exhibit C hereto (the "Plan"), and shall reserve for issuance
under such Plan a number of shares, equal to 10% of Surviving Corporation Common
Stock. To the extent required by law or NASDAQ listing requirements or necessary
to obtain customary tax benefits for the Company or the holders of options, the
adoption of such Plan shall be contingent on approval by the holders of
Surviving Corporation Common Stock. The Company shall use its best efforts to
secure such approval not later than the Effective Time. On or immediately after
the Effective Time, the Surviving Corporation shall grant options to purchase at
least 10.0% of Surviving Corporation Common Stock under such Plan pursuant to
the terms and conditions set forth in ss.5 of the Plan to such Persons and in
such amounts as determined by the board of directors of the Surviving
Corporation or its Compensation Committee. Within eighteen months following the
Effective Time, the Surviving Corporation shall grant options to purchase at
least 2.0% of Surviving Corporation Common Stock (except with respect to options
that expire by their own terms). As soon as
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practicable after the adoption of such Plan, the Surviving Corporation shall
file a registration statement on Form S-8 (or other appropriate form) with
respect to the Surviving Corporation Common Stock to be issued pursuant to such
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 such Plan.
(iv) Prior to the Effective Time, the Company shall (A) take
such action as may be necessary to terminate the Company's 1994 Stock Option and
Incentive Plan, and (B) use its reasonable efforts under the circumstances to
enter into a written agreement with each Person who holds an option to purchase
shares of Company Common Stock whereby each such option holder agrees that such
option will be cancelled immediately prior to the Effective Time in exchange for
the cash payment specified in ss.2(d)(vii). If the per share exercise price of
any option equals or exceeds the Cash Election Price, such agreement shall
provide for the cancellation of such option without any corresponding payment.
(m) DISCLOSURE.
----------
(i) DISCLOSURE BY COMPANY. The Joint Disclosure Documents
prepared by the Company will comply with the Securities Exchange Act in all
material respects. The Joint Disclosure Documents will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they will be made, not misleading; PROVIDED, HOWEVER, that the Company
makes no representation or warranty with respect to any information that AAC and
its Affiliates will supply specifically for use in the Joint Disclosure
Documents.
(ii) DISCLOSURE BY AAC. The Joint Disclosure Documents will
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they will be made, not misleading; PROVIDED, HOWEVER,
that AAC makes no representation or warranty with respect to any information
that the Company will supply specifically for use in the Joint Disclosure
Documents.
(n) COMFORT LETTERS. The Company will deliver to AAC on or before the
date the Joint Disclosure Document is mailed to the Company Stockholders a
letter from its accountants, Coopers & Lybrand, LLP stating its conclusions as
to the accuracy of certain information derived from the financial records from
the Company and its Subsidiaries and contained in the Joint Disclosure Document
(the "Company Comfort Letter"). The Company Comfort Letter shall be reasonably
satisfactory to AAC in form and substance. AAC will deliver to the Company on or
before the date the Joint Disclosure Document is mailed to the Stockholders of
the Company a letter from its accountants, Coopers & Lybrand, LLP, stating its
conclusions as to the accuracy of certain information derived from the financial
records of AAC and contained in the Joint Disclosure Document (the "AAC Comfort
Letter"). The AAC Comfort Letter shall be reasonably satisfactory to the Company
in form and substance. Each of the Company Comfort Letter and the AAC Comfort
Letter shall cover such matters as are customarily covered in transactions of
the type contemplated hereby.
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(o) AFFILIATE LETTERS. Not later than the tenth Business Day following
the mailing of the Joint Disclosure Document, the Company shall deliver to AAC,
after consultation with legal counsel, a list of the names and addresses of
those persons it deems to be "Affiliates" of the Company within the meaning of
Rule 145 promulgated under the Securities Act and a letter, substantially in the
form attached hereto as Exhibit D, restricting the disposition of shares
retained by such Affiliate as part of the Merger Consideration.
(p) CONTINUED REGISTRATION. The Surviving Corporation will use
commercially reasonable efforts, for at least two years after the Effective Time
of the Merger, to cause the Surviving Corporation Common Stock not to be
de-listed from The NASDAQ National Market System ("NASDAQ"); PROVIDED, HOWEVER,
that the Surviving Corporation may cause or permit the Surviving Corporation
Common Stock to be de-listed in connection with any transaction which results in
the termination of registration of such securities under Section 12 of the
Securities Exchange Act; PROVIDED, HOWEVER, that nothing in this ss.5(p) shall
require the Surviving Corporation to take any affirmative action to prevent the
Surviving Corporation Common Stock from being delisted by NASDAQ if the
Surviving Corporation Common Stock ceases to meet the applicable listing
standards.
(q) OPERATION OF AAC'S BUSINESS. Except as expressly permitted by this
Agreement or contemplated in the Ancillary Agreements, the Debt Financing
Commitments and the Equity Financing Commitment, AAC will not incur any
liabilities or material obligations not set forth in ss.5(q) of the AAC
Disclosure Schedule.
(r) NO AMENDMENT OF ANCILLARY AGREEMENTS. From the date hereof through
the Effective Time, neither AAC nor the Company shall amend in any manner
adverse to the other Party in any material respect any of the Ancillary
Agreements without the other Party's prior written consent, which consent shall
not be unreasonably withheld.
(s) SOLVENCY OPINION. The Company shall use its commercially reasonable
efforts to obtain the Solvency Opinion.
6. CONDITIONS TO OBLIGATION TO CLOSE.
---------------------------------
(a) CONDITIONS TO OBLIGATION OF AAC. The obligation of AAC to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3 above
shall be true and correct in all respects at and as of the Effective Time,
except (A) for those representations and warranties which address matters only
as of a particular date (which shall have been true and correct as of such date,
subject to clause (B)), and (B) where the failure of such representations and
warranties taken together without regard to any materiality or Knowledge
qualification set forth therein to be true and correct could reasonably be
expected to have a Material Adverse Effect, with the same force and effect as if
made on and as of the Effective Time;
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(ii) the Company shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) there shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that AAC
shall use its reasonable best efforts to have any such judgment, order, decree,
stipulation, injunction or charge vacated or reversed;
(iv) the Company shall have delivered to AAC a certificate to
the effect that each of the conditions specified above in ss.6(a)(i)-(iii) is
satisfied in all respects
(v) this Agreement and the Merger shall have received the
Requisite Stockholder Approval or the Requisite Super-Majority Stockholder
Approval, as the case may be;
(vi) the holders of not more than 3% of the outstanding shares
of Company Common Stock shall have demanded appraisal of such shares in
accordance with the Delaware General Corporation Law;
(vii) the Company shall have delivered to AAC written consents
to the transactions contemplated hereby from third parties who are parties to
Contracts set forth on ss.6(a) of the Company Disclosure Schedule;
(viii) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated and the Parties shall have received all other authorizations,
consents, and approvals of Governmental Bodies referred to in ss.3(d) above;
(ix) AAC shall be reasonably satisfied that the Merger will be
recorded as a recapitalization for financial reporting purposes;
(x) Total Debt of the Company and its Subsidiaries determined
on a consolidated basis in accordance with GAAP as of the Effective Time shall
not exceed $38 million;
(xi) the Company shall have received the proceeds of the
Financing on terms and conditions set forth in the Debt Financing Commitments or
upon terms and conditions which are substantially equivalent thereto;
(xii) the Company shall have received and accepted the
resignations of all directors of the Company other than Richard P. Kleinknecht;
(xiii) the Stockholders Agreement shall be in full force and
effect and the parties thereto shall have taken the actions required to be taken
pursuant to Section 5 thereof; and
(xiv) each of the Investors Agreement, Share Exchange and
Termination Agreement, the Starr Termination Agreement, the Walsh Employment
Agreement, the KEC-NJ
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Labor Pool Agreement, the Corporate Opportunity Agreement, and the KEC-NY Labor
Pool Agreement shall be in full force and effect.
To the extent permitted by applicable law, AAC may waive any condition specified
in this ss.6(a) if it executes and delivers to the Company written notice so
stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.4
above, without regard to any materiality or Knowledge qualification set forth
therein, shall be true and correct in all respects at and as of the Effective
Time, except (A) for those representations and warranties which address matters
only as of a particular date (which shall have been true and correct as of such
date, subject to clause (B)) , and (B) where the failure of such representations
and warranties taken together without regard to any materiality or Knowledge
qualification set forth therein to be true and correct could reasonably be
expected to have a Material Adverse Effect, with the same force and effect as if
made on and as of the Effective Time;
(ii) AAC shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that Company
shall use its reasonable best efforts to have any such judgment, order, decree,
stipulation, injunction or charge vacated or reversed;
(iv) AAC shall have delivered to the Company a certificate to
the effect that each of the conditions specified above in ss.6(b)(i)-(iii) is
satisfied in all respects;
(v) this Agreement and the Merger shall have received the
Requisite Stockholder Approval or the Requisite Super-Majority Stockholder
Approval, as the case may be;
(vi) the AAC Shareholder Agreement shall be in full force and
effect;
(vii) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated and the Parties shall have received all other authorizations,
consents, and approvals of Governmental Bodies referred to in ss.3(d) above;
(viii) the Company shall be reasonably satisfied that the
Merger will be recorded as a recapitalization for financial reporting purposes;
and
(ix) the board of directors of the Company shall have received
the Solvency Opinion.
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To the extent permitted by applicable law, the Company may waive any condition
specified in this ss.6(b) if it executes and delivers to AAC written notice so
stating at or prior to Closing.
7. TERMINATION.
-----------
(a) TERMINATION OF AGREEMENT. Any of the Parties may terminate this
Agreement, and the Merger contemplated hereby may be abandoned, with the prior
authorization of its board of directors (whether before or after stockholder
approval), as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time;
(ii) AAC may terminate this Agreement by giving written notice
to the Company at any time prior to the Effective Time (A) in the event the
Company has breached any material representation, warranty, or covenant
contained in this Agreement when made or at any time prior to the Closing in any
material respect, AAC has notified the Company of the breach, and the breach has
continued without cure for a period of 15 days after the notice of breach, or
(B) if the Closing shall not have occurred on or before April 30, 1998, by
reason of the failure of any condition precedent under ss.6(a) hereof (unless
the failure results from AAC breaching any of its representations, warranties,
or covenants contained in this Agreement);
(iii) the Company may terminate this Agreement by giving
written notice to AAC at any time prior to the Effective Time (A) in the event
AAC has breached any material representation, warranty, or covenant contained in
this Agreement when made or at any time prior to the Closing in any material
respect, the Company has notified AAC of the breach, and the breach has
continued without cure for a period of 15 days after the notice of breach, or
(B) if the Closing shall not have occurred on or before April 30, 1998, by
reason of the failure of any condition precedent under ss.6(b) hereof (unless
the failure results from the Company breaching any of its representations,
warranties, or covenants contained in this Agreement);
(iv) the Company may terminate this Agreement by giving
written notice to AAC, at any time prior to the Effective Time, in the event
that a Person has made an Acquisition Proposal that the board of directors of
the Company determines, in good faith, and after consultation with and advice
from its financial advisors, is reasonably likely to be subject to completion
and would, if consummated, result in a transaction more favorable, from a
financial point of view, to the Company's Stockholders than this Agreement and
the Merger (a "Superior Acquisition Proposal");
(v) either Party may terminate this Agreement by giving
written notice to the other Party at any time after the Special Meeting in the
event this Agreement and the Merger fail to receive the Requisite Stockholder
Approval;
(vi) AAC may terminate this Agreement by giving written notice
to the Company if (A) the board of directors of the Company shall have withdrawn
or modified or amended, in a manner adverse to AAC, either its approval or
recommendation of this Agreement and the Merger or its recommendation that the
Company Stockholders adopt and approve this Agreement and the
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Merger, (B) the board of directors of the Company shall have approved,
recommended or endorsed any Superior Acquisition Proposal, or (C) if the Company
has failed to duly call the Special Meeting;
(vii) the Company may terminate this Agreement by giving
written notice to AAC if (A) the board of directors of the Company shall have
withdrawn or modified or amended, in a manner adverse to AAC, its approval and
recommendation of this Agreement and the Merger or its recommendation that the
Company Stockholders adopt and approve this Agreement and the Merger, or (B) the
board of directors of the Company shall have approved, recommended or endorsed
any Superior Acquisition Proposal, provided that the Company shall be in
compliance with ss.5(j).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to ss.7(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party (or its directors, officers
or stockholders) to any other Party (except for any liability of any Party then
in breach); PROVIDED, HOWEVER, that (i) this ss.7(b), (ii) ss.7(c), (iii) the
confidentiality provisions contained in ss.5(h) above, (iv) the
Confidentiality/Standstill Letter Agreement, and (v) the provisions of ss.8(b),
ss.8(h), ss.8(i) and ss.8(l), shall, in each case, survive any such termination.
(c) TERMINATION FEE; EXPENSES. Upon the occurrence of any one of the
following, the Company shall pay AAC a Termination Fee (as defined below) and
certain expenses (as described below):
(i) this Agreement having been terminated by the
Company or AAC, as the case may be, pursuant to
ss.7(a)(iv), ss.7(a)(vi)(B) or ss.7(a)(vii)(B); or
(ii) a Third Party having made an Acquisition
Proposal (whether prior to or following the
termination of this Agreement) and this Agreement
having been terminated pursuant to ss.7(a)(vi)(A),
ss.7(a)(vi)(C) or ss.7(a)(vii)(A), the Company
consummates an Acquisition Transaction within 12
months following termination of this Agreement.
The termination fee referred to in the preceding sentence shall be equal to
$3.37 million (the "Termination Fee") and shall be payable, if at all, upon the
occurrence of the relevant event under clause (i) or (ii) above. The expenses
referred to in the first sentence of this ss.7(c) shall mean that amount, not to
exceed $2.2 million in the aggregate, of all reasonable out-of-pocket costs,
fees and expenses, including, without limitation, the reasonable fees and
disbursements of banks, investment banks, accountants or legal counsel.
Notwithstanding anything to the contrary contained in this ss.7(c), the expenses
referred to in the previous sentence shall be payable upon termination of this
Agreement under ss.7(a)(iv), ss.7(a)(vi) or ss.7(a)(vii) above within ten (10)
Business Days of receipt by the Company of reasonably satisfactory documentation
detailing such costs, fees and expenses.
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8. MISCELLANEOUS.
-------------
(a) SURVIVAL. Except for the provisions of ss.7(b), ss.7(c) and the
provisions of ss.8 (and the provisions referred to in ss.7(b), ss.7(c) and ss.8)
none of the representations, warranties, and covenants of the Parties will
survive the Effective Time.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Parties;
PROVIDED, HOWEVER, that any Party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its reasonable best efforts to advise the other Party prior to making
the disclosure).
(c) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; PROVIDED, HOWEVER, that (i) the provisions in
ss.2 above concerning payment of the Merger Consideration are intended for the
benefit of the Company's Stockholders; (ii) the provisions in ss.5(k) above
concerning insurance and indemnification are intended for the benefit of the
individuals specified therein and their respective heirs and legal
representatives; (iii) the provisions of ss.5(l) are for the benefit of
continuing employees; (iv) the provisions of ss.2(d)(vii) are for the benefit of
the holders of options to purchase shares of Company Common Stock; and (v) the
provisions of ss.5(p) are intended for the benefit of the holders of Surviving
Corporation Common Stock other than the stockholders of AAC.
(d) ENTIRE AGREEMENT. This Agreement (including the Exhibits and the
Schedule hereto, the Company Disclosure Schedule and AAC Disclosure Schedule and
the attachments thereto) and the Confidentiality/Standstill Letter Agreement,
constitute the entire agreement between the Parties and supersede any prior
understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof. References in this Agreement to transactions contemplated by this
Agreement shall include transactions contemplated by the Ancillary Agreements.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
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(i) the terms defined in this Agreement include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other gender;
(ii) accounting terms not otherwise defined herein have the
meanings given to them in accordance with GAAP;
(iii) references herein to "articles," "sections," "ss.'s,"
"subsections," and other subdivisions without reference to a document are to
designated articles, sections, ss.'s, subsections, and other subdivisions of
this Agreement;
(iv) a reference to a subsection without further reference to
a section is a reference to such subsection as contained in the same section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(v) the words "herein," "hereof," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
provision;
(vi) the term "include" or "including" shall mean without
limitation by reason of enumeration;
(vii) the headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement;
(viii) any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context otherwise requires; and
(ix) the Parties have participated jointly in the negotiation
and drafting of this Agreement, and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring either Party by virtue of the authorship of any of the
provisions of this Agreement.
(h) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
Business Days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
44
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If to the Company: IPC Information Systems, Inc.
Wall Street Plaza
88 Pine Street
New York, New York 10005
Facsimile: (212) 858-7959
Attention: Daniel Utevsky, Esq.
Copy to: Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Facsimile: (212) 912-7751
Attention: Thomas N. Talley, Esq.
If to AAC: Arizona Acquisition Corp.
c/o Cable Systems Holding LLC
505 North 51st Avenue
Phoenix, Arizona 85043-2701
Facsimile: (602) 233-5782
Attention: President
Copies to: Citicorp Venture Capital, Ltd.
399 Park Avenue
New York, New York 10043
Facsimile: (212) 888-2940
Attention: Richard M. Cashin, Jr.
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178-0060
Facsimile: (212) 309-6273
Attention: Philip H. Werner, Esq.
Either Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(i) GOVERNING LAW; FORUM SELECTION; AND WAIVER OF JURY TRIAL. (i) This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice or conflict of
law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other
45
<PAGE>
than the State of New York; except, however, the Delaware General Corporation
Law shall apply to matters governed exclusively thereby.
(ii) The Parties hereto agree that any action, suit or
proceeding (a "Proceeding") arising out of the transactions contemplated by this
Agreement shall be commenced and litigated exclusively in the United States
District Court for the District of Delaware or in a state court of the State of
Delaware.
(iii) Each of the Parties hereto hereby irrevocably and
unconditionally (A) consents to submit to the exclusive jurisdiction of the
federal and state courts in the State of Delaware for any Proceeding (and each
such Party agrees not to commence any Proceeding, except in such courts), (B)
waives any objection to the laying of venue of any Proceeding in the courts of
the State of Delaware, and (C) waives, and agrees not to plead or to make, any
claim that any Proceeding brought in any court of the State of Delaware has been
brought in an improper or otherwise inconvenient forum.
(iv) Each of the Parties hereby irrevocably designates and
appoints RL&F Service Corp., with offices on the date hereof at One Rodney
Square, Wilmington, Delaware 19801 (hereinafter called the "Agent"), as its
attorney-in-fact to receive service of process in such Proceeding, it being
agreed that service upon such attorney-in-fact shall constitute valid service
upon each of the Parties or its successors or assigns. Each of the Parties
agrees that (A) the sole responsibilities of the Agent shall be (1) to receive
such process, (2) to send a copy of any such process so received to the relevant
Party, by registered airmail, return receipt requested, at the address set forth
in ss.8(h) hereof, or at the last address filed in writing by such Party with
the Agent and (3) to give prompt telegraphic notice of receipt thereof to such
Party at such address, and (B) the Agent shall have no responsibility for the
receipt or non-receipt by such Party of such process, nor for any performance or
non-performance by such Party or any other Party to this Agreement or their
successors or assigns. Each of the Parties hereby agrees to pay to the Agent
such compensation as shall be agreed upon from time to time for services of the
Agent hereunder. Each of the Parties hereby agrees that its submission to
jurisdiction and its designation of the Agent set forth above is made for the
express benefit of each of the Parties hereto. Each of the Parties further
agrees that a final judgment against a Party in any such action or proceeding
shall be conclusive, and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law, a certified or true copy of
which final judgment shall be conclusive evidence of the fact and of the amount
of any indebtedness or liability of such Party herein described; provided that
nothing in this ss.8(i)(iv) shall affect the right of any Party or its
successors or assigns to serve legal process in any other manner permitted by
law. Each of the Parties further covenants and agrees that so long as this
Agreement shall be in effect, each of the Parties shall maintain a duly
appointed agent for the service of summonses and other legal processes in
Wilmington, Delaware and will notify the other parties hereto of the name and
address of such agent if it is no longer the Agent.
(v) Each of the Parties hereto agrees that it shall not seek a
jury trial in any Proceeding based upon or arising out of or otherwise related
to this Agreement or any of the other documents and instruments contemplated
hereby and each of the Parties hereto hereby waives any and all right to any
such jury trial.
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(j) AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; PROVIDED, HOWEVER,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Delaware General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by both Parties. No waiver by either Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence. No waiver shall be valid unless the same shall be in writing and
signed by both Parties.
(k) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction; PROVIDED, HOWEVER, that if the
invalidity of any covenant, agreement or provision shall deprive any party of
the economic benefit intended to be conferred by this Agreement, the Parties
shall negotiate in good faith to amend the Agreement in a manner so that the
economic effect of the Agreement, as amended, is as nearly as possible the same
as the economic effect of this Agreement.
(l) EXPENSES. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby, whether or not the Merger is
consummated.
(m) INCORPORATION OF EXHIBITS, SCHEDULE AND DISCLOSURE SCHEDULES. The
Exhibits, Schedule, the Company Disclosure Schedule and the AAC Disclosure
Schedule identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) TRANSFER TAXES. Any liability arising out of the New York City or
New York State Real Property Transfer Tax, if applicable and due with respect to
the Merger, shall be borne by the Surviving Corporation and expressly shall not
be a liability of the Company Stockholders.
(o) LIMITED RECOURSE. Notwithstanding anything in this Agreement or any
Ancillary Agreement to the contrary (except as otherwise provided in the
Ancillary Agreements), (i) the obligations and liabilities of the Parties
hereunder and thereunder shall be without recourse to any stockholder of such
Party or any of such stockholder's Affiliates (other than the Parties), or any
of their respective directors, employees, officers, representatives or agents
(in each case, in their capacity as such) and shall be limited to the assets of
such Party and (ii) the stockholders of AAC have made no (and shall not be
deemed to have made any) representations, warranties or covenants (express or
implied) under or in connection with this Agreement or any Ancillary Agreement.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
IPC INFORMATION SYSTEMS, INC.
By: /S/ S.T. CLONTZ
----------------------------------
Title: PRESIDENT AND C.E.O.
-------------------------------
ARIZONA ACQUISITION CORP.
By: /S/ PETER A. WOOG
---------------------------------
Title: PRESIDENT
------------------------------
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SCHEDULE A
DIRECTORS OF SURVIVING CORPORATION
----------------------------------
Peter Woog
Richard Cashin, Jr.
David Y. Howe
Robert J. McInerney
Richard Kleinknecht
2 independent directors to be designated by AAC
2 management directors to be designated by AAC
49
<PAGE>
EXHIBIT A-1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
IPC INFORMATION SYSTEMS, INC.
IPC Information Systems, Inc., a Delaware corporation
incorporated August 29, 1985 under the name IPC Merger Corporation, does hereby
amend and restate its certificate of incorporation to read in its entirety as
set forth below:
1. NAME. The name of the corporation is IPC Information
Systems, Inc. (the "Corporation").
2. REGISTERED OFFICE AND AGENT. The address of the
Corporation's registered office in the State of Delaware is Corporation Trust
Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The
name of the Corporation's registered agent at such address is The Corporation
Trust Company.
3. PURPOSE. The nature of the business and purpose or purposes
to be conducted or promoted by the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
4. CAPITAL STOCK.
4.1 SHARES, CLASSES AND SERIES AUTHORIZED. The total number of
shares of all classes of capital stock which the Corporation shall have
authority to issue is thirty-five million (35,000,000) shares, of which ten
million (10,000,000) shares shall be preferred stock, par value one cent ($.01)
per share (the "Preferred Stock"), and twenty five million (25,000,000) shares
shall be common stock, par value one cent ($.01) per share (the "Common Stock").
The Preferred Stock and Common Stock are sometimes hereinafter collectively
referred to as the "Capital Stock."
4.2 DESIGNATIONS, POWERS, PREFERENCES, RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS RELATING TO THE CAPITAL STOCK. The following is a
statement of the designations, powers, preferences and rights in respect of the
classes of the Capital Stock, and the qualifications, limitations or
restrictions thereof, and of the authority with respect thereto expressly vested
in the Board of the Corporation.
-1-
<PAGE>
(a) PREFERRED STOCK. The Preferred Stock may be issued from
time to time in one or more series, the number of shares and any designation of
each series and the powers, preferences and rights of the shares of each series,
and the qualifications, limitations or restrictions thereof, to be as stated and
expressed in a resolution or resolutions providing for the issue of such series
adopted by the Board of Directors, subject to the limitations prescribed by law.
The Board of Directors in any such resolution or resolutions is expressly
authorized to state for each such series:
(i) the voting powers, if any, of the holders of stock of such
series in addition to any voting rights affirmatively required by law;
(ii) the rights of stockholders in respect of dividends,
including, without limitation, the rate or rates per annum and the time
or times at which (or the formula or other method pursuant to which
such rate or rates and such time or times may be determined) and
conditions upon which the holders of stock of such series shall be
entitled to receive dividends and other distributions, and whether any
such dividends shall be cumulative or noncumulative and, if cumulative,
the terms upon which such dividends shall be cumulative;
(iii) whether the stock of each such series shall be
redeemable by the Corporation at the option of the Corporation or the
holder thereof or upon the occurrence of a specified event or events,
and, if redeemable, the terms and conditions upon which the stock of
such series may be redeemed;
(iv) the amount payable and the rights or preferences to which
the holders of the stock of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(v) the terms, if any, upon which shares of stock of such
series shall be convertible into, or exchangeable for, shares of stock
of any other class or classes or of any other series of the same or any
other class or classes, including the price or prices or the rate or
rates of conversion or exchange and the terms of adjustment, if any;
and
(vi) any other designations, preferences, and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, so far as they are not
inconsistent with the provisions of this Restated Certificate of
Incorporation and to the full extent now or hereafter permitted by the
laws of the State of Delaware.
All shares of the Preferred Stock of any one series shall be
identical to each other in all respects, except that shares of any one series
issued at different times may differ as to the dates from which dividends
thereon, if cumulative, shall be cumulative.
Subject to any limitations or restrictions stated in the
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting a series, the Board of
-2-
<PAGE>
Directors may by resolution or resolutions likewise adopted increase (but not
above the total number of authorized shares of that class) or decrease (but not
below the number of shares of the series then outstanding) the number of shares
of the series subsequent to the issue of shares of that series; and if the
number of shares of any series shall be so decreased, the shares constituting
the decrease shall resume that status that they had prior to the adoption of the
resolution originally fixing the number of shares constituting such series.
(b) COMMON STOCK. All shares of Common Stock shall be
identical to each other in every respect. The shares of Common Stock shall
entitle the holders thereof to one vote for each share on all matters on which
stockholders have the right to vote. The holders of Common Stock shall not be
permitted to cumulate their votes for the election of directors.
Subject to the preferences, privileges and powers with respect
to each class or series of Capital Stock having any priority over the Common
Stock, and the qualifications, limitations or restrictions thereof, the holders
of the Common Stock shall have and possess all rights pertaining to the Common
Stock. No holder of shares of Common Stock shall be entitled as such, as a
matter of preemptive right, to subscribe for, purchase or otherwise acquire any
part of any new or additional issue of stock of any class or series whatsoever
of the Corporation, or of securities convertible into stock of any class or
series whatsoever of the Corporation, or of any warrants or other instruments
evidencing rights or options to subscribe for, purchase or otherwise acquire
such stock or securities, whether now or hereafter authorized or whether issued
for cash or other consideration or by way of dividend.
5. BOARD OF DIRECTORS.
5.1 NUMBER OF DIRECTORS. The total number of directors which
shall constitute the whole board of directors shall be determined in accordance
with the By-laws of the Corporation, but shall not be less than two (2) nor more
than nine (9).
5.2 WRITTEN BALLOT. Unless and to the extent that the By-Laws
so provide, elections of directors need not be by written ballot.
5.3 AMENDMENT OF BY-LAWS. The Board of Directors of the
Corporation, acting by majority vote, may alter, amend or repeal the By-Laws of
the Corporation.
6. LIMITATION OF DIRECTOR LIABILITY. Except as otherwise
provided by the Delaware General Corporation Law as the same exists or may
hereafter be amended, no director of the Corporation shall be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. Any repeal or modification of this Section 6 by
the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be duly executed by ______________________, its
Chief Executive Officer, and attested to by ______________, its Secretary, this
___th day of ___, 199_.
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<PAGE>
IPC INFORMATION SYSTEMS, INC.
By:_________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
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<PAGE>
EXHIBIT A-2
RESTATED CERTIFICATE OF INCORPORATION
OF
IPC INFORMATION SYSTEMS, INC.
IPC Information Systems, Inc., a Delaware corporation
incorporated August 29, 1985 under the name IPC Merger Corporation, does hereby
amend and restate its certificate of incorporation to read in its entirety as
set forth below:
1. NAME. The name of the corporation is IPC Information
Systems, Inc. (the "Corporation").
2. REGISTERED OFFICE AND AGENT. The address of the
Corporation's registered office in the State of Delaware is Corporation Trust
Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The
name of the Corporation's registered agent at such address is The Corporation
Trust Company.
3. PURPOSE. The nature of the business and purpose or purposes
to be conducted or promoted by the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
4. CAPITAL STOCK.
4.1 SHARES, CLASSES AND SERIES AUTHORIZED. The total number of
shares of all classes of capital stock which the Corporation shall have
authority to issue is thirty-five million (35,000,000) shares, of which ten
million (10,000,000) shares shall be preferred stock, par value one cent ($.01)
per share (the "Preferred Stock"), and twenty five million (25,000,000) shares
shall be common stock, par value one cent ($.01) per share (the "Common Stock").
The Preferred Stock and Common Stock are sometimes hereinafter collectively
referred to as the "Capital Stock."
4.2 DESIGNATIONS, POWERS, PREFERENCES, RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS RELATING TO THE CAPITAL STOCK. The following is a
statement of the designations, powers, preferences and rights in respect of the
classes of the Capital Stock, and the qualifications, limitations or
restrictions thereof, and of the authority with respect thereto expressly vested
in the Board of the Corporation.
(a) PREFERRED STOCK. The Preferred Stock may be issued from
time to time in one or more series, the number of shares and any designation of
each series and the powers,
<PAGE>
preferences and rights of the shares of each series, and the qualifications,
limitations or restrictions thereof, to be as stated and expressed in a
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors, subject to the limitations prescribed by law. The Board of
Directors in any such resolution or resolutions is expressly authorized to state
for each such series:
(i) the voting powers, if any, of the holders of stock of such
series in addition to any voting rights affirmatively required by law;
(ii) the rights of stockholders in respect of dividends,
including, without limitation, the rate or rates per annum and the time
or times at which (or the formula or other method pursuant to which
such rate or rates and such time or times may be determined) and
conditions upon which the holders of stock of such series shall be
entitled to receive dividends and other distributions, and whether any
such dividends shall be cumulative or noncumulative and, if cumulative,
the terms upon which such dividends shall be cumulative;
(iii) whether the stock of each such series shall be
redeemable by the Corporation at the option of the Corporation or the
holder thereof or upon the occurrence of a specified event or events,
and, if redeemable, the terms and conditions upon which the stock of
such series may be redeemed;
(iv) the amount payable and the rights or preferences to which
the holders of the stock of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(v) the terms, if any, upon which shares of stock of such
series shall be convertible into, or exchangeable for, shares of stock
of any other class or classes or of any other series of the same or any
other class or classes, including the price or prices or the rate or
rates of conversion or exchange and the terms of adjustment, if any;
and
(vi) any other designations, preferences, and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, so far as they are not
inconsistent with the provisions of this Restated Certificate of
Incorporation and to the full extent now or hereafter permitted by the
laws of the State of Delaware.
All shares of the Preferred Stock of any one series shall be
identical to each other in all respects, except that shares of any one series
issued at different times may differ as to the dates from which dividends
thereon, if cumulative, shall be cumulative.
Subject to any limitations or restrictions stated in the
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting a series, the Board of Directors may by resolution or
resolutions likewise adopted increase (but not above the total
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<PAGE>
number of authorized shares of that class) or decrease (but not below the number
of shares of the series then outstanding) the number of shares of the series
subsequent to the issue of shares of that series; and if the number of shares of
any series shall be so decreased, the shares constituting the decrease shall
resume that status that they had prior to the adoption of the resolution
originally fixing the number of shares constituting such series.
(b) COMMON STOCK. All shares of Common Stock shall be
identical to each other in every respect. The shares of Common Stock shall
entitle the holders thereof to one vote for each share on all matters on which
stockholders have the right to vote. The holders of Common Stock shall not be
permitted to cumulate their votes for the election of directors.
Subject to the preferences, privileges and powers with respect
to each class or series of Capital Stock having any priority over the Common
Stock, and the qualifications, limitations or restrictions thereof, the holders
of the Common Stock shall have and possess all rights pertaining to the Capital
Stock.
No holder of shares of Common Stock shall be entitled as such,
as a matter of preemptive right, to subscribe for, purchase or otherwise acquire
any part of any new or additional issue of stock of any class or series
whatsoever of the Corporation, or of securities convertible into stock of any
class or series whatsoever of the Corporation, or of any warrants or other
instruments evidencing rights or options to subscribe for, purchase or otherwise
acquire such stock or securities, whether now or hereafter authorized or whether
issued for cash or other consideration or by way of dividend.
5. BOARD OF DIRECTORS.
5.1 NUMBER OF DIRECTORS. The total number of directors which
shall constitute the whole board of directors shall be determined in accordance
with the By-laws of the Corporation, but shall not be less than two (2) nor more
than nine (9).
5.2 CLASSIFICATION OF BOARD. Subject to the rights of any
holders of any series of Preferred Stock that may be issued by the Corporation
pursuant to a resolution or resolutions of the Board of Directors providing for
such issuance, the directors of the Corporation shall be divided into three
classes with respect to the term of office, each class to contain, as near as
may be possible, one-third of the whole number of the Board, with the terms of
office of one class expiring each successive year. At each annual meeting of
stockholders, the successors to the class of directors whose term expires at
that time shall be elected by the stockholders to serve until the annual meeting
of stockholders held three years next following and until their successors shall
be elected and qualified.
In the event of any intervening changes in the authorized
number of directors, the Board of Directors shall designate the class or classes
to which the increases or decreases in directorships shall be apportioned and
may designate one or more directorships as directorships
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<PAGE>
of another class in order more nearly to achieve equality of number of directors
among the classes; provided, however, that no such apportionment or
redesignation shall shorten the term of any incumbent director.
Unless and to the extent that the By-laws so provide,
elections of directors need not be by written ballot.
5.3 VACANCIES. Subject to the limitations prescribed by law
and this Restated Certificate of Incorporation, all vacancies in the office of
director, including vacancies created by newly created directorships resulting
from an increase in the authorized number of directors, may be filled only by a
vote of a majority of the directors then holding office, although less than a
quorum, or by a sole remaining director; and any director so elected shall serve
for the remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor is duly elected and shall qualify or until such director's earlier
resignation or removal.
5.4 AMENDMENT TO THIS PARAGRAPH. In addition to any
requirements of law or of any other provisions of this Restated Certificate of
Incorporation, the affirmative vote of the holders of not less than eighty
percent (80%) of the total number of votes eligible to be cast by the holders of
all outstanding shares of Capital Stock entitled to vote thereon shall be
required to amend, alter, rescind or repeal any provision of this Paragraph 5.
6. LIMITATION OF DIRECTOR LIABILITY.
6.1 LIMITATION. A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except to the extent such exemption
from liability or limitation thereof is expressly prohibited by the General
Corporation Law of the State of Delaware as the same exists or may hereafter be
amended.
6.2 NO RETROACTIVE CHANGES. Any amendment, termination or
repeal of this Paragraph 6 or any provisions hereof shall not adversely affect
or diminish in any way any right or protection of a director of the Corporation
existing with respect to any act or omission occurring prior to the time of the
final adoption of such amendment, termination or repeal.
6.3 AMENDMENT OF THIS PARAGRAPH. In addition to any
requirements of law or of any other provisions of this Restated Certificate of
Incorporation, the affirmative vote of the holders of not less than seventy
percent (70%) of the total number of votes eligible to be cast by the holders of
all outstanding shares of Capital Stock entitled to vote thereon shall be
required to amend, alter, rescind or repeal any provision of this Paragraph 6.
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<PAGE>
7. AMENDMENTS.
7.1 AMENDMENTS OF CERTIFICATE OF INCORPORATION. In addition to
any affirmative vote required by applicable law and any voting rights granted to
or held by holders of Preferred Stock, any alteration, amendment, repeal or
rescission (collectively, any "Change") of any provision of this Restated
Certificate of Incorporation must be approved by a majority of the directors of
the Corporation then in office and by the affirmative vote of the holders of a
majority (or such greater proportion as may otherwise be required pursuant to
any specific provision of this Restated Certificate of Incorporation) of the
total votes eligible to be cast by the holders of all outstanding shares of
Capital Stock entitled to vote thereon.
Except as may otherwise be provided in this Restated
Certificate of Incorporation, the Corporation reserves the right at any time,
and from time to time, to amend, alter, change or repeal any provision contained
in this Restated Certificate of Incorporation, and to add or insert herein any
other provisions authorized by the laws of the State of Delaware at the time in
force, in the manner now or hereafter prescribed by law, and all rights,
preferences and privileges of any nature conferred upon stockholders, directors
or any other persons whomsoever by and pursuant to this Restated Certificate of
Incorporation in its present form or as hereafter amended are granted subject to
the provisions contained in this Paragraph 7.1.
7.2 AMENDMENTS OF BY-LAWS. In furtherance and not in
limitation of the powers conferred by statute, the Board of Directors of the
Corporation is expressly authorized to make, alter, amend, rescind or repeal
from time to time any of the By-laws of the Corporation in accordance with the
terms thereof; provided, however, that any By-law made by the Board may be
altered, amended, rescinded, or repealed by the holders of a majority of the
shares of Capital Stock entitled to vote thereon at any annual meeting or at any
special meeting called for that purpose. Notwithstanding the foregoing, any
provision of the By-laws that contains a supermajority voting requirement shall
only be altered, amended, rescinded, or repealed by a vote of the Board or
holders of shares of Capital Stock entitled to vote thereon that is not less
than the supermajority specified in such provision.
The foregoing Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Sections 228, 242 and 245 of the
General Corporation Law of the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, IPC Information Systems, Inc. has caused
this Restated Certificate of Incorporation to be duly executed by Richard P.
Kleinknecht, its Chairman and Chief Executive Officer, and attested to by Daniel
Utevsky, its Secretary, this 9th day of May, 1994.
IPC INFORMATION SYSTEMS, INC.
By: /S/ RICHARD P. KLEINKNECHT
-----------------------------
Richard P. Kleinknecht, Chairman
and Chief Executive Officer
Attest:
/S/ DANIEL UTEVSKY
- ----------------------------
Daniel Utevsky, Secretary
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<PAGE>
EXHIBIT B
AMENDED AND RESTATED
BY-LAWS
OF
IPC INFORMATION SYSTEMS, INC.
ARTICLE I
STOCKHOLDERS
------------
SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders
of the Corporation shall be held on such date, at such time and at such place
within or without the State of Delaware as may be designated by the Board of
Directors, for the purpose of electing Directors and for the transaction of such
other business as may be properly brought before the meeting.
SECTION 2. SPECIAL MEETINGS. Except as otherwise provided in the
Certificate of Incorporation, a special meeting of the stockholders of the
Corporation may be called at any time by the Board of Directors or the Chairman
of the Board. Any special meeting of the stockholders shall be held on such
date, at such time and at such place within or without the State of Delaware as
the Board of Directors or the officer calling the meeting may designate. At a
special meeting of the stockholders, no business shall be transacted and no
corporate action shall be taken other than that stated in the notice of the
meeting unless all of the stockholders are present in person or
<PAGE>
by proxy, in which case any and all business may be transacted at the meeting
even though the meeting is held without notice.
SECTION 3. NOTICE OF MEETINGS. Except as otherwise provided in
these By-Laws or by law, a written notice of each meeting of the stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder of the Corporation entitled to vote at
such meeting at his or her address as it appears on the records of the
Corporation. The notice shall state the place, date and hour of the meeting and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called.
SECTION 4. QUORUM. At any meeting of the stockholders, the holders
of a majority in number of the total outstanding shares of stock of the
Corporation entitled to vote at such meeting, present in person or represented
by proxy, shall constitute a quorum of the stockholders for all purposes, unless
the representation of a larger number of shares shall be required by law, by the
Certificate of Incorporation or by these By-Laws, in which case the
representation of the number of shares so required shall constitute a quorum;
provided that at any meeting of the stockholders at which the holders of any
class of stock of the Corporation shall be entitled to vote separately as a
class, the holders of a majority in number of the total outstanding shares of
such class, present in person or represented by proxy, shall constitute a quorum
for purposes of such class vote unless the representation of a larger number of
shares of such class shall be required by law, by the Certificate of
Incorporation or by these By-Laws.
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<PAGE>
SECTION 5. ADJOURNED MEETINGS. Whether or not a quorum shall be
present in person or represented at any meeting of the stockholders, the holders
of a majority in number of the shares of stock of the Corporation present in
person or represented by proxy and entitled to vote at such meeting may adjourn
from time to time; provided, however, that if the holders of any class of stock
of the Corporation are entitled to vote separately as a class upon any matter at
such meeting, any adjournment of the meeting in respect of action by such class
upon such matter shall be determined by the holders of a majority of the shares
of such class present in person or represented by proxy and entitled to vote at
such meeting. When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the stockholders, or the holders of any class of stock entitled to vote
separately as a class, as the case may be, may transact any business which might
have been transacted by them at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the adjourned meeting.
SECTION 6. ORGANIZATION. The Chairman of the Board, or, in his
absence, the Vice-Chairman of the Board, or, in their absence, the Chief
Executive Officer, or, in the absence of the Chairman of the Board, the
Vice-Chairman of the Board and the Chief Executive Officer, the President, or,
in the absence of the Chairman of the Board, the Vice-Chairman of the Board, the
Chief Executive Officer and the President, a Vice President shall call all
meetings of the stockholders to order, and shall act as Chairman of such
meetings. In the absence of the
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<PAGE>
Chairman of the Board, the Vice-Chairman of the Board, the Chief Executive
Officer, the President and all of the Vice Presidents, the holders of a majority
in number of the shares of stock of the Corporation present in person or
represented by proxy and entitled to vote at such meeting shall elect a
Chairman.
The Secretary of the Corporation shall act as Secretary of all
meetings of the stockholders; but in the absence of the Secretary, the Chairman
may appoint any person to act as Secretary of the meeting. It shall be the duty
of the Secretary to prepare and make, at least ten days before every meeting of
stockholders, a complete list of stockholders entitled to vote at such meeting,
arranged in alphabetical order and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list shall
be open, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting or, if not so
specified, at the place where the meeting is to be held, for the ten days next
preceding the meeting, to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, and shall be produced
and kept at the time and place of the meeting during the whole time thereof and
subject to the inspection of any stockholder who may be present.
SECTION 7. VOTING. Except as otherwise provided in the Certificate
of Incorporation or by law, each stockholder shall be entitled to one vote for
each share of the capital stock of the Corporation registered in the name of
such stockholder upon the books of the Corporation. Each stockholder entitled to
vote at a meeting of stockholders or to express consent or dissent to
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<PAGE>
corporate action in writing without a meeting may authorize another person or
persons to act for him or her by proxy, but no such proxy shall be voted or
acted upon after three years from its date, unless the proxy provides for a
longer period. When directed by the presiding officer or upon the demand of any
stockholder, the vote upon any matter before a meeting of stockholders shall be
by ballot. Except as otherwise provided by law or by the Certificate of
Incorporation, Directors shall be elected by a plurality of the votes cast at a
meeting of stockholders by the stockholders entitled to vote in the election
and, whenever any corporate action, other than the election of Directors is to
be taken, it shall be authorized by a majority of the votes cast at a meeting of
stockholders by the stockholders entitled to vote thereon.
Shares of the capital stock of the Corporation belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be counted
for quorum purposes.
SECTION 8. INSPECTORS. When required by law or directed by the
presiding officer or upon the demand of any stockholder entitled to vote, but
not otherwise, the polls shall be opened and closed, the proxies and ballots
shall be received and taken in charge, and all questions touching the
qualification of voters, the validity of proxies and the acceptance or rejection
of votes shall be decided at any meeting of the stockholders by one or more
Inspectors who may be appointed by the Board of Directors before the meeting, or
if not so appointed, shall be appointed by the presiding officer at the meeting.
If any person so appointed fails to appear or
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<PAGE>
act, the vacancy may be filled by appointment in like manner. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability.
SECTION 9. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Any action
required to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of the stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered to the Corporation by delivery to its
registered office in Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be made by hand or by certified or registered mail,
return receipt requested.
Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the date the earliest dated consent is delivered to the Corporation, a written
consent or consents signed by a sufficient number of holders to take action are
delivered to the Corporation in the manner prescribed in the first paragraph of
this Section.
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<PAGE>
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
SECTION 1. NUMBER AND TERM OF OFFICE. The business and affairs of
the Corporation shall be managed by or under the direction of a Board of
Directors, none of whom need be stockholders of the Corporation. The number of
Directors constituting the Board of Directors shall be fixed from time to time
by resolution passed by a majority of the Board of Directors. The Directors
shall, except as hereinafter otherwise provided for filling vacancies, be
elected at the annual meeting of stockholders, and shall hold office until their
respective successors are elected and qualified or until their earlier
resignation or removal.
SECTION 2. REMOVAL, VACANCIES AND ADDITIONAL DIRECTORS. The
stockholders may, at any special meeting the notice of which shall state that it
is called for that purpose, remove, with or without cause, any Director and fill
the vacancy; provided that whenever any Director shall have been elected by the
holders of any class of stock of the Corporation voting separately as a class
under the provisions of the Certificate of Incorporation, such Director may be
removed and the vacancy filled only by the holders of that class of stock voting
separately as a class. Vacancies caused by any such removal and not filled by
the stockholders at the meeting at which such removal shall have been made, or
any vacancy caused by the death or resignation of any Director or for any other
reason, and any newly created directorship resulting from any increase in the
authorized number of Directors, may be filled by the affirmative vote of a
majority of the
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<PAGE>
Directors then in office, although less than a quorum, and any Director so
elected to fill any such vacancy or newly created directorship shall hold office
until his or her successor is elected and qualified or until his or her earlier
resignation or removal.
When one or more Directors shall resign effective at a future date,
a majority of the Directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective, and
each Director so chosen shall hold office as herein provided in connection with
the filling of other vacancies.
SECTION 3. PLACE OF MEETING. The Board of Directors may hold its
meetings in such place or places in the State of Delaware or outside the State
of Delaware as the Board from time to time shall determine.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such times and places as the Board from time to time
by resolution shall determine. No further notice shall be required for any
regular meeting of the Board of Directors; but a copy of every resolution fixing
or changing the time or place of regular meetings shall be mailed to every
Director at least five days before the first meeting held in pursuance thereof.
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<PAGE>
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held whenever called by direction of the Chairman of the
Board or by any two of the Directors then in office.
Notice of the day, hour and place of holding of each special
meeting shall be given by mailing the same at least two days before the meeting
or by causing the same to be transmitted by facsimile, telegram or telephone at
least one day before the meeting to each Director. Unless otherwise indicated in
the notice thereof, any and all business other than an amendment of these
By-Laws may be transacted at any special meeting, and an amendment of these
By-Laws may be acted upon if the notice of the meeting shall have stated that
the amendment of these By-Laws is one of the purposes of the meeting. At any
meeting at which every Director shall be present, even though without any
notice, any business may be transacted, including the amendment of these
By-Laws.
SECTION 6. QUORUM. Subject to the provisions of Section 2 of this
Article II, a majority of the members of the Board of Directors in office (but
in no case less than one-third of the total number of Directors nor less than
two Directors) shall constitute a quorum for the transaction of business and the
vote of the majority of the Directors present at any meeting of the Board of
Directors at which a quorum is present shall be the act of the Board of
Directors. If at any meeting of the Board there is less than a quorum present, a
majority of those present may adjourn the meeting from time to time.
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<PAGE>
SECTION 7. ORGANIZATION. The Chairman of the Board shall preside at
all meetings of the Board of Directors. In the absence of the Chairman of the
Board, a Chairman shall be elected from the Directors present. The Secretary of
the Corporation shall act as Secretary of all meetings of the Directors; but in
the absence of the Secretary, the Chairman may appoint any person to act as
Secretary of the meeting.
SECTION 8. COMMITTEES. The Board of Directors may designate one or
more committees including, without limitation, compensation and audit
committees, each committee to consist of one or more of the Directors of the
Corporation. The Board may designate one or more Directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and the affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority in reference to
approving or adopting, or recommending to the stockholders, any action or matter
expressly required by law to be submitted to stockholders for approval, or
adopting, amending or repealing these By-laws.
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<PAGE>
SECTION 9. CONFERENCE TELEPHONE MEETINGS. Unless otherwise
restricted by the Certificate of Incorporation or by these By-Laws, the members
of the Board of Directors or any committee designated by the Board, may
participate in a meeting of the Board or such committee, as the case may be, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
SECTION 10. CONSENT OF DIRECTORS OR COMMITTEE IN LIEU OF MEETING.
Unless otherwise restricted by the Certificate of Incorporation or by these
By-Laws, any action required or permitted to be taken at any meeting of the
Board Directors, or of any committee thereof, may be taken without a meeting if
all members of the Board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the Board or committee, as the case may be.
ARTICLE III
-----------
OFFICERS
--------
SECTION 1. OFFICERS. The officers of the Corporation shall be a
Chairman of the Board, Vice-Chairman of the Board, Chief Executive Officer, a
President, one or more Vice Presidents, a Secretary and a Treasurer, and such
additional officers, if any, as shall be elected by the Board of Directors
pursuant to the provisions of Section 7 of this Article III. The Chairman of the
Board, the Vice-Chairman of the Board, the President, the Chief Executive
Officer, one or
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more Vice Presidents, the Secretary and the Treasurer shall be elected by the
Board of Directors at its first meeting after each annual meeting of the
stockholders. The failure to hold such election shall not of itself terminate
the term of office of any officer. All officers shall hold office at the
pleasure of the Board of Directors. Any officer may resign at any time upon
written notice to the Corporation. Officers may, but need not, be Directors. Any
number of offices may be held by the same person.
All officers, agents and employees shall be subject to removal,
with or without cause, at any time by the Board of Directors. The removal of an
officer without cause shall be without prejudice to his or her contract rights,
if any. The election or appointment of an officer shall not of itself create
contract rights. All agents and employees other than officers elected by the
Board of Directors shall also be subject to removal, with or without cause, at
any time by the officers appointing them.
Any vacancy caused by the death, resignation or removal of any
officer, or otherwise, may be filled by the Board of Directors, and any officer
so elected shall hold office at the pleasure of the Board of Directors.
In addition to the powers and duties of the officers of the
Corporation as set forth in these By-Laws, the officers shall have such
authority and shall perform such duties as from time to time may be determined
by the Board of Directors.
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<PAGE>
SECTION 2. POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD. The
Chairman of the Board shall preside at all meetings of the stockholders and at
all meetings of the Board of Directors and shall have such other powers and
perform such other duties as may from time to time be assigned by these By-Laws
or by the Board of Directors.
SECTION 3. POWERS AND DUTIES OF THE VICE-CHAIRMAN OF THE BOARD. The
Vice-Chairman of the Board shall have all powers and shall perform all duties
incident to the office of Vice-Chairman of the Board and shall have such other
powers and perform such other duties as may from time to time be assigned by
these By-Laws or by the Board of Directors or the Chairman of the Board.
SECTION 4. POWERS AND DUTIES OF THE CHIEF EXECUTIVE OFFICER. The
Chief Executive Officer shall be the chief executive officer of the Corporation,
have general charge and control of all the Corporation's business and affairs
and, subject to the control of the Board of Directors, shall have all powers and
shall perform all duties incident to the office of Chief Executive Officer. In
the absence of the Chairman of the Board, the Chief Executive Officer shall
preside at all meetings of the stockholders and at all meetings of the Board of
Directors. In addition, the Chief Executive Officer shall have such other powers
and perform such other duties as may from time to time be assigned by these
By-Laws or by the Board of Directors.
SECTION 5. POWERS AND DUTIES OF THE PRESIDENT. The President
shall, subject to the control of the Board of Directors, have all powers and
shall perform all duties incident to the
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<PAGE>
office of President. In the absence of the Chairman of the Board and the Chief
Executive Officer, the President shall preside at all meetings of the
stockholders and at all meetings of the Board of Directors. In the absence of
the Chief Executive Officer, the President shall be the chief executive officer
of the Corporation, have general charge and control of all the Corporation's
business and affairs and shall have such other powers and perform such other
duties as may from time to time be assigned by these By-Laws or by the Board of
Directors.
SECTION 6. POWERS AND DUTIES OF THE VICE PRESIDENTS. Each Vice
President shall have all powers and shall perform all duties incident to the
office of Vice President and shall have such other powers and perform such other
duties as may from time to time be assigned by these By-Laws or by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
President.
SECTION 7. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall
keep the minutes of all meetings of the Board of Directors and the minutes of
all meetings of the stockholders in books provided for that purpose. The
Secretary shall attend to the giving or serving of all notices of the
Corporation; shall have custody of the corporate seal of the Corporation and
shall affix the same to such documents and other papers as the Board of
Directors, the Chairman of the Board, the Vice-Chairman of the Board, the Chief
Executive Officer or the President shall authorize and direct; shall have charge
of the stock certificate books, transfer books and stock ledgers and such other
books and papers as the Board of Directors, the Chairman of the Board, the
Vice-Chairman of the Board, the Chief Executive
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<PAGE>
Officer or the President shall direct, all of which shall at all reasonable
times be open to the examination of any Director, upon application, at the
office of the Corporation during business hours. The Secretary shall have all
powers and shall perform all duties incident to the office of Secretary and
shall also have such other powers and shall perform such other duties as may
from time to time be assigned by these By-Laws or by the Board of Directors, the
Chairman of the Board, the Vice-Chairman of the Board, the Chief Executive
Officer or the President.
SECTION 8. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall
have custody of, and when proper shall pay out, disburse or otherwise dispose
of, all funds and securities of the Corporation. The Treasurer may endorse on
behalf of the Corporation for collection checks, notes and other obligations and
shall deposit the same to the credit of the Corporation in such bank or banks or
depositary or depositaries as the Board of Directors may designate; shall sign
all receipts and vouchers for payments made to the Corporation; shall enter or
cause to be entered regularly in the books of the Corporation kept for the
purpose full and accurate accounts of all moneys received or paid or otherwise
disposed of and whenever required by the Board of Directors, the Chairman of the
Board, the Vice-Chairman of the Board, the Chief Executive Officer or the
President shall render statements of such accounts. The Treasurer shall, at all
reasonable times, exhibit the books and accounts to any Director of the
Corporation upon application at the office of the Corporation during business
hours; and shall have all powers and shall perform all duties incident of the
office of Treasurer and shall also have such other powers and shall perform such
other duties as may from time to time be assigned by these By-Laws or by
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<PAGE>
the Board of Directors, the Chairman of the Board, the Vice-Chaiman of the
Board, the Chief Executive Officer or the President.
SECTION 9. ADDITIONAL OFFICERS. The Board of Directors may from
time to time elect such other officers (who may but need not be Directors),
including a Controller, Assistant Treasurers, Assistant Secretaries and
Assistant Controllers, as the Board may deem advisable and such officers shall
have such authority and shall perform such duties as may from time to time be
assigned by the Board of Directors, the Chairman of the Board, the Vice-Chairman
of the Board, the Chief Executive Officer or the President.
The Board of Directors may from time to time by resolution delegate
to any Assistant Treasurer or Assistant Treasurers any of the powers or duties
herein assigned to the Treasurer; and may similarly delegate to any Assistant
Secretary or Assistant Secretaries any of the powers or duties herein assigned
to the Secretary.
SECTION 10. GIVING OF BOND BY OFFICERS. All officers of the
Corporation, if required to do so by the Board of Directors, shall furnish bonds
to the Corporation for the faithful performance of their duties, in such
penalties and with such conditions and security as the Board shall require.
SECTION 11. VOTING UPON STOCKS. Unless otherwise ordered by the
Board of Directors, the Chairman of the Board, the Vice-Chairman of the Board,
the Chief Executive
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Officer, the President or any Vice President shall have full power and authority
on behalf of the Corporation to attend and to act and to vote, or in the name of
the Corporation to execute proxies to vote, at any meeting of stockholders of
any corporation in which the Corporation may hold stock, and at any such meeting
shall possess and may exercise, in person or by proxy, any and all rights,
powers and privileges incident to the ownership of such stock. The Board of
Directors may from time to time, by resolution, confer like powers upon any
other person or persons.
SECTION 12. COMPENSATION OF OFFICERS. The officers of the
Corporation shall be entitled to receive such compensation for their services as
shall from time to time be determined by the Board of Directors.
ARTICLE IV
----------
INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
Section 1. RIGHT TO INDEMNIFICATION. Each person who was or is made
a party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter, a "Proceeding"), by reason of the fact that he or
she is or was a director or officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter, an "Indemnitee"), whether the basis of such Proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity
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while serving as a director, officer, employee or agent shall be indemnified and
held harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than permitted
prior thereto), against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such Indemnitee in connection
therewith and such indemnification shall continue as to an Indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the Indemnitee's heirs, executors and administrators; PROVIDED,
HOWEVER, that, except as provided in Section 3 of this Article IV with respect
to Proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such Indemnitee in connection with a Proceeding (or part thereof)
initiated by such Indemnitee only if such Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
Section 2. RIGHT TO ADVANCEMENT OF EXPENSES. The right to
indemnification conferred in Section 1 of this Article IV shall include the
right to be paid by the Corporation the expenses incurred in defending any
Proceeding for which such right to indemnification is applicable in advance of
its final disposition (hereinafter, an "Advancement of Expenses"); PROVIDED,
HOWEVER, that, if the Delaware General Corporation Law requires, an Advancement
of Expenses incurred by an Indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such Indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking
(hereinafter, an "Undertaking"), by or on behalf of such Indemnitee, to repay
all amounts so
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advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter, a "Final Adjudication")
that such Indemnitee is not entitled to be indemnified for such expenses under
this Section or otherwise.
Section 3. RIGHT OF INDEMNITEE TO BRING SUIT. The rights to
indemnification and to the advancement of expenses conferred in Sections 1 or 2
of this Article IV shall be contract rights. If a claim under Sections 1 or 2 of
this Article IV is not paid in full by the Corporation within sixty days after a
written claim has been received by the Corporation, except in the case of a
claim for an Advancement of Expenses, in which case the applicable period shall
be twenty days, the Indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an Undertaking, the Indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the Indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the Indemnitee to
enforce a right to an Advancement of Expenses) it shall be a defense that, and
(ii) in any suit by the Corporation to recover an Advancement of Expenses
pursuant to the terms of an Undertaking the Corporation shall be entitled to
recover such expenses upon a Final Adjudication that, the Indemnitee has not met
any applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
Indemnitee is proper in the circumstances because the Indemnitee has met the
applicable
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<PAGE>
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the Indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
Indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the Indemnitee, be a defense to such suit. In any suit
brought by the Indemnitee to enforce a right to indemnification or to an
Advancement of Expenses hereunder, or by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an Undertaking, the burden of
proving that the Indemnitee is not entitled to be indemnified, or to such
Advancement of Expenses, under this Section or otherwise shall be on the
Corporation.
Section 4. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification
and to the Advancement of Expenses conferred in this Article IV shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, the Corporation's certificate of incorporation, bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 5. INSURANCE. The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
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<PAGE>
Section 6. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE
CORPORATION. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification, and to the Advancement
of Expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article IV with respect to the indemnification and
Advancement of Expenses of directors and officers of the Corporation.
ARTICLE V
---------
STOCK-SEAL-FISCAL YEAR
----------------------
SECTION 1. CERTIFICATES FOR SHARES OF STOCK. The certificates for
shares of stock of the Corporation shall be in such form, not inconsistent with
the Certificate of Incorporation, as shall be approved by the Board of
Directors. All certificates shall be signed by the Chairman of the Board, the
Vice-Chairman of the Board, the Chief Executive Officer, the President or a Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and shall not be valid unless so signed.
In case any officer or officers who shall have signed any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates had not ceased
to be such officer or officers of the Corporation.
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<PAGE>
All certificates for shares of stock shall be consecutively
numbered as the same are issued. The name of the person owning the shares
represented thereby with the number of such shares and the date of issue thereof
shall be entered on the books of the Corporation.
Except as hereinafter, provided, all certificates surrendered to
the Corporation for transfer shall be canceled, and no new certificates shall be
issued until former certificates for the same number of shares have been
surrendered and canceled.
SECTION 2. LOST, STOLEN OR DESTROYED CERTIFICATES. Whenever a
person owning a certificate for shares of stock of the Corporation alleges that
it has been lost, stolen or destroyed, he or she shall file in the office of the
Corporation an affidavit setting forth, to the best of his or her knowledge and
belief, the time, place and circumstances of the loss, theft or destruction,
and, if required by the Board of Directors, a bond of indemnity or other
indemnification sufficient in the opinion of the Board of Directors to indemnify
the Corporation and its agents against any claim that may be made against it or
them on account of the alleged loss, theft or destruction of any such
certificate or the issuance of a new certificate in replacement therefor.
Thereupon the Corporation may cause to be issued to such person a new
certificate in replacement for the certificate alleged to have been lost, stolen
or destroyed. Upon the stub of every new certificate so issued shall be noted
the fact of such issue and the number, date and the name of the registered owner
of the lost, stolen or destroyed certificate in lieu of which the new
certificate is issued.
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<PAGE>
SECTION 3. TRANSFER OF SHARES. Shares of stock of the Corporation
shall be transferred on the books of the Corporation by the holder thereof, in
person or by his or her attorney duly authorized in writing, upon surrender and
cancellation of certificates for the number of shares of stock to be
transferred, except as provided in Section 2 of this Article IV.
SECTION 4. REGULATIONS. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates for shares of stock of the
Corporation.
SECTION 5. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders, or to receive payment of any dividend or other distribution or
allotment of any rights or to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date on which the resolution fixing the record date is adopted and
which record date shall not be more than sixty (60) nor less than ten (10) days
before the date of any meeting of stockholders, nor more than sixty (60) days
prior to the time for such other action as hereinbefore described; provided,
however, that if no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held, and, for
determining stockholders entitled to receive payment of any dividend or other
distribution or
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<PAGE>
allotment of rights or to exercise any rights of change, conversion or exchange
of stock or for any other purpose, the record date shall be at the close of
business on the day on which the Board of Directors adopts a resolution relating
thereto.
A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which record date shall be not more than ten (10) days after the date upon which
the resolution fixing the record date is adopted. If no record date has been
fixed by the Board of Directors and no prior action by the Board of Directors is
required by the Delaware General Corporation Law, the record date shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in the manner prescribed by
Article I, Section 9 hereof. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by the Delaware
General Corporation Law with respect to the proposed action by written consent
of the stockholders, the record date for determining stockholders entitled to
consent to corporate action in writing shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action.
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<PAGE>
SECTION 6. DIVIDENDS. Subject to the provisions of the Certificate
of Incorporation, the Board of Directors shall have power to declare and pay
dividends upon shares of stock of the Corporation, but only out of funds
available for the payment of dividends as provided by law.
Subject to the provisions of the Certificate of Incorporation, any
dividends declared upon the stock of the Corporation shall be payable on such
date or dates as the Board of Directors shall determine. If the date fixed for
the payment of any dividend shall in any year fall upon a legal holiday, then
the dividend payable on such date shall be paid on the next day not a legal
holiday.
SECTION 7. CORPORATE SEAL. The Board of Directors shall provide a
suitable seal, containing the name of the Corporation, which seal shall be kept
in the custody of the Secretary. A duplicate of the seal may be kept and be used
by any officer of the Corporation designated by the Board of Directors, the
Chairman of the Board, the Vice-Chairman of the Board, the Chief Executive
Officer or the President.
SECTION 8. FISCAL YEAR. The fiscal year of the Corporation shall
be such fiscal year as the Board of Directors from time to time by resolution
shall determine.
ARTICLE VI MISCELLANEOUS
------------------------
PROVISIONS.
-----------
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<PAGE>
SECTION 1. CHECKS, NOTES, ETC. All checks, drafts, bills of
exchange, acceptances, notes or other obligations or orders for the payment of
money shall be signed and, if so required by the Board of Directors,
countersigned by such officers of the Corporation and/or other persons as the
Board of Directors from time to time shall designate.
Checks, drafts, bills of exchange, acceptances, notes, obligations
and orders for the payment of money made payable to the Corporation may be
endorsed for deposit to the credit of the Corporation with a duly authorized
depository by the Treasurer and/or such other officers or persons as the Board
of Directors from time to time may designate.
SECTION 2. LOANS. No loans and no renewals of any loans shall be
contracted on behalf of the Corporation except as authorized by the Board of
Directors. When authorized to do so, any officer or agent of the Corporation may
effect loans and advances for the Corporation from any bank, trust company or
other institution or from any firm, corporation or individual, and for such
loans and advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Corporation. When authorized so to do,
any officer or agent of the Corporation may pledge, hypothecate or transfer, as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Corporation, any and all stocks, securities and other
personal property at any time held by the Corporation, and to that end may
endorse, assign and deliver the same. Such authority may be general or confined
to specific instances.
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<PAGE>
SECTION 3. CONTRACTS. Except as otherwise provided in these By-Laws
or by law or as otherwise directed by the Board of Directors, the Chairman of
the Board, the Vice-Chairman of the Board, the Chief Executive Officer, the
President or any Vice President shall be authorized to execute and deliver, in
the name and on behalf of the Corporation, all agreements, bonds, contracts,
deeds, mortgages, and other instruments, either for the Corporation's own
account or in a fiduciary or other capacity, and the seal of the Corporation, if
appropriate, shall be affixed thereto by any of such officers or the Secretary
or an Assistant Secretary. The Board of Directors, the Chairman of the Board,
the Vice-Chairman of the Board, the Chief Executive Officer, the President or
any Vice President designated by the Board of Directors may authorize any other
officer, employee or agent to execute and deliver, in the name and on behalf of
the Corporation, agreements, bonds, contracts, deeds, mortgages, and other
instruments, either for the Corporation's own account or in a fiduciary or other
capacity, and, if appropriate, to affix the seal of the Corporation thereto. The
grant of such authority by the Board or any such officer may be general or
confined to specific instances.
SECTION 4. WAIVERS OF NOTICE. Whenever any notice whatever is
required to be given by law, by the Certificate of Incorporation or by these
By-Laws to any person or persons, a waiver thereof in writing, signed by the
person or persons entitled to the notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
SECTION 5. OFFICES OUTSIDE OF DELAWARE. Except as otherwise
required by the laws of the State of Delaware, the Corporation may have an
office or offices and keep its books,
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documents and papers outside of the State of Delaware at such place or places as
from time to time may be determined by the Board of Directors, the Chairman of
the Board, the Vice-Chairman of the Board, the Chief Executive Officer or the
President.
ARTICLE VII
-----------
AMENDMENTS
----------
These By-Laws and any amendment thereof may be altered, amended or
repealed, or new By-Laws may be adopted, by the Board of Directors at any
regular or special meeting by the affirmative vote of a majority of all of the
members of the Board, provided in the case of any special meeting at which all
of the members of the Board are not present, that the notice of such meeting
shall have stated that the amendment of these By-Laws was one of the purposes of
the meeting; but these By-Laws and any amendment thereof may be altered, amended
or repealed or new By-Laws may be adopted by the holders of a majority of the
total outstanding stock of the Corporation entitled to vote at any annual
meeting or at any special meeting, provided, in the case of any special meeting,
that notice of such proposed alteration, amendment, repeal or adoption is
included in the notice of the meeting.
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ARTICLE VIII
------------
WAIVER OF SECTION 203
---------------------
The Corporation expressly elects not to be governed by Section 203
of the Delaware General Corporation Law, which election shall, in accordance
with such Section, not be effective until 12 months after the adoption of these
By-Laws and not apply to any business combination between the Corporation and
any person who became an interested stockholder of the Corporation on or prior
to such adoption.
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EXHIBIT D
_______________, 1998
IPC Information Systems, Inc.
Wall Street Plaza
88 Pine Street
New York, NY 10005
Ladies and Gentlemen:
The undersigned has been advised that as of the date of this letter, he may be
deemed to be an "affiliate" of IPC Information Systems, Inc., a Delaware
corporation ("IPC"), as the term "affiliate" is defined for purposes of Rule 145
("Rule 145") promulgated under the Securities Act of 1933, as amended (the
"Act"). Pursuant to the terms of the Agreement and Plan of Merger dated as of
December , 1997 (the "Merger Agreement"), between Arizona Acquisition
Corp.("AAC") and
IPC, AAC will be merged with and into IPC (the "Merger").
As a result of the Merger, the undersigned will receive shares of Common Stock,
par value $.01 per share, of IPC ("New IPC Common Stock"), in exchange for
shares of Common Stock, par value $.01 per share, of IPC (the "Old IPC Common
Stock") owned (or deemed owned pursuant to the terms of the Merger Agreement) by
the undersigned.
The undersigned hereby undertakes that he shall not make any sale, transfer or
other disposition of New IPC Common Stock received in the Merger in violation of
the Act and the rules and regulations promulgated thereunder. The undersigned
has been advised that the issuance of New IPC Common Stock to him in the Merger
has been registered with the Securities and Exchange Commission (the "SEC") on a
Registration Statement on Form S-4. However, the undersigned has also been
advised that, because at the time the Merger was submitted for a vote of the
stockholders of IPC, the undersigned may be deemed to have been an "affiliate"
of IPC and the distribution by him of New IPC Common Stock has not been
registered under the Act, the undersigned may not sell, transfer or otherwise
dispose of the New IPC Common Stock issued to him in the Merger except (i)
pursuant to an effective registration statement under the Act, (ii) in
conformity with the applicable volume and other limitations of Rule 145, or
(iii) in a transaction which, in the opinion of counsel reasonably satisfactory
to IPC or as described in a "no action" or interpretive letter obtained by the
undersigned from the staff of the SEC, is not required to be registered under
the Act.
In the event of a sale or other disposition by the undersigned of New IPC Common
Stock pursuant to Rule 145, the undersigned will supply IPC with evidence of
compliance with such rule, in the form of a letter in the form of Annex 1
hereto. The undersigned understands that IPC may instruct its transfer agent to
withhold the transfer of any shares of New IPC Common Stock disposed of by
<PAGE>
the undersigned, but that upon receipt of such evidence of compliance the
transfer agent shall effectuate the transfer of New IPC Common Stock sold as
indicated in the letter.
The undersigned acknowledges that he has carefully read this letter and the
Merger Agreement and has discussed the requirements of such documents and other
applicable limitations upon his ability to sell, transfer or otherwise dispose
of the New IPC Common Stock to the extent he felt necessary, with his counsel.
Execution of this letter should not be considered an admission on the part of
the undersigned that he is an "affiliate" of IPC as described in the first
paragraph of this letter or as a waiver of any rights the undersigned may have
to object to any claim that the undersigned is such an affiliate on or after the
date of this letter.
Very truly yours,
-------------------------------
Accepted this ___ day of __________, 1998
by IPC Information Systems, Inc.
By: __________________________
Name: _______________________
Title: ________________________
<PAGE>
ANNEX I
IPC Information Systems, Inc.
Wall Street Plaza
88 Pine Street
New York, NY 10005
Ladies and Gentlemen:
On ____________, the undersigned sold ________ shares of Common Stock, par value
$.01 per share (the "Common Stock") of IPC Information Systems, Inc. ("IPC").
The Common Stock was received by the undersigned in connection with the merger
of Arizona Acquisition Corp. with and into IPC.
The undersigned hereby represents that the Common Stock was sold in conformity
with the applicable volume and other limitations of Rule 145 promulgated under
the Securities Act of 1933, as amended.
Very truly yours,
cc: [Transfer Agent]
[Address]
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Attn: Philip H. Werner
<PAGE>
EXHIBIT 4
STOCKHOLDERS AGREEMENT
AGREEMENT, dated as of December 18, 1997 by and between Arizona Acquisition
Corp., a Delaware corporation ("Merger Subsidiary"), and the other parties
signatory hereto (each, a "Stockholder"). Capitalized terms used but not defined
herein shall have the meanings set forth in the Agreement and Plan of Merger,
dated the date hereof (as such agreement may be amended from time to time, the
"Merger Agreement").
WHEREAS, concurrently herewith, Merger Subsidiary and IPC Information
Systems, Inc., a Delaware corporation (the "Company"), are entering into a
Merger Agreement, pursuant to which Merger Subsidiary will be merged with and
into the Company (the "Merger"), whereby each share of common stock, par value
$.01 per share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time will be converted into either (A) the
right to retain at the election of the holder thereof and subject to the terms
of the Merger Agreement, common stock, par value $.01 per share, of the Company
or (B) the right to receive cash, other than (i) shares of Company Common Stock
owned, directly or indirectly, by the Company or any Subsidiary of the Company
or by Merger Subsidiary and (ii) Dissenting Shares.
WHEREAS, as a condition to Merger Subsidiary's entering into the Merger
Agreement, Merger Subsidiary requires that each Stockholder enter into, and each
such Stockholder has agreed to enter into, this Agreement with Merger
Subsidiary.
NOW, THEREFORE, in order to implement the foregoing and in consideration of
the mutual agreements contained herein, the parties hereby agree as follows:
Section 1. Certain Definitions. The following terms, when used in this
Agreement, shall have the following meanings (such definitions to be equally
applicable to both singular and plural terms of the terms defined):
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person,
provided that no securityholder of the Company shall be deemed an Affiliate of
any other securityholder solely by reason of any investment in the Company. For
the purpose of this definition, the term "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of stock, as a
trustee or executor, by contract or credit arrangement or otherwise.
<PAGE>
"Amended and Restated Labor Pooling Agreements" has the meaning ascribed
thereto in Section 5(e) of this Agreement.
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean having "beneficial ownership" of such securities (as determined
pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned by
all other Persons with whom such Person would constitute a "group" as described
in Section 13(d)(3) of the Exchange Act.
"Business" means (i) the design, manufacture, sale, distribution and/or
maintenance of voice and/or data communications products, including, but not
limited to, turret or dealerboard systems used within the financial services,
energy, transportation or emergency services industries, Private Branch Exchange
(PBX) and/or key telephone systems, voice recording systems and video
teleconferencing products; (ii) the furnishing of communications cabling or
voice or data communications products, including the design and/or installation
of local and wide area networks or the provision of maintenance services for
said communications cabling or products; (iii) the design, furnishing,
installation and/or maintenance of low voltage cabling systems (such as would
not require an electrical license for the installation thereof); and (iv) the
provision of long distance telecommunications network services.
"Company" has the meaning ascribed thereto in the recitals of this
Agreement.
"Company Common Stock" has the meaning ascribed thereto in the recitals of
this Agreement.
"Control" (including the terms "Controlled by" and "under common Control
with") means the possession, directly or indirectly or as a trustee or executor,
of the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of stock, as a trustee or executor, by
contract or credit arrangement or otherwise.
"Existing Shares" has the meaning ascribed thereto in Section 2(a)(i).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"KEC-NY" means Kleinknecht Electric Company, Inc., a New York corporation.
"KEC-NJ" means Kleinknecht Electric Company, Inc., a New Jersey
corporation.
"Kleinknechts" means Richard Kleinknecht and Peter Kleinknecht.
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<PAGE>
"Merger" has the meaning ascribed thereto in the recitals of this
Agreement.
"Merger Subsidiary" has the meaning ascribed thereto in the introductory
paragraph of this Agreement.
"Permitted Transferee" means in the case of any Stockholder, (a) a spouse
or lineal descendent (including by adoption and stepchildren), heir, executor,
testamentary trustee or legatee of such Stockholder or (b) any trust or estate
the beneficiaries of which, or any corporation, limited liability company or
partnership, the stockholders, members or partners of which include only the
Persons described in clause (a) above.
"Person" means an individual, corporation, partnership, limited liability
company, limited partnership, association, trust, unincorporated organization or
other entity or group (as defined in Section 13(d)(3) of the Exchange Act).
"Rollover Stockholder" means Richard Kleinknecht.
"Shares" means the Existing Shares, together with any shares of Company
Common Stock acquired of record or beneficially by such Stockholder in any
capacity after the date hereof and prior to the termination hereof, whether upon
exercise of options, conversion of convertible securities, purchase, exchange or
otherwise; provided, however, that in the event of a stock dividend or
distribution, or any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged.
"Stockholder" has the meaning ascribed thereto in the introductory
paragraph to this Agreement.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
"Termination Date" has the meaning ascribed thereto in Section 12 of this
Agreement.
"Trustee" has the meaning ascribed thereto in Section 2(a)(i) of this
Agreement.
Section 2. Representations and Warranties of Stockholders. Each
Stockholder hereby, severally and not jointly, represents and warrants to Merger
Subsidiary as follows:
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(a) (i) Such Stockholder is either (A) the record holder or
beneficial owner of the number of, or (B) trustee of a trust that
is the record holder or beneficial owner of, and whose
beneficiaries are the beneficial owners (such trustee, a
"Trustee"), shares of Company Common Stock as is set forth opposite
such Stockholder's name on Schedule I hereto (the "Existing
Shares").
(ii) On the date hereof, the Existing Shares set forth opposite
such Stockholder's name on Schedule I hereto constitute all of the
outstanding shares of Company Common Stock owned of record or
beneficially by such Stockholder. Such Stockholder does not have
record or beneficial ownership of any Shares not set forth on
Schedule I hereto.
(iii) Such Stockholder has sole power of disposition with
respect to all of the Existing Shares set forth opposite such
Stockholder's name on Schedule I and sole voting power with respect
to the matters set forth in Section 4 hereof and sole power to
demand dissenter's or appraisal rights, in each case with respect
to all of the Existing Shares set forth opposite such Stockholder's
name on Schedule I, with no restrictions on such rights, subject to
applicable federal securities laws and the terms of this Agreement.
(iv) Such Stockholder will have sole power of disposition with
respect to Shares other than Existing Shares, if any, which become
beneficially owned by such Stockholder and will have sole voting
power with respect to the matters set forth in Section 4 hereof and
sole power to demand dissenter's or appraisal rights, in each case
with respect to all Shares other than Existing Shares, if any,
which become beneficially owned by such Stockholder with no
restrictions on such rights, subject to applicable federal
securities laws and the terms of this Agreement.
(b) Such Stockholder has the legal capacity, power and authority to enter
into and perform all of such Stockholder's obligations under this Agreement.
The execution, delivery and performance of this Agreement by such Stockholder
will not violate any other agreement to which such Stockholder is a party or by
which such Stockholder is bound including, without limitation, any trust
agreement, voting agreement, stockholders agreement, voting trust, partnership
or other agreement. This Agreement has been duly and validly executed and
delivered by such Stockholder and constitutes a valid and binding agreement of
such Stockholder, enforceable against such Stockholder in accordance with its
terms, except as limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditor's rights generally, (b)
general principles of equity, whether such enforceability is considered in a
proceeding in equity or at law, and to the discretion of the court before which
any proceeding therefore may be brought, or (c) public policy considerations or
court decisions which may limit the rights of the parties thereto for
indemnification. All necessary consents of
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<PAGE>
any beneficiary of or holder of interest in any trust of which a Stockholder is
Trustee to the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been obtained. If such Stockholder is
married and such Stockholder's Shares constitute community property, this
Agreement has been duly authorized, executed and delivered by, and constitutes a
valid and binding agreement of, such Stockholder's spouse, enforceable against
such person in accordance with its terms.
(c) Except for filings under the HSR Act, if applicable, (i) no filing
with, and no permit, authorization, consent or approval of, any state or
federal public body or authority is necessary for the execution of this
Agreement by such Stockholder and the consummation by such Stockholder of the
transactions contemplated hereby and (ii) neither the execution and delivery
of this Agreement by such Stockholder nor the consummation by such
Stockholder of the transactions contemplated hereby nor compliance by such
Stockholder with any of the provisions hereof shall (x) conflict with or
result in any breach of any applicable trust, partnership agreement or other
agreements or organizational documents applicable to such Stockholder, (y)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which such
Stockholder is a party or by which such Stockholder or any of such
Stockholder's properties or assets may be bound or (z) violate any order,
writ, injunction, decree, judgment, statute, rule or regulation applicable to
such Stockholder or any of such Stockholder's properties or assets.
(d) Except for the shares of Company Common Stock owned by the
Kleinknechts identified in Schedule II hereto (the "Pledged Shares"), such
Stockholder's Shares and the certificates representing such Shares are now
and at all times during the term hereof will be held by such Stockholder, or
by a nominee or custodian for the benefit of such Stockholder, free and clear
of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
(e) No broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar fee
or commission in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of such Stockholder in his or her
capacity as such.
(f) Such Stockholder understands and acknowledges that Merger Subsidiary
is entering into the Merger Agreement in reliance upon such Stockholder's
execution and delivery of this Agreement with Merger Subsidiary.
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<PAGE>
Section 3. Representations and Warranties of Merger Subsidiary.
Merger Subsidiary hereby represents and warrants to each Stockholder as follows:
(a) Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation.
(b) Merger Subsidiary has all necessary power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Merger
Subsidiary of this Agreement and the consummation by Merger Subsidiary of
the transactions contemplated hereby have been duly and validly authorized
and approved by all required corporate action other than shareholder
approval which shall be effected prior to the Effective Time. This
Agreement has been duly executed and delivered by Merger Subsidiary, and
(assuming due authorization, execution and delivery by the Stockholders)
constitutes a valid and binding obligation of Merger Subsidiary,
enforceable against it in accordance with its terms, except as limited by
(a) bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditor's rights generally, (b) general principles of
equity, whether such enforceability is considered in a proceeding in equity
or at law, and to the discretion of the court before which any proceeding
therefor may be brought, or (c) public policy considerations or court
decisions which may limit the rights of the parties thereto for
indemnification.
(c) Except for the filing of a pre-merger notification and report
form under the HSR Act, the execution and delivery of this Agreement do
not, and the consummation by Merger Subsidiary of the transactions
contemplated by this Agreement and compliance by Merger Subsidiary with the
provisions of this Agreement will not, conflict with, or result in any
breach or violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation
or acceleration of or "put" right with respect to any obligation or to loss
of a material benefit under, or result in the creation of any lien upon any
of the properties or assets of Merger Subsidiary under, (i) any charter or
by-laws of Merger Subsidiary, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Merger Subsidiary or its
properties or assets or (iii) any judgment, order, decree, statute, law,
ordinance, rule, regulation or arbitration award applicable to Merger
Subsidiary or its properties or assets. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notice
to, any state or federal public body or authority is required by or with
respect to Merger Subsidiary in connection with the execution and delivery
of this Agreement by Merger Subsidiary or the consummation by Merger
Subsidiary of any of the transactions contemplated by this Agreement.
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<PAGE>
Section 4. Agreement to Vote; Proxy
(a) Each Stockholder hereby, severally and not jointly, agrees that,
until the Termination Date (as defined in Section 12), at any meeting of
the Company Stockholders, however called, or in connection with any written
consent of the Company Stockholders, such Stockholder shall vote (or cause
to be voted) the Shares held of record or beneficially by such Stockholder
(i) in favor of the Merger, the execution and delivery by the Company of
the Merger Agreement and the approval of the terms thereof and each of the
other actions contemplated by the Merger Agreement and this Agreement and
any actions required in furtherance hereof and thereof; (ii) against any
action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or this Agreement; (iii) in favor of the
incentive stock option plan referred to in Section 5(l) of the Merger
Agreement; and (iv) against the following actions (other than the Merger
and the transactions contemplated by the Merger Agreement or any such
actions identified in writing by Merger Subsidiary in advance): (A) any
extraordinary corporate transaction, including, without limitation, a
merger, consolidation or other business combination involving the Company
or its Subsidiaries; (B) a sale, lease or transfer of a material amount of
assets of the Company or its Subsidiaries or a reorganization,
recapitalization, dissolution or liquidation of the Company or its
Subsidiaries; (C) any change in the majority of the board of directors of
the Company; (D) any material change in the present capitalization of the
Company or any amendment of the Company's Certificate of Incorporation or
By-Laws; (E) any other material change in the Company's corporate structure
or business; or (F) any other action which is intended, or could reasonably
be expected, to impede, interfere with, delay, postpone, discourage or
materially adversely affect the Merger or the transactions contemplated by
the Merger Agreement or this Agreement. Such Stockholder shall not enter
into any agreement or understanding with any person or entity to vote or
give instructions in any manner inconsistent with clauses (i), (ii) or
(iii) of the preceding sentence.
(b) EACH STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS, MERGER
SUBSIDIARY AND ANY DESIGNEE OF MERGER SUBSIDIARY, EACH OF THEM
INDIVIDUALLY, SUCH STOCKHOLDER'S IRREVOCABLE (UNTIL THE TERMINATION DATE)
PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE THE
SHARES AS SET FORTH IN SECTION 4.1 ABOVE. EACH STOCKHOLDER INTENDS THIS
PROXY TO BE IRREVOCABLE (UNTIL THE TERMINATION DATE) AND COUPLED WITH AN
INTEREST AND WILL TAKE SUCH FURTHER ACTION AND EXECUTE SUCH OTHER
INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND
HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY SUCH STOCKHOLDER WITH
RESPECT TO SUCH STOCKHOLDER'S SHARES.
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<PAGE>
Section 5. Certain Covenants of Stockholders. Except in accordance
with the terms of this Agreement, each Stockholder hereby severally covenants
and agrees as follows:
(a) Prior to the Termination Date, no Stockholder shall, in its
capacity as such, directly or indirectly (including through advisors,
agents or other intermediaries), solicit (including by way of furnishing
information) or respond to any inquiries or the making of any proposal by
any person or entity (other than Merger Subsidiary or any Affiliate
thereof) with respect to the Company that constitutes or could reasonably
be expected to lead to an Acquisition Proposal (as defined in Section 5(j)
of the Merger Agreement), provided, however, that the foregoing shall not
restrict a Stockholder who is also a director of the Company from taking
any actions in such Stockholder's capacity as a director. If any
Stockholder in its capacity as such receives any such inquiry or proposal,
then such Stockholder shall promptly inform Merger Subsidiary of the
material terms and conditions, if any, of such inquiry or proposal and the
identity of the person making it. Each Stockholder, in its capacity as
such, will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(b) Prior to the Termination Date, no Stockholder shall, directly or
indirectly (i) except pursuant to the terms of the Merger Agreement or this
Agreement, offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, enforce or permit the execution of the provisions
of any redemption agreement with the Company or enter into any contract,
option or other arrangement or understanding with respect to or consent to
the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment
or other disposition of, or exercise any discretionary powers to
distribute, any or all of such Stockholder's Shares or any interest
therein, including any trust income or principal, except in each case to a
Permitted Transferee who is or agrees to become bound by this Agreement;
(ii) except as contemplated hereby, grant any proxies or powers of attorney
with respect to any Shares, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares; or (iii) take any
action that would make any representation or warranty of such Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling such Stockholder from performing such Stockholder's obligations
under this Agreement.
(c) Each Stockholder hereby waives any rights of appraisal or rights
to dissent from the Merger that such Stockholder may have. Each Trustee
represents that no beneficiary who is a beneficial owner of Shares under
any trust has any right of appraisal or right to dissent from the Merger
which has not been so waived.
(d) Subject to the terms and provisions of the Merger Agreement, in
connection with the Merger, the Rollover Stockholder hereby agrees to elect
to retain an aggregate of 380,952 shares of Surviving Corporation Common
Stock upon conversion
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of, and with respect to, 380,952 of such Rollover Stockholder's Shares
(the "Rollover Shares") unless otherwise agreed with Merger Subsidiary.
(e) The Kleinknechts shall cause (i) KEC-NY to enter into the Amended
and Restated Labor Pooling Agreement between KEC-NY and the Company,
substantially in the form of Exhibit A-1 attached hereto, and (ii) KEC-NJ
to enter into the Amended and Restated Labor Pooling Agreement between
KEC-NJ and the Company, substantially in the form of Exhibit A-2 attached
hereto (collectively, the "Amended and Restated Labor Pooling Agreements").
(f) Richard Kleinknecht shall enter into the Investors Agreement
among the Company, Cable Systems Holding LLC, Cable Systems International
Inc. and certain other parties named therein.
(g) Unless, in connection therewith, the Shares held by any trust
which are presently subject to the terms of this Agreement are transferred
to one or more Stockholders and remain subject in all respects to the terms
of this Agreement, or other Permitted Transferees who upon receipt of such
Shares become signatories to this Agreement, the Stockholders who are
Trustees shall not take any action to terminate, close or liquidate any
such trust and shall take all steps necessary to maintain the existence
thereof at least until the first to occur of (i) the Effective Time and
(ii) the Termination Date.
(h) The Rollover Stockholder shall take all actions necessary to
cause any Rollover Shares that constitute Pledged Shares, prior to the
Effective Time, to be free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder.
Section 6. Non-Competition.
(a) For a period of three years after the Effective Time, except as
contemplated or permitted under the Merger Agreement, the Amended and
Restated Labor Pooling Agreements, the Corporate Opportunity Agreement, the
Investors Agreement, dated the date hereof, among the Company and the other
parties named therein, the Amended and Restated Employment Agreement, dated
as of the Effective Date between Richard Kleinknecht and the Company (the
"Richard Kleinknecht Employment Agreement"), or the Amended and Restated
Employment Agreement, dated the Effective Date, between Peter Kleinknecht
and the Company (the "Peter Kleinknecht Employment Agreement" and, together
with the Richard Kleinknecht Employment Agreement, the "Amended and
Restated Employment Agreements") each of the Kleinknechts severally agrees,
and shall cause each of their respective Affiliates, including, without
limitation, KEC-NY and KEC-NJ, to agree, that any such Person shall
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not, directly or indirectly, through any Person Controlled by either of the
Kleinknechts in any form or manner within any jurisdiction in which the
Company or any of its Affiliates are doing business: (i) engage in the
Business (as defined herein) for his or their own account or for the
account of any other Person, or (ii) become interested in any Person
engaged in the Business as a partner, shareholder, member, principal,
agent, employee, trustee, consultant or in any other relationship or
capacity; provided, however, that either of the Kleinknechts may own,
directly or indirectly, solely as a passive investment, securities of any
Person if either of the Kleinknechts or any of their respective Affiliates,
as the case may be (1) is not a Person in Control of, or a member of a
group that Controls, such Person and (2) does not, directly or indirectly,
own 5% or more of any voting class of securities of such Person.
(b) In perpetuity and on a worldwide basis, except as contemplated or
permitted under the Merger Agreement, each of the Kleinknechts severally
agrees, and shall cause each of their respective Affiliates including,
without limitation, KEC-NY or KEC-NJ to agree, that such Person shall not,
directly or indirectly, disclose to any other party, unless required to do
so by law or court order, any confidential, non-public or proprietary
information relating to the Company or to any Subsidiary or joint venture
thereof which information was acquired during the course of such Person's
relationship with the Company, except information which (i) becomes known
to such Person from a source other than the Company, its directors,
officers or employees, which source is not obligated to the Company to keep
such information confidential or (ii) becomes generally available to the
public through no breach of this Agreement by the Kleinknechts.
(c) For a period ending on the later to occur of (i) three years
after the Effective Time and (ii) the expiration or termination of the
Amended and Restated Labor Pooling Agreements, on a worldwide basis, except
as contemplated or permitted under the Merger Agreement or the Amended and
Restated Labor Pooling Agreements, each of the Kleinknechts severally
agrees that, without the prior written consent of the Company, the
Kleinknechts, any of their Affiliates or any business or enterprise with
which either of the Kleinknechts is associated as an officer, director or
controlling shareholder or other investor with the power to direct or cause
the direction of the management of such business or enterprise shall not
employ or attempt to employ an employee of the Company or any of its
subsidiaries or joint ventures (other than, with respect to Richard
Kleinknecht, his executive assistant).
(d) If either of the Kleinknechts breaches, or threatens to commit a
breach of, any of the provisions contained in this Section 6, the Company
shall have the following rights and remedies with respect to Richard or
Peter Kleinknecht, as the case may be, each of which rights and remedies
shall be independent of the others and severally enforceable, and each of
which is in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity:
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<PAGE>
(i) the right and remedy to have the provisions of this Section
6 specifically enforced by any court of competent jurisdiction and
Merger Subsidiary shall be entitled to apply for and receive
injunctive relief in order to prevent the continuation of any existing
breach or the occurrence of any threatened breach, it being agreed
that any breach or threatened breach of the provisions of this Section
6 would cause irreparable injury to the Company and that money damages
would not provide an adequate remedy to the Company.
(e) Each of the Kleinknechts agrees that the provisions of this
Section 6 are reasonable and valid in geographical and temporal scope and
in all other respects. If any court determines that the provisions of this
Section 6, or any part thereof, is unenforceable because of the duration or
geographical scope of such provision, such court shall have the power to
reduce the duration or scope of such provision, as the case may be, and, in
its reduced form, such provision shall be enforceable.
(f) If any court determines that the provisions of this Section 6, or
any part thereof, is invalid or unenforceable, the remainder of the
provisions of this Section 6 shall not thereby be affected and shall be
given full effect without regard to invalid portions.
Section 7. Termination of Certain Agreements. Effective immediately
prior to the Effective Time and without further action by the parties hereto,
each of (a) the Employment Agreement, dated May 9, 1994, between the Company and
Peter Kleinknecht, (b) the Employment Agreement, dated May 9, 1994, between the
Company and Richard Kleinknecht, (c) Registration Rights Agreement, dated as of
May 9, 1994, between the Company, Richard Kleinknecht and Peter Kleinknecht and
(d) all special compensation arrangements for the Kleinknechts (other than those
set forth in the Amended and Restated Employment Agreements), in each case shall
terminate without any obligation or liability to the Company and shall be of no
further force and effect.
Section 8. Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further action
as may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
Section 9. Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to such Stockholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including without limitation such Stockholder's heirs, guardians,
administrators or successors or as a result of any divorce.
Section 10. Stop Transfer. Each Stockholder agrees with, and covenants
to, Merger Subsidiary that such Stockholder shall not request that the Company
register the transfer (book-
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entry or otherwise) of any certificate or uncertificated interest
representing any of such Stockholder's Shares, unless such transfer is made
in compliance with this Agreement.
Section 11. Rule 145 Affiliates. Each Stockholder who is an "affiliate"
of the Company for purposes of Rule 145 under the Securities Act of 1933, as
amended, hereby agrees to deliver to Merger Subsidiary, on or prior to the
Closing Date (as defined in the Merger Agreement) a written agreement as
contemplated by Section 5(o) of the Merger Agreement.
Section 12. Termination. The obligations of the Stockholders and the
irrevocable proxy contained in Section 4(b) of this Agreement shall terminate
upon the first to occur of (a) the Effective Time and (b) the date the Merger
Agreement is terminated in accordance with its terms (the "Termination
Date"); provided that the provisions of Sections 2, 3 and 13 and any claim
for breach of any representation, warranty, covenant or other agreement under
this Agreement shall survive the Effective Time and/or the Termination Date,
as applicable.
Section 13. Miscellaneous.
(a) All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to
have been duly received if so given) by hand delivery, telegram, telex or
telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service providing proof of delivery.
All communications hereunder shall be delivered to the respective parties
at the following addresses:
If to the Stockholders: Richard Kleinknecht
15 Banbury Lane
Huntington, NY 11743
copy to: White & Case
1155 Avenue of the Americas
New York, NY 10036
Attn: Edward F. Rover, Esq.
Telecopier: (212) 354-8113
If to Merger Subsidiary: Arizona Acquisition Corp.
c/o Cable Systems Holding LLC
505 North 51st Avenue
Phoenix, Arizona 85043-2701
Attn: President
Telecopier: 602-233-5782
-12-
<PAGE>
copy to: Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor, Zone 4
New York, NY 10043
Attn: Richard M. Cashin, Jr.
Telecopier: 212-888-2940
and: Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Attn: Philip H. Werner, Esq.
Telecopier: 212-309-6273
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above.
(b) At any time prior to the Effective Time, any party hereto may,
with respect to any other party hereto, (i) extend the time for the
performance of any of the obligations or other acts, (ii) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto or (iii) waive compliance with any
of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
(c) The headings contained in this Agreement are for the convenience
of reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(d) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy,
all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance
of the transactions contemplated by the Merger Agreement is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner.
(e) This Agreement, including all exhibits, disclosure schedules and
schedules hereto, constitutes the entire agreement and supersedes all prior
agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof and except as
otherwise expressly provided herein.
-13-
<PAGE>
(f) Neither this Agreement nor any of the rights or obligations
hereunder may be assigned by any party (whether by operation of law or
otherwise) without the prior written consent of the other parties hereto.
Subject to the preceding sentence, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and permitted assigns, and no other Person shall have any right, benefit or
obligation under this Agreement as a third party beneficiary or otherwise.
(g) The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed
in accordance with their specific terms. It is accordingly agreed that the
parties hereto shall be entitled to specific performance of the terms
hereof, this being in addition to any other remedy to which they are
entitled at law or in equity.
(h) No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to
be a waiver of, or acquiescence in, any breach of any representation,
warranty or agreement herein, nor shall any single or partial exercise of
any such right preclude other or further exercise thereof or of any other
right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
(i) Notwithstanding anything herein to the contrary, no Person
executing this Agreement who is, or becomes during the term hereof, a
director of the Company makes any agreement or understanding herein in his
or her capacity as such director, and the agreements set forth herein shall
in no way restrict any director in the exercise of his or her fiduciary
duties as a director of the Company. Each Stockholder has executed this
Agreement solely in his or her capacity as the record or beneficial holder
of such Stockholder's Shares or as the trustee of a trust whose
beneficiaries are the beneficial owners of such Stockholder's Shares.
(j) Each party agrees to bear its own expenses in connection with the
transactions contemplated hereby.
(k) This Agreement shall be governed and construed in accordance
with the laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of New
York, except to the extent that the General Corporation Law of the State of
Delaware applies as a result of the Company being incorporated in the State
of Delaware, in which case such General Corporation Law shall apply.
(l) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS
-14-
<PAGE>
CONTEMPLATED BY THE MERGER AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(m) This Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
(n) Each of the Stockholders hereby acknowledges that, for purposes
of Title IV of the Employee Retirement Income Security Act of 1974, as
amended, IPC and IXNET may become members of a controlled group of
corporations that includes Citicorp Venture Capital, Ltd. and its
Affiliates.
[Signature Page to Follow]
-15-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ARIZONA ACQUISITION CORP.
By: /s/ Peter A. Woog
___________________________
Name: Peter A. Woog
Title: President
STOCKHOLDERS:
/s/ Richard P. Kleinknecht
______________________________
Richard P. Kleinknecht
/s/ Peter J. Kleinknecht
______________________________
Peter J. Kleinknecht
KLEINKNECHT 1997 ANNUITY TRUST
By: /s/ Richard P. Kleinknecht
___________________________
Name: Richard P. Kleinknecht
Title: Agent
ERIC KLEINKNECHT
REVOCABLE TRUST
By: /s/ Richard P. Kleinknecht
___________________________
Name: Richard P. Kleinknecht
Title: Agent
-16-
<PAGE>
MARK KLEINKNECHT
REVOCABLE TRUST
By: /s/ Richard P. Kleinknecht
___________________________
Name: Richard P. Kleinknecht
Title: Agent
LISA KLEINKNECHT
REVOCABLE TRUST
By: /s/ Richard P. Kleinknecht
___________________________
Name: Richard P. Kleinknecht
Title: Agent
/s/ Lisa Kleinknecht
______________________________
Lisa Kleinknecht
PETER J. KLEINKNECHT 1996
GRANTOR RETAINED
ANNUITY TRUST
By: /s/ Peter J. Kleinknecht
___________________________
Name: Peter J. Kleinknecht
Title:
MAUREEN KLEINKNECHT 1996
GRANTOR RETAINED
ANNUITY TRUST
By: /s/ Maureen Kleinknecht
___________________________
Name: Maureen Kleinknecht
Title:
-17-
<PAGE>
/s/ Sabrina Kleinknecht
______________________________
Sabrina Kleinknecht
/s/ Gavin Kleinknecht
______________________________
Gavin Kleinknecht
/s/ Keir Kleinknecht
______________________________
Keir Kleinknecht
/s/ Russell G. Kleinknecht
______________________________
Russell G. Kleinknecht
-18-
<PAGE>
SCHEDULE I
EXISTING SHARES
Shareholder No. Of Existing Shares
- ----------- ----------------------
Richard P. Kleinknecht 1,552,273
Peter Kleinknecht 2,240,999
Kleinknecht 1997 Annuity Trust 1,000,000
Eric Kleinknecht Revocable Trust 300,575
Mark Kleinknecht Revocable Trust 300,275
Lisa Kleinknecht Revocable Trust 300,275
Lisa Kleinknecht 298
Peter J. Kleinknecht 1996 Grantor Retained Annuity Trust 155,637
Maureen Kleinknecht 1996 Grantor Retained Annuity Trust 155,637
Sabrina Kleinknecht 300,075
Gavin Kleinknecht 300,075
Keir Kleinknecht 300,075
Russell G. Kleinknecht 46,574
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<PAGE>
SCHEDULE II
PLEDGED SHARES
Any and all shares of Existing Shares pledged by the Kleinknechts pursuant to
(a) the Pledge Agreement, dated April 28, 1994, by the Kleinknechts and
Citibank, N.A. and National Westminster Bank NJ, (b) the Pledge Agreement,
dated October 6, 1995, between the Kleinknechts and The Chase Manhattan Bank
(National Association) and (c) the Pledge Agreement, dated April 15, 1996,
between Peter J. Kleinknecht and Maureen Kleinknecht and Smith Barney Inc.
-20-
<PAGE>
EXHIBIT 5
IPC INFORMATION SYSTEMS, INC.
STOCK OPTION 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. Options granted under the Plan are not intended to qualify as
incentive stock options pursuant to Section 422 of the Internal Revenue Code of
1986, as amended.
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
<PAGE>
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 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 has agreed to perform services for the Corporation, other
than as an Employee or Director.
(g) "Corporation" means IPC Information Systems, Inc., a Delaware
corporation.
(h) "Director" means any member of the Board.
(i) "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.
(j) "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.
2
<PAGE>
(k) "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. 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.
(l) "Grantee" means a person granted an Option under the Plan.
(m) "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.
(n) "Option" means an option granted pursuant to the Plan to purchase
shares of the Common Stock.
(o) "Plan" means this Stock Option Plan as set forth herein and as amended
from time to time.
(p) "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder as presently in effect or hereafter amended.
(q) "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.
(r) "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 [554,112]
shares in the aggregate [12% 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
3
<PAGE>
are forfeited, lapse or terminate in whole or in part for any reason, shall be
available for issuance pursuant to other Options.
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 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;
(iv) 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;
(v) to determine the restrictions or conditions related to the
delivery, holding and disposition of shares of Common Stock received upon
exercise of an Option, and
(vi) to prescribe the form of each Stock Option Agreement, which need
not be identical for each Grantee;
(vii) 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;
(viii) 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
4
<PAGE>
(ix) 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.
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
5
<PAGE>
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) 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.
(b) 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.
(c) 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) 90 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;
provided, however, that during any such 90-day period, the Options shall be
exercisable only to the extent vested and exercisable as of the date of such
termination;
(iii) 180 days 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 180-day period,
the Options shall be exercisable only to the extent vested and exercisable as of
the date of such termination;
(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(b)), 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
the Grantee of consummation of such transaction at least ten days in advance
thereof.
6
<PAGE>
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 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
7
<PAGE>
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, 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.
8
<PAGE>
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 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.
9
<PAGE>
EXHIBIT 6
INVESTORS AGREEMENT
dated as of
December 18, 1997
among
IPC INFORMATION SYSTEMS, INC.
CABLE SYSTEMS HOLDING, LLC
AND
CERTAIN OTHER PERSONS NAMED HEREIN
________________
* Cable Systems International, Inc. to be added as a signatory in the
event CSI owns IPC stock.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS
Section 1.01. Definitions.....................................................1
ARTICLE 2 CORPORATE GOVERNANCE AND MANAGEMENT
Section 2.01. Composition of the Board........................................6
Section 2.02. Removal.........................................................7
Section 2.03. Vacancies.......................................................7
Section 2.04. Action by the Board.............................................7
Section 2.05. Conflicting Charter or Bylaw Provision..........................8
Section 2.06. IXNET Board.....................................................8
ARTICLE 3 RESTRICTIONS ON TRANSFER
Section 3.01. General.........................................................8
Section 3.02. Legends.........................................................8
Section 3.03. Permitted Transferees...........................................9
Section 3.04. Restrictions on Transfers by Kleinknecht Shareholders...........9
Section 3.05. Restrictions on Transfers by Walsh Shareholders and Servidio
Shareholders....................................................9
ARTICLE 4 TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS
Section 4.01. Rights to Participate in Transfer..............................10
Section 4.02. Right to Compel Participation in Certain Transfers.............12
ARTICLE 5 REGISTRATION RIGHTS
Section 5.01. Demand Registration............................................13
Section 5.02. Piggyback Registration.........................................16
Section 5.03. Holdback Agreements............................................17
Section 5.04. Registration Procedures........................................17
Section 5.05. Indemnification by the Company.................................20
Section 5.06. Indemnification by Participating Shareholders..................21
Section 5.07. Conduct of Indemnification Proceedings.........................21
Section 5.08. Contribution...................................................22
Section 5.09. Participation in Public Offering...............................23
Section 5.10. Rule 144.......................................................24
Section 5.11. No Transfer of Registration Rights.............................24
ARTICLE 6 CERTAIN COVENANTS AND AGREEMENTS
Section 6.01. Limitations on Subsequent Registration.........................24
Section 6.02. Limitation on Purchase of Common Stock.........................24
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ARTICLE 7 MISCELLANEOUS
Section 7.01. Entire Agreement...............................................25
Section 7.02. Binding Effect; Benefit........................................25
Section 7.03. Assignability..................................................25
Section 7.04. Amendment; Waiver; Termination.................................25
Section 7.05. Notices........................................................26
Section 7.06. Headings.......................................................28
Section 7.07. Counterparts...................................................28
Section 7.08. Governing Law..................................................28
Section 7.09. Specific Enforcement...........................................29
Section 7.10. Certain Actions................................................29
Section 7.11. Consent to Jurisdiction; Expenses..............................29
Section 7.12. Severability...................................................30
Section 7.13. Additional Stockholder.........................................30
Section 7.14. Schedule I.....................................................30
Section 7.15 Effectiveness..................................................30
Schedule I Securities Ownership
Exhibit A Form of Joinder Agreement
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INVESTORS AGREEMENT
INVESTORS AGREEMENT, dated as of December 18, 1997, among (i) IPC
Information Systems, Inc. (the "Company"), (ii) Cable Systems Holding, LLC, a
Delaware limited liability company ("CSH"), and (iii) Richard Kleinknecht,
(iv) David Walsh and (v) Anthony Servidio.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Merger Agreement (as defined
below), Arizona Acquisition Corp. will be merged with and into the Company,
with the Company as the surviving corporation (the "Merger");
WHEREAS, at the Effective Time (as defined in the Merger Agreement)
the parties hereto will hold securities of the Company as set forth on
Schedule I to be attached hereto at the Effective Time;
WHEREAS, the parties hereto desire to enter into this Agreement to
govern certain of their rights, duties and obligations after consummation of
the transactions contemplated by the Merger Agreement;
The parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
Section 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"Adverse Person" means any Person whom the Board of Directors of the
Company may reasonably determine to be a competitor or a potential competitor
of the Company or its Subsidiaries.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with such Person, provided that no securityholder of the Company shall be
deemed an Affiliate of any other securityholder solely by reason of any
investment in the Company. For the purpose of this definition, the term
"control" (including with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession,
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directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities or by contract or otherwise.
"beneficially own" shall have the meaning set forth in Rule 13d-3 of
the Exchange Act.
"Board" means the board of directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York City are authorized by law to close.
"Change of Control" means such time as (a) the CSH Shareholders
shall own less than 20% of the outstanding shares of Common Stock, (b) the
transfer of all or substantially all of the assets of the Company to any
Person or group shall have been consummated, or (c) the Company shall have
been liquidated.
"Closing Date" shall have the meaning ascribed thereto in the Merger
Agreement.
"Common Stock" shall mean the common stock, par value $.01 per
share, of the Company and any stock into which such Common Stock may
thereafter be converted or changed; provided, however, that in the event of a
stock dividend, split-up, recapitalization, combination, exchange of stock or
the like in respect of such Common Stock, the term "Common Stock" shall be
deemed to refer to and include the stock as well as all stock dividends and
distributions and any stock into which or for which any or all of such stock
may be changed or exchanged.
"CSH Entities" means (a) CSH and (b) Cable Systems International
Inc., a Delaware Corporation, if it becomes a party hereto pursuant to
Section 7.13.
"CSH Shareholders" means the CSH Entities and their direct and
indirect Permitted Transferees so long as any such Person shall beneficially
own any Common Stock.
"Drag-Along Portion" means, with respect to any Kleinknecht
Shareholder, any Walsh Shareholder or any Servidio Shareholder, the number of
Shares beneficially owned by such Kleinknecht Shareholder, Walsh Shareholder
or Servidio Shareholder multiplied by a fraction, the numerator of which is
the number of Shares to be sold by the CSH Shareholders on behalf of the CSH
Shareholders and the Kleinknecht Shareholders, the Walsh Shareholders and the
Servidio Shareholders and the denominator of which is the total number of
Shares then beneficially owned by all of the Shareholders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Fully Diluted" means all outstanding shares of Common Stock and all
shares issuable in respect of securities convertible into or exchangeable or
exercisable for such Common Stock, stock appreciation rights or options,
warrants and other irrevocable rights to purchase or subscribe for such
Common Stock or securities convertible into or exchangeable or exercisable
for such Common Stock; provided that no Person shall be deemed to own such
number of Fully Diluted shares of any Common Stock as such Person has the
right to acquire from any Person other than the Company.
"Initial Ownership" means, with respect to any Shareholder, the
number of shares of Common Stock beneficially owned (and (without
duplication) which such Persons have the right to acquire from any Person) as
of the Effective Time, or in the case of any Person that shall become a party
to this Agreement on a later date, as of such date, taking into account any
stock split, stock dividend, reverse stock split or similar event.
"Kleinknecht Shareholders" means Richard Kleinknecht and his direct
and indirect Permitted Transferees so long as any such Person shall
beneficially own any Common Stock.
"Merger Agreement" means the Agreement and Plan of Merger dated as
of the date hereof, as subsequently amended, between the Company and Arizona
Acquisition Corp.
"Permitted Transferee" means (i) in the case of any Shareholder who
is a natural person, (a) a spouse or lineal descendent (including by adoption
and stepchildren), heir, executor, testamentary trustee or legatee of such
Shareholder or (b) any trust or estate the beneficiaries of which, or any
corporation, limited liability company or partnership, the stockholders,
members or partners of which include only the Persons described in clause (a)
above, and (ii) in the case of any CSH Shareholder, (a) Citicorp Venture
Capital, Ltd., any stockholder, member, partner or Affiliate of any such CSH
Shareholder or of Citicorp Venture Capital, Ltd. and any officer, director,
or employee of any such CSH Shareholder, Citicorp Venture Capital, Ltd. or of
any such stockholder, member, partner or Affiliate, (b) a spouse or lineal
descendant (including by adoption and stepchildren), heir, executor,
testamentary trustee or legatee of the officers, directors and employees
referred to in clause (ii)(a) above, and any trust or estate (where a
majority in interest of the beneficiaries thereof are any of the Persons
described in this clause (b) and in clause (ii)(a) above), corporation,
limited liability company or partnership (where a majority in interest of the
stockholders, members or limited partners, or where the managing general
partner, is one of more of the Persons described in this clause (b) or in
clause (ii)(a) above.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
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"Pro Rata Portion" means the number of Shares a Shareholder holds
multiplied by a fraction, the numerator of which is the number of Shares to
be sold by the CSH Shareholders, the Kleinknecht Shareholders, the Walsh
Shareholders and the Servidio Shareholders in a Public Offering and the
denominator of which is the total number of Shares, on a Fully Diluted basis,
held in the aggregate by the CSH Shareholders, the Kleinknecht Shareholders,
the Walsh Shareholders and the Servidio Shareholders immediately prior to
such Public Offering.
"Public Offering" means any primary or secondary public offering of
shares of Common Stock pursuant to an effective registration statement under
the Securities Act other than pursuant to a registration statement filed in
connection with a transaction of the type described in Rule 145 of the
Securities Act or for the purpose of issuing securities pursuant to an
employee benefit plan.
"Registrable Securities" means at any time, with respect to any
Shareholder, any shares of Common Stock then owned by such Shareholder until
(i) a registration statement covering such securities has been declared
effective by the SEC and such securities have been disposed of pursuant to
such effective registration statement, (ii) such securities are sold to the
public pursuant to Rule 144 (or any similar provisions then in force) under
the Securities Act or (iii) such securities are otherwise transferred, the
Company has delivered a new certificate or other evidence of ownership for
such securities not bearing the legend required pursuant to this Agreement
and such securities are freely tradeable without restriction by the holder
thereof under the Securities Act.
"Registration Expenses" means (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the securities registered), (iii) printing
expenses, (iv) internal expenses of the Company (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), (v) reasonable fees and disbursements
of counsel for the Company and customary fees and expenses for independent
certified public accountants retained by the Company (including expenses
relating to any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort
letters requested pursuant to Section 5.04(g) hereof), (vi) the reasonable
fees and expenses of any special experts retained by the Company in
connection with such registration, (vii) reasonable fees and expenses of up
to one counsel for the Shareholders participating in the offering, (viii)
fees and expenses in connection with any review of underwriting arrangements
by the National Association of Securities Dealers, Inc. (the "NASD"),
including fees and expenses of any "qualified independent underwriter" and
(ix) fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but shall not include any underwriting fees, discounts
or commissions attributable to the sale of Registrable Securities, or any
out-of-pocket expenses (except as set forth in clause (vii) above) of the
Shareholders.
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended.
"Servidio Shareholders" means Anthony Servidio and his direct and
indirect Permitted Transferees so long as any such Person shall beneficially
own any Common Stock.
"Shareholder" means each Person (other than the Company) who shall
be a party to this Agreement, whether in connection with the execution and
delivery hereof as of the date hereof, pursuant to Section 7.03 or otherwise,
so long as such Person shall beneficially own any Common Stock.
"Shares" means shares of Common Stock held by the Shareholders.
"Subject Securities" means the Common Stock beneficially owned by
the Kleinknecht Shareholders, the Walsh Shareholders and the Servidio
Shareholders to be transferred in a Section 4.02 Sale.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect
a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Tag-Along Portion" means the number of Shares held by the Tagging
Person or the Selling Person, as the case may be, multiplied by a fraction,
the numerator of which is the number of Shares proposed to be sold by the
Selling Person pursuant to Section 4.01, and the denominator of which is the
aggregate number of Shares, on a Fully Diluted basis, then owned by the
Selling Person.
"Third Party" means a prospective purchaser of Common Stock from a
Shareholder where such purchaser is not a Permitted Transferee of such
Shareholder or an entity in which such Shareholder or any of its Permitted
Transferees directly or indirectly owns any outstanding securities or other
ownership interests having ordinary voting power.
"Underwritten Public Offering" means a firmly underwritten public
offering of Registrable Securities of the Company pursuant to an effective
registration statement under the Securities Act.
"Walsh Shareholders" means Walsh and his direct and indirect
Permitted Transferees so long as any such Person shall beneficially own any
Common Stock.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
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Term Section
Cause 2.02
Demand Registration 5.01(a)
Drag-Along Rights 4.02(a)
Free Percentage 4.01(a)
Holders 5.01(a)(ii)
Indemnified Party 5.07
Indemnifying Party 5.07
Inspectors 5.04(g)
Joinder Agreement 3.03
Maximum Offering Size 5.01(e)
Nominee 2.03(a)
Piggyback Registration 5.02(a)
Records 5.04(g)
Section 4.01 Response Notice 4.01(a)
Section 4.02 Sale 4.02(a)
Section 4.02 Notice 4.02(a)
Section 4.02 Sale Price 4.02(a)
Section 4.02 Notice Period 4.02(a)
Selling Person 4.01(a)
Selling Shareholder 5.01(a)
Tag-Along Notice 4.01(a)
Tag-Along Notice Period 4.01(a)
Tag-Along Offer 4.01(a)
Tag-Along Right 4.01(a)
Tag-Along Sale 4.01(a)
Tagging Person 4.01(a)
Transfer 3.01(a)
Walsh Preamble
ARTICLE 2.
CORPORATE GOVERNANCE AND MANAGEMENT
Section 2.01. Composition of the Board. The Board shall consist of
nine members, of whom (i) three shall be nominated by the CSH Shareholders,
(ii) two shall be nominated by the CSH Shareholders and shall be individuals
which are not "Affiliates" or "Associates" (as those terms are used within
the meaning of Rule 12b-2 of the General Rules and Regulations under the
Exchange Act) of any Shareholder or its Affiliates, (iii) two shall be
nominated by the CSH Shareholders and shall be individuals who are executive
officers of the Company or its Subsidiaries and (iv) two shall be nominated
by the Kleinknecht Shareholders.
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Each Shareholder entitled to vote for the election of directors to the Board
agrees that it will vote its shares of Common Stock or execute consents, as
the case may be, and take all other necessary action (including causing the
Company to call a special meeting of shareholders) in order to ensure that
the composition of the Board is as set forth in this Section 2.01; provided
that, no Shareholder shall be required to vote for the CSH Shareholders' or
the Kleinknecht Shareholders' nominee(s) , as applicable, if the number of
Shares held by the group of Shareholders, as applicable, making the
nomination is, at the close of business on the day preceding such vote or
execution of consents, (x) less than 5% of the outstanding number of Shares
of Common Stock, in the case of the CSH Shareholders or (y) less than 50% of
its Initial Ownership of Common Stock, in the case of the Kleinknecht
Shareholders.
Section 2.02. Removal. Subject to applicable law, each Shareholder
agrees that if, at any time, it is then entitled to vote for the removal of
directors of the Company, it will not vote any of its Shares in favor of the
removal of any director who shall have been designated or nominated pursuant
to Section 2.01 unless such removal shall be for Cause or the Person(s)
entitled to designate or nominate such director shall have consented to such
removal in writing, provided that if the Persons entitled to designate or
nominate any director pursuant to Section 2.01 shall request the removal,
with or without Cause, of such director in writing, each such Shareholder
shall vote its shares of Common Stock in favor of such removal. Removal for
"Cause" shall mean removal of a director because of such director's (a)
willful and continued failure substantially to perform his duties with the
Company in his established position, (b) willful conduct which is injurious
to the Company or any of its Subsidiaries, monetarily or otherwise, (c)
conviction for, or guilty plea to, a felony or a crime involving moral
turpitude, or (d) abuse of illegal drugs or other controlled substances or
habitual intoxication.
Section 2.03. Vacancies. If, as a result of death, disability,
retirement, resignation, removal (with or without Cause) or otherwise, there
shall exist or occur any vacancy on the Board:
(a) The Shareholder(s) entitled under Section 2.01 to nominate such
director whose death, disability, retirement, resignation or removal resulted
in such vacancy, may, subject to the provisions of Section 2.01, nominate
another individual (the "Nominee") to fill such vacancy and serve as a
director of the Company; and
(b) each Shareholder then entitled to vote for the election of the
Nominee as a director of the Company agrees that it will vote its Shares, or
execute a written consent, as the case may be, in order to ensure that the
Nominee be elected to the Board; provided that, no Shareholder shall be
required to vote for another party's Nominee(s) if the aggregate number of
Shares held by the Shareholder or group of Shareholders, as applicable,
making the nomination is, at the close of business of the day preceding such
vote or execution of consents, less than (x) 5% of the outstanding number of
Shares of Common Stock, in the case of the CSH Shareholders or (y) less than
50% of the Initial Ownership of Common Stock, in the case of the Kleinknecht
Shareholders.
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Section 2.04. Action by the Board. (a) A quorum at any meeting of
the Board shall consist of five directors.
(b) All actions of the Board shall require the affirmative vote of
at least a majority of the directors present at a duly convened meeting of
the Board at which a quorum is present or the unanimous written consent of
the Board; provided that, in the event there is a vacancy on the Board and an
individual has been nominated to fill such vacancy, the first order of
business shall be to fill such vacancy.
Section 2.05. Conflicting Charter or Bylaw Provision. Each
Shareholder shall vote its Shares, and shall take all other actions
reasonably necessary, to ensure that the Company's certificate of
incorporation and bylaws are consistent with, facilitate and do not at any
time conflict with any provision of this Agreement.
Section 2.06. IXNET Board. For so long as (a) International
Exchange Network Ltd, a Delaware corporation ("IXNET") is a wholly-owned
Subsidiary of the Company and (b) David Walsh is an employee of IXNET, the
Company shall cause David Walsh to be a member of the board of directors of
IXNET.
ARTICLE 3.
RESTRICTIONS ON TRANSFER
Section 3.01 General. (a) Each Shareholder agrees that it will not,
directly or indirectly, sell, assign, transfer, grant a participation in,
pledge or otherwise dispose of ("transfer") any Common Stock (or solicit any
offers to buy or otherwise acquire, or take a pledge of any Common Stock)
except in compliance with the Securities Act and the terms and conditions of
this Agreement.
(b) Any attempt to transfer any Common Stock not in compliance with
this Agreement shall be null and void and the Company shall not, and shall
cause any transfer agent not to, give any effect in the Company's stock
records to such attempted transfer.
Section 3.02. Legends. (a) In addition to any other legend that may
be required, each certificate for shares of Common Stock that is issued to
any Shareholder shall bear a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN
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ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED. SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON TRANSFER AS SET FORTH IN THE INVESTORS
AGREEMENT DATED AS OF DECEMBER 18, 1997, COPIES OF WHICH MAY BE OBTAINED
UPON REQUEST FROM IPC INFORMATION SYSTEMS, INC. OR ANY SUCCESSOR THERETO."
(b) If any Common Stock shall cease to be subject to any and all
restrictions on transfer set forth in this Agreement, the Company shall, upon
the written request of the holder thereof, issue to such holder a new
certificate evidencing such Common Stock without the legend required by
Section 3.02(a) endorsed thereon.
Section 3.03. Permitted Transferees. Any Shareholder may at any
time transfer any or all of its Shares to one or more of its Permitted
Transferees without the consent of the Company or any Shareholder or group of
Shareholders and without compliance with Sections 3.04 and 4.01 so long as
(a) such Permitted Transferee shall have executed a Joinder Agreement
substantially in the form of Exhibit A hereto ("Joinder Agreement") and
thereby agreed to be bound by the terms of this Agreement and (b) the
transfer to such Permitted Transferee is not in violation of applicable
federal or state securities laws.
Section 3.04. Restrictions on Transfers by Kleinknecht Shareholders.
(a) Except as provided in Section 3.03, the Kleinknecht Shareholders may
transfer their Common Stock only as follows:
(i) in a transfer made in compliance with Section 4.01 or
Section 4.02;
(ii) in a Public Offering in connection with the exercise of
their rights under Article 5 hereof; or
(iii) following the earlier to occur of (i) the date on which
the number of Shares held by the Kleinknecht Shareholders is less
than 5% of the outstanding number of Shares of Common Stock and (ii)
the fifth anniversary of the Closing Date, to any Person other than
any Adverse Person.
(b) The restrictions set forth in Section 3.04 shall terminate at
such time as the aggregate number of Shares of Common stock held by the CSH
Shareholders is less than 50% of the CSH Shareholders' aggregate Initial
Ownership of Common Stock.
Section 3.05. Restrictions on Transfers by Walsh Shareholders and
Servidio Shareholders. Except as provided in Section 3.03, the Walsh
Shareholders and the Servidio Shareholders may transfer their Common Stock
only as follows:
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(i) in a transfer made in compliance with Section 4.01 of
Section 4.02; or
(ii) in any Public Offering; or
(iii) following the 30th month anniversary of the Closing Date,
to any Person other than any Adverse Person; or
(iv) to any Person, in a transfer through a broker or dealer in
compliance with Rule 144 (or any successor rule).
ARTICLE 4.
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS
Section 4.01. Rights to Participate in Transfer. (a) If CSH
Shareholders (the "Selling Person") propose to, directly or indirectly,
transfer (other than transfers of Shares (i) in a Public Offering, (ii) to
any Permitted Transferee of any of the CSH Shareholders or (iii) up to 3% in
the aggregate of the securities of such class outstanding on the date of the
first transfer of any Shares by any of the CSH Shareholders (such percentage,
the "Free Percentage")) shares of Common Stock (a "Tag-Along Sale"), the
Kleinknecht Shareholders and/or the Walsh Shareholders and/or the Servidio
Shareholders may, at their option, elect to exercise their rights under this
Section 4.01 (each such Shareholder, a "Tagging Person"). In the event of
such a proposed transfer, the Selling Person shall provide each Kleinknecht
Shareholder, each Walsh Shareholder and each Servidio Shareholder written
notice of the material terms and conditions of such proposed transfer
("Tag-Along Notice") and offer each Tagging Person the opportunity to
participate in such sale. The Tag-Along Notice shall identify the number of
shares of Common Stock subject to the offer ("Tag-Along Offer"), the
consideration for which the transfer is proposed to be made and all other
material terms and conditions of the Tag-Along Offer. Each Tagging Person
shall have the right (a "Tag-Along Right"), exercisable by irrevocable
written notice (a "Section 4.01 Response Notice") given within 10 Business
Days from receipt of the Tag-Along Notice (the "Tag-Along Notice Period") to
participate in such Tag-Along Sale on the same terms and conditions as set
forth in the Tag-Along Notice and to sell all or any portion of its Tag-Along
Portion. If the Tagging Persons exercise their Tag-Along Rights hereunder,
each Tagging Person shall deliver at least two business days prior to the
date scheduled for the closing of the Tag-Along Sale to the Selling Person
for delivery to the prospective transferee one or more certificates, in a
proper form for transfer, representing the Shares of such Tagging Person to
be included in the Tag-Along Sale. Such certificate or certificates that a
Tagging Person delivers to the Selling Person shall be delivered on the date
scheduled for the closing of the Tag-Along Sale to such transferee in
consummation of the Tag-Along Sale. Notwithstanding anything to the contrary
contained in this Section 4.01, except for the Selling Person's obligation to
return to each Tagging Person any certificates representing the Tagging
Person's Shares there shall be no
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liability on the part of the Selling Person to any Shareholder in the event
that the proposed Tag-Along Sale is not consummated for whatever reason.
Whether a Tag-Along Sale is effected pursuant to this Section 4.01 by the
Selling Person is in the sole and absolute discretion of the Selling Person.
(b) Concurrently with the consummation of the Tag-Along Sale, the
Selling Person shall notify the Tagging Persons thereof, shall remit to the
Tagging Persons the total consideration (by bank or certified check) for the
Shares of the Tagging Persons transferred pursuant thereto, and shall,
promptly after the consummation of such Tag-Along Sale, furnish such other
evidence of the completion and time of completion of such transfer and the
terms thereof as may be reasonably requested by the Tagging Persons.
(c) If at the termination of the Tag-Along Notice Period any
Tagging Person shall not have elected to participate in the Tag-Along Sale,
such Tagging Person will be deemed to have waived its rights under Section
4.01(a) with respect to the transfer of its securities pursuant to such
Tag-Along Sale.
(d) If any Tagging Person declines to exercise its Tag-Along Rights
or elects to exercise its Tag-Along Rights with respect to less than such
Tagging Person's Tag-Along Portion, the CSH Shareholders shall be entitled to
transfer, pursuant to the Tag-Along Offer, a number of Shares held by the CSH
Shareholders equal to the number of Shares constituting the portion of such
Tagging Person's Tag-Along Portion with respect to which Tag-Along Rights
were not exercised.
(e) The CSH Shareholders and any Tagging Person who exercises the
Tag-Along Rights pursuant to this Section 4.01 may consummate the Tag-Along
Sale on substantially the same terms and conditions set forth in the
Tag-Along Notice (provided, however, that the price payable in any such sale
may exceed the price specified in the Tag-Along Notice by up to 5%) within
120 days of the date on which Tag-Along Rights shall have been waived,
exercised or expire.
(f) The exercise or the non-exercise of the rights of the Tagging
Persons to participate in one or more Tag-Along Sales shall not adversely
affect their rights to participate in subsequent Tag-Along Sales subject to
this Section 4.01.
(g) The sale of the Selling Person's Shares in any Tag-Along Sale
shall be effected on the same terms and conditions as the sale of any Tagging
Person's Shares and no Selling Person shall receive any form of special
consideration or control premium in addition to the price payable for the
sold Shares.
(h) The right of the Kleinknecht Shareholders, the Walsh
Shareholders and the Servidio Shareholders to participate in a Tag-Along Sale
shall terminate at such time as the aggregate number of Shares held by the
Kleinknecht Shareholders, the Walsh Shareholders or the
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Servidio Shareholders, as the case may be, is less than 50% of their
aggregate Initial Ownership of Common Stock.
Section 4.02. Right to Compel Participation in Certain Transfers.
(a) If (i) the CSH Shareholders propose to transfer Shares representing not
less than 50% of their aggregate Initial Ownership of Common Stock to a Third
Party in a bona fide sale for cash negotiated on an arms-length basis, and
(ii) the CSH Shareholders propose a transfer in which the Shares to be
transferred by the CSH Shareholders, the Kleinknecht Shareholders, the Walsh
Shareholders and the Servidio Shareholders would constitute more than 50% of
the outstanding shares of Common Stock determined on a fully diluted basis (a
"Section 4.02 Sale"), the CSH Shareholders may at their option require all
Kleinknecht Shareholders, Walsh Shareholders and Servidio Shareholders to
sell the Subject Securities ("Drag-Along Rights") then held by every
Kleinknecht Shareholder, Walsh Shareholder, and Servidio Shareholders to such
Third Party, for the same consideration per share of Common Stock and
otherwise on the same terms and conditions as the CSH Shareholders. CSH
shall provide written notice of such Section 4.02 Sale to the Kleinknecht
Shareholders, the Walsh Shareholders and the Servidio Shareholders (a
"Section 4.02 Notice") not later than the 30th day prior to the proposed
Section 4.02 Sale. The Section 4.02 Notice shall identify the transferee,
the number of Subject Securities, the consideration for which a transfer is
proposed to be made (the "Section 4.02 Sale Price") and all other material
terms and conditions of the Section 4.02 Sale. The number of shares of
Common Stock to be sold by each Kleinknecht Shareholder, Walsh Shareholder
and Servidio Shareholders shall not exceed the Drag-Along Portion of the
shares of Common Stock that such Kleinknecht Shareholder, Walsh Shareholder
and Servidio Shareholders owns. Each Kleinknecht Shareholder, Walsh
Shareholder or Servidio Shareholder shall be required to participate in the
Section 4.02 Sale on the terms and conditions set forth in the Section 4.02
Notice and to tender all its Subject Securities as set forth below. The
price payable in such transfer shall be the Section 4.02 Sale Price. Each of
the Kleinknecht Shareholders, Walsh Shareholders or Servidio Shareholders
shall deliver not later than 2 Business Days prior to the date scheduled for
the Section 4.02 Sale to a representative of CSH designated in the Section
4.02 Notice certificates representing all Subject Securities held by such
Kleinknecht Shareholder, Walsh Shareholder and Servidio Shareholders duly
endorsed, together with all other documents required to be executed in
connection with such Section 4.02 Sale or, if such delivery is not permitted
by applicable law, an unconditional agreement to deliver such Subject
Securities pursuant to this Section 4.02 at the closing for such Section 4.02
Sale against delivery to such Kleinknecht Shareholder, Walsh Shareholder and
Servidio Shareholders of the consideration therefor. If a Kleinknecht
Shareholder, Walsh Shareholder or Servidio Shareholder should fail to deliver
such certificates to CSH, the Company shall cause the books and records of
the Company to show that such Subject Securities are bound by the provisions
of this Section 4.02 and that such Subject Securities shall be transferred to
the purchaser of the Subject Securities immediately upon surrender for
transfer by the holder thereof.
(b) The CSH Shareholders shall have a period of 120 days from the
date of receipt of the Section 4.02 Notice to consummate the Section 4.02
Sale on the terms and conditions set forth in such Section 4.02 Sale Notice.
If the Section 4.02 Sale shall not have been
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consummated during such period, CSH shall return to each of the Kleinknecht
Shareholders, each of the Walsh Shareholders and each of the Servidio
Shareholders all certificates representing Shares that such Kleinknecht
Shareholder, Walsh Shareholder or Servidio Shareholder, as the case may be,
may have delivered for transfer pursuant hereto, together with any documents
in the possession of CSH executed by the Kleinknecht Shareholder, the Walsh
Shareholder or the Servidio Shareholder, as the case may be, in connection
with such proposed transfer, and all the restrictions on transfer contained
in this Agreement or otherwise applicable at such time with respect to Common
Stock owned by the Kleinknecht Shareholders, the Walsh Shareholders and the
Servidio Shareholders shall again be in effect.
(c) Concurrently with the consummation of the transfer of Shares
pursuant to this Section 4.02, CSH or the Company, as applicable, shall remit
to each of the Shareholders who have surrendered their certificates the total
consideration (by bank or certified check) for the Shares transferred
pursuant hereto and shall furnish such other evidence of the completion and
time of completion of such transfer and the terms thereof as may be
reasonably requested by such Shareholders.
(d) In furtherance of, and not in limitation of the foregoing
provisions of this Section 4.02, in connection with a Section 4.02 Sale
(which Section 4.02 Sale may be structured as a merger, recapitalization,
reorganization, sale of assets or otherwise) each Kleinknecht Shareholder,
Walsh Shareholder or Servidio Shareholder will (i) consent to and raise no
objection against the Section 4.02 Sale or the process pursuant to which it
was arranged, (ii) waive any appraisal rights and other similar rights and
(iii) execute all documents containing such terms and conditions as those
executed by other Shareholders as directed by the CSH Shareholders.
(e) The sale of the CSH Shareholders' Shares in any Section 4.02
Sale shall be effected on the same terms and conditions as the sale of any
Shares owned by the Kleinknecht Shareholders, the Walsh Shareholders and the
Servidio Shareholders and no CSH Shareholder shall receive any form of
special consideration or control premium in addition to the price payable for
the sold Shares.
ARTICLE 5.
REGISTRATION RIGHTS
Section 5.01. Demand Registration. (a) If the Company shall
receive a written request by the CSH Shareholders (any such requesting
Person, a "Selling Shareholder") that the Company effect the registration
under the Securities Act of all or a portion of such Selling Shareholder's
Registrable Securities, and specifying the intended method of disposition
thereof, then the Company shall promptly give written notice of such
requested registration (a "Demand Registration") to the Kleinknecht
Shareholders, the Walsh Shareholders and the Servidio
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Shareholders, and thereupon will use its best efforts to effect, as
expeditiously as possible, the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by the Selling Shareholders, then held by the
Selling Shareholders; and
(ii) all other Registrable Securities of the same type as that to
which the request by the Selling Shareholders relates which any
Kleinknecht Shareholder, any Walsh Shareholder or any Servidio
Shareholder (all such Shareholders, together with the Selling
Shareholders, the "Holders") has requested the Company to register by
written request received by the Company within 10 days (one of which
shall be a Business Day) after the receipt by such Holders of such
written notice given by the Company, all to the extent necessary to
permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be
registered; provided that, subject to Section 5.01(d) hereof, the
Company shall not be obligated to effect more than five Demand
Registrations for the CSH Shareholders; and provided further that the
Company shall not be obligated to effect a Demand Registration unless
the aggregate proceeds expected to be received from the sale of the
Common Stock requested to be included in such Demand Registration, in
the reasonable opinion of CSH exercised in good faith, equals or
exceeds $7,500,000. In no event will the Company be required to
effect more than one Demand Registration within any four-month period.
(b) Promptly after the expiration of the 10-day period referred to
in Section 5.01(a)(ii) hereof, the Company will notify all the Holders to be
included in the Demand Registration of the other Holders and the number of
Registrable Securities requested to be included therein. The Selling
Shareholders requesting a registration under Section 5.01(a) may, at any time
prior to the effective date of the registration statement relating to such
registration, revoke such request, without liability to any of the other
Holders, by providing a written notice to the Company revoking such request,
in which case such request, so revoked, shall be considered a Demand
Registration unless such revocation arose out of the fault of the Company or
unless the participating Shareholders reimburse the Company for all costs
incurred by the Company in connection with such registration, in which case
such request shall not be considered a Demand Registration.
(c) The Company will pay all Registration Expenses in connection
with any Demand Registration.
(d) A registration requested pursuant to this Section 5.01 shall
not be deemed to have been effected unless the registration statement
relating thereto (i) has become effective under the Securities Act and (ii)
all of the Registrable Securities registered thereunder have been
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sold; provided that if, within 180 days after it has become effective, the
offering of Registrable Securities pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court such registration will be
deemed not to have been effected.
(e) If a Demand Registration involves an Underwritten Public
Offering and the managing underwriter shall advise the Company and the
Selling Shareholders that, in its view, (i) the number of shares of
Registrable Securities requested to be included in such registration
(including any securities which the Company proposes to be included which are
not Registrable Securities) or (ii) the inclusion of some or all of the
shares of Registrable Securities owned by the Holders, in any such case,
exceeds the largest number of shares which can be sold without having an
adverse effect on such offering, including the price at which such shares can
be sold (the "Maximum Offering Size"), the Company will include in such
registration, in the priority listed below, up to the Maximum Offering Size:
(A) first, all Registrable Securities requested to be registered
by the parties requesting such Demand Registration and all Registrable
Securities requested to be included in such registration by any other
Holder (allocated, if necessary for the offering not to exceed the
Maximum Offering Size, pro rata among such Holders on the basis of the
relative number of Registrable Securities so requested to be included
in such registration); and
(B) second, any securities proposed to be registered by the
Company.
(f) Upon written notice to each Selling Shareholder, the Company
may postpone effecting a registration pursuant to this Section 5.01 on one
occasion during any period of six consecutive months for a reasonable time
specified in the notice but not exceeding 90 days (which period may not be
extended or renewed), if (1) an investment banking firm of recognized
national standing shall advise the Company and the Selling Shareholders in
writing that effecting the registration would materially and adversely affect
an offering of securities of such Company the preparation of which had then
been commenced or (2) the Company is in possession of material non-public
information the disclosure of which during the period specified in such
notice the Company believes, in its reasonable judgment, would not be in the
best interests of the Company.
(g) After the Company has effected one Demand Registration by the
CSH Shareholders pursuant to this Section 5.01 of Common Stock, the
Kleinknecht Shareholders, upon request of the Kleinknecht Shareholders owning
a majority of the Shares acquired by the Kleinknecht Shareholders on the
Closing Date may request that the Company register Common Stock which are
Registrable Securities then owned by such Kleinknecht Shareholders. In no
event will the Company be required to effect more than two such Demand
Registrations by the Kleinknecht Shareholders. The other provisions of this
Article 5 applicable to Demand
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Registrations requested by the CSH Shareholders shall apply, mutatis
mutandis, to any such Demand Registration by the Kleinknecht Shareholders.
(h) If any registration requested pursuant to this Section 5.01
which is proposed by the Company to be effected by the filing of a
registration statement on form S-3 (or any successor or similar short-form
registration statement) shall be in connection with an Underwritten Public
Offering, and if the managing underwriter shall advise the Company in writing
that, in its opinion, the use of another form of registration statement is of
material importance to the success of such proposed offering, then such
registration shall be effected on such other form.
Section 5.02. Piggyback Registration. (a) If the Company proposes
to register any of its Common Stock under the Securities Act (other than
pursuant to a Demand Registration), it will each such time, subject to the
provisions of Section 5.02(b) hereof, give prompt written notice at least 15
days prior to the anticipated filing date of the registration statement
relating to such registration to all Shareholders which notice shall set
forth such Shareholders' rights under this Section 5.02 and shall offer all
Shareholders the opportunity to include in such registration statement such
number of shares of Common Stock as each such Shareholder may request (a
"Piggyback Registration"). Upon the written request of any such Shareholder
made within 10 days after the receipt of notice from the Company (which
request shall specify the number of shares of Common Stock intended to be
disposed of by such Shareholder), the Company will use its reasonable best
efforts to effect the registration under the Securities Act of all shares of
Common Stock which the Company has been so requested to register by such
Shareholders, to the extent requisite to permit the disposition of the shares
of Common Stock so to be registered; provided that (i) if such registration
involves an Underwritten Public Offering, all such Shareholders requesting to
be included in the Company's registration must sell their Registrable
Securities to the underwriters selected as provided in Section 5.04(f) on the
same terms and conditions as apply to the Company or the Selling Shareholder,
as applicable, and (ii) if, at any time after giving written notice of its
intention to register any stock pursuant to this Section 5.02(a) and prior to
the effective date of the registration statement filed in connection with
such registration, the Company shall determine for any reason not to register
such stock, the Company shall give written notice to all such Shareholders
and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration. No registration
effected under this Section 5.02 shall relieve the Company of its obligations
to effect a Demand Registration to the extent required by Section 5.01
hereof. The Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant to this
Section 5.02.
(b) If a registration pursuant to this Section 5.02 involves an
Underwritten Public Offering and the managing underwriter advises the Company
that, in its view, the number of shares of Common Stock which the Company and
the selling Shareholders intend to include in such registration exceeds the
Maximum Offering Size, the Company will include in such registration, in the
following priority, up to the Maximum Offering Size:
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(i) first, so much of the Common Stock proposed to be registered
for the account of the Company as would not cause the offering to
exceed the Maximum Offering Size; and
(ii) second, all Registrable Securities requested to be
included in such registration by any Shareholder pursuant to Section
5.02 (allocated, if necessary for the offering not to exceed the
Maximum Offering Size, pro rata among such Shareholders on the basis
of the relative number of shares of Registrable Securities so
requested to be included in such registration).
Section 5.03. Holdback Agreements. With respect to each and every
firmly underwritten Public Offering, each Shareholder agrees not to offer or
sell any shares of Common Stock (except for shares of Common Stock, if any,
sold in that Public Offering) during the 14 days prior to the effective date
of the applicable registration statement for a public offering of shares of
Common Stock (except as part of such registration) and during the period
after such effective date equal to the lesser of: (i) 180 days or (ii) any
such shorter period as the Company and the lead managing underwriter of an
Underwritten Public Offering agree.
Section 5.04. Registration Procedures. Whenever Shareholders
request that any Registrable Securities be registered pursuant to Section
5.01 or 5.02 hereof, the Company will, subject to the provisions of such
Sections, use its reasonable best efforts to effect the registration and the
sale of such Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with any
such request:
(a) The Company will as expeditiously as possible prepare and file
with the SEC a registration statement on any form selected by counsel for the
Company and which form shall be available for the sale of the Registrable
Securities to be registered thereunder in accordance with the intended method
of distribution thereof, and use its reasonable best efforts to cause such
filed registration statement to become and remain effective for a period of
not less than 180 days (or such shorter period in which all of the
Registrable Securities of the Holders included in such registration statement
shall have actually been sold thereunder).
(b) The Company will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to
each Shareholder and each underwriter, if any, of the Registrable Securities
covered by such registration statement copies of such registration statement
as proposed to be filed, and thereafter the Company will furnish to such
Shareholder and underwriter, if any, such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such Shareholder or
underwriter may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such Shareholder. Each Shareholder shall
have the right to request that the Company modify any information contained
in such registration statement, amendment and
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supplement thereto pertaining to such Shareholder and the Company shall use
its reasonable best efforts to comply with such request, provided, however,
that the Company shall not have any obligation to so modify any information
if so doing would cause the prospectus to contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(c) After the filing of the registration statement, the Company
will (i) cause the related prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the Securities Act, (ii) comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement during the applicable period in
accordance with the intended methods of disposition by the sellers thereof
set forth in such registration statement or supplement to such prospectus and
(iii) promptly notify each Shareholder holding Registrable Securities covered
by such registration statement of any stop order issued or threatened by the
SEC or any state securities commission under state blue sky laws and take all
reasonable actions required to prevent the entry of such stop order or to
remove it if entered.
(d) The Company will use its reasonable best efforts to (i)
register or qualify the Registrable Securities covered by such registration
statement under such other securities or blue sky laws of such jurisdictions
in the United States as any Shareholder holding such Registrable Securities
reasonably (in light of such Shareholder's intended plan of distribution)
requests and (ii) cause such Registrable Securities to be registered with or
approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company and do any
and all other acts and things that may be reasonably necessary or advisable
to enable such Shareholder to consummate the disposition of the Registrable
Securities owned by such Shareholder; provided that the Company will not be
required to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (d), (B)
subject itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction.
(e) The Company will immediately notify each Shareholder holding
such Registrable Securities covered by such registration statement, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading and promptly prepare and make available to each such
Shareholder and file with the SEC any such supplement or amendment.
(f) In connection with any Demand Registration requested by the CSH
Shareholders, the Company shall appoint the underwriter or underwriters
chosen by CSH. The Company will enter into customary agreements (including
an underwriting agreement in customary form) and take such other actions as
are reasonably required in order to expedite or
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facilitate the disposition of such Registrable Securities, including the
engagement of a "qualified independent underwriter" in connection with the
qualification of the underwriting arrangements with the NASD.
(g) Upon execution of confidentiality agreements in form and
substance reasonably satisfactory to the Company, the Company will make
available for inspection by any Shareholder and any underwriter participating
in any disposition pursuant to a registration statement being filed by the
Company pursuant to this Section 5.04 and any attorney, accountant or other
professional retained by any such Shareholder or underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records") as
shall be reasonably requested by any such Person, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any Inspectors in connection with such registration statement.
(h) The Company will furnish to each such Shareholder (if requested
by such Shareholder) and to each such underwriter, if any, a signed
counterpart, addressed to such underwriter and the participating
Shareholders, of (i) an opinion or opinions of counsel to the Company and
(ii) a comfort letter or comfort letters from the Company's independent
public accountants, each in customary form and covering such matters of the
type customarily covered by opinions or comfort letters, as the case may be,
as a majority of such Shareholders or the managing underwriter therefor
reasonably requests.
(i) The Company will otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC and the relevant
state blue sky commissions, and make available to its securityholders, as
soon as reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act.
(j) The Company may require each such Shareholder to promptly
furnish in writing to the Company information regarding the distribution of
the Registrable Securities as the Company may from time to time reasonably
request and such other information as may be legally required in connection
with such registration.
(k) Each such Shareholder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 5.04(e) hereof, such Shareholder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Shareholder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section
5.04(e) hereof, and, if so directed by the Company, such Shareholder will
deliver to the Company all copies, other than any permanent file copies then
in such Shareholder's possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the event
that the Company shall give such notice, the Company shall extend the period
during which such
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registration statement shall be maintained effective (including the period
referred to in Section 5.04(a) hereof) by the number of days during the
period from and including the date of the giving of notice pursuant to
Section 5.04(e) hereof to the date when the Company shall make available to
such Shareholder a prospectus supplemented or amended to conform with the
requirements of Section 5.04(e) hereof.
(l) The Company will use its reasonable best efforts to list such
Registrable Securities on any securities exchange on which the Common Stock
is then listed or on NASDAQ if the Common Stock is then quoted on NASDAQ not
later than the effective date of such registration statement.
Section 5.05. Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Shareholder holding Registrable
Securities covered by a registration statement, its officers, directors,
employees, members, partners and agents, any affiliate of such Shareholder
and each Person, if any, who controls such Shareholder within the meaning of
the Securities Act or Section 20 of the Exchange Act (and officers,
directors, employees, members, partners and agents of any such affiliate or
controlling Persons) from and against any and all losses, claims, damages and
liabilities, joint or several, and expenses (including reasonable attorneys
fees and costs and expenses of investigation) caused by any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission so made
in strict conformity with information furnished in writing to the Company by
such Shareholder or on such Shareholder's behalf expressly for use therein;
provided that with respect to any untrue statement or omission or alleged
untrue statement or omission made in any preliminary prospectus, or in any
prospectus, as the case may be, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of the
prospectus (or, in the case of a prospectus, the prospectus as amended or
supplemented) was not sent or given to the Person asserting any such loss,
claim, damage, liability or expense at or prior to the written confirmation
of the sale of the Registrable Securities concerned to such Person if it is
determined that the Company has provided such current copy of such prospectus
(or such amended or supplemented prospectus, as the case may be) to such
Shareholder in a timely manner prior to such sale and it was the
responsibility of such Shareholder under the Securities Act to provide such
Person with a current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the prospectus (or
such amended or supplemented prospectus, as the case may be) would have cured
the defect giving rise to such loss, claim, damage, liability or expense.
The Company also agrees to indemnify any underwriters of the Registrable
Securities, their officers and
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directors and each person who controls such underwriters on substantially the
same basis as that of the indemnification of the Shareholders provided in this
Section 5.05.
Section 5.06. Indemnification by Participating Shareholders. Each
Shareholder holding Registrable Securities included in any registration
statement agrees, severally but not jointly, to indemnify and hold harmless the
Company, its officers, directors and agents and each Person (other than such
Shareholder) if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to such Shareholder, but only
(i) with respect to information furnished in writing by such Shareholder or on
such Shareholder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus or (ii) to the extent that any
loss, claim, damage, liability or expense described in Section 5.05 results from
the fact that a current copy of the prospectus (or, in the case of a prospectus,
the prospectus as amended or supplemented) was not sent or given to the Person
asserting any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Securities concerned to such
Person if it is determined that it was the responsibility of such Shareholder to
provide such Person with a current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) and such current copy of the
prospectus (or such amended or supplemented prospectus, as the case may be)
would have cured the defect giving rise to such loss, claim, damage, liability
or expense. Each such Shareholder shall be prepared, if required by the
underwriting agreement, to indemnify and hold harmless underwriters of the
Registrable Securities, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 5.06. As a condition to
including Registrable Securities in any registration statement filed in
accordance with Article 5 hereof, the Company may require that it shall have
received an undertaking reasonably satisfactory to it from any underwriter to
indemnify and hold it harmless to the extent customarily provided by
underwriters with respect to similar securities.
No Shareholder shall be liable under Section 5.06 for any damage
thereunder in excess of the net proceeds realized by such Shareholder in the
sale of the Registrable Securities of such Shareholder.
Section 5.07. Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
this Article 5, such Person (an "Indemnified Party") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially and actually prejudiced by such failure to
notify. In any such proceeding, any Indemnified Party shall have the right to
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retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) in the reasonable judgment of such Indemnified Party representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent, or if there be a final judgment for the plaintiff, the Indemnifying
Party shall indemnify and hold harmless such Indemnified Parties from and
against any and all losses, claims, damages, liabilities and expenses or
liability (to the extent stated above) by reason of such settlement or judgment.
No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such proceeding.
Section 5.08. Contribution. If the indemnification provided for in
this Article 5 is held by a court of competent jurisdiction to be unavailable to
the Indemnified Parties in respect of any losses, claims, damages, liabilities
or expenses referred to herein, then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) as between the Company and the Shareholders holding Registrable
Securities covered by a registration statement and their related Indemnified
Parties on the one hand and the underwriters and their related Indemnified
Parties on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and such Shareholders on the one hand
and the underwriters on the other, from the offering of the Shareholders'
Registrable Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the Company and such Shareholders on the
one hand and of such underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations and (ii) as between the
Company and their related Indemnified Parties on the one hand and each such
Shareholder and their related Indemnified Parties on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and of
each such Shareholder in connection with such statements or omissions, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and such Shareholders on the one hand and such underwriters on
the other shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company and such Shareholders
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bear to the total underwriting discounts and commissions received by such
underwriters, in each case as set forth in the table on the cover page of the
prospectus. The relative fault of the Company and such Shareholders on the one
hand and of such underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company and such Shareholders or by such
underwriters. The relative fault of the Company on the one hand and of each
such Shareholder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Shareholders agree that it would not be just and
equitable if contribution pursuant to this Section 5.08 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages, liabilities or expenses referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 5.08 no
underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to securities purchased by such underwriter in
such offering, less the aggregate amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no Shareholder shall be required
to contribute any amount in excess of the amount by which the net proceeds
realized on the sale of the Registrable Securities of such Shareholder exceeds
the amount of any damages which such Shareholder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Each
Shareholder's obligation to contribute pursuant to this Section 5.08 is several
in the proportion that the proceeds of the offering received by such Shareholder
bears to the total proceeds of the offering received by all such Shareholders
and not joint.
Section 5.09. Participation in Public Offering. No Person may
participate in any Underwritten Public Offering hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements to be entered into in connection with such
Underwritten Public Offering and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and the
provisions of this Agreement in respect of registration rights.
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Section 5.10 Rule 144. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder (or, if the Company
is not required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available such information), and it will
take such further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any holder of Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such requirements.
Notwithstanding anything contained in this Section 5.10, the Company may
de-register under Section 12 of the Exchange Act if it then is permitted to do
so pursuant to the Exchange Act and the rules and regulations thereunder and, in
such circumstances, shall not be required hereby to file any reports which may
be necessary in order for Rule 144 or any similar rule or regulation to be
available.
Section 5.11. No Transfer of Registration Rights. None of the
rights of Shareholders under this Article 5 shall be assignable by any
Shareholder to any Person acquiring securities of such Shareholder in any Public
Offering or pursuant to a distribution to the public under Rule 144 under the
Securities Act.
ARTICLE 6.
CERTAIN COVENANTS AND AGREEMENTS
Section 6.01. Limitations on Subsequent Registration. Without the
prior written consent of Shareholders holding at least 51% of the Shares held by
all Shareholders, the Company shall not enter into any agreement with any holder
or prospective holder of any securities of the Company (a) that would allow such
holder or prospective holder to include such securities in any registration
filed pursuant to Section 5.01 or 5.02 hereof, unless under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of such securities would
not reduce the amount of the Registrable Securities of the Shareholders included
therein or (b) on terms otherwise more favorable than this Agreement.
Section 6.02. Limitation on Purchase of Common Stock. Until the
earlier to occur of (i) the fifth anniversary of the Closing Date or (ii) the
occurrence of a Change in Control no Kleinknecht Shareholder shall acquire any
shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock except (x) as a Permitted Transferee in a transfer
from any other Kleinknecht Shareholder which is otherwise permitted under the
terms of Article 3 hereof or (y) pursuant to stock options granted by the
Company.
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ARTICLE 7
MISCELLANEOUS
Section 7.01. Entire Agreement. This Agreement, including all
exhibits hereto, constitutes the entire agreement and supersedes all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and except as otherwise
expressly provided herein.
Section 7.02. Binding Effect; Benefit. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
heirs, successors, legal representatives and permitted assigns. Except as
expressly provided in Sections 5.05 and 5.06, nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the parties
hereto, and their respective heirs, successors, legal representatives and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
Section 7.03. Assignability. (a) Neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by the Company or any Shareholder; provided that (i) any
Permitted Transferee acquiring shares of Common Stock in a transfer permitted
under this Agreement shall execute and deliver to the Company a Joinder
Agreement, and (ii) with the prior written consent of Shareholders holding at
least 50% of the Shares held by all Shareholders, the rights and obligations of
the Shareholders under Article 5 shall be assignable by the Shareholders to any
Third Party acquiring Registrable Securities in a transfer permitted under this
Agreement.
Section 7.04. Amendment; Waiver; Termination. (a) No provision of
this Agreement may be waived except by an instrument in writing executed by the
party against whom the waiver is to be effective. No provision of this
Agreement may be amended or otherwise modified except by an instrument in
writing executed by the Company and holders of at least 50% of the Shares held
by the Shareholders at the time of such proposed amendment or modification.
(b) In addition, any amendment or modification of any provision of
this Agreement that would adversely affect any (i) CSH Shareholder may be
effected only with the consent of CSH Shareholders holding at least 50% of the
Shares held by the CSH Shareholders, (ii) Kleinknecht Shareholder may be
effected only with the consent of Kleinknecht Shareholders holding at least 50%
of the Shares held by the Kleinknecht Shareholders, (iii) Walsh Shareholder may
be effected only with the consent of Walsh Shareholders holding at least 50% of
the Shares held by the Walsh Shareholders or (iv) Servidio Shareholder may be
effected only with the consent of Servidio Shareholders holding at least 50% of
the Shares held by the Servidio Shareholders.
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(c) This Agreement shall terminate on the tenth anniversary of the
date hereof unless earlier terminated.
Section 7.05. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service providing proof of delivery.
All communications hereunder shall be delivered to the respective parties at the
following addresses:
(i) if to the Company to:
IPC Information Systems, Inc.
Wall Street Plaza
88 Pine Street
New York, NY 10005
Attention: General Counsel
Fax: (212) 858-7959
with copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, NY 10043
Attention: Richard M. Cashin, Jr.
Fax: (212) 888-2940
and
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Attention: Philip H. Werner, Esq.
Fax: (212) 309-6273
and
Thacher, Proffitt & Wood
Two World Trade Center
New York, NY 10048
Attention: Thomas N. Talley, Esq.
Fax: (212) 432-7152
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(ii) if to any CSH Shareholder, to:
Cable Systems Holding, LLC
505 North 51st Avenue
Phoenix, Arizona 85043-2701
Attention: Peter Woog
Fax: (602) 233-5782
with copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, NY 10043
Attention: Richard M. Cashin, Jr.
Fax: (212) 888-2940
and
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Attention: Philip H. Werner, Esq.
Fax: (212) 309-6273
(iii) If to any Kleinknecht Shareholder, to:
Richard P. Kleinknecht
15 Banbury Lane
Huntington, NY 11745
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York
Attention: Edward F. Rover, Esq.
Fax: (212) 354-8113
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<PAGE>
(iv) If to any Walsh Shareholder, to:
IPC Information Systems, Inc.
Wall Street Plaza
88 Pine Street
New York, NY 10005
Attention: David Walsh
Fax: (212) 344-5106
(v) If to any Servidio Shareholder, to:
IPC Information Systems, Inc.
Wall Street Plaza
88 Pine Street
New York, NY 10005
Attention: Anthony Servidio
Fax: (212) 344-5106
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Attention: Jonathan Schaffzin, Esq.
Fax: (212) 269-5420
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.06. Headings. The headings contained in this Agreement
are for the convenience of reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 7.07. Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Section 7.08. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule that would
cause the application of the laws of any jurisdiction other than the State of
New York, except to the extent that the General Corporation
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<PAGE>
Law of the State of Delaware applies as a result of the Company being
incorporated in the State of Delaware, in which case such General Corporation
Law shall apply.
Section 7.09. Specific Enforcement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms. It is
accordingly agreed that the parties hereto shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 7.10. Certain Actions. Unless otherwise expressly provided
herein, whenever any action is required under this Agreement by:
(a) the CSH Stockholders (as a group, as opposed to the exercise by a
CSH Shareholder of its individual rights hereunder), it shall be by the
affirmative vote of the holders of at least 51% of the Shares then held by the
CSH Shareholders as a group; or
(b) the Kleinknecht Shareholders (as a group, as opposed to the
exercise by a Kleinknecht Shareholder of its individual rights hereunder), it
shall be by the affirmative vote of the holders of at least 51% of the Shares
then held by the Kleinknecht Shareholders as a group.
(c) the Walsh Shareholders (as a group, as opposed to the exercise by
a Walsh Shareholder of its individual rights hereunder), it shall be by the
affirmative vote of the holders of at least 51% of the Shares then held by the
Walsh Shareholders as a group.
(d) the Servidio Shareholders (as a group, as opposed to the exercise
of a Servidio Shareholder of its individual rights hereunder), it shall be by
the affirmative vote of the holders of at least 51% of the Shares then held by
the Servidio Shareholders as a group.
Section 7.11. Consent to Jurisdiction; Expenses. (a) Any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in any Federal Court sitting in New York,
New York, or any New York State court sitting in New York, New York, and each of
the parties hereby consents to the exclusive jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party by any method provided in Section
7.05 shall be deemed effective service of process on such party and consents to
the personal jurisdiction of any Federal Court sitting in New York, New York, or
any New York State court sitting in New York, New York.
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(b) In any dispute arising under this Agreement among any of the
parties hereto, the costs and expenses (including, without limitation, the
reasonable fees and expenses of counsel) incurred by the prevailing party shall
be paid by the party that does not prevail.
Section 7.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated by the Merger Agreement is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner.
Section 7.13. Additional Stockholder. In the event that CSI shall
acquire Common Stock, CSH agrees to cover CSI to become a party to this
Agreement by executing the signature page hereof.
Section 7.14. Schedule I. The parties hereto shall cooperate in
causing Schedule I hereto to set forth the securities of the Company held by
them.
Section 7.15. Effectiveness. It is a condition precedent to the
effectiveness of this Agreement that the "Merger" under and as defined in the
Merger Agreement shall have been consummated.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
IPC INFORMATION SYSTEMS, INC.
By: /s/ S.T. Clontz
----------------------------
Name: S.T. Clontz
Title: President and CEO
CABLE SYSTEMS HOLDING, LLC
By: /s/ Peter A. Woog
----------------------------
Name: Peter A. Woog
Title: President
/s/ Richard P. Kleinknecht
--------------------------
Richard P. Kleinknecht
/s/ David Walsh
--------------------------
David Walsh
/s/ Anthony Servidio
--------------------------
Anthony Servidio
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SCHEDULE I
Securities Ownership
<PAGE>
EXHIBIT A
Form of Joinder Agreement
IPC Information Systems, Inc.
88 Pine Street
New York, New York 10005
Attention: Chief Executive Officer
Gentlemen:
In consideration of the transfer to the undersigned of _____ Shares of
Common Stock, par value $.01 per share, [Describe any other security being
transferred] of IPC Information Systems, Inc., a Delaware corporation (the
"Company"), the undersigned represents that it is a Permitted Transferee of
[Insert name of transferor] and agrees that, as of the date written below, [he]
[she] [it] shall become a party to, and a Permitted Transferee as defined in,
that certain Investors Agreement dated as of December 18, 1998, as such
agreement may have been or may be amended from time to time (the "Agreement"),
among the Company and the persons named therein, and as a Permitted transferee
shall be fully bound by, and subject to, all of the covenants, terms and
conditions of the Agreement that were applicable to the undersigned's transferor
as though an original party thereto and shall be deemed a [Kleinknecht
Shareholder] [CSH Shareholder] for purposes thereof.
Executed as of the day of ,
TRANSFEREE:
----------------------------
Address:
-----------------------------
-----------------------------
