UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
IPC Information Systems, Inc.
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(NAME OF ISSUER)
Common Stock, par value $0.01 per share
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(TITLE OF CLASS OF SECURITIES)
44980K107
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(CUSIP NUMBER)
Daniel Utevsky, Esq.,
General Counsel and Secretary
IPC Information Systems, Inc., Wall Street Plaza, 88 Pine Street,
New York, New York 10005 (212) 825-9060
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS)
October 3, 1994
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(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
schedule because of Rule 13d-1(b)(3) or (4), check the
following box / /.
Check the following box if a fee is being paid with the statement /X/. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Page 1 of 8 Pages)
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<TABLE>
<CAPTION>
SCHEDULE 13D
CUSIP No. 44980K107 Page 2 of 8 Pages
<S> <C>
1. NAME OF REPORTING PERSON..............................................................Richard P. Kleinknecht
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON................................................###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS*
PF, 00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
</TABLE>
NUMBER 7. SOLE VOTING POWER
OF 3,165,623
SHARES
BENEFICIALLY 8. SHARED VOTING POWER
OWNED 0
BY
EACH 9. SOLE DISPOSITIVE POWER
REPORTING 3,150,623
PERSON
WITH: 10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,165,623
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/X/
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.0%
14. TYPE OF REPORTING PERSON*
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE
COVER PAGE; RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE
SCHEDULE AND THE SIGNATURE ATTESTATION.
(Page 2 of 8 Pages)
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ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the common stock, par value $.01 per share
("Common Stock"), of IPC Information Systems, Inc., a Delaware corporation
having its principal executive offices at 88 Pine Street, Wall Street Plaza, New
York, New York 10005 (the "Issuer").
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D is filed by Richard P. Kleinknecht (the "Reporting
Person"), the Chairman, Chief Executive Officer and Director of IPC Information
Systems, Inc., 88 Pine Street, Wall Street Plaza, New York, New York 10005.
During the last five years the Reporting Person has not been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors),
nor has the Reporting Person been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction which resulted in his being
subject to any judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
The Reporting Person is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
In October 1991, the Reporting Person together with Peter J. Kleinknecht,
his brother, their respective children and other individuals acquired all of the
shares of stock of the Issuer for $14,548,000, consisting of $10,000,000 cash
and a purchase money note of $4,548,000. The Reporting Person's individual
interest was 34.82%. Peter J. Kleinknecht's individual interest was 34.82%. Each
of the three children of the Reporting Person, and each of the three children of
Peter J. Kleinknecht, owned 4.07%, for an aggregate children's interest of
24.42%. Other individuals owned an aggregate of 7.60%. The purchase money note
was guaranteed by the Reporting Person and Peter J. Kleinknecht and remains
outstanding.
The acquisitions of shares of Common Stock during the past sixty days by
the Reporting Person as custodian for his son, Mark Kleinknecht, as described in
Item 5, were from the funds of the Reporting Person as custodian. The
acquisitions of shares of Common Stock by Eric and Lisa Kleinknecht, two of the
Reporting Person's children the beneficial ownership of shares of Common Stock
of whom is disclaimed by the Reporting Person, were from the personal funds of
such individuals.
ITEM 4. PURPOSE OF TRANSACTION
The purpose for which the shares are being held by the Reporting Person
is for investment. The Reporting Person will continuously evaluate the business,
prospects and financial condition of the Issuer, the market for the shares and
the conditions in the economy and the industry in which the Issuer is engaged,
all with a view to determining whether to hold, decrease or add to the
investment in the Issuer, through open market, privately negotiated or any other
share transactions.
The Reporting Person has no plan or proposal as of the date hereof which
would relate to or result in any transaction, change or event specified in
clauses (a) through (j) of Item 4 of the Schedule 13D form.
(Page 3 of 8 Pages)
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Upon consummation of the Issuer's initial public offering of 3,250,000
shares of Common Stock on October 3, 1994 and the issuance on that date of
30,000 shares to an officer of the Issuer, there were 10,536,272 shares of
Common Stock outstanding.
The Reporting Person is currently the beneficial owner of 3,165,623
shares of Common Stock, representing 30.04% of the shares of Common Stock
outstanding on October 3, 1994. This includes (a) 298,075 shares held as
custodian for Gavin Kleinknecht, Peter J. Kleinknecht's son, (b) 298,075 shares
held as custodian for Keir Kleinknecht, the Reporting Person's son, (c) 2,200
shares held as custodian for Mark Kleinknecht, also the Reporting Person's son
and (d) 15,000 shares pursuant to an irrevocable proxy given by Jeffrey M. Gill,
chief operating officer of the Issuer. Peter J. Kleinknecht and the Reporting
Person are brothers.
The Reporting Person disclaims beneficial ownership of (a) 300,075 shares
owned by his son, Eric Kleinknecht, as well as the option which Eric Kleinknecht
holds to purchase 3,000 additional shares, and (b) 300,275 shares owned by his
daughter, Lisa Kleinknecht. These shares, as well as the option, are excluded
from the shares reported above as beneficially owned by the Reporting Person.
The Reporting Person has the sole power (a) to vote or to direct the vote
with respect to 3,165,623 shares of Common Stock and (b) to dispose or to direct
the disposition with respect to 3,150,623 shares of Common Stock. The Reporting
Person does not share the power to vote or to direct the vote, or to dispose
or to direct the disposition, of any shares of Common Stock.
During the past sixty days, the Reporting Person has become the
beneficial owner of the following additional shares of Common Stock through the
following transactions:
As custodian for his son, Mark Kleinknecht, the Reporting Person acquired
200 shares at $15.00 per share from the Issuer's initial public offering
on October 3, 1994 and 2000 shares at $15.50 on October 4, 1994 pursuant
to an open market transaction.
The Reporting Person's son, Eric Kleinknecht, bought 2000 shares at
$15.00 per share from the Issuer's initial public offering on October 3, 1994;
and the Reporting Person's daughter, Lisa Kleinknecht, acquired 200 shares at
$15.00 per share from the Issuer's initial public offering on October 3, 1994
and 2000 shares at $15.50 on October 4, 1994 pursuant to an open market
transaction. The Reporting Person disclaims beneficial ownership of these 4,200
shares acquired by his son and daughter.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
The Reporting Person, for himself and as custodian for Gavin and Keir
Kleinknecht, has agreed with Smith Barney Inc., Kidder, Peabody & Co.
Incorporated and Prudential Securities Incorporated, the managing underwriters
of the Issuer's initial public offering, not to sell, offer to sell, solicit an
offer to buy, contract to sell, grant any option to purchase or otherwise
transfer or dispose of, any shares of Common Stock for a period of 180 days from
September 26, 1994, without the prior written consent of Smith Barney Inc.
(Page 4 of 8 Pages)
<PAGE>
Pursuant to a Pledge Agreement dated April 28, 1994 (the "Pledge
Agreement") made by the Reporting Person and Peter J. Kleinknecht jointly and
severally to Citibank N.A. ("Citibank") and National Westminster Bank NJ
("NatWest") (collectively, the "Banks"), shares of Common Stock of the Issuer
owned by the Reporting Person and his brother, Peter J. Kleinknecht, in an
amount equal to 15% of the outstanding shares of Common Stock, are subject to a
first priority security interest given the Banks to secure certain debt of the
Reporting Person and Peter J. Kleinknecht and certain companies controlled by
them. The Reporting Person has satisfied one-half of this security interest
obligation.
The Reporting Person and Peter J. Kleinknecht together with a company
controlled by them are guarantors (the "Guarantors") of a Credit Agreement
Modification and Extension Agreement dated as of April 28, 1994 (the
"Modification Agreement") by and among Kleinknecht Electric Company, Inc. (a New
York corporation formerly George Kleinknecht, Inc.) ("KEC"), Kleinknecht
Electric Company, Inc. (a New Jersey corporation formerly GK Telecommunications
Inc.) ("GKT" and collectively with KEC, the "Borrowers"), the Guarantors and the
Banks. The Modification Agreement consists of the extension and modification of
various notes previously executed by the Borrowers. These notes consisted of (a)
a note dated May 18, 1993 made by the Borrowers to Citibank in an aggregate
principal amount of $2,848,000 and (b) a note dated May 18, 1993 made by GKT to
NatWest in the original principal amount of $5,902,000. As modified by the
Modification Agreement, the Borrowers are obligated to repay $5,832,467 to the
Banks. The Reporting Person and Peter J. Kleinknecht are also guarantors of a
certain real estate loan from Citibank in the original principal amount of
$4,125,000 which had an unpaid principal balance of $3,900,000 as of April 28,
1994; and borrowers of a certain mortgage loan from NatWest in the original
principal amount of $2,000,000 which had an unpaid principal balance of
$1,458,333.95 as of April 28, 1994 ("NatWest Mortgage Loan"). Amounts due under
the Modification Agreement and the real estate loans are collectively referred
to as the "Obligations".
The NatWest Mortgage Loan is payable in installments at a rate of 2.5%
over NatWest's Prime Rate and is due on April 1, 1999. All of the other
Obligations are payable in installments at a rate of 2.5% over the base rate
announced publicly by Citibank from time to time and are due on January 31,
1995. All of the Obligations are current. The aggregate unpaid principal balance
of the Obligations as of October 12, 1994 was approximately $7,654,000.
Pursuant to an agreement between the Reporting Person and Peter J.
Kleinknecht (the "Principal Stockholders") and the Issuer, the Principal
Stockholders are entitled to certain rights with respect to the registration of
shares of Common Stock held by the Reporting Person under the Securities Act of
1933, as amended (the "Act"). If the Issuer proposes to register any of its
securities under the Act, either for its own account or for the account of other
security holders, the Principal Stockholders are entitled to notice of the
registration and are entitled to include, at the Issuer's expense, such shares
therein, provided, among other conditions, that the underwriters of any offering
have the right to limit the number of such shares included in the registration.
In addition, the Principal Stockholders may require the Issuer, beginning six
months after September 26, 1994, on not more than four occasions, to file a
registration statement under the Act, at the Issuer's expense, with respect to
their shares of Common Stock, and the Issuer is required to use its best efforts
to effect the registration, subject to certain conditions and limitations.
Further, the Principal Stockholders may require the Issuer on three occasions,
at the Issuer's expense, to register their shares on Form S-3 when such form
becomes available to the Issuer, subject to certain conditions and limitations.
The Reporting Person holds an irrevocable proxy from Jeffrey M. Gill, the
Issuer's chief operating officer, with respect to one-half of all shares of
Common Stock acquired by Mr. Gill pursuant to the terms
(Page 5 of 8 Pages)
<PAGE>
of his employment agreement with the Issuer. This proxy currently applies to
one-half of the 30,000 shares acquired by Mr. Gill upon consummation of the
Issuer's initial public offering on October 3, 1994. Under his employment
agreement, Mr. Gill could acquire a maximum of 159,285 additional shares of
Common Stock in five annual installments of 31,857 each on the last day of the
Issuer's fiscal years ending in 1995, 1996, 1997, 1998 and 1999, provided that
Mr. Gill is then in the Issuer's employ. If such shares are acquired by Mr.
Gill, the irrevocable proxy would permit the Reporting Person to vote one-half
such shares for the duration of Mr. Gill's employment under his employment
agreement with the Issuer.
ITEM 7. MATERIAL FILED AS EXHIBITS
The following documents are filed as Exhibits to this Schedule 13D:
EXHIBIT DESCRIPTION
A Lock-up Letter Agreements (3)
dated April 26, 1994 with Smith
Barney Inc., Kidder, Peabody & Co.
Incorporated and Prudential
Securities Incorporated.
B Pledge Agreement dated April 28,
1994 with Citibank, N.A. and
National Westminster Bank NJ and a
letter dated May 4, 1994 from
Gubman Sitomar Goldstein & Edletz
P.C. to Leichner Ellman & Krause.
C Jeffrey M. Gill irrevocable proxy
dated as of August 29, 1994.
D Registration Rights Agreement
dated as of May 9, 1994 between
the Issuer and Richard P.
Kleinknecht and Peter J.
Kleinknecht.
(Page 6 of 8 Pages)
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: October 12, 1994 /s/ Richard P. Kleinknecht
--------------------------
Richard P. Kleinknecht
(Page 7 of 8 Pages)
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
A Lock-up Letter Agreements (3) dated April 26, 9
1994 with Smith Barney Inc., Kidder, Peabody &
Co. Incorporated and Prudential Securities
Incorporated.
B Pledge Agreement dated April 28, 1994 with 12
Citibank, N.A. and National Westminster Bank NJ
and a letter dated May 4, 1994 from Gubman
Sitomar Goldstein & Edletz P.C. to Leichner
Ellman & Krause.
C Jeffrey M. Gill irrevocable proxy dated as of 35
August 29, 1994.
D Registration Rights Agreement dated as of May 9, 36
1994 between the Issuer and Richard P.
Kleinknecht and Peter J. Kleinknecht.
(Page 8 of 8 Pages)
