<PAGE>
Page of 13 Pages
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________
Amendment No. 2
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)
April 9, 1998
(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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<PAGE>
- ------------------------------ ------------------------------
CUSIP No. 44980K100 13D Page 2 of 13 Pages
- ------------------------------ ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Cable Systems Holding, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 6,952,768
REPORTING ------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,952,768
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,952,768
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65 %
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- ------------------------------ ------------------------------
CUSIP No. 44980K100 13D Page 3 of 13 Pages
- ------------------------------ ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Arizona Acquisition Corp.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 6,952,768
REPORTING ------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,952,768
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,952,768
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65 %
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- ------------------------------ ------------------------------
CUSIP No. 44980K100 13D Page 4 of 13 Pages
- ------------------------------ ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David Kirby
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
US
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 6,952,768
REPORTING ------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,952,768
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,952,768
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- ------------------------------ ------------------------------
CUSIP No. 44980K100 13D Page 5 of 13 Pages
- ------------------------------ ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
John O'Mara
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
US
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 6,952,768
REPORTING ------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,952,768
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,952,768
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65%
- --------------------------------------------------------------------------------
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 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) Cable Systems Holding,
LLC, a Delaware limited liability company ("CSH"); (ii) Arizona Acquisition
Corp., a Delaware corporation ("AAC"); (iii) David Kirby ("Kirby"); and (iv)
John O'Mara ("O'Mara").
CSH is a Delaware limited liability company which engages in certain
telecommunication businesses through its subsidiaries.
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.
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 CSH and AAC are set forth on
Schedules A and 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 and 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.
None of the parties listed in the response to Item 2 have expended
any funds in connection with the Amended and Restated Investors Agreement (as
defined in Item 5 below).
ITEM 4. PURPOSE OF TRANSACTION.
On December 18, 1997, IPC and AAC entered into the Agreement and Plan
of Merger, as amended and restated on April 9, 1998 (the "Amended and Restated
Merger Agreement", a copy of which is attached hereto, and made a part hereof as
Exhibit 2). The Amended and Restated Merger Agreement provides, among other
things, for the merger of AAC with and into IPC (the "Merger"), with IPC as the
surviving corporation. Under the terms of the Amended and Restated Merger
Agreement, which is subject to majority shareholder approval and regulatory
review, CSH and certain of its affiliates are to purchase a minimum of 54
percent and as much as 90 percent of the outstanding shares of IPC (the
"Shares") for $21 per Share. IPC shareholders 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
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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 Amended and Restated Merger Agreement by the
stockholders of IPC.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
On April 9, 1998, IPC, CSH, Cable Systems International, Inc.
("CSI"), David Walsh ("Walsh"), Anthony Servidio ("Servidio") and Lawrence,
Smith & Horey III, L.P. ("LSH") entered into the Amended and Restated
Investors Agreement (the "Amended and Restated Investors Agreement," a copy
of which is attached hereto, and made a part hereof as Exhibit 3). The
Amended and Restated Investors Agreement amends the Investors Agreement,
dated as of December 18, 1997, by and among IPC, CSH, Walsh and Servidio to
add CSI and LSH as parties thereto.
Pursuant to the Amended and Restated Investors Agreement, the Board
of Directors of the Surviving Corporation will consist of 9 members, (i)
three of whom shall be nominated by CSH, CSI and their respective 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 Amended and Restated
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 Amended and Restated 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 Amended and Restated Investors
Agreement).
Pursuant to the Amended and Restated Investors Agreement, the CSH
Shareholders, the Kleinknecht Shareholders, Walsh and his Permitted Transferees
(the "Walsh Shareholders"), Servidio and his Permitted Transferees (the
"Servidio Shareholders") and LSH and its Permitted Transferees (the "LSH
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 Amended and Restated
Investors Agreement.
Any CSH Shareholder, Kleinknecht Shareholder, Walsh Shareholder,
Servidio Shareholder or LSH 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, Kleinknecht Shareholder, Walsh
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<PAGE>
Shareholder, Servidio Shareholder or LSH 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 Amended and Restated Investors
Agreement and thereby agreed to be bound by the terms of the Amended and
Restated 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 Amended
and Restated 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 Amended and Restated 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 Amended and Restated Investors
Agreement).
Aside from a transfer to a Permitted Transferee as discussed above,
the Kleinknecht Shareholders, the Walsh Shareholders and the Servidio
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 any public offering; (iv) following the 30th month
anniversary of the Effective Time, to any person other than any Adverse Person
(as defined in the Amended and Restated Investors Agreement); or (v) to any
person, in a transfer through a broker or dealer in compliance with Rule 144 (or
any successor rule).
Aside from a transfer to a Permitted Transferee as discussed above,
the LSH 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 any public offering; or (iv) to any
person, in a transfer through a broker or dealer in compliance with Rule 144 (or
any successor rule).
The Amended and Restated Investors Agreement also provides that if the
CSH Shareholders propose to sell New Common Shares, the Kleinknecht
Shareholders, the Walsh Shareholders, the Servidio Shareholders and the LSH
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; (iii) in public offerings; or (iv) to the
transfer of New Common Shares that will indirectly result from a sale of all or
substantially all of the capital stock or assets of CSH, CSI, Cable Systems
Holding Company, Citicorp or any of its Subsidiaries. If Tag-Along Rights
apply, the CSH Shareholders will inform the Kleinknecht Shareholders, the Walsh
Shareholders, the Servidio Shareholders and the LSH Shareholders (collectively,
for purposes of this paragraph, 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 Amended and Restated 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 Amended and Restated 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
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<PAGE>
Common Shares held by such person or group as of the date of the Amended and
Restated 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,
the Kleinknecht Shareholders, the Walsh Shareholders, the Servidio
Shareholders and the LSH 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 Kleinknecht Shareholders, the
Walsh Shareholders, the Servidio Shareholders and the LSH Shareholders
(collectively, for purposes of this paragraph, the "Drag Shareholders") to
participate in the sale ("Drag-Along Rights") with respect to the New Common
Shares owned by each Drag 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 Drag 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 Amended and Restated 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 Amended and Restated 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 Amended and Restated 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
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 Amended and Restated Investors Agreement or (B) pursuant
to stock options granted by the Surviving Corporation.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
See response to Item 5.
A copy of each of the Amended and Restated Merger Agreement and the
Amended and Restated Investors Agreement are attached hereto as Exhibits 2
and 3, respectively, and are incorporated herein by reference.
Except as disclosed previously in Amendment No. 1 to Schedule 13D, as
filed with the SEC on December 29, 1997, and except for the agreements described
in the response to Item 5, 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.
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<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1: Joint Filing Agreement among the Reporting Persons
Exhibit 2: Amended and Restated Agreement and Plan of Merger, dated
as of December 18, 1998 as amended and restated on April 9, 1998, by and between
IPC Information Systems, Inc. and Arizona Acquisition Corp.
Exhibit 3: Amended and Restated Investors Agreement, dated April 9,
1998, by and among, Cable Systems Holding, LLC, Cable Systems International,
Inc., Richard Kleinknecht, David Walsh, Anthony Servidio and Lawrence Smith &
Horey, III, L.P.
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<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: April 27, 1998
Cable Systems Holding, LLC
By: /s/ Peter A. Woog
--------------------------------
Name: Peter A. 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: April 27, 1998
Arizona Acquisition Corp.
By: /s/ Peter A. Woog
--------------------------------
Name: Peter A. 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: April 27, 1998
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: April 27, 1998
By: /s/ John O'Mara
--------------------------------
Name: John O'Mara
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<PAGE>
Schedule A
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 Present Principal Occupation
- ---- ----------------------------
Peter A. Woog Manager; President of Cable Systems International,
Inc.
Bruce Burkett Manager; Chief Financial Officer of Cable Systems
International, Inc.
-12-
<PAGE>
Schedule B
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 Present Principal Occupation
- ---- ----------------------------
* Peter A. Woog President; President of Cable Systems
International, Inc.
* Bruce Burkett Secretary and Treasurer; Chief Financial Officer
of Cable Systems International, Inc.
---------------
* Director
-13-
<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.
Cable Systems Holding, LLC
By: /s/Peter A. Woog
--------------------------------
Name: Peter A. Woog
Title: Manager
Arizona Acquisition Corp.
By: /s/Peter A. Woog
--------------------------------
Name: Peter A. Woog
Title: Manager
By: /s/David Kirby
--------------------------------
Name: David Kirby
By: /s/John O'Mara
--------------------------------
Name: John O'Mara
<PAGE>
Exhibit 2
========================================================
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BETWEEN
ARIZONA ACQUISITION CORP.
AND
IPC INFORMATION SYSTEMS, INC.
December 18, 1997
========================================================
<PAGE>
CONTENTS
Page
----
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Basic Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . .11
(a) The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
(b) The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
(c) Actions at the Closing . . . . . . . . . . . . . . . . . . . . . .11
(d) Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . .11
(e) Elections. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
(f) Proration. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
(g) Procedure for Payment. . . . . . . . . . . . . . . . . . . . . . .16
(h) Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . .18
(i) Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . .18
(j) Closing of Transfer Records. . . . . . . . . . . . . . . . . . . .18
3. Representations and Warranties of the Company . . . . . . . . . . . . .19
(a) Organization, Qualification, and Corporate Power . . . . . . . . .19
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . .19
(c) Authorization of Transaction . . . . . . . . . . . . . . . . . . .20
(d) Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . .20
(e) Filings with the SEC . . . . . . . . . . . . . . . . . . . . . . .20
(f) Financial Statements . . . . . . . . . . . . . . . . . . . . . . .21
(g) [Intentionally left blank.]. . . . . . . . . . . . . . . . . . . .21
(h) Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . .21
(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. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(p) Intellectual Property Rights . . . . . . . . . . . . . . . . . . .24
(q) Board Approval; Fairness Opinion . . . . . . . . . . . . . . . . .25
(r) ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
(s) Labor and Employment Matters . . . . . . . . . . . . . . . . . . .27
(t) Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . .27
(u) Environmental Matters. . . . . . . . . . . . . . . . . . . . . . .28
4. Representations and Warranties of AAC . . . . . . . . . . . . . . . . .28
(a) Organization . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(b) Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(c) Authorization of Transaction . . . . . . . . . . . . . . . . . . .29
(i)
<PAGE>
CONTENTS
(Continued)
Page
----
(d) Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . .30
(e) Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .30
(f) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . .30
5. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
(a) General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
(b) Notices and Consents . . . . . . . . . . . . . . . . . . . . . . .31
(c) Regulatory Matters and Approvals . . . . . . . . . . . . . . . . .31
(d) Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
(e) Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . .33
(f) Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . .33
(g) Operation of the Company's Business. . . . . . . . . . . . . . . .33
(h) Full Access. . . . . . . . . . . . . . . . . . . . . . . . . . . .35
(i) Notice of Developments . . . . . . . . . . . . . . . . . . . . . .35
(j) No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . .35
(k) Insurance and Indemnification. . . . . . . . . . . . . . . . . . .36
(l) Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
(m) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
(n) Comfort Letters. . . . . . . . . . . . . . . . . . . . . . . . . .38
(o) Affiliate Letters. . . . . . . . . . . . . . . . . . . . . . . . .38
(p) Continued Registration . . . . . . . . . . . . . . . . . . . . . .39
(q) Operation of AAC's Business. . . . . . . . . . . . . . . . . . . .39
(r) No Amendment of Ancillary Agreements . . . . . . . . . . . . . . .39
(s) Solvency Opinion . . . . . . . . . . . . . . . . . . . . . . . . .39
6. Conditions to Obligation to Close . . . . . . . . . . . . . . . . . . .39
(a) Conditions to Obligation of AAC. . . . . . . . . . . . . . . . . .39
(b) Conditions to Obligation of the Company. . . . . . . . . . . . . .41
7. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
(a) Termination of Agreement . . . . . . . . . . . . . . . . . . . . .42
(b) Effect of Termination. . . . . . . . . . . . . . . . . . . . . . .43
(c) Termination Fee; Expenses. . . . . . . . . . . . . . . . . . . . .43
8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
(a) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
(b) Press Releases and Public Announcements. . . . . . . . . . . . . .44
(c) No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . .44
(d) Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . .44
(e) Succession and Assignment. . . . . . . . . . . . . . . . . . . . .44
(ii)
<PAGE>
CONTENTS
(Continued)
Page
----
(f) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .44
(g) General Interpretive Principles. . . . . . . . . . . . . . . . . .44
(h) Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
(i) Governing Law; Forum Selection; and Waiver of Jury Trial . . . . .46
(j) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . .48
(k) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .48
(l) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
(m) Incorporation of Exhibits, Schedule and Disclosure Schedules . . .48
(n) Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .48
(o) Limited Recourse . . . . . . . . . . . . . . . . . . . . . . . . .48
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 Amended and Restated Certificate of Incorporation
(with 80% supermajority voting)
Exhibit B Bylaws
Exhibit C Stock Option Plan
Exhibit D Affiliate Letters
(iii)
<PAGE>
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
Amended and Restated 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 is intended by both Parties to amend and restate the
Agreement and Plan of Merger, dated as of December 18, 1997, by and between the
Company and AAC (the "Original Agreement").
This Agreement contemplates the merger of AAC with and into the Company.
Concurrently with the execution of the Original Agreement, and as an
inducement to AAC and the Company to enter into the Original 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 Section 4.
"AAC-owned Share" means any Company Common Stock that AAC beneficially
owns.
"AAC Comfort Letter" has the meaning set forth in Section 5(n).
"AAC Common Stock" has the meaning set forth in Section 4(f).
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"AAC Stockholders Agreement" means the AAC Stockholders Agreement, dated as
of December 18, 1997 between CSH LLC, as shareholder of AAC, and the Company.
"Acquisition Proposal" has the meaning set forth in Section 5(j).
"Acquisition Transaction" has the meaning set forth in Section 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 Section 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 Stockholders Agreement.
"Annual Meeting" has the meaning set forth in Section 5(c)(ii).
"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 Section 2(d)(viii).
"Cash Election Price" has the meaning set forth in Section 2(d)(viii).
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<PAGE>
"Cash Proration Factor" has the meaning set forth in Section 2(f)(iii).
"Certificate Amendment" means a proposal to be considered and voted upon at
the Annual Meeting to amend and restate the Company's certificate of
incorporation.
"Certificate of Merger" has the meaning set forth in Section 2(c).
"Closing" has the meaning set forth in Section 2(b).
"Closing Date" has the meaning set forth in Section 2(b).
"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 Section 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 Section 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 December 18, 1997, among the Company, KEC-NY
and KEC-NJ.
"CSH LLC" means Cable Systems Holding, LLC, a Delaware limited liability
company.
"CSI" means Cable Systems International, Inc., a Delaware corporation.
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<PAGE>
"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);
(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 Section 4(b).
"Definitive Proxy Materials" means the definitive proxy materials relating
to the Annual 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 Section 2(h).
"Election Date" has the meaning set forth in Section 2(e)(i).
"Effective Time" has the meaning set forth in Section 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,
4
<PAGE>
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 Section 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.
"Exchange Agent" has the meaning set forth in Section 2(e)(ii).
"Exchange Fund" has the meaning set forth in Section 2(g).
"Form of Election" has the meaning set forth in Section 2(e)(iii).
"GAAP" means United States generally accepted accounting principles as in
effect from time to time consistently applied.
"Goldman" has the meaning set forth in Section 4(b).
"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
5
<PAGE>
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 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 Amended and Restated Investors Agreement,
dated as of December 18, 1997, 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 December 18, 1997, 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 December 18, 1997, between KEC-NY and the Company.
"Kleinknechts" means Richard P. Kleinknecht and Peter J. Kleinknecht.
6
<PAGE>
"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 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 Section
2(f)(i).
"Merger" has the meaning set forth in Section 2(a).
"Merger Consideration" has the meaning set forth in Section 2(d)(viii).
"Minimum Stock Election Number" has the meaning set forth in Section
2(f)(i).
"Most Recent Fiscal Year End" has the meaning set forth in Section 3(f).
"MSCI" has the meaning set forth in Section 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 Section 4201 of ERISA.
"New Stock Incentive Plan" has the meaning set forth in Section 5(l)(iii).
"Non-Stock Electing Shares" has the meaning set forth in Section 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 Section 3(t).
"Party" has the meaning set forth in the preface above.
7
<PAGE>
"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 December 18, 1997, 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 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 Section 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 Section 8(i).
"Public Reports" has the meaning set forth in Section 3(e).
"Registration Statement" has the meaning set forth in Section 5(c)(i).
"Requisite Stockholder Approval" means the affirmative vote of at least a
majority of the outstanding shares of 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 outstanding shares of Company Common Stock in favor of
the Certificate Amendment in accordance with Delaware General Corporation Law.
8
<PAGE>
"Richard P. Kleinknecht Employment Agreement" means the Amended and
Restated Employment Agreement, dated as of December 18, 1997, between the
Company and Richard P. Kleinknecht.
"Schedule 13E-3" has the meaning set forth in Section 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 Second Amended and Restated
Employment Agreement, dated as of December 18, 1997, between Servidio and IXNET.
"Share Exchange and Termination Agreement" means the Share Exchange and
Termination Agreement, dated as of December 18, 1997, 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 left with
unreasonably small capital, (ii) will not have incurred debts beyond its ability
to pay such debts as they mature, and (iii) will have a fair value and present
fair salable value of its assets in excess of its stated liabilities and
identified contingent liabilities.
"Starrs" mean Gerald and Robert Starr.
"Starr Termination Agreement" means the Termination Agreement, dated as of
December 18, 1997, among the Starrs and the Company.
"Stock Electing Shares" has the meaning set forth in Section 2(d)(viii).
"Stock Election" has the meaning set forth in Section 2(e)(i).
"Stock Election Price" has the meaning set forth in Section 2(d)(viii).
"Stock Proration Factor" has the meaning set forth in Section 2(f)(ii).
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"Stockholders Agreement" means the Stockholders Agreement, dated as of
December 18, 1997, 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 Section
7(a)(iv).
"Surviving Corporation" has the meaning set forth in Section 2(a).
"Surviving Corporation Common Stock" has the meaning set forth in Section
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 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 Section 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 Second Amended and Restated
Employment Agreement, dated as of December 18, 1997, between Walsh and IXNET.
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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").
(c) ACTIONS AT THE CLOSING. On the day of the Closing (which Closing
satisfies the requirements of Section 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 Section 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, (a) the
certificate of incorporation of the Company in effect immediately prior to the
Effective Time, in the event that the Requisite Super-Majority Stockholder
Approval is obtained, shall be amended as of the Effective Time to read as set
forth in Exhibit A-1 and as so amended shall be the certificate of incorporation
of the Surviving Corporation until thereafter amended in accordance with
applicable law, or (b) the certificate of incorporation of the Company in effect
immediately prior to the Effective Time, in the event that the Requisite
Super-Majority Stockholder Approval is not obtained, shall be amended as of the
Effective Time to read as set forth in 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.
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(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.
(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").
(viii) 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
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or exercisable) shall, at the Effective Time, be canceled, 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 canceled 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
Section 2(d)(v)-(vii) or as provided in Section 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 Section 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 pursuant to Section 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 Annual Meeting (the "Election Date"), is a record
holder of shares of Company Common Stock will be entitled, with respect to any
or all 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 Annual 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
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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 three 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, or causing it to be submitted, 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 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 Section 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 Section 2(d)(viii)(B).
The Exchange Agent shall also make all computations as to the allocation and the
proration contemplated by Section 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 Section 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 Section 2(d)(v) and Section 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
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(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 Section 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.
(C) Each Stock Electing Share, other than any shares
converted into the right to receive the Stock Election Price in accordance
with Section 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 Section 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 Section
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 Section 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.
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(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 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
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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 Section 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.
(viii) 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.
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(h) DISSENTING SHARES. Notwithstanding Section 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
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 Section 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.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to AAC that the statements contained in this Section 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 Section 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 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
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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.
(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 Section 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
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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)
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 Section 3(h) conflicts with
any representation made by the Company having a Knowledge qualification
contained in any subsection of this Section 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 Section 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
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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;
(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
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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 Section 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 Section 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 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)
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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. Section 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 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 Section 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 Section 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) Section 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. Section 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
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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
Section 3(p) of the Disclosure Schedule.
(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 Section 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 Section 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;
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(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) except as disclosed in Section 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
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(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 (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) Section 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) Section 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 Section 3(t) of the Company Disclosure Schedule.
Neither the Company nor any Subsidiary thereof leases all or any part of any
Owned Real Property.
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(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;
(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 Section 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 Section 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
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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, (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, and
(iii) an amended and restated commitment letter, dated January 12, 1998, from
MSCI and Goldman, Sachs & Co. ("Goldman"), which replaced and superseded the
commitment letter from MSCI referred to in (ii) above, pursuant to which MSCI
and Goldman have committed, subject to the terms and conditions set forth
therein, to use their 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 to purchase such
senior unsecured notes. The commitment letters referred to in clauses (i) and
(iii) 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 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
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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.
(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 Section 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. Immediately
following the Effective Time, David Kirby, a private investor and U.S. citizen,
will own 25.5% of the voting interests relating to the units of CSH LLC
attributable to CSH LLC's ownership of IPC (the "IPC Units"), John O'Mara, a
private investor and U.S. citizen, will own 25.5% of the voting interests
relating to the IPC Units, and CVC will own 49% of the voting interests relating
to the IPC Units. 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
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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
Section 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 Section 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 Section 3(d) and Section 4(d) above. Without
limiting the generality of the foregoing:
(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 Annual 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
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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) Concurrently with the filing of the Preliminary Proxy
Materials, the Company shall, and shall cause its Affiliates to, file with
the SEC a Schedule 13E-3. AAC and the Company each agrees to correct any
information provided by it (and each agrees to cause any information
provided by its respective Affiliates to be corrected) for use in the
Schedule 13E-3, if and to the extent that it shall have become false and
misleading in any material respect. The Company 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.
AAC 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; ANNUAL MEETING. The
Company will (A) call an annual meeting of its stockholders (the "Annual
Meeting"), as soon as reasonably practicable in order that such stockholders may
consider and vote upon (i) the adoption of this Agreement and the approval of
the Merger in accordance with the Delaware General Corporation Law, (ii) the
Certificate Amendment, (iii) the New Stock Incentive Plan, (iv) the election of
two directors and (v) the ratification of the appointment of Coopers & Lybrand
L.L.P. as the Company's auditors for the fiscal year ending September 30, 1998,
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 Annual 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 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.
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(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 Section 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 Section 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
Section 3(o) 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);
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(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;
(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.
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(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 Section 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 Section 3 and Section
4 above. No disclosure by any Party pursuant to this Section 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,
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 Section 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
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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 Section 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.
(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
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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 Section 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 "New Stock Incentive Plan"), and shall
reserve for issuance under the New Stock Incentive Plan a number of shares,
equal to 12% of Surviving Corporation Common Stock after giving effect to the
reservation of shares for issuance under the New Stock Incentive Plan and the
transactions contemplated under the Share Exchange and Termination Agreement.
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 the New Stock Incentive Plan shall be contingent on approval by the
holders of Company 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 the New Stock Incentive
Plan pursuant to the terms and conditions set forth in Section 5 of the New
Stock Incentive 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 practicable after the adoption of the New Stock Incentive 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 the New Stock Incentive 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 New Stock Incentive 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 canceled immediately prior to the Effective Time in exchange for
the cash payment specified in Section 2(d)(vii). If the per share exercise
price of any option equals or
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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, L.L.P. 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,
L.L.P., 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.
(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
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results in the termination of registration of such securities under Section 12
of the Securities Exchange Act; PROVIDED, HOWEVER, that nothing in this Section
5(p) shall require the Surviving Corporation to take any affirmative action to
prevent the Surviving Corporation Common Stock from being de-listed 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 Section 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 Section 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;
(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 Section 6(a)(i)-(iii) is
satisfied in all respects
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(v) this Agreement and the Merger shall have received the
Requisite Stockholder Approval;
(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 Section 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 Section 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 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 Section 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:
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(i) the representations and warranties set forth in Section 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 Section 6(b)(i)-(iii) is
satisfied in all respects;
(v) this Agreement and the Merger shall have received the
Requisite Stockholder Approval;
(vi) the AAC Stockholders 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 Section 3(d) above;
(ix) the Company shall be reasonably satisfied that the Merger
will be recorded as a recapitalization for financial reporting purposes; and
(x) the board of directors of the Company shall have received
the Solvency Opinion.
To the extent permitted by applicable law, the Company may waive any condition
specified in this Section 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:
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(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 Section 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 Section 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 Annual 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 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 Annual 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
42
<PAGE>
endorsed any Superior Acquisition Proposal, provided that the Company shall be
in compliance with Section 5(j).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 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 Section 7(b), (ii)
Section 7(c), (iii) the confidentiality provisions contained in Section 5(h)
above, (iv) the Confidentiality/Standstill Letter Agreement, and (v) the
provisions of Section 8(b), Section 8(h), Section 8(i) and Section 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 Section 7(a)(iv), Section 7(a)(vi)(B)
or Section 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 Section 7(a)(vi)(A),
Section 7(a)(vi)(C) or Section 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 Section 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 Section 7(c), the
expenses referred to in the previous sentence shall be payable upon termination
of this Agreement under Section 7(a)(iv), Section 7(a)(vi) or Section 7(a)(vii)
above within ten (10) Business Days of receipt by the Company of reasonably
satisfactory documentation detailing such costs, fees and expenses.
8. MISCELLANEOUS.
(a) SURVIVAL. Except for the provisions of Section 7(b), Section 7(c) and
the provisions of Section 8 (and the provisions referred to in Section 7(b),
Section 7(c) and Section 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).
43
<PAGE>
(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
Section 2 above concerning payment of the Merger Consideration are intended for
the benefit of the Company's Stockholders; (ii) the provisions in Section 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 Section 5(l) are for the benefit of
continuing employees; (iv) the provisions of Section 2(d)(vii) are for the
benefit of the holders of options to purchase shares of Company Common Stock;
and (v) the provisions of Section 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:
(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," "Section 's,"
"subsections," and other subdivisions without reference to a document are to
designated articles, sections, Section '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;
44
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(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:
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
45
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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 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
46
<PAGE>
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 Section 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 Section 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.
(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.
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<PAGE>
(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.
48
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
IPC INFORMATION SYSTEMS, INC.
By: /s/ Terry 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
Terry Clontz
David Walsh
2 independent directors to be designated by AAC
50
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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, Qualification,
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, 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
<PAGE>
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 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.
<PAGE>
(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.
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.
7. Amendments.
<PAGE>
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.
<PAGE>
IN WITNESS WHEREOF, IPC Information Systems, Inc. has caused this
Restated Certificate of Incorporation to be duly executed by , its ,
and attested to by , its Secretary, this day of , 199 .
IPC Information Systems, Inc.
By:
--------------------------------
Attest:
By:
--------------------------------
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EXHIBIT A-2
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.
(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
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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 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.
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(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 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
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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.
5.5 Written Ballot. Unless and to the extent that the By-Laws so
provide, elections of directors need not be by written ballot.
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.
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
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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.
IN WITNESS WHEREOF, IPC Information Systems, Inc. has caused this
Restated Certificate of Incorporation to be duly executed by _______, its
______, and attested to by ________, its _______, this ______ day of ______,
199_.
IPC Information Systems, Inc.
By:
--------------------------------
Attest:
By:
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EXHIBIT B
AMENDED AND RESTATED
BY-LAWS
OF
IPC INFORMATION SYSTEMS, INC.
ARTICLE
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
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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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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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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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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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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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ARTICLE II
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BOARD OF DIRECTORS
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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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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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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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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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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
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OFFICERS
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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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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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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
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Executive 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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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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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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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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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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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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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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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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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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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 C
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.
Section 2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms, when
used in the Plan, shall have the meanings set forth in this Section:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Cause" means any of the following: (i) commission of any act of fraud
or dishonesty with respect to the business of the Corporation or its
Subsidiaries, (ii) willful misconduct or gross negligence in connection with the
performance of a Grantee's duties to the Corporation and its Subsidiaries, (iii)
indictment for, or conviction of, any crime or an offence involving moral
turpitude, (iv) commission of any act injurious to the interest of the
Corporation, or (v) breach of any material provision of any applicable
employment or consulting agreement. Notwithstanding the foregoing, if any
Grantee is party to an employment or consulting agreement governing the terms of
his employment or consultancy with the Corporation or its Subsidiaries, and such
agreement includes a definition of cause, then for purposes hereof, cause shall
have the meaning ascribed thereto in such agreement.
(c) "Change in Control" shall mean (i) approval by the stockholders of the
Corporation of a transaction that would result in the reorganization, merger or
consolidation of the Corporation with one or more persons, and, upon
consummation thereof, would result in persons who, immediately prior to such
transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) at least 50% of the securities
entitled to vote generally in the election of directors of the Corporation,
beneficially owning (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) in the aggregate immediately after such
transaction less than 50% of the securities entitled to vote generally in the
election of directors of the entity resulting from such transaction; (ii) the
acquisition of all or substantially all of the assets of the Corporation or
beneficial ownership (within the meaning of Rule
<PAGE>
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 any of its Subsidiaries, or has agreed to perform services
for the Corporation or any of its Subsidiaries, other than as an Employee or
Director.
(g) "Code" means the Internal Revenue Code of 1986, as amended
(h) "Corporation" means IPC Information Systems, Inc., a Delaware
corporation.
(i) "Director" means any member of the Board.
(j) "Disability" means a physical or mental impairment that causes the
Grantee to be unable to engage in any substantial gainful activity and that is
expected to result in death or is expected to last for a continuous period of at
least 12 months. Notwithstanding the foregoing, if any Grantee is party to an
employment or consulting agreement governing the terms of his employment or
consultancy with the Corporation or its Subsidiaries, and such agreement
includes a definition of disability, then for purposes hereof, disability shall
have the meaning ascribed thereto in such agreement.
(k) "Employee" means any employee of the Corporation or any of its
Subsidiaries, or any person who has agreed to become an employee of the
Corporation or any of its Subsidiaries. The term Employee shall include
directors who are otherwise employed by the Corporation or any Subsidiary.
2
<PAGE>
(l) "Fair Market Value" means, as of any date, the fair market value of a
share of Common Stock as determined by the Committee acting in good faith in
its sole discretion; PROVIDED, HOWEVER, that if the Common Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
fair market value shall be based on the last sales price or, if unavailable, the
average of the closing bid and asked prices per share of the Common Stock on
such date (or, if there was no trading or quotation in the Common Stock on such
date, on the next preceding date on which there was trading or quotation) as
provided by one of such organizations. Notwithstanding the foregoing, the Fair
Market Value of a share of Common Stock on the closing date of the transactions
contemplated by the Merger Agreement shall be deemed to be the "Cash Election
Price" as defined in the Merger Agreement.
(m) "Incentive Stock Option" means an Option designated by the Committee
as an Option that is intended to be an incentive stock option within the meaning
of Section 422(b) of the Code.
(n) "Grantee" means a person granted an Option under the Plan.
(o) "Merger Agreement" means the Agreement and Plan of Merger, dated as of
December 18, 1997 by and between the Corporation and Arizona Acquisition Corp.,
a Delaware Corporation.
(p) "Nonqualified Stock Option" means an Option that is not an Incentive
Stock Option, or an Incentive Stock Option that, subsequent to the date of grant
thereof, fails to satisfy the requirements of Section 422(b) or (d) of the Code.
(q) "Option" means an option granted pursuant to the Plan to purchase
shares of the Common Stock.
(r) "Plan" means this Stock Option Plan as set forth herein and as amended
from time to time.
(s) "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder as presently in effect or hereafter amended.
(t) "Stock Option Agreement" shall mean a written agreement between the
Corporation and the Grantee, or a certificate accepted by the Grantee,
evidencing the grant of an Option hereunder and containing such terms and
conditions, not inconsistent with the Plan, as the Committee shall approve.
(u) "Subsidiary" shall mean (i) any corporation with respect to which the
Corporation owns, directly or indirectly, 50% or more of the total combined
voting power of all classes of stock of such corporation, or (ii) any entity
which the Committee reasonably expects to become a Subsidiary within the meaning
of clause (i).
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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 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 whether an Option shall be an Incentive Stock
Option or a Nonqualified Stock Option;
(iv) to determine the terms and conditions of any Option granted
under the Plan (including, but not limited to, the exercise price, the
period, if any, over which Options shall vest and become exercisable (which
period may be accelerated at any time in the discretion of the Committee),
and performance conditions relating to an Option, based in each case on
such considerations as the Committee shall determine), and all other
matters to be determined in connection with an Option;
(v) to determine whether, to what extent and under what
circumstances an the exercise price of an Option may be paid, in cash,
Common Stock, or other property, or an Option may expire or be canceled,
forfeited, or surrendered;
(vi) to determine the restrictions or conditions related to the
delivery, holding and disposition of shares of Common Stock received upon
exercise of an Option;
(vii) to prescribe the form of each Stock Option Agreement, which
need not be identical for each Grantee;
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<PAGE>
(viii) to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Option, Stock Option Agreement or other instrument hereunder; and
(x) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem necessary
or advisable for the administration of the Plan.
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
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<PAGE>
on behalf of the Committee, shall be personally liable for any action,
determination or interpretation taken or made in good faith with respect to the
Plan, and all members of the Committee and any officer or employee of the
Corporation acting on its behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Corporation with respect to any such action,
determination or interpretation.
Section 5. OPTION TERMS
Unless otherwise determined by the Committee and set forth in a Stock
Option Agreement, Options granted under the Plan shall contain the following
terms and conditions:
(a) TYPE OF OPTION. Each Option shall be an Incentive Stock Option to the
maximum extent permitted by Section 422(d) of the Code, and any excess over such
maximum shall be a Nonqualified Stock Option.
(b) EXERCISE PRICE. The exercise price per share of Common Stock subject
to each Option shall equal the Fair Market Value on the date the Option is
granted.
(c) VESTING. Each Option shall vest and become exercisable in five equal
installments on each of the first five anniversaries on the date the Option is
granted; PROVIDED, HOWEVER that the Option shall be vested and exercisable as to
no less than 75% of the shares of Common Stock subject thereto as of the end of
any period of 30 consecutive trading days during which the Fair Market Value
averages at least 300% of the Fair Market Value on the date the Option is
granted, and shall be vested and exercisable as to 100% of the shares of Common
Stock subject thereto as of the end of any period of 30 consecutive trading days
during which the Fair Market Value averages at least 450% of the Fair Market
Value on the date the Option is granted; AND PROVIDED FURTHER that each Option
shall become vested and exercisable in full immediately prior to a Change in
Control.
(d) TERMINATION. Options held by any Grantee shall terminate upon the
earliest of:
(i) the termination of the Grantee's employment, directorship or
consultancy with the Corporation and its Subsidiaries for Cause;
(ii) the later of (x) 180 days after the Grantee's termination of
employment, directorship or consultancy with the Corporation and its
Subsidiaries (which shall be deemed to include the sale of any Subsidiary of the
Corporation that employs such Grantee) for any reason other than Cause, death or
Disability, or (y) 180 days following the end of any "blackout period" imposed
by the Corporation's general counsel that is in effect on the date of such
termination; PROVIDED, HOWEVER, that during any such 180-day period, the Options
shall be exercisable only to the extent vested and exercisable as of the date of
such termination;
(iii) one year after the Grantee's termination of employment,
directorship or consultancy with the Corporation and its Subsidiaries by reason
of death or Disability; PROVIDED,
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HOWEVER, that during any such one year period, the Options shall be exercisable
to the extent such Options would have been vested and exercisable pursuant to
Section 5(c) (but without regard to the provisos contained therein) as of the
anniversary of the date of grant next following such termination, assuming such
termination had not occurred;
(iv) the tenth anniversary of the date of grant; and
(v) upon the consummation of any transaction whereby the Corporation
(or any successor to the Corporation or substantially all of its business)
becomes a wholly-owned subsidiary of any other corporation (but after giving
effect to Section 5(c)), unless such other corporation shall continue or assume
the Plan as it relates to Options then outstanding (in which case such other
corporation shall be treated as the Corporation for all purposes hereunder, and,
pursuant to Section 7, the Committee of such other corporation shall make
appropriate adjustment in the number and kind of shares of Common Stock subject
thereto and the exercise price per share thereof to reflect consummation of such
transaction). If the Plan is not to be so assumed, the Corporation shall notify
the Grantee of consummation of such transaction at least ten days in advance
thereof. If such other corporation is an affiliate of the Corporation
immediately prior to consummation of any such transaction, Options shall not
terminate and shall remain Options to purchase Common Stock of the Corporation
unless the Plan is in fact so continued or assumed by such other corporation.
Section 6. EXERCISE OF OPTIONS
A Grantee shall exercise an Option by delivery of written notice to the
Corporation setting forth the number of shares with respect to which the Option
is to be exercised, together with cash, certified check, bank draft, wire
transfer, or postal or express money order payable to the order of the
Corporation for an amount equal to the exercise price of such shares and any
income tax required to be withheld. The Committee may, in its sole discretion,
permit a Grantee to pay all or a portion of the exercise price or tax
withholding obligation by delivery of Common Stock or other property (including
notes or other contractual obligations of the Grantee to make payment on a
deferred basis, such as through "cashless exercise" arrangements, to the extent
permitted by applicable law), and the methods by which Common Stock will be
delivered or deemed to be delivered by the Grantee.
Section 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event any recapitalization, forward or reverse split,
reorganization, merger, consoli dation, 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
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<PAGE>
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 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
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<PAGE>
subject to any Option except as set forth herein. The Corporation shall not be
required to establish any fund or make any other segregation of assets to assure
the payment of any Option.
(d) Unless otherwise permitted in the discretion of the Committee with
respect to Nonqualified Stock Options, no Option or other right under the Plan
may be sold, transferred, assigned, pledged or otherwise encumbered, except by
will or the laws of descent and distribution, and an Option shall be exercisable
during the Grantee's lifetime only by the Grantee.
(e) The Corporation shall have the right to require that the Grantee make
such provision, or furnish the Corporation such authorization, necessary or
desirable so that the Corporation may satisfy its obligation, under applicable
laws, to withhold or otherwise pay for income or other taxes of the Grantee
attributable to the grant, exercise or cancellation of Options granted under the
Plan or the sale of Common Stock issued with respect to Options. This authority
shall include authority to withhold or receive Common Stock or other property
and to make cash payments in respect thereof in satisfaction of a Grantee's tax
obligations.
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<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.
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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 3
AMENDED AND RESTATED
INVESTORS AGREEMENT
dated as of
April 9, 1998
among
IPC INFORMATION SYSTEMS, INC.
CABLE SYSTEMS HOLDING, LLC
CABLE SYSTEMS INTERNATIONAL, INC.
AND
CERTAIN OTHER PERSONS NAMED HEREIN
<PAGE>
TABLE OF CONTENTS
__________
Page
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ARTICLE 1 DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 CORPORATE GOVERNANCE AND MANAGEMENT
Section 2.01. Composition of the Board. . . . . . . . . . . . . . . . . . . 7
Section 2.02. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.03. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.04. Action by the Board . . . . . . . . . . . . . . . . . . . . . 8
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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 . . . . . . . . . . . . . . . . . . . . 10
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 . . . . . . . . . . . . . . . . . . . . . 14
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. . . . . . . . . . . . 22
Section 5.08. Contribution. . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.09. Participation in Public Offering. . . . . . . . . . . . . . . 24
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. . . . . . . . . . . . 25
Section 6.02. Limitation on Purchase of Common Stock. . . . . . . . . . . . 25
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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. . . . . . . . . . . . . . . . 26
Section 7.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.06. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.07. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.09. Specific Enforcement. . . . . . . . . . . . . . . . . . . . . 29
Section 7.10. Certain Actions . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.11. Consent to Jurisdiction; Expenses . . . . . . . . . . . . . . 30
Section 7.12. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.13. Schedule I. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.14. Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . 31
Schedule I Securities Ownership
Exhibit A Form of Joinder Agreement
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<PAGE>
AMENDED AND RESTATED INVESTORS AGREEMENT
AMENDED AND RESTATED INVESTORS AGREEMENT, dated as of April 9, 1998,
among (i) IPC Information Systems, Inc. (the "Company"), (ii) Cable Systems
Holding, LLC, a Delaware limited liability company ("CSH"), (iii) Cable Systems
International, Inc., a Delaware Corporation, (iv) Richard Kleinknecht, (v) David
Walsh, (vi) Anthony Servidio and (vii) Lawrence, Smith & Horey III, L.P., a
Delaware limited partnership.
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
<PAGE>
"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 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.
"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 any Servidio Shareholder or any LSH
Shareholder, the number of Shares beneficially owned by such Kleinknecht
Shareholder, Walsh Shareholder, Servidio Shareholder or any LSH 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, the Servidio Shareholders and
the LSH Shareholders and the denominator of which is the total number of Shares
then beneficially owned by all of the Shareholders.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"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.
"LSH" means Lawrence, Smith & Horey III, L.P .
"LSH Shareholders" means LSH and its direct and indirect Permitted
Transferee 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,
(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)
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above and (iii) in the case of any LSH Shareholder, (a) any shareholder, member,
partner or Affiliate of such LSH Shareholder or (b) a spouse or lineal
descendant (including by adoption and stepchildren), heir, executor,
testamentary trustee or legatee of the shareholders, members and partners
referred to in clause (iii)(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 (iii)(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 (iii)(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.
"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, the Servidio Shareholders and the LSH 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, the Servidio Shareholders and the LSH
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
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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.
"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
and the LSH 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.
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"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:
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)
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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. 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:
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(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.
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
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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 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
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(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:
(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).
Section 3.06. RESTRICTIONS ON TRANSFERS BY LSH SHAREHOLDERS. Except
as provided in Section 3.03, the LSH Shareholders may transfer their Common
Stock only as follows:
(i) in a transfer made in compliance with Section 4.01 of
Section 4.02; or
(ii) in any Public Offering; or
(iii) to any Person, in a transfer through a broker or dealer
in compliance with Rule 144 (or any successor rule).
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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, (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") or (iv) that will indirectly result from a sale of all or
substantially all of the capital stock or assets of CSH, CSI, Cable Systems
Holding Company, Citicorp or any of its Subsidiaries) shares of Common Stock (a
"Tag-Along Sale"), the Kleinknecht Shareholders and/or the Walsh Shareholders
and/or the Servidio Shareholders and/or the LSH 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, each Servidio Shareholder, each LSH Shareholder and the Company
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 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
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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, the Servidio Shareholders and the LSH 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, the
Servidio Shareholders or the LSH 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, the
Servidio Shareholders and the LSH Shareholders would constitute more than 50% of
the
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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, Servidio Shareholders and the LSH
Shareholders to sell the Subject Securities ("Drag-Along Rights") then held by
every Kleinknecht Shareholder, Walsh Shareholder, Servidio Shareholders and the
LSH 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, the Servidio Shareholders, the
LSH Shareholders and the Company (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, Servidio Shareholder and LSH Shareholder shall not exceed the
Drag-Along Portion of the shares of Common Stock that such Kleinknecht
Shareholder, Walsh Shareholder, Servidio Shareholder and LSH Shareholder owns.
Each Kleinknecht Shareholder, Walsh Shareholder, Servidio Shareholder or LSH
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, Servidio Shareholders or LSH Shareholder 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, Servidio Shareholder and LSH Shareholder 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, Servidio Shareholder and LSH
Shareholder of the consideration therefor. If a Kleinknecht Shareholder, Walsh
Shareholder, Servidio Shareholder or LSH 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 consummated during such period, CSH shall
return to each of the Kleinknecht Shareholders, each of the Walsh Shareholders,
each of the Servidio Shareholders and each of the LSH Shareholders all
certificates representing Shares that such Kleinknecht Shareholder, Walsh
Shareholder, Servidio Shareholder or LSH 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, the Servidio Shareholder or the LSH
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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, the Servidio Shareholders and the LSH
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, Servidio Shareholder or LSH 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, the Servidio
Shareholders and the LSH 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,
the Servidio Shareholders and the LSH Shareholders, and thereupon will use its
best efforts to effect, as expeditiously as possible, the registration under the
Securities Act of:
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(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, any Servidio
Shareholder or any LSH 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 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
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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
Registrations requested by the CSH Shareholders shall apply, mutatis mutandis,
to any such Demand Registration by the Kleinknecht Shareholders.
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(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, (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 or
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(v) LSH Shareholder may be effected only with the consent of LSH Shareholders
holding at least 50% of the Shares held by the LSH Shareholders.
(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
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Attention: Thomas N. Talley, Esq.
Fax: (212) 432-7152
(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
and
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attn: Carmen Romano, Esq.
Fax: (215) 994-2222
(iii) If to any Kleinknecht Shareholder, to:
Richard P. Kleinknecht
15 Banbury Lane
Huntington, NY 11745
with a copy to:
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White & Case
1155 Avenue of the Americas
New York, New York
Attention: Edward F. Rover, Esq.
Fax: (212) 354-8113
(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
(vi) If to any LSH Shareholder, to:
Lawrence, Smith & Horey III, L.P.
515 Madison Avenue
New York, NY 10022-5403
Attention: Richard W. Smith
Fax: (212) 759-2561
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.
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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 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 Shareholders (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 by 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.
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(e) the LSH Shareholders (as a group, as opposed to the exercise by
a LSH 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
LSH 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.
(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. SCHEDULE I. The parties hereto shall cooperate in
causing Schedule I hereto to set forth the securities of the Company held by
them.
Section 7.14. 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. Terry Clontz
------------------------------------
Name: S. Terry Clontz
Title: President & C.E.O.
CABLE SYSTEMS HOLDING, LLC
By: /s/ Peter A. Woog
------------------------------------
Name: Peter A. Woog
Title: Manager
CABLE SYSTEMS INTERNATIONAL, INC.
By: /s/ Peter A. Woog
------------------------------------
Name: Peter A. Woog
Title: President & C.E.O.
/s/ Richard Kleinknecht
----------------------------------------
Richard Kleinknecht
/s/ David Walsh
----------------------------------------
David Walsh
/s/ Anthony Servidio
----------------------------------------
Anthony Servidio
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LAWRENCE, SMITH & HOREY III, L.P.
Its General Partner:
LSH Partners III, L.P.
By: /s/ Richard W. Smith
-------------------------------------
Name: Richard W. Smith
Title: General Partner
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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] [Walsh Shareholder] [Servidio Shareholder] [LSH
Shareholder] for purposes thereof.
Executed as of the day of ,
TRANSFEREE:__________________
Address: ___________________
___________________
