STOCKHOLDER'S AGREEMENT
This Agreement is dated as of April 14, 1999 by and between IPC
Information Systems, Inc. (the "Buyer") and Xxxxxx X. Xxxx (the "Stockholder").
Concurrently herewith, the Buyer, Merger Sub and the Target are
entering into the Merger Agreement, pursuant to which Target will be merged with
and into Merger Sub, whereby each share of common stock, par value $.01, of the
Target, other than any Dissenting Share or Buyer-owned Share, will be converted
into the right to receive the Merger Consideration.
As a condition to Buyer entering into the Merger Agreement, the Buyer
requires that the Shareholder enter into, and the Stockholder has agreed to
enter into, this Agreement with the Buyer.
In order to implement the foregoing and in consideration of the mutual
agreements contained herein, the parties hereby agree as follows:
1. Certain Definitions. Capitalized terms used but not defined shall
have the meanings set forth in the Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"). The following terms, when used in this
Agreement, shall have the following meanings (such definitions to be equally
applicable to both singular and plural terms of the terms defined):
"Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing. Without duplicative counting of the same securities by the same holder,
securities Beneficially Owned by a Person shall include securities Beneficially
Owned by all other Persons with whom such Person would constitute a "group" as
described in Section 13(d)(3) of the Securities Exchange Act.
"Control" (including the terms "Controlled by" and "under common
Control with") means the possession, directly or indirectly or as a trustee or
executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock, as a trustee or
executor, by contract or credit arrangement or otherwise.
"Existing Shares" has the meaning ascribed thereto in ss. 2(a)(i).
"Permitted Transferee" means in the case of the Stockholder, (a) a
spouse or lineal descendent (including by adoption and stepchildren), heir,
executor, testamentary trustee or legatee of such Stockholder or (b) any trust
or estate the beneficiaries of which, or any
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corporation, limited liability company or partnership, the stockholders, members
or partners of which include only the Persons described in clause (a) above.
"Shares" means the Existing Shares, together with any shares of Target
Common Stock acquired of record or beneficially by such Stockholder in any
capacity after the date hereof and prior to the Termination Date, whether upon
exercise of options, conversion of convertible securities, purchase, exchange or
otherwise; provided, however, that in the event of a stock dividend or
distribution, or any change in the Target Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged.
"Stockholder" has the meaning ascribed thereto in the introductory
paragraph to this Agreement.
"Target Common Stock" means the common stock, $.01 par value per share,
of the Target.
"Termination Date" has the meaning ascribed thereto in ss. 9 of this
Agreement.
2. Representations and Warranties of Stockholder. The Stockholder
hereby represents and warrants to the Buyer as follows:
(a) 1 the Stockholder is the record holder or beneficial owner of
1,430,472 shares of Target Common Stock (the "Existing Shares").
(2) On the date hereof, the Existing Shares constitute all of the
outstanding shares of Target Common Stock owned of record or beneficially by the
Stockholder. The Stockholder does not have record or beneficial ownership of any
other Shares.
(3) Except for 40,000 of the Existing Shares held of record by his spouse,
the Stockholder has sole power of disposition with respect to all of the
Existing Shares and sole voting power with respect to the matters set forth in
ss. 4 hereof and sole power to demand dissenter's or appraisal rights, in each
case with respect to all of the Existing Shares, with no restrictions on such
rights, subject to applicable federal securities laws and the terms of this
Agreement.
(4) The Stockholder will have sole power of disposition with respect to
Shares other than Existing Shares, if any, which become beneficially owned by
him and will have sole voting power with respect to the matters set forth in ss.
4 hereof and sole power to demand dissenter's or appraisal rights, in each case
with respect to all Shares other than Existing Shares, if any, which become
beneficially owned by him with no restrictions on such rights, subject to
applicable federal securities laws and the terms of this Agreement.
(b) The Stockholder has the legal capacity, power and authority to
enter into and perform all of his obligations under this Agreement. The
execution, delivery and performance of this Agreement by the Stockholder will
not violate any other agreement to which the Stockholder is a party or by which
the Stockholder is bound including, without limitation, any trust agreement,
voting agreement, stockholders agreement, voting trust, partnership or other
agreement. This Agreement has been duly and validly executed and delivered by
the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as limited by (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditor's rights generally, (b) general
principles of equity, whether such enforceability is considered in a proceeding
in equity or at law, and to the discretion of the court before which any
proceeding therefore may be brought, or (c) public policy considerations or
court decisions which may limit the rights of the parties thereto for
indemnification. All necessary consents of any beneficiary of or holder of
interest in any trust of which the Stockholder is Trustee to the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been obtained. If the Stockholder is married and his Shares
constitute community property, this Agreement has been duly authorized, executed
and delivered by, and constitutes a valid and binding agreement of, the
Stockholder's spouse, enforceable against such person in accordance with its
terms.
(c) No filing with, and no permit, authorization, consent or approval
of, any state or federal public body or authority is necessary for the execution
of this Agreement by the Stockholder and the consummation by the Stockholder of
the transactions contemplated hereby and (ii) neither the execution and delivery
of this Agreement by the Stockholder nor the consummation by the Stockholder of
the transactions contemplated hereby nor compliance by the Stockholder with any
of the provisions hereof shall (x) conflict with or result in any breach of any
applicable trust, partnership agreement or other agreements applicable to the
Stockholder, (y) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which the Stockholder is a
party or by which the Stockholder or any of the Stockholder's properties or
assets may be bound or (z) violate any order, writ, injunction, decree,
judgment, statute, rule or regulation applicable to the Stockholder or any of
the Stockholder's properties or assets. The Buyer acknowledges the requirement
that Stockholder file an amendment to his Schedule 13D with the Securities and
Exchange Commission.
(d) The Stockholder's Shares (other than the 40,000 Shares held of
record by his spouse) and the certificates representing such Shares are now and
at all times during the term hereof will be held by the Stockholder, or by a
nominee or custodian for the benefit of the Stockholder, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever, except for
any such encumbrances or proxies arising hereunder.
(e) No broker, investment banker, financial adviser or other person
is entitled to any broker's, finder's, financial adviser's or other similar fee
or commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Stockholder in his or her capacity as
such.
(f) The Stockholder understands and acknowledges that the Buyer is
entering into the Merger Agreement in reliance upon the Stockholder's execution
and delivery of this Agreement with the Buyer.
3. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Stockholder as follows:
(a) The Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its formation.
(b) The Buyer has all necessary power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by the Buyer of this Agreement and the
consummation by the Buyer of the transactions contemplated hereby have been duly
and validly authorized and approved by all required corporate action. This
Agreement has been duly executed and delivered by the Buyer, and (assuming due
authorization, execution and delivery by the Stockholder) constitutes a valid
and binding obligation of the Buyer, enforceable against it in accordance with
its terms, except as limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditor's rights generally, (b)
general principles of equity, whether such enforceability is considered in a
proceeding in equity or at law, and to the discretion of the court before which
any proceeding therefor may be brought, or (c) public policy considerations or
court decisions which may limit the rights of the parties thereto for
indemnification.
(c) The execution and delivery of this Agreement does not, and the
consummation by the Buyer of the transactions contemplated by this Agreement and
compliance by the Buyer with the provisions of this Agreement will not, conflict
with, or result in any breach or violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of or "put" right with respect to any obligation or
to loss of a material benefit under, or result in the creation of any lien upon
any of the properties or assets of the Buyer under, (i) the certificate of
incorporation or by-laws of the Buyer, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Buyer or its properties or
assets or (iii) any judgment, order, decree, statute, law, ordinance, rule,
regulation or arbitration award applicable to the Buyer or its properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any state or federal public body or
authority is required by or with respect to the Buyer in connection with the
execution and delivery of this Agreement by the Buyer or the consummation by the
Buyer of any of the transactions contemplated by this Agreement.
4. Agreement to Vote; Proxy
(a) The Stockholder hereby agrees that, until the Termination Date
(as defined in Section 9), at any meeting of the Target Stockholders, however
called, or in connection with any written consent of the Target Stockholders,
the Stockholder shall vote (or cause to be voted) the Shares held of record or
beneficially by him (i) in favor of the Merger, the execution and delivery by
the Target of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and this
Agreement and any actions required in furtherance hereof and thereof; (ii)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Target
under the Merger Agreement; and (iii) against the following actions (other than
the Merger and the transactions contemplated by the Merger Agreement or any such
actions identified in writing by the Buyer in advance): (A) any extraordinary
corporate transaction, including, without limitation, a merger, consolidation or
other business combination involving the Target or its Subsidiaries; (B) a sale,
lease or transfer of a material amount of assets of the Target or its
Subsidiaries or a reorganization, recapitalization, dissolution or liquidation
of the Target or its Subsidiaries; (C) any change in the majority of the board
of directors of the Target; (D) any material change in the present
capitalization of the Target or any amendment of the Target's certificate of
incorporation or by-laws; (E) any other material change in the Target's
corporate structure or business; or (F) any other action which is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone,
discourage or materially adversely affect the Merger or the transactions
contemplated by the Merger Agreement or this Agreement. The Stockholder shall
not enter into any agreement or understanding with any person or entity to vote
the Shares or give voting instructions with respect to the Shares in any manner
inconsistent with clauses (i), (ii) or (iii) of the preceding sentence.
(b) THE STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS, THE BUYER AND
ANY DESIGNEE OF THE BUYER, EACH OF THEM INDIVIDUALLY, SUCH STOCKHOLDER'S
IRREVOCABLE (UNTIL THE TERMINATION DATE) PROXY AND ATTORNEY-IN-FACT (WITH FULL
POWER OF SUBSTITUTION) TO VOTE THE SHARES AS SET FORTH IN ss. 4(a) ABOVE. THE
STOCKHOLDER INTENDS THIS PROXY TO BE IRREVOCABLE (UNTIL THE TERMINATION DATE)
AND COUPLED WITH AN INTEREST AND WILL TAKE SUCH FURTHER ACTION AND EXECUTE SUCH
OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND
HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY HIM WITH RESPECT TO HIS SHARES.
5. Certain Covenants of Stockholder. Except in accordance with the
terms of this Agreement, the Stockholder hereby covenants and agrees as follows:
(a) Prior to the Termination Date, the Stockholder shall not,
in his capacity as such, directly or indirectly (including through advisors,
agents or other intermediaries), solicit (including by way of furnishing
information) or respond (other than to inform a party of the provisions of this
Agreement) to any inquiries or the making of any proposal by any person or
entity (other than the Buyer or any Affiliate thereof) with respect to the
Company that constitutes
or could reasonably be expected to lead to an Acquisition Proposal (as defined
in ss. 5(g) of the Merger Agreement), provided, however, that the foregoing
shall not restrict the Stockholder from taking any actions in his capacity as a
director of Target. If the Stockholder in his capacity as Stockholder receives
any such inquiry or proposal, then the Stockholder shall promptly inform the
Buyer of the material terms and conditions, if any, of such inquiry or proposal
and the identity of the person making it. The Stockholder, in his capacity as
such, will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
(b) Prior to the Termination Date, the Stockholder shall not,
directly or indirectly (i) except pursuant to the terms of the Merger Agreement
or this Agreement, offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, enforce or permit the execution of the
provisions of any redemption agreement with the Target or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, or exercise any discretionary powers to
distribute, any or all of the Stockholder's Shares or any interest therein,
including any trust income or principal, except in each case to a Permitted
Transferee who is or agrees to become bound by this Agreement; (ii) except as
contemplated hereby, grant any proxies or powers of attorney with respect to any
Shares, deposit any Shares into a voting trust or enter into a voting agreement
with respect to any Shares; or (iii) take any action that would make any
representation or warranty of the Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling the Stockholder from
performing his obligations under this Agreement.
(c) The Stockholder hereby waives any rights of appraisal or
rights to dissent from the Merger that he may have.
6. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
7. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's heirs, guardians, administrators or successors or
as a result of any divorce.
8. Stop Transfer. The Stockholder agrees with, and covenants to, the
Buyer that he shall not request that the Target register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Stockholder's Shares, unless such transfer is made in
compliance with this Agreement.
9. Termination. The obligations of the Stockholder and the irrevocable
proxy contained in ss. 4(b) of this Agreement shall terminate upon the first to
occur of (a) the Effective
Time, (b) the date the Merger Agreement is terminated in accordance with its
terms, and (c) the date, if any, upon which the Target, the Buyer and Merger Sub
enter into any amendment to the Merger Agreement which changes in any adverse
manner the amount, composition, or timing of the receipt of the Merger
Consideration (such earlier to occur, the "Termination Date"); provided that the
provisions of Section 11 and any claim for breach of any representation,
warranty, covenant or other agreement under this Agreement occurring prior to
the Termination Date shall survive the Effective Time and/or the Termination
Date, as applicable.
10. Release of Rights to Compensation. Stockholder represents that
since August 1, 1998 he has and will defer receiving $125,000 ("Deferred
Compensation") of his $200,000 annual salary, a pro rata portion of which is
included in accrued wages set forth in the Most Recent Balance Sheet.
Stockholder agrees not to accept payment from Target or its Subsidiaries of any
Deferred Compensation prior to the Termination Date. Stockholder hereby
releases, effective on the Closing Date, any obligation of the Target or its
Subsidiaries to pay any of the Deferred Compensation.
11. Miscellaneous.
(a) 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:
If to the Stockholder:
Xxxxxx X. Xxxx
c/o V Band Corporation
0 Xxxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
copy to: Xxxxxxxx Ingersoll P.C.
Eleven Penn Center, 14th Floor
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxx North
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Buyer:
IPC Information Systems, Inc.
00 Xxxx Xxxxxx
Wall Street Plaza
New York, New York 10005
Attention: Xxxxxx Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
copy to: Xxxxxxx Xxxxxxxx & Xxxx
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(b) Waiver. At any time prior to the Effective Time, any party
hereto may, with respect to any other party hereto, (i) extend the time for the
performance of any of the obligations or other acts, (ii) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto or (iii) waive compliance with any of the agreements
or conditions contained herein. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party or parties to be bound
thereby.
(c) 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.
(d) 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
party hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner.
(e) Entire Agreement. This Agreement, including all exhibits,
disclosure schedules and schedules hereto, constitutes the entire agreement and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof and
except as otherwise expressly provided herein.
(f) Succession and Assignment. Neither this Agreement nor any
of the rights or obligations hereunder may be assigned by any party (whether by
operation of law or otherwise) without the prior written consent of the other
party hereto. Subject to the preceding sentence, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and no other Person shall have any right,
benefit or obligation under this Agreement as a third party beneficiary or
otherwise.
(g) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms. It is
accordingly agreed that the parties hereto shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
(h) Rights and Remedies. No failure or delay on the part of
any party hereto in the exercise of any right hereunder shall impair such right
or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
(i) Fiduciary Duty. Notwithstanding anything herein to the
contrary, no Person executing this Agreement who is, or becomes during the term
hereof, a director or officer of the Company makes any agreement or
understanding herein in his or her capacity as such director or officer, and the
agreements set forth herein shall in no way restrict any director or officer in
the exercise of his or her fiduciary duties as a director or officer of the
Target. The Stockholder has executed this Agreement solely in his capacity as
the record or beneficial holder of the Stockholder's Shares or as the trustee of
a trust whose beneficiaries are the beneficial owners of the Stockholder's
Shares.
(j) Expenses. Each party agrees to bear its own expenses in
connection with the transactions contemplated hereby.
(k) 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.
(l) Trial by Jury. EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND
FOR ANY COUNTERCLAIM THEREIN.
(m) 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.
* * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
IPC INFORMATION SYSTEMS, INC.
By:/s/ Xxxxxx X. Xxxxx
----------------------
Xxxxxx X. Xxxxx
Name:
Title:
STOCKHOLDER
/s/ Xxxxxx X. Xxxx
--------------------
Xxxxxx X. Xxxx
