EXECUTION COPY
-------------------------------------------
AGREEMENT AND PLAN OF MERGER
BETWEEN
ARIZONA ACQUISITION CORP.
AND
IPC INFORMATION SYSTEMS, INC.
December 18, 1997
-------------------------------------------
CONTENTS
--------
(Continued)
CONTENTS
PAGE
----
1. Definitions.......................................................1
2. Basic Transaction................................................10
(a) The Merger..............................................10
(b) The Closing.............................................10
(c) Actions at the Closing..................................11
(d) Effect of Merger........................................11
(e) Elections...............................................13
(f) Proration...............................................14
(g) Procedure for Payment...................................15
(h) Dissenting Shares.......................................17
(i) Fractional Shares.......................................18
(j) Closing of Transfer Records.............................18
3. Representations and Warranties of the Company....................18
(a) Organization, Qualification, and Corporate Power........18
(b) Capitalization..........................................19
(c) Authorization of Transaction............................19
(d) Noncontravention........................................20
(e) Filings with the SEC....................................20
(f) Financial Statements....................................20
(g) [Intentionally left blank.].............................20
(h) Undisclosed Liabilities.................................20
(i) Brokers' Fees...........................................21
(j) Absence of Certain Changes..............................21
(k) Litigation..............................................22
(l) Taxes...................................................22
(m) Compliance with Laws....................................23
(n) Permits.................................................23
(o) Contracts...............................................23
(p) Intellectual Property Rights............................24
(q) Board Approval; Fairness Opinion........................25
(r) ERISA...................................................25
(s) Labor and Employment Matters............................26
(t) Real Estate.............................................27
(u) Environmental Matters...................................27
4. Representations and Warranties of AAC............................28
(a) Organization............................................28
(b) Financing...............................................28
(c) Authorization of Transaction............................29
(i)
CONTENTS
(Continued)
PAGE
----
(d) Noncontravention........................................29
(e) Brokers' Fees...........................................30
(f) Capitalization..........................................30
5. Covenants........................................................30
(a) General.................................................30
(b) Notices and Consents....................................30
(c) Regulatory Matters and Approvals........................30
(d) Financing...............................................32
(e) Accounting Treatment....................................32
(f) Cooperation.............................................32
(g) Operation of the Company's Business.....................33
(h) Full Access.............................................34
(i) Notice of Developments..................................34
(j) No Solicitation.........................................34
(k) Insurance and Indemnification...........................35
(l) Employees...............................................36
(m) Disclosure..............................................37
(n) Comfort Letters.........................................37
(o) Affiliate Letters.......................................37
(p) Continued Registration..................................38
(q) Operation of AAC's Business.............................38
(r) No Amendment of Ancillary Agreements....................38
(s) Solvency Opinion........................................38
6. Conditions to Obligation to Close................................38
(a) Conditions to Obligation of AAC.........................38
(b) Conditions to Obligation of the Company.................40
7. Termination......................................................41
(a) Termination of Agreement................................41
(b) Effect of Termination...................................42
(c) Termination Fee; Expenses...............................42
8. Miscellaneous....................................................42
(a) Survival................................................42
(b) Press Releases and Public Announcements.................43
(c) No Third Party Beneficiaries............................43
(d) Entire Agreement........................................43
(e) Succession and Assignment...............................43
(f) Counterparts............................................43
(ii)
CONTENTS
(Continued)
PAGE
----
(g) General Interpretive Principles.........................43
(h) Notices.................................................44
(i) Governing Law; Forum Selection; and
Waiver of Jury Trial....................................45
(j) Amendments and Waivers..................................46
(k) Severability............................................47
(l) Expenses................................................47
(m) Incorporation of Exhibits, Schedule
and Disclosure Schedules................................47
(n) Transfer Taxes..........................................47
(o) Limited Recourse........................................47
Company Disclosure Schedule
AAC Disclosure Schedule
Schedule A List of Directors of the Surviving Corporation
Exhibit A-1 Amended and Restated Certificate of Incorporation
Exhibit A-2 Restated Certificate of Incorporation
Exhibit B Bylaws
Exhibit C Stock Option Plan
Exhibit D Affiliate Letters
(iii)
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (the "Agreement") entered into as of
December 18, 1997, by and between Arizona Acquisition Corp., a Delaware
corporation ("AAC"), and IPC Information Systems, Inc., a Delaware corporation
(the "Company"). AAC and the Company are referred to collectively herein as the
"Parties."
This Agreement contemplates the merger of AAC with and into the
Company.
Concurrently with the execution of this Agreement, and as an inducement
to AAC and the Company to enter into this Agreement, (i) AAC and certain
principal stockholders of the Company have entered into the Stockholders
Agreement pursuant to which such stockholders have agreed, among other things,
not to sell, transfer, pledge, assign or otherwise dispose of any shares of
Company Common Stock owned or held by them, or enter into any agreement to
accomplish any of the foregoing prior to the Closing, with certain exceptions
and (ii) one or more of the parties thereto and/or others have entered into the
other Ancillary Agreements.
It is intended that the Merger be recorded as a recapitalization for
financial reporting purposes, and both Parties, after discussion with their
auditors, believe that the Merger is eligible for such accounting treatment.
It is intended that the Merger constitute a tax-free reorganization
within the meaning of Section 368(a)(1)(E) of the Code.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
------------
"AAC" has the meaning set forth in the preface above.
"AAC Disclosure Schedule" has the meaning set forth in ss.4.
"AAC-owned Share" means any Company Common Stock that AAC beneficially
owns.
"AAC Comfort Letter" has the meaning set forth in ss.5(n).
"AAC Common Stock" has the meaning set forth in ss.4(f).
"AAC Shareholder Agreement" means the AAC Shareholder Agreement, dated
as of the date hereof between CSH LLC, as shareholder of AAC, and the Company.
"Acquisition Proposal" has the meaning set forth in ss.5(j).
1
"Acquisition Transaction" has the meaning set forth in ss.5(j).
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Agent" has the meaning set forth in ss.8(i).
"Agreement" has the meaning set forth in the preface above.
"Ancillary Agreements" means the Stockholders Agreement, the Investors
Agreement, the Share Exchange and Termination Agreement, the Starr Termination
Agreement, the Xxxxx Employment Agreement, the Xxxxxxxx Employment Agreement,
the KEC-NY Labor Pool Agreement, the KEC-NJ Labor Pool Agreement, the Corporate
Opportunity Agreement, the Xxxxxxx X. Xxxxxxxxxxx Employment Agreement, the
Xxxxx X. Xxxxxxxxxxx Employment Agreement and the AAC Shareholder Agreement.
"Benefit Plan" means any Plan, other than a Multiemployer Plan,
existing at the Closing Date or prior thereto, established or to which
contributions have at any time been made by the Company or any Subsidiary, or
any predecessor of the Company or any Subsidiary, under which any employee,
former employee or director of the Company or any Subsidiary, or any beneficiary
thereof is covered, is eligible for coverage or has benefit rights in respect of
service to the Company or any Subsidiary.
"Business Day" means any day on which the principal offices of the SEC
in Washington, D.C., are open to accept filings or, in the case of determining a
date when any payment is due, any day other than a day on which banks in New
York, New York, are required or authorized to be closed.
"Capital Lease" means a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
"Cash Electing Shares" has the meaning set forth in ss.2(d)(viii).
"Cash Election Price" has the meaning set forth in ss.2(d)(viii).
"Cash Proration Factor" has the meaning set forth in ss.2(f)(iii).
"Certificate of Merger" has the meaning set forth in ss.2(c).
"Closing" has the meaning set forth in ss.2(b).
"Closing Date" has the meaning set forth in ss.2(b).
2
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Comfort Letter" has the meaning set forth in ss.5(n).
"Company Common Stock" means any share of the common stock, $0.01 par
value per share, of the Company.
"Company Disclosure Schedule" has the meaning set forth in ss.3.
"Company Stockholder" means any Person who or which holds any shares of
Company Common Stock.
"Confidential Information" means any information concerning the
businesses and affairs of the Company and its Subsidiaries that is not already
generally available to the public or is otherwise required to be disclosed by
law or court order.
"Confidentiality/Standstill Letter Agreement" means the
confidentiality/standstill letter agreement, dated as of November 13, 1997,
between AAC and the Company.
"Contracts" means, with respect to any Person, any agreement, contract,
obligation, note, bond, mortgage, indenture, option, Lease, promise or
undertaking that is legally binding on such Person or to which such Person is a
party.
"Corporate Opportunity Agreement" means the Amended and Restated
Corporate Opportunity Agreement dated as of the date hereof, among the Company,
KEC-NY and KEC-NJ.
"CSH LLC" means Cable Systems Holdings, LLC, a Delaware limited
liability company.
"CSI" means Cable Systems International, Inc., a Delaware corporation.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"Debt" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable preferred stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the Ordinary Course of Business but including all liabilities created
or arising under any conditional sale or other title retention
agreement with respect to any such property);
3
(c) all Capital Lease Obligations of such Person;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not such
Person has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swap Obligations of such Person; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) hereof.
"Debt Financing Commitments" has the meaning set forth in ss.4(b).
"Definitive Proxy Materials" means the definitive proxy materials
relating to the Special Meeting.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Dissenting Shares" has the meaning set forth in ss.2(h).
"Election Date" has the meaning set forth in ss.2(e)(i).
"Effective Time" has the meaning set forth in ss.2(d)(i).
"Environmental Law" means any and all current federal, state, local,
foreign and provincial statutes, ordinances, rules and regulations relating to
the protection of the environment, and/or governing the generation, treatment,
storage, transportation, disposal, manufacture, or release of Hazardous
Materials, and any common law doctrine, including but not limited to,
negligence, nuisance, trespass, personal injury, or property damage related to,
or arising out of, the presence, release, or exposure to a Hazardous Material.
"Equity Financing Commitment" has the meaning set forth in ss.4(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person who is, or was, a member of a
controlled group (within the meaning of Section 412(n)(6) of the Code) that
includes, or at any time included, the Company or any Subsidiary, or any
predecessor of any of the foregoing.
4
"Exchange Agent" has the meaning set forth in ss.2(e)(ii).
"Exchange Fund" has the meaning set forth in ss.2(g).
"Form of Election" has the meaning set forth in ss.2(e)(iii).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time consistently applied.
"Governmental Body" means any government or political subdivision
thereof, whether foreign or domestic, federal, state, provincial, county, local,
municipal or regional, or any other governmental entity, any agency, authority,
department, division or instrumentality of any such government, political
subdivision, or other governmental entity, any court, arbitral tribunal or
arbitrator, and any non-governmental regulating body, to the extent that the
rules, regulations or orders of such body have the force of law.
"Guaranties" by any Person means all obligations (other than
endorsements in the Ordinary Course of Business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Debt, cash dividend or other monetary obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Debt or obligation or any
property or assets constituting security therefor; (ii) to advance or supply
funds for the purchase or payment of such Debt or obligation; (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring the owner of such Debt or obligation of the ability of
the primary obligor to make payment of the Debt or obligation; or (iv) otherwise
to assure the owner of the Debt or obligation of the primary obligor against
loss in respect thereof. For the purposes of all computations made under this
Agreement, a Guaranty in respect of any Debt for borrowed money shall be deemed
to be Debt equal to the principal amount of such Debt for borrowed money which
has been guaranteed, and a Guaranty in respect of any other obligation or
liability or any dividend shall be deemed to be Debt equal to the maximum
aggregate amount of such obligation, liability or dividend unless such Guaranty
is limited.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx 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 xxxx rights,
service names and service name rights, copyrights and copyright rights, patents
and patent rights, brand names, trade dress, business and
5
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 xxx for past
infringement, if any, in connection with any of the foregoing, and all
documents, disks and other media on which any of the foregoing is stored.
"Investors Agreement" means the Investors Agreement, dated as of the
date hereof, by and among the Company, CSH LLC, CSI and certain other persons
named therein.
"IXNET" means International Exchange Networks, Ltd., a Delaware
corporation.
"Joint Disclosure Document" means the disclosure document combining the
Prospectus and the Definitive Proxy Materials.
"KEC-NJ" means Xxxxxxxxxxx Electric Company, Inc., a New Jersey
corporation.
"KEC-NJ Labor Pool Agreement" means the Amended and Restated Labor Pool
Agreement, dated as of the date hereof, between KEC-NJ and the Company.
"KEC-NY" means Xxxxxxxxxxx Electric Company, Inc., a New York
corporation.
"KEC-NY Labor Pool Agreement" means the Amended and Restated Labor Pool
Agreement, dated as of the date hereof, between KEC-NY and the Company.
"Kleinknechts" means Xxxxxxx X. Xxxxxxxxxxx and Xxxxx X. Xxxxxxxxxxx.
"Knowledge" means actual or constructive knowledge without independent
investigation of any current director or current executive officer.
"Lease" means any lease of real property made under which the Company
or a Subsidiary thereof is a tenant.
"Lien" means any lien, claim, restriction, security interest,
preemptive right, covenant, easement, mortgage, other encumbrance or any claim
of any third party other than (a) mechanic's, materialman's, and similar liens,
(b) liens for taxes not yet due and payable or for taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Material Adverse Effect" means any material adverse effect on the
financial condition or operations, business, assets, or results of operations of
the Company and its Subsidiaries taken as
6
a whole, or AAC, as the context in this Agreement requires, but excluding any
change resulting from general industry or economic conditions.
"Maximum Stock Election Number" has the meaning set forth in
ss.2(f)(i).
"Merger" has the meaning set forth in ss.2(a).
"Merger Consideration" has the meaning set forth in ss.2(d)(viii).
"Minimum Stock Election Number" has the meaning set forth in
ss.2(f)(i).
"Most Recent Fiscal Year End" has the meaning set forth in ss.3(f).
"MSCI" has the meaning set forth in ss.4(b).
"Multiemployer Plan" means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA with respect to which the Company or any ERISA
Affiliate has an obligation to contribute or has or could have withdrawal
liability under ss.4201 of ERISA.
"Non-Stock Electing Shares" has the meaning set forth in ss.2(f)(iii).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Owned Real Property" has the meaning set forth in ss.3(t).
"Party" has the meaning set forth in the preface above.
"Permits" means each material license (other than with respect to
Intellectual Property), franchise, permit, certificate, approval, consent or
other similar authorization affecting, or relating in any way to, the assets or
business of the Company and its Subsidiaries.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, an
estate, a joint venture, an unincorporated organization, or other entity or a
Governmental Body.
"Xxxxx X. Xxxxxxxxxxx Employment Agreement" means the Amended and
Restated Employment Agreement dated as of the date hereof between the Company
and Xxxxx X.
Xxxxxxxxxxx.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether
7
written or oral, or whether for the benefit of a single individual or more than
one individual including, but not limited to, without limitation, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA (whether or not
subject thereto).
"Predecessor Site" means any of the real properties of any predecessors
of the Company or any Subsidiary thereof or any entities previously owned by the
Company or any Subsidiary thereof.
"Preliminary Proxy Materials" has the meaning set forth in ss.5(c)(i).
"Prospectus" means the final prospectus relating to the registration of
the Surviving Corporation Common Stock under the Securities Act.
"Proceeding" has the meaning set forth in ss.8(i).
"Public Reports" has the meaning set forth in ss.3(e).
"Registration Statement" has the meaning set forth in ss.5(c)(i).
"Requisite Stockholder Approval" means the affirmative vote of at least
a majority of the shares of Company Common Stock, but less than 80% of the
shares of the Company Common Stock, in favor of this Agreement and the Merger in
accordance with the Delaware General Corporation Law.
"Requisite Super-Majority Stockholder Approval" means the affirmative
vote of at least 80% of the shares of Company Common Stock in favor of the
Merger and this Agreement in accordance with Delaware General Corporation Law.
"Xxxxxxx X. Xxxxxxxxxxx Employment Agreement" means the Amended and
Restated Employment Agreement dated as of the date hereof between the Company
and Xxxxxxx X.
Xxxxxxxxxxx.
"Schedule 13E-3" has the meaning set forth in ss.5(c)(i).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Xxxxxxxx" means Xxxxxxx Xxxxxxxx.
"Xxxxxxxx Employment Agreement" means the Amended and Restated
Employment Agreement, dated as of the date hereof, between Xxxxxxxx and IXNET.
8
"Share Exchange and Termination Agreement" means the Share Exchange and
Termination Agreement, dated as of the date hereof, among Walsh, Servidio, IXNET
and the Company.
"Site" means any of the real properties currently or previously owned,
leased or operated by the Company or any Subsidiary thereof, including all soil,
subsoil, surface waters and groundwater thereat.
"Solvency Opinion" means the opinion from an independent advisor
confirming that, upon the consummation of the transactions contemplated hereby,
the Surviving Corporation (on a consolidated basis) (i) will not be insolvent,
(ii) will not be left with unreasonably small capital, (iii) will not have
incurred debts beyond its ability to pay such debts as they mature, and (iv)
will have a fair value and present fair salable value of its assets in excess of
its stated liabilities and identified contingent liabilities by at least the
total par value of its capital stock.
"Special Meeting" has the meaning set forth in ss.5(c)(ii).
"Starrs" mean Xxxxxx and Xxxxxx Xxxxx.
"Starr Termination Agreement" means the Termination Agreement, dated as
of the date hereof, among the Starrs and the Company.
"Stock Electing Shares" has the meaning set forth in ss.2(d)(viii).
"Stock Election" has the meaning set forth in ss.2(e)(i).
"Stock Election Price" has the meaning set forth in ss.2(d)(viii).
"Stock Proration Factor" has the meaning set forth in ss.2(f)(ii).
"Stockholders Agreement" means the Stockholders Agreement, dated as of
the date hereof, by and among, inter alia, the Kleinknechts, AAC and Xxxxxxx X.
Xxxxxxxxxxx.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Superior Acquisition Proposal" has the meaning set forth in
ss.7(a)(iv).
"Surviving Corporation" has the meaning set forth in ss.2(a).
"Surviving Corporation Common Stock" has the meaning set forth in
ss.2(d)(vi).
"Swap Obligations" means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps and similar
obligations obligating such Person to make payments, whether periodically or
upon the happening of a contingency. For the purposes of this
9
Agreement, the amount of any Swap Obligation shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap Obligation had terminated at
the end of such fiscal quarter, and, in making such determination, if any
agreement relating to such Swap Obligation provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then, in each such
case, the amount of such obligation shall be the net amount so determined.
"Taxes" means all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax.
"Tax Returns" means all returns and reports (including elections,
claims, declarations, disclosures, schedules, estimates, computations and
information returns) required to be supplied to a Tax authority in any
jurisdiction relating to Taxes.
"Termination Fee" has the meaning set forth in ss.7(c).
"Third Party" means any "group," as described in Rule 13d-5(b)
promulgated under the Securities Exchange Act, or Person, other than AAC or any
of its Affiliates.
"Xxxxx" means Xxxxx Xxxxx.
"Xxxxx Employment Agreement" means the Amended and Restated Employment
Agreement, dated as of the date hereof, between Xxxxx and IXNET.
2. BASIC TRANSACTION.
(a) THE MERGER. Subject to the terms and conditions of this Agreement
and in accordance with the Delaware General Corporation Law, AAC will merge with
and into the Company (the "Merger") at the Effective Time. Upon the Effective
Time, the separate existence of AAC shall cease and the Company shall be the
corporation surviving the Merger and shall continue under the name IPC
Information Systems, Inc. (the "Surviving Corporation").
(b) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxx, Xxxxx &
Xxxxxxx 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").
10
(c) ACTIONS AT THE CLOSING. On the day of the Closing (which Closing
satisfies the requirements of ss.2(b)), immediately following the satisfaction
or waiver of the conditions to the obligations of the Parties to consummate the
transactions contemplated hereby, (i) the Company will file with the Secretary
of State of the State of Delaware a Certificate of Merger (the "Certificate of
Merger"), and (ii) AAC will cause the Exchange Fund to be delivered to the
Exchange Agent in the manner provided below in this ss.2.
(d) EFFECT OF MERGER.
(i) GENERAL. The Merger shall become effective at the time
(the "Effective Time") the Company duly files the Certificate of Merger with the
Secretary of State of the State of Delaware or at such later time as is
specified in the Certificate of Merger. The Merger shall have the effect set
forth in the Delaware General Corporation Law. The Surviving Corporation may, at
any time after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either the Company or AAC
in order to carry out and effectuate the transactions contemplated by this
Agreement.
(ii) CERTIFICATE OF INCORPORATION. At the Effective Time, and
without any further action on the part of the Company or AAC, the certificate of
incorporation of the Company in effect immediately prior to the Effective Time
shall be amended as of the Effective Time, (i) in the event that the Requisite
Super-Majority Stockholder Approval is obtained, to read as set forth in Exhibit
A-1, or (ii) in the event that the Requisite Stockholder Approval is obtained,
to read as set forth in the Exhibit A-2, and as so amended shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended in accordance with applicable law.
(iii) BYLAWS. At the Effective Time and without any further
action on the part of the Company or AAC, the bylaws of the Company, as amended
and restated, a copy of which is set forth as Exhibit B, and in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation, until amended in accordance with applicable law.
(iv) (A) DIRECTORS. (1) Subject to applicable law, in the
event that the Requisite Super-Majority Stockholder Approval is obtained, the
directors of the Surviving Corporation at the Effective Time shall be the
directors as set forth on Schedule A hereto; provided, that in the event any
such director is unable, or becomes unable to serve, a replacement director
shall be designated by AAC.
(2) In the event that the Requisite Stockholder Approval
is obtained:
(a) Subject to applicable law, (i) the vacancies on
the board of directors of the Company created by the
resignations of directors at the Closing and (ii) the
vacancies created by an increase in the size of the board of
directors of the Company from six to nine in accordance with
the bylaws of the Surviving Corporation, in each case, shall
be filled by the individuals set forth on Schedule A hereto;
provided, that in the event any such individual is unable, or
becomes unable to serve, a replacement director shall be
designated by AAC.
11
(b) AAC will supply to the Surviving Corporation in
writing and be solely responsible for any information provided
by AAC with respect to itself and its nominees, officers,
directors and Affiliates required by Section 14(f) of the
Securities Exchange Act and Rule 14f-1 promulgated thereunder.
(B) OFFICERS. Subject to applicable law and the provisions of
applicable Ancillary Agreements, the officers of the Surviving
Corporation at the Effective Time shall be the officers of the Company
immediately prior to the Effective Time.
(v) TREASURY STOCK AND AAC-OWNED SHARES. At and as of the
Effective Time, by virtue of the Merger and without any action on the part of
the Company or AAC or any holder of shares of Company Common Stock or AAC Common
Stock, each share of Company Common Stock owned by the Company or any subsidiary
as treasury stock and each AAC-owned Share held immediately prior to the
Effective Time shall be canceled and cease to exist, and no consideration shall
be delivered or deliverable with respect thereto.
(vi) CONVERSION OF AAC COMMON STOCK. At and as of the
Effective Time, by virtue of the Merger and without any action on the part of
the Company or AAC or any holder of shares of Company Common Stock or AAC Common
Stock, each share of AAC Common Stock shall be converted into one share of
common stock, $0.01 par value per share, of the Surviving Corporation (the
"Surviving Corporation Common Stock").
(vii) COMPANY STOCK OPTIONS. Each option to purchase shares of
Company Common Stock that is outstanding immediately prior to the Effective Time
(whether or not vested or exercisable) shall, at the Effective Time, be
cancelled, and in exchange therefor, each option holder shall receive a cash
payment which, prior to deduction for applicable withholding taxes, is in an
amount equal to the product of (A) the excess, if any, of the Cash Election
Price over the per share exercise price of the option and (B) the number of
shares subject to the option (whether or not vested). AAC shall make such
payment on or after the Closing Date immediately upon receipt of a written
agreement from the option holder to accept such payment in full settlement of
such option holder's rights with respect to the option. If the per share
exercise price of any option equals or exceeds the Cash Election Price, such
option shall be cancelled without any payment required thereunder.
(viii) CONVERSION OPTION (OR RETENTION) OF COMPANY COMMON
STOCK. At and as of the Effective Time, by virtue of the Merger and without any
action on the part of the Company or AAC or any holder of shares of Company
Common Stock or AAC Common Stock, each share of Company Common Stock outstanding
immediately prior to the Effective Time shall, except as otherwise provided in
ss.2(d)(v)-(vii) or as provided in ss.2(h) with respect to Dissenting Shares as
to which appraisal rights have been exercised, be converted into the following
(the "Merger Consideration"), subject to ss.2(f):
(A) for each such share with respect to which an
election to retain Surviving Corporation Common Stock has been
effectively made and not revoked or lost
12
pursuant to ss. 2(e)(iii), (iv) and (v) (the "Stock Electing Shares"),
the right to retain one share of Surviving Corporation Common Stock
(the "Stock Election Price"); and
(B) for each such share ("Cash Electing Shares")
(other than Stock Electing Shares), the right to receive in cash from
the Surviving Corporation following the Merger an amount equal to $21
(the "Cash Election Price").
(e) ELECTIONS.
----------
(i) Each Person who, on or prior to the Business Day next
preceding the date of the Special Meeting (the "Election Date"), is a record
holder of shares of Company Common Stock will be entitled, with respect to such
shares, to make an unconditional election on or prior to such Election Date to
retain the Stock Election Price (a "Stock Election") on the basis hereinafter
set forth.
(ii) Prior to the mailing of the Joint Disclosure Document,
the Company shall appoint an agent reasonably acceptable to AAC (the "Exchange
Agent") for the purpose of exchanging certificates representing shares of
Company Common Stock for the Merger Consideration.
(iii) The Company shall prepare and mail a form of election,
which form shall be subject to the reasonable approval of AAC (the "Form of
Election"), with the Joint Disclosure Document to the record holders of shares
of Company Common Stock as of the record date for the Special Meeting, which
Form of Election shall be used by each record holder of shares who makes a Stock
Election with respect to any or all such holder's shares. The Company will use
its reasonable best efforts to make the Form of Election and the Joint
Disclosure Document available to all persons who become holders of shares during
the period between such record date and the Election Date. Any such holder's
Stock Election shall have been properly made only if the Exchange Agent shall
have received at its designated office, by 5:00 p.m., New York City time on the
Election Date, a Form of Election properly completed and signed and accompanied
by certificates for the shares of Company Common Stock to which such Form of
Election relates, duly endorsed in blank or otherwise in form acceptable for
transfer on the books of the Company (or by an appropriate guarantee of delivery
of such certificates as set forth in such Form of Election from a firm which is
a member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States, provided such
certificates are in fact delivered to the Exchange Agent within five New York
Stock Exchange trading days after the date of execution of such guarantee of
delivery).
(iv) Any Form of Election may be revoked by the holder
submitting it to the Exchange Agent only by written notice received by the
Exchange Agent (i) prior to 5:00 p.m., New York City time, on the Election Date
or (ii) after the Election Date, if (and to the extent that) the Exchange Agent
is legally required to permit revocations, and the Effective Time shall not have
occurred prior to such date. In addition, all Forms of Election shall
automatically be revoked if the Exchange Agent is notified in writing by AAC or
the Company that the Merger has been
13
abandoned or this Agreement has been terminated. If a Form of Election is
revoked, the certificate or certificates (or guarantees of delivery, as
appropriate) for the shares to which such Form of Election relates shall be
promptly returned by the Exchange Agent to the stockholder submitting the same
to the Exchange Agent.
(v) The good faith determination of the Exchange Agent shall
be binding as to whether or not Stock Elections have been properly made or
revoked pursuant to this ss.2(e) with respect to shares and when elections and
revocations were received by it. If the Exchange Agent determines that any Stock
Election either (x) was not properly made or (y) was not submitted to or
received by the Exchange Agent with respect to any shares, such shares shall be
converted into Merger Consideration in accordance with ss.2(d)(viii)(B). The
Exchange Agent shall also make all computations as to the allocation and the
proration contemplated by ss.2(f), and any such computation shall be conclusive
and binding on the holders of shares. The Exchange Agent may, with the mutual
agreement of AAC and the Company, make such rules as are consistent with this
ss.2(e) for the implementation of the elections provided for herein as shall be
necessary or desirable fully to effect such elections.
(f) PRORATION.
---------
(i) Notwithstanding anything to the contrary contained in this
Agreement but subject to ss.2(d)(v) and ss.2(h),
(A) the minimum number of shares of Company Common
Stock to be converted into the right to retain Surviving Corporation
Common Stock shall be equal to 380,952 shares (the "Minimum Stock
Election Number"), and
(B) the maximum number of shares of Company Common
Stock to be converted into the right to retain Surviving Corporation
Common Stock shall be equal to 1,752,381 shares (the "Maximum Stock
Election Number").
(ii) If the number of Stock Electing Shares exceeds in the
aggregate the Maximum Stock Election Number, then the Stock Electing Shares for
each Stock Election shall be converted into the right to retain the Stock
Election Price or the right to receive the Cash Election Price in accordance
with the terms of ss.2(d)(viii) in the following manner:
(A) A stock proration factor (the "Stock Proration
Factor") shall be determined by dividing the Maximum Stock Election
Number by the total number of Stock Electing Shares.
(B) The number of Stock Electing Shares covered by
each Stock Election to be converted into the right to retain the Stock
Election Price shall be determined by multiplying the Stock Proration
Factor by the total number of Stock Electing Shares covered by such
Stock Election.
14
(C) Each Stock Electing Share, other than any shares
converted into the right to receive the Stock Election Price in
accordance with ss.2(f)(ii)(B), shall be converted into the right to
receive the Cash Election Price as if such shares were not Stock
Electing Shares in accordance with the terms of ss.2(d)(viii)(B).
(iii) If the number of Stock Electing Shares is less in the
aggregate than the Minimum Stock Election Number, then:
(A) All Stock Electing Shares shall be converted into
the right to receive the Stock Election Price in accordance with
ss.2(d)(viii)(A).
(B) Such number of shares with respect to which a
Stock Election is not in effect ("Non-Stock Electing Shares") shall be
converted into the right to retain the Stock Election Price (and a
Stock Election shall be deemed to have been made with respect to such
shares) in accordance with ss.2(d)(viii)(A) in the following manner:
(1) a cash proration factor (the "Cash
Proration Factor") shall be determined by dividing (x) the
difference between the Minimum Stock Election Number and the
number of Stock Electing Shares by (y) the total number of
shares other than Stock Electing Shares and Dissenting Shares;
and
(2) the number of shares (in addition to
Stock Electing Shares) to be converted into the right to
retain the Stock Election Price shall be determined by
multiplying the Cash Proration Factor by the total number of
shares other than Stock Electing Shares and Dissenting Shares
so that the aggregate number of Stock Electing Shares and
Non-Stock Electing Shares converted into such right equals the
Minimum Stock Election Number.
(g) PROCEDURE FOR PAYMENT.
---------------------
(i) At the Closing, AAC will cause to be furnished to the
Exchange Agent a corpus (the "Exchange Fund") consisting of cash sufficient in
the aggregate for the Exchange Agent to make full payment of the cash portion of
the Merger Consideration to the holders of all of the issued and outstanding
shares of Company Common Stock (other than any Dissenting Shares and AAC-owned
Shares). Immediately after the Effective Time, the Company will cause the
Exchange Agent to mail a letter of transmittal (with instructions for its use)
to each record holder of issued and outstanding shares of Company Common Stock
who did not make a timely and valid Stock Election in order to permit the
Exchange Agent to pay such record holder the cash portion of the Merger
Consideration. No interest will accrue or be paid to the holder of any issued
and outstanding shares of Company Common Stock.
(ii) If any portion of the Merger Consideration is to be paid
to a Person other than the registered holder of the shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the
15
Person requesting such payment shall pay to the Exchange Agent any transfer or
other Taxes required as a result of such payment to a Person other than the
registered holder of such shares or establish to the satisfaction of the
Exchange Agent that such Tax has been paid or is not payable.
(iii) After the Effective Time, there shall be no further
registration of transfers of shares of Company Common Stock. If, after the
Effective Time, certificates representing shares of Company Common Stock are
presented to the Surviving Corporation, they shall be canceled and exchanged for
the cash portion of the Merger Consideration provided for in accordance with the
procedures set forth herein.
(iv) Any portion of the Merger Consideration made available to
the Exchange Agent to pay for shares of Company Common Stock for which appraisal
rights have been perfected shall be paid to the Surviving Corporation, upon
demand.
(v) The Surviving Corporation may cause the Exchange Agent to
pay over to the Surviving Corporation any portion of the Exchange Fund
(including any earnings thereon) remaining 180 days after the Effective Time,
and thereafter each remaining Company Stockholder shall be entitled to look only
to the Surviving Corporation (subject to abandoned property, escheat, and other
similar laws) as a general creditor thereof with respect to the cash payable
upon surrender of such Company Stockholder's certificates. To the extent
permitted by applicable law, neither the Surviving Corporation nor the Exchange
Agent shall be liable to any Person in respect of any shares of Company Common
Stock (or dividends or distributions with respect thereto) or cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Any amounts remaining unclaimed by
holders of shares of Company Common Stock two years after the Effective Time (or
such earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Body) shall, to the extent
permitted by applicable law, become the property of Surviving Corporation free
and clear of any claims or interest of any Person previously entitled thereto.
(vi) No dividends or other distributions with respect to
Company Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered certificate for shares of Company Common
Stock with respect to the shares of Company Common Stock represented thereby,
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to ss.2(i) until the surrender of such certificate in accordance
with this Article 2. Subject to the effect of applicable laws, following
surrender of any such certificate, there shall be paid to the holder of the
certificate representing whole shares of Company Common Stock issued in exchange
therefor, without interest, (A) the amount of dividends and other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Company Common Stock, and (B) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such whole shares of Company Common
Stock.
16
(vii) The Exchange Agent shall invest any cash included in the
Exchange Fund as directed by the Company or the Surviving Corporation, as the
case may be, provided that such investment shall be in (A) securities issued or
directly and fully guaranteed or insured by the United States Government or any
agency or instrumentality thereof having maturities not more than six months
from the Effective Time of the Merger, (B) certificates of deposit, Eurodollar
time deposits and bankers' acceptances with maturities not exceeding six months
and overnight bank deposits with any commercial bank, depository institution or
trust company incorporated or doing business under the laws of the United States
of America, any state thereof or the District of Columbia, provided that such
commercial bank, depository institution or trust company has, at the time of
investment, (1) capital and surplus exceeding $250 million and (2) outstanding
short-term debt securities which are rated at least A-1 by Standard & Poor's
Ratings Group, a Division of the XxXxxx-Xxxx Companies, Inc., or at least P-1 by
Xxxxx'x 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 XxXxxx-Xxxx Companies, Inc. or Xxxxx'x Investors Service, Inc.,
or carrying an equivalent rating by a nationally recognized rating agency if
both of the two named rating agencies cease to publish ratings of investments
and in each case maturing within six months of the Effective Time and (E) money
market mutual or similar funds having assets in excess of $1 billion. Any
interest and other income resulting from such investments shall be paid to the
Company or the Surviving Corporation, as the case may be.
(viii) The Surviving Corporation shall pay all charges and
expenses of the Exchange Agent.
(h) DISSENTING SHARES. Notwithstanding ss.2(d), shares of Company
Common Stock which are issued and outstanding immediately prior to the Effective
Time and which are held by a Company Stockholder who has not voted such shares
in favor of the Merger, who shall have delivered a written demand for appraisal
of such shares in the manner provided by the Delaware General Corporation Law
and who, as of the Effective Time, shall not have effectively withdrawn or lost
such right to appraisal ("Dissenting Shares") shall not be converted into a
right to receive the Merger Consideration. The holders thereof shall be entitled
only to such rights as are granted by Section 262 of the Delaware General
Corporation Law. Each holder of Dissenting Shares who becomes entitled to
payment for such shares pursuant to Section 262 of the Delaware General
Corporation Law shall receive payment therefor from the Surviving Corporation in
accordance with the Delaware General Corporation Law; PROVIDED, HOWEVER, that
(i) if any such holder of Dissenting Shares shall have failed to establish his
entitlement to appraisal rights as provided in Section 262 of the Delaware
General Corporation Law, (ii) if any such holder of Dissenting Shares shall have
effectively withdrawn his demand for appraisal of such shares or lost his right
to appraisal and payment for his shares under Section 262 of the Delaware
General Corporation Law or (iii) if neither any holder of Dissenting Shares nor
the Surviving Corporation shall have filed a petition demanding a determination
of the value of all Dissenting Shares within the time provided in Section 262 of
the Delaware General Corporation Law, such holder shall forfeit the right to
17
appraisal of such shares and each such share shall be treated as if it had been
a Non-Stock Electing Share and had been converted, as of the Effective Time,
into a right to receive the Merger Consideration, without interest thereon, from
the Surviving Corporation as provided in ss.2(d) hereof. The Company shall give
AAC prompt notice of any demands received by the Company for appraisal of
shares, and, until the Effective Time, AAC shall have the right to participate
in all negotiations and proceedings with respect to such demands. The Company
shall not, except with the prior written consent of AAC, make any payment with
respect to, or settle or offer to settle, any such demands.
(i) FRACTIONAL SHARES.
-----------------
(i) No certificates or scrip representing fractional shares of
Surviving Corporation Common Stock shall be issued upon the surrender for
exchange of certificates representing shares of Company Common Stock, and such
fractional interests shall not entitle the owner thereof to vote or to any
rights of a stockholder of the Surviving Corporation.
(ii) Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock exchanged pursuant to the Merger
who would otherwise be entitled to receive a fraction of a share of Surviving
Corporation Common Stock (after taking into account all shares of Company Common
Stock delivered by such holder) shall receive, in lieu thereof, a cash payment
(without interest) representing (A) the applicable fraction of Surviving
Corporation Common Stock multiplied by (B) $21, payable as soon as practicable
on or after the Effective Time.
(j) CLOSING OF TRANSFER RECORDS. After the close of business on the
Closing Date, transfers of Company Common Stock outstanding prior to the
Effective Time shall not be made on the stock transfer books of the Surviving
Corporation.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to AAC that the statements contained in this ss.3 are
correct and complete as of the date of this Agreement, except as set forth in
the disclosure schedule prepared by the Company accompanying this Agreement (the
"Company Disclosure Schedule"). The Company Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained in
this ss.3.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of the
Company and its Subsidiaries is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation.
Each of the Company and its Subsidiaries is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a Material Adverse Effect or a material adverse effect on the ability of
the Parties to consummate the transactions contemplated by this Agreement. Each
of the Company and its Subsidiaries has full corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. Each of the Company and its Subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where
18
the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) CAPITALIZATION. The authorized capital stock of the Company
consists of 25,000,000 shares, $0.01 par value per share, of Company Common
Stock and 10,000,000 shares, $0.01 par value per share, of preferred stock (the
"Company Preferred Stock"). As of the date of this Agreement: (i) 10,715,119
shares of Company Common Stock were issued and outstanding, and no shares of
Company Preferred Stock were issued or outstanding, (ii) no shares of Company
Common Stock were reserved for issuance except that (A) 1,579,337 shares of
Company Common Stock have been reserved for issuance pursuant to the 1994
Company Stock Option and Incentive Plan, of which 1,082,334 may be issued in the
future upon the exercise of options currently outstanding and (B) 526,813 shares
of Company Common Stock have been reserved for issuance pursuant to the 1994
Company Employee Stock Purchase Plan, of which 19,037 shares are estimated to be
the number of shares of Company Common Stock which will be issued pursuant to
contributions by employees of the Company under the 1994 Company Employee Stock
Purchase Plan during calendar year 1997, and (C) 31,857 shares of Company Common
Stock have been reserved for issuance at par value on or about September 30,
1997 pursuant to an employment agreement with a former employee, (iii) no shares
of Company Preferred Stock were reserved for issuance and (iv) 242,185 shares of
Company Common Stock were held by the Company in its treasury. All of the issued
and outstanding shares of Company Common Stock have been duly authorized and are
validly issued, fully paid, and nonassessable. Except as indicated hereinabove,
there are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Company or any Subsidiary thereof to issue,
sell, or otherwise cause to become outstanding any of its capital stock or the
capital stock of any Subsidiary thereof. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to the Company or any of its Subsidiaries. After giving effect to the
transactions contemplated by the Share Exchange and Termination Agreement, all
shares of capital stock of Subsidiaries of the Company are wholly owned directly
or indirectly by the Company and have been duly authorized and are validly
issued, fully paid and nonassessable.
(c) AUTHORIZATION OF TRANSACTION. The Company has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder, subject to the
Requisite Stockholder Approval or Requisite Super-Majority Stockholder Approval,
as the case may be. The execution and delivery by the Company of this Agreement
and the Merger, and the performance of the Company's obligations hereunder, have
been duly authorized by all requisite corporate action, subject to the Requisite
Stockholder Approval or Requisite Super-Majority Stockholder Approval, as the
case may be, and this Agreement has been executed and delivered by the Company.
This Agreement constitutes the valid and legally binding obligation of the
Company, enforceable in accordance with its terms and conditions. The Company
has heretofore duly elected, pursuant to Section 203 of the Delaware General
Corporation Law, not to be governed by such Section.
19
(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 Xxxx-Xxxxx-Xxxxxx Act, the Delaware General Corporation Law,
the Securities Exchange Act, the Securities Act, the state securities laws, the
Communications Act of 1934, as amended, and as set forth on ss. 3(d) of the
Company Disclosure Schedule, none of the Company and its Subsidiaries needs to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any Governmental Body in order for the Parties to consummate the
transactions contemplated by this Agreement or execute, deliver and perform its
obligations under this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
Material Adverse Effect or a material adverse effect on the ability of the
Parties to consummate the transactions contemplated by this Agreement.
(e) FILINGS WITH THE SEC. Since October 1, 1994, the Company has made
all filings with the SEC that it has been required to make under the Securities
Act and the Securities Exchange Act (collectively the "Public Reports"). Each of
the Public Reports has complied with the Securities Act and the Securities
Exchange Act and the rules and regulations promulgated thereunder in all
material respects. None of the Public Reports, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(f) FINANCIAL STATEMENTS. The Company has delivered to AAC a draft, in
substantially final form, of an Annual Report on Form 10-K for the fiscal year
ended September 30, 1997 (the "Most Recent Fiscal Year End"). The financial
statements included in or incorporated by reference into these Public Reports
(including the related notes and schedules) have been prepared in accordance
with GAAP and present fairly the financial condition of the Company and its
Subsidiaries as of the indicated dates and the results of operations of the
Company and its Subsidiaries for the indicated periods.
(g) [INTENTIONALLY LEFT BLANK.]
(h) UNDISCLOSED LIABILITIES. Except as set forth in the Public Reports
and except for (i) liabilities which have arisen after the Most Recent Fiscal
Year End in the Ordinary Course of Business and (ii) liabilities under this
Agreement, neither the Company nor any of its Subsidiaries has any material
liabilities of any nature (whether accrued, absolute, contingent or otherwise)
20
required by GAAP to be set forth on a financial statement or in the notes
thereto and which individually or in the aggregate would have a Material Adverse
Effect. To the extent that any provision of this ss.3(h) conflicts with any
representation made by the Company having a Knowledge qualification contained in
any subsection of this ss.3, the provisions of that subsection shall apply.
(i) BROKERS' FEES. Other than fees related to financial advisory
services performed for the Company to be paid to the Persons set forth on
ss.3(i) of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has any liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement. The Company has furnished to AAC true, correct and complete
copies of engagement letters relating to such services.
(j) ABSENCE OF CERTAIN CHANGES. Since September 30, 1997, the Company
and its Subsidiaries have conducted their business in the Ordinary Course of
Business and there has not been:
(i) any event, occurrence or development of a state of facts
which, to the Company's Knowledge, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, except, however, any
event, occurrence or development related to, arising out of or resulting from
this Agreement and the transactions and activities contemplated hereby;
(ii) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of the
Company, or (other than (A) any retirement of, or issuance of Company Common
Stock pursuant to the exercise of options to acquire shares of Company Common
Stock granted to employees or directors, or (B) contemplated pursuant to this
Agreement), any repurchase, redemption or other acquisition by the Company or
any Subsidiary thereof of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any Subsidiary
thereof;
(iii) any amendment of any material term of any outstanding
equity security of the Company or any Subsidiary thereof;
(iv) any incurrence, assumption or guarantee by the Company or
any Subsidiary thereof of any indebtedness for borrowed money, other than in the
Ordinary Course of Business in amounts and on terms consistent with past
practices;
(v) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the Company or any
Subsidiary thereof which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
(vi) any material change in any method of accounting or
accounting practice by the Company or any Subsidiary thereof which, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect;
21
(vii) any (A) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary thereof, (B)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any Subsidiary thereof, (C) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements or (D) increase in compensation, bonus or other benefits
payable to directors, officers or employees of the Company or any Subsidiary
thereof; in each case, other than in the Ordinary Course of Business; or
(viii) any cancellation of any Permits or Contracts to which
the Company or any Subsidiary thereof is a party, or any written or oral
notification to the Company or any Subsidiary thereof that any party to any such
arrangement intends to cancel or not renew such arrangement beyond its
expiration date as in effect on the date hereof, which cancellation or
notification, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
(k) LITIGATION. There is no action, suit or proceeding pending against,
or, to the Knowledge of the Company, any action, suit, investigation or
proceeding threatened against or affecting, the Company or any Subsidiary
thereof or any of their respective properties before any Governmental Body,
which could reasonably be expected to have a Material Adverse Effect or which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
Merger or any of the other transactions contemplated hereby.
(l) TAXES. (i) The Company and each of its Subsidiaries have duly and
timely filed (taking into account any extension of time within which to file)
all material Tax Returns required to be filed by any of them and all such filed
Tax Returns are complete and accurate in all material respects; (ii) the Company
and each of its Subsidiaries have paid all Taxes required to be paid by it
including Taxes that the Company and its Subsidiaries are obligated to withhold
from amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith or for such amounts that, individually or in
aggregate, could not reasonably be expected to have a Material Adverse Effect;
(iii) as of the date of this Agreement, there are no pending or, to the
Knowledge of the Company, threatened in writing audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters relating
to the Company or any of its Subsidiaries which, if determined adversely to the
Company or its Subsidiaries, could reasonably be expected to have a Material
Adverse Effect; (iv) there are no deficiencies or claims for any Taxes that have
been proposed, asserted or assessed against the Company or any of its
Subsidiaries which, if such deficiencies or claims were finally resolved against
the Company or any of its Subsidiaries, could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; (v) there
are no material Liens for Taxes upon the assets of the Company or any of its
Subsidiaries, other than Liens for current Taxes not yet due and payable and
Liens for Taxes that are being contested in good faith by appropriate
proceedings; (vi) none of the Company or any of its Subsidiaries has made an
election under Section 341(f) of the Code; (vii) except as set forth in ss.3(l)
of the Company Disclosure Schedule, no extension of the statute of limitations
on the assessment of any Taxes has been granted by the Company or any of its
Subsidiaries and is currently in effect; (viii) except as set forth in ss.3(l)
of the Company Disclosure Schedule none of the Company or its Subsidiaries is a
party to any agreement or arrangement that could reasonably
22
be expected to result, separately or in the aggregate, in the actual or deemed
payment by the Company or a Subsidiary of any "excess parachute payments" within
the meaning of Section 280G or 162(m) of the Code; (ix) none of the Company or
its Subsidiaries has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; (x) all Taxes required to be
withheld, collected or deposited by or with respect to the Company and its
Subsidiaries have been timely withheld, collected or deposited, as the case may
be, and, to the extent required, have been paid to the relevant taxing
authority, except, in each case, to the extent that failing to so withhold,
collect, deposit or pay would not have a Material Adverse Effect; (xi) none of
the Company or its Subsidiaries has issued or assumed (A) any obligations
described in Section 279(b) of the Code, (B) any applicable high yield discount
obligations, as defined in Section 163(i) of the Code, or (C) any
registration-required obligations, within the meaning of Section 163(f)(2) of
the Code, that is not in registered form; (xii) there are no requests for
information currently outstanding that could affect the Taxes of the Company and
its Subsidiaries; and (xiii) there are no proposed reassessments of any property
owned by the Company or its Subsidiaries or other proposals that could increase
the amount of any Tax to which the Company, its Subsidiaries or any such Person
would be subject.
(m) COMPLIANCE WITH LAWS. Neither the Company nor any Subsidiary
thereof is in violation of, or has since September 30, 1997 violated, and, to
the Knowledge of the Company, none of them is under investigation with respect
to or has been threatened to be charged with or given notice of any violation by
any Governmental Body of any applicable law, rule, regulation, judgment,
injunction, order or decree, except for violations that could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(n) PERMITS. Except as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (i) the Permits are
valid and in full force and effect, (ii) neither the Company nor any Subsidiary
thereof is in default under, and no condition exists that with notice or lapse
of time or both would constitute a default under, the Permits and (iii) none of
the Permits will be terminated or impaired or become terminable, in whole or in
part, as a result of the transactions contemplated hereby. The Company and each
of its Subsidiaries have all Permits necessary to carry on its business as
currently conducted or as proposed to be conducted, except to the extent that
the failure to so have them would not have a Material Adverse Effect.
(o) CONTRACTS. ss.3(o) of the Company Disclosure Schedule sets forth a
list of the following Contracts to which the Company or any of its Subsidiaries
is a party or by or to which it or its assets are bound or subject: (i)
Contracts relating to the borrowing of money; (ii) Contracts with any current or
former officer or director of the Company; (iii) joint venture agreements
between the Company or any of its Subsidiaries and an unaffiliated third party;
(iv) any Contracts providing for two or more fiscal year payments to or from the
Company or any Subsidiary thereof of $200,000 or more; (v) any license
agreements (except with respect to Intellectual Property), distribution
agreements, franchise agreements or agreements in respect of similar rights
granted to or held by the Company or any of its Subsidiaries; (vi) any Contract
that materially limits the freedom of the Company or any Subsidiary thereof to
compete in any line of
23
business or with any Person or in any geographical area or which would so
materially limit the freedom of the Company or any Subsidiary thereof so to
compete after the Effective Time; (vii) any other Contract not made in the
Ordinary Course of Business which Contract is material to the Company and the
Subsidiaries taken as a whole; or (viii) any Tax sharing agreement or other
arrangement. The Company has heretofore made available to AAC true and complete
copies of each of the Contracts set forth in ss.3(o) of the Company Disclosure
Schedule. Except for Contracts that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, all Contracts
disclosed in ss.3(o) of the Company Disclosure Schedule are valid and binding
Contracts of the Company or a Subsidiary thereof, are in full force and effect
(except for those that have terminated or will terminate by their own terms),
and neither the Company, any Subsidiary thereof nor, to the Knowledge of the
Company, any other party thereto, is in default in any material respect under
the terms of any such Contract.
(p) INTELLECTUAL PROPERTY RIGHTS.
----------------------------
(i) ss.3(p) of the Company Disclosure Schedule sets forth a
complete list of all (A) patents and patent applications, (B) trademarks,
trademark registrations and applications to register any trademarks, and (C)
copyright registrations and copyright applications of the Company and its
Subsidiaries, in each case, whether currently used or not used by the Company
and its Subsidiaries in connection with the business of the Company and its
Subsidiaries as currently conducted. ss.3(p) also sets forth a complete list of
all material licenses with respect to Intellectual Property owned or licensed by
the Company or any Subsidiary thereof and used in the operation of the current
products of the Company or any Subsidiary thereof.
(ii) The Company and its Subsidiaries own or have the right to
use all material Intellectual Property currently used by the Company and its
Subsidiaries in the business of the Company and its Subsidiaries as currently
conducted. To the Knowledge of the Company, the Company and its Subsidiaries own
or have the right to use all other Intellectual Property currently used by the
Company and its Subsidiaries in the business of the Company and its Subsidiaries
as currently conducted.
(iii) The Company has no Knowledge of any unresolved claims
made by any third party that the Company or any Subsidiary thereof is infringing
the Intellectual Property rights of any Person as a result of the Company's or
any Subsidiary's use of any Intellectual Property. To the Company's Knowledge,
the use of the Company's or any Subsidiary's Intellectual Property does not
infringe the rights of any third party.
(iv) The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of any trade
secret of the Company or any Subsidiary thereof necessary for the operation of
the Company's or any Subsidiary's business.
(v) To the Knowledge of the Company, the Company and its
Subsidiaries are not, nor have they received any notice that they are, in
default or, with the giving of notice or lapse of time or both, would be in
default under any material license to use any Intellectual Property listed in
ss.3(p) of the Disclosure Schedule.
24
(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 Xxxxxx Xxxxxxxx Inc. has delivered to the board
of directors of the Company its opinion that, as of the date hereof, the
consideration to be paid to the Company Stockholders in the Merger is fair from
a financial point of view, to the Company Stockholders.
(r) ERISA. Each Benefit Plan and Multiemployer Plan with an annualized
cost to the Company in excess of $100,000 are listed in ss.3(r) of the Company
Disclosure Schedule, and copies of all material documentation relating to such
Benefit Plans during the last three (3) years have been delivered to AAC
(including copies of written Benefit Plans, written descriptions of oral Benefit
Plans, summary plan descriptions, trust agreements, the three most recent annual
returns, employee communications, and IRS determination letters). Except as
disclosed in ss.3(r) of the Disclosure Schedule:
(i) each Benefit Plan has at all times been maintained and
administered in accordance with its terms and with the requirements of all
applicable laws, including ERISA and the Code (except to the extent that a
failure to so maintain and administer would have a Material Adverse Effect), and
each Benefit Plan intended to qualify under section 401(a) of the Code has a
current determination letter on which the Company may rely;
(ii) no Benefit Plan is a "defined benefit plan" within the
meaning of section 414(j) of the Code, other than a Benefit Plan described in
Section 401(a)(1) of ERISA;
(iii) no direct, contingent or secondary liability has been
incurred or is expected to be incurred by the Company or any Subsidiary under
Title IV of ERISA to any party with respect to any Benefit Plan, or, to the
Company's Knowledge, with respect to any other Plan presently or heretofore
maintained or contributed to by any ERISA Affiliate;
(iv) with respect to each Multiemployer Plan (A) no withdrawal
liability has been incurred by the Company or, to the Company's Knowledge, any
ERISA Affiliate, and the Company or any Subsidiary thereof has no reason to
believe that any such liability will be incurred, prior to the Closing Date,
(B), to the Knowledge of the Company, no such plan is in "reorganization"
(within the meaning of Section 4241 of ERISA), (C) no notice has been received
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of an excise tax, or that the plan is or may become
"insolvent" (within the meaning of Section 4241 of ERISA), (D), to the Knowledge
of the Company, no proceedings have been instituted by the Pension Benefit
Guaranty Corporation against the plan, (E) there is no contingent liability for
withdrawal liability by reason of a sale of assets pursuant to Section 4204 of
ERISA, and (F)
25
except as disclosed in ss.3(r) of the Company Disclosure Schedule, if the
Company or any ERISA Affiliate were to have a complete or partial withdrawal
under Section 4203 of ERISA as of the Closing, no obligation to pay withdrawal
liability would exist on the part of the Company or, to the Company's Knowledge,
any ERISA Affiliate.
(v) neither the Company nor, to the Company's Knowledge, any
ERISA Affiliate has incurred any liability for any tax imposed under section
4971 through 4980B of the Code or civil liability under section 502(i) or (l) of
ERISA;
(vi) no benefit under any Benefit Plan, including, without
limitation, any severance or parachute payment plan or agreement, will be
established or become accelerated, vested or payable by reason of any
transaction contemplated under this Agreement;
(vii) no tax has been incurred under section 511 of the Code
with respect to any Benefit Plan (or trust or other funding vehicle pursuant
thereto).
(viii) no Benefit Plan provides health or death benefit
coverage beyond the termination of an employee's employment, except as required
by Part 6 of Subtitle B of Title I of ERISA or section 4980B of the Code or any
State or local laws requiring continuation of benefits coverage following
termination of employment;
(ix) no suit, actions or other litigation (excluding claims
for benefits incurred in the ordinary course of plan activities) have been
brought or, to the Knowledge of the Company, threatened against or with respect
to any Benefit Plan, and there are no facts or circumstances to the Knowledge of
the Company that could reasonably be expected to give rise to any such suit,
action or other litigation; and
(x) all contributions to Benefit Plans and Multiemployer Plans
that were required to be made under such Plans by the Company or any Subsidiary
thereof have been made and each of the Company and each Subsidiary has performed
all material obligations required to be performed under all such Plans.
(s) LABOR AND EMPLOYMENT MATTERS.
(i) (A) No employee of the Company or any Subsidiary thereof
is represented by a labor union, no labor union has been certified or recognized
as a representative of any such employee, and neither the Company nor any
Subsidiary thereof has any obligation under any collective bargaining agreement
or other agreement with any labor union or any obligation to recognize or deal
with any labor union, and there are no such contracts or agreements pertaining
to or which determine the terms or conditions of employment of any employee of
the Company or any Subsidiary thereof; (B) there are no pending or threatened
representation campaigns, elections or proceedings; (C) the Company has no
Knowledge of any strikes, slowdowns, or work stoppages of any kind, or threats
thereof, and no such activities occurred during the 24-month period preceding
the date hereof; (D) neither the Company nor any Subsidiary thereof has engaged
in, admitted committing or been held to have committed any unfair labor
practice; and
26
(E) there are no controversies or grievances between the Company or any
Subsidiary thereof and any of its employees or representatives thereof, the
outcome of which could result in a Material Adverse Effect.
(ii) ss.3(s) of the Company Disclosure Schedule sets forth all
Contracts under which the Company or any Subsidiary thereof has any obligation
to provide compensation or remuneration of any kind (other than obligations to
make current wage or salary payments that are terminable at will without notice
or that are less than $100,000 annually per person) to or on behalf of any
employee or consultant.
(iii) The Company and each of its Subsidiaries have at all
times complied in all material respects, and is in material compliance with, all
applicable laws, rules and regulations respecting employment, wages, hours,
compensation, benefits, occupational health and safety, and payment and
withholding of taxes in connection with employment, except to the extent that
failure to so comply would not have a Material Adverse Effect.
(t) REAL ESTATE.
-----------
(i) ss.3(t) of the Company Disclosure Schedule is a true and
complete list (including, without limitation, legal descriptions) of all real
property owned in fee by the Company or any Subsidiary thereof (together with
all buildings and improvements thereon, the "Owned Real Property"). Such Owned
Real Property is not subject to any Liens (including, without limitation,
Leases, occupancy agreements, possessory rights, options and rights of first
refusal) except as listed on ss.3(t) of the Company Disclosure Schedule. Neither
the Company nor any Subsidiary thereof leases all or any part of any Owned Real
Property.
(ii) Neither the Company nor any Subsidiary thereof has
assigned, pledged or otherwise transferred, or has sublet (as sublessor) the
premises demised by, any Lease. The Company or a Subsidiary thereof is in
possession of the premises demised by the Leases. No tenant or landlord under
any Lease has exercised any option or right to (i) cancel or terminate such
Lease or shorten the term thereof, (ii) lease additional premises, (iii) reduce
or relocate the premises demised by such Lease, or (iv) purchase any property.
All brokerage commissions payable by the Company or any Subsidiary thereof with
respect to any Lease have been fully paid.
(u) ENVIRONMENTAL MATTERS. To the Knowledge of the Company:
(i) Neither the Company nor any of its Subsidiaries is in
violation of any Environmental Laws such that the violation would have a
Material Adverse Effect;
(ii) The Company and each of its Subsidiaries have obtained
all permits and licenses that are required under Environmental Laws and are not
in violation of any applicable permit or license such that the failure to have
such permits or licenses or the violation thereof would have a Material Adverse
Effect;
27
(iii) Neither the Company nor any of its Subsidiaries has
received any written notices that are currently pending or outstanding alleging
that the Company, any Subsidiary of the Company, any predecessor of the Company,
or any entity previously owned by the Company, is in violation of or has any
liabilities under any Environmental Laws, except for any violation or
liabilities that would not have a Material Adverse Effect; and
(iv) There have been no releases of any Hazardous Materials
at, from, in, to, on or under any Site or, to the Company's Knowledge, any
Predecessor Site, that would have a Material Adverse Effect.
4. REPRESENTATIONS AND WARRANTIES OF AAC. AAC represents and warrants
to the Company that the statements contained in this ss.4 are correct and
complete as of the date of this Agreement, except as set forth in the disclosure
schedule prepared by AAC (the "AAC Disclosure Schedule"). The AAC Disclosure
Schedule will be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this ss.4.
(a) ORGANIZATION. AAC is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. AAC is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a Material
Adverse Effect or a material adverse effect on the ability of the Parties to
consummate the transactions contemplated by this Agreement. AAC has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. AAC was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby. AAC has not engaged, nor prior to the Effective Time will
it engage, in any business activities other than the business activities
contemplated hereby (including business activities contemplated by or reasonably
incident to the Financing). AAC has conducted and, prior to the Effective Time,
will conduct its operations only as contemplated hereby (including activities
contemplated by or reasonably incident to the Financing). AAC has no
Subsidiaries and, during the period commencing with the date hereof and ending
at the Effective Time, AAC will have no Subsidiaries. AAC does not have, nor at
the Effective Time will it have, any liabilities or material obligations not
expressly contemplated pursuant to this Agreement or the transactions
contemplated hereby.
(b) FINANCING. AAC has delivered to the Company true and complete
copies of (i) a commitment letter, dated December 17, 1997, from Xxxxxx Xxxxxxx
Senior Funding, Inc. relating to a $75 million senior secured revolving credit
facility, and (ii) a commitment letter, dated December 17, 1997, from Xxxxxx
Xxxxxxx & Co. Incorporated ("MSCI") pursuant to which MSCI has committed,
subject to the terms and conditions set forth therein, to use its best efforts
to complete the public offering or the private placement of senior unsecured
notes of the Company for an aggregate amount equal to $157,000,000 or, under
certain circumstances set forth therein, to purchase such senior unsecured
notes. The commitment letters referred to in clauses (i) and (ii) above shall be
collectively referred to as the "Debt Financing Commitments" and the financing
under the Debt Financing Commitments shall be referred to as the "Financing". In
addition, AAC
28
has delivered to the Company a true and complete copy of a commitment letter,
dated December 17, 1997, from CVC pursuant to which CVC (together with its
Affiliates) has committed, subject to the terms and conditions set forth
therein, to purchase securities of CSH LLC not exceeding $72 million in the
aggregate (the "Equity Financing Commitment"), the proceeds of which shall,
pursuant to the terms of the Equity Financing Commitment, be invested by CSH LLC
in AAC in furtherance of the consummation by AAC of the transactions
contemplated hereby. The aggregate proceeds to be made available pursuant to the
Debt Financing Commitments and the Equity Financing Commitment (including any
funds which may be made available to AAC by one or more Subsidiaries of CSH LLC
as contemplated by the Equity Financing Commitment) are in an amount sufficient
to consummate the transactions contemplated hereby. None of the Debt Financing
Commitments and the Equity Financing Commitment has been withdrawn and AAC knows
of no facts or circumstances that reasonably may be expected to result in any of
the conditions set forth in the Debt Financing Commitments and the Equity
Financing Commitment not being satisfied.
(c) AUTHORIZATION OF TRANSACTION. AAC has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
by AAC, and the performance of its obligations hereunder have been duly
authorized by all requisite corporate action other than the requisite
stockholder approval, and this Agreement has been duly executed and delivered by
AAC. This Agreement constitutes the valid and legally binding obligation of AAC,
enforceable in accordance with its terms and conditions.
(d) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any Governmental Body to
which AAC is subject or any provision of the certificate of incorporation or
bylaws of AAC or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under Contract,
or other arrangement to which AAC is a party or by which it is bound or to which
any of its assets is subject, except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation or failure to
give notice would not have a Material Adverse Effect or a material adverse
effect on the ability of the Parties to consummate the transactions contemplated
by this Agreement. Other than in connection with the provisions of the
Xxxx-Xxxxx-Xxxxxx 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.
29
(e) BROKERS' FEES. AAC has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which any of the Company and its Subsidiaries
could become liable or obligated.
(f) CAPITALIZATION. The authorized capital stock of AAC consists of
4,000,000 shares, $.01 par value, of common stock (the "AAC Common Stock"). As
of the moment immediately prior to the Effective Time, the number of shares of
AAC Common Stock that will be outstanding will equal the sum of (A) 3,809,524
minus (B) the final aggregate number of Stock Electing Shares immediately prior
to the Effective Time (after giving effect to the provisions of ss.2(f)). All of
the issued and outstanding shares of AAC Common Stock have been duly authorized
and are validly issued, fully paid and nonassessable. AAC is a Subsidiary owned
by one or more of CSH LLC and its Subsidiaries. A majority of the membership
interests in CSH LLC are owned by CVC, officers and employees thereof, and
members of the management of CSH LLC, its wholly owned Subsidiary, Cable Systems
Holding Company, and CSI. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require AAC to issue, sell,
or otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to AAC. Except as otherwise
provided in the Ancillary Agreements, neither CSH LLC nor any of its
Subsidiaries has entered into any direct or indirect agreements related to the
voting or transferability of the Surviving Corporation Common Stock.
5. COVENANTS. The Parties agree as follows with respect to the period
from and after the execution of this Agreement.
(a) GENERAL. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ss.6 below); PROVIDED, HOWEVER, that no director or officer of the Company shall
be required either to violate any requirement imposed by law in connection
therewith or to take any action such director or officer deems, after
consultation with outside counsel, not consistent with such director's or
officer's fiduciary duty.
(b) NOTICES AND CONSENTS. The Company will give any notices (and will
cause each of its Subsidiaries to give any notices) to third parties, and will
use its reasonable best efforts to obtain (and will cause each of its
Subsidiaries to use its reasonable best efforts to obtain) any required third
party consents, that AAC reasonably may request in connection with the matters
referred to in ss.3(d) above.
(c) REGULATORY MATTERS AND APPROVALS. Each of the Parties will (and the
Company will cause each of its Subsidiaries to) give any notices to, make any
filings with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in ss.3(d) and ss.4(d) above.
Without limiting the generality of the foregoing:
30
(i) SECURITIES ACT, SECURITIES EXCHANGE ACT, AND STATE
--------------------------------------------------
SECURITIES LAWS.
---------------
(A) The Company will prepare and file with the SEC
preliminary proxy materials ("Preliminary Proxy Materials") under the
Securities Exchange Act relating to the Special Meeting. The Company
will use its best efforts to respond to the comments of the SEC thereon
and will make any further filings (including amendments and
supplements) in connection therewith that may be necessary, proper or
advisable. AAC will provide the Company with whatever information and
assistance in connection with the foregoing filings that the Company
may request.
(B) The Company and AAC shall each use its reasonable
best efforts to take, or cause to be taken, (i) all actions necessary,
proper or advisable by such Party with respect to the prompt
preparation and filing with the SEC of a registration statement on Form
S-4 relating to the Surviving Corporation Common Stock (the
"Registration Statement") and a Rule 13e-3 Transaction Statement on
Schedule 13E-3 with respect to the Merger (together with any
supplements or amendments thereto, collectively, the "Schedule 13E-3"),
(ii) such actions as may be required to have the Registration Statement
declared effective under the Securities Act and to have the Preliminary
Proxy Materials cleared by the SEC, in each case as promptly as
practicable, and (iii) such actions as may be required to be taken
under state securities or applicable Blue Sky laws in connection with
the issuance of the securities contemplated hereby.
(C) As soon as practicable after the date of
announcement of the execution of this Agreement, AAC shall file with
the SEC a Schedule 13E-3. AAC and the Company each agrees to correct
any information provided by it for use in the Schedule 13E-3, if and to
the extent that it shall have become false and misleading in any
material respect. AAC agrees to take all steps necessary to cause the
Schedule 13E-3 as so corrected to be filed with the SEC and to be
disseminated to holders of the Company Common Stock, in each case as
and to the extent required by applicable federal securities laws. The
Company and its counsel shall be given reasonable opportunity to review
and comment on Schedule 13E-3 prior to its being filed with the SEC.
(ii) DELAWARE GENERAL CORPORATION LAW; SPECIAL MEETING. The
Company will (A) call a special meeting of its stockholders (the "Special
Meeting"), as soon as reasonably practicable in order that such stockholders may
consider and vote upon the adoption of this Agreement and the approval of the
Merger in accordance with the Delaware General Corporation Law and (B) mail the
Joint Disclosure Document to its stockholders as soon as reasonably practicable,
which Joint Disclosure Document will contain the affirmative recommendation of
the board of directors of the Company in favor of the adoption of this Agreement
and the approval of the Merger; PROVIDED, HOWEVER, that any provision of this
Agreement to the contrary notwithstanding, the Company will not have any
obligation to call the Special Meeting or mail the Joint Disclosure Document to
its stockholders (x) if such action would require any director or officer of the
Company either to violate any requirement imposed by law in connection therewith
or, after consultation with and advice from its outside counsel, any director or
officer of the Company determines in good faith that to take such action would
be inconsistent with such
31
director's or officer's fiduciary duty or (y) until the board of directors of
the Company shall have received from Deutsche Xxxxxx Xxxxxxxx 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) XXXX-XXXXX-XXXXXX 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 Xxxx-Xxxxx-Xxxxxx Act, will use its best efforts
to obtain (and the Company will cause each of its Subsidiaries to use its best
efforts to obtain) an early termination of the applicable waiting period, and
will make (and the Company will cause each of its Subsidiaries to make) any
further filings pursuant thereto that may be necessary, proper, or advisable.
(d) FINANCING. AAC will use its reasonable best efforts to (i) satisfy
all the conditions necessary to be satisfied by it and/or its Affiliates to
obtain the full proceeds under the Debt Financing Commitments and the Equity
Financing Commitment, (ii) assist the Company in obtaining the Financing, and
(iii) obtain the equity contributions contemplated under the Equity Financing
Commitment. Subject to the Company having received the proceeds, or the
immediate right to receive the proceeds, of the Financing, AAC at the Closing
will be capitalized with equity contributions in an amount at least equal to
$80,000,000 minus the product of (i) the final aggregate number of Stock
Electing Shares immediately prior to the Effective Time (after giving effect to
the provisions of ss.2(f)) and (ii) $21. AAC will not amend the Debt Financing
Commitments or the Equity Financing Commitment in any way materially adverse to
the Company, or the Company's interest as successor to AAC, without the written
consent of the Company, which consent shall not be unreasonably withheld.
(e) ACCOUNTING TREATMENT. The Company and AAC shall cooperate with any
reasonable requests of the other or the SEC related to the recording of the
Merger as a recapitalization for financial reporting purposes, including,
without limitation, to assist AAC and its Affiliates with any presentation to
the SEC with regard to such recording and to include appropriate disclosure with
regard to such recording in all filings with the SEC and all mailings to
shareholders made in connection with the Merger. In furtherance of the
foregoing, the Company shall provide to AAC for the prior review of AAC's
advisors any description of the transactions contemplated by this Agreement
which is meant to be filed with the SEC.
(f) COOPERATION. The Company agrees to provide, and will cause its
Subsidiaries and its and their respective officers, employees and advisors to
provide, all necessary and appropriate cooperation in connection with the
arrangement of the Financing. In conjunction with the obtaining of the
Financing, the Company agrees, at the request of AAC, (i) to call for prepayment
or redemption of all or a portion of the indebtedness disclosed in ss.3(o) of
the Company Disclosure Schedule, but, only to the extent that such call for
prepayment or redemption is permitted under the applicable agreement
representing such indebtedness, or (ii) to prepay or redeem all or a portion of
any then existing indebtedness of the Company or its Subsidiaries described in
ss.3(o)
32
of the Company Disclosure Schedule, provided that no such prepayment or
redemption shall themselves actually be made (nor shall the Company be required
to incur any liability in respect of such prepayment or redemption) until
contemporaneously with the Effective Time.
(g) OPERATION OF THE COMPANY'S BUSINESS. Without the written consent of
AAC, the Company will not (and will not cause or permit any of its Subsidiaries
to) engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business, including, without limitation, the
following:
(i) authorizing or effecting any change in its charter or
bylaws (other than as contemplated by this Agreement);
(ii) granting any options, warrants, or other rights to
purchase or obtain any of its capital stock or issuing, selling, or otherwise
disposing of any of its capital stock (except upon the conversion or exercise of
options and other rights and obligations currently outstanding);
(iii) declaring, setting aside, or paying any dividend or
distribution with respect to its capital stock (whether in cash or in kind), or
redeeming, repurchasing, or otherwise acquiring any of its capital stock, in
either case, outside the Ordinary Course of Business;
(iv) issuing any note, bond, or other debt security or
creating, incurring, assuming, or guaranteeing any indebtedness for borrowed
money or capitalized lease obligation (except for inter-company loans or
advances from the Company to, or guarantees on behalf of, any one or more of its
Subsidiaries), outside the Ordinary Course of Business;
(v) imposing any Lien upon any of its assets outside the
Ordinary Course of Business;
(vi) other than pursuant to the transactions contemplated by
this Agreement, making any material change in employment terms for any of its
directors, officers and employees outside the Ordinary Course of Business;
(vii) except pursuant to existing agreements or arrangements
as of the date hereof, making any capital investment in, making any loan to, or
acquiring the securities or assets of any other Person outside the Ordinary
Course of Business;
(viii) adopting or amending any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or employee benefit plan, agreement, trust,
plan, fund or other arrangement for the benefit and welfare of any director,
officer or employee, except for normal increases in the Ordinary Course of
Business and that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company or any Subsidiary;
33
(ix) revaluing in any material respect any significant portion
of its assets, including, without limitation, writing down the value of
inventory in any material amount or write-off of notes or accounts receivable in
any material amount;
(x) paying, discharging or satisfying any material liabilities
(whether matured, unmatured, absolute, accrued, asserted or unasserted,
contingent or otherwise) other than the payment, discharge or satisfaction in
the Ordinary Course of Business of liabilities reflected or reserved against in
the consolidated financial statements of the Company and set forth in the Public
Reports or incurred in the Ordinary Course of Business;
(xi) making any Tax election with respect to or settling or
compromising any material income Tax liability;
(xii) taking any action other than in the Ordinary Course of
Business with respect to accounting policies or procedures; and
(xiii) committing to any of the foregoing.
(h) FULL ACCESS. The Company will (and will cause each of its
Subsidiaries to) permit representatives of AAC to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company and its Subsidiaries, to all premises,
properties, personnel, books, records (including tax records), contracts, and
documents of or pertaining to each of the Company and its Subsidiaries. AAC will
keep confidential and hold as such any Confidential Information it receives from
any of the Company and its Subsidiaries in the course of the reviews
contemplated by this ss.5(h), will not use any of the Confidential Information
except in connection with this Agreement, and, if this Agreement is terminated
for any reason whatsoever, will return to the Company all tangible embodiments
(and all copies) thereof which are in AAC's possession, and AAC acknowledges
that it and its Representatives (as defined therein) will be bound to the
Confidentiality/Standstill Letter Agreement.
(i) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice
to the others of any event giving rise to a Material Adverse Effect and causing
a breach of any of its own representations and warranties in ss.3 and ss.4
above. No disclosure by any Party pursuant to this ss.5(i), however, shall be
deemed to amend or supplement the Company Disclosure Schedule, or the AAC
Disclosure Schedule, as the case may be, or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(j) NO SOLICITATION.
---------------
(i) The Company shall not, and shall not permit any of its
Subsidiaries to (whether directly or indirectly through advisors, agents or
other intermediaries), and
(ii) the Company shall not, and shall not permit any of its
Subsidiaries to, authorize or knowingly permit any of its or their officers,
directors, agents, representatives, advisors or Subsidiaries,
34
solicit, initiate or knowingly encourage the submission of inquiries, proposals
or offers from any Third Party relating to (A) any acquisition of 10% or more of
the consolidated assets of the Company and its Subsidiaries or of over 10% of
any class of equity securities of the Company or any of its Subsidiaries, (B)
any tender offer (including a self tender offer) or exchange offer that if
consummated would result in any Third Party beneficially owning 10% or more of
any class of equity securities of the Company or any of its Subsidiaries, (C)
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries whose assets, individually or in the aggregate, constitute more
than 10% of the consolidated assets of the Company, other than the transactions
contemplated by this Agreement or (D) any other transaction the consummation of
which would, or could reasonably be expected to impede, interfere with, prevent
or materially delay the Merger or which would, or could reasonably be expected
to, materially dilute the benefits to AAC of the transactions contemplated
hereby (collectively, the "Acquisition Proposals" and which, if consummated,
will be an "Acquisition Transaction") or enter into or participate in any
discussions (except as may be necessary to inform a Third Party of the
provisions of this ss.5(j)) or negotiations regarding any of the foregoing, or
furnish to any Third Party any information with respect to the business,
properties or assets of the Company in connection with the foregoing, or
otherwise cooperate in any way with, or knowingly assist or participate in,
facilitate or encourage, any effort or attempt by any Third Party to do or seek
any of the foregoing; PROVIDED, HOWEVER, that the provisions of this ss.5(j)
shall not limit or prohibit the Company or its board of directors from (i)
engaging in discussions or negotiations with such a Third Party who has made a
Superior Acquisition Proposal but only if the board of directors of the Company,
after consultation with and advice from its outside counsel, determines in good
faith that, in the exercise of its fiduciary responsibilities, such discussions
or negotiations should be commenced or such information should be furnished or
such facilitation undertaken; (ii) furnishing information pursuant to an
appropriate and customary confidentiality letter concerning the Company and its
businesses, properties or assets to a Third Party who has made a Superior
Acquisition Proposal as to which a prior determination of the board of directors
of the Company as contemplated under clause (i) above has been made; PROVIDED,
FURTHER, that (A) the board of directors of the Company shall not, and shall not
authorize any officers or representatives to, take any of the foregoing actions
until notice to AAC of the Company's intent to take such action shall have been
given; and (B) if the board of directors of the Company receives a Superior
Acquisition Proposal, to the extent it may do so without breaching its fiduciary
duties as determined in good faith after consultation with its outside counsel,
and without violating any of the conditions of such Superior Acquisition
Proposal, then the Company shall promptly inform AAC of the material terms and
conditions of such proposal and the identity of the Third Party making it; or
(iii) taking a position on a tender offer by a Third Party, as required by Rule
14e-2 under the Securities Exchange Act (provided no such position shall
constitute a recommendation of such transaction if it does not constitute a
Superior Acquisition Proposal), or complying with its duties of disclosure under
applicable state law. As of the date hereof, the Company shall immediately cease
and cause each of its Subsidiaries and its and their advisors, agents and other
intermediaries to cease, any and all existing activities, discussions or
negotiations with any Third Party conducted heretofore with respect to any of
the foregoing.
(k) INSURANCE AND INDEMNIFICATION.
-----------------------------
35
(i) For a period of 6 years after the Effective Time, the
Surviving Corporation shall indemnify and hold harmless the present and former
officers and directors of the Company and its Subsidiaries in respect of acts or
omissions occurring prior to the Effective Time to the maximum extent provided
under the Company's certificate of incorporation and bylaws, or any Subsidiary's
certificate of incorporation or bylaws, in either case, as in effect on the date
hereof; provided that such indemnification shall be subject to any limitation
imposed from time to time under applicable law.
(ii) For a period of 6 years after the Effective Time, the
Surviving Corporation shall provide officers' and directors' liability insurance
in respect of acts or omissions occurring prior to the Effective Time covering
each such Person currently covered by the Company's or any Subsidiary's
officers' and directors' liability insurance policy on terms with respect to
coverage and amount no less favorable than those of such policy in effect on the
date hereof (or, if such insurance policy cannot be obtained, such insurance
policy on terms with respect to coverage and amount as favorable as can be
obtained, subject to the proviso at the conclusion of this sentence), provided
that, in satisfying its obligation under this Section, the Surviving Corporation
shall not be obligated to pay premiums in excess of, 150% of the amount per
annum the Company paid in its last full fiscal year, which amount has been
disclosed to AAC.
(l) EMPLOYEES.
---------
(i) For a period of one year following the Effective Time, the
Surviving Corporation will not adopt or make effective any change in any
"employee benefit plan" (within the meaning of Section 3(3) of ERISA) that would
terminate or substantially reduce any benefits provided thereunder or materially
increase the cost to any employee of participation thereunder without any notice
to all affected employees at least 60 days in advance.
(ii) The Surviving Corporation shall assume and perform the
obligations of the Company and its Subsidiaries under the employment and
severance contracts specified in ss.3(h) of the Company Disclosure Schedule.
(iii) Prior to the Effective Time, the Company shall adopt,
effective at the Effective Time, a stock incentive plan substantially in the
form attached as Exhibit C hereto (the "Plan"), and shall reserve for issuance
under such Plan a number of shares, equal to 10% of Surviving Corporation Common
Stock. To the extent required by law or NASDAQ listing requirements or necessary
to obtain customary tax benefits for the Company or the holders of options, the
adoption of such Plan shall be contingent on approval by the holders of
Surviving Corporation Common Stock. The Company shall use its best efforts to
secure such approval not later than the Effective Time. On or immediately after
the Effective Time, the Surviving Corporation shall grant options to purchase at
least 10.0% of Surviving Corporation Common Stock under such Plan pursuant to
the terms and conditions set forth in ss.5 of the Plan to such Persons and in
such amounts as determined by the board of directors of the Surviving
Corporation or its Compensation Committee. Within eighteen months following the
Effective Time, the Surviving Corporation shall grant options to purchase at
least 2.0% of Surviving Corporation Common Stock (except with respect to options
that expire by their own terms). As soon as
36
practicable after the adoption of such Plan, the Surviving Corporation shall
file a registration statement on Form S-8 (or other appropriate form) with
respect to the Surviving Corporation Common Stock to be issued pursuant to such
Plan and shall use its best efforts to maintain the effectiveness of such
registration statement (and maintain the currency of any related prospectus) for
so long as options are outstanding or may be granted under such Plan.
(iv) Prior to the Effective Time, the Company shall (A) take
such action as may be necessary to terminate the Company's 1994 Stock Option and
Incentive Plan, and (B) use its reasonable efforts under the circumstances to
enter into a written agreement with each Person who holds an option to purchase
shares of Company Common Stock whereby each such option holder agrees that such
option will be cancelled immediately prior to the Effective Time in exchange for
the cash payment specified in ss.2(d)(vii). If the per share exercise price of
any option equals or exceeds the Cash Election Price, such agreement shall
provide for the cancellation of such option without any corresponding payment.
(m) DISCLOSURE.
----------
(i) DISCLOSURE BY COMPANY. The Joint Disclosure Documents
prepared by the Company will comply with the Securities Exchange Act in all
material respects. The Joint Disclosure Documents will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they will be made, not misleading; PROVIDED, HOWEVER, that the Company
makes no representation or warranty with respect to any information that AAC and
its Affiliates will supply specifically for use in the Joint Disclosure
Documents.
(ii) DISCLOSURE BY AAC. The Joint Disclosure Documents will
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they will be made, not misleading; PROVIDED, HOWEVER,
that AAC makes no representation or warranty with respect to any information
that the Company will supply specifically for use in the Joint Disclosure
Documents.
(n) COMFORT LETTERS. The Company will deliver to AAC on or before the
date the Joint Disclosure Document is mailed to the Company Stockholders a
letter from its accountants, Coopers & Xxxxxxx, LLP stating its conclusions as
to the accuracy of certain information derived from the financial records from
the Company and its Subsidiaries and contained in the Joint Disclosure Document
(the "Company Comfort Letter"). The Company Comfort Letter shall be reasonably
satisfactory to AAC in form and substance. AAC will deliver to the Company on or
before the date the Joint Disclosure Document is mailed to the Stockholders of
the Company a letter from its accountants, Coopers & Xxxxxxx, LLP, stating its
conclusions as to the accuracy of certain information derived from the financial
records of AAC and contained in the Joint Disclosure Document (the "AAC Comfort
Letter"). The AAC Comfort Letter shall be reasonably satisfactory to the Company
in form and substance. Each of the Company Comfort Letter and the AAC Comfort
Letter shall cover such matters as are customarily covered in transactions of
the type contemplated hereby.
37
(o) AFFILIATE LETTERS. Not later than the tenth Business Day following
the mailing of the Joint Disclosure Document, the Company shall deliver to AAC,
after consultation with legal counsel, a list of the names and addresses of
those persons it deems to be "Affiliates" of the Company within the meaning of
Rule 145 promulgated under the Securities Act and a letter, substantially in the
form attached hereto as Exhibit D, restricting the disposition of shares
retained by such Affiliate as part of the Merger Consideration.
(p) CONTINUED REGISTRATION. The Surviving Corporation will use
commercially reasonable efforts, for at least two years after the Effective Time
of the Merger, to cause the Surviving Corporation Common Stock not to be
de-listed from The NASDAQ National Market System ("NASDAQ"); PROVIDED, HOWEVER,
that the Surviving Corporation may cause or permit the Surviving Corporation
Common Stock to be de-listed in connection with any transaction which results in
the termination of registration of such securities under Section 12 of the
Securities Exchange Act; PROVIDED, HOWEVER, that nothing in this ss.5(p) shall
require the Surviving Corporation to take any affirmative action to prevent the
Surviving Corporation Common Stock from being delisted by NASDAQ if the
Surviving Corporation Common Stock ceases to meet the applicable listing
standards.
(q) OPERATION OF AAC'S BUSINESS. Except as expressly permitted by this
Agreement or contemplated in the Ancillary Agreements, the Debt Financing
Commitments and the Equity Financing Commitment, AAC will not incur any
liabilities or material obligations not set forth in ss.5(q) of the AAC
Disclosure Schedule.
(r) NO AMENDMENT OF ANCILLARY AGREEMENTS. From the date hereof through
the Effective Time, neither AAC nor the Company shall amend in any manner
adverse to the other Party in any material respect any of the Ancillary
Agreements without the other Party's prior written consent, which consent shall
not be unreasonably withheld.
(s) SOLVENCY OPINION. The Company shall use its commercially reasonable
efforts to obtain the Solvency Opinion.
6. CONDITIONS TO OBLIGATION TO CLOSE.
---------------------------------
(a) CONDITIONS TO OBLIGATION OF AAC. The obligation of AAC to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3 above
shall be true and correct in all respects at and as of the Effective Time,
except (A) for those representations and warranties which address matters only
as of a particular date (which shall have been true and correct as of such date,
subject to clause (B)), and (B) where the failure of such representations and
warranties taken together without regard to any materiality or Knowledge
qualification set forth therein to be true and correct could reasonably be
expected to have a Material Adverse Effect, with the same force and effect as if
made on and as of the Effective Time;
38
(ii) the Company shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) there shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that AAC
shall use its reasonable best efforts to have any such judgment, order, decree,
stipulation, injunction or charge vacated or reversed;
(iv) the Company shall have delivered to AAC a certificate to
the effect that each of the conditions specified above in ss.6(a)(i)-(iii) is
satisfied in all respects
(v) this Agreement and the Merger shall have received the
Requisite Stockholder Approval or the Requisite Super-Majority Stockholder
Approval, as the case may be;
(vi) the holders of not more than 3% of the outstanding shares
of Company Common Stock shall have demanded appraisal of such shares in
accordance with the Delaware General Corporation Law;
(vii) the Company shall have delivered to AAC written consents
to the transactions contemplated hereby from third parties who are parties to
Contracts set forth on ss.6(a) of the Company Disclosure Schedule;
(viii) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated and the Parties shall have received all other authorizations,
consents, and approvals of Governmental Bodies referred to in ss.3(d) above;
(ix) AAC shall be reasonably satisfied that the Merger will be
recorded as a recapitalization for financial reporting purposes;
(x) Total Debt of the Company and its Subsidiaries determined
on a consolidated basis in accordance with GAAP as of the Effective Time shall
not exceed $38 million;
(xi) the Company shall have received the proceeds of the
Financing on terms and conditions set forth in the Debt Financing Commitments or
upon terms and conditions which are substantially equivalent thereto;
(xii) the Company shall have received and accepted the
resignations of all directors of the Company other than Xxxxxxx X. Xxxxxxxxxxx;
(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 Xxxxx Employment
Agreement, the KEC-NJ
39
Labor Pool Agreement, the Corporate Opportunity Agreement, and the KEC-NY Labor
Pool Agreement shall be in full force and effect.
To the extent permitted by applicable law, AAC may waive any condition specified
in this ss.6(a) if it executes and delivers to the Company written notice so
stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.4
above, without regard to any materiality or Knowledge qualification set forth
therein, shall be true and correct in all respects at and as of the Effective
Time, except (A) for those representations and warranties which address matters
only as of a particular date (which shall have been true and correct as of such
date, subject to clause (B)) , and (B) where the failure of such representations
and warranties taken together without regard to any materiality or Knowledge
qualification set forth therein to be true and correct could reasonably be
expected to have a Material Adverse Effect, with the same force and effect as if
made on and as of the Effective Time;
(ii) AAC shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that Company
shall use its reasonable best efforts to have any such judgment, order, decree,
stipulation, injunction or charge vacated or reversed;
(iv) AAC shall have delivered to the Company a certificate to
the effect that each of the conditions specified above in ss.6(b)(i)-(iii) is
satisfied in all respects;
(v) this Agreement and the Merger shall have received the
Requisite Stockholder Approval or the Requisite Super-Majority Stockholder
Approval, as the case may be;
(vi) the AAC Shareholder Agreement shall be in full force and
effect;
(vii) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated and the Parties shall have received all other authorizations,
consents, and approvals of Governmental Bodies referred to in ss.3(d) above;
(viii) the Company shall be reasonably satisfied that the
Merger will be recorded as a recapitalization for financial reporting purposes;
and
(ix) the board of directors of the Company shall have received
the Solvency Opinion.
40
To the extent permitted by applicable law, the Company may waive any condition
specified in this ss.6(b) if it executes and delivers to AAC written notice so
stating at or prior to Closing.
7. TERMINATION.
-----------
(a) TERMINATION OF AGREEMENT. Any of the Parties may terminate this
Agreement, and the Merger contemplated hereby may be abandoned, with the prior
authorization of its board of directors (whether before or after stockholder
approval), as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time;
(ii) AAC may terminate this Agreement by giving written notice
to the Company at any time prior to the Effective Time (A) in the event the
Company has breached any material representation, warranty, or covenant
contained in this Agreement when made or at any time prior to the Closing in any
material respect, AAC has notified the Company of the breach, and the breach has
continued without cure for a period of 15 days after the notice of breach, or
(B) if the Closing shall not have occurred on or before April 30, 1998, by
reason of the failure of any condition precedent under ss.6(a) hereof (unless
the failure results from AAC breaching any of its representations, warranties,
or covenants contained in this Agreement);
(iii) the Company may terminate this Agreement by giving
written notice to AAC at any time prior to the Effective Time (A) in the event
AAC has breached any material representation, warranty, or covenant contained in
this Agreement when made or at any time prior to the Closing in any material
respect, the Company has notified AAC of the breach, and the breach has
continued without cure for a period of 15 days after the notice of breach, or
(B) if the Closing shall not have occurred on or before April 30, 1998, by
reason of the failure of any condition precedent under ss.6(b) hereof (unless
the failure results from the Company breaching any of its representations,
warranties, or covenants contained in this Agreement);
(iv) the Company may terminate this Agreement by giving
written notice to AAC, at any time prior to the Effective Time, in the event
that a Person has made an Acquisition Proposal that the board of directors of
the Company determines, in good faith, and after consultation with and advice
from its financial advisors, is reasonably likely to be subject to completion
and would, if consummated, result in a transaction more favorable, from a
financial point of view, to the Company's Stockholders than this Agreement and
the Merger (a "Superior Acquisition Proposal");
(v) either Party may terminate this Agreement by giving
written notice to the other Party at any time after the Special Meeting in the
event this Agreement and the Merger fail to receive the Requisite Stockholder
Approval;
(vi) AAC may terminate this Agreement by giving written notice
to the Company if (A) the board of directors of the Company shall have withdrawn
or modified or amended, in a manner adverse to AAC, either its approval or
recommendation of this Agreement and the Merger or its recommendation that the
Company Stockholders adopt and approve this Agreement and the
41
Merger, (B) the board of directors of the Company shall have approved,
recommended or endorsed any Superior Acquisition Proposal, or (C) if the Company
has failed to duly call the Special Meeting;
(vii) the Company may terminate this Agreement by giving
written notice to AAC if (A) the board of directors of the Company shall have
withdrawn or modified or amended, in a manner adverse to AAC, its approval and
recommendation of this Agreement and the Merger or its recommendation that the
Company Stockholders adopt and approve this Agreement and the Merger, or (B) the
board of directors of the Company shall have approved, recommended or endorsed
any Superior Acquisition Proposal, provided that the Company shall be in
compliance with ss.5(j).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to ss.7(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party (or its directors, officers
or stockholders) to any other Party (except for any liability of any Party then
in breach); PROVIDED, HOWEVER, that (i) this ss.7(b), (ii) ss.7(c), (iii) the
confidentiality provisions contained in ss.5(h) above, (iv) the
Confidentiality/Standstill Letter Agreement, and (v) the provisions of ss.8(b),
ss.8(h), ss.8(i) and ss.8(l), shall, in each case, survive any such termination.
(c) TERMINATION FEE; EXPENSES. Upon the occurrence of any one of the
following, the Company shall pay AAC a Termination Fee (as defined below) and
certain expenses (as described below):
(i) this Agreement having been terminated by the
Company or AAC, as the case may be, pursuant to
ss.7(a)(iv), ss.7(a)(vi)(B) or ss.7(a)(vii)(B); or
(ii) a Third Party having made an Acquisition
Proposal (whether prior to or following the
termination of this Agreement) and this Agreement
having been terminated pursuant to ss.7(a)(vi)(A),
ss.7(a)(vi)(C) or ss.7(a)(vii)(A), the Company
consummates an Acquisition Transaction within 12
months following termination of this Agreement.
The termination fee referred to in the preceding sentence shall be equal to
$3.37 million (the "Termination Fee") and shall be payable, if at all, upon the
occurrence of the relevant event under clause (i) or (ii) above. The expenses
referred to in the first sentence of this ss.7(c) shall mean that amount, not to
exceed $2.2 million in the aggregate, of all reasonable out-of-pocket costs,
fees and expenses, including, without limitation, the reasonable fees and
disbursements of banks, investment banks, accountants or legal counsel.
Notwithstanding anything to the contrary contained in this ss.7(c), the expenses
referred to in the previous sentence shall be payable upon termination of this
Agreement under ss.7(a)(iv), ss.7(a)(vi) or ss.7(a)(vii) above within ten (10)
Business Days of receipt by the Company of reasonably satisfactory documentation
detailing such costs, fees and expenses.
42
8. MISCELLANEOUS.
-------------
(a) SURVIVAL. Except for the provisions of ss.7(b), ss.7(c) and the
provisions of ss.8 (and the provisions referred to in ss.7(b), ss.7(c) and ss.8)
none of the representations, warranties, and covenants of the Parties will
survive the Effective Time.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Parties;
PROVIDED, HOWEVER, that any Party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its reasonable best efforts to advise the other Party prior to making
the disclosure).
(c) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; PROVIDED, HOWEVER, that (i) the provisions in
ss.2 above concerning payment of the Merger Consideration are intended for the
benefit of the Company's Stockholders; (ii) the provisions in ss.5(k) above
concerning insurance and indemnification are intended for the benefit of the
individuals specified therein and their respective heirs and legal
representatives; (iii) the provisions of ss.5(l) are for the benefit of
continuing employees; (iv) the provisions of ss.2(d)(vii) are for the benefit of
the holders of options to purchase shares of Company Common Stock; and (v) the
provisions of ss.5(p) are intended for the benefit of the holders of Surviving
Corporation Common Stock other than the stockholders of AAC.
(d) ENTIRE AGREEMENT. This Agreement (including the Exhibits and the
Schedule hereto, the Company Disclosure Schedule and AAC Disclosure Schedule and
the attachments thereto) and the Confidentiality/Standstill Letter Agreement,
constitute the entire agreement between the Parties and supersede any prior
understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof. References in this Agreement to transactions contemplated by this
Agreement shall include transactions contemplated by the Ancillary Agreements.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
43
(i) the terms defined in this Agreement include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other gender;
(ii) accounting terms not otherwise defined herein have the
meanings given to them in accordance with GAAP;
(iii) references herein to "articles," "sections," "ss.'s,"
"subsections," and other subdivisions without reference to a document are to
designated articles, sections, ss.'s, subsections, and other subdivisions of
this Agreement;
(iv) a reference to a subsection without further reference to
a section is a reference to such subsection as contained in the same section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(v) the words "herein," "hereof," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
provision;
(vi) the term "include" or "including" shall mean without
limitation by reason of enumeration;
(vii) the headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement;
(viii) any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context otherwise requires; and
(ix) the Parties have participated jointly in the negotiation
and drafting of this Agreement, and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring either Party by virtue of the authorship of any of the
provisions of this Agreement.
(h) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
Business Days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
44
If to the Company: IPC Information Systems, Inc.
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Copy to: Xxxxxxx Xxxxxxxx & Wood
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to AAC: Arizona Acquisition Corp.
c/o Cable Systems Holding LLC
000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: President
Copies to: Citicorp Venture Capital, Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Either Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(i) GOVERNING LAW; FORUM SELECTION; AND WAIVER OF JURY TRIAL. (i) This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice or conflict of
law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other
45
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 Xxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 (hereinafter called the "Agent"), as its
attorney-in-fact to receive service of process in such Proceeding, it being
agreed that service upon such attorney-in-fact shall constitute valid service
upon each of the Parties or its successors or assigns. Each of the Parties
agrees that (A) the sole responsibilities of the Agent shall be (1) to receive
such process, (2) to send a copy of any such process so received to the relevant
Party, by registered airmail, return receipt requested, at the address set forth
in ss.8(h) hereof, or at the last address filed in writing by such Party with
the Agent and (3) to give prompt telegraphic notice of receipt thereof to such
Party at such address, and (B) the Agent shall have no responsibility for the
receipt or non-receipt by such Party of such process, nor for any performance or
non-performance by such Party or any other Party to this Agreement or their
successors or assigns. Each of the Parties hereby agrees to pay to the Agent
such compensation as shall be agreed upon from time to time for services of the
Agent hereunder. Each of the Parties hereby agrees that its submission to
jurisdiction and its designation of the Agent set forth above is made for the
express benefit of each of the Parties hereto. Each of the Parties further
agrees that a final judgment against a Party in any such action or proceeding
shall be conclusive, and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law, a certified or true copy of
which final judgment shall be conclusive evidence of the fact and of the amount
of any indebtedness or liability of such Party herein described; provided that
nothing in this ss.8(i)(iv) shall affect the right of any Party or its
successors or assigns to serve legal process in any other manner permitted by
law. Each of the Parties further covenants and agrees that so long as this
Agreement shall be in effect, each of the Parties shall maintain a duly
appointed agent for the service of summonses and other legal processes in
Wilmington, Delaware and will notify the other parties hereto of the name and
address of such agent if it is no longer the Agent.
(v) Each of the Parties hereto agrees that it shall not seek a
jury trial in any Proceeding based upon or arising out of or otherwise related
to this Agreement or any of the other documents and instruments contemplated
hereby and each of the Parties hereto hereby waives any and all right to any
such jury trial.
46
(j) AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; PROVIDED, HOWEVER,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Delaware General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by both Parties. No waiver by either Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence. No waiver shall be valid unless the same shall be in writing and
signed by both Parties.
(k) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction; PROVIDED, HOWEVER, that if the
invalidity of any covenant, agreement or provision shall deprive any party of
the economic benefit intended to be conferred by this Agreement, the Parties
shall negotiate in good faith to amend the Agreement in a manner so that the
economic effect of the Agreement, as amended, is as nearly as possible the same
as the economic effect of this Agreement.
(l) EXPENSES. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby, whether or not the Merger is
consummated.
(m) INCORPORATION OF EXHIBITS, SCHEDULE AND DISCLOSURE SCHEDULES. The
Exhibits, Schedule, the Company Disclosure Schedule and the AAC Disclosure
Schedule identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) TRANSFER TAXES. Any liability arising out of the New York City or
New York State Real Property Transfer Tax, if applicable and due with respect to
the Merger, shall be borne by the Surviving Corporation and expressly shall not
be a liability of the Company Stockholders.
(o) LIMITED RECOURSE. Notwithstanding anything in this Agreement or any
Ancillary Agreement to the contrary (except as otherwise provided in the
Ancillary Agreements), (i) the obligations and liabilities of the Parties
hereunder and thereunder shall be without recourse to any stockholder of such
Party or any of such stockholder's Affiliates (other than the Parties), or any
of their respective directors, employees, officers, representatives or agents
(in each case, in their capacity as such) and shall be limited to the assets of
such Party and (ii) the stockholders of AAC have made no (and shall not be
deemed to have made any) representations, warranties or covenants (express or
implied) under or in connection with this Agreement or any Ancillary Agreement.
47
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
IPC INFORMATION SYSTEMS, INC.
By: /S/ S.T. XXXXXX
----------------------------------
Title: PRESIDENT AND C.E.O.
-------------------------------
ARIZONA ACQUISITION CORP.
By: /S/ XXXXX X. XXXX
---------------------------------
Title: PRESIDENT
------------------------------
48
SCHEDULE A
DIRECTORS OF SURVIVING CORPORATION
----------------------------------
Xxxxx Xxxx
Xxxxxxx Xxxxxx, Xx.
Xxxxx X. Xxxx
Xxxxxx X. XxXxxxxxx
Xxxxxxx Xxxxxxxxxxx
2 independent directors to be designated by AAC
2 management directors to be designated by AAC
49
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, 0000 Xxxxxx Xxxxxx, xx xxx Xxxx xx Xxxxxxxxxx, Xxxxxx of New Castle. The
name of the Corporation's registered agent at such address is The Corporation
Trust Company.
3. PURPOSE. The nature of the business and purpose or purposes
to be conducted or promoted by the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
4. CAPITAL STOCK.
4.1 SHARES, CLASSES AND SERIES AUTHORIZED. The total number of
shares of all classes of capital stock which the Corporation shall have
authority to issue is thirty-five million (35,000,000) shares, of which ten
million (10,000,000) shares shall be preferred stock, par value one cent ($.01)
per share (the "Preferred Stock"), and twenty five million (25,000,000) shares
shall be common stock, par value one cent ($.01) per share (the "Common Stock").
The Preferred Stock and Common Stock are sometimes hereinafter collectively
referred to as the "Capital Stock."
4.2 DESIGNATIONS, POWERS, PREFERENCES, RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS RELATING TO THE CAPITAL STOCK. The following is a
statement of the designations, powers, preferences and rights in respect of the
classes of the Capital Stock, and the qualifications, limitations or
restrictions thereof, and of the authority with respect thereto expressly vested
in the Board of the Corporation.
-1-
(a) PREFERRED STOCK. The Preferred Stock may be issued from
time to time in one or more series, the number of shares and any designation of
each series and the powers, preferences and rights of the shares of each series,
and the qualifications, limitations or restrictions thereof, to be as stated and
expressed in a resolution or resolutions providing for the issue of such series
adopted by the Board of Directors, subject to the limitations prescribed by law.
The Board of Directors in any such resolution or resolutions is expressly
authorized to state for each such series:
(i) the voting powers, if any, of the holders of stock of such
series in addition to any voting rights affirmatively required by law;
(ii) the rights of stockholders in respect of dividends,
including, without limitation, the rate or rates per annum and the time
or times at which (or the formula or other method pursuant to which
such rate or rates and such time or times may be determined) and
conditions upon which the holders of stock of such series shall be
entitled to receive dividends and other distributions, and whether any
such dividends shall be cumulative or noncumulative and, if cumulative,
the terms upon which such dividends shall be cumulative;
(iii) whether the stock of each such series shall be
redeemable by the Corporation at the option of the Corporation or the
holder thereof or upon the occurrence of a specified event or events,
and, if redeemable, the terms and conditions upon which the stock of
such series may be redeemed;
(iv) the amount payable and the rights or preferences to which
the holders of the stock of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(v) the terms, if any, upon which shares of stock of such
series shall be convertible into, or exchangeable for, shares of stock
of any other class or classes or of any other series of the same or any
other class or classes, including the price or prices or the rate or
rates of conversion or exchange and the terms of adjustment, if any;
and
(vi) any other designations, preferences, and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, so far as they are not
inconsistent with the provisions of this Restated Certificate of
Incorporation and to the full extent now or hereafter permitted by the
laws of the State of Delaware.
All shares of the Preferred Stock of any one series shall be
identical to each other in all respects, except that shares of any one series
issued at different times may differ as to the dates from which dividends
thereon, if cumulative, shall be cumulative.
Subject to any limitations or restrictions stated in the
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting a series, the Board of
-2-
Directors may by resolution or resolutions likewise adopted increase (but not
above the total number of authorized shares of that class) or decrease (but not
below the number of shares of the series then outstanding) the number of shares
of the series subsequent to the issue of shares of that series; and if the
number of shares of any series shall be so decreased, the shares constituting
the decrease shall resume that status that they had prior to the adoption of the
resolution originally fixing the number of shares constituting such series.
(b) COMMON STOCK. All shares of Common Stock shall be
identical to each other in every respect. The shares of Common Stock shall
entitle the holders thereof to one vote for each share on all matters on which
stockholders have the right to vote. The holders of Common Stock shall not be
permitted to cumulate their votes for the election of directors.
Subject to the preferences, privileges and powers with respect
to each class or series of Capital Stock having any priority over the Common
Stock, and the qualifications, limitations or restrictions thereof, the holders
of the Common Stock shall have and possess all rights pertaining to the Common
Stock. No holder of shares of Common Stock shall be entitled as such, as a
matter of preemptive right, to subscribe for, purchase or otherwise acquire any
part of any new or additional issue of stock of any class or series whatsoever
of the Corporation, or of securities convertible into stock of any class or
series whatsoever of the Corporation, or of any warrants or other instruments
evidencing rights or options to subscribe for, purchase or otherwise acquire
such stock or securities, whether now or hereafter authorized or whether issued
for cash or other consideration or by way of dividend.
5. BOARD OF DIRECTORS.
5.1 NUMBER OF DIRECTORS. The total number of directors which
shall constitute the whole board of directors shall be determined in accordance
with the By-laws of the Corporation, but shall not be less than two (2) nor more
than nine (9).
5.2 WRITTEN BALLOT. Unless and to the extent that the By-Laws
so provide, elections of directors need not be by written ballot.
5.3 AMENDMENT OF BY-LAWS. The Board of Directors of the
Corporation, acting by majority vote, may alter, amend or repeal the By-Laws of
the Corporation.
6. LIMITATION OF DIRECTOR LIABILITY. Except as otherwise
provided by the Delaware General Corporation Law as the same exists or may
hereafter be amended, no director of the Corporation shall be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. Any repeal or modification of this Section 6 by
the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be duly executed by ______________________, its
Chief Executive Officer, and attested to by ______________, its Secretary, this
___th day of ___, 199_.
-3-
IPC INFORMATION SYSTEMS, INC.
By:_________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
-4-
EXHIBIT A-2
RESTATED CERTIFICATE OF INCORPORATION
OF
IPC INFORMATION SYSTEMS, INC.
IPC Information Systems, Inc., a Delaware corporation
incorporated August 29, 1985 under the name IPC Merger Corporation, does hereby
amend and restate its certificate of incorporation to read in its entirety as
set forth below:
1. NAME. The name of the corporation is IPC Information
Systems, Inc. (the "Corporation").
2. REGISTERED OFFICE AND AGENT. The address of the
Corporation's registered office in the State of Delaware is Corporation Trust
Center, 0000 Xxxxxx Xxxxxx, xx xxx Xxxx xx Xxxxxxxxxx, Xxxxxx 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 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
-2-
number of authorized shares of that class) or decrease (but not below the number
of shares of the series then outstanding) the number of shares of the series
subsequent to the issue of shares of that series; and if the number of shares of
any series shall be so decreased, the shares constituting the decrease shall
resume that status that they had prior to the adoption of the resolution
originally fixing the number of shares constituting such series.
(b) COMMON STOCK. All shares of Common Stock shall be
identical to each other in every respect. The shares of Common Stock shall
entitle the holders thereof to one vote for each share on all matters on which
stockholders have the right to vote. The holders of Common Stock shall not be
permitted to cumulate their votes for the election of directors.
Subject to the preferences, privileges and powers with respect
to each class or series of Capital Stock having any priority over the Common
Stock, and the qualifications, limitations or restrictions thereof, the holders
of the Common Stock shall have and possess all rights pertaining to the Capital
Stock.
No holder of shares of Common Stock shall be entitled as such,
as a matter of preemptive right, to subscribe for, purchase or otherwise acquire
any part of any new or additional issue of stock of any class or series
whatsoever of the Corporation, or of securities convertible into stock of any
class or series whatsoever of the Corporation, or of any warrants or other
instruments evidencing rights or options to subscribe for, purchase or otherwise
acquire such stock or securities, whether now or hereafter authorized or whether
issued for cash or other consideration or by way of dividend.
5. BOARD OF DIRECTORS.
5.1 NUMBER OF DIRECTORS. The total number of directors which
shall constitute the whole board of directors shall be determined in accordance
with the By-laws of the Corporation, but shall not be less than two (2) nor more
than nine (9).
5.2 CLASSIFICATION OF BOARD. Subject to the rights of any
holders of any series of Preferred Stock that may be issued by the Corporation
pursuant to a resolution or resolutions of the Board of Directors providing for
such issuance, the directors of the Corporation shall be divided into three
classes with respect to the term of office, each class to contain, as near as
may be possible, one-third of the whole number of the Board, with the terms of
office of one class expiring each successive year. At each annual meeting of
stockholders, the successors to the class of directors whose term expires at
that time shall be elected by the stockholders to serve until the annual meeting
of stockholders held three years next following and until their successors shall
be elected and qualified.
In the event of any intervening changes in the authorized
number of directors, the Board of Directors shall designate the class or classes
to which the increases or decreases in directorships shall be apportioned and
may designate one or more directorships as directorships
-3-
of another class in order more nearly to achieve equality of number of directors
among the classes; provided, however, that no such apportionment or
redesignation shall shorten the term of any incumbent director.
Unless and to the extent that the By-laws so provide,
elections of directors need not be by written ballot.
5.3 VACANCIES. Subject to the limitations prescribed by law
and this Restated Certificate of Incorporation, all vacancies in the office of
director, including vacancies created by newly created directorships resulting
from an increase in the authorized number of directors, may be filled only by a
vote of a majority of the directors then holding office, although less than a
quorum, or by a sole remaining director; and any director so elected shall serve
for the remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor is duly elected and shall qualify or until such director's earlier
resignation or removal.
5.4 AMENDMENT TO THIS PARAGRAPH. In addition to any
requirements of law or of any other provisions of this Restated Certificate of
Incorporation, the affirmative vote of the holders of not less than eighty
percent (80%) of the total number of votes eligible to be cast by the holders of
all outstanding shares of Capital Stock entitled to vote thereon shall be
required to amend, alter, rescind or repeal any provision of this Paragraph 5.
6. LIMITATION OF DIRECTOR LIABILITY.
6.1 LIMITATION. A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except to the extent such exemption
from liability or limitation thereof is expressly prohibited by the General
Corporation Law of the State of Delaware as the same exists or may hereafter be
amended.
6.2 NO RETROACTIVE CHANGES. Any amendment, termination or
repeal of this Paragraph 6 or any provisions hereof shall not adversely affect
or diminish in any way any right or protection of a director of the Corporation
existing with respect to any act or omission occurring prior to the time of the
final adoption of such amendment, termination or repeal.
6.3 AMENDMENT OF THIS PARAGRAPH. In addition to any
requirements of law or of any other provisions of this Restated Certificate of
Incorporation, the affirmative vote of the holders of not less than seventy
percent (70%) of the total number of votes eligible to be cast by the holders of
all outstanding shares of Capital Stock entitled to vote thereon shall be
required to amend, alter, rescind or repeal any provision of this Paragraph 6.
-4-
7. AMENDMENTS.
7.1 AMENDMENTS OF CERTIFICATE OF INCORPORATION. In addition to
any affirmative vote required by applicable law and any voting rights granted to
or held by holders of Preferred Stock, any alteration, amendment, repeal or
rescission (collectively, any "Change") of any provision of this Restated
Certificate of Incorporation must be approved by a majority of the directors of
the Corporation then in office and by the affirmative vote of the holders of a
majority (or such greater proportion as may otherwise be required pursuant to
any specific provision of this Restated Certificate of Incorporation) of the
total votes eligible to be cast by the holders of all outstanding shares of
Capital Stock entitled to vote thereon.
Except as may otherwise be provided in this Restated
Certificate of Incorporation, the Corporation reserves the right at any time,
and from time to time, to amend, alter, change or repeal any provision contained
in this Restated Certificate of Incorporation, and to add or insert herein any
other provisions authorized by the laws of the State of Delaware at the time in
force, in the manner now or hereafter prescribed by law, and all rights,
preferences and privileges of any nature conferred upon stockholders, directors
or any other persons whomsoever by and pursuant to this Restated Certificate of
Incorporation in its present form or as hereafter amended are granted subject to
the provisions contained in this Paragraph 7.1.
7.2 AMENDMENTS OF BY-LAWS. In furtherance and not in
limitation of the powers conferred by statute, the Board of Directors of the
Corporation is expressly authorized to make, alter, amend, rescind or repeal
from time to time any of the By-laws of the Corporation in accordance with the
terms thereof; provided, however, that any By-law made by the Board may be
altered, amended, rescinded, or repealed by the holders of a majority of the
shares of Capital Stock entitled to vote thereon at any annual meeting or at any
special meeting called for that purpose. Notwithstanding the foregoing, any
provision of the By-laws that contains a supermajority voting requirement shall
only be altered, amended, rescinded, or repealed by a vote of the Board or
holders of shares of Capital Stock entitled to vote thereon that is not less
than the supermajority specified in such provision.
The foregoing Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Sections 228, 242 and 245 of the
General Corporation Law of the State of Delaware.
-5-
IN WITNESS WHEREOF, IPC Information Systems, Inc. has caused
this Restated Certificate of Incorporation to be duly executed by Xxxxxxx X.
Xxxxxxxxxxx, its Chairman and Chief Executive Officer, and attested to by Xxxxxx
Xxxxxxx, its Secretary, this 9th day of May, 1994.
IPC INFORMATION SYSTEMS, INC.
By: /S/ XXXXXXX X. XXXXXXXXXXX
-----------------------------
Xxxxxxx X. Xxxxxxxxxxx, Chairman
and Chief Executive Officer
Attest:
/S/ XXXXXX XXXXXXX
----------------------------
Xxxxxx Xxxxxxx, Secretary
-6-
EXHIBIT B
AMENDED AND RESTATED
BY-LAWS
OF
IPC INFORMATION SYSTEMS, INC.
ARTICLE I
STOCKHOLDERS
------------
SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders
of the Corporation shall be held on such date, at such time and at such place
within or without the State of Delaware as may be designated by the Board of
Directors, for the purpose of electing Directors and for the transaction of such
other business as may be properly brought before the meeting.
SECTION 2. SPECIAL MEETINGS. Except as otherwise provided in the
Certificate of Incorporation, a special meeting of the stockholders of the
Corporation may be called at any time by the Board of Directors or the Chairman
of the Board. Any special meeting of the stockholders shall be held on such
date, at such time and at such place within or without the State of Delaware as
the Board of Directors or the officer calling the meeting may designate. At a
special meeting of the stockholders, no business shall be transacted and no
corporate action shall be taken other than that stated in the notice of the
meeting unless all of the stockholders are present in person or
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.
-2-
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
-3-
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
-4-
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
-5-
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.
-6-
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
SECTION 1. NUMBER AND TERM OF OFFICE. The business and affairs of
the Corporation shall be managed by or under the direction of a Board of
Directors, none of whom need be stockholders of the Corporation. The number of
Directors constituting the Board of Directors shall be fixed from time to time
by resolution passed by a majority of the Board of Directors. The Directors
shall, except as hereinafter otherwise provided for filling vacancies, be
elected at the annual meeting of stockholders, and shall hold office until their
respective successors are elected and qualified or until their earlier
resignation or removal.
SECTION 2. REMOVAL, VACANCIES AND ADDITIONAL DIRECTORS. The
stockholders may, at any special meeting the notice of which shall state that it
is called for that purpose, remove, with or without cause, any Director and fill
the vacancy; provided that whenever any Director shall have been elected by the
holders of any class of stock of the Corporation voting separately as a class
under the provisions of the Certificate of Incorporation, such Director may be
removed and the vacancy filled only by the holders of that class of stock voting
separately as a class. Vacancies caused by any such removal and not filled by
the stockholders at the meeting at which such removal shall have been made, or
any vacancy caused by the death or resignation of any Director or for any other
reason, and any newly created directorship resulting from any increase in the
authorized number of Directors, may be filled by the affirmative vote of a
majority of the
-7-
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.
-8-
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.
-9-
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.
-10-
SECTION 9. CONFERENCE TELEPHONE MEETINGS. Unless otherwise
restricted by the Certificate of Incorporation or by these By-Laws, the members
of the Board of Directors or any committee designated by the Board, may
participate in a meeting of the Board or such committee, as the case may be, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
SECTION 10. CONSENT OF DIRECTORS OR COMMITTEE IN LIEU OF MEETING.
Unless otherwise restricted by the Certificate of Incorporation or by these
By-Laws, any action required or permitted to be taken at any meeting of the
Board Directors, or of any committee thereof, may be taken without a meeting if
all members of the Board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the Board or committee, as the case may be.
ARTICLE III
-----------
OFFICERS
--------
SECTION 1. OFFICERS. The officers of the Corporation shall be a
Chairman of the Board, Vice-Chairman of the Board, Chief Executive Officer, a
President, one or more Vice Presidents, a Secretary and a Treasurer, and such
additional officers, if any, as shall be elected by the Board of Directors
pursuant to the provisions of Section 7 of this Article III. The Chairman of the
Board, the Vice-Chairman of the Board, the President, the Chief Executive
Officer, one or
-11-
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.
-12-
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
-13-
office of President. In the absence of the Chairman of the Board and the Chief
Executive Officer, the President shall preside at all meetings of the
stockholders and at all meetings of the Board of Directors. In the absence of
the Chief Executive Officer, the President shall be the chief executive officer
of the Corporation, have general charge and control of all the Corporation's
business and affairs and shall have such other powers and perform such other
duties as may from time to time be assigned by these By-Laws or by the Board of
Directors.
SECTION 6. POWERS AND DUTIES OF THE VICE PRESIDENTS. Each Vice
President shall have all powers and shall perform all duties incident to the
office of Vice President and shall have such other powers and perform such other
duties as may from time to time be assigned by these By-Laws or by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
President.
SECTION 7. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall
keep the minutes of all meetings of the Board of Directors and the minutes of
all meetings of the stockholders in books provided for that purpose. The
Secretary shall attend to the giving or serving of all notices of the
Corporation; shall have custody of the corporate seal of the Corporation and
shall affix the same to such documents and other papers as the Board of
Directors, the Chairman of the Board, the Vice-Chairman of the Board, the Chief
Executive Officer or the President shall authorize and direct; shall have charge
of the stock certificate books, transfer books and stock ledgers and such other
books and papers as the Board of Directors, the Chairman of the Board, the
Vice-Chairman of the Board, the Chief Executive
-14-
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
-15-
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
-16-
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
-17-
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
-18-
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
-19-
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.
-20-
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.
-21-
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.
-22-
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
-23-
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.
-24-
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.
-----------
-25-
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.
-26-
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,
-27-
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.
-28-
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.
-29-
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. Options granted under the Plan are not intended to qualify as incentive
stock options pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended.
Section 2. DEFINITIONS
-----------
Unless the context clearly indicates otherwise, the following terms,
when used in the Plan, shall have the meanings set forth in this Section:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Cause" means any of the following: (i) commission of any act of
fraud or dishonesty with respect to the business of the Corporation or its
Subsidiaries, (ii) willful misconduct or gross negligence in connection with the
performance of a Grantee's duties to the Corporation and its Subsidiaries, (iii)
indictment for, or conviction of, any crime or an offence involving moral
turpitude, (iv) commission of any act injurious to the interest of the
Corporation, or (v) breach of any material provision of any applicable
employment or consulting agreement. Notwithstanding the foregoing, if any
Grantee is party to an employment or consulting agreement governing the terms of
his employment or consultancy with the Corporation or its Subsidiaries, and such
agreement includes a definition of cause, then for purposes hereof, cause shall
have the meaning ascribed thereto in such agreement.
(c) "Change in Control" shall mean (i) approval by the stockholders of
the Corporation of a transaction that would result in the reorganization, merger
or consolidation of the Corporation with one or more persons, and, upon
consummation thereof, would result in persons who, immediately prior to such
transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) at least 50% of the securities
entitled to vote generally in the election of directors of the Corporation,
beneficially owning (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) in the aggregate immediately after such
transaction less than 50% of the securities entitled to vote generally in the
election of directors of the entity resulting from such transaction; (ii) the
acquisition of all or
substantially all of the assets of the Corporation or beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act
of 1934) of at least 50% of the outstanding securities of the Corporation
entitled to vote generally in the election of directors by any person or by any
persons acting in concert, or approval by the stockholder of the Corporation of
any transaction which would result in such an acquisition (other than by any
person or persons who beneficially own (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934), immediately after the
closing date of transactions contemplated by the Merger Agreement at least 50%
of the outstanding securities of the Corporation entitled to vote generally in
the election of directors); or (iii) a complete liquidation or dissolution of
the Corporation, or approval of the Corporation of a plan for such liquidation
or dissolution; PROVIDED, HOWEVER, that in no event shall any of the
transactions contemplated by the Merger Agreement (or shareholder approval
thereof) constitute a Change in Control.
(d) "Committee" means the Compensation Committee of the Board;
PROVIDED, HOWEVER, that with respect to any Option granted or to be granted to
any member of the Compensation Committee, Committee shall mean the Board acting
through a majority of its members who are not members of the Compensation
Committee.
(e) "Common Stock" means the common stock par value $.01 per share, of
the Corporation.
(f) "Consultant" means any person who is engaged to perform services
for the Corporation, or has agreed to perform services for the Corporation,
other than as an Employee or Director.
(g) "Corporation" means IPC Information Systems, Inc., a Delaware
corporation.
(h) "Director" means any member of the Board.
(i) "Disability" means a physical or mental impairment that causes the
Grantee to be unable to engage in any substantial gainful activity and that is
expected to result in death or is expected to last for a continuous period of at
least 12 months. Notwithstanding the foregoing, if any Grantee is party to an
employment or consulting agreement governing the terms of his employment or
consultancy with the Corporation or its Subsidiaries, and such agreement
includes a definition of disability, then for purposes hereof, disability shall
have the meaning ascribed thereto in such agreement.
(j) "Employee" means any employee of the Corporation or any of its
Subsidiaries, or any person who has agreed to become an employee of the
Corporation or any of its Subsidiaries. The term Employee shall include
directors who are otherwise employed by the Corporation or any
Subsidiary.
2
(k) "Fair Market Value" means, as of any date, the fair market value of
a share of Common Stock as determined by the Committee acting in good faith in
its sole discretion; PROVIDED, HOWEVER, that if the Common Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
fair market value shall be based on the last sales price or, if unavailable, the
average of the closing bid and asked prices per share of the Common Stock on
such date (or, if there was no trading or quotation in the Common Stock on such
date, on the next preceding date on which there was trading or quotation) as
provided by one of such organizations. Notwithstanding the foregoing, the Fair
Market Value of a share of Common Stock on the closing date of the transactions
contemplated by the Merger Agreement shall be deemed to be the "Cash Election
Price" as defined in the Merger Agreement.
(l) "Grantee" means a person granted an Option under the Plan.
(m) "Merger Agreement" means the Agreement and Plan of Merger, dated as
of December 18, 1997 by and between the Corporation and Arizona Acquisition
Corp., a Delaware Corporation.
(n) "Option" means an option granted pursuant to the Plan to purchase
shares of the Common Stock.
(o) "Plan" means this Stock Option Plan as set forth herein and as
amended from time to time.
(p) "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder as presently in effect or hereafter
amended.
(q) "Stock Option Agreement" shall mean a written agreement between the
Corporation and the Grantee, or a certificate accepted by the Grantee,
evidencing the grant of an Option hereunder and containing such terms and
conditions, not inconsistent with the Plan, as the Committee shall approve.
(r) "Subsidiary" shall mean (i) any corporation with respect to which
the Corporation owns, directly or indirectly, 50% or more of the total combined
voting power of all classes of stock of such corporation, or (ii) any entity
which the Committee reasonably expects to become a
Subsidiary within the meaning of clause (i).
Section 3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
------------------------------------------
Subject to adjustment as provided in Section 7, the Common Stock which
may be issued pursuant to Options granted under the Plan shall not exceed
[554,112] shares in the aggregate [12% of outstanding on fully diluted basis].
Common Stock issuable under the Plan may be authorized but unissued shares or
reacquired shares of Common Stock. Common Stock subject to Options that
3
are forfeited, lapse or terminate in whole or in part for any reason, shall be
available for issuance pursuant to other Options.
Section 4. ADMINISTRATION OF THE PLAN
--------------------------
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to
and consistent with the provisions of the Plan:
(i) to select the Employees, Directors and Consultants to whom
Options may be granted;
(ii) to determine the number of shares of Common Stock subject to each
such Option; PROVIDED, HOWEVER, that during any calendar year, no individual may
be granted Options with respect to more than 250,000 shares of Common Stock.
(iii) to determine the terms and conditions of any Option granted under
the Plan (including, but not limited to, the exercise price, the period, if any,
over which Options shall vest and become exercisable (which period may be
accelerated at any time in the discretion of the Committee), and performance
conditions relating to an Option, based in each case on such considerations as
the Committee shall determine), and all other matters to be determined in
connection with an Option;
(iv) to determine whether, to what extent and under what circumstances
an the exercise price of an Option may be paid, in cash, Common Stock, or other
property, or an Option may expire or be canceled, forfeited, or surrendered;
(v) to determine the restrictions or conditions related to the
delivery, holding and disposition of shares of Common Stock received upon
exercise of an Option, and
(vi) to prescribe the form of each Stock Option Agreement, which need
not be identical for each Grantee;
(vii) to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(viii) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any Option,
Stock Option Agreement or other instrument hereunder; and
(ix) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or advisable
for the administration of the Plan.
4
The Committee may, at any time, grant new or additional options to any eligible
Employee, Director or Consultant who has previously received Options under the
Plan, or options under other plans, whether such prior Options or other options
are still outstanding, have been exercised previously in whole or in part, or
have been canceled. The exercise price of such new or additional Options may be
established by the Committee, without regard to such previously granted Options
or other options.
Other provisions of the Plan notwithstanding, the Board may perform any function
of the Committee under the Plan, including without limitation for the purpose of
ensuring that transactions under the Plan by Grantees who are then subject to
Section 16 of the Securities Exchange Act of 1934 in respect of the Corporation
are exempt under Rule 16b-3 thereunder. In any case in which the Board is
performing a function of the Committee under the Plan, each reference to the
Committee herein shall be deemed to refer to the Board.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. Any action of the
Committee with respect to the Plan shall be final, conclusive and binding on all
persons, including the Corporation, Subsidiaries, Grantees, any person claiming
any rights under the Plan from or through any Grantee and stockholders, except
to the extent the Committee may subsequently modify, or take further action not
consistent with, its prior action. If not specified in the Plan, the time at
which the Committee must or may make any determination shall be determined by
the Committee, and any such determination may thereafter by modified by the
Committee (subject to Section 10). The express grant of any specific power to
the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The Committee may
delegate to officers or managers of the Corporation or any subsidiary of the
Corporation the authority, subject to such terms as the Committee shall
determine, to perform such functions as the Committee may determine, to the
extent permitted under applicable law.
(c) LIMITATION OF LIABILITY. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Corporation or any
subsidiary, the Corporation's independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Corporation to assist in the administration of the Plan. To the fullest
extent permitted by applicable law, no member of the Committee, nor any officer
or employee of the Corporation acting on behalf of the Committee, shall be
personally liable for any action, determination or interpretation taken or made
in good faith with respect to the Plan, and all members of the Committee and any
officer or employee of the Corporation acting on its behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Corporation with
respect to any such action, determination or interpretation.
Section 5. OPTION TERMS
------------
Unless otherwise determined by the Committee and set forth in a Stock
Option Agreement, Options granted under the Plan shall contain the following
terms and conditions:
5
(a) EXERCISE PRICE. The exercise price per share of Common Stock
subject to each Option shall equal the Fair Market Value on the date the Option
is granted.
(b) VESTING. Each Option shall vest and become exercisable in five
equal installments on each of the first five anniversaries on the date the
Option is granted; PROVIDED, HOWEVER that the Option shall be vested and
exercisable as to no less than 75% of the shares of Common Stock subject thereto
as of the end of any period of 30 consecutive trading days during which the Fair
Market Value averages at least 300% of the Fair Market Value on the date the
Option is granted, and shall be vested and exercisable as to 100% of the shares
of Common Stock subject thereto as of the end of any period of 30 consecutive
trading days during which the Fair Market Value averages at least 450% of the
Fair Market Value on the date the Option is granted; AND PROVIDED FURTHER that
each Option shall become vested and exercisable in full immediately prior to a
Change in Control.
(c) TERMINATION. Options held by any Grantee shall terminate upon the
earliest of:
(i) the termination of the Grantee's employment, directorship
or consultancy with the Corporation and its Subsidiaries for Cause;
(ii) 90 days after the Grantee's termination of employment,
directorship or consultancy with the Corporation and its Subsidiaries (which
shall be deemed to include the sale of any Subsidiary of the Corporation that
employs such Grantee) for any reason other than Cause, death or Disability;
PROVIDED, HOWEVER, that during any such 90-day period, the Options shall be
exercisable only to the extent vested and exercisable as of the date of such
termination;
(iii) 180 days after the Grantee's termination of employment,
directorship or consultancy with the Corporation and its Subsidiaries by reason
of death or Disability; PROVIDED, HOWEVER, that during any such 180-day period,
the Options shall be exercisable only to the extent vested and exercisable as of
the date of such termination;
(iv) the tenth anniversary of the date of grant; and
(v) upon the consummation of any transaction whereby the
Corporation (or any successor to the Corporation or substantially all of its
business) becomes a wholly-owned subsidiary of any other corporation (but after
giving effect to Section 5(b)), unless such other corporation shall continue or
assume the Plan as it relates to Options then outstanding (in which case such
other corporation shall be treated as the Corporation for all purposes
hereunder, and, pursuant to Section 7, the Committee of such other corporation
shall make appropriate adjustment in the number and kind of shares of Common
Stock subject thereto and the exercise price per share thereof to reflect
consummation of such transaction). If the Plan is not to be so assumed, the
Corporation shall notify the Grantee of consummation of such transaction at
least ten days in advance thereof.
6
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, xxxxxxx 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 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
7
completion of such stock exchange listing or registration or qualification of
Common Stock or other required action under any federal or state law, rule, or
regulation as the Corporation may consider appropriate, and may require any
Grantee to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of Common Stock
under the Plan. The Corporation shall file a registration statement on Form S-8
(or other appropriate form) with respect to the Common Stock to be issued
pursuant to the Plan and shall use its best efforts to maintain the
effectiveness of such registration statement (and maintain the currency of any
related prospectus) for so long as Options are outstanding or may be granted
under the Plan.
Section 9. GENERAL PROVISIONS
(a) Each Option grant shall be evidenced by a Stock Option
Agreement.
(b) The grant of an Option in any year shall not give the Grantee any
right to similar grants in future years or any right to continue such Grantee's
employment relationship with the Corporation. All Grantees shall remain subject
to discharge to the same extent as if the Plan were not in effect.
(c) No Grantee, and no beneficiary or other persons claiming under or
through the Grantee shall have any right, title or interest by reason of any
Option to any particular assets of the Corporation, or any shares of Common
Stock allocated or reserved for the purposes of the Plan or subject to any
Option except as set forth herein. The Corporation shall not be required to
establish any fund or make any other segregation of assets to assure the payment
of any Option.
(d) Unless otherwise permitted in the discretion of the Committee, no
Option or other right under the Plan may be sold, transferred, assigned, pledged
or otherwise encumbered, except by will or the laws of descent and distribution,
and an Option shall be exercisable during the Grantee's lifetime only by the
Grantee.
(e) The Corporation shall have the right to require that the Grantee
make such provision, or furnish the Corporation such authorization, necessary or
desirable so that the Corporation may satisfy its obligation, under applicable
laws, to withhold or otherwise pay for income or other taxes of the Grantee
attributable to the grant, exercise or cancellation of Options granted under the
Plan or the sale of Common Stock issued with respect to Options. This authority
shall include authority to withhold or receive Common Stock or other property
and to make cash payments in respect thereof in satisfaction of a Grantee's tax
obligations.
8
Section 10. AMENDMENT OR TERMINATION
------------------------
The Board may alter, amend, suspend, discontinue or terminate the Plan
at any time; PROVIDED, HOWEVER, that no such action shall adversely affect the
rights of Grantees of Options previously granted hereunder and, PROVIDED
FURTHER, HOWEVER, that any stockholder approval necessary or desirable in order
to comply with applicable law, regulation or listing requirement shall
be obtained in the manner required therein.
Section 11. EFFECTIVE DATE OF PLAN
----------------------
The Plan shall be effective immediately after the closing of the
transactions contemplated by the Merger Agreement, subject to the approval of
the Plan by the Corporation's shareholders either
before or after such effective date.
9
EXHIBIT D
_______________, 1998
IPC Information Systems, Inc.
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
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
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: ________________________
ANNEX I
IPC Information Systems, Inc.
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
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]
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
