Exhibit 2.1
EXECUTION COPY
ACQUISITION AGREEMENT
dated as of November 13, 2005
by and among
Man Financial Inc.,
as Buyer,
and
Refco Inc.,
Refco Group Ltd., LLC,
Refco Global Futures LLC,
Refco Global Holdings, LLC,
Refco LLC,
Refco (Singapore) PTE Limited,
Refco Canada Co.,
Refco Overseas Ltd,
and
Certain Affiliates of Refco LLC
as Sellers
Table of Contents
Page
----
ARTICLE I DEFINITIONS................................................................................1
Section 1.1 Defined Terms..............................................................................1
Section 1.2 Other Defined Terms.......................................................................12
ARTICLE II PURCHASE AND SALE OF ACQUIRED ASSETS......................................................14
Section 2.1 Purchase and Sale of Acquired Assets......................................................14
Section 2.2 Assets and Liabilities....................................................................15
Section 2.3 Option to Modify the Asset and Liability Schedules........................................16
Section 2.4 Assignment of Contracts and Licenses......................................................16
Section 2.5 ▇▇▇▇ of Sale, Assignment and Assumption Agreements........................................17
Section 2.6 Intellectual Property Rights..............................................................17
Section 2.7 Transition Services Agreements............................................................18
Section 2.8 Stock Sale Alternative....................................................................19
ARTICLE III PURCHASE PRICE............................................................................19
Section 3.1 Purchase Price............................................................................19
Section 3.2 Subsequent Closings.......................................................................20
Section 3.3 Purchase Price Adjustments................................................................20
Section 3.4 Pre-Closing Price Adjustment..............................................................20
Section 3.5 Post-Closing Adjustments..................................................................21
ARTICLE IV CLOSING...................................................................................23
Section 4.1 Closing; Transfer of Possession: Certain Deliveries.......................................23
Section 4.2 Seller Deliveries.........................................................................23
Section 4.3 Buyer Closing Deliveries..................................................................24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE PURCHASED ENTITIES......................24
Section 5.1 Existence; Good Standing and Power........................................................24
Section 5.2 Capitalization............................................................................25
Section 5.3 Authority.................................................................................25
Section 5.4 Execution and Binding Effect..............................................................25
Section 5.5 No Violation..............................................................................25
Section 5.6 Prior or Preferential Rights..............................................................26
Section 5.7 Third Party Approvals.....................................................................26
Section 5.8 Brokers and Finders.......................................................................26
Section 5.9 Taxes.....................................................................................26
Section 5.10 Regulatory Accounting Reports.............................................................26
Section 5.11 Indebtedness..............................................................................27
Section 5.12 Books and Records.........................................................................27
Section 5.13 Title to Acquired Assets; Condition of Acquired Assets....................................27
Section 5.14 Sufficiency of Acquired Assets............................................................28
Section 5.15 Real Property and Realty Rights...........................................................28
Section 5.16 Employee Benefits.........................................................................28
Section 5.17 Intellectual Property.....................................................................29
Section 5.18 Customer Accounts; Reports; Registrations; Regulations....................................30
Section 5.19 Affiliate Transactions....................................................................32
Section 5.20 Accounts Receivable.......................................................................32
Section 5.21 Customer and Introducing Broker Agreements and Other
Material Agreements; Margin Requirements................................................33
Section 5.22 Cash Distributions........................................................................34
Section 5.23 Litigation, etc...........................................................................34
ARTICLE VI INTENTIONALLY OMITTED.....................................................................34
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BUYER...................................................34
Section 7.1 Existence, Good Standing and Power........................................................34
Section 7.2 Authority.................................................................................34
Section 7.3 Execution and Binding Effect..............................................................34
Section 7.4 No Violation..............................................................................35
Section 7.5 Third Party Approvals.....................................................................35
Section 7.6 Brokers and Finders.......................................................................35
Section 7.7 Acquisition of Securities for Investment..................................................35
Section 7.8 Financing.................................................................................35
Section 7.9 Litigation................................................................................36
Section 7.10 Ability to Conduct the Business...........................................................36
ARTICLE VIII COVENANTS OF THE PARTIES..................................................................36
Section 8.1 Conduct of Business.......................................................................36
Section 8.2 Schedule of Assets Used in the Business...................................................37
Section 8.3 Access....................................................................................39
Section 8.4 Reasonable Efforts........................................................................40
Section 8.5 Further Assurances; Confidentiality.......................................................41
Section 8.6 Mail and Other Post-Closing Inquiries.....................................................42
Section 8.7 Tax Filings...............................................................................42
Section 8.8 HSR Act...................................................................................42
Section 8.9 Rejected Contracts and Licenses...........................................................43
Section 8.10 Post-Closing Access to Records and Personnel..............................................43
Section 8.11 Intellectual Property.....................................................................43
Section 8.12 Daily Capital Statements..................................................................44
Section 8.13 Service...................................................................................44
Section 8.14 U.S. Tax Classification of the Purchased Entities.........................................44
Section 8.15 Group Relief..............................................................................44
Section 8.16 Document Preservation.....................................................................44
Section 8.17 Employees.................................................................................44
Section 8.18 Non-Compete and Wind Down.................................................................46
Section 8.19 Additional Sellers........................................................................47
Section 8.20 Operations................................................................................47
Section 8.21 Agent for Excepted Accounts...............................................................47
Section 8.22 Personally Identifiable Information.......................................................48
ARTICLE IX CONDITIONS TO OBLIGATIONS OF THE PARTIES..................................................48
Section 9.1 Conditions Precedent to Obligations of Buyer and the Sellers..............................48
Section 9.2 Conditions Precedent to Obligations of Buyer..............................................49
Section 9.3 Conditions Precedent to the Obligations of the Sellers....................................52
ARTICLE X TERMINATION...............................................................................53
Section 10.1 Termination of Agreement..................................................................53
Section 10.2 Liabilities in Event of Termination.......................................................54
Section 10.3 Termination by Reason of Buyer Failure to Close...........................................54
ARTICLE XI INDEMNIFICATION...........................................................................55
Section 11.1 Survival..................................................................................55
Section 11.2 Indemnification of Buyer by the Sellers...................................................56
Section 11.3 Notice of Claim...........................................................................57
Section 11.4 Resolution of Notice of Claim.............................................................58
ARTICLE XII MISCELLANEOUS.............................................................................58
Section 12.1 Expenses..................................................................................58
Section 12.2 Assignment................................................................................58
Section 12.3 Parties in Interest.......................................................................59
Section 12.4 Notices...................................................................................59
Section 12.5 Choice of Law.............................................................................60
Section 12.6 Entire Agreement: Amendments and Waivers.................................................60
Section 12.7 Counterparts..............................................................................60
Section 12.8 Invalidity................................................................................60
Section 12.9 Headings..................................................................................61
Section 12.10 Exclusive Jurisdiction....................................................................61
Section 12.11 Specific Performance......................................................................61
Section 12.12 Counting..................................................................................61
Section 12.13 Exhibits and Schedules....................................................................61
Section 12.14 Interpretation............................................................................61
Section 12.15 Preparation of this Agreement.............................................................62
Section 12.16 Purchase Price Allocation.................................................................62
Section 12.17 Bankruptcy Court Approval.................................................................62
TABLE OF CONTENTS
(continued)
Exhibits: Exhibit A Form of Statement of Segregation Requirements and Funds
in Segregation for Customers Trading in U.S. Commodity
Exchanges
Exhibit B [RESERVED]
Exhibit C [RESERVED]
Exhibit D Form of ▇▇▇▇ of Sale, Assignment and Assumption Agreement
Exhibit E Escrow Agreement
Exhibit F Regulatory Accounting Reports
Exhibit G Margin Policies
Schedules: Schedule 2.2(a) Acquired Assets
Schedule 2.2(b) Excluded Assets
Schedule 2.2(d) Excluded Liabilities
Schedule 2.6 Intellectual Property Not Related to the Business
Schedule 2.7 Certain Leases
Schedule 3.2 Deferred Purchase Payment Amount Guidelines
Schedule 5.1 Organizational Documents of the Sellers
Schedule 5.2 Capitalization
Schedule 5.5 No Violation
Schedule 5.7 Third Party Approvals
Schedule 5.9 Taxes
Schedule 5.11 Inter-Company Debt
Schedule 5.12 Books and Records
Schedule 5.13(a) Title to Acquired Assets; Condition of Acquired Assets
Schedule 5.13(b) Exchange Seats
Schedule 5.14 Sufficiency of Acquired Assets
Schedule 5.16 Employee Benefits
Schedule Intellectual Property
Schedule 5.18 Customer Accounts; Reports; Registrations; Regulations
Schedule 5.19 Affiliate Transactions
Schedule 5.21(b) Special Commission Arrangements
Schedule 5.21(d) Special Commission Agreements (Give-Up)
Schedule 5.21(e) Material Contracts
Schedule 5.21(f) Contract Status
Schedule 7.5 Third Party Approvals (Buyer)
Schedule 7.6 Brokers and Finders
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT, dated as of November 13, 2005, is by and
among Man Financial Inc., a Delaware corporation ("Buyer"), Refco Inc., a
Delaware corporation ("Parent"), Refco Group Ltd., LLC, a Delaware limited
liability company ("RGL"), Refco Global Futures, LLC, a Delaware limited
liability company ("Refco Global Futures"), Refco Global Holdings, LLC ("Refco
Global Holdings"), Refco LLC, a Delaware limited liability company (the
"Company"), Refco Overseas Ltd, a United Kingdom company ("Refco Overseas"),
Refco Canada Co., a Canadian company ("Refco Canada"), Refco (Singapore) Pte.
Ltd., a Singapore corporation ("Refco Singapore"), Refco Investment Services
Pte. Ltd., a Singapore corporation ("RIS"), Refco Hong Kong Ltd., a Hong Kong
corporation ("Refco Hong Kong"), Refco Capital Markets, Ltd., a corporation
organized under the Laws of Bermuda ("RCM"), Refco Fixed Assets Management LLC,
a Delaware limited liability company ("RFAM"), Refco Securities, LLC, a
Delaware limited liability corporation ("Refco Securities"), Refco Taiwan,
Ltd., a corporation organized under the Laws of Taiwan ("Refco Taiwan," and
collectively with RGL, Refco Global Futures, Refco Global Holdings, the
Company, Refco Overseas, Refco Canada, Refco Singapore, RIS, Refco Hong Kong,
RCM, RFAM, Refco Securities and any other Person that may hereafter become
party hereto as a seller, the "Sellers").
WITNESSETH:
WHEREAS, each of Parent, Refco Global Holdings, Refco Global Futures
and the other entities which are Debtors (as hereinafter defined) as of the
date hereof commenced a case under chapter 11 of the Bankruptcy Code (as
hereinafter defined) on October 17, 2005, by filing a voluntary petition with
the United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court"), and immediately prior to the consummation of the
transactions contemplated hereby the Company shall commence a case under
chapter 7 of the Bankruptcy Code by filing a voluntary petition with the
Bankruptcy Court (each of the chapter 11 and chapter 7 cases referred to in
this recital individually, a "Case," and together, the "Cases"); and
WHEREAS, each of the Sellers wishes to sell, or cause to be sold, to
Buyer, and Buyer wishes to purchase from the Sellers, all of the Acquired
Assets (as defined) pursuant to, inter alia Sections 363 and 365 of the
Bankruptcy Code and the applicable Federal Rules of Bankruptcy Procedure; and
WHEREAS, the sale of the Acquired Assets is subject to the approval of
the Bankruptcy Court.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions hereof, the parties,
intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, the capitalized
terms set forth in this Section shall have the following respective meanings
(which meanings shall be applicable to both the singular and plural forms of
the term defined) or the meanings ascribed in the Sections referenced to in
Section 1.2:
"Affiliate" means, with respect to any Person (as defined), any entity
which, directly or indirectly, controls or is controlled by that Person, or is
under common control with that Person. For the purposes of this definition,
"control" (including, with correlative meaning, the terms "controlled by" and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"Agreement" means this Acquisition Agreement (together with all
schedules and exhibits referenced herein).
"Artwork" means all paintings, drawings, prints, lithographs,
sculptures and photographs owned by any Seller.
"Asset and Liability Schedules" means all of Schedules 2.2(a), 2.2(b)
and 2.2(d).
"Assumed Contracts" means all of the Contracts that constitute
Acquired Assets.
"Assumed IP Licenses" means all of the IP Licenses that constitute
Acquired Assets.
"Bankruptcy Code" means title 11 of the United States Code.
"Bid Procedures Order" means the order of the Bankruptcy Court setting
a sale hearing date for the sale of the Business and specifying related bid
procedures.
"Broker Business" means the business, as previously or currently
conducted by any of the Broker Entities (but with respect to the London Broker
Entities, limited to the London Business), including soliciting, placing,
clearing and executing buy and sell orders for futures and derivatives
contracts on any board of trade, derivatives transaction execution facility,
electronic trading facility or other trading facility on a world-wide basis and
all activities related or ancillary thereto.
"Broker Entities" mean all of the Company, Refco Singapore, RIS, Refco
Hong Kong, Refco Taiwan, the London Broker Entities, Refco Canada, RGL and the
Purchased Entities.
"Business" means the Broker Business, the Securities Business and the
FX Business.
"Business Day" means any day other than a Saturday, Sunday or a legal
holiday on which banking institutions in the State of New York are not required
to open.
"Buyer Indemnitee" means Buyer, the Purchased Entities, and each of
their respective Affiliates, successors and assigns, and each of the respective
current and former members, officers, directors, agents, employees, partners,
Affiliates and representatives of any such Person; provided, however, that the
Buyer Indemnitees shall not include the Purchased Entities' Affiliates, agents
or representatives in their capacities as such at any time on or prior to the
Closing Date or the Subsequent Closing Date, as applicable.
"Buyer Transition Services Agreement" means a transition services
agreement to be entered into by and between Buyer, on the one hand, and Parent
or the applicable Seller, on the other hand, as a condition to the Initial
Closing, as further described in Section 2.7.
"CFTC" means the United States Commodity Futures Trading Commission.
"CME" means the Chicago Mercantile Exchange.
"COBRA" means Part 6 of Subtitle B of Title I of ERISA, Section 4980B
of the Code, and any similar state Law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Exchange Act" means the Commodity Exchange Act, as amended.
"Confidential Information" means all information, ideas, data,
designs, concepts, techniques, methods, processes, formulae, plans, strategies,
know-how, and trade secrets, and materials, documents and other tangible
embodiments of the foregoing (in any form or medium) relating to or concerning
the past, present or future Business, the Purchased Entities, the Acquired
Assets, or Buyer that are not generally available to the public, including all
(a) information relating to or concerning (i) finances, investments, profits,
pricing, costs, or accounting, (ii) proposals, plans, designs, specifications,
models, products, services, sales, marketing, advertising or promotions, (iii)
personnel, compensation, recruiting, training, contractors, customers,
suppliers, vendors, partners, collaborators, competitors, customers and/or
clients, and (b) information marked as "confidential," other than (i)
information that becomes generally available to the public other than through
the fault of the party subject to the confidentiality obligation (or such
party's affiliates or representatives) or (ii) information which is or becomes
known to the party subject to the confidentiality obligation on a
non-confidential basis from a source other than the disclosing party, provided
that such source is not and was not known to be bound by any duty of
confidentiality with respect to such information.
"Contracts" means all contracts, agreements, indentures, notes, bonds,
loans, leases (whether of real or personal property), conditional sales
contracts, collective bargaining agreements, commitments, mortgages, licenses,
IP Licenses, permits, instruments, guarantees, bids, orders, proposals and
other enforceable arrangements, whether written or oral.
"Controlled Group Liability" means any and all liabilities (i) under
Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412
and 4971 of the Code, (iv) as a result of a failure to comply with the
continuation coverage requirements of Section 601 et seq. of ERISA and Section
4980B of the Code, and (v) under corresponding or similar provisions of foreign
laws or regulations.
"Cure Amount" means, with respect to any Assumed Contract, (i) with
respect to any Debtor, (x) any amounts required by Section 365(b)(1) of the
Bankruptcy Code to cure any defaults under such Assumed Contract and to pay any
actual or pecuniary losses that have resulted from such defaults under such
Assumed Contract, and (y) any amounts owing to, or accrued in favor of, any
counterparty to any Seller party to such Assumed Contract under such Assumed
Contract in respect of the period on or after the filing of the relevant
bankruptcy petition and prior to the applicable Closing Date, and (ii) with
respect to any Person other than a Debtor, any amount owing to, or accrued in
favor of, any counterparty to any Seller party to such Assumed Contract under
such Assumed Contract in respect of the period prior to the Closing Date.
"Customer Accounts" shall have the meaning set forth in Schedule
2.2(a).
"Debtors" means Parent, Bersec International LLC, ▇▇▇▇▇▇ & Associates,
LLC, ▇▇▇▇▇▇▇▇ Metals LLC, New Refco Group Ltd., LLC, Refco Administration LLC,
Refco Capital LLC, Refco Capital Holdings LLC, Refco Capital Management LLC,
Refco Capital Markets, LTD, Refco Capital Trading LLC, Refco Finance Inc.,
Refco Financial LLC, Refco Fixed Assets Management LLC, Refco F/X Associates
LLC, Refco Global Capital Management LLC, Refco Global Finance Ltd., Refco
Global Futures LLC, Refco Global Holdings LLC, Refco Group Ltd., LLC, Refco
Information Services LLC, Refco Mortgage Securities, LLC, Refco Regulated
Companies LLC, and Summit Management LLC and each other Affiliate of Parent,
including when and as applicable the Company, that files for protection under
the Bankruptcy Code or analogous provisions of any non-U.S. law.
"Deficit Account" means any customer account (a) containing an
unsecured debit balance or net negative liquidating value or (b) that is not in
compliance with applicable Laws relating to margin or with applicable exchange
margin requirements for such account, in each case as of the applicable Closing
Date; provided, however, that, subject to Section 8.21, if at any time after
the applicable Closing Date any such account shall cease to fall within
category (a) or (b) above as a result of payment by the customer not funded
directly or indirectly by the Sellers, such account shall not thereafter be a
Deficit Account.
"Delayed Purchase Assets" means any Acquired Assets that (a) Buyer
does not purchase on the Initial Closing Date as a result of the failure of one
or more of the conditions to Closing set forth in Section 9.1 and 9.2 hereof to
be satisfied with respect to such Acquired Assets as of the Initial Closing
Date, or (b) are designated as Acquired Assets subsequent to the Initial
Closing Date pursuant to Section 2.3.
"Disclosure Schedules" means the schedules described in Article V
hereto.
"Disqualified Person Claims" means any and all claims, rights or
causes of action, whether accrued, absolute, contingent or otherwise and
whether known or unknown, against or in respect of any Disqualified Person or
any Affiliate (other than Parent or any Subsidiary of Parent) of such
Disqualified Person (in each case, except in such Person's capacity as a
customer of the Company).
"Disqualified Person" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Tone ▇▇▇▇▇, ▇▇▇▇▇
("▇▇▇▇▇") ▇▇▇▇▇▇, ▇▇▇▇▇▇ Trosten, ▇▇▇▇▇▇ ▇. ▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
RGHI, ▇▇▇▇▇▇ ▇. ▇▇▇ Partners, Liberty Corner Capital Strategies LLC, ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ & Maw LLP, BAWAG P.S.K. Group, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, PlusFunds Group,
Inc., Betio Asset Investments Ltd., Chaco City Investments Ltd., Rabaul
Holdings Ltd., Tecka Asset Holdings Ltd., Tuvalu Holding Company, Ltd.,
Catamarca Asset Series, I, Ltd. and ▇▇▇▇▇ ▇▇▇▇▇▇ and, with respect to any such
Person that is not an individual, such Person's directors, officers, partners,
members and agents.
"Employee Benefit Plan" means each "employee benefit plan" as defined
in Section 3(3) of ERISA and each other compensation or benefit plan, program,
policy, practice, agreement or arrangement of any kind providing benefits to
any current or former employee, officer or director maintained, sponsored,
contributed or required to be contributed to by Parent, Sellers or their
Affiliates or with respect to which Parent, the Sellers or their Affiliates has
any current or potential liability.
"Environmental and Safety Requirements" means all Laws concerning
pollution or protection of the environment or natural resources, occupational
health and safety, or releases of or exposures of Persons or property to
hazardous or toxic substances, contaminants, pollutants, wastes, odors, noise
or radiation.
"Equity Interests" of any Person means, as applicable, (a) any capital
stock, membership interests or other share capital, (b) any securities directly
or indirectly convertible into or exchangeable for any capital stock,
membership interests or other share capital or containing any profit
participation features, (c) any rights or options directly or indirectly to
subscribe for or to purchase any capital stock, membership interests, other
share capital or securities containing any profit participation features, or to
subscribe for or to purchase any securities directly or indirectly convertible
into or exchangeable for any capital stock, membership interests, other share
capital or securities containing any profit participation features, (d) any
share appreciation rights, phantom share rights or other similar rights, (e)
subordinated debt, including Inter-Company Debt, or (f) any Equity Interests
issued or issuable with respect to the securities referred to in clauses (a)
through (e) above in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person that at any relevant time is or was
considered a single employer with the Sellers or any of their Affiliates under
Section 414 of the Code.
"Escrow Amount" means the amounts deposited in escrow pursuant to
Section 3.
"Estimated Purchase Price" means the estimated amount of the Adjusted
Purchase Price as set forth in the Purchase Price Adjustment Certificate, or,
if the Buyer's Price Estimate has been provided to the Sellers pursuant to
Section 3.4, the Adjusted Purchase Price as set forth in the Buyer's Price
Estimate.
"Excepted Account" means any Customer Account that is either a Deficit
Account or an Undermargined Account as of the close of business on the
applicable Closing Date.
"Excluded Liabilities" means any and all Liabilities of the Sellers or
any of their Affiliates (other than Purchased Entities) other than the Assumed
Liabilities, including any and all Liabilities (a) relating to or arising under
or in connection with any Employee Benefit Plan or any other benefit plan,
program or arrangement of any kind at any time maintained, sponsored or
contributed or required to be contributed to by any of the Purchased Entities,
any Seller, Parent or any of their respective ERISA Affiliates, or with respect
to which any of the Purchased Entities, any Seller or any of their respective
ERISA Affiliates has any Liability or potential Liability, including, without
limitation, any Controlled Group Liability, (b) pertaining to the employment or
service with, or termination from employment or service with, any of the
Purchased Entities, any Seller, Parent or any of their respective ERISA
Affiliates, of any individual or any Liabilities resulting from being an
employer or a co-employer under Law, (c) relating to or arising under or in
connection with Environmental and Safety Requirements, (d) with respect to
Taxes (including any and all Transfer Taxes), (e) relating to any Indebtedness,
(f) arising out of any transactions made or entered into outside of the
ordinary course of business, including any payments required under the Purchase
and Sale Agreement between Refco Group Ltd., LLC, and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
dated as of June 21, 2005, (g) relating to or arising out of the operation of
the Business prior to the Closing Date (or the applicable Subsequent Closing
Date with respect to a Delayed Purchase Asset), (h) constituting losses, costs
or expenses (including fines, penalties, attorney fees and the costs of any
investigations, regardless of whether initiated by Buyer or otherwise)
associated with, relating to or arising out of any civil or criminal Proceeding
against, involving, or related to the Sellers or any of their Affiliates or any
of their respective Representatives or the Acquired Assets, (i) arising from
state and bankruptcy law theories of recovery, including fraudulent transfer,
and (j) without limiting the foregoing, all of the Liabilities of the Sellers
set forth in Schedule 2.2(d) (as revised from time to time pursuant to Section
2.3). With respect to (a) and (b), for purposes of this definition, "Seller"
shall be deemed to include the Sellers, Parent and all Affiliates and
Subsidiaries of any Seller and any predecessors to any Seller and any Person
with respect to which any Seller is a successor-in-interest (including by
operation of law, merger, liquidation, consolidation, assignment, assumption or
otherwise), but shall not include Purchased Entities.
"Final Order" means an order of the Bankruptcy Court or other court of
competent jurisdiction: (a) as to which no appeal, notice of appeal, motion to
amend or make additional findings of fact, motion to alter or amend judgment,
motion for rehearing or motion for new trial has been timely filed or, if any
of the foregoing has been timely filed, it has been disposed of in a manner
that upholds and affirms the subject order in all material respects without the
possibility for further appeal or rehearing thereon; (b) as to which the time
for instituting or filing an appeal, motion for rehearing or motion for new
trial shall have expired; and (c) as to which no stay is in effect; provided,
however, that the filing or pendency of a motion under Federal Rule of
Bankruptcy Procedure 9024 shall not cause an order not to be deemed a "Final
Order" unless such motion shall be filed within ten (10) days of the entry of
the order at issue.
"Futures Commission Merchant" has the meaning ascribed to such term in
Section 1a(20) of the Commodity Exchange Act.
"FX Business" means the business, as previously or currently conducted
by Refco Capital Markets Ltd., encompassing execution, clearing, securities
financing, securities lending, custody and trade processing in the foreign
exchange markets for institutional clients, wherever located, and activities
related or ancillary thereto.
"GAAP" means United States generally accepted accounting principles as
in effect as of the date hereof.
"Governance Documents" means the legal document(s) by which any Person
(other than an individual) establishes its legal existence or which govern its
internal affairs as well as any agreements governing the rights of holders of
Equity Interests with respect to such Equity Interests or the governance of the
issuers of such Equity Interests. For example, the "Governance Documents" of a
corporation would be its certificate of incorporation, by-laws and shareholder
agreement (if any), the "Governance Documents" of a limited partnership are its
certificate of limited partnership and its limited partnership agreement or
other similar agreement (if any) and the "Governance Documents" of a limited
liability company are its certificate of formation and its operating agreement
or other similar agreement (if any).
"Governmental Entity" means any (i) federal, state, local, municipal,
foreign or other government; (ii) governmental or quasi-governmental entity of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal); or (iii) body exercising, or entitled
to exercise any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature, including any arbitral
tribunal.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and any successor law and the rules and regulations
thereunder or under any successor law.
"ICTA" means the Income and Corporation Taxes Act of 1988.
"Indebtedness" of any Person means, without duplication, (A) all
indebtedness for borrowed money (including all principal, interest, premiums,
penalties, and breakage fees), (B) all obligations evidenced by notes, bonds,
debentures or similar instruments or pursuant to any guaranty (excluding, in
any event, the amounts covered in clause (A) and trade payables), (C) all
obligations (including breakage costs) payable under interest rate protection
agreements, and (D) all obligations under capital leases or for deferred
purchase price of property or services.
"Information and Records" of any Person means all books and records
(other than minute books and corporate records, but including accounting and
other financial books and records), files, databases, plans, specifications,
technical information, Confidential Information, price lists, promotional
materials, advertising copy and data, marketing research and information,
competitive analyses, customer impact analyses, sales records, service records,
Tax records, customer lists and files (including customer credit, collection,
deposit and complaint information), customer profiles and other customer
information, vendor lists and files, and all other proprietary information of
such Person.
"Intellectual Property Rights" means any and all of the following in
any jurisdiction throughout the world: (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents and patent rights, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, divisionals, extensions, and reexaminations
thereof; (b) all trademarks, service marks, designs, trade dress, logos,
slogans, trade names, business names, corporate names, and Internet domain
names, together with all translations, adaptations, derivations, and
combinations thereof, all applications, registrations, and renewals in
connection therewith, and all goodwill associated with any of the foregoing
(collectively, "Marks"); (c) all works of authorship, copyrights, and moral
rights, and all applications, registrations, and renewals in connection
therewith; (d) all trade secrets and confidential information (including ideas,
research and development, know-how, compositions, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals); (e) all
technologies, processes, formulae, algorithms, architectures, layouts,
look-and-feel, designs, specifications, and methodologies; (f) all software,
including source code, executable code, data, databases, Web sites, firmware,
and related documentation ("Software"); and (g) all other proprietary and/or
intellectual property rights.
"Inter-Company Debt" means any Indebtedness owed by any of the
Purchased Entities to Parent or any of Parent's Subsidiaries that are not
Purchased Entities.
"IP Licenses" means any applicable license or agreement in which
Intellectual Property Rights have been licensed from third parties for use in
connection with the Business.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, principle of common law, judgment
enacted, promulgated, issued, enforced or entered by any Governmental Entity or
Self-Regulatory Organization, or other requirement or rule of law.
"Liabilities" means, as to any Person, all debts, adverse claims,
liabilities, commitments, responsibilities, and obligations of any kind or
nature whatsoever, direct, indirect, absolute or contingent, matured or
unmatured of such Person, whether accrued, vested or otherwise, whether known
or unknown, foreseen or unforeseen, and whether or not actually reflected, or
required to be reflected, in such Person's balance sheets or other books and
records.
"Lien" means any mortgage, pledge, security interest, right of first
refusal, right of first offer, option, encumbrance, restriction on voting or
transfers, lien, charge or other legal or equitable encumbrances of any kind
(including any conditional sale or other title retention agreement or lease in
the nature thereof), any sale of receivables with recourse, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code as in effect in the state of New York or any similar statute (other than
to reflect ownership by a third party of property leased to any of the Sellers
or Purchased Entities under a lease which is not in the nature of a conditional
sale or title retention agreement), or any subordination arrangement in favor
of another Person.
"London Broker Entities" means Refco Overseas, Trafalgar Commodities
Ltd., Greenwich Europe, Limited, Cargill Investor Services Ltd. and Refco
Trading Services (UK) Ltd. (and its London-based subsidiaries).
"London Business" means the Business as conducted through the London
Broker Entities other than Business, personnel, assets, accounts or liabilities
(which for avoidance of doubt shall be Excluded Assets and Excluded Liabilities
as applicable) relating to, arising out of or resulting from the ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ or other non-UK branches or subsidiaries of London Broker
Entities or the clients of such branches or subsidiaries, directly or
indirectly.
"Material Adverse Effect" means a material and adverse effect upon (i)
the business, assets, liabilities, condition (financial or otherwise), or
results of operation of the Business, taken as a whole or (ii) the ability of
the Sellers to consummate the transactions contemplated by this Agreement;
provided, in no event shall any of the following be taken into account (alone
or in combination with any other event identified in this proviso) in
determining whether there has been such a Material Adverse Effect: (i) any
change, event, circumstance, development or effect primarily attributable to
conditions generally affecting the regulated futures and commodities trading
industry, except to the extent that any such change, event, circumstance,
development or effect has an adverse effect on the Sellers and the Purchased
Entities that is disproportionately greater than the adverse effect on
comparable entities operating in such industries; (ii) general economic,
political or market conditions, or acts of terrorism or war (whether or not
formally declared) except to the extent that any such conditions or acts have
an adverse effect on the Sellers and the Purchased Entities that is
disproportionately greater than the adverse effect on comparable entities
operating in the regulated futures and commodities trading industry; (iii) any
change in Law; and (iv) any reduction or change in the Segregated Account
Balance; provided further, that the filing or pendency of the Cases and any
customary proceedings thereunder are not by themselves a Material Adverse
Effect.
"Multiemployer Plan" means a multiemployer plan as defined in Section
3(37) of ERISA.
"Multiple Employer Plan" means a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA.
"Net Regulatory Capital" means, (i) with respect to each Seller or
Purchased Entity regulated by the CFTC, the amount determined from line item 6,
box 3100 of the US Regulatory Accounting Report; (ii) with respect to each
Seller or Purchased Entity regulated by the Monetary Authority of Singapore,
the line item number 23 labeled "Financial Resources/Adjusted Net Head Office
Funds" or "Adjusted Net Capital," as the case may be, in the Singapore
Regulatory Accounting Report; and (iii) with respect to any other Seller or
Purchased Entity regulated in connection with the conduct of its business, the
comparable net regulatory capital amount reflected on such entity's comparable
Regulatory Accounting Report form.
"Order" means any judgment, order, injunction, writ, ruling, decree,
stipulation or award of any Governmental Entity or private arbitration
tribunal.
"Permits" means all approvals, authorizations, consents, licenses,
franchises, permits, registrations and other rights granted by Governmental
Entities.
"Person" means an individual, a partnership, a joint venture, a
corporation, a business trust, a limited liability company, a trust, an
unincorporated organization, a joint stock company, a labor union, an estate, a
Governmental Entity or any other entity.
"Proceeding" means any action, arbitration, audit, claim, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Entity, Self-Regulatory
Organization or arbitrator.
"Purchased Entities" mean all of Refco Carlton Ltd, Refco Sify
Securities (India) Ltd., Hanmag Refco Futures Corp., Kaf-Refco Futures
(Malaysia) and Polaris Refco Co Ltd.
"Regulatory Accounting Reports" means, (i) with respect to each Seller
or Purchased Entity regulated by the CFTC, the US Regulatory Accounting Report;
and (ii) with respect to any other Seller or Purchased Entity that is a
regulated entity, the corresponding report required to be filed with the
applicable regulatory body in the applicable jurisdiction.
"Regulatory Accounting Standards" means, with respect to any Seller or
Purchased Entity that is a regulated entity, the standards pursuant to which
such Seller must prepare Regulatory Accounting Reports in order to be in
compliance with applicable Laws.
"Related Documents" means any Contracts, documents or instructions to
be executed and/or delivered in connection with this Agreement and the
transactions contemplated in this Agreement.
"Representative" means, with respect to any Person, such Person's
officers, directors, employees, agents and representatives (including any
lender, investment banker, financial advisor, accountant, legal counsel, agent,
representative or expert retained by or acting on behalf of such Person, its
subsidiaries or its representatives).
"Required Consent" means all Regulatory Consents and all consents set
forth on Schedule 5.7.
"Sale Motion" means a motion for entry of the Sale Order.
"Sale Notice" means the notice given pursuant to the Bid Procedures
Order.
"Sale Order" means an order of the Bankruptcy Court in the cases of
each or any of the Debtors (including the Company) authorizing and approving
this Agreement and the sale of the Business; references herein to the "Sale
Order" shall be deemed to refer to the Sale Order applicable to the Debtor
referred to.
"SEC" means the United States Securities and Exchange Commission.
"Securities Business" means the U.S. government securities business,
as previously or currently conducted by Refco Securities, including execution,
clearing, securities financing, securities lending, custody and trade
processing in United States Government Securities and all activities related or
ancillary thereto.
"Segregated Account Balance" means the total amounts required to be
segregated by the Company as determined from line 6 of CFTC Form 1-FR-FCM
"Statement of Segregation Requirements and Funds in Segregation for Customers
Trading in U.S. Commodity Exchanges," an example of which is attached hereto as
Exhibit A as to which the Segregated Account Balance as of October 17, 2005 is
$4,777,131,210.49.
"Self-Regulatory Organization" means the National Association of
Securities Dealers, Inc., the American Stock Exchange, the National Futures
Association, the Chicago Mercantile Exchange, the Chicago Board of Trade, the
New York Stock Exchange, Inc., any national securities exchange (as defined in
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder), any other derivatives clearing organization or
securities exchange, futures exchange, contract market, commodities market,
clearinghouse or corporation or other similar federal, state or foreign
self-regulatory body or organization including, but not limited to, those in
Singapore and London.
"Seller Transition Services Agreement" means a transition services
agreement to be entered into by and between Buyer, on the one hand, and the
applicable Subject Entity, on the other hand, as a condition to the Initial
Closing, as further described in Section 2.7.
"Subject Entities" means Parent, each Seller and each of the Purchased
Entities.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a partnership,
limited liability company, association or other business entity, a majority of
the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
partnership, limited liability company, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, limited
liability company, association or other business entity gains or losses or
shall be or control the manager, managing director, managing member or board,
or general partner of such partnership, limited liability company, association
or other business entity.
"Take-or-Pay Fee" means the London Take-or-Pay Fee, the Singapore
Take-or-Pay Fee, the Canada Take-or-Pay Fee or the Hong Kong Take-or-Pay Fee,
as applicable.
"Tax" means (i) all United States federal, state, and local and
non-United States taxes, assessments, charges, duties, levies or other similar
governmental charges of any kind or nature whatsoever, including all income,
franchise, profits, capital gains, capital stock, transfer, sales, use,
occupation, property, excise, severance, windfall profits, stamp, stamp duty
reserve, license, payroll, withholding, ad valorem, value added, consumption,
goods and services, alternative minimum, environmental, customs, social
security (or similar), unemployment, sick pay, disability, registration and
other taxes, assessments, charges, duties, fees, levies or other similar
governmental charges of any kind whatsoever, whether disputed or not, together
with all estimated taxes, deficiency assessments, additions to tax, penalties
and interest; (ii) any liability for the payment of any amount of a type
described in clause (i) arising as a result of being or having been a member of
any consolidated, combined, unitary or other group or being or having been
included or required to be included in any Tax Return related thereto; (iii)
any liability for the payment of any amount of a type described in clause (i)
or clause (ii) as a result of any obligation to indemnify or otherwise assume
or succeed to the liability of any other Person; and (iv) any liability for
payment by a Purchased Entity to any non-Purchased Entity for the surrender of
losses or other amounts to any Purchased Entity by way of group relief or
consortium relief in accordance with the ICTA.
"Tax Return" shall mean any return, report, information return or
other document (including any related or supporting information and, where
applicable, profit and loss accounts and balance sheets) with respect to Taxes.
"Transfer Tax" means any federal, state, county, local, foreign and
other sales, use, transfer, real property transfer, conveyance, documentary
transfer, recording or other similar tax, fee or charge imposed upon the sale,
transfer or assignment of property or any interest therein or the recording
thereof, and any penalty, addition to tax or interest with respect thereto, but
such term shall not include any tax on, based upon or measured by, the net
income, gains or profits from such sale, transfer or assignment of the property
or any interest therein.
"Undermargined Account" means a customer account that is on margin
call as a result of such customer account failing to maintain such original or
variation margin in such amount as (a) is required by Seller in the ordinary
course or (b) is required pursuant to applicable Law or exchange requirements;
provided, however, that if at any time after the Closing Date any such account
shall cease to fall within category (a) or (b) above as a result of payment by
the customer not funded directly or indirectly by the Sellers, such account
shall not thereafter be an Undermargined Account.
"US Regulatory Accounting Report" means CFTC Form 1-FR-FCM "Statement
of the Computation of the Minimum Capital Requirements" substantially in the
form of Exhibit C.
Section 1.2 Other Defined Terms. The following additional capitalized terms
shall have the meanings defined for such terms in the Sections set forth below:
Term Section
-------------------------------------------- -------------
Acquired Assets 2.2(a)
Additional Asset Sales 9.2(i)(i)(I)
Adjusted Purchase Price 3.1(c)
Allocation 12.16
Assumed Liabilities 2.2(c)
Balance Sheet 5.10(a)
Bankruptcy Court Recitals
Broker Entities Intellectual Property Rights 5.17(a)
Business Marks 8.11(a)
Business Employees 8.17(a)
Buyer Preamble
Buyer Benefit Plan 8.17(b)
Buyer Qualified Plan 8.17(d)
Buyer's Price Estimate 3.4
Case Recitals
Cases Recitals
Claim 11.3(a)
Closing 4.1
Closing Date 4.1
Closing Report 3.5(a)
Closing Statement 3.5(a)
Company Preamble
Company Breaches 11.2
Confidentiality Agreement 8.5(c)
Contested Claim 11.4(b)
Daily Capital Statements 8.12
Damages 11.2
Debit 2.3
Deposit 3.1(b)
Dispute Notice 3.5(b)
Disputed Items 3.5(b)
Drop Dead Date 10.1(b)
Encumbrances 5.2(b)
Escrow Agent 3.1(b)
Escrow Account 3.1(a)
Excepted Account 2.9
Excepted Account Escrow 8.21
Excluded Assets 2.2(b)
Final Purchase Price 3.5(d)
F/X Associates Preamble
Indemnitor 11.3(a)
Independent Accountants 3.5(c)
Initial Closing 4.1
Initial Closing Date 4.1
Intellectual Property License Agreement 2.6
Latest Regulatory Statements 5.10(a)
London Election 2.3
Marks 1.1
Material Contracts 5.21(e)
Non-Acceptance Offer Employee 8.17(a)
Notice of Claim 11.3(a)
Offer Employee 8.17(a)
Owned Assets 5.13
Parent Preamble
Purchase Price 3.1(a)
Purchase Price Adjustment Certificate 3.4
Qualified Plan 5.16(a)
RCM Preamble
Refco Global Futures Preamble
Refco Global Holdings Preamble
Refco Hong Kong Preamble
REFCO ▇▇▇▇ 8.11(a)
Refco Securities Preamble
Refco Singapore Preamble
Refco Taiwan Preamble
Reference Segregated Account Balance 3.3(b)
Regulatory Consents 9.1(c)
Regulatory Order 5.18(d)(v)
RIS Preamble
Securities 2.1
Securities Act 7.7
Segregated Account Adjustment 3.3
Segregated Account Estimate 3.4
Seller 401(k) Plan 8.17(d)
Seller Liquidated Damages 10.3
Sellers Preamble
Sellers' Price Estimate 3.4
Software 1.1
SRO Reports 5.18(c)
Standard Customer Agreements 5.21(a)
Standard Give-Up Agreements 5.21(d)
Standard Introducing Broker Agreements 5.21(c)
Subsequent Closings 4.1
Subsequent Closing Date 4.1
Transferred Employee 8.17(a)
Transition Leases 2.7(a)
Transition Services 2.7(a)
Unresolved Items 3.5(c)
Welfare Plan 8.17(f)
ARTICLE II
PURCHASE AND SALE OF ACQUIRED ASSETS
Section 2.1 Purchase and Sale of Acquired Assets. Subject to the terms
and conditions of this Agreement, including Section 2.4(b), (a) the Sellers
shall (and Parent shall cause each of the Sellers to) sell, assign, convey,
transfer and deliver to Buyer or its designees at and as of the Initial Closing
(or, if applicable, any Subsequent Closing), the Acquired Assets, including all
of the issued and outstanding capital stock of the Purchased Entities owned by
the Sellers and set forth on Schedule 5.2 (the "Securities"), to be purchased
at such Closing, all free and clear of all Liens and Excluded Liabilities; and
(b) in exchange therefor, Buyer shall pay the Adjusted Purchase Price
applicable to the Acquired Assets in accordance with Section 3.1 or 3.2, as
applicable, and shall accept, assume and agree to pay, perform or otherwise
discharge, in accordance with the respective terms and subject to the
respective conditions thereof, the Assumed Liabilities to be assumed at such
Closing. The Sellers shall pay all Cure Amounts in respect of the Assumed
Contracts and Assumed IP Licenses and shall bear all Transfer Taxes related to
the Sellers' sale of the Acquired Assets and the assumption of the Assumed
Contracts and Assumed IP Licenses. After any Closing, Buyer shall be entitled
to exercise all rights attached or accruing to the Acquired Assets purchased at
such Closing, including the right to receive all dividends, distributions or
any return of capital declared, paid or made by any of the Purchased Entities
in respect of the Securities on or after the relevant Closing Date.
Section 2.2 Assets and Liabilities.
(a) Acquired Assets. For purposes of this Agreement,
"Acquired Assets" means, subject to Section 2.3, (i) all of the assets,
properties, rights, agreements and other interests of the Sellers (other than
Contracts and Excluded Assets, but including the Securities), whether tangible
or intangible, wherever located, that are used, useful or held for use in,
primarily related to, material to or necessary for the operation or conduct of
the Business by the Sellers, including those set forth on Schedule 2.2(a), as
the same shall exist on the applicable Closing Date, and (ii) each Contract set
forth on Exhibit 1 to Schedule 2.2(a). For the avoidance of doubt, if any
Acquired Asset is not sold, assigned, conveyed, transferred or delivered to
Buyer or its designees on the Initial Closing Date, whether pursuant to Section
2.3 or otherwise, such Acquired Asset shall be sold, assigned, conveyed,
transferred or delivered as the same shall exist on the Subsequent Closing Date
applicable to such Acquired Asset or, in the case of an Acquired Asset that is
a Contract, as promptly as possible in accordance with the procedures for
assumption and assignment of Contracts set forth in the Sale Order; provided,
that with respect to any Acquired Asset that is subject to a right of first
refusal or other option to purchase that predates the Cases and does not
constitute a Lien of which the Acquired Assets may be sold free and clear
pursuant to the Sale Order under applicable law, and provided such right or
option is exercised, then the Acquired Assets shall include, in lieu of such
Acquired Asset, all proceeds of the sale of any such Acquired Asset and such
proceeds shall be conveyed to the Buyer as promptly as possible.
(b) Excluded Assets. The Subject Entities and Buyer hereby
acknowledge and agree that Buyer shall not purchase, acquire or accept from the
Sellers, any of the rights properties, agreements or assets set forth in
Schedule 2.2(b) as it may be revised from time to time pursuant to Section 2.3
(such rights, properties, agreements and assets being referred to herein,
collectively, as the "Excluded Assets").
(c) Assumed Liabilities. For purposes of this Agreement,
"Assumed Liabilities" means (i) all Liabilities of the Sellers that are
required to be performed, and that accrue, on or after the applicable Closing
Date under the Assumed Contracts and Assumed IP Licenses (but excluding any
Liabilities of the Sellers in respect of a breach by any Seller of or default
by any Seller under such Assumed Contracts or Assumed IP Licenses prior to the
applicable Closing Date), to the extent such Assumed Contracts and Assumed IP
Licenses, and all rights of the Sellers thereunder, are effectively assigned to
Buyer at such Closing, (ii) Liabilities for accrued vacation, sick time and
time-off with respect to any Transferred Employee, as set forth in Section
8.17(c), and (iii) all Customer Account Liabilities as of the applicable
Closing Date of the type required to be listed on Lines 22A through D
("Equities in commodity accounts") of CFTC Form 1-FR-FCM (and comparable
liabilities on the comparable form with respect to any foreign regulated FCM)
with respect to any Customer Accounts that are conveyed to Buyer pursuant to
this Agreement. For the avoidance of doubt, (1) Assumed Liabilities shall not
include any Excluded Liabilities, and (2) Buyer shall not be responsible for
any Liabilities resulting from the ownership, use, operation or maintenance of
the Acquired Assets, or the conduct of the Business by the Sellers, prior to
the Closing.
(d) Excluded Liabilities. The Subject Entities and Buyer
hereby acknowledge and agree that Buyer shall not accept, assume, agree to pay,
perform or otherwise discharge or satisfy or be liable for any Excluded
Liabilities.
Section 2.3 Option to Modify the Asset and Liability Schedules. From
and after the date hereof until 60 days after the Initial Closing Date (and
solely in respect of Transition Leases, until the termination of the Buyer
Transition Services Agreement), Buyer may by written notice to the Sellers
amend or modify any of the Asset and Liability Schedules to include in or
exclude from each Asset and Liability Schedule additional assets or additional
Liabilities relating to the Business; provided, that in no event will Buyer
have the right to amend Schedule 2.2(b) to remove any item included in Part I
of such Schedule 2.2(b); provided, further that no Asset and Liability Schedule
may be amended to exclude an asset (other than assets constituting "plant,
property and equipment") that was purchased at any Closing (or subsequently) or
to exclude any liability that was assumed at any Closing or subsequently. For
the avoidance of doubt, all Customer Accounts shall be Acquired Assets. The
parties agree that the Purchase Price shall not be increased, reduced or
otherwise amended on account of any election under this Section 2.3, it being
understood and agreed that the Purchase Price entitles Buyer to accept and
assume or reject such assets or liabilities of the Sellers as Buyer may in its
sole discretion determine, other than the assets and liabilities set forth on
Part I of Schedule 2.2(b). Buyer agrees that, provided that the conditions
precedent to its obligation to close have been satisfied or waived (other than,
with respect to the London Business, the receipt of all required Regulatory
Consents), it shall at its election (solely as to London, the "London
Election") either (a) acquire all of the Acquired Assets (including all Leases)
and assume the Assumed Liabilities associated with such Acquired Assets (other
than Excluded Liabilities) with respect to the London Business and the Business
in Canada and shall be responsible for all severance and termination costs
associated with such Acquired Assets, or (b) pay the Take-or-Pay Fee with
respect to such region, as set forth in Section 10.3; provided, that Buyer
shall, by notice to the Parent, make the London Election no later than the date
that is four weeks from the date hereof; provided, further, that if Buyer
elects option (a) above with respect to the London Business and notifies the
Parent of its intent that an entity other than Buyer or its Affiliates shall be
Buyer's designee for receipt of the Acquired Assets relating to such business,
then Buyer's obligation to close on the London Business shall be tolled until
(and the Drop Dead Date as to the London Business shall become) the date that
is 90 days from the date hereof. Once any such Acquired Asset has been acquired
or liability assumed, that asset or liability cannot be transferred or
otherwise conveyed back to Sellers.
Section 2.4 Assignment of Contracts and Licenses.
(a) Subject to the applicable provisions of the Sale Order
and the other terms and conditions of this Agreement, as soon as possible (but
in no event prior to the Initial Closing Date) after any Contract (including
any IP License) is listed on Exhibit 1 to Schedule 2.2(a) (as revised from time
to time pursuant to Section 2.3), (i) the Sellers that are Debtors shall assume
and assign to Buyer or its designees, and Buyer or its designees shall take
assignment of, all of each such Seller's title, right and interest in and to
each such Assumed Contract, free and clear of any and all Liens and Excluded
Liabilities, and (ii) the Sellers that are not Debtors shall assign to Buyer or
its designees, and Buyer or its designees shall take assignment of, all of each
such Seller's title, right and interest in and to each such Assumed Contract,
free and clear of any and all Liens and Excluded Liabilities.
(b) Notwithstanding anything contained in this Agreement to
the contrary, this Agreement shall not constitute an agreement to assign any
Assumed Contract or Assumed IP License if pursuant to Section 365 of the
Bankruptcy Code (if applicable) or other applicable law, an assignment thereof
requires the consent of a third party thereto and such consent is not obtained
at or prior to the applicable Closing, in which case the provisions of Sections
2.7, 8.4 and 8.5(a) shall apply; provided, that (x) this sentence shall not
limit or otherwise affect the terms of Section 5.5, and (y) the Sellers shall
provide to Buyer, by whatever measures are necessary, the equivalent of the
entire benefit Buyer would have realized from the assignment of such Assumed
Contract or Assumed IP License to Buyer.
Section 2.5 ▇▇▇▇ of Sale, Assignment and Assumption Agreements. At or
as of the applicable Closing, Parent shall cause each Seller to deliver to
Buyer or its designated Affiliate a ▇▇▇▇ of Sale, Assignment and Assumption
Agreement substantially in the form of Exhibit D.
Section 2.6 Intellectual Property Rights. With respect to any Acquired
Asset consisting of Intellectual Property Rights owned by the Sellers or their
Affiliates that are used or useful in the operation of the businesses of the
Sellers or their Affiliates, (a) if such Intellectual Property Rights are not
substantially related or material to the Business and are listed on Schedule
2.6 then, at the Sellers' option, the Sellers may retain all right, title and
interest in and to such Intellectual Property Rights and shall grant to the
applicable Purchased Entity and/or Buyer and/or one or more designees of Buyer
a transferable, royalty free, worldwide, perpetual, irrevocable license to use
such Intellectual Property Rights in the conduct of its business, and (b) for
any Intellectual Property Rights for which the Sellers do not exercise the
right described in clause (a) or which are substantially related or material to
the Business, Buyer or the applicable Purchased Entity shall grant the Sellers
and their Affiliates a non-exclusive, royalty free, worldwide, perpetual,
irrevocable license to use such Intellectual Property Rights in the conduct of
their respective businesses, but only to the extent the conduct of such
business is not prohibited by this Agreement. Such license shall be
transferable (per entire assignment in whole but not in part) and
sublicenseable on an exclusive and perpetual basis but in each case only in
connection with the divestiture, sale or transfer to a third party of business
lines or Affiliates of Parent or Sellers after the Closing Date and only if
such transferee agrees to such restriction. Any license to Intellectual
Property Rights described in this Section shall be memorialized in a license
agreement agreed upon by the parties (an "Intellectual Property License
Agreement"), which shall include other customary terms and conditions to be
agreed upon by the parties, acting reasonably and in good faith, to include
disclaimers, indemnification and liability limitations.
Section 2.7 Transition Services Agreements.
(a) Pursuant to the Buyer Transition Services Agreement,
Parent and the Sellers will (or will cause their Affiliates to) provide to
Buyer, its designees and/or the Purchased Entities, for a term of 270 days
after the Initial Closing, as reasonably requested by Buyer, such services (i)
as Parent, the Sellers and/or their respective Affiliates currently provide to
the Business, including the benefit of IP Licenses (including Assumed IP
Licenses described in Section 2.4(b) until such IP Licenses can be assigned)
that are not at the time Assumed IP Licenses, the benefit of real property
leases of the Sellers necessary to permit the Buyer and its Affiliates
(including the Purchased Entities) to conduct the Business as it has previously
been conducted (including, without limitation, those leases set forth on
Schedule 2.7) (the "Transition Leases"), access to software (including the
Easyscreen software), data and communications services, and other
administrative and information technology services, in each case to the extent
currently provided to the Business, but excluding any services that the Sellers
or their respective Affiliates are not reasonably able to provide due to the
transfer of an Acquired Asset, Transferred Employee, Assumed IP License or
Assumed Contract to Buyer or a Purchased Entity, and (ii) as may otherwise be
agreed to by Seller upon the request of Buyer, such agreement not to be
unreasonably withheld, including in connection with the transition of the
services described in (i) above to the Buyer ((i) and (ii), collectively,
"Transition Services"). The Buyer Transition Services Agreement shall provide
that all Transition Services provided by Parent, the Sellers and/or their
respective Affiliates shall be provided at cost (including costs and expenses
associated with implementation and connectivity between the parties), and shall
otherwise contain customary terms and conditions to be agreed upon by the
parties, acting reasonably and in good faith, to include disclaimers,
indemnification and liability limitations; provided, that such costs shall only
reflect direct, out-of-pocket costs of providing the services covered thereby,
such as (1) salaries, overtime, and benefit allocation of fully dedicated or
portions of partially dedicated personnel, (2) costs of third parties,
contractors or temporary employees, and (3) rent and utility costs based on the
proportional usage between the employees who are fully dedicated to providing
the services and the other employees of the Sellers; provided, further, that
such costs shall not include (1) any allocation of overhead costs (such as
human resources, legal, accounting, etc.), and (2) any severance costs related
to the termination of any of the employees of the Subject Entities following
the provision of the Transition Services. The Sellers shall bear all costs and
expenses related to obtaining any consents required for the provision of
Transition Services. The Buyer may terminate the Buyer Transition Services at
any time in whole or in part and for any reason upon ten-days' notice to
Parent.
(b) With respect to any Acquired Asset consisting of an
Assumed IP License or Assumed Contract that is used or useful in the operation
of the business(es) of the Sellers and/or their Affiliates following the
Closing, and solely to the extent the conduct of such business is expressly
permitted in this Agreement, upon the Sellers' request, Buyer and the Purchased
Entities shall provide to the Sellers and their Affiliates the benefit of such
Assumed IP License or Assumed Contract pursuant to the Seller Transition
Services Agreement for a term of 270 days after the Initial Closing (or, with
respect to such services, such shorter or longer period as Buyer and the
Sellers may agree, such agreement not to be unreasonably withheld). The Seller
Transition Services Agreement shall provide that all such services shall be
provided at cost (including costs and expenses associated with implementation
and connectivity between the parties), and shall otherwise contain customary
terms and conditions to be agreed upon by the parties, acting reasonably and in
good faith, to include disclaimers, indemnifications and liability limitations;
provided, that such costs shall only reflect direct, out-of-pocket costs of
providing the services covered thereby, such as (1) salaries, overtime, and
benefit allocation of fully dedicated or portions of partially dedicated
personnel, (2) costs of third parties, contractors or temporary employees, and
(3) rent and utility costs based on the proportional usage between the
employees who are fully dedicated to providing the services and the other
employees of the Buyer; provided, further, that such costs shall not include
(1) any allocation of overhead costs (such as human resources, legal,
accounting, etc.), and (2) any severance costs related to the termination of
any of the employees of the Buyer following the provision of the Transition
Services. Buyer shall bear all costs and expenses related to obtaining any
consents required for the provision of services under the Seller Transition
Services Agreement. Parent may terminate the Seller Transition Services at any
time in whole or in part and for any reason upon ten-days' notice to the Buyer.
The Seller Transition Services Agreement shall provide that all such services
shall, at Parent's or Sellers' request, be provided to former businesses or
Affiliates of Parent or Sellers that are divested, sold or otherwise
transferred to a third party after the Closing Date if permitted to be operated
hereunder (but not for a period beyond 270 days after the Initial Closing
Date).
Section 2.8 Stock Sale Alternative. At any time prior to a Closing
with respect to the Acquired Assets of a Seller, Buyer may elect at its option
to acquire all of the capital stock of such Seller and treat such Seller as a
Purchased Entity under this Agreement, it being agreed that with respect to
such Seller, the parties hereto shall make all reasonable adjustments to ensure
that the parties' respective rights and obligations with respect to such Seller
are substantially the same as the rights and obligations of the parties had the
assets of the Seller been Acquired Assets.
ARTICLE III
PURCHASE PRICE
Section 3.1 Purchase Price.
(a) In consideration for the Securities and the other
Acquired Assets and in reliance on the representations, warranties and
covenants of Parent, the Sellers and the Purchased Entities contained herein
and in the Related Documents, at or prior to the Closing (including any
Subsequent Closings) and in the manner set forth below, Buyer shall pay to the
Sellers an amount equal to $282,000,000 (the "Purchase Price"; such amount
subject to adjustment as provided below), of which seventy-five percent (75%)
shall be paid in cash by wire transfer of immediately available funds to an
account specified in writing by the Sellers, and twenty-five percent (25%)
shall be paid into an escrow account (the "Escrow Account") pursuant to an
escrow agreement in the form of Exhibit E attached hereto among Buyer, the
Sellers and the Escrow Agent; provided, that if (i) Sellers shall have filed
under the HSR Act by the close of business on the date of this Agreement and
satisfied their additional conditions to be fulfilled prior to the Closing
(other than the Sale Order becoming a Final Order), and (ii) the Initial
Closing Date shall not have occurred on or prior to midnight on Monday,
November 21, 2005, then the Purchase Price shall be increased by $5,000,000.
(b) No later than the close of business on Monday November
14, 2005, Buyer shall deposit with a mutually agreeable escrow agent (the
"Escrow Agent"), by certified check or wire transfer of immediately available
funds, the sum of $15 million (the "Deposit").
(c) Subject to Section 3.2, prior to or on the Initial
Closing Date, Buyer shall wire transfer to the Sellers 75% of an amount (the
"Adjusted Purchase Price") equal to:
(i) the Purchase Price, minus
(ii) the Segregated Account Adjustment.
(d) Subject to Section 3.2, prior to or on the Initial
Closing Date, Buyer shall deposit into the Escrow Account an amount equal to
(i) 25% of the Adjusted Purchase Price, minus (ii) the Deposit.
Section 3.2 Subsequent Closings. In the event that the Acquired Assets
are sold in more than one Closing (i.e., there are Delayed Purchase Assets) the
portion of the Adjusted Purchase Price payable in respect of the Acquired
Assets to be sold on the Initial Closing Date and the portion payable in
respect of the Acquired Assets to be sold at each Subsequent Closing shall be
equitably determined in accordance with the guidelines set forth in Schedule
3.2 and shall be paid on the applicable Closing Date, in each case 75% direct
to the Sellers in cash as above and 25% into the Escrow Account as above.
Section 3.3 Purchase Price Adjustment. In the event that the
Segregated Account Balance at the end of the Business Day immediately preceding
the Closing Date on which the assets of the Company are to be transferred, net
of any transfers of deposits pending or in process (the "Reference Segregated
Account Balance") is less than $1,750,000,000, the Purchase Price shall be
decreased by an amount equal to (a) $1,750,000,000 minus the Reference
Segregated Account Balance, divided by (b) $1,750,000,000, multiplied by (c)
the Purchase Price (such amount the "Segregated Account Adjustment").
Section 3.4 Pre-Closing Price Adjustments. On the Business Day
immediately prior to the applicable Closing Date (including any applicable
Subsequent Closing Dates), the President or Chief Financial Officer of the
Company shall deliver to Buyer no later than 12:00 noon, New York City time, a
certificate (the "Purchase Price Adjustment Certificate") setting forth (a) the
Company's good faith estimated calculation as of such Closing Date of the
Segregated Account Balance on such Closing Date (the "Segregated Account
Estimate"), and (b) an estimated calculation of the Adjusted Purchase Price
(the "Sellers' Price Estimate"). Following the delivery of the Purchase Price
Adjustment Certificate to Buyer, the Sellers and Buyer shall discuss the
Segregated Account Estimate and the Sellers' Price Estimate and endeavor to
resolve any differences. In the event of any disagreement as to any of the
items estimated in the Purchase Price Adjustment Certificate or the calculation
of the Adjusted Purchase Price, Buyer shall deliver to the Sellers Buyer's good
faith estimate as of such Closing Date of the Segregated Account Balance of the
applicable Person(s) and a calculation of the Adjusted Purchase Price (the
"Buyer's Price Estimate") and shall pay to the Sellers in accordance with
Sections 3.1 or 3.2, as applicable, an amount equal to Buyer's Price Estimate
(or the applicable portion thereof) and shall deposit the difference between
Sellers' Price Estimate and Buyer's Price Estimate in a separate escrow account
established specifically for such purpose.
Section 3.5 Post-Closing Adjustments.
(a) No later than the later of (i) the 20th day following the
end of the calendar month in which the applicable Closing occurs and (ii) 30th
day following such Closing Date, Buyer will prepare and deliver to the Company,
a report of the successor in interest to the Company with respect to the
Customer Accounts purchased from the Company as of such Closing Date (such
report, the "Closing Report"), together with a statement (the "Closing
Statement") setting forth Buyer's calculation as of such Closing Date of the
Segregated Account Balance and a determination of the amount of the Adjusted
Purchase Price. Buyer will prepare the Closing Report and the Closing Statement
(including the determinations included therein) in accordance with Section
3.5(e). In the event Buyer shall fail to deliver the Closing Report and the
Closing Statement within such 30-day period, the Purchase Price Adjustment
Certificate will be treated as the Closing Statement for purposes of Section
3.1 or 3.2, as applicable.
(b) During the 20-day period immediately following the
Company's receipt of the Closing Report and the Closing Statement, the Company
and its representatives (i) will be permitted to review, during normal business
hours and upon reasonable notice, the applicable successor's books and records
and the working papers related to the preparation of the Closing Report and the
Closing Statement (including the determinations included therein), and (ii)
will be given reasonable access, during normal business hours and upon
reasonable notice, to knowledgeable employees and accounting professionals of
Buyer in order to facilitate the Company's review of the Closing Report and the
Closing Statement; provided, however, that the review and access described in
clauses (i) and (ii) will be conducted at times and in a manner that does not
unreasonably interfere with the operation of Buyer's or any of its Affiliates'
businesses. The Closing Report and the Closing Statement (including the
determinations included therein) will become final, binding and conclusive upon
Buyer and the Sellers (a) on the 20th day following the Company's receipt
thereof, unless Buyer receives from the Company prior to such 20th day, written
notice of the Sellers' disagreement (a "Dispute Notice") with any account or
determination set forth in the Closing Report or the Closing Statement or (b)
on such earlier date as the Company notifies Buyer that it does not dispute the
Closing Report and Closing Statement. Any Dispute Notice will specify in
reasonable detail the nature and dollar amount of any disagreement so asserted
(collectively, the "Disputed Items"). Any account or determination set forth or
reflected on the Closing Report or the Closing Statement that is not
specifically objected to in the Dispute Notice will be deemed final, binding
and conclusive upon Buyer and the Sellers upon delivery of the Dispute Notice.
If Company timely delivers a Dispute Notice, then the determination of the
Adjusted Purchase Price (in accordance with the resolution described in clause
(x) or (y) below, as applicable) will become final, binding and conclusive upon
Buyer and the Sellers on the first to occur of (x) the date on which Buyer and
the Company resolve in writing all differences they have with respect to the
Disputed Items or (y) the date on which all of the Disputed Items that are not
resolved by the Buyer and the Company in writing are finally resolved in
writing by the Independent Accountants in accordance with Section 3.5(c).
(c) During the 15 days following delivery of a Dispute
Notice, Buyer and the Company will seek in good faith to resolve in writing any
differences which they have with respect to all of the Disputed Items. Any
Disputed Item resolved in writing by Buyer and Company will be deemed final,
binding and conclusive on Buyer and the Sellers. If Buyer and Company do not
reach agreement on all of the Disputed Items during such 15-day period (or such
longer period as they shall mutually agree), then at the end of such 15-day (or
longer) period Buyer and Company will submit all unresolved Disputed Items
(collectively, the "Unresolved Items") to one of the "big four" nationally
recognized firms of independent certified public accountants with a nationwide
audit and accounting practice as Buyer and Company may mutually agree (the
"Independent Accountants") to review and resolve such matters. The Independent
Accountants will determine each Unresolved Item (the amount of which may not be
more favorable to Buyer than the related amount reflected in the Closing
Statement nor more favorable to the Sellers than the related amount set forth
in the Dispute Notice) in accordance with Section 3.5(e) as promptly as may be
reasonably practicable, and Buyer and Company will instruct the Independent
Accountants to endeavor to complete such process within a period of no more
than 15 days. The Independent Accountants may conduct such proceedings as the
Independent Accountants believe, in their sole discretion, will assist in the
determination of the Unresolved Items; provided, however, that, except as Buyer
and Company may otherwise agree, all communications between Buyer, Company and
the Sellers or any of their respective representatives, on the one hand, and
the Independent Accountants, on the other hand, will be in writing with copies
simultaneously delivered to the non-communicating party. The Independent
Accountants' determination of the Unresolved Items will be final, binding and
conclusive on Buyer and the Sellers, effective as of the date the Independent
Accountants' written determination is received by Buyer and Company. The fees
and expenses of the Independent Accountants will be borne one-half by Buyer and
one-half jointly by the Sellers, and each of Buyer and the Sellers will bear
its own legal, accounting and other fees and expenses of participating in such
dispute resolution procedure.
(d) Upon final determination of the Adjusted Purchase Price
pursuant to Section 3.5(b) or (c) (the "Final Purchase Price"), an adjustment
to the Purchase Price will be determined and paid as follows:
(i) If the Estimated Purchase Price exceeds the Final
Purchase Price, the Sellers (or their respective successors and assigns,
including any post-consummation trusts formed to administer claims against the
Debtors' estate) shall within five (5) Business Days of the determination of
the Final Purchase Price pay to Buyer the amount of such excess by wire
transfer of immediately available funds to the account specified by Buyer.
Seller's obligations pursuant to the preceding sentence shall constitute
superpriority administrative claims and shall be secured by liens having the
priority contemplated by Section 11.2 of this Agreement.
(ii) If the Final Purchase Price exceeds the Estimated
Purchase Price, Buyer shall within five (5) Business Days of the determination
of the Final Purchase Price pay the amount of such excess by wire transfer of
immediately available funds, 75% to the Sellers and 25% to the Escrow Account,
as above.
(e) For the purposes of this Section 3.5, each accounting
term used herein will have the meaning that is applied thereto in accordance
with Regulatory Accounting Standards and, to the extent consistent with
Regulatory Accounting Standards, the accounting principles, policies,
procedures and methodologies applied in preparing the Latest Regulatory
Statements. Each account included in the Closing Statement and the Closing
Report will be consistent with the books and records of the Broker Entities and
the definitions herein agreed; provided, that in no event shall any Excluded
Liability be included on the Closing Report.
ARTICLE IV
CLOSING
Section 4.1 Closing; Transfer of Possession; Certain Deliveries.
Unless this Agreement shall have been terminated and the transactions herein
contemplated shall have been abandoned pursuant to Article X, the initial
closing of the transactions contemplated herein (the "Initial Closing") shall
take place within one (1) Business Day after the day (and, at the option of
Buyer, shall take place on the same day) on which all the conditions precedent
set forth in Article IX have been satisfied (or waived) (other than (i) with
respect to any Delayed Purchase Assets, the conditions set forth in Section 9.1
or 9.2, and (ii) such conditions which by their nature can only be satisfied at
the Closing, but subject to the satisfaction or waiver of such conditions) or
on such other date as the parties hereto shall mutually agree. The Initial
Closing shall be held at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP, Four Times Square, New York, New York 10036-6522, at 10:00 a.m., local
time, unless the parties hereto otherwise agree. The actual time and date of
the Initial Closing are herein called the "Initial Closing Date." In the event
that that there are any Delayed Purchase Assets, such Delayed Purchase Assets
shall, upon satisfaction or waiver of the conditions set forth in Section 9.1
and 9.2, be acquired at one or more additional Closings (the "Subsequent
Closings"). Any Subsequent Closing shall take place at the offices of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square, New York, New York
10036-6522, at 10:00 a.m., local time. The date and time of any Subsequent
Closing are herein referred to as a "Subsequent Closing Date." Unless the
context otherwise requires, (i) each of the Initial Closing and any Subsequent
Closing are herein referred to as a "Closing" and (ii) each of the Initial
Closing Date and any Subsequent Closing Date are herein referred to as a
"Closing Date."
Section 4.2 Seller Deliveries. At each Closing (including any
Subsequent Closing), the Sellers shall deliver to Buyer:
(a) All duly executed Bills of Sale, Assignment and
Assumption Agreements with respect to the Acquired Assets and Assumed Contracts
being purchased at such Closing and such other instruments of conveyance and
assignment as Buyer shall deem necessary or appropriate to vest in Buyer (or
its designee, as the case may be) all right, title and interest in, to and
under the Acquired Assets and the Assumed Contracts;
(b) A certified copy of the Sale Order for the Sellers;
(c) The officer's certificates required to be delivered
pursuant to Section 9.2(c) hereof;
(d) The Price Certification Certificate, duly executed by the
President or Chief Financial Officer of the Sellers;
(e) All certificates required by all relevant taxing
authorities that are necessary to support any claimed exemption from the
imposition of Transfer Taxes;
(f) Signed resignations of the directors and officers of the
Purchased Entities being purchased at such Closing to the extent the same were
appointed or designated by Parent or any of its Affiliates;
(g) The unit certificates and notes for all of the Securities
being purchased at such Closing, endorsed in blank or accompanied by duly
executed assignment documents;
(h) A certified copy of all required directors' and
shareholders' resolutions, consents and waivers;
(i) An affidavit or affidavits dated as of the Closing Date
and in the form and substance required under the Treasury Regulations issued
pursuant to Section 1445(b) of the Code so that Buyer is exempt from
withholding any portion of the Purchase Price;
(j) A duly executed Seller Transition Services Agreement;
(k) A duly executed Intellectual Property License Agreement;
and
(l) Such other documents as Buyer may deem reasonably
necessary or appropriate.
Section 4.3 Buyer Closing Deliveries. At the Closing (including any
Subsequent Closing), Buyer shall deliver to the Sellers:
(a) The Adjusted Purchase Price applicable to the Acquired
Assets being purchased at such Closing;
(b) The officer's certificate required to be delivered
pursuant to Section 9.3(c) hereof;
(c) A duly executed Buyer Transition Services Agreement; and
(d) A duly executed Intellectual Property License Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
AND THE PURCHASED ENTITIES
As a material inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, and except as set forth on a
schedule corresponding to such representation or warranty delivered in
accordance herewith, the Sellers hereby jointly and severally represent and
warrant to Buyer as follows:
Section 5.1 Existence; Good Standing and Power. Each Purchased Entity
and each Seller is an entity duly organized, validly existing and in good
standing under the laws of the state of or jurisdiction of its organization,
formation or incorporation. Each of the Purchased Entities and the Sellers is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the character of its properties or assets (including the
real property) or the operation of the Business so require except to the extent
failure to be so qualified or licensed would not, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect.
Each of the Purchased Entities and the Sellers has all requisite corporate,
partnership or limited liability company power and authority to own, lease and
operate the assets owned by it, to carry on, in all material respects, the
Business and, subject to entry of the Sale Order, to execute and deliver this
Agreement and the Related Documents and to perform its respective obligations
hereunder and thereunder. Schedule 5.1 sets forth a complete list of the
Governance Documents of each of the Purchased Entities in effect as of the date
hereof.
Section 5.2 Capitalization.
(a) Schedule 5.2 sets forth, with respect to each of the
Purchased Entities, its name, type of entity, the jurisdiction and date of its
formation, its authorized Equity Interests (if applicable), the number and type
of its issued and outstanding Equity Interests and the current ownership of
such Equity Interests.
(b) All the Securities (i) are owned by the Sellers free and
clear of all Liens, agreements, voting trusts, proxies or restrictions of any
kind ("Encumbrances") and (ii) have been duly authorized, validly issued and
are fully paid and non-assessable.
Section 5.3 Authority. Prior to its execution of this Agreement, each
of the Purchased Entities and the Sellers has taken all necessary or
appropriate corporate, partnership, or limited liability company actions
(including obtaining any required affirmative vote or written consent of
directors or Equity Interest holders) to authorize the execution and delivery
of this Agreement and the Related Documents and the performance of its
obligations hereunder and thereunder, subject to the Sale Order.
Section 5.4 Execution and Binding Effect. Upon execution of this
Agreement by each of the Sellers, this Agreement and the Related Documents will
have been duly and validly executed and delivered by each of the Sellers and
this Agreement and the Related Documents will, subject to entry of the Sale
Order, constitute the legal valid and binding obligation of each of the Sellers
enforceable against each of the Sellers in accordance with their respective
terms.
Section 5.5 No Violation. Except as disclosed on Schedule 5.5, the
execution, delivery and performance by the Sellers of this Agreement, the
Related Documents and the transactions contemplated hereby and thereby, do not
and will not conflict with or result in, with or without the giving of notice
or lapse of time or both, any violation of or constitute a breach or default,
give rise to any right of acceleration, payment, amendment, cancellation or
termination, or result in or require the creation or imposition of any Lien
against or with respect to any of the Securities or the Acquired Assets or any
interest therein, under (a) the Governance Documents of any of the Purchased
Entities or Sellers or any resolution adopted by the board of directors,
shareholders, members or general partners (as applicable) of any of the
Purchased Entities or the Sellers and not rescinded, (b) subject to approval of
the Sale Order, any Contract or other instrument to which any of the Purchased
Entities or Sellers is a party or by which any of the Purchased Entities or the
Sellers or any of its respective properties or assets is bound, (c) any Order
of any Governmental Entity or Self-Regulatory Organization to which any of the
Purchased Entities or the Sellers is bound or subject, or (d) any Law
applicable to any of the Purchased Entities, the Business or any of the
Acquired Assets.
Section 5.6 Prior or Preferential Rights. There are no prior or
preferential rights, rights of first refusal, rights of first offer or other
similar rights of any party (other than Buyer) to purchase or otherwise acquire
the Business, the Acquired Assets of or any Securities.
Section 5.7 Third Party Approvals. Except for (i) any approvals
required in order to comply with the provisions of the HSR Act, if necessary,
(ii) the Sale Order and (iii) any other third party approvals set forth on
Schedule 5.7, the execution, delivery and performance by the Subject Entities
of this Agreement, the Related Documents and the transactions contemplated
hereby do not and will not require, subject to the approval of the Sale Order,
any consents, waivers, authorizations or approvals of, or filings with, any
Persons that have not been obtained by the Purchased Entities.
Section 5.8 Brokers and Finders. Parent and certain of its Affiliates
have engaged ▇▇▇▇▇▇▇▇▇ & Co., LLC to assist them in connection with the matters
contemplated by this Agreement and shall be solely responsible for the fees and
expenses of such firm. The Sellers and the Purchased Entities have not
otherwise engaged any person not a party to this Agreement in such a manner as
to give rise to any claim by any such person against Buyer or any of the
Purchased Entities for any brokerage commissions, finder's fees or other like
payments.
Section 5.9 Taxes. Each of the Sellers and the Purchased Entities has
filed (or has had filed on its behalf) all income and other material Tax
Returns that it was required to file under applicable laws and regulations.
Except as set forth on Schedule 5.9, all such Tax Returns were correct and
complete in all material respects and were prepared in substantial compliance
with all applicable laws and regulations. All material Taxes shown as due on
such Tax Returns have been paid. To the knowledge of Parent, none of the
Purchased Entities is liable for any Taxes of any Person other than the
Purchased Entities, including any Taxes for which the Purchased Entities are
liable under Section 1.1502-6 of the Treasury Regulations (or any similar
provision of state, local or foreign Tax law), as a transferee or successor, by
contract or otherwise. To the knowledge of Parent, there is no material action,
suit, proceeding, investigation, assessment, adjustment, audit or claim now
proposed or pending against or with respect to any Purchased Entity in respect
of any Tax. To the knowledge of Parent, no Purchased Entity has received any
notice of deficiency or assessment from any taxing authority with respect to
material liabilities for Taxes of any Purchased Entity which have not been paid
or finally settled.
Section 5.10 Regulatory Accounting Reports.
(a) Attached hereto as Exhibit F are the Regulatory
Accounting Reports of each of the Purchased Entities, dated as of September 30,
2005 (collectively, the "Latest Regulatory Statements") or to the extent
Regulatory Accounting Reports are not created for a Purchased Entity, the
balance sheets for the Purchased Entities, dated as of September 30, 2005
(each, a "Balance Sheet").
(b) The Latest Regulatory Statements or Balance Sheets, as
applicable have been prepared from, and are in accordance with, the books and
records of the Purchased Entities, are true, correct and complete in all
material respects, fairly present the financial condition and the operating
results and cash flows of the Purchased Entities as of the dates and for the
periods then ended, and have been prepared in accordance with the Regulatory
Accounting Standards applicable to each Purchased Entity consistently applied
throughout the Latest Regulatory Statements and the periods covered thereby.
(c) Except (1) as disclosed in the Latest Regulatory
Statements or Balance Sheets, as applicable, or (2) as incurred after the date
of the Latest Regulatory Statement or Balance Sheet in the ordinary course of
business, provided that such Liability was not incurred in violation of this
Agreement, there are no undisclosed Liabilities with respect to the Purchased
Entities or the Business.
(d) Since the date of the Latest Regulatory Statements or
Balance Sheets as applicable, there has been no change by any of the Purchased
Entities or the Sellers in accounting methods or principles or the application
thereof or any change in any of the Purchased Entities' or Sellers' policies or
practices, including with respect to items affecting Net Regulatory Capital,
risk measurement (including value-at-risk metrics) or margin requirements,
except as required by the applicable Regulatory Accounting Standards.
Section 5.11 Indebtedness. None of the Purchased Entities has any
outstanding Indebtedness to any Affiliate other than Inter-Company Debt listed
on Schedule 5.11, all of which constitutes Securities being sold to Buyer
hereunder.
Section 5.12 Books and Records. Except as set forth on Schedule 5.12,
the books of account and other financial records of the Purchased Entities and
the Sellers, all of which have been made available to Buyer, are true, complete
and correct in all material respects, represent actual, bona fide transactions
and have been maintained in accordance with sound business practices, including
the maintenance of an adequate system of internal controls. The Liabilities of
each Purchased Entities as of the date hereof are solely the Liabilities of
such Purchased Entity itself and no such Purchased Entity has any Liability in
respect of any outstanding or undischarged Liability of Parent or any Affiliate
of Parent (other than such Purchased Entity). To the knowledge of Parent and
the Sellers, the minute books of the Purchased Entities, all of which have been
made available to Buyer, contain accurate and complete records of all meetings
held of, and corporate action taken by, the shareholders, members, the board of
directors, the board of managers and committees of the board of directors (as
applicable) of the Purchased Entities, and no meeting of any such shareholders,
members, board of managers, board of directors, committee has been held for
which minutes have not been prepared or are not contained in such minute books.
Each of the Purchased Entities and the Sellers have maintained all books of
account, financial records, minutes books and other records of such Purchased
Entity and the Seller (including electronic files and correspondence) and has
not engaged in the destruction of any such documents.
Section 5.13 Title to Acquired Assets; Condition of Acquired Assets.
Except as set forth on Schedule 5.13(a), (a) the Sellers have, and from and
after the applicable Closing, Buyer shall have, good and valid title (or in the
case of leases, or other agreements, the full and unencumbered right to
exercise their respective rights under such leases and other agreements) to, or
a valid leasehold interest or license in, all of the Acquired Assets (including
the Securities and including the exchange seats described on Schedule
5.13(b)(1)), free and clear of all Liens and Excluded Liabilities, and (b) each
of the Purchased Entities has good and valid title (or, in the case of leases,
or other agreements, the full and unencumbered right to exercise their
respective rights under such leases and other agreements) to, or a valid
leasehold interest or license in, all of its respective assets, whether
tangible or intangible, free and clear of all Liens and Excluded Liabilities,
including all Information and Records, Permits and Intellectual Property Rights
used or useful in connection with the operation of the Business (the assets
described in clause (a) and (b), the "Owned Assets").
Section 5.14 Sufficiency of Acquired Assets. The Owned Assets,
together with the assets listed on the Schedule delivered by Parent pursuant to
Section 8.2, and Buyer's rights under this Agreement and the Related Documents
(including the assets, rights and services to be made available under the Buyer
Transition Services Agreement) constitute all of the assets, properties,
Contracts, licenses, accounts and rights primarily related to, material to or
necessary to carry on the Business as a going concern on a basis consistent
with past prudent practices of each of the Purchased Entities and the Sellers.
Section 5.15 Real Property and Realty Rights. None of the Purchased
Entities or the Sellers owns any real property.
Section 5.16 Employee Benefits.
(a) Schedule 5.16 contains a complete and correct list of
each Employee Benefit Plan, separately designating each Employee Benefit Plan
that is a Multiemployer Plan and each Employee Benefit Plan that is intended to
be a "qualified plan" within the meaning of Section 401(a) of the Code (a
"Qualified Plan").
(b) Each of the Purchased Entities, Sellers and each of their
respective ERISA Affiliates are and have been at all times in material
compliance with the requirements of COBRA and under any corresponding or
similar provisions of foreign laws or regulations. No Employee Benefit Plan is
subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code
or any corresponding or similar provisions of foreign laws or regulations and
none of the Purchased Entities, Sellers or their respective ERISA Affiliates
has contributed to, or has any obligations or liability under, any such plan.
No Employee Benefit Plan to which Parent or any of its Affiliates contributes
or is obligated to contribute or has contributed or been obligated to
contribute is a Multiple Employer Plan or Multiemployer Plan. None of the
Purchased Entities, Sellers nor any of their respective ERISA Affiliates has
any liability or potential liability under Title IV of ERISA or under any
corresponding or similar provisions of foreign laws or regulations that could
reasonably be expected to become a liability of Buyer, including on account of
a "partial withdrawal" or a "complete withdrawal" (within the meaning of
Sections 4205 and 4203 of ERISA, respectively) from any Multiemployer Plan or a
failure to make any required contribution to any Multiemployer Plan. With
respect to each Multiemployer Plan or Multiple Employer Plans to which any of
the Purchased Entities or Sellers or any of their respective ERISA Affiliates
has an obligation to contribute or any other liability or obligation: (i) all
contributions required to be made by such entity have been timely made; (ii) no
such Multiemployer Plan or Multiple Employer Plan is or is expected to be in
reorganization (as defined in Section 4241 of ERISA) or insolvent (as defined
in Section 4245 of ERISA); (iii) no withdrawal liability has been incurred by
or assessed against such entity that has not been satisfied; and (iv) no such
Multiemployer Plan or Multiple Employer Plan has an application pending for or
has received a minimum funding waiver under Section 412 of the Code or has
elected to defer or given notice that it intends to elect to defer any net
experience loss charge pursuant to Section 412(b)(7)(F) of the Code or Section
302(b)(7)(F) of ERISA. The Company and its subsidiaries have no liability for
life, health, medical or other welfare benefits to former employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA and at no
expense to the Company and its subsidiaries. The Internal Revenue Service has
issued a favorable determination letter with respect to each Qualified Plan and
the related trust that has not been revoked and, to the knowledge of Parent, no
existing circumstances and no events have occurred that could adversely affect
the qualified status of any such Qualified Plan or the related trust.
Section 5.17 Intellectual Property.
(a) Except as set forth on Schedule 5.17, (i) there are no
Proceedings (including opposition, interferences and cancellation petitions and
like proceedings) against any of the Purchased Entities, Sellers or any of
their Affiliates that were either made within the past two (2) years, are
presently pending, or, to the knowledge of any of the Subject Entities,
threatened, contesting the validity, use, ownership, enforceability or
registrability of any of the Intellectual Property Rights (A) owned by the
Purchased Entities or (B) owned by any of their Affiliates (including the
Sellers) and primarily used for, material to or necessary for the operation of
the Business as presently conducted (collectively, the "Broker Entities
Intellectual Property Rights"), and, to the knowledge of any of the Subject
Entities, there is no reasonable basis for any such claim, (ii) to the
knowledge of the Subject Entities, none of the Purchased Entities or Sellers
are infringing, misappropriating or otherwise conflicting with, and the
operation of the Business as currently conducted does not infringe,
misappropriate or otherwise conflict with, any Intellectual Property Rights of
other Persons, and neither the Sellers nor any of the Purchased Entities have
received any notices alleging any of the foregoing, and (iii) to the knowledge
of any of the Subject Entities, no third party is infringing, misappropriating
or otherwise conflicting with any of the Broker Entities Intellectual Property
Rights. The Broker Entities Intellectual Property Rights are not subject to any
outstanding consent, settlement, decree, order, injunction, judgment or ruling
restricting the use thereof. All of the Broker Entities Intellectual Property
Rights shall be owned or available for use by the Purchased Entities or Buyer
or its designee immediately after the Closing on terms and conditions identical
to those under which the Purchased Entities and the Sellers owned or used the
Broker Entities Intellectual Property Rights immediately prior to the Closing.
(b) The Purchased Entities and the Sellers own all right,
title and interest in and to all Broker Entities Intellectual Property Rights
developed by all past and present employees of, and consultants to, Parent, the
Purchased Entities or any of the Affiliates who own Broker Entities
Intellectual Property Rights in the course of their relationship with the
Purchased Entities or its relevant Affiliates.
(c) The Purchased Entities and the Sellers have substantially
complied with all applicable data protection or privacy laws governing the use
of personal information. The Purchased Entities and Sellers are substantially
in compliance with any privacy policies or related policies, programs or other
notices that concern the Purchased Entities' and the Sellers' use of personal
information.
(d) Except as set forth in Schedule 5.17, to the knowledge of
the Subject Entities, (i) the Broker Entities Intellectual Property Rights are
valid, subsisting and enforceable, and (ii) the Subject Entities have timely
made in all material respects all filings, payments and ownership recordation
with the appropriate foreign or domestic agencies required to maintain in
substance, in the name of the Subject Entities, all Broker Entities
Intellectual Property Rights.
Section 5.18 Customer Accounts; Reports; Registrations; Regulations.
(a) Except as set forth on Schedule 5.18, none of the funds
on deposit in segregated customer accounts (or the accounts related thereto)
are beneficially owned or controlled by an Affiliate of the Sellers or any of
the Purchased Entities or any of their employees (except in compliance with and
as necessary to meet the requirements of a Governmental Entity or
Self-Regulatory Organization).
(b) None of the Purchased Entities or the Sellers has
executed securities or futures trades on behalf of customers without charging a
commission.
(c) Each Purchased Entity and Seller has timely filed all
reports, registrations, offering memoranda, statements and other filings,
together with any amendments required to be made with respect thereto
concerning such Purchased Entity or Seller that were required to be filed with
any Governmental Entity or any Self-Regulatory Organization (all such reports,
and statements being collectively referred to herein as the "SRO Reports")
since January 1, 2003. Each of the SRO Reports, when filed, complied as to form
in all material respects with all applicable statutes, rules, regulations and
orders (whether or not enforced or promulgated by the Governmental Entity with
which they were filed) and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(d) Without limiting the generality of the preceding
paragraph (c), except as set forth on Schedule 5.18, each Purchased Entity and
Seller:
(i) has complied in all material respects with all
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders and decrees applicable to the Business or to the
employees thereof and with the applicable rules of all Self-Regulatory
Organizations including (A) all applicable regulatory net capital requirements,
including SEC Rule 15c3-1 and, as applicable, the "early warning" and
"expansion-contraction" capital requirements of any Governmental Entity,
including Self-Regulatory Organizations, (B) the provisions of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder, (C) the provisions of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (USA PATRIOT Act) and the rules and regulations thereunder, and (D) the
Currency and Foreign Transactions Reporting Act of 1970 (Bank Secrecy Act) and
the rules and regulations thereunder;
(ii) is not subject to a "statutory disqualification" as
defined in Section 3(a)(39) of the Securities Exchange Act of 1934, as amended,
and is not subject to any of the provisions of Section 8a of the Commodity
Exchange Act that would permit the CFTC to refuse to register or to suspend or
revoke its registration, nor is there any current investigation, whether formal
or informal, preliminary or otherwise, that is reasonably likely to result in
any such statutory disqualification or provision of Section 8a of the Commodity
Exchange Act in respect of any of the subjects covered by this Section 5.18;
(iii) has conducted its operations in accordance with the
material provisions of its Governance Documents (as well as the material
descriptions included in its offering memorandum, if any); and
(iv) has not at any time within the past three years
entered into or been subject to any judgment, consent decree, or administrative
order with respect to any aspect of the business, affairs, properties or assets
of such Purchased Entity or Seller or, as of the date hereof, received any
notice of the institution against such Purchased Entity or Seller of any civil,
criminal or administrative action, suit, proceeding or investigation from any
Governmental Entity or Self-Regulatory Organization with respect to any aspect
of the business, affairs, properties or assets of such Purchased Entity or
Seller.
(v) has not at any time within the past three years
received any sanction or extraordinary supervisory letter from, or adopted any
board resolutions at the request of, any Self-Regulatory Organization or
Governmental Entity charged with the supervision or regulation of
broker-dealers or the supervision of the Business (each such item referred to
in this Section 5.18(v), a "Regulatory Order") including any such Regulatory
Order that restricts the conduct of the Business, or in any manner relates to
its capital adequacy, credit policies or management.
(e) Schedule 5.18 lists each current registration of each
Purchased Entity or Seller as (i) a broker-dealer with the SEC, the securities
commission or similar authority of any State and any Self-Regulatory
Organization and (ii) a Futures Commission Merchant with the CFTC and any
Self-Regulatory Organization, or a similar status with any Governmental Entity
or Self-Regulatory Organization. Each of the Purchased Entities or Sellers has
made available to the Buyer a true, correct and complete copy of such Purchased
Entities' or Sellers' currently effective Forms BD as filed with the SEC,
currently effective Forms 7-R registration and, for each "principal,"
"associated person" and "introducing broker" of such Purchased Entities or
Sellers currently effective Forms 7-R and 8-R, as applicable, with the CFTC,
current composite Forms BD filings with the SEC, Regulatory Accounting Reports,
FOCUS Reports, Forms 1-FR-FCM, and annual audits and all other material reports
filed by the Sellers or any of the Purchased Entities with the SEC or any
Self-Regulatory Organization within the last three years, and will make
available to Buyer such material forms and reports as are filed from and after
the date hereof and prior to the Closing Date. The information contained in
such forms and reports was true, correct and complete in all material respects
as of the time of filing.
(f) None of the Purchased Entities or Sellers engage in
proprietary trading or otherwise takes speculative positions in any securities
or futures markets or pursuant to any private transactions.
(g) No Purchased Entity or Seller is registered as a
"commodity pool operator" (as defined in Section 1(a)(5) of the Commodity
Exchange Act) with the CFTC. No Purchased Entity or Seller is subject to
registration under the Investment Advisers Act or the Investment Company Act.
No Purchased Entity or Seller is, or has been during the past five years, an
"investment adviser" or a "commodity trading advisor" within the meaning of the
Investment Advisers Act and the Commodity Exchange Act, respectively, required
to be registered, licensed or qualified as an investment adviser under the
Investment Advisers Act or any similar applicable state law or subject to any
material liability or disability by reason of any failure to be so registered,
licensed or qualified.
(h) Schedule 5.18 lists each Purchased Entity or Seller that
is registered or required to be registered as a Futures Commission Merchant
with the CFTC. Each such Purchased Entity or Seller is a duly qualified member
in good standing of the National Futures Association to the extent required to
be such a member. All Futures Commission Merchants as set forth on Schedule
5.18 have established written supervisory procedures that are reasonably
designed to prevent and detect any violation of Laws relating to such entity's
current operation, as applicable, and that include financial, operational,
trading, money laundering, internal control and risk control procedures. Buyer
has been provided with a true, complete and correct copy of such procedures.
Each Futures Commission Merchant as set forth on Schedule 5.18 has at all times
maintained and continues to maintain, all books and records required by
applicable Laws and has at all times filed all reports required by applicable
Laws.
(i) No Proceeding is pending or, to the knowledge of the
Subject Entities threatened, nor does any judgment exist (which has not been
discharged), against any of the Purchased Entities or Seller by or before any
Governmental Entity or Self-Regulatory Organization to restrain or prohibit, or
to obtain damages, a discovery order or other relief in connection with, this
Agreement, the other documents and instruments executed and delivered in
connection herewith, or any of the other transactions contemplated hereby and
thereby.
Section 5.19 Affiliate Transactions. Except as set forth on Schedule
5.19, no officer, director, shareholder, Representative or Affiliate of Parent
or any of its Subsidiaries or any individual related by blood, marriage or
adoption to any such individual or any entity in which any such Person or
individual owns any material beneficial interest, is a party to any material
agreement, contract, commitment or transaction with the Purchased Entities or
Sellers or has any material interest in any property used or useful in the
Business.
Section 5.20 Accounts Receivable. All accounts receivable reflected on
the Latest Regulatory Statements of the Purchased Entities and all accounts
receivable reflected on the books and records of the Purchased Entities that
have arisen subsequent to the date of the Latest Regulatory Statements of the
Purchased Entities (a) are bona fide, valid receivables, representing amounts
due with respect to actual transactions in the ordinary course of business, (b)
are not subject to valid counterclaims or setoffs, and (c) are subject to the
reserve set forth on the face of the Latest Regulatory Statements of the
Purchased Entities. Nothing in this Section 5.20 shall constitute a
representation or warranty as to collectibility of any of the accounts
receivable of the Purchased Entities.
Section 5.21 Customer and Introducing Broker Agreements and Other
Material Agreements; Margin Requirements.
(a) The Sellers have delivered to Buyer all forms of customer
agreements used by the Purchased Entities and Sellers (collectively, the
"Standard Customer Agreements"). All of the customers of the Purchased Entities
and Sellers are party to a customer agreement that is substantially identical
to the Standard Customer Agreements. No material modifications or amendments
have been made to any such agreement and no other agreement or understanding,
written or oral, supplementing the terms set forth in any Standard Customer
Agreement has been entered into with a customer. Except for any special
commission arrangements set forth in Schedule 5.21(b), none of the Purchased
Entities or the Sellers is a party to any agreement with any customer regarding
commission rates or commission structure other than the commission rates or
commission structure set forth in the Standard Customer Agreements.
(b) The Sellers have delivered to Buyer the margin policies
and guidelines of the Purchased Entities and the Sellers. Since December 31,
2004, none of the Purchased Entities or Sellers have lowered their margin
requirements below the requirements set forth in Exhibit G or otherwise
modified their margin policies and/or guidelines. No Purchased Entity or Seller
has guaranteed to any customer the performance of any account. No Purchased
Entity or Seller has made any loan to any customer for the purposes of
exchange-required margin payments or any other purpose.
(c) The Sellers have delivered to Buyer all of the forms of
introducing broker agreements used by the U.S. Purchased Entities and Sellers
and the forms of all comparable agreements used by non-U.S. Purchased Entities
and Sellers (collectively, the "Standard Introducing Broker Agreement"). All of
the introducing brokers (or non-U.S. equivalents) of the Purchased Entities and
Sellers are party to an agreement that is substantially identical to the
Standard Introducing Broker Agreement. No material modifications or amendments
have been made to any such agreement and no other agreement or understanding,
written or oral, supplementing the terms set forth in any Standard Introducing
Broker Agreement has been entered into with an introducing broker (or non-U.S.
equivalent).
(d) The Sellers have delivered to Buyer all of the forms of
give-up agreements (including the standard commission structure) used by the
Purchased Entities or Sellers (collectively, the "Standard Give-Up
Agreements"). Except for any special commission arrangements set forth in
Schedule 5.21(d), none of the Purchased Entities or Sellers is a party to any
give-up agreement with commission rates or commission structure different than
the Standard Give-up Agreement.
(e) Set forth on Schedule 5.21(e) is a true, correct and
complete list of all the material Contracts (other than the Standard Customer
Agreement, the Standard Introducing Broker Agreement and the Standard Give-Up
Agreement) to which any Seller or Purchased Entity is a party or otherwise
bound in connection with the Business or by which any of the Acquired Assets
are bound (such Contracts, the "Material Contracts").
(f) Except as set forth on Schedule 5.21(f), each of the
Standard Customer Agreements, Standard Introducing Broker Agreements, Standard
Give-Up Agreements, and Material Contracts is valid, binding and enforceable in
accordance with its terms and to the knowledge of the Subject Entities, is in
full force and effect. No Seller or Purchased Entity, and to the knowledge of
any of the Subject Entities, no party to a Standard Customer Agreement,
Standard Introducing Broker Agreement, Standard Give-Up Agreement or Material
Contract, is in material default in the performance or observance of any term
or provision of, and no event has occurred which, with the lapse of time, would
result in a material default under any such agreement.
Section 5.22 Cash Distributions. Since October 18, 2005, the Purchased
Entities have not made any loan repayment, paid any dividends, made any
distributions or made any commitments to make such payments to any members,
shareholders or Affiliates or any other Person.
Section 5.23 Litigation, etc. Except in connection with the Cases,
there are no Proceedings or claims pending or, to the knowledge of the Sellers,
threatened against or affecting the Sellers in which it is sought to restrain
or prohibit, or to obtain damages or other relief in connection with, the
transactions contemplated hereby.
ARTICLE VI
INTENTIONALLY OMITTED
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to the Sellers to enter into this Agreement
and to consummate the transactions contemplated hereby, Buyer hereby represents
and warrants to the Sellers as follows:
Section 7.1 Existence, Good Standing and Power. Buyer is corporation
validly existing and in good standing under the laws of its jurisdiction of
organization and has all requisite corporate power and authority to own, lease
and operate the property it now owns, leases and operates. Buyer has all
requisite limited liability company power and authority to conduct its business
as presently conducted, to execute and deliver this Agreement and the other
documents and instruments to be executed and delivered by Buyer pursuant hereto
and to perform its obligations hereunder and thereunder. Buyer is duly
authorized to transact business as a foreign corporation, and is in good
standing, in the states in which the Business is proposed to be conducted by
Buyer.
Section 7.2 Authority. The execution, delivery and performance of this
Agreement and the consummation by Buyer of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Buyer.
Section 7.3 Execution and Binding Effect. This Agreement has been duly
and validly executed and delivered by Buyer and constitutes (assuming, in each
case, the due and valid authorization, execution and delivery thereof by the
other parties hereto) a valid and legally binding obligation of Buyer,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether considered in a proceeding in
equity or at law).
Section 7.4 No Violation. The execution, delivery and performance by
Buyer of this Agreement and the transactions contemplated hereby, do not and
will not conflict with or result in, with or without the giving of notice or
lapse of time or both, any violation of or constitute a breach or default, or
give rise to any right of acceleration, payment, amendment, cancellation or
termination, under (a) the Governance Documents of Buyer or any resolution
adopted by the board of Buyer and not rescinded, (b) any agreement or other
instrument to which Buyer is a party or by which Buyer or any of its respective
properties or assets is bound, (c) subject to Section 7.5, any Order of any
Governmental Entity to which Buyer is bound or subject or (d) subject to
Section 7.5, any Law applicable to Buyer or any of its respective properties or
assets.
Section 7.5 Third Party Approvals. Except for (i) any approvals
required in order to comply with the provisions of the HSR Act, if necessary,
or any other antitrust or competition law or regulation and (ii) any other
third party approvals as are reflected on Schedule 7.5 hereto or which have
been or will be received on or prior to the applicable Closing, the execution,
delivery and performance by Buyer of this Agreement and the transactions
contemplated hereby do not require, subject to the approval of the Sale Order,
any consents, waivers, authorizations or approvals of, or filings with, any
third Persons which have not been obtained by Buyer and which are material as
to the consummation of the transactions contemplated by this Agreement.
Section 7.6 Brokers and Finders. Other than as disclosed on Schedule
7.6, Buyer has not employed any broker or finder or incurred any liability for
any brokerage fees, commissions, finders, or similar fees in connection with
the transactions contemplated by this Agreement.
Section 7.7 Acquisition of Securities for Investment. Buyer has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of its purchase of the Securities. Buyer
confirms that the Sellers and the Purchased Entities have provided Buyer the
opportunity to ask questions of the officers and management employees of the
Sellers and the Purchased Entities and to acquire additional information about
the business and financial condition of the Sellers and the Purchased Entities.
Buyer is acquiring the Securities for investment and not with a view toward or
for sale in connection with any distribution thereof, or with any present
intention of distributing or selling such Securities. Buyer is financially able
to bear the risk of holding such investment for an indefinite period of time.
Buyer is not relying on any representation or inducement by any Person
(including, without limitation, any Affiliate of the Company) other than as
provided in this Agreement. Buyer agrees that the Securities may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act of 1933, as amended (the
"Securities Act"), except pursuant to an exemption from such registration
available under the Securities Act.
Section 7.8 Financing. Buyer has sufficient funds or binding
commitment for sufficient funds to be available as of the Closing Date to
enable Buyer to consummate the transactions contemplated hereby including
payment of the Purchase Price and the fees and expenses of Buyer relating to
the transactions contemplated hereby.
Section 7.9 Litigation. There are no Proceedings or claims pending or,
to the knowledge of Buyer, threatened against or affecting Buyer in which it is
sought to restrain or prohibit the transactions contemplated hereby.
Section 7.10 Ability to Conduct the Business. To Buyer's knowledge,
Buyer has, or does not have any impediment preventing Buyer from promptly
obtaining, all licenses, permits, certificates of authority, authorizations,
approvals or consents required to conduct the Business from and after the
Closing.
ARTICLE VIII
COVENANTS OF THE PARTIES
Each of the parties hereto agrees (and agrees to cause their
respective Subsidiaries) as follows with respect to the period following the
date hereof through the Closing (or such other later date as may be specified
in the sections contained in this Article VIII):
Section 8.1 Conduct of Business. From the date hereof until the
Closing Date (or the applicable Subsequent Closing Date with respect to any
Purchased Entity or Acquired Asset not purchased at the Initial Closing),
except as otherwise set forth herein, each of the Sellers shall (with respect
to such Person's portion of the Business) (and each Seller shall cause the
Purchased Entities (to the extent Sellers have control over them) and the
Sellers that are Subsidiaries of such Seller to, and Parent shall cause its
Subsidiaries to, in each case solely with respect to the Business):
(a) Carry on its business diligently and in the ordinary
course of business (taking into account that the Debtors are involved in a
bankruptcy proceeding), and shall use its reasonable best efforts to preserve
the current business organization intact, to keep available the services of its
current officers, agents or employees, and to preserve its current
relationships with customers and other Persons having business dealings with
the Business;
(b) Not directly or indirectly (through any merger,
consolidation, reorganization, issuance of securities or rights, license,
lease, encumbrance or otherwise), sell, assign, convey, transfer, license,
lease or otherwise dispose of any Acquired Assets or assets of the Business or
any interest therein other than in the ordinary course of business or agree to
do any of the foregoing;
(c) Neither issue nor redeem securities of the Purchased
Entities, nor make any payments of (or commitments to pay) dividends or
distributions to any members, shareholders or Affiliates of the Purchased
Entities;
(d) Not make any commitments to pay on or after the Closing
Date any bonuses or other benefits to employees of the Business other than in
the ordinary course of business;
(e) Use their respective reasonable best efforts to preserve
the goodwill of all persons dealing with the Business (including, without
limitation, all of the employees, agents, brokers, Representatives, suppliers,
distributors and customers of the Business);
(f) Notify Buyer immediately of any material adverse
development affecting any of the Acquired Assets or the Business, (or any part
or portion of any thereof);
(g) Not enter into any material settlement agreement without
the written consent of Buyer with respect to any suit, claim or legal
proceeding against any of the Purchased Entities, the Acquired Assets or the
Business, or which would otherwise bind any of them;
(h) Not change any accounting methods or practices followed
by the Purchased Entities, the Business or the Sellers or risk measurement
(including any value-at-risk metrics) or margin requirements;
(i) Use commercially reasonable efforts to maintain the
safety, confidentiality, integrity and use of the assets related to the
Business, including technology-related property contained in computer files,
and the availability of appropriate "back-up" copies thereof;
(j) Not make or change any election, change an annual
accounting period, adopt or change any accounting method, file any amended Tax
Return, enter into any closing agreement, settle any Tax claim or assessment of
Taxes, consent to any extension or waiver of the limitation period applicable
to any Tax claim or assessment relating to the Purchased Entities or the
Business conducted by the Purchased Entities, or take any other similar action
relating to the filing of any Tax Return or the payment of any Tax without the
written consent of Buyer (which consent shall not be unreasonably withheld or
delayed); and
(k) Not request the Bankruptcy Court to approve or authorize
the Purchased Entities and the Sellers to take or omit to take any action which
would breach the Purchased Entities' or Sellers' covenants under or any other
provisions of this Agreement, the Related Documents, or consent to any such
approval or authorization.
Section 8.2 Schedule of Assets Used in the Business. As promptly as
practicable after the date hereof but in any event within three (3) days prior
to the Initial Closing, Parent shall deliver to Buyer a reasonably detailed
schedule setting forth the owner and a specific identification of all assets of
the Sellers or Purchased Entities that are used or useful in, held for use in,
primarily related to, material to or necessary for the operation of the
Business, including the following:
(a) All machinery, equipment, storage racking, fixed assets,
furniture, tools, spare and replacement parts, maintenance equipment,
materials, computers, printers, servers and other items of personal property of
every kind and description;
(b) All receivables to the extent arising out of or from the
operation of the Business, including trade receivables, rebates, allowances and
other receivables from suppliers;
(c) All material Intellectual Property Rights owned by any
Subject Entity;
(d) All claims, causes of action, rights of recovery and
rights of set-off of any kind relating to or arising out of the Acquired Assets
or the Business, including any claims against insurance companies;
(e) All exchange memberships and exchange seats, or leases
thereof, required to carry on the Business as currently conducted or proposed
to be conducted or otherwise owned or used by any Seller;
(f) All improvements to any real property leased by any
Seller pursuant to any real property lease made by or for the benefit of the
tenant;
(g) All bank accounts that are used or held for use in,
primarily related to, material to or necessary for the Business;
(h) All leases to or by any Debtor or other Affiliate of
Parent of personal property, which leases or leased personal property relate
to, in whole or in part, other Acquired Assets or are used or held for use in,
primarily related to, material to or necessary for the Business;
(i) All customer Contracts and other Contracts for the sale
or provision by any Debtor or other Affiliate of Parent of goods and/or
services, including Contracts or goods and/or services which relate to, in
whole or in part, other Acquired Assets or the Business;
(j) All purchase orders and other Contracts for the purchase
by any Debtor or other Affiliate of Parent of goods and/or services, which
Contracts or goods and/or services relate to, in whole or in part, other
Acquired Assets or the Business;
(k) All agreements (including IP Licenses) for the license to
or by any Debtor or other Affiliate of Parent of any Intellectual Property
Rights, which agreements or Intellectual Property Rights are used or held for
use in, primarily related to, material to or necessary for the Business;
(l) The real property leases to which any Seller is party;
(m) All non-disclosure, confidentiality and similar
obligations owed to any Debtor or other Affiliate of Parent, including all
rights with respect to any obligation of any current or former employee of the
Business owed to any Debtor or other Affiliate of Parent to maintain the
confidentiality of proprietary information of the Business;
(n) All warranties, indemnities, claims and rights against
third parties given to, assigned to or benefiting any Debtor or other Affiliate
of Parent in connection with any Acquired Assets or the Business;
(o) All rights with respect to any obligation of any current
employee or former employee of the Business owed to any Debtor or other
Affiliate of Parent to refrain from competing with the Business;
(p) A detailed list of customers by name; and
(q) All other assets and rights of every kind and description
not of a type specifically identified in this Section 8.2, wherever located,
personal or mixed, tangible or intangible, known or unknown, that are used or
held for use in, primarily related to, material to or necessary for the
Business.
Section 8.3 Access.
(a) From the date hereof until the Initial Closing Date, the
Purchased Entities and the Sellers shall (and the Sellers shall cause the
Purchased Entities and the Sellers that are Subsidiaries of such Seller, and
Parent shall cause its Subsidiaries to): (i) permit Representatives of Buyer to
have full access during normal business hours (or at such other hours that the
Sellers and Buyer may mutually agree) to all premises, assets, properties,
personnel, books, records (including tax records), contracts, agreements and
other documents of or pertaining to the Business and (ii) permit
Representatives of Buyer to meet with Purchased Entities' and the Sellers'
officers, employees, attorneys, agents, independent accountants and customers,
including all personnel responsible for the Regulatory Accounting Reports, the
internal controls of the Sellers and Parent and any other formal or informal
disclosure controls and procedures relating to the dissemination of information
throughout the Business (or any portion thereof) to discuss such matters as
Buyer may deem reasonably necessary or appropriate. In connection with such
access, Buyer's Representatives shall cooperate with the Sellers' and the
Purchased Entities' Representatives and shall use their reasonable best efforts
to minimize any disruption of the business of the Sellers and the Broker
Entities. For purposes of this Section 8.3(a), "Representatives" of Buyer shall
be deemed to include potential designees of Buyer with respect to and for
receipt of conveyance of any or all of the Acquired Assets of the London
Business and the Representatives of such potential designees. All information
provided to Buyer pursuant to this Section 8.3 shall be maintained in
confidence in accordance with the Confidentiality Agreement (and, if
applicable, any potential designees of Buyer shall be bound to the
Confidentiality Agreement or a substantively similar form prior to receiving
the access provided for in this Section 8.3(a)).
(b) Following the Initial Closing Date, Buyer shall, and
shall cause its Affiliates to (and shall contractually bind, for the benefit of
the applicable Seller, any designee of any of the Acquired Assets to), make
available (and provide copies) to Sellers and their Representatives, on a
reasonable basis and subject to appropriate confidentiality restrictions, any
data and other information in the possession of Buyer (or any applicable
designee) relating to the operation of the Business by Sellers and their
Affiliates prior to the Initial Closing and the Buyer shall reasonably assist
Sellers and their Representatives in arranging discussions with officers,
employees and agents of the Buyer and their Affiliates who are knowledgeable
about the operation of the Business by Sellers and their Affiliates prior to
the Initial Closing, in each case solely to (i) defend or prosecute any claim
between Sellers or their Affiliates on the one hand and parties other than the
Buyer or its Affiliates on the other involving the Cases or the Business, (ii)
for any other purpose reasonably requested by Sellers and their Affiliates
relating to the operation of the Business prior to the Initial Closing Date or
the disposition or wind-down of the businesses subsequent thereto or (iii) the
administration of the Cases; provided, that the obligation of Buyer (or any
applicable designee) to so accommodate the Sellers shall be subject to (A)
reasonable notice from Sellers of any request for information, (B) the
applicable Seller's agreement to reimburse the Buyer the out-of-pocket expenses
of such accommodation, (C) reasonable limitations on frequency and duration of
Seller requests, (D) non-interference of the applicable information request
with the ordinary conduct of business by the Buyer and (E) the right of the
Buyer to refuse any request for information that would result in a loss of
privilege for the Buyer or a breach of any confidentiality obligation of the
Buyer.
Section 8.4 Reasonable Efforts. Upon the terms and subject to the
conditions herein provided, Buyer, on the one hand, and each of the Sellers and
each of the Purchased Entities, on the other hand, shall (and each Seller shall
cause the Purchased Entities and the Sellers that are Subsidiaries of such
Seller, and Parent shall cause its Subsidiaries to) use its respective
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties hereto
in doing, all things necessary, proper or advisable under applicable Laws and
regulations to ensure that the conditions set forth in this Agreement are
satisfied and to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement and the Related
Documents, including, without limitation, the following:
(a) Buyer, on the one hand, and each of the Sellers and each
of the Purchased Entities, on the other hand, shall (and each Seller shall
cause the Purchased Entities and the Sellers that are Subsidiaries of such
Seller, and Parent shall cause its Subsidiaries to) use its reasonable best
efforts (including, in the case of the Sellers, petitioning the Bankruptcy
Court pursuant to Sections 363 and 365 of the Bankruptcy Code) to obtain, at
its own expense, any and all approvals, authorizations, consents and other
actions by Governmental Entities, administrative agencies, courts and other
Persons necessary or appropriate (above and beyond the entry of the Sale Order)
for such party to consummate the transactions contemplated hereby. Without
limiting the generality of the foregoing, each Seller shall (and Parent shall
cause its Subsidiaries to) use its reasonable best efforts, considering the
operation, force and effect of the Sale Order in authorizing such transfers, to
obtain, at its own expense, any approvals, authorizations, consents and other
actions by all parties necessary for the Sellers or Parent's Subsidiaries to
transfer to Buyer, as applicable, and Buyer to receive, all Securities and all
other assets associated with the Business which are Acquired Assets;
(b) Each of the Sellers and each of the Purchased Entities
shall (and each Seller shall cause the Purchased Entities and the Sellers that
are Subsidiaries of such Seller, and Parent shall cause its Subsidiaries to)
take all actions, including appropriate service and notice of pleadings, in
form and substance reasonably satisfactory to Buyer, needed to obtain a Sale
Order that authorizes, orders and effects a sale of all of the Securities and
the other Acquired Assets free and clear of all Liens and Excluded Liabilities,
and the other orders contemplated herein;
(c) The Subject Entities shall (and Parent shall cause its
Subsidiaries to) (1) take all necessary or appropriate corporate actions
(including, without limitation, obtaining any required affirmative vote or
written consent of directors) to authorize the execution and delivery of this
Agreement and all documents to be executed or delivered by it pursuant hereto
or in connection herewith, as appropriate, and the performance of its
obligations here and there under; and (2) deliver to Buyer copies of all such
corporate actions, which shall be certified by its secretary, as soon as
practicable after the date hereof;
(d) Parent or the Sellers, as the case may be, shall notify,
as required by the Bankruptcy Code and all rules promulgated thereunder, all
parties entitled to notice of all motions, notices and orders referenced in
this Agreement, as modified by any orders issued by the Bankruptcy Court.
Parent or the Sellers, as the case may be, shall timely notify all parties to
the Assumed Contracts and Assumed IP Licenses of the Cure Amounts for each such
contract or license, so as to enable any such party to object to the proposed
Cure Amounts and the Bankruptcy Court to determine such amounts prior to the
Closing;
(e) Each Seller shall (and Parent shall cause its
Subsidiaries to) cooperate fully, following entry of the Sale Order approving
the sale of the Acquired Assets to Buyer or its designee, in the arrangements
for the transfer of the Acquired Assets from the Sellers to Buyer in an orderly
fashion, free and clear of and from any and all Liens and Excluded Liabilities
and otherwise in accordance with the terms, provisions and conditions of this
Agreement and all other agreements, documents and instruments executed and/or
delivered in connection herewith, including to the extent reasonably practical,
entering into any ancillary insolvency, restructuring or similar proceedings in
any relevant non-U.S. jurisdiction; provided, however, that it shall be a
condition to the commencement of an insolvency, restructuring or similar
proceeding of any Seller organized in a jurisdiction outside the United States
that Buyer shall have (a) entered into an agreement with Sellers providing for
compensation to Sellers reasonable under the circumstances for any delay or
incremental expense or liability resulting from such proceeding and (b)
indemnified the directors of such entity against any liability resulting from
such proceeding; and
(f) Without limiting the generality of the foregoing, the
parties hereto shall furnish to each other such necessary information and
reasonable assistance, as each may request in connection with each Seller's
preparation and filing of applications and motion papers, including the Sale
Motion needed to obtain Bankruptcy Court approval of the transactions
contemplated by this Agreement, and shall execute any additional instruments
necessary to consummate the transactions contemplated hereby, whether before or
after the Closing.
Section 8.5 Further Assurances; Confidentiality.
(a) On and after the Closing Date, the parties shall (and
shall cause their Subsidiaries to), at their own expense, take all appropriate
action and shall execute all documents, instruments or conveyances of any kind
that may be reasonably necessary or advisable to carry out any of the
provisions hereof.
(b) None of Parent or the Sellers will (and Parent and the
Sellers will cause each of their Subsidiaries, respective officers, directors,
Representatives not to) disclose to any third party any of the Confidential
Information and Parent and the Sellers will (and Parent and the Sellers will
cause each of their Subsidiaries, respective officers, directors,
Representatives to) treat and hold as confidential all of the Confidential
Information, refrain from using any of the Confidential Information except in
connection with and as contemplated by this Agreement, and deliver promptly to
Buyer or destroy, at the request and option of Buyer, all tangible embodiments
(in whatever form or medium, including copies) of the Confidential Information
which are in its or their possession; provided, that to the extent any such
Confidential Information relates to the ongoing business of the Debtors,
subject to compliance with the confidentiality provisions contained herein and
the restrictions contained in Section 8.18, the foregoing restrictions on use
and requirements for delivery or destruction will not apply. In the event that
any of the Sellers or any of their respective Affiliates (or any officer,
director or Representative thereof) is requested or required (by oral question
or request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, such Person will (i) notify Buyer promptly in writing
of the request or requirement prior to any such disclosure so that Buyer may
seek an appropriate protective order or other confidential treatment or waive
compliance with the provisions of this Section 8.5, (ii) cooperate with Buyer
to obtain any such protective order or other confidential treatment, and (iii)
disclose only that information strictly required.
(c) The parties acknowledge that Parent and Buyer previously
executed a confidentiality agreement dated October 25, 2005 (as the same may be
amended or supplemented, the "Confidentiality Agreement"), which
Confidentiality Agreement shall continue in full force and effect until
completion of the Closing, at which time the obligations of Buyer thereunder
shall terminate.
(d) Sellers shall post such collateral or other security as
may be required from time to time by the Bankruptcy Court, the CFTC, the
Chicago Mercantile Exchange or any other governmental or non-governmental
authority with appropriate jurisdiction in order to permit the delivery of the
Acquired Assets free and clear of Liens and Excluded Liabilities as required
hereby.
Section 8.6 Mail and Other Post-Closing Inquiries. The Sellers shall
(and Parent shall cause its Subsidiaries to) authorize and empower Buyer on and
after the Closing Date to receive and to open all mail received by Buyer
relating to the Business and to deal with the contents of such communications
in any proper manner. The Sellers shall (and Parent shall cause its
Subsidiaries to) promptly deliver to Buyer any mail or other communication
received by the Sellers or Parent's Subsidiaries, as applicable, after the
Closing Date pertaining to the Business. Buyer shall promptly deliver to Parent
any mail or other communication received by it after the Closing Date
pertaining to the Excluded Liabilities and any cash, checks or other
instruments of payment in respect thereof.
Section 8.7 Tax Filings. Each party shall furnish or cause to be
furnished to the other, upon request, as promptly as practicable, such
information and assistance relating to the Purchased Entities, the Sellers and
the Business as is reasonably necessary for filing of all Tax returns,
including any claim for exemption or exclusion from the application or
imposition of any Taxes or making of any election related to Taxes, the
preparation for any audit by any taxing authority and the prosecution or
defense of any claim, suit or proceeding relating to any Tax return. Buyer
shall not, without the express prior written consent of Parent, make an
election pursuant to section 338 of the Code with respect to any Purchased
Entity that is treated as a foreign corporation under Section 7701 of the Code.
Section 8.8 HSR Act. If necessary, each party shall (or cause its
Subsidiaries to) make an appropriate filing of a notification and report form
pursuant to the HSR Act with respect to the transactions contemplated hereby
within five (5) Business Days after the date hereof, promptly provide the other
party with all information regarding its business necessary for the other party
to prepare such notification and report form, and supply promptly any
additional information and documentary material that may be requested pursuant
to the HSR Act. In addition, each party shall promptly make any other filing
that may be required under any other antitrust law or by any antitrust
authority. All such filings shall comply in all material respects with the
requirements of the respective laws or regulations pursuant to which they are
filed. Each party hereto shall (or cause its Subsidiaries to) promptly inform
the other of any communication from any Governmental Entity regarding any such
filing or notification with respect to the transactions contemplated by this
Agreement to the extent permitted by law. If any party or Affiliate thereof
receives a request for additional information or documentary material from any
such Government Entity with respect to the transactions contemplated by this
Agreement, then such party will use its reasonable efforts to make, or cause to
be made, as soon as reasonably practicable and after consultation with the
other party, an appropriate response in compliance with such request. Each
party shall pay 50% of all filing fees associated with any filings made in
connection with this Section 8.8.
Section 8.9 Rejected Contracts and Licenses. The Sellers shall not
(and Parent shall cause its Subsidiaries not to) reject or materially amend any
Contract or IP License in any bankruptcy proceeding following the date hereof
unless (a) Buyer informs the Sellers that such Contract or IP License will not
be an Assumed Contract or Assumed IP License, or (b) this Agreement is
terminated in accordance with its terms.
Section 8.10 Post-Closing Access to Records and Personnel. Buyer
hereby acknowledges that it shall grant to the Sellers, from and after the
Closing Date reasonable access upon prior written notice, to any records
related to any Seller's operation of the Business prior to the Closing Date
upon such Seller's request, provided, that the review and access described in
this Section 8.10 will be conducted at times and in a manner that does not
unreasonably interfere with the operation of the Buyer's or any of its
Affiliates' Business.
Section 8.11 Intellectual Property. After the Initial Closing, upon
the request of Buyer, Parent, the Sellers and their Affiliates:
(a) shall cease to use the ▇▇▇▇ "REFCO" or any derivative or
combination thereof, or any ▇▇▇▇ confusingly similar thereto (collectively, the
"REFCO ▇▇▇▇") or any other Marks used in the Business or any derivative or
combination thereof (the "Business Marks"), including in any proceeding in any
Bankruptcy Court; provided, however, that, effective as of the Closing Date,
Buyer and the Purchased Entities hereby grant to those Sellers and their
Affiliates that use the REFCO ▇▇▇▇ and the Business Marks as of the date hereof
a royalty-free, worldwide, non-exclusive license to (1) continue to use the
REFCO ▇▇▇▇ and the Business Marks as used as of the date hereof until 90 days
after the Initial Closing; and (ii) continue to use REFCO ▇▇▇▇ and the Business
Marks in connection with the wind-down of the business pursuant to any current
or future proceeding in any Bankruptcy Court until the conclusions of any such
proceedings.
(b) to the extent such Person is a Debtor, shall reject
pursuant to Section 365 of the Bankruptcy Code or otherwise any licenses,
sublicenses or any other Contract relating to or in any way affecting (a) the
REFCO ▇▇▇▇ or the Business Marks or (b) provided the same is an Acquired Asset,
any other Intellectual Property Rights.
Section 8.12 Daily Capital Statements. From the date hereof until the
Closing in which the securities or assets of such Broker Entity is purchased,
each of the Broker Entities shall deliver to Buyer via electronic mail, as soon
as practicable, and in any event no later than 5:00 p.m., New York Time, on
each Business Day a statement that sets forth an estimate of the Segregated
Account Balances and Statutory Capital Balances for the immediately preceding
Business Day (collectively, the "Daily Capital Statements"). Such Daily Capital
Statements shall be prepared on a basis consistent with prior practice of each
of the Broker Entities throughout the periods covered thereby (including,
without limitation, the maintenance and establishment of appropriate reserves
for doubtful accounts), and shall be consistent with the books and records of
each of the Broker Entities, as applicable.
Section 8.13 Service. Each of Parent, the applicable Sellers and the
Purchased Entities shall (and Parent shall cause its Subsidiaries to) timely
serve notice of the Sale Motion and the Sale Notice (as defined in the Bid
Procedures Order) on all Persons legally entitled to such notices and in a
manner otherwise consistent with applicable Law.
Section 8.14 U.S. Tax Classification of the Purchased Entities.
Schedule 8.14 lists current classification of each Purchased Entity for U.S.
federal income tax purposes under Section 7701 of the Code and regulations
thereunder and indicates whether such classification is other than the default
classification.
Section 8.15 Group Relief. Where and to the extent that the Sellers
would otherwise be liable to indemnify against or otherwise discharge Taxes of
a Purchased Entity under this Agreement or the Sellers have agreed on or before
the Closing Date to surrender a specific amount of losses (even if such amount
is provisional) under a pre-existing contractual arrangement, the Sellers shall
and shall procure that their Affiliates shall cooperate fully in surrendering
to the Purchased Entities all group relief and consortium relief amounts, up to
the amount for which the Sellers would otherwise be liable or which has been
agreed to be surrendered, that such Purchased Entities are entitled to claim in
accordance with the ICTA.
Section 8.16 Document Preservation. From the date hereof until the
seventh anniversary of the Initial Closing Date each of Parent and the
Purchased Entities shall and shall cause their respective Affiliates to
maintain all books of account, financial records, minute books and all other
records of or related to the Business prior to the Closing (including
electronic files and correspondence) and shall not engage in the destruction of
any such documents or issue any directive or request recommending or requiring
such destruction.
Section 8.17 Employees.
(a) Buyer has delivered to Parent a schedule setting forth
those categories of individuals whom Buyer has designated as continuing
employees of the Business (the "Business Employees"). On and as of the
applicable Closing Date, employees of Refco Canada, Refco Singapore and the
London Business who are employed in the Business shall also be Business
Employees. The parties hereto intend that there will be continuity of
employment for all Business Employees following the applicable Closing Date. In
order to effectuate such transfer of employment as of such Closing Date, except
as otherwise provided herein, Buyer shall make a general offer of employment
through a general notice of transfer to each Business Employee who is not an
employee of a Purchased Entity (each an "Offer Employee"). Such general offer
of employment will be deemed accepted by each Offer Employee unless (i)
expressly rejected by the Offer Employee prior to the Closing Date or (ii) the
Offer Employee otherwise indicates by his or her actions that such offer of
employment has not been accepted (each Offer Employee who acts under (i) or
(ii), a "Non-Acceptance Offer Employee"). For purposes of this Agreement,
"Transferred Employee" shall mean each Offer Employee other than a
Non-Acceptance Offer Employee; provided that, in the case of Offer Employees on
short term disability or other approved leaves of absence, such employees must
commence service with Buyer prior to the six-month anniversary of the Closing
Date to become Transferred Employees. Any Business Employee who does not
commence employment with Buyer as described above shall not be treated as a
Transferred Employee. Except as otherwise provided in this Section 8.17, all
Transferred Employees will cease to accrue benefits under and cease to
participate as active participants in all Employee Benefit Plans as of the
Closing Date and the Purchased Entities shall withdraw as participating
employers from each Employee Benefit Plan as of the Closing Date. The parties
will cooperate to comply with legal and regulatory requirements to accomplish
the employment transfers described in this Section 8.17, including without
limitation any requirements for Parent to terminate the employment of any
Business Employee and for Buyer to make a specific employment offer to such
Business Employees, and Parent will transfer any work permits or passes
applicable to the Business Employees.
(b) For the one year period following the Closing, Buyer
shall provide to Transferred Employees compensation and employee benefits
comparable, in the aggregate, to the compensation and employee benefits
provided by Sellers (or their Affiliates, as the case may be) to Transferred
Employees as of immediately prior to the Closing. Except as otherwise provided
in this Section 8.17 or under the terms of any employee benefit plans of Buyer
providing benefits to Transferred Employees (the "Buyer Benefit Plans") or
applicable Law, Buyer shall be entitled to modify, amend, suspend, terminate or
supplement any Buyer Benefit Plans in its sole discretion.
(c) The Buyer Benefit Plans shall credit such Transferred
Employees (and their dependents) for any deductibles and out-of-pocket expenses
paid under the applicable Employee Benefit Plans in the year of initial
participation in the applicable Buyer Benefit Plans that are group health plans
(within the meaning of Section 5000(b)(1) of the Code). Buyer shall provide
each Transferred Employee with credit for the same number of vacation and
sickness benefit days he or she has accrued but not used in the calendar year
in which the Closing occurs, provided, that, to the extent required by law,
such amount shall be paid by Buyer in cash.
(d) Buyer shall permit each Transferred Employee who is a
participant in the Refco Group, Ltd. Employee Savings Plan (the "Seller 401(k)
Plan"), and who elects to transfer his or her account balance under the Seller
401(k) Plan, to roll over his or her account balance (including any outstanding
loans thereunder) to the Man Group USA Inc Savings and Investment Plan (the
"Buyer Qualified Plan"), as soon as practicable following the Closing Date in
accordance with the terms of the Buyer Qualified Plan. Parent agrees to use and
to cause the Purchased Entities and the Sellers to use their best efforts to
cooperate with Buyer, its agents and designees to ensure a smooth transfer of
accounts, records and recordkeeping to effect the transfers described in the
previous sentence. Parent further agrees to take and to cause the Sellers and
Purchased Entities to take such actions as are necessary, including securing
the cooperation of the recordkeeper, trustee and other service providers of
Seller 401(k) Plan, to effect such transfers.
(e) Buyer will pay and provide to Transferred Employees whose
employment terminates on or within twelve months after the Closing severance
benefits under conditions and in amounts that are no less favorable to the
employee than those provided to Transferred Employees as of immediately prior
to the Closing under Parent's (or Parent's Affiliate's) severance policies;
provided, that such amounts shall be without duplication of any severance
payments required to be made by applicable law. Solely for purposes of
determining eligibility, vesting and benefit accruals under the Buyer severance
plans (and not for any other purpose), Buyer shall credit each Transferred
Employee with his or her years of service with the Sellers and their respective
Affiliates, and any predecessor entities, to the same extent as such
Transferred Employee was entitled to credit for such service under any similar
Employee Benefit Plan prior to the Transferred Employee's commencement of
participation in the Buyer Benefit Plan, except that Transferred Employees
shall receive no such credit to the extent that such credit would result in a
duplication of benefits.
(f) Parent shall retain or assume liability for all claims
under any welfare benefit plan ("Welfare Plan") as such term is defined in
Section 3(l) of ERISA sponsored or maintained by Parent or any of its
Affiliates which are incurred by any Transferred Employees prior to or on the
date that such Transferred Employee becomes a Transferred Employee and any
other current or former employee of Parent (and covered dependents and COBRA
beneficiaries). Buyer shall assume liability for all claims under Welfare Plans
which are incurred by Transferred Employees (and their covered dependents and
COBRA beneficiaries) after that date. For purposes of this paragraph, the
following welfare benefit claims shall be deemed to be incurred as follows: (a)
life, accidental death and dismemberment and business travel accident insurance
benefits, upon the death or accident giving rise to such benefits; (b) health,
dental and/or prescription drug benefits (included in health benefits), upon
the provision of services, materials or supplies relating to such claim; and
(c) short-term disability and long-term disability benefits, upon the date on
which an individual becomes disabled under the applicable disability plan.
Section 8.18 Non-Compete and Wind Down. The Subject Entities agree
that following the final Closing Date until the fifth anniversary of the final
Closing Date, except as required to provide services to Buyer or its designee
under the Transition Services Agreement, the Subject Entities shall not, and
shall cause each of its Subsidiaries not to (i) directly or indirectly,
operate, perform, control or engage in, manage or own a greater than 5%
ownership in a business or Person that conducts any activities in competition
with the Business, (ii) solicit, raid or knowingly entice, encourage or induce
any Person that currently or at any time prior to or during the five year
non-competition period is or was a client or customer (or is actively pursued
as a potential client or customer) of any portion of the Business for
activities which are the same as or competitive with the operation of the
Business, (iii) interfere with, disrupt or attempt to disrupt, any
relationship, contractual or otherwise, between the Business or Buyer or any of
its Subsidiaries and any of their respective clients or customers, or (iv)
cause or authorize any third party controlled by the Sellers to take any of the
action described above. In addition, promptly after the Initial Closing, the
Subject Entities, upon the request of Buyer, shall take all actions reasonably
necessary to cause the Sellers' businesses (other than those businesses
constituting Excluded Assets) to cease operations and wind down, including by
terminating any and all Permits or IP Licenses other than those which are or
may still become Assumed Contracts or Assumed IP Licenses pursuant to Section
2.3.
Section 8.19 Additional Sellers. Parent shall cause each of its
Affiliates owning any Acquired Asset to execute a joinder to this Agreement, in
form and substance reasonably satisfactory to Buyer, as a "Seller" hereunder
and to have all of the obligations and rights of a Seller hereunder as if such
entity had executed this Agreement on the date hereof.
Section 8.20 Operations. Parent and the Sellers shall, and shall cause
their respective Subsidiaries to, take all actions necessary to continue the
operation and performance in a manner consistent with past practice of the data
processing, information technology, risk analysis and other operations
currently conducted by the Sellers, including operations conducted at Sellers'
office located in Memphis, Tennessee.
Section 8.21 Agent for Excepted Accounts. From and after the Initial
Closing, Buyer shall serve as the agent of the Sellers for purposes of
administering the Excepted Accounts acquired by Buyer, which will include
resolving, closing, liquidating, transferring or otherwise disposing of the
Excepted Accounts and collecting and remitting within three (3) days after
collection (subject to the terms of this Section 8.21) to the appropriate
Sellers all amounts owed by customers in respect thereof in excess of amounts
required to close out such accounts with no loss. All risk and benefit with
respect to the Excepted Accounts shall be and remain for the account of the
Sellers and Sellers shall pay (or reimburse to Buyer as a superpriority
administrative claim and lien) all reasonable out of pocket expenses (but not a
fee for agency services provided) associated with the administration by Buyer
of the Excepted Accounts (including, without limitation, the expenses of
counsel, it being understood and agreed that Buyer shall have not bring suit,
in its own name or the name of any Seller, in conjunction with the collection
or liquidation of any Excepted Account and Seller shall have the right to bring
such suit, but only in its own name.). Buyer shall not settle or compromise any
claim against any customer without the consent of the applicable Seller. In its
capacity as administrative agent for the Sellers, Buyer shall take such steps,
not inconsistent with the foregoing, as Parent or the applicable Seller may
instruct from time to time; provided, (i) that such instruction shall not be in
contravention of any applicable law, regulation or other order, directive or
request of the CFTC, Chicago Mercantile Exchange, Monetary Authority of
Singapore or other applicable governmental or non-governmental authority or any
interpretation thereof; (ii) that Sellers acknowledge that Buyer may transfer
any Excepted Account and the rights and obligations of Buyer in respect
thereof, including Buyer's interest in the applicable portion of the Excepted
Account Escrow, to an appropriate third party selected by Buyer which has
assumed the obligations of Buyer hereunder with respect to such account, with
Parent's or the applicable Seller's consent, such consent not to be
unreasonably withheld; and (iii) that Buyer acknowledges that Sellers may
direct Buyer to transfer any Excepted Account and the rights and obligations of
Buyer in respect thereof to an appropriate third party which has assumed the
obligations of Buyer hereunder with respect to such account, without any
requirement of Buyer consent to such transfer. In connection with any transfer
under either clause (ii) or (iii) of the preceding sentence, the Excepted
Account Escrow balance applicable to the account so transferred shall be
released to (a) the transferee, in the case of a transfer under clause (ii), or
(b) the applicable Seller, in the case of a transfer under clause (iii), but in
each case solely to the extent that Buyer shall be released of any liability
with respect to such account upon such transfer. On or prior to the Initial
Closing Date, the applicable Sellers shall establish a separate escrow account
(the "Excepted Account Escrow") into which account such Sellers shall deposit
and in which account such Sellers shall at all times maintain liquid funds
equal to at least the sum of (x) to the extent such amounts have not previously
been deposited in the applicable Customer Accounts, the aggregate deficit of
all Deficit Accounts that are Excepted Accounts, as calculated in accordance
with the daily segregated funds computation as of the close of business on the
day of determination, it being agreed that Sellers shall not take any action
outside the ordinary course of business to withdraw assets from Customer
Accounts in contemplation of Closing, (y) to the extent such amounts have not
previously been deposited in the applicable Customer Accounts, the aggregate
margin necessary to render all Undermargined Accounts that are Excepted
Accounts no longer Undermargined Accounts, such margin amount to be determined
by reference to applicable exchange minimums as in effect from time to time and
(z) $12,000,000. Buyer shall have the right to direct the application of funds
from the Excepted Account Escrow to such Excepted Accounts to cover any
additional deficit or under-margin amounts in accordance with exchange minimums
in effect from time to time or to satisfy any indemnity liability of the
Sellers to Buyer in respect of the Excepted Accounts (notwithstanding any other
limitation herein with respect to the source of funds for the Sellers'
indemnity obligations). The $12,000,000 additional escrow will be remitted back
to Seller in the proportion of collected Excepted Accounts to total Excepted
Accounts (line 9A, CFTC Form-1FR-FCM) as of the Closing Date. Any dispute with
respect to the Excepted Accounts and/or any instruction given pursuant to this
Section 8.21 shall be subject to resolution by the Bankruptcy Court. Buyer and
the Sellers agree that it is their shared intention that the Excepted Accounts
be collected, liquidated or otherwise resolved in a prompt and prudent manner,
taking into account the likelihood that any deficit or under-margin
circumstance will be resolved by the client in a timely manner in the ordinary
course of business.
Section 8.22 Personally Identifiable Information. Buyer shall adopt
the Debtors' privacy policies with respect to personally identifiable
information (as such term is defined in section 101(41A) of the Bankruptcy
Code) of the Debtors' customers whose Customer Accounts are conveyed to Buyer.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE PARTIES
Section 9.1 Conditions Precedent to Obligations of Buyer and the
Sellers. The respective obligations of Buyer, on the one hand, and the Sellers,
on the other hand, to close under this Agreement shall be subject to the
satisfaction at or prior to each Closing Date of the following conditions, to
the extent applicable to such closing:
(a) No Injunction. No preliminary or permanent injunction or
other order issued by, and no Proceeding or Order by or before any Governmental
Entity or by any Governmental Entity nor any Law or Order promulgated or
enacted by any Governmental Entity shall be in effect or pending which
materially delays, restrains, enjoins or otherwise prohibits or seeks to
restrain, enjoin or otherwise prohibit the transactions contemplated hereby.
(b) Bankruptcy Court Orders. The Bankruptcy Court shall have
entered the Sale Order and any other orders necessary to permit and consummate
the transactions contemplated hereby, each such other order to be in form and
substance reasonably satisfactory to Buyer and all such orders shall be Final
Orders; provided, that it shall be a condition only to the obligations of
Buyer, and shall not be a condition to the obligations of Sellers, that any
order, including the Sale Order, be a Final Order.
(c) Regulatory Consents. All material required notices shall
have been given and filings made and, as the case may be, all applicable
waiting periods (including under the HSR Act, if required) shall have expired
without adverse action by, and all orders, consents and approvals required to
consummate the transactions contemplated hereby and operate the Business shall
have been received from all relevant Governmental Entities and Self-Regulatory
Organizations (the "Regulatory Consents")
Section 9.2 Conditions Precedent to Obligations of Buyer. The
obligation of Buyer to close under this Agreement is subject to the
satisfaction (or waiver by Buyer) at or prior to each Closing Date of each of
the following additional conditions to the extent applicable to such closing:
(a) Accuracy of Representations and Warranties. The
representations and warranties of the Sellers and the Purchased Entities
contained herein, without giving any effect to any materiality qualifications
therein, shall be true and correct in all respects on and as of the applicable
Closing Date as though made on and as of the applicable Closing Date (except
for representations and warranties made as of a specified date, which need be
true and correct only as of the specified date) with only such exceptions as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(b) Performance of Agreements. The Subject Entities shall
have performed in all material respects all obligations and agreements
contained in this Agreement and the Related Documents required to be performed
by them prior to or at the Closing Date.
(c) Officer's Certificate. Buyer shall have received a
certificate, dated the Closing Date, of an officer of Parent to the effect that
the conditions specified in Section 9.2(a) and (b) above have been fulfilled.
(d) Title. The Purchased Entities shall have good and valid
title to all assets, properties, licenses, contracts and rights owned by the
Purchased Entities.
(e) Permits and Licenses. The Sellers shall have delivered to
Buyer all Required Consents, including in respect of the material Assumed
Contracts and material Assumed IP Licenses that will be assumed by Buyer or the
Purchased Entities prior to the Closing, taking into consideration the effects
of the Sale Order.
(f) Documents; Actions. At the Closing, and contemporaneously
with all other actions provided for herein, the appropriate Subject Entities
shall have executed and delivered the documents referenced in Section 4.2.
(g) Computer Files and Related Data. The Subject Entities
shall have transferred to Buyer or its designees all electronic data relating
to the operation of the Business (including data relating to customers, sales
history, inventory, accounts receivable, vendors, employees and accounts
payable) that is located or stored on computer files of any of the Sellers or
their Affiliates; provided that, subject to the confidentiality provisions
contained in this Agreement, the Sellers may retain copies of any such
electronic records (i) to the extent relating to the operation of the
businesses of the Sellers or their Affiliates as contemplated to be conducted
after the Closing, (ii) to the extent necessary to provide Transition Services,
or (iii) to the extent required for regulatory or reporting purposes. Such
electronic records shall be provided in the format then maintained by the
Sellers or their Affiliates, provided that Buyer may request that the Sellers,
at Buyer's cost and expense, convert such electronic data to a format
reasonably requested by Buyer.
(h) Sale Order of Parent. The Sale Order of the Parent and
the Debtors as of the dater hereof shall be a Final Order or Final Orders
entered by the Bankruptcy Court in form and substance acceptable to the Buyer
in its sole discretion that provides inter alia the following with such
modifications as may be approved by Buyer:
(i) Specific findings of fact and conclusions of law:
(A) Buyer will not consummate the transactions
contemplated by the Agreement unless the Agreement specifically provides, and
the Bankruptcy Court specifically orders, that none of Buyer or its Affiliates,
members or shareholders or the Purchased Entities or the Acquired Assets will
have any liability whatsoever with respect to or be required to satisfy in any
manner, whether at law or in equity, whether by payment, setoff or otherwise,
directly or indirectly, any Lien or Excluded Liability;
(B) Buyer is a good-faith purchaser of the Acquired
Assets pursuant to Section 363(m) of the Bankruptcy Code;
(C) Neither Buyer nor an of its Affiliates (other
than the Purchased Entities) shall be liable for any Liability of the Purchased
Entities;
(D) The Debtors gave due and proper notice of this
Agreement and the transactions contemplated hereby to all Persons entitled
thereto;
(E) As of the date hereof, none of the Purchased
Entities is an alter ego of any Debtor, and there is no common identity of
incorporators, directors or equityholders between Buyer on one hand, and the
Debtors on the other;
(F) Buyer is not holding itself out to the public as
a continuation of the Debtors;
(G) There is no factual or legal basis for the
Bankruptcy Court to order substantive consolidation of the Purchased Entities
with one or more of the Debtors;
(H) The consideration to be paid by Buyer under this
Agreement constitutes reasonably equivalent value (as that term is defined in
each of the Uniform Fraudulent Transfer Act and Section 548 of the Bankruptcy
Code) and fair consideration for the Acquired Assets;
(I) Neither Buyer nor the Debtors are entering into
the transactions contemplated by this Agreement fraudulently;
(J) There may be sales of additional Acquired Assets
to Buyer ("Additional Asset Sales") subsequent to the Initial Closing Date, and
authority under the Sale Order for the Debtors to enter into and consummate any
such Additional Asset Sales without further order of the Bankruptcy Court is a
necessary condition precedent to Buyer consummating the transactions
contemplated by this Agreement;
(K) The Debtors have provided adequate assurances to
all parties to the Assumed Contracts and Assumed IP Licenses which are to be
assigned on any Closing Date;
(L) All defaults under the Assumed Contracts and
Assumed IP Licenses which are to be assigned on any Closing Date are deemed
cured; and
(M) As of the Closing Date, (a) the transactions
contemplated by this Agreement effect a legal, valid, enforceable and effective
sale and transfer of the Acquired Assets (subject to adjustment in accordance
with Section 2.3) to Buyer and shall vest Buyer with title to such assets free
and clear of all Liens and Excluded Liabilities, and (b) this Agreement and the
transactions and instruments contemplated hereby shall be specifically
performable and enforceable against and binding upon, and not subject to
rejection or avoidance by, the Sellers or any chapter 7 or chapter 11 trustee
of the Sellers and their applicable estate.
(ii) Specific Orders of the Bankruptcy Court:
(A) Approving this Agreement and all of the terms
and conditions hereof in all respects, and approving and authorizing the
Sellers to consummate the transactions contemplated by this Agreement,
including the sale of the Acquired Assets free and clear of all Liens and
Excluded Liabilities;
(B) Ordering that none of Buyer or its Affiliates,
members or shareholders or the Purchased Entities or the Acquired Assets will
have any liability whatsoever with respect to or be required to satisfy in any
manner, whether at law or in equity, whether by payment, setoff or otherwise,
directly or indirectly, any Lien or Excluded Liability;
(C) Directing any chapter 7 trustee who may be
appointed in any of the Cases to immediately effectuate the sales of the
Acquired Assets owned by the applicable Debtor on the applicable Closing Date;
(D) Approving the indemnification provisions set
forth in Article XI of the Agreement;
(E) Retaining core jurisdiction, pursuant to its
statutory powers under 28 U.S.C. ss. 157(b)(2) (2005), over resolution of any
controversy or claim arising out of or relating to this Agreement, or the
breach hereof as provided in Section 12.10 of the Agreement;
(F) Extending, as and to the extent necessary the
time period under Section 365 of the Bankruptcy Code by which the Sellers must
assume (or assume and assign) or reject any Contract to at least the last date
under which Buyer shall have the option to include such Contract in the
Acquired Assets;
(G) Ordering that, notwithstanding the provisions of
Federal Rules of Bankruptcy Procedure 6004(g) and 6006(d), the Sale Order is
not stayed and is effective immediately upon entry;
(H) Approving the Debtors' assumption of all Assumed
Contracts and Assumed IP Licenses which are to be assigned on any Closing Date
pursuant to Section 365 of the Bankruptcy Code, and their assignment to Buyer
or its designee, as the case may be;
(I) Approving and authorizing the Debtors to enter
into the Transition Service Agreement and any other agreements, licenses or
contracts contemplated hereby and take all other and further actions necessary
to implement the transactions contemplated by this Agreement;
(J) (1) Obligating the Sellers to pay all Cure
Amounts relative to the Contracts to be assigned on any Closing Date and
providing that none of Buyer, its Affiliates or the Purchased Entities shall
have any obligation to pay, or any Liability for, any such Cure Amounts, and
(2) enjoining and forever barring the non-Seller party or parties to each
Assumed Contract which is to be assigned on any Closing Date from asserting
against Buyer, and of its Affiliates or any of the Acquired Assets: (i) any
default existing as of the Closing Date, and (ii) any objection to the
assumption and assignment of such non-Seller party's Assumed Contract.
(i) Sale Order of Company. In addition to the provisions set
forth above as to the Sale Order of Parent, the Sale Order entered in the Case
of the Company shall provide that the indemnity claims of Buyer shall have the
status and priority set forth in the last proviso of Section 11.2 hereof.
(j) Price Certification Certificate. The Sellers shall
deliver to Buyer the Price Certification Certificate.
For avoidance of doubt, the parties acknowledge that Buyer's
knowledge of the existence of any facts, events, conditions or circumstances
shall not in any way prevent Buyer from exercising all of its rights hereunder
and requiring that all conditions in Section 9.1 and 9.2 be satisfied in full.
Section 9.3 Conditions Precedent to the Obligations of the Sellers.
The obligation of the Sellers to close under this Agreement is subject to the
satisfaction (or waiver by the Sellers) at or prior to each Closing Date of
each of the following additional conditions to the extent applicable to such
closing:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained herein, without giving any
effect to any materiality qualifications therein, shall be true and correct in
all material respects on and as of the applicable Closing Date as though made
on and as of the applicable Closing Date (except for representations and
warranties made as of a specified date, which need be true and correct only as
of the specified date).
(b) Performance of Agreements. Buyer shall have executed and
delivered the documents referenced in Section 4.3 and shall have performed in
all material respects all obligations and agreements contained in this
Agreement required to be performed by it prior to or at the Closing Date.
(c) Officer's Certificate. The Sellers shall have received a
certificate, dated the Closing Date, of an officer of Buyer to the effect that
the conditions specified in subsections (a) and (b) above have been fulfilled.
(d) Closing Documents. At the Closing, Buyer shall have
delivered to the Sellers the documents specified in Section 4.3.
ARTICLE X
TERMINATION
Section 10.1 Termination of Agreement. This Agreement may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing:
(a) By mutual written consent of Buyer and the Sellers,
acting jointly, in a written agreement executed by all such parties;
(b) Upon written notice, by either Buyer or the Sellers, if
the Initial Closing shall not have occurred on or before December 6, 2005 (the
"Drop Dead Date"); provided, however, that, if the Initial Closing shall not
have occurred on or before the Drop Dead Date due to a material breach of this
Agreement by Buyer or the Sellers, the breaching party may not terminate this
Agreement pursuant to this Section 10.1(b); provided further that Buyer or
Sellers may elect to extend the Drop Dead Date for an additional period of up
to thirty (30) days in the event that any Required Consents have not been
obtained prior to the Drop Dead Date; provided, further, that if, but only if,
the Initial Closing with respect to a portion of the Acquired Assets shall have
occurred during such thirty (30) day period, Buyer or Sellers may elect to
further extend the Drop Dead Date for an additional period of up to sixty (60)
days in the event that any Required Consents have not been obtained prior to
the expiration of such thirty (30) day period;
(c) By Buyer, upon written notice to the Sellers, if Buyer
has previously provided the Sellers written notice of any material inaccuracy
in or material breach of any representation or warranty contained in Article V,
or a failure to perform or comply in any material respect with any covenant or
obligation of the Sellers contained in this Agreement or the Related Documents,
and the Sellers have failed, within two (2) days after the date of such notice,
to properly remedy such inaccuracy or to perform or comply with such covenant
or obligation or provide reasonably adequate assurance as to the Sellers'
ability to promptly remedy such inaccuracy or perform or comply with such
covenant; provided, however, that Buyer shall not have the right to terminate
this Agreement under this Section 10.1(c) if Buyer is then in material breach
of this Agreement or if the breach or breaches by the Sellers would not result
in the failure of the condition contained in Section 9.2(a) or 9.2(b) to be
satisfied;
(d) By Buyer, upon written notice to the Sellers, if (i) the
Bid Procedures Order is stayed, reversed, amended or vacated, (ii) the Sale
Order has not been entered within twenty (20) days after the entry of the Bid
Procedures Order, or if after such entry, such Sale Order has not, within
eleven (11) days after its entry, become a Final Order, or (iii) if, prior to
the Initial Closing Date, Debtors' chapter 11 cases are converted to a case
under chapter 7 of the Bankruptcy Code, a trustee or examiner with expanded
powers is appointed in the Debtors' chapter 11 case or the Debtors' chapter 11
case is dismissed or if a motion is filed seeking any of the foregoing;
(e) By Buyer, upon written notice to the Sellers, if any
regulatory action shall be taken against any of the Purchased Entities, the
Sellers or the Business that has had or could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; or
(f) By the Sellers, by written notice to Buyer, if the
Sellers have previously provided Buyer written notice of any material
inaccuracy in or material breach of any representation or warranty contained in
Article VII, or a failure to perform or comply in any material respect with any
covenant or obligation of Buyer contained in this Agreement or the Related
Documents, and Buyer has failed, within two (2) days after the date of such
notice, to properly remedy such inaccuracy or to perform or comply with such
covenant or obligation or provide reasonably adequate assurance as to Buyer's
ability to promptly remedy such inaccuracy or perform or comply with such
covenant; provided, however, that the Sellers shall not have the right to
terminate this Agreement under this Section 10.1(f) if any Seller is then in
material breach of this Agreement or if the breach or breaches by the Buyer
would not result in the failure of the condition contained in Section 9.3(a) or
9.3(b) to be satisfied.
Section 10.2 Liabilities in Event of Termination. In the event of any
termination of the Agreement pursuant to Section 10.1, written notice thereof
shall forthwith be given to the other party specifying the provision hereof
pursuant to which any such termination is made, this Agreement shall forthwith
become wholly void and of no further force and effect, and there shall be no
Liability on the part of Buyer or the Sellers, except that the obligations of
the Sellers and Buyer under this Article X and the last sentence of Section
8.3(a) shall remain in full force and effect.
Section 10.3 Termination by Reason of Buyer Failure to Close. If this
Agreement is terminated pursuant to Section 10.1(f), the sole and exclusive
remedy of Parent, the Sellers and their Affiliates shall be strictly limited to
retention of the Securities, the Acquired Assets that are not conveyed and paid
for, the Deposit and additional cash in an amount equal to $43 million (payable
on demand), which shall in such case constitute liquidated damages in respect
of Buyer's breach of or failure to close on this Agreement (the "Seller
Liquidated Damages"); provided, that as long as the Initial Closing has taken
place the Seller Liquidated Damages shall be reduced by (a) $37 million on the
Closing Date upon which the Acquired Assets of the London Business are sold to
Buyer or the London Take or Pay Fee (as defined below) is paid, (b) $13 million
on the Closing Date upon which the Acquired Assets of Refco Canada are sold to
Buyer or the Canada Take or Pay Fee (as defined below) is paid, (c) $7 million
on the Closing Date upon which the Acquired Assets of Refco's Singapore
business are sold to Buyer or the Singapore Take or Pay Fee (as defined below)
is paid, and (d) $1 million on the Closing Date upon which the Acquired Assets
of Refco Hong Kong are sold to Buyer or the Hong Kong Take or Pay Fee (as
defined below) is paid. If on or prior to the Drop Dead Date (as it may be
extended) (or earlier at Buyer's election) (a) all conditions precedent to
Buyer's obligation to complete the purchase of such assets have been satisfied
or waived by Buyer, other than the receipt of required Regulatory Consents, but
Buyer has not purchased all Acquired Assets of the London Business and offered
employment to substantially all employees in the United Kingdom, Buyer shall
pay $37 million to Sellers (the "London Take or Pay Fee"), (b) all conditions
precedent to Buyer's obligation to complete the purchase of such assets have
been satisfied or waived by Buyer, but Buyer has not purchased all Acquired
Assets of Refco's Singapore business, Buyer shall pay $7 million to Sellers
(the "Singapore Take or Pay Fee"), (c) all conditions precedent to Buyer's
obligation to complete the purchase of such assets have been satisfied or
waived by Buyer, but Buyer has not purchased all Acquired Assets of Refco's
Canada Business, Buyer shall pay $13 million to Sellers (the "Canada Take or
Pay Fee") and (d) all conditions precedent to Buyer's obligation to complete
the purchase of such assets have been satisfied or waived by Buyer, but Buyer
has not purchased all Acquired Assets of Refco Hong Kong Ltd., Buyer shall pay
$1 million to Sellers (the "Hong Kong Take or Pay Fee"); provided, that the
London Take or Pay Fee shall in no event be due prior to the Drop Dead Date
with respect to the London Business unless the applicable Regulatory Consents
have been received. In no event shall Buyer or any of its Affiliates or
representatives have any Liability to Parent, the Sellers or their respective
Affiliates or any other Person hereunder in excess of the applicable Seller
Liquidated Damages, and any claim, right or cause of action (including any
claim, right or cause of action for willful breach of this Agreement) by
Parent, the Sellers or their respective Affiliates or any other Person against
Buyer or its Affiliates or representatives in excess of the Seller Liquidated
Damages is hereby fully waived, released and forever discharged. In no event
shall Buyer or its Affiliates have any Liability to Parent, the Sellers or
their respective Affiliates or any other Person for any special, consequential
or punitive damages, and any such claim, right or cause of action for any
damages that are special, consequential or punitive for the specific
performance of this Agreement is hereby fully waived, released and forever
discharged.
ARTICLE XI
INDEMNIFICATION
Section 11.1 Survival.
(a) The respective representations and warranties of the
parties contained herein and in any other agreement, certificate, instrument or
other document delivered pursuant hereto shall survive the Closing (or, in the
case of any Acquired Assets acquired following the Closing Date, the Subsequent
Closing Date) until a date 12 months from the Closing Date (and, in the case of
any Acquired Assets acquired following the Closing Date, 12 months following
the Subsequent Closing Date on which such asset was acquired); provided, that
representations and warranties contained in Sections 5.2, 5.9, 5.13, 5.14 and
Article I shall survive until the earlier of 60 days after the lapse of the
applicable statute of limitations and the effective date of the plan of
reorganization of the Debtors. No Claim may be asserted nor may any action be
commenced against the Sellers pursuant to Section 11.2(a) unless written notice
of such action is received by Parent on or prior to the date on which the
representation or warranty is based ceases to survive as set forth in the prior
sentence (it being agreed and understood that if a claim for a breach of
representation or warranty is timely made, the representation or warranty
shall, solely for purposes of such claim, survive until the date on which such
claim is finally liquidated or otherwise resolved). No other Claim with respect
to the representations and warranties may be asserted nor may any action be
commenced against the Sellers pursuant to Section 11.2 unless written notice of
such action is received by Parent on or prior to the relevant date described
above.
(b) Except as otherwise provided herein, the respective
covenants of the parties contained in this Agreement, or in any Related
Documents shall survive the Closing indefinitely.
Section 11.2 Indemnification of Buyer by the Sellers.
(a) On and after the Closing Date, and notwithstanding any
disclosure in this Agreement or Buyer's knowledge thereof or otherwise, the
Sellers and their respective successors and assigns, including, but not limited
to, any pre- or post-consummation trusts formed to administer claims against
the Debtors' estate, shall, jointly and severally, indemnify, save, hold
harmless, discharge and release each of the Buyer Indemnitees from and against
any and all claims, demands, suits, actions, causes of actions, losses
(including, for avoidance of doubt, loss of profits), costs, damages,
liabilities and out-of-pocket expenses incurred or paid, including reasonable
attorneys' fees (including such fees which are incurred in connection with a
dispute of the provisions of this Agreement), fines, penalties, costs of
investigation or settlement, other professionals' and experts' fees, and court
or arbitration costs (but specifically excluding punitive damages and exemplary
damages except to the extent (i) such damages specifically excluded herein are
included and awarded to a third party or (ii) such damages are incurred as a
result of fraud) (hereinafter collectively referred to as "Damages"), to the
extent such Damages are determined to have arisen out of or to have resulted
from, in connection with, or by virtue of (a) any facts or circumstances that
constitute an inaccuracy, misrepresentation, breach of, default in, or failure
to perform, any of the representations, warranties or covenants given or made
by the Purchased Entities or the Sellers in this Agreement or in any of the
certificates or other instruments or documents furnished by or on behalf of the
Purchased Entities or the Sellers pursuant to this Agreement at or prior to the
Closing Date, including the covenant of the Sellers to deliver the Acquired
Assets in consideration of the Purchase Price; provided, that for purposes of
determining whether there has been any Company Breach (as defined), any
knowledge qualification shall be disregarded, (b) any inaccuracy, error or
omission in any of the books of account and other financial records of the
Purchased Entities and the Sellers, (c) any legal, regulatory, investigative or
similar proceedings relating to any pre-closing action, activity, occurrence,
fact or event, (d) any Liability (i) arising from or attributable to the
actions, failure to act, or profit or performance of or by a Person other than
a Purchased Entity for which a Purchased Entity may otherwise be joint and
severally liable under applicable common or statutory law or regulation,
including applicable tax or environmental law, and (ii) for which any Purchased
Entity is secondarily liable as a guarantor or surety to the extent Parent or
any Affiliate of Parent is primarily liable for such Liability, (e) any
Excluded Liabilities and (f) any Liability arising from or attributable to the
Excepted Accounts, the agreements governing such Excepted Accounts or the
customers with respect thereto other than any Liability arising from misconduct
of Buyer (collectively, "Company Breaches"). All payments under this Article XI
shall be treated for Tax purposes as adjustments to the Final Purchase Price
and the Assumed Liabilities. Notwithstanding anything to the contrary contained
herein, neither Parent nor the Sellers shall have any indemnification
obligations hereunder to any Buyer Indemnitee unless and until the total amount
of Damages for all Claims for which Buyer Indemnitees are indemnified hereunder
exceeds $1,000,000. Buyer acknowledges and agrees that the Escrow Amount is the
sole source of funding for any Claims for indemnification for the Buyer
Indemnitees and under no circumstances shall any Buyer Indemnitees be entitled
to be indemnified to the extent the Damages exceed the Escrow Amount, except to
the extent such Damages (other than punitive damages) are incurred as a result
of fraud in connection with or willful breach of this agreement. Buyer's
Indemnitees are hereby granted a superpriority lien pursuant to Section 364(d)
of the Bankruptcy Code on all assets of the Debtors, as well as a superpriority
administrative claim against the estates of the Debtors, which superpriority
lien and superpriority claim shall (except as hereinafter provided) be senior
and prior to all liens created on property of the Debtors after the date hereof
and all expenses of administration of the Debtors under Section 503(b) of the
Bankruptcy Code; provided, however, that such superpriority liens and claims
shall be subject and subordinate to (i) all valid and perfected Liens existing
on the date of commencement of the Cases and the claims secured thereby, as
well as any Liens and claims provided as adequate protection therefor,
including, without limitation, the Liens and claims of the Debtor's
pre-petition lending group and (ii) any post-petition financing providing new
funds to the Debtors; provided, further, that if the Sale Order of the Company
provides that Buyer's indemnities are granted a super-priority lien pursuant to
section 364(d) of the Bankruptcy Code on all of the assets of the Company, as
well as a super-priority administrative claim against the estate of the
Company, which lien and claim shall not be junior to any lien or claim against
the Company, then the aggregate amount of Buyer's indemnities over and above
the Escrow Amount shall be limited to the sum of (x) the Purchase Price, to the
extent paid, (y) the $58,000,0000 sum of the Take or Pay Fees provided for in
Section 10.3 and (z) an additional $100,000,000 estimate of the aggregate
amount of absolute and contingent Assumed Liabilities (it being understood that
Sellers shall have the right to seek a further determination from the
Bankruptcy Court as to the actual amount of such Assumed Liabilities, which
shall be used instead of such estimate for this purpose if such actual amount
is determined by the Court to be less than such estimate). For avoidance of
doubt, any superpriority granted pursuant to the preceding sentence shall be
without prejudice to the priority of the prepetition liens and claims of the
prepetition lenders to the Parent in respect of their borrowers, their
guarantors or the properties of the respective estates of their borrowers or
guarantors, as set forth in the proviso to the second sentence of paragraph 26
of the Sale Order entered in the Case of the Parent.
(b) Damages in respect of any breach or violation of this
Agreement shall be determined and computed in accordance with ordinary
principles of contract law as applied in the courts of the State of New York.
Section 11.3 Notice of Claim.
(a) As used herein, the term "Claim" means a claim for
indemnification by Buyer or any other Buyer Indemnitee for Damages under this
Article XI. Any Buyer Indemnitee may give notice of a Claim under this
Agreement, whether for its own Damages or for Damages incurred by any other
Buyer Indemnitee pursuant to written notice of such Claim executed by Buyer (a
"Notice of Claim") and delivered to the Sellers (such receiving party, the
"Indemnitor"), after such Buyer Indemnitee becomes aware of the existence of
any potential claim for indemnification under this Section 11.3 arising out of
or resulting from any item indemnified pursuant to the terms of Section 11.2.
(b) No delay on the part of any Buyer Indemnitee in giving a
Notice of Claim shall limit or reduce such Person's right to indemnity
hereunder, or relieve the Indemnitor from any of its obligations under this
Section 11.3, unless (and then only to the extent that) the Indemnitor is
actually and materially prejudiced thereby.
Section 11.4 Resolution of Notice of Claim. Each Notice of Claim given
by any Buyer Indemnitee shall be resolved as follows:
(a) Admitted Claims. If, within 20 Business Days after a
Notice of Claim is delivered to the Indemnitor, the Indemnitor agrees in
writing that liability for such Claim is indemnified under Article XI the full
amount of the Damages specified in the Notice of Claim is agreed to, and that
such Notice of Claim is timely, the Indemnitor shall be conclusively deemed to
have consented to the recovery by the Buyer Indemnitee of the full amount of
Damages specified in the Notice of Claim in accordance with this Section
11.4(a).
(b) Contested Claims. If the Indemnitor does not agree in
writing to such Notice of Claim or gives the Buyer Indemnitee written notice
contesting all or any portion of a Notice of Claim (a "Contested Claim") within
the 20 Business Day period specified in Section 11.4(a), then such Contested
Claim shall be resolved by either (i) a written settlement agreement executed
by Buyer and Parent or (ii) in the absence of such a written settlement
agreement, all Claims shall be resolved by the Bankruptcy Court as a section
101(5) claim against the Debtors' estates or a court of competent jurisdiction.
(c) Manner of Payment. If a Buyer Indemnitee is entitled to
the recovery of Damages pursuant to any Claim that is agreed to pursuant to
Section 11.4(a), or a Contested Claim that is resolved by a court of competent
jurisdiction, the Sellers and their respective successors and assigns,
including, but not limited to, any post-consummation trusts formed to
administer claims against the Debtors' estate, shall pay the amount of Damages
arising out of or resulting from each such Claim as so determined to Buyer by
wire transfer of immediately available funds to an account designated in
writing by Buyer, or, if applicable, such amounts shall be released by the
escrow agent by wire transfer of immediately available funds to an account
designated in writing by Buyer.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Expenses. Except as set forth in this Agreement and
whether or not the transactions contemplated hereby are consummated, each party
shall bear all costs and expenses incurred or to be incurred by such party in
connection with this Agreement and the consummation of the transactions
contemplated hereby.
Section 12.2 Assignment. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by Parent or the Sellers without the
prior written consent of Buyer, or by Buyer without the prior written consent
of Parent or the Sellers; provided, however, that, Buyer may assign its rights
and obligations hereunder, in whole or in part, to one or more designees of
Buyer, provided that no such assignment shall relieve Buyer of its liabilities
and obligations hereunder if such assignee does not perform such obligations
and, provided, further, that this Agreement may be assigned to one or more
trustees appointed by the Bankruptcy Court to succeed to the rights of the
Sellers; provided, however, that any such assignment shall not affect Buyer's
rights hereunder. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, and except as otherwise expressly provided herein, no
other Person shall have any right, benefit or obligation hereunder.
Section 12.3 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of the Sellers and Buyer, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement, except as provided in Article XI. Without limiting
the foregoing, no direct or indirect holder of any Equity Interests of the
Sellers or Buyer (whether such holder is a limited or general partner, member,
stockholder or otherwise), nor any Affiliate of the Sellers or Buyer, nor any
director, officer, employee, Representative, agent or other controlling person
of each of the parties hereto and their respective Affiliates shall have any
liability or obligation arising under this Agreement or the transactions
contemplated thereby.
Section 12.4 Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to
any other party shall be in writing and shall be delivered in person or by
courier or facsimile transmission (with such facsimile transmission confirmed
by sending a copy of such notice, request, instruction or other document by
certified mail, return receipt requested or overnight mail) or mailed by
certified mail, postage prepaid, return receipt requested (such mailed notice
to be effective on the date such receipt is acknowledged), as follows:
If to the Sellers or the Purchased Entities:
Refco Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to Buyer:
Man Financial Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
With a copy (which shall not constitute notice) to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other place and with such other copies as either party may designate
as to itself by written notice to the other party. Rejection, any refusal to
accept or the inability to deliver because of changed address of which no
notice was given shall be deemed to be receipt of the notice as of the date of
such rejection, refusal or inability to deliver.
Section 12.5 Choice of Law. This Agreement shall be construed and
interpreted, and the rights of the parties shall be determined, in accordance
with the Bankruptcy Code and the substantive laws of the State of New York, in
each case without regard to the conflict of law principles thereof or of any
other jurisdiction.
Section 12.6 Entire Agreement: Amendments and Waivers. This Agreement,
the Related Documents and the Confidentiality Agreement constitute the entire
agreement between the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations, and discussions,
whether oral or written, of the parties. Except as set forth herein or in any
certificate delivered pursuant hereto, no party (or any employee or agent
thereof) makes any representation or warranty, express or implied, to any other
party with respect to this Agreement or the transactions contemplated hereby.
No supplement, modification or waiver of this Agreement (including, without
limitation, any schedule hereto) shall be binding unless the same is executed
in writing by all parties. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), and no such waiver shall constitute a continuing
waiver unless otherwise expressly provided. Unless this Agreement shall have
been terminated pursuant to Section 10.1, the sole remedy of the parties
against each other in connection with this Agreement and the transactions
contemplated hereby shall be the indemnification rights set forth in Article XI
and as provided in Section 10.2 and 10.3.
Section 12.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by telecopy shall be as
effective as delivery of a manually executed counterpart of this Agreement. In
proving this Agreement, it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom enforcement is
sought.
Section 12.8 Invalidity. If anyone or more of the provisions contained
in this Agreement (other than any of the provisions contained in Article II,
Article III or Article IV hereof) or in any Related Document, shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, the
parties shall use their reasonable efforts, including, but not limited to, the
amendment of this Agreement, to ensure that this Agreement shall reflect as
closely as practicable the intent of the parties hereto on the date hereof.
Section 12.9 Headings. The table of contents and the headings of the
Articles and Sections herein are inserted for convenience of reference only and
are not intended to be a part of, or to affect the meaning or interpretation
of, this Agreement.
Section 12.10 Exclusive Jurisdiction. The Bankruptcy Court shall
retain exclusive jurisdiction to enforce the terms of this Agreement and to
decide any claims or disputes which may arise or result from, or be connected
with, this Agreement, any breach or default hereunder, or the transactions
contemplated hereby. Any and all claims, actions, causes of action, suits and
proceedings related to the foregoing shall be filed and maintained only in the
Bankruptcy Court, and the parties hereby consent to and submit to the
jurisdiction and venue of the Bankruptcy Court and shall receive notices at
such locations as indicated in Section 12.4 hereof.
Section 12.11 Specific Performance. The Sellers each acknowledge that
Buyer may be irreparably damaged in the event any of the provisions of this
Agreement are not performed by the Sellers in accordance with their specific
terms or are otherwise breached by the Sellers. Accordingly, Buyer shall be
entitled to seek an injunction or injunctions to prevent breaches of the
provisions of this Agreement by the Sellers and to enforce specifically this
Agreement and the terms and provisions thereof in any action instituted in any
court of the United States or any state thereof having subject matter
jurisdiction, in addition to any other remedy to which Buyer may be entitled,
at law, in equity or pursuant to this Agreement.
Section 12.12 Counting. If the due date for any action to be taken
under this Agreement or the Related Document (including, without limitation,
the delivery of notices) is not a Business Day, then such action shall be
considered timely taken if performed on or prior to the next Business Day
following such due date.
Section 12.13 Exhibits and Schedules. The Exhibits and Schedules
attached to, delivered with and identified to this Agreement are a part of this
Agreement the same as if fully set forth herein and all references herein to
any Section of this Agreement shall be deemed to include a reference to any
Schedule named therein.
Section 12.14 Interpretation.
(a) Whenever the words "include," "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(b) Words denoting any gender shall include all genders.
Where a word or phrase is defined herein, each of its other grammatical forms
shall have a corresponding meaning.
(c) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(d) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(e) All references to "$" and dollars shall be deemed to
refer to United States currency unless otherwise specifically provided.
(f) All references to any financial or accounting terms shall
be defined in accordance with the Regulatory Accounting Standards.
(g) All references to "Closing Date" in this Agreement shall
refer to the Closing Date upon which the Acquired Asset or Assumed Liability at
issue is conveyed to Buyer or, as the case may be, the Closing Date to which
the circumstance at issue relates.
Section 12.15 Preparation of this Agreement. Buyer, Parent and the
Sellers hereby acknowledge that (i) Buyer, Parent and the Sellers jointly and
equally participated in the drafting of this Agreement and all other agreements
contemplated hereby, (ii) Buyer, Parent and the Sellers have been adequately
represented and advised by legal counsel with respect to this Agreement and the
transactions contemplated hereby, and (iii) no presumption shall be made that
any provision of this Agreement shall be construed against either party by
reason of such role in the drafting of this Agreement and any other agreement
contemplated hereby.
Section 12.16 Purchase Price Allocation. After the Closing, the
parties shall cooperate in good faith to prepare an allocation of the Final
Purchase Price and Assumed Liabilities (and all other capitalized costs) among
the Acquired Assets (including the Securities) in accordance with Code Section
1060 and the Treasury Regulations promulgated thereunder (and any similar
provision of state, local or foreign law, as appropriate), which allocation
shall be binding on the parties (the "Allocation"). If the parties cannot agree
upon the Allocation within 90 days of the Closing Date, the parties shall
submit any disputes to the Independent Accountants. The Independent Accountants
shall finally and conclusively resolve any disputed matters in accordance with
Code Section 1060 within 30 days of receipt of the submission. Buyer, Seller
and each Purchased Entity shall report, act and file Tax Returns (including but
not limited to Internal Revenue Service Form 8594) in all respects and for all
purposes consistent with the Allocation. Neither Buyer, Seller nor any
Purchased Entity shall take any position (whether in audits, Tax Returns or
otherwise) that is inconsistent with the Allocation unless required to do so by
applicable law. The parties agree that any allocation made for tax purposes
pursuant to this Section 12.16 shall in no way be binding or definitive for
purposes of any allocation of proceeds or other accounting in connection with
the Cases.
Section 12.17 Bankruptcy Court Approval. This Agreement shall not be
binding on the Sellers until the Sale Order is entered.
[Signatures appear on the next page]
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of each of the Sellers, Buyer and
Purchased Entities as of the date first above written.
REFCO INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Signatory
REFCO GROUP LTD., LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Signatory
MAN FINANCIAL INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman and CEO of
Man Financial, Inc.