Exhibit 2.11
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PURCHASE AGREEMENT
among
GLOBAL CROSSING LTD.,
ASIA GLOBAL CROSSING LTD.,
GLOBAL CROSSING NORTH AMERICA HOLDINGS INC.,
SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED,
IXNET HONG KONG LTD.
and
ASIA GLOBAL CROSSING (SINGAPORE) PTE LTD.,
as the Sellers,
and
GS CAPITAL PARTNERS 2000, L.P.,
GS CAPITAL PARTNERS 2000 OFFSHORE, L.P.,
GS CAPITAL PARTNERS 2000 GMBH & CO. BETEILIGUNGS KG,
BRIDGE STREET SPECIAL OPPORTUNITIES FUND 2000, L.P.,
GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P.
and
STONE STREET FUND 2000, L.P.
and
GS IPC Acquisition Corp.
as Buyer
Dated as of November 16, 2001
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS, RULES OF CONSTRUCTION AND DOCUMENTARY CONVENTIONS 1
SECTION 1.1. Definitions
ARTICLE II PURCHASE AND SALE 1
SECTION 2.1. Purchase and Sale of the Shares 1
SECTION 2.2. Purchase and Sale of the Assets 2
SECTION 2.3. Determination of Closing Date Net Working Capital Amount 2
SECTION 2.4. Adjustments 4
SECTION 2.5. Allocation of Purchase Price 5
ARTICLE III THE CLOSING 5
SECTION 3.1. Closing Date 5
SECTION 3.2. Transactions to be Effected at the Closing 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS 7
SECTION 4.1. Corporate Existence and Power 7
SECTION 4.2. Authorization 7
SECTION 4.3. Consents 8
SECTION 4.4. Noncontravention 8
SECTION 4.5. The Shares and the Assets 8
SECTION 4.6. Brokers and Intermediaries 8
SECTION 4.7. Real Property 8
SECTION 4.8. Sufficiency of Assets 9
SECTION 4.9. IPC Contract Guarantees 9
SECTION 4.10. IPC Guaranteed Debt 9
ARTICLE V REPRESENTATIONS AND WARRANTIES OF GC, ASIA GC, GC NORTH AMERICA
AND SATURN 10
SECTION 5.1. Organization and Standing 10
SECTION 5.2. Capital Stock and Share Capital of the Companies 10
SECTION 5.3. Subsidiaries 11
SECTION 5.4. Financial Statements 11
SECTION 5.5. Absence of Certain Changes 12
SECTION 5.6. Litigation 14
SECTION 5.7. Compliance with Applicable Laws 14
SECTION 5.8. Material Contracts 14
SECTION 5.9. Intellectual Property 15
SECTION 5.10. Benefit Plans 16
SECTION 5.11. Taxes 19
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SECTION 5.12. Environmental Matters 20
SECTION 5.13. Insurance 21
SECTION 5.14. Major Customers and Suppliers 22
SECTION 5.15. Labor Matters 22
SECTION 5.16. Product Warranty 22
SECTION 5.17. Fairness Opinions 23
SECTION 5.18. Certain IPC Entity Guarantees and Obligations 23
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BUYER 23
SECTION 6.1. Organization and Existence 23
SECTION 6.2. Authorization 23
SECTION 6.3. Consent and Filings 23
SECTION 6.4. Noncontravention 24
SECTION 6.5. Litigation 24
SECTION 6.6. Brokers and Intermediaries 24
SECTION 6.7. Investment Intent 24
SECTION 6.8. Investigation 24
SECTION 6.9. Funding 24
ARTICLE VII COVENANTS 25
SECTION 7.1. Conduct of the Business 25
SECTION 7.2. Access to Information 25
SECTION 7.3. Regulatory Filings; Cooperation 25
SECTION 7.4. Post-Closing Books and Records 27
SECTION 7.5. Expenses 27
SECTION 7.6. [INTENTIONALLY OMITTED] 27
SECTION 7.7. Assumption of Litigation 27
SECTION 7.8. Cash Balance; Intercompany Accounts 27
SECTION 7.9. Use of Names and Logos 29
SECTION 7.10. Benefit Plans 30
SECTION 7.11. Network and Transition Services Agreement 32
SECTION 7.12. Non Solicitation 32
SECTION 7.13. Insurance Matters 33
SECTION 7.14. Non-Competition; Confidentiality 33
SECTION 7.15. Termination of Guarantees 34
SECTION 7.16. [INTENTIONALLY OMITTED] 34
SECTION 7.17. Further Assurances 34
SECTION 7.18. Delivery of Certain Financial Statements 34
SECTION 7.19. Obtaining Tibco License 35
SECTION 7.20. Removal of Liens 35
SECTION 7.21. Foreign Operations 35
SECTION 7.22. Connecticut Transfer Act 35
ARTICLE VIII CONDITIONS TO CLOSING 35
SECTION 8.1. Conditions to Obligation of the Buyer 35
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SECTION 8.2. Conditions to Obligation of the Sellers 36
ARTICLE IX INDEMNIFICATION 37
SECTION 9.1. Indemnification by the Sellers Other than for Tax Matters 37
SECTION 9.2. Indemnification by the Buyer 37
SECTION 9.3. Indemnification Procedures for Claims Other than Tax Matters 37
SECTION 9.4. Tax Indemnification 40
SECTION 9.5. Limitations Upon Indemnification 42
SECTION 9.6. Computation of Indemnifiable Losses 43
SECTION 9.7. Scope of Representations and Warranties 44
SECTION 9.8. Application of Holdback Account 44
ARTICLE X TERMINATION, AMENDMENT AND WAIVER 44
SECTION 10.1. Termination 44
SECTION 10.2. Amendments and Waivers 45
ARTICLE XI TAX MATTERS 45
SECTION 11.1. Tax Matters 45
ARTICLE XII MISCELLANEOUS 49
SECTION 12.1. Notices 49
SECTION 12.2. Severability 51
SECTION 12.3. Counterparts 51
SECTION 12.4. Entire Agreement; No Third Party Beneficiaries 51
SECTION 12.5. Governing Law 51
SECTION 12.6. Consent to Jurisdiction 51
SECTION 12.7. Publicity 52
SECTION 12.8. Assignment 52
SECTION 12.9. Obligations of GS Funds 52
ARTICLE II PURCHASE AND SALE 1
SECTION 2.1. Purchase and Sale of the Shares 1
SECTION 2.2. Purchase and Sale of the Assets 2
SECTION 2.3. Determination of Closing Date Net Working Capital Amount 2
SECTION 2.4. Adjustments 4
SECTION 2.5. Allocation of Purchase Price 5
ARTICLE III THE CLOSING 5
SECTION 3.1. Closing Date 5
SECTION 3.2. Transactions to be Effected at the Closing 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS 7
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SECTION 4.1. Corporate Existence and Power 7
SECTION 4.2. Authorization 7
SECTION 4.3. Consents 8
SECTION 4.4. Noncontravention 8
SECTION 4.5. The Shares and the Assets 8
SECTION 4.6. Brokers and Intermediaries 8
SECTION 4.7. Real Property 8
SECTION 4.8. Sufficiency of Assets 9
SECTION 4.9. IPC Contract Guarantees 9
SECTION 4.10. IPC Guaranteed Debt 9
ARTICLE V REPRESENTATIONS AND WARRANTIES OF GC, ASIA GC, GC NORTH AMERICA
AND SATURN 10
SECTION 5.1. Organization and Standing 10
SECTION 5.2. Capital Stock and Share Capital of the Companies 10
SECTION 5.3. Subsidiaries 11
SECTION 5.4. Financial Statements 11
SECTION 5.5. Absence of Certain Changes 12
SECTION 5.6. Litigation 14
SECTION 5.7. Compliance with Applicable Laws 14
SECTION 5.8. Material Contracts 14
SECTION 5.9. Intellectual Property 15
SECTION 5.10. Benefit Plans 16
SECTION 5.11. Taxes 19
SECTION 5.12. Environmental Matters 20
SECTION 5.13. Insurance 21
SECTION 5.14. Major Customers and Suppliers 22
SECTION 5.15. Labor Matters 22
SECTION 5.16. Product Warranty 22
SECTION 5.17. Fairness Opinions 23
SECTION 5.18. Certain IPC Entity Guarantees and Obligations 23
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BUYER 23
SECTION 6.1. Organization and Existence 23
SECTION 6.2. Authorization 23
SECTION 6.3. Consent and Filings 23
SECTION 6.4. Noncontravention 24
SECTION 6.5. Litigation 24
SECTION 6.6. Brokers and Intermediaries 24
SECTION 6.7. Investment Intent 24
SECTION 6.8. Investigation 24
SECTION 6.9. Funding 24
ARTICLE VII COVENANTS 25
SECTION 7.1. Conduct of the Business 25
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SECTION 7.2. Access to Information 25
SECTION 7.3. Regulatory Filings; Cooperation 25
SECTION 7.4. Post-Closing Books and Records 27
SECTION 7.5. Expenses 27
SECTION 7.6. [INTENTIONALLY OMITTED] 27
SECTION 7.7. Assumption of Litigation 27
SECTION 7.8. Cash Balance; Intercompany Accounts 27
SECTION 7.9. Use of Names and Logos 29
SECTION 7.10. Benefit Plans 30
SECTION 7.11. Network and Transition Services Agreement 32
SECTION 7.12. Non Solicitation 32
SECTION 7.13. Insurance Matters 33
SECTION 7.14. Non-Competition; Confidentiality 33
SECTION 7.15. Termination of Guarantees 34
SECTION 7.16. [INTENTIONALLY OMITTED] 34
SECTION 7.17. Further Assurances 34
SECTION 7.18. Delivery of Certain Financial Statements 34
SECTION 7.19. Obtaining Tibco License 35
SECTION 7.20. Removal of Liens 35
SECTION 7.21. Foreign Operations 35
SECTION 7.22. Connecticut Transfer Act 35
ARTICLE VIII CONDITIONS TO CLOSING 35
SECTION 8.1. Conditions to Obligation of the Buyer 35
SECTION 8.2. Conditions to Obligation of the Sellers 36
ARTICLE IX INDEMNIFICATION 37
SECTION 9.1. Indemnification by the Sellers Other than for Tax Matters 37
SECTION 9.2. Indemnification by the Buyer 37
SECTION 9.3. Indemnification Procedures for Claims Other than Tax Matters 37
SECTION 9.4. Tax Indemnification 40
SECTION 9.5. Limitations Upon Indemnification 42
SECTION 9.6. Computation of Indemnifiable Losses 43
SECTION 9.7. Scope of Representations and Warranties 44
SECTION 9.8. Application of Holdback Account 44
ARTICLE X TERMINATION, AMENDMENT AND WAIVER 44
SECTION 10.1. Termination 44
SECTION 10.2. Amendments and Waivers 45
ARTICLE XI TAX MATTERS 45
SECTION 11.1. Tax Matters 45
ARTICLE XII MISCELLANEOUS 49
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SECTION 12.1. Notices 49
SECTION 12.2. Severability 51
SECTION 12.3. Counterparts 51
SECTION 12.4. Entire Agreement; No Third Party Beneficiaries. 51
SECTION 12.5. Governing Law 51
SECTION 12.6. Consent to Jurisdiction 51
SECTION 12.7. Publicity 52
SECTION 12.8. Assignment 52
SECTION 12.9. Obligations of GS Funds 52
Schedules
Schedule 2.2(a)(i) IXnet HK Assets
Schedule 2.2(a)(ii) AGC Singapore Assets
Schedule 4.3 Consents and Filings
Schedule 4.4 Noncontravention
Schedule 4.5 Liens
Schedule 4.7(b) Real Estate Leases
Schedule 4.8 Excluded Assets
Schedule 4.9 IPC Contract Guarantees
Schedule 4.10 IPC Guaranteed Debt
Schedule 5.1 Foreign Qualifications
Schedule 5.2 Capitalization of the Companies
Schedule 5.3 Subsidiaries
Schedule 5.4 Financial Statements
Schedule 5.4(c) Material Exceptions to GAAP
Schedule 5.5 Certain Changes
Schedule 5.5(iv) Claims
Schedule 5.5(viii) Capital Expenditures
Schedule 5.5(ix) Affiliate Contracts
Schedule 5.5(x) Adoption or Amendment of IPC Plans
Schedule 5.5(xvi) Power of Attorney
Schedule 5.6 Litigation
Schedule 5.7(a) Compliance with Applicable Laws
Schedule 5.7(b) Permits
Schedule 5.8 Material Contracts
Schedule 5.9(a) Intellectual Property
Schedule 5.9(b) Intellectual Property Exceptions
Schedule 5.10(a) Benefit Plans
Schedule 5.10(d) Claims Under Benefit Plans
Schedule 5.10(f) Acceleration of Benefits
Schedule 5.11 Taxes
Schedule 5.11(b) Tax Proceedings
Schedule 5.11(c) Availability of Tax Materials
Schedule 5.11(d) Entity Classification
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Schedule 5.12(a)(i) Environmental Compliance Exceptions
Schedule 5.12(a)(ii) Environmental Permit Exceptions
Schedule 5.12(a)(iii) Environmental Hazardous Substances
Exceptions
Schedule 5.12(a)(iv) Environmental Claim Exceptions
Schedule 5.13 Insurance
Schedule 5.14(a) Customers
Schedule 5.14(b) Suppliers
Schedule 5.15 Labor Matters
Schedule 5.16 Product Warranty
Schedule 6.3 Consents and Filings
Schedule 7.1 Exceptions to Conduct of Business
Schedule 7.9(a) Names and Logos
Schedule 7.10(g) List of IPC Employees
Schedule 7.10(g)-1 List of Change in Control Severance
Agreements
Schedule 7.12 Non Solicitation Exceptions
Schedule A-1 Key Persons
Exhibit A Transfer Agreement
Exhibit B Network and Transition Services
Agreement
PURCHASE AGREEMENT dated as of November 16, 2001 among GLOBAL CROSSING
LTD. ("GC"), a Bermuda corporation, ASIA GLOBAL CROSSING LTD. ("ASIA GC"), a
Bermuda corporation, GLOBAL CROSSING NORTH AMERICA HOLDINGS INC. ("GC North
America"), a Delaware corporation, SATURN GLOBAL NETWORK SERVICES HOLDINGS
LIMITED ("Saturn"), a company incorporated under the laws of the United
Kingdom, IXNET HONG KONG LTD. ("IXnet HK"), a Hong Kong corporation, ASIA
GLOBAL CROSSING (SINGAPORE) PTE LTD., a Singapore corporation ("AGC Singapore")
(each a "Seller" and, collectively, the "Sellers"), GS CAPITAL PARTNERS 2000,
L.P., GS CAPITAL PARTNERS 2000 OFFSHORE, L.P., GS CAPITAL PARTNERS 2000 GMBH &
CO. BETEILIGUNGS KG, BRIDGE STREET SPECIAL OPPORTUNITIES FUND 2000, L.P., GS
CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. and STONE STREET FUND 2000, L.P.
(collectively the "GS Funds") and GS IPC ACQUISITION CORP., a Delaware
corporation (the "Buyer").
WHEREAS, the Buyer desires to purchase and the Sellers desire to sell or
cause to be sold to the Buyer (i) all issued and outstanding shares of common
stock, par value $.01 per share (the "IPC Inc. Shares"), of IPC Information
Systems, Inc., a Delaware corporation ("IPC Inc."), (ii) all of the issued and
outstanding ordinary shares, par value $1.00 per share (the "IPC Trading
Systems Shares", together with the IPC Inc. Shares, the "Shares"), of Asia
Global Crossing IPC Trading Systems Australia Pry Ltd., an Australian
corporation ("IPC Trading Systems"; together with IPC Inc., the "Companies" and
each a "Company"), and (iii) certain assets related to the operation of the
business of the Companies, all as hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements herein set forth and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND
DOCUMENTARY CONVENTIONS
SECTION 1.1. Definitions. Defined terms used in this Agreement have the
meanings ascribed to them by definition in this Agreement or in Appendix A,
which also specifies the Sections of this Agreement in which each definition
appears and includes rules of construction with respect thereto.
ARTICLE II
PURCHASE AND SALE
SECTION 2.1. Purchase and Sale of the Shares. (a) Upon the terms and
subject to the conditions of this Agreement, GC North America shall sell,
transfer and deliver (and GC shall cause to be sold, transferred and delivered)
to the Buyer, and the Buyer shall purchase, the IPC Inc. Shares, free and clear
of any liens, claims, encumbrances, security interests, options,
charges or restrictions of any kind, for an aggregate purchase price of $337.5
million in cash (the "IPC Inc. Shares Purchase Price") less the Holdback Amount
(if any), payable pursuant to Section 3.2(b)(i).
(b) Upon the terms and subject to the conditions of this Agreement, at
the Closing, Saturn shall sell, transfer and deliver to the Buyer (and GC and
Asia GC shall cause to be sold, transferred and delivered), and the Buyer shall
purchase, the IPC Trading Systems Shares, free and clear of any liens, claims,
encumbrances, security interests, options, charges or restrictions of any kind,
for the IPC Trading Systems Shares Purchase Price (together with the IPC Inc.
Shares Purchase Price, the "Shares Purchase Price"), payable pursuant to
Section 3.2(b)(ii).
SECTION 2.2. Purchase and Sale of the Assets. (a) (i) Upon the terms and
subject to the conditions of this Agreement, at the Closing, IXnet HK shall
sell, convey, transfer, assign and deliver (and Asia GC shall cause to be sold,
conveyed, transferred, assigned and delivered) to the Buyer, and the Buyer
shall purchase, all right, title and interest of such Seller in and to the
assets and properties listed on Schedule 2.2(a)(i) (the "IXnet HK Assets").
(ii) Upon the terms and subject to the conditions of this Agreement, at
the Closing, AGC Singapore shall sell, convey, transfer, assign and deliver
(and Asia GC shall cause to be sold, conveyed, transferred, assigned and
delivered) to the Buyer, and the Buyer shall purchase, all right, title and
interest of AGC Singapore in and to the assets and properties listed on
Schedule 2.2(a)(ii) (the "AGC Singapore Assets"; together with the IXnet HK
Assets, the "Assets").
(b) (i) IXnet HK Assets Purchase Price shall be determined in accordance
with Section 2.5 and shall be payable pursuant to Section 3.2(b)(iii).
(ii) AGC Singapore Assets Purchase Price (together with the IXnet HK
Assets Purchase Price, the "Assets Purchase Price") shall be determined in
accordance with Section 2.5 and shall payable pursuant to Section 3.2(b)(iv).
(iii) The Assets shall be sold, conveyed, transferred, assigned and
delivered pursuant to a Transfer Agreement substantially in the form of
Exhibit A (the "Transfer Agreement") to be executed (upon the terms and
subject to the conditions hereof) on the Closing by the Buyer, IXnet HK and
AGC Singapore selling, conveying, transferring, assigning and delivering the
Assets.
SECTION 2.3. Determination of Closing Date Net Working Capital Amount.
(a) As promptly as practicable following the Closing Date (but not later than
90 days after the Closing Date), the Buyer shall:
(i) prepare, in accordance with GAAP (applied in a manner consistent with
the Reference Balance Sheet as to principles, policies, methodologies and
procedures), except for the exceptions thereto identified on Schedule
5.4(c), a combined balance sheet of the Companies and their respective
Subsidiaries as of the close of business on the Closing Date (the
"Preliminary Closing Date Balance Sheet"); and
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(ii) deliver to the Sellers a certificate executed by the Buyer setting
forth or attaching the Preliminary Closing Date Balance Sheet and the
Sellers' calculation of (A) the amount of "working capital" of the Companies
and their respective Subsidiaries (as defined in Section 2.3(d)) as of the
Closing Date ("Preliminary Closing Date Net Working Capital Amount"), (B)
the amount of customer advances related to maintenance contracts of the
Companies and their respective Subsidiaries as of the Closing Date
("Preliminary Deferred Maintenance Revenue Amount"), (C) the amount of
customer advances related to uncompleted installation contracts of the
Companies and their respective Subsidiaries as of the Closing Date (the
"Preliminary Deferred Turret Revenue Amount") and (D) the amount of costs
incurred on uncompleted installation contracts of the Companies and their
respective Subsidiaries as of the Closing Date ("Preliminary Work-In-Process
Amount," together with the Preliminary Closing Date Net Working Capital
Amount, the Preliminary Deferred Turret Revenue Amount and the Preliminary
Deferred Maintenance Revenue Amount, the "Preliminary Amounts"), each as
derived from the Preliminary Closing Date Balance Sheet.
(b) The Sellers shall have 30 business days following receipt of the
certificate referenced in Section 2.3(a) (the "Review Period") in which to
review the Preliminary Closing Date Balance Sheet and Preliminary Amounts. In
connection therewith, the Sellers and their authorized representatives
(including outside accountants) shall have reasonable access to all relevant
books and records and employees of the Companies and any Subsidiaries to the
extent required to complete such review. In the event the Sellers do not object
to the contents of the Preliminary Closing Date Balance Sheet and Preliminary
Amounts prior to expiration of the Review Period, (i) such balance sheet shall
become the definitive balance sheet of the Companies as of the Closing Date
(the "Closing Date Balance Sheet"), (ii) the Preliminary Closing Date Working
Capital Amount shall become the "Closing Date Net Working Capital Amount",
(iii) the Preliminary Deferred Maintenance Revenue Amount shall become the
"Closing Date Deferred Maintenance Revenue Amount," (iv) the Preliminary
Deferred Turret Revenue Amount shall become the "Closing Date Deferred Turret
Revenue Amount" and (v) the Preliminary Work-In-Process Amount shall become the
"Closing Date Work-In-Process Amount," each for the purposes of determining the
adjustments (if any) specified in Section 2.4 of this Agreement. In the event
the Sellers object to the Preliminary Closing Date Balance Sheet and any or all
of the Preliminary Amounts, the Sellers shall send a written notice to the
Buyer specifying its objections in reasonable detail and the basis therefore,
prior to expiration of the Review Period ("Objection Notice"). During the 15
business day period following the Buyer's receipt of the Objection Notice (the
"Resolution Period"), Buyer and the Sellers shall attempt to resolve the
differences specified in the Objection Notice and any resolution by them
(evidenced in writing) of such differences shall be final, binding and
conclusive.
(c) If at the conclusion of the Resolution Period any amounts remain in
dispute, then the amounts so in dispute (the "Disputed Items") shall be
submitted to a firm of independent public accountants (the "Arbitrator")
mutually selected by the Sellers and Buyer within ten business days after the
expiration of the Resolution Period. The Arbitrator shall determine and
resolve, by independent review, the Disputed Items, in accordance with GAAP
(applied in a manner consistent with the Reference Balance Sheet as to
principles, policies, methodologies and procedures), except for the exceptions
identified on Schedule 5.4(c). The Arbitrator's determination shall be made
within 30 business days of its selection, shall be set forth in a
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written statement delivered to the Sellers and Buyer and shall be final,
binding and conclusive on the parties hereto. The Preliminary Closing Date
Balance Sheet and the Preliminary Amounts shall be adjusted to reflect all
agreed upon changes and the resolution of all Disputed Items by the Arbitrator.
The Preliminary Closing Date Balance Sheet, as so adjusted, shall become the
Closing Date Balance Sheet; the Preliminary Closing Date Working Capital
Amount, as so adjusted, shall be the "Closing Date Net Working Capital Amount";
the Preliminary Deferred Maintenance Revenue Amount shall become the "Closing
Date Deferred Maintenance Revenue Amount"; and the Preliminary Deferred Turret
Revenue Amount shall become the "Closing Date Deferred Turret Revenue Amount"
and Preliminary Work-In-Process shall become the "Closing Date
Work-In-Process", each for the purposes of determining the adjustments (if any)
specified in Section 2.4. All fees and expenses of the Arbitrator shall be paid
one-half by Buyer and one-half by the Sellers.
(d) For purposes of Sections 2.3 and 2.4, the amount of "working
capital" of the Companies and their respective Subsidiaries as of any point of
time shall mean (A) the combined total current assets (excluding Cash Balance,
intercompany assets, deferred tax assets and costs incurred on uncompleted
installation contracts) of the Companies and their Subsidiaries as of such
point in time minus (B) the combined total current liabilities (excluding
intercompany liabilities, deferred tax liabilities and customer advances
related to uncompleted installation contracts and maintenance contracts) of the
Companies and their Subsidiaries as of such point in time; in each case in a
manner consistent with the Reference Balance Sheet as to principles, policies,
methodologies and procedures.
SECTION 2.4. Adjustments. Promptly (but not later than five days) after
the determination of the Closing Date Net Working Capital Amount, Closing Date
Deferred Maintenance Revenue Amount, Closing Date Deferred Turret Revenue
Amount and Closing Date Work-In-Process Amount, each pursuant to Section 2.3:
(a) (i) if the Closing Date Net Working Capital Amount exceeds the
"working capital" of the Companies and their Subsidiaries as of the date of
the Reference Balance Sheet (the "Reference Net Working Capital Amount"),
Buyer shall pay to the Sellers, by wire transfer of immediately available
funds to such bank accounts of the Sellers as the Sellers shall designate in
writing to Buyer, an aggregate amount equal to the excess of the Closing
Date Net Working Capital Amount over the Reference Net Working Capital
Amount (the "Additional Net Working Capital") plus interest on such excess
from the Closing Date to the date of payment thereof at the Agreed Rate; or
(ii) if the Closing Date Net Working Capital Amount is less than the
Reference Net Working Capital Amount, the Sellers shall pay to Buyer, by
wire transfer of immediately available funds to such bank account of Buyer
as Buyer shall designate in writing to the Sellers, an aggregate amount
equal to the Reference Net Working Capital Amount less the Closing Date Net
Working Capital Amount (the "Excess New Working Capital") plus interest on
such amount from the Closing Date to the date of payment thereof at the
Agreed Rate.
(iii) for avoidance of doubt, Sections 2.4(a)(i) and (ii) are intended to
work in conjunction with Section 7.8(e) to avoid duplication of payments and
underpayments. To
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illustrate, the amount of the account receivable relating to an undeposited
check shall not be included in "working capital" as the Sellers received the
benefit of such check under Section 7.8 and the amount of the account
payable relating to a check written by an IPC Entity which has not been
deposited by the payee thereof shall be reduced by the amount of such check
for the purposes of calculating "working capital" as the Sellers did not
receive the cash supporting that check under Section 7.8.
(b) If the Closing Date Deferred Maintenance Revenue Amount exceeds the
amount of customer advances related to maintenance services of the Companies
and their respective Subsidiaries as of the date of the Reference Balance
Sheet, the Sellers shall pay to the Buyer, by wire transfer of immediately
available funds to such bank account of the Buyer as the Buyer shall designate
in writing to the Sellers, an aggregate amount equal to such excess (the
"Deferred Maintenance Revenue Adjustment").
(c) If the amount of the Closing Date Deferred Turret Revenue Amount
less the Closing Date Work-In-Process Amount exceeds the customer advances
related to installation services as of the date of the Reference Balance Sheet
less the costs incurred on uncompleted installation contracts of the Companies
and their respective Subsidiaries as reflected in the Reference Balance Sheet,
then the Sellers shall pay to the Buyer, by wire transfer of immediately
available funds to such bank accounts of the Buyer, as the Buyer shall
designate in writing to the Sellers, an aggregate amount equal to such excess
(the "Deferred Turret Revenue Adjustment").
(d) The Purchase Price Adjustment shall be allocated among the Shares in
the same proportion as the Purchase Price (prior to the adjustments under this
Section 2.4) was allocated among the Shares on the Closing Date.
SECTION 2.5. Allocation of Purchase Price. The IPC Trading Systems
Shares Purchase Price, the IXnet HK. Assets Purchase Price and the AGC
Singapore Assets Purchase Price shall be mutually agreed upon by Asia GC and
the Buyer prior to the Closing; provided that the sum of the IPC Trading
Systems Shares Purchase Price, the IXnet HK Assets Purchase Price and the AGC
Singapore Assets Purchase Price shall be $22,500,000.
ARTICLE III
THE CLOSING
SECTION 3.1. Closing Date. The closing of the transactions pursuant
hereto (hereinafter called the "Closing") shall take place at the offices of
Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00
a.m., local time, on the second business day following the satisfaction or
waiver of the conditions set forth in Article VIII, or at such other time, date
and place as shall be fixed by agreement of the parties hereto (the date on
which the Closing actually occurs being hereinafter referred to as the "Closing
Date").
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SECTION 3.2. Transactions to be Effected at the Closing. At the Closing:
(a) (i) GC North America shall deliver to the Buyer certificates
representing the IPC Inc. Shares, duly endorsed in blank in proper form for
transfer, with appropriate transfer stamps, if any, affixed;
(ii) Saturn shall deliver to the Buyer certificates representing the IPC
Trading Systems Shares, and a duly executed form of transfer in respect to
those shares and (if the Buyer so requires) an irrevocable power of attorney
in the agreed form duly executed by Saturn in favor of the Buyer or its
nominee(s) to enable the Buyer (pending registration of the relevant
transfers) to exercise all voting and other rights attaching to the IPC
Trading Systems Shares and to appoint proxies for this purpose;
(b) (i) the Buyer shall deliver to GC North America payment of the IPC
Inc. Shares Purchase Price in immediately available funds less the Holdback
Amount in accordance with Section 3.3;
(ii) the Buyer shall deliver to Saturn payment of the IPC Trading Shares
Purchase Price in immediately available funds;
(iii) the Buyer shall deliver to IXnet HK payment of the IXnet Assets
Purchase Price in immediately available funds; and
(iv) the Buyer shall deliver to AGC Singapore payment of the AGC
Singapore Assets Purchase Price in immediately available funds; and
(c) (i) the Buyer, IXnet HK and AGC Singapore shall execute and deliver
to the other parties thereto the Transfer Agreement.
(ii) the Buyer and an Affiliate of the applicable Sellers shall execute
and deliver to the other parties the Network and Transition Services
Agreement.
SECTION 3.3 Holdback of Purchase Price. Notwithstanding anything to the
contrary in Articles II and III, the Buyer may withhold from the IPC Inc.
Shares Purchase Price payable at the Closing an amount equal to the sum of (1)
the amount of the liabilities (including principal and interest) owing under
the IPC Guaranteed Debt set forth in the certificate delivered pursuant to
Section 8. l(g) hereof and (2) the amount of liabilities incurred by the
Sellers and their Affiliates (other than the IPC Entities) in connection with
contracts or other agreements or arrangements guaranteed by the IPC Contract
Guarantees (such sum, the "Holdback Amount"). Concurrent with the Closing, the
Buyer shall deposit an amount equal to the Holdback Amount in a segregated,
interest bearing account in the Buyer's name with a bank of
nationally-recognized standing (the "Holdback Account"). The Buyer may not
withdraw any amount in the Holdback Account except as provided in this Section
3.3. GC North America acknowledges that it has no right, title or interest
(legal or beneficial) in the funds so deposited. Upon receipt of evidence
reasonably satisfactory to the Buyer that (i) the IPC Guaranteed Debt in whole
or in part has been paid, discharged or otherwise satisfied or that the IPC
Entities have been fully and unconditionally released in whole or in part from
any such IPC Guaranteed Debt, (ii) the IPC Contract Guarantees or the contracts
guaranteed by the IPC Contract Guarantees have been terminated in
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whole or in part (and, if in whole or in part, all amounts outstanding relating
thereto have been have satisfied) or (iii) the tax liability set forth on
Schedule 5.11 (b) relating to certain New York State taxes (the "Scheduled Tax
Liability") has been paid, discharged or otherwise satisfied, the Buyer shall
promptly pay GC North America an amount equal to (x) the amount of any IPC
Guaranteed Debt so paid, discharged or otherwise satisfied or for which a full
and unconditional release has been obtained or (y) the amount of liabilities
incurred by the Sellers or their Affiliates (other than the IPC Entities) in
connection with contracts or other agreements or arrangements guaranteed by any
of the IPC Contract Guarantees so satisfied in whole or in part, provided,
however, if the Scheduled Tax Liability has not been paid, discharged or
otherwise satisfied in full the Buyer shall not be obligated to pay any amount
to GC North America pursuant to this Section 3.3 until the amounts pursuant to
(x) and (y) above exceed an amount equal to the Scheduled Tax Liability and any
additional interest accrued thereon, and provided, further, at such time as the
Scheduled Tax Liability and any additional interest accrued thereon is paid,
discharged or otherwise satisfied, any amount not paid pursuant to the prior
proviso shall be paid to GC North America. In the event that the Buyer or any
of its Affiliates makes any payment to GC North America pursuant to this
Section 3.3 or any third party receives any amounts from the Buyer or any of
its Affiliates with respect to the IPC Guaranteed Debt or the IPC Contract
Guarantees, the Buyer may withdraw funds from the Holdback Account in an amount
equal to the amount so paid or collected.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
GC, on behalf of itself and the other Sellers hereby represents and
warrants; Asia GC, on behalf of itself, Saturn, IXnet HK and AGC Singapore
hereby represents and warrants; GC North America, on behalf of itself, hereby
represents and warrants; Saturn, on behalf of itself, hereby represents and
warrants; IXnet HK, on behalf of itself, hereby represents and warrants; and
AGC Singapore, on behalf of itself, hereby represents and warrants; to the
Buyer as follows:
SECTION 4.1. Corporate Existence and Power. The applicable Seller is a
corporation duly incorporated, validly existing and, where applicable, in good
standing under the laws of the jurisdiction of its organization and has all
corporate power required to consummate the transactions contemplated hereby.
SECTION 4.2. Authorization. The execution, delivery and performance by
the applicable Seller of this Agreement and consummation by such Seller of the
transactions contemplated hereby are within such Seller's corporate powers and
have been duly authorized by all necessary corporate action on the part of such
Seller. This Agreement constitutes, and each other agreement executed and
delivered or to be executed and delivered by the applicable Seller pursuant to
this Agreement will, upon such execution and delivery, constitute, a legal,
valid and binding obligation of such Seller enforceable against such Seller in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
7
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
SECTION 4.3. Consents. Except as set forth in Schedule 4.3 or as
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), no material consent, approval, license, permit, order
or authorization (each, a "Consent") of, or registration, declaration or filing
(each, a "Filing") with, any Governmental Entity which has not been obtained or
made by the applicable Seller is required for or in connection with the
execution and delivery of this Agreement by such Seller, and the consummation
by such Seller of the transactions contemplated hereby.
SECTION 4.4. Noncontravention. Except as set forth in Schedule 4.4, the
execution, delivery and performance of this Agreement by the applicable Seller
does not, and the consummation by such Seller of the transactions contemplated
hereby will not, (i) violate any provision of the organizational documents of
such Seller, or (ii) subject to obtaining or making the Consents and/or
Filings, as the case may be, referred to in Section 4.3, violate in any
material respect any provision of, or result in the termination or acceleration
of, or entitle any party to accelerate any material obligation or any
indebtedness for borrowed money under, or result in the imposition of any lien
upon or the creation of a security interest in the Shares or the Assets
pursuant to, any mortgage, lease, franchise, license, permit, agreement,
instrument, law, order, arbitration award, judgment or decree to which such
Seller is a party or by which such Seller is bound.
SECTION 4.5. The Shares and the Assets. (a) Except as set forth on
Schedule 4.5, the applicable Seller has good and valid title to the Shares or
Assets, as applicable, free and clear of any liens, claims, encumbrances,
security interests, options, charges or restrictions of any kind except for any
liens for Taxes not yet due and payable.
(b) All material equipment included in the Assets is in good working
order and condition, ordinary wear and tear excepted, for the purposes for
which it is normally used.
SECTION 4.6. Brokers and Intermediaries. Other than X.X. Xxxxxx
Securities Inc. and UBS Warburg LLC, no Seller has employed any broker, finder,
advisor or intermediary in connection with the transactions contemplated by
this Agreement which would be entitled to a broker's, finder's or similar fee
or commission in connection therewith or upon the consummation thereof.
SECTION 4.7. Real Property. (a) IPC Inc. has good and marketable title
to the property located at 00 Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx (the
"Westbrook Facility"), free and clear of any liens, claims, encumbrances,
security interests, options, charges or restrictions (collectively, the
"Encumbrances") of any kind that do not unreasonably interfere with the present
use of the property, except for liens for Taxes not yet due and payable or
being contested in good faith by appropriate proceedings which have been
reserved for on the Reference Balance Sheet.
(b) Schedule 4.7(b) sets forth a list of all real estate leases,
subleases, or other occupancy agreements to which any IPC Entity is a party (a
"Lease"). Each Lease and each
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Global Crossing Lease is in full force and effect and all rent and other
material sums and charges payable thereunder by a Seller or an IPC Entity are
current and its not in default in any material respect by a Seller or an IPC
Entity or the respective landlord under any Lease or Global Crossing Lease
exists. A complete and correct copy of each Lease and each Global Crossing
Lease, including all modifications, amendments and addenda thereof, has been
provided to the Buyer. Except as set forth in Schedule 4.7(b), no consent is
necessary upon a change of control of the tenant of such Lease or Global
Crossing Lease from the landlord or any other third party, and each Lease and
each Global Crossing Lease grants the lessee under such lease the exclusive
right to occupy the premises and rights demised thereunder in accordance with
the terms thereof, free and clear of any Encumbrances.
(c) The Xxxxxxxxx Facility and properties covered by each Lease or
Global Crossing Lease have adequate water, sewer and electric supply for its
present use.
(d) There is no pending or, to the knowledge of the Sellers,
contemplated annexation or condemnation or similar proceeding affecting all or
any portion of the Xxxxxxxxx Facility or properties covered by a Lease or
Global Crossing Lease. There is no pending or, to the knowledge of the Sellers,
proposed proceeding to change or redefine the zoning classification of all or
any portion of the Xxxxxxxxx Facility or properties covered by a Lease or
Global Crossing Lease and no pending imposition of any material assessments for
which Buyer or an IPC Entity would be responsible.
(e) The use and operation of the Xxxxxxxxx Facility in the conduct of
the business of the IPC Entities does not violate any instrument of record,
contract or agreement, or Applicable Law affecting the Xxxxxxxxx Facility. To
the knowledge of the Sellers, the use and operation of the Leases and the
Global Crossing Leases in the conduct of the business of the IPC Entities does
not violate any instrument of record, contract or agreement, or Applicable Law
affecting the Leases or the Global Crossing Leases.
SECTION 4.8. Sufficiency of Assets. Except as set forth in Schedule 4.8,
the Assets, and the assets, rights and properties owned, leased or licensed by
the IPC Entities (before and after giving effect to the IXnet Restructuring
Actions) constitute all the assets, rights and properties used or held for use
in, and necessary to, the conduct of the Business in all material respects as
conducted. Notwithstanding the foregoing, it is understood that assets
providing turret connectivity provided by IXnet, Inc. and its subsidiaries and
assets, rights and properties subject to Article V of the Network and
Transition Services Agreement are not owned by any IPC Entity and will not be
conveyed to IPC pursuant to Section 7.16.
SECTION 4.9. IPC Contract Guarantees. Except as set forth on Schedule
4.9, no IPC Entity has entered into any guarantees (other than for borrowed
money), keepwells or other support arrangements or agreements for the benefit
of any Seller, any Affiliate of any Seller (other than the IPC Entities) or any
third party (collectively, the "IPC Contract Guarantees").
SECTION 4.10. IPC Guaranteed Debt. Except as set forth on Schedule 4.10,
no IPC Entity has entered into any agreement or arrangement for the guarantee
of any borrowed money, advances, bonds, debentures, notes or similar
instruments, performance bonds, liens, or
9
any other indebtedness of Persons other than an IPC Entity (collectively, the
"IPC Guaranteed Debt").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF GC,
ASIA GC, GC NORTH AMERICA AND SATURN
GC, on behalf of itself, represents and warrants; Asia GC, on behalf of
itself, represents and warrants (in the case of a representation or warranty
regarding IPC Trading Systems and its Subsidiaries (if any)); GC North America,
on behalf of itself, represents and warrants (in the case of a representation
or warranty regarding IPC Inc. and/or its Subsidiaries); and Saturn, on behalf
of itself, represents and warrants (in the case of a representation or warranty
regarding IPC Trading Systems and its Subsidiaries (if any)); as follows:
SECTION 5.1. Organization and Standing. Except as set forth in Schedule
5.1, each Company (a) is a corporation duly incorporated, validly existing and,
where applicable, in good standing under the laws of its jurisdiction of
organization, has the corporate power and authority, and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it, to own, lease or otherwise hold its properties and
assets and to carry on its business as presently conducted, except such power,
authority, franchises, licenses, permits, authorizations and approvals the
absence of which could not reasonably be expected to have a Material Adverse
Effect and (b) where applicable, is duly qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which the conduct or
nature of its business or the ownership, leasing or holding of its properties
makes such qualification or good standing necessary, except such jurisdictions
where the failure to be so qualified or in good standing, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
SECTION 5.2. Capital Stock and Share Capital of the Companies. (a) The
authorized (if applicable), issued and outstanding capital stock of each
Company as of the date hereof is as set forth in Schedule 5.2; all of such
outstanding shares of capital stock are duly authorized and validly issued,
fully paid and, to the extent applicable, nonassessable and are owned
beneficially by GC North America or Saturn, as the case may be, and of record
(if applicable) by GC North America and Saturn, as the case may be.
(b) Except as set forth on Schedule 5.2, (i) the Shares of each Company
have not been issued in violation of any purchase option, call, right of first
refusal, preemptive, subscription or similar rights under any provision of
applicable law, the organizational documents of such Company, or any contract,
agreement or instrument to which such Company is subject or by which it is
bound; (ii) there are no outstanding warrants, options, rights, agreements,
convertible or exchangeable securities or other commitments (other than this
Agreement) pursuant to which either Company, GC North America or Saturn, as the
case may be, is or may become obligated to issue, sell, purchase, return or
redeem any shares of capital stock or other securities of either Company.
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SECTION 5.3. Subsidiaries. Set forth in Schedule 5.3 is a list of all
the Subsidiaries of each Company. Except as set forth in Schedule 5.3, (a) each
Subsidiary of the Companies is a corporation duly organized, validly existing
and, where applicable, in good standing under the laws of its jurisdiction of
organization, has the corporate power and authority, and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it, to own, lease or otherwise hold its properties and
assets and to carry on its business as presently conducted, except such power,
authority, franchises, licenses, permits, authorization and approvals the
absence of which could not reasonably be expected to have a Material Adverse
Effect and (b) where applicable, each of such Subsidiaries is duly qualified
and in good standing to do business as a foreign corporation in each
jurisdiction in which the conduct or nature of its business or the ownership,
leasing or holding of its properties makes such qualification or good standing
necessary, except such jurisdictions where the failure to be so qualified or in
good standing, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. All the outstanding shares of
capital stock of such Subsidiaries are duly authorized and validly issued and
outstanding, fully paid and nonassessable and owned by the respective Company.
None of such outstanding shares of capital stock of such Subsidiaries have been
issued in violation of any purchase option, call, right of first refusal,
preemptive, subscription or similar rights under any provision of Applicable
Law, the respective organizational documents of such Subsidiaries, or any
contract, agreement or instrument to which such Subsidiary is subject or by
which it is bound. There are no outstanding warrants, options, rights,
agreements, convertible or exchangeable securities or other commitments
pursuant to which any of such Subsidiaries is or may become obligated to issue,
sell, purchase, return or redeem any shares of capital stock or other
securities of such Subsidiary.
SECTION 5.4. Financial Statements.
(a) Attached as Schedule 5.4 are the following financial statements: the
unaudited combined balance sheets of the Companies and their respective
Subsidiaries (collectively, the "IPC Entities" and each, an "IPC Entity") as at
September 30, 2000 and 2001 and the unaudited combined statements of operations
of the Predecessor Company of the IPC Entities for the twelve-month period
ended September 30, 1999 and the period from October 1, 1999 through June 14,
2000, and of the IPC Entities for the period from June 15, 2000 through
September 30, 2000 and the twelve month period ended September 30, 2001; the
aforementioned unaudited combined financial statements are hereinafter
collectively called the "Financial Statements." For purposes of this Agreement,
the "Reference Balance Sheet" shall mean the unaudited combined balance sheet
of the IPC Entities as at September 30, 2001.
(b) The Financial Statements have been prepared based upon the books and
records of the Predecessor Company and the IPC Entities and have been prepared
in accordance with the normal accounting practices as of and for the periods to
which they relate of the Predecessor Company and the IPC Entities as applicable.
(c) The Financial Statements have been prepared in accordance with GAAP
consistently applied, with the material exceptions thereto identified on
Schedule 5.4(c), throughout the periods covered thereby, and fairly present, in
all material respects, the financial condition and results of operations of the
Predecessor Company and the IPC Entities, as applicable, as of and for the
periods to which they relate. The IPC Entities have no direct or
11
indirect liabilities, losses or obligations of any nature, whether absolute,
accrued, contingent or otherwise, that would be required to be reflected on a
balance sheet or the notes thereto prepared in accordance with GAAP
consistently applied other than (i) liabilities reflected, accrued or reserved
for in the Financial Statements; (ii) liabilities disclosed in the Schedules to
this Agreement; (iii) liabilities that are not material incurred subsequent to
September 30, 2001 in the ordinary course of business and not inconsistent with
past practice; (iv) liabilities or performance obligations arising in the
ordinary course of business (and not as a result of a breach or default by the
Sellers or any IPC Entity) out of or under agreements, contracts, leases,
arrangements or commitments to which the Sellers or an IPC Entity was a party
as of September 30, 2001; or (v) liabilities under this Agreement.
(d) The Sellers shall cause a nationally recognized public accounting
firm to prepare audited combined balance sheets of the IPC Entities as at
September 30, 2000 and 2001 and audited combined statements of operations of
the Predecessor Company for the twelve month period ended September 30, 1999
and the period from October 1, 1999 through June 14, 2000, and of the IPC
Entities for the period from June 15, 2000 through September 30, 2000 and the
twelve month period ended September 30, 2001 (such audited financials,
including the notes thereto, the "Audited Financial Statements"). The Audited
Financial Statements shall (i) be prepared in accordance with GAAP throughout
the periods covered thereby, (ii) reflect the financial position of the
Predecessor Company and the IPC Entities, (iii) fairly present, in all material
respects, the financial condition and results of operations as at and for the
periods to which they relate and (iv) be consistent with the books and records
of the Predecessor Company and the IPC Entities.
SECTION 5.5. Absence of Certain Changes. Except as set forth in Schedule
5.5 or as otherwise disclosed or permitted pursuant to this Agreement, since
September 30, 2001, the business of the IPC Entities has been conducted in the
ordinary course in all material respects and in substantially the same manner
as previously conducted and none of the IPC Entities has suffered a Material
Adverse Effect. Except as set forth in Schedule 5.5 or as otherwise disclosed
or permitted pursuant to this Agreement, since September 30, 2001, none of the
IPC Entities has:
(i) authorized for issuance, issued, delivered, sold, pledged or
otherwise encumbered any of its share capital, any other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire any shares, voting securities or convertible securities or any other
securities or equity equivalents (including without limitation stock
appreciation rights);
(ii) granted to any IPC Employee any increase in, or additional,
compensation (including, without limitation, any base pay and incentive
compensation) or benefits, other than in the ordinary course of business
consistent with past practice or as may be required under existing IPC Plans
or Applicable Law, or entered into any employment or severance agreement or
arrangement;
(iii) made any change in any method of accounting or accounting practice
or policy other than in accordance with GAAP or made any material Tax
election or settled, or compromised, any material Tax liability;
12
(iv) made any voluntary prepayment of any indebtedness or, on a voluntary
basis, settled, compromised or waived any material claims or rights;
(v) amended its organizational documents;
(vi) redeemed or otherwise acquire any shares of its capital stock;
(vii) merged or consolidated with any other Person or acquire all or a
substantial portion of the assets or capital stock of any business or any
corporation, partnership, association or other business organization or
division thereof;
(viii) made or incurred any capital expenditure (other than as
contemplated under Schedule 5.5(viii)) which in the aggregate is in excess
of $250,000;
(ix) paid, loaned, dividended or advanced any amount to, or sold,
transferred or leased any of its assets to, or entered into any agreement or
arrangement with, any Seller or any of such Seller's Affiliates (other than
(A) the IPC Entities or (B) as set forth in Schedule 5.5(ix));
(x) adopted or amended any IPC Plan, except (A) as set forth on Schedule
5.5(x), (B) as required by Applicable Law or (C) as required by an existing
IPC Plan;
(xi) modified or amended in any material manner, terminated or permitted
the lapse of, any lease of, operating agreement or other agreement relating
to, any real property (except modifications or amendments associated with
renewals of existing leases in the ordinary course of business consistent
with past practice and except for the lapse or termination of any lease or
agreement in accordance with its terms);
(xii) permitted, allowed or subjected any of its assets to any mortgage,
lien, security interest, encumbrance, easement, covenant, right-of-way or
other similar restriction of any nature whatsoever, other than (A) in the
ordinary course of business consistent with past practice, (B) those
restrictions existing prior to the date of this Agreement or (C) as required
by Applicable Law;
(xiii) sold, leased, licensed or otherwise disposed of any of its assets,
other than in the ordinary course of business consistent with past practice;
(xiv) incurred or assumed any material liabilities or obligations, other
than in the ordinary course of business consistent with past practice, or
incurred or assumed any indebtedness for borrowed money or guarantee any
such liabilities, obligations or indebtedness;
(xv) suffered any material damage, destruction or casualty loss (whether
or not covered by insurance);
(xvi) except as set forth in Schedule 5.5(xvi), granted any Person a
power of attorney;
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(xvii) written down inventory or accounts receivable, except in the
ordinary course of business consistent with past practice; or
(xviii) agreed to do any of the foregoing.
SECTION 5.6. Litigation. Except as set forth in Schedule 5.6, there are
no actions or suits against any IPC Entity pending or, to the knowledge of the
Sellers, threatened, involving a claim against any IPC Entity in excess of
$500,000 or which could reasonably be expected to have a Material Adverse
Effect, nor are there any judgments, decrees or orders against or binding upon
any IPC Entity enjoining it in respect of, or which would prohibit, restrict,
or affect in any material respect the business of the IPC Entities as currently
conducted.
SECTION 5.7. Compliance with Applicable Laws. (a) Except as set forth in
Schedule 5.7(a), the business of the IPC Entities is being conducted in
compliance in all material respects with all Applicable Laws, regulations,
rules and orders of all Governmental Entities having jurisdiction over the
Companies. The IXnet Restructuring Actions shall be or shall have been
conducted in compliance in all material respects with Applicable Law.
(b) The Sellers, with respect to the IPC Entities, and/or the IPC
Entities, have duly obtained all material permits, concessions, grants,
franchises, licenses and other governmental authorizations and approvals
(collectively, "Permits") necessary for the conduct of the business of the IPC
Entities; each Permit is in full force and effect; except as set forth in
Schedule 5.7(b), there are no proceedings pending or, to the knowledge of GC,
Asia GC, GC North America and Saturn, threatened which may result in the
revocation, cancellation, suspension or modification thereof; and the
consummation of the transactions contemplated hereby will not result in any
such revocation, cancellation, suspension or modification of any such Permit.
SECTION 5.8. Material Contracts. Set forth in Schedule 5.8 is a list of
the following agreements in effect on the date of this Agreement (other than
the plans, arrangements and agreements set forth in Schedules 5.10 and 5.11):
(a) each commitment or agreement for the purchase of any materials, supplies or
services that involves an expenditure by any IPC Entity of more than $500,000;
(b) each agreement with customers that involves annual payments to any IPC
Entity of more than $250,000; (c) each agreement between any IPC Entity, on the
one hand, and GC, Asia GC, GC North America or Saturn, as the case may be, or
any of such Seller's Affiliates (other than the IPC Entities), on the other
hand, that involves payments of more than $100,000, other than agreements that
will terminate on or prior to the Closing or which are described in Section
7.11; and (d) each other commitment, agreement and instrument (including
mortgages, indentures and other agreements and instruments relating to
indebtedness for borrowed money) to which any IPC Entity is a party or by which
it or its properties are bound that has a term of more than one year and
requires annual payments by such IPC Entity of more than $250,000. Except as
set forth in Schedule 5.8, (x) no IPC Entity has received notice of any default
under any Material Contract, except for defaults which could not reasonably be
expected to have a Material Adverse Effect, and (y) to the knowledge of GC
North America and Saturn, as the case may be, each of the Material Contracts is
in full force and effect and (z) no consent of any Person is necessary in order
for each such Material Contract to continue in full force and effect in
accordance with its terms without penalty, acceleration or rights of
termination by
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reason of the consummation of the transactions contemplated herein. As used in
this Agreement, the term "Material Contract" means any commitment, agreement,
lease, order or instrument required to be set forth on Schedules 5.8 or 5.10.
SECTION 5.9. Intellectual Property. Schedule 5.9(a) sets forth all of
the Intellectual Property owned, held or used by the IPC Entities in connection
with the conduct of the business of the IPC Entities as currently conducted or
currently contemplated to be conducted ("IPC Intellectual Property") which is
issued by, registered or filed with, or has been submitted to, any Governmental
Entity, and all material licenses, sublicenses, consent-to-use agreements and
other agreements written or otherwise concerning IPC Intellectual Property to
which any of the IPC Entities is a party.
For the purpose of this Section 5.9, "Intellectual Property" shall mean
(i) all inventions (whether patentable or unpatentable and whether or not
reduced to practice) and improvements thereon, and all patents, patent
applications and patent disclosures, together with all reissues, continuations,
continuations-in-part, revisions, divisions, extensions and reexaminations
thereof, (ii) all trademarks, service marks, trade dress, logos, trade names,
domain names and corporate names, and other source indicators, together with
all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (iii) all copyrightable
works, all copyrights, and all applications, registrations and renewals in
connection therewith, (iv) all mask works and all applications, registrations
and renewals in connection therewith, (v) all trade secrets and confidential
business information (including but not limited to research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, methods, schematics, technology, flowcharts, block diagrams,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information and business and marketing plans and proposals),
(vi) all computer software, databases and related items, and (vii) all copies
and tangible embodiments of any of the foregoing (in whatever form or medium).
(b) Except as set forth in Schedule 5.9(b),
(i) the IPC Entities either (i) are the sole and exclusive owner of, with
all right, title and interest in and to all IPC Intellectual Property
(including but not limited to the IPC Intellectual Property set forth in
Schedule 5.9(a)) free of all material encumbrances, or (ii) have rights to
use all IPC Intellectual Property pursuant to license, sublicense or other
contract (and is not contractually obligated to pay any compensation or
grant any rights to any third party in respect thereof);
(ii) the IPC Entities have the right to require the applicant, inventor,
or author of any IPC Intellectual Property which constitutes an application
for registration, including, but not limited to, all patent applications,
trademark applications, service xxxx applications, copyright applications
and mask work applications, to transfer ownership including all right, title
and interest in and to (including any moral rights) to the IPC Entities of
the application and of the registration once it issues;
15
(iii) to the knowledge of the IPC Entities and Sellers, all IPC
Intellectual Property which are registrations, including but not limited to,
all issued patents, trademarks, service marks, copyrights and mask works,
are valid and subsisting and in full force and effect;
(iv) no claims have been asserted or, to the knowledge of Sellers and the
IPC Entities, threatened by any Person, nor are the Sellers or the IPC
Entities aware of any basis for any bona fide claims, challenging the
ownership, legality, use, validity, enforceability or effectiveness of any
of the IPC Intellectual Property;
(v) the Sellers and the IPC Entities know of no third party interfering
with, infringing upon, misappropriating, or using without authorization any
IPC Intellectual Property, and no knowledge of any employee or former
employee of the Sellers or the IPC Entities who has interfered with,
infringed upon, misappropriated, used without authorization, or otherwise
come into conflict with any IPC Intellectual Property;
(vi) to the knowledge of the Sellers and IPC Entities, the Sellers or the
IPC Entities have not infringed on, misappropriated, interfered with, or
otherwise come in conflict with the Intellectual Property of third parties
in the operation of the business of the IPC Entities as currently conducted,
and will not infringe on, misappropriate, interfere with, or otherwise come
in conflict with any Intellectual Property Right of any third party in the
operation of the business of the IPC Entities as currently contemplated to
be conducted;
(vii) the IPC Intellectual Property is all the Intellectual Property,
excluding patents, necessary for the ownership and unencumbered maintenance
and operations of the properties, assets, and business of the IPC Entities
as currently conducted or currently contemplated to be conducted in all
jurisdictions. To knowledge of the Sellers and IPC Entities, the patents
owned by IPC are all of the patents necessary for the ownership and
unencumbered maintenance and operations of the properties, assets, and
business of the IPC Entities as currently conducted or currently
contemplated to be conducted in all jurisdictions;
(viii) the transactions contemplated by this Agreement shall not alter,
impair, diminish or result in the loss of any rights or interests of the IPC
Entities in any IPC Intellectual Property, and all such IPC Intellectual
Property will be owned or available for use by the IPC Entities on identical
terms and conditions following the Closing;
(ix) the Sellers and the IPC Entities have taken all necessary action to
maintain and protect all IPC Intellectual Property; and
(x) the Seller and the IPC Entities have not entered into any contract to
indemnify any other Person for or against any charge of infringement or
misappropriation of, or interference or conflict with respect to, any of the
IPC Intellectual Property.
SECTION 5.10. Benefit Plans. (a) Schedule 5.10(a) lists each material
"employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") including, without
limitation,
16
multiemployer plans within the meaning of ERISA Section 3(37)) and all material
stock purchase, stock option, consulting, severance, employment,
change-in-control, termination, fringe benefit, bonus, incentive, deferred
compensation and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA (including any
funding mechanism therefore now in effect or required in the future as a result
of the transactions contemplated by this Agreement or otherwise), whether oral
or written, (x) under which any current or former director or any employee or
former employee of any IPC Entity, or any employee identified on Schedule
7.10(g) as an employee who is not on any IPC Entity payroll (such employees,
the "IPC Employees") has any present or future right to benefits, (y) sponsored
or maintained by any IPC Entity or (z) under which any IPC Entity is reasonably
expected to have any present or future liability ("Benefit Plans"). All such
plans, agreements, programs, policies and arrangements sponsored or maintained
by any IPC Entity shall be collectively referred to as the "IPC Plans". Copies
(or to the extent no such copy exists, an accurate description) of the Benefit
Plans and, with respect to the IPC Plans (other than the Foreign Benefit
Plans), to the extent applicable: (A) the most recent determination letter, if
applicable; (B) any summary plan description prepared by any IPC Entity to any
IPC Employee concerning the extent of the benefits provided under an IPC Plan;
and (C) with respect to each employee pension benefit plan, for the most recent
year (I) the Form 5500 and attached schedules, (II) audited financial
statements, and (III) actuarial valuation reports have been furnished or made
available to the Buyer. Notwithstanding anything set forth herein to the
contrary, however, with respect to any Benefit Plans maintained outside of the
United States (the "Foreign Benefit Plans"), the Sellers shall provide a list
of all such plans to the Buyer, and shall furnish or make available copies of
such Benefit Plans to the Buyer, no later than ten (10) business days after the
Closing Date.
(b) (i)Each IPC Plan has been established and administered in
compliance, in all material respects, with the terms of such plan and all
Applicable Laws, rules and regulations; (ii) each IPC Plan that is intended to
be qualified within the meaning of Code section 401 (a) is so qualified and has
received a favorable determination letter as to its qualification, and nothing
has occurred, whether by action or failure to act, that would reasonably be
expected to cause the loss of such qualification; and (iii) except as would not
be reasonably expected to result in a Material Adverse Effect, no event has
occurred and no condition exists that would subject any IPC Entity, either
directly or by reason of their affiliation with any member of their "Controlled
Group" (defined as any organization which is a member of a controlled group of
organizations within the meaning of Code sections 414(b), (c), (m) or (o)), to
any tax, fine, lien, penalty or other liability imposed by ERISA, the Code or
other applicable laws, rules and regulations. For each IPC Plan with respect to
which a Form 5500 has been filed, no "reportable event" (as such term is
defined in ERISA section 4043) that would reasonably be expected to result in
material liability to any IPC Entity, no "prohibited transaction" (as such term
is defined in ERISA section 406 and Code section 4975), nor any "accumulated
funding deficiency" (as such term is defined in ERISA section 302 and Code
section 412 (whether or not waived)) has occurred with respect to any such IPC
Plan. No IPC Plan provides retiree welfare benefits and no IPC Entity has any
obligations to provide any retiree welfare benefits, other than those mandated
by the Consolidated Omnibus Budget Reconciliation Act of 1995 or other
Applicable Law.
(c) There are no IPC Plans (that are not multiemployer plans) which are
subject to Title IV of ERISA. With respect to any multiemployer plan (within
the meaning of ERISA
17
section 4001(a)(3)) to which any IPC Entity or any member of their Controlled
Group has any liability or contributes (or has at any time contributed or had
an obligation to contribute): (i) no IPC Entity or any member of their
Controlled Group has incurred any withdrawal liability under Title IV of ERISA
which remains unsatisfied, or, except as would not be reasonably expected to
result in a Material Adverse Effect, would reasonably be expected to be subject
to such liability, including by way of indemnity, if, as of the Closing Date,
any IPC Entity, Xxxxxxxxxxx Electric Company, Inc. (NJ), Xxxxxxxxxxx Electric
Company, Inc. (NY) or any member of their Controlled Group were to engage in a
complete withdrawal (as defined in ERISA section 4203) or partial withdrawal
(as defined in ERISA section 4205) from any such multiemployer plan; and (ii)
no such multiemployer plan is in reorganization or insolvent (as those terms
are defined in ERISA sections 4241 and 4245, respectively).
(d) Except as set forth in Schedule 5.10(d), with respect to any IPC
Plan, (i) no actions, suits or claims (other than routine claims for benefits
in the ordinary course) are pending or, to the knowledge of Sellers,
threatened, (ii) no facts or circumstances exist that would be reasonably
expected to give rise to any such actions, suits or claims, and (iii) no
administrative investigation, audit or other administrative proceeding by the
Department of Labor, the Pension Benefit Guaranty Corporation, the Internal
Revenue Service or any other governmental agency is pending, in progress or, to
the knowledge of Sellers, threatened.
(e) Except as set forth in Schedule 5.10(e), no IPC Plan exists that, as
a result of the transaction contemplated by this Agreement, could reasonably be
expected to result in the payment to any IPC Employee or director of any IPC
Entity of any money or other property or could result in the acceleration or
provision of any other rights or benefits to any IPC Employee or director of
any IPC Entity.
(f) The level of benefits, in the aggregate, provided to the applicable
IPC Employees under the applicable Foreign Benefit Plans impose no greater
obligation in any material respect on the IPC Entities, taken as a whole, than
the level of benefits, in the aggregate, provided to similarly situated IPC
Employees in the United States under the applicable Benefit Plans, other than
as may be required by Applicable Law.
(g) Each IPC Entity (i) is in compliance in all material respects with
all applicable federal, state and local laws, rules and regulations (domestic
and foreign) respecting employment, employment practices, labor, terms and
conditions of employment and wages and hours, in each case, with respect to IPC
Employees; and, (ii) except as would not, individually or in the aggregate, be
reasonably expected to result in a material liability to any IPC Entity: (A)
has withheld all amounts required by law or by agreement to be withheld from
wages, salaries and other payments to IPC Employees; (B) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any of
the foregoing; and (C) is not liable for any payment to any trust or other fund
or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits for IPC
Employees. Each individual who performs services for any IPC Entity and who is
a common law employee of such entity is properly classified as such for all
purposes, including, but not limited to, participation in IPC Plans.
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(h) None of the IPC Entities will incur any material liability in
respect of the GC layoffs that the IPC Entities implemented in August of 2001
in excess of amounts required by Applicable Law or as otherwise reserved on the
Financial Statements.
SECTION 5.11. Taxes. Except as set forth in Schedule 5.11, (a) all
material Tax Returns required to be filed by or with respect to each of the IPC
Entities have been filed. All such Tax Returns were correct and complete in all
material respects. All material Taxes due and required to be paid by or with
respect to each IPC Entity have been paid other than those being contested in
good faith. None of the IPC Entities currently is the beneficiary of any
extension of time within which to file any material Tax Returns.
(b) None of the IPC Entities are required to include in income any
adjustment pursuant to Section 481(a) or 482 of the Code or any analogous
provision of state, local or foreign law as a result of any prior audit,
proceeding, or agreement with any Taxing Authority (nor has any Taxing
Authority proposed in writing any such adjustment). All Tax deficiencies that
have been claimed, proposed, or assessed in writing against any of the IPC
Entities have been fully paid or finally settled, or are being contested in
good faith by appropriate proceedings and are disclosed on Schedule 5.1 1(b).
(c) IPC, Inc. joined the GC North America affiliated group on January 1,
2001. No IPC Entity was a member of an affiliated group within the meaning of
section 1504 of the Code (or any analogous provision of state, local or foreign
income tax law) with Seller or any Affiliate of Seller prior to January 1,
2001. The Sellers have made available to Buyer correct and complete copies of
(i) the consolidated U.S. federal income Tax Returns for the GC North America
consolidated group for the tax years 1999 and 2000; (ii) all other U.S. federal
income Tax Returns with respect to the IPC Entities for the tax years 1998,1999
and 2000, and (iii) to GC's knowledge, all other material Tax Returns with
respect to each of the IPC Entities for the tax years 1998, 1999 and 2000 ((i),
(ii) and (iii) collectively, the "Provided Tax Returns"). The Sellers have made
available to Buyer correct and complete copies of all audit and examination
reports, letter rulings and technical advice memoranda relating to the Provided
Tax Returns (or the Taxes due on such Tax Returns), and any closing agreements
relating to the Provided Tax Returns (or the Taxes due on such Tax Returns), in
each case which could materially affect the liability for Taxes of any of the
IPC Entities after the Closing.
(d) Except for IPC Trading Systems, each IPC Entity is classified as a
corporation within the meaning of Section 7701(a)(3) of the Code. No Taxing
Authority in a jurisdiction where any of the IPC Entities, IXnet HK or AGC
Singapore does not file Tax Returns has made, in writing, any claim, assertion
or threat that such Person is or may be subject to taxation by such
jurisdiction.
(e) GC North America is not a "foreign person" within the meaning of
Section 1445 of the Code. None of the IPC Entities (A) has been a member of an
affiliated group filing a consolidated, combined, or unitary federal, state,
local or foreign income Tax Return or VAT (as defined below) Return (other than
a group the common parent of which was any Seller) or (B) has any material
liability for the Taxes of any Person (i) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law (other than
Taxes of the Sellers and any member of its consolidated group)) or (ii) as a
transferee or successor, by contract, or
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otherwise. None of the material Assets nor the assets owned by any of the IPC
Entities is: (i) subject to a tax benefit transfer lease executed in accordance
with Section 168(f)(8) of the Internal Revenue Code of 1954, as amended or (ii)
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(f) Each of the IPC Entities that is organized under the laws of, or
doing business in, any country that has a Value Added Tax ("VAT") is duly
registered for VAT and has materially maintained all requisite records for that
purpose.
SECTION 5.12. Environmental Matters. (a) Except as would not have a
Material Adverse Effect:
(i) except as set forth in Schedule 5.12(a)(i), the IPC Entities and the
Assets are and since their acquisition by Sellers have been, and to the
knowledge of the Sellers at all times prior thereto have been, operated in
compliance with all applicable Environmental Laws, including all
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in all
applicable Environmental Laws.
(ii) except as set forth in Schedule 5.12(a)(ii), the IPC Entities and
the Assets (1) have obtained, and are in compliance with, all permits,
licenses, authorizations, registrations and other governmental consents
required by applicable Environmental Laws ("Environmental Permits") to
conduct current operations, and (2) have timely made all filings required
for the issuance or renewal of such Environmental Permits.
(iii) except as set forth in Schedule 5.12(a)(iii), to the knowledge of
Sellers, there are no events or conditions, nor Hazardous Substances at or
emanating from the Assets or any other facilities or real property owned,
leased or operated by any of the IPC Entities or any predecessor of any of
the IPC Entities, in either case under circumstances that would reasonably
be expected to result in liability to any of the IPC Entities arising out of
any Environmental Law applicable to any of the IPC Entities or to third
parties with respect to whom the IPC Entities have contractual obligations.
(iv) except as set forth in Schedule 5.12(a)(iv), none of the IPC
Entities has received notice of any claims (including, without limitation,
notices from any Governmental Entity that any of the IPC Entities are or may
be a potentially responsible person or otherwise liable in connection with
any site containing Hazardous Substances or other location allegedly used
for the disposal of Hazardous Substances), civil, criminal or administrative
actions, suits, hearings, investigations, inquiries or proceedings pending
or threatened against any of the IPC Entities or relating to the Assets that
are based on any Environmental Law, or, to the extent in Sellers' possession
or control, on the failure to have, or to comply with, any required
Environmental Permits.
(b) The Sellers have made available to Buyer true and complete copies,
to the extent in Sellers' possession or control, of any material reports,
studies, assessments, or similar documents possessed or initiated by Sellers or
any of the IPC Entities generated within the past five years pertaining to
material issues involving Hazardous Substances at, on, under, within or
20
migrating to or from the Assets or any facility or real property owned, leased
or operated by any of the IPC Entities or any predecessor of any of the IPC
Entities, or concerning compliance by any of the IPC Entities or, to the
knowledge of the Sellers, any other Person for whose conduct the IPC Entities
are or may be held responsible, or the Assets with any applicable Environmental
Law.
(c) The representations and warranties in this Section 5.12 shall be
deemed the only representations and warranties in this Agreement with respect
to matters relating to Environmental Laws or Hazardous Substances.
(d) As used herein:
(i) the term "Environmental Law" means any federal, state or local law,
statute, ordinance, rule or regulation including common law, relating to
pollution, contamination, protection of the environment, sanitation, and any
matters relating to emissions, discharges, disseminations, releases or
threatened releases, of Hazardous Substances into the air (indoor and
outdoor), surface water, groundwater, soil, land surface or subsurface,
buildings, facilities, real or personal property or fixtures or otherwise
arising out of, relating to, or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, handling,
release or threatened release of Hazardous Substances and all applicable
judicial and administrative decisions, orders and decrees relating thereto.
(ii) the term "Hazardous Substances" means any pollutants, contaminants,
toxic or hazardous or extremely hazardous substances, materials, wastes,
constituents, compounds, chemicals (including, without limitation, asbestos
and asbestos-containing materials, building construction materials and
debris, polychlorinated biphenyls ("PCBs") and PCB-containing equipment)
that are regulated due to concerns about impacts on human health or the
environment arising out of the exposure to or the presence of any of them.
SECTION 5.13. Insurance. The IPC Entities maintain in force insurance
policies and bonds in such amounts and against such liabilities and hazards as
are consistent with industry practice. A complete list of all material
insurance policies is set forth on Schedule 5.13. Except as set forth on
Schedule 5.13, the IPC Entities are not liable, nor will they become liable,
for any retroactive premium adjustment not reflected in the Reference Balance
Sheet. All policies are valid and enforceable and in full force and effect
(except as the enforceability of any such policy may be limited by the
insurer's bankruptcy, insolvency, moratorium and other similar laws relating to
or affecting creditors' rights generally or by general equitable principles),
all premiums owing in respect thereof have been timely paid, and the Sellers or
the IPC Entities have not received any notice of premium increase or
cancellation with respect to any of its insurance policies or bonds. Except for
any matters which could not reasonably be expected to have a Material Adverse
Effect and except as set forth on Schedule 5.13, there are no claims pending as
to which the insurer has denied liability or is reserving its rights, and all
claims have been timely and properly filed. Within the last three years, the
IPC Entities have not been refused any insurance coverage sought or applied
for, and the Sellers have no reason to believe that the existing insurance
coverage with respect to the IPC Entities cannot be renewed as and
21
when the same shall expire, upon terms and conditions standard in the market at
the time renewal is sought.
SECTION 5.14. Major Customers and Suppliers. (a) Schedule 5.14(a) sets
forth a list of the ten largest customers of each of (i) the trading systems
division and (ii) the ITS division of the IPC Entities for each of the fiscal
years ended December 31, 1999 and 2000 and the nine months ended September 30,
2001 (determined on the basis of the total dollar amount of net revenues)
showing the dollar amount of net revenues from each such customer during each
such year. To the knowledge of the Sellers, no customer of the IPC Entities
identified pursuant to the preceding sentence has advised the Sellers in
writing prior to or as of the date of this Agreement that it (A) is terminating
or considering terminating substantially all of its current business with the
IPC Entities or (B) is planning to reduce its contracted aggregate future
spending with the IPC Entities in any material manner.
(b) Schedule 5.14(b) sets forth a list of the ten largest suppliers of
the IPC Entities in terms of dollar volume during the fiscal years ended
December 31, 1999 and 2000 and the nine months ended September 30, 2001.
SECTION 5.15. Labor Matters. Except as set forth on Schedule 5.15, no
IPC Entity is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization. Except as set forth on Schedule 5.15, no IPC Entity is the
subject of any proceeding asserting that it has committed a materially unfair
labor practice or seeking to compel it to bargain with any labor organization
as to wages or conditions of employment nor is such unfair labor practice
threatened or otherwise affecting any IPC Entity. There is not any strike, work
stoppage, material dispute, lockout or other material labor controversy
involving any IPC Entity pending or to the knowledge of the Sellers,
threatened. No representation question exists or has been raised respecting any
of the IPC Employees within the past eighteen months, nor to the knowledge of
the Sellers are there any campaigns being conducted to solicit cards from IPC
employees to authorize representation by any labor organization. Except as set
forth in Schedule 5.15, no IPC Entity has closed any plant or facility,
effectuated any layoffs of employees or implemented any early retirement,
separation or window program within the past three years, nor has any IPC
Entity planned or announced any such action or program for the future. No IPC
Entity shall, at any time within the 90-day period prior to the Closing Date,
effectuate a "plant closing" or "mass layoff", as those terms are defined in
the Worker Adjustment and Retraining Notification Act of 1988, as amended, or
any state law, affecting in whole of in part any site of employment, facility,
operating unit or employee without complying with the notice requirements of
WARN. Each IPC Entity is in compliance with its obligations pursuant to WARN,
and all other material notification and bargaining obligations arising under
any collective bargaining agreement, statute or otherwise.
SECTION 5.16. Product Warranty
(a) Schedule 5.16 sets forth in reasonable detail an accurate summary of
all product warranty claims in excess of $150,000 made by customers of the IPC
Entities from January 1, 2001 to the date hereof and also sets forth a brief
description of each express warranty, service or repair policy applicable to
the products sold by the IPC Entities.
22
SECTION 5.17. Fairness Opinions. (a) GC shall have received a fairness
opinion from X.X. Xxxxxx Securities Inc. addressed to GC stating that the IPC
Inc. Shares Purchase Price is fair to GC from a financial point of view.
(b) Asia GC shall have received a fairness opinion from UBS Warburg LLC
addressed to Asia GC stating that each of the IPC Trading Systems Shares
Purchase Price, the IXnet HK Assets Purchase Price, and the AGC Singapore
Assets Purchase Price, respectively, are fair to Asia GC from a financial point
of view.
SECTION 5.18. Certain IPC Entity Guarantees and Obligations. No IPC
Entity has received notice of any default under any IPC Contract Guarantee or
IPC Guaranteed Debt and (ii) to the knowledge of the Sellers, each of the
primary obligations to which an IPC Contract Guarantee or an IPC Guaranteed
Debt relates is in full force and effect and there is no default under any IPC
Contract Guarantee or any IPC Guaranteed Debt.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to each Seller as follows:
SECTION 6.1. Organization and Existence. The Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate power required to consummate the transactions
contemplated hereby.
SECTION 6.2. Authorization. The execution, delivery and performance by
the Buyer of this Agreement and the consummation by the Buyer of the
transactions contemplated hereby are within the Buyer's corporate powers and
have been duly authorized by all necessary corporate action on the part of the
Buyer. This Agreement constitutes, and each other agreement or instrument
executed and delivered or to be executed and delivered by the Buyer pursuant to
this Agreement will, upon such execution and delivery, constitute, a legal,
valid and binding obligation of the Buyer, enforceable against the Buyer in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
SECTION 6.3. Consent and Filings. Except as set forth on Schedule 6.3 or
as otherwise referred to or contemplated by this Agreement or as required under
the HSR Act, no Consent of, or Filing with, any Governmental Entity which has
not been obtained or made is required for or in connection with the execution
and delivery of this Agreement by the Buyer, and the consummation by the Buyer
of the transactions contemplated hereby, other than such Consents and Filings
the failure of which to obtain or make would not impair or delay the ability of
the Buyer to effect the Closing.
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SECTION 6.4. Noncontravention. The execution, delivery and performance
of this Agreement by the Buyer does not, and the consummation by the Buyer of
the transactions contemplated hereby will not, (i) violate any provision of the
Certificate of Incorporation or By-Laws of the Buyer, or (ii) subject to
obtaining or making the Consents and/or the Filings, as the case may be,
referred to in Section 6.3, violate in any material respect any provision of,
or result in the termination or acceleration of, or entitle any party to
accelerate any material obligation or any indebtedness for borrowed money
under, any mortgage, lease, franchise, license, permit, agreement, instrument,
law, order, arbitration award, judgment or decree to which the Buyer is a party
or by which the Buyer is bound.
SECTION 6.5. Litigation. There are no actions or suits against the Buyer
pending, or to the knowledge of the Buyer, threatened which seek to, and the
Buyer is not subject to any judgments, decrees or orders which, individually or
in the aggregate, would, enjoin or rescind the transactions contemplated by
this Agreement or otherwise prevent the Buyer from complying with the terms and
provisions of this Agreement.
SECTION 6.6. Brokers and Intermediaries. The Buyer has not employed any
broker, finder, advisor or intermediary (other than any Affiliate of the Buyer)
in connection with the transactions contemplated by this Agreement which would
be entitled to a broker's, finder's or similar fee or commission in connection
therewith or upon the consummation thereof.
SECTION 6.7. Investment Intent. The Buyer is acquiring the Shares for
its own account for investment, without a view to resale or distribution
thereof in violation of U.S. Federal or state securities laws and with no
present intention of distributing or reselling any part thereof. The Buyer will
not so distribute or resell any of the Shares in violation of any such law.
SECTION 6.8. Investigation. The Buyer is knowledgeable about the
industry in which the IPC Entities operate and is experienced in the
acquisition and management of businesses. The Buyer has been afforded
reasonable access to the books, records, facilities and personnel of the IPC
Entities for purposes of conducting a due diligence investigation of the
Companies and their respective Subsidiaries. The Buyer has conducted a
reasonable due diligence investigation of the IPC Entities and has received
answers to substantially all inquiries it has made respecting the IPC Entities
and their business.
SECTION 6.9. Funding. The Buyer has obtained commitment letters (the
"Commitment Letters") from reputable financial institutions confirming their
commitments, subject to the respective terms and conditions thereof, to lend or
provide amounts, together with the equity to be contributed by the Buyer,
sufficient to pay the Purchase Price and all related fees and expenses and
effect all other transactions contemplated hereby. True and complete copies of
the Commitment Letters are attached hereto as Exhibit C.
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ARTICLE VII
COVENANTS
SECTION 7.1. Conduct of the Business. From the date hereof until the
Closing Date, except as provided in Section 7.8 or as otherwise herein
contemplated, disclosed or permitted, GC and GC North America shall cause IPC
Inc. and its Subsidiaries and GC, Asia GC and Saturn shall cause IPC Trading
Systems and its Subsidiaries (if any) to (a) operate the businesses of the IPC
Entities in the ordinary course consistent with past practice and to make
reasonable best efforts to preserve, in all material respects, their
relationships with customers, suppliers and others with whom such IPC Entities
deal; (b) make reasonable best efforts to keep available to the Buyer the
opportunity to retain the services of the present employees of the IPC
Entities; and (c) except as set forth in Schedule 7.1, not permit any
applicable IPC Entity to take any of the actions described in clauses (i)
through (xvi) of Section 5.5 without the prior written consent of the Buyer
(such consent not to be unreasonably withheld) if the taking any of such
actions would have been a breach of Section 5.5 had they been taken after
September 30, 2001 and prior to the date of this Agreement. Notwithstanding
anything to the contrary in this Agreement, the Sellers shall have the right,
without the prior consent of the Buyer, to take or cause IPC Inc. and its
Subsidiaries to take, any actions necessary or desirable (such actions, the
"IXnet Restructuring Actions"), including without limitation any of the actions
described in clauses (i) through (xviii) of Section 5.5, to remove Global
Crossing USA Inc., Global Crossing Holdings USA Inc., IXnet, Inc. and any of
their direct or indirect subsidiaries, as subsidiaries of IPC Inc.
SECTION 7.2. Access to Information. (a) From the date of this Agreement
until the Closing Date, the Sellers will, to the extent permitted by Applicable
Law, give the Buyer and its authorized representatives reasonable access to the
offices, properties, books and records of the IPC Entities during Normal
Business Hours and upon reasonable prior notice, provided that such access
shall not interfere with normal operations of the IPC Entities, and will, to
the extent permitted by Applicable Law, furnish to the Buyer and its authorized
representatives such financial and operating data and other information as the
Buyer may reasonably request.
(b) Any information regarding the IPC Entities heretofore obtained from
or on behalf of any Seller or any IPC Entity by the Buyer or hereafter obtained
from or on behalf of any Seller or any IPC Entity by the Buyer shall be subject
to, or deemed subject to, the terms of the Confidentiality Agreement and such
information shall be held by the Buyer in accordance with the terms of such
Confidentiality Agreement.
SECTION 7.3. Regulatory Filings; Cooperation. (a) In addition to and
without limiting the Buyer's covenants contained in this Article VII, the Buyer
will (i) take promptly all actions necessary to make the Filings required of
the Buyer and its Affiliates under the HSR Act (including without limitation
causing the initial Filing under the HSR Act to be made no later than 2
Business Days after the date of the Agreement), (ii) comply at the earliest
practicable date with any request for additional information received by Buyer
or its Affiliates from the Federal Trade Commission or the Antitrust Division
of the Department of Justice pursuant to the HSR Act and (iii) cooperate with
the Sellers in connection with the Sellers' filing under the HSR Act
25
and in connection with resolving any investigation or other regulatory inquiry
concerning the transactions contemplated by this Agreement commenced by either
the Federal Trade Commission or the Antitrust Division of the Department of
Justice or state attorneys general.
(b) In addition to and not in limitation of the Sellers' covenants
contained in Article VII, the Sellers will (i) take promptly all actions
necessary to make the filings required of the Sellers or the Affiliates under
the HSR Act (including without limitation causing the initial Filing under the
HSR Act to be made no later than 2 Business Days after the date of the
Agreement), (ii) comply at the earliest practicable date with any request for
additional information received by Seller or its Affiliates from the Federal
Trade Commission or the Antitrust Division of the Department of Justice
pursuant to the HSR Act and (iii) cooperate with the Buyer in connection with
the Buyer's filing under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated by this
Agreement commenced by either the Federal Trade Commission or the Antitrust
Division of the Department of Justice or state attorneys general.
(c) (i) The Buyer and each of the Sellers will cooperate with each other
and use their respective reasonable best efforts to facilitate the completion
of the transactions contemplated hereunder, including the obtaining of all
material Consents and Filings and the furnishing to each other such necessary
information and reasonable assistance as may be reasonably requested in
connection with the preparation of necessary filings or submissions to any
Governmental Entity in connection with the transactions contemplated hereby
(including, without limitation, any filing required under the Connecticut
Transfer Act).
(ii) The Buyer shall use its reasonable best efforts to obtain the
financing contemplated in the Commitment Letters and shall use its
reasonable best efforts to comply with its obligations under the Commitment
Letters and cause the conditions precedent under its control contained
therein to be satisfied.
(d) Nothing contained in this Agreement shall require, or be construed
to require, the Buyer, in connection with the receipt of any regulatory
approval, to proffer to, or agree to (i) sell, hold separate, discontinue or
limit, before or after the Closing Date, any assets, businesses, or interest in
any assets or businesses of the Buyer, any Affiliates of the Buyer or the IPC
Entities (or to consent to any sale, or agreement to sell, or discontinuance or
limitation by the Buyer, any Affiliates of the Buyer or the IPC Entities of any
of their assets or businesses) or (ii) any conditions relating to, or changes
or restrictions in, the operations of any such assets or businesses which, in
either case would, in the reasonable judgment of the Buyer, materially
adversely impact the economic or business benefits to the Buyer of the
transactions contemplated by this Agreement.
(e) The Sellers and their respective Affiliates shall, and shall cause
their officers, employees, agents, auditors and representatives to, cooperate
with the Buyer to ensure the orderly transition of control and transfer of the
IPC Entities and the Assets to the Buyer. The Sellers shall cooperate with and
assist the Buyer, including, without limitation, furnishing or causing to be
furnished any information relating to the Sellers, the IPC Entities and the
Assets, as is necessary for the Buyer's financing arrangements including,
without limitation, refinancing the Bridge Loans (as defined in the Commitment
Letters), financial reporting, preparing or
26
causing to be prepared any "comfort letters" customary in scope and substance
for letters delivered by independent public accountants in connection with
similar financings and preparing or causing to be prepared and filing any other
information, documents or assistance as may be reasonably requested by the
Buyer.
SECTION 7.4. Post-Closing Books and Records. The Buyer and each of the
Sellers shall use reasonable best efforts to cooperate with each other, and
shall cause their respective officers, employees, agents, auditors and
representatives to cooperate with each other, for a period of not less than 360
days after the Closing Date to ensure the orderly transition of the Companies
from the applicable Seller to the Buyer and to minimize any disruption to the
respective businesses of the Sellers, the Buyer, and the IPC Entities that
might result from the transition contemplated hereby. Subject to Section 9.4,
after the Closing, upon reasonable written notice, the Buyer and the Sellers
shall furnish or cause to be furnished to each other and their employees,
counsel, auditors and representatives access, during Normal Business Hours,
such information and assistance relating to the IPC Entities as is reasonably
necessary for financial reporting and accounting matters, the preparation and
filing of any Tax Returns, reports or forms or the defense of any Tax claim or
assessment. Neither party shall be required by this Section 7.4 to take any
action that would unreasonably interfere with the conduct of its business or
unreasonably disrupt its normal operations.
SECTION 7.5. Expenses. Whether or not the Closing takes place, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby, except as otherwise provided herein, shall be paid by the
party incurring such costs and expenses; provided, that any filing costs in
connection with the HSR Act shall be paid equally by the Buyer and GC and any
costs incurred in connection with preparation of the Audited Financial
Statements shall be borne by the IPC Entities. Except as provided in the
immediately preceding sentence, no IPC Entity shall be liable for the payment
of any cost or expense incurred in connection with this Agreement and the
transactions contemplated hereby.
SECTION 7.6. [INTENTIONALLY OMITTED]
SECTION 7.7. Assumption of Litigation. The Buyer agrees from and after
the Closing Date to assume the defense of claims, proceedings and other
litigation set forth on Schedule 5.6 and agrees to indemnify the Sellers and
their respective Affiliates (other than the IPC Entities) in respect of any
liability, claim, damage or expense (including reasonable attorney's fees) of
any kind whatsoever which such Sellers or any such Sellers' Affiliates may
incur arising out of or relating to any such litigation or claim.
SECTION 7.8. Cash Balance: Intercompany Accounts. (a) At the Closing, GC
North America and Saturn shall endeavor to cause the combined Cash Balance to
be held at Closing by the IPC Entities to be equal to zero (the "Target Cash
Amount"). It is understood and agreed that in achieving the Target Cash Amount,
notwithstanding anything to the contrary contained in this Agreement (including
Section 7.1), the Sellers, directly or indirectly through their respective
Subsidiaries, may cause the Cash Balance of the IPC Entities to be distributed
and/or dividended to the Sellers or their respective other Affiliates at or
prior to the Closing, whether or not in the ordinary course of business.
27
(b) As promptly as practicable following the Closing Date (but not later
than 45 days after the Closing Date), the Buyer shall:
(i) prepare a reasonably detailed record of the transactions made
pursuant to Section 7.8(a) (the "Preliminary Transaction Record"); and
(ii) deliver to the Sellers a certificate executed by the Buyer setting
forth or attaching the Preliminary Transaction Record and the Buyers'
calculation of the Cash Balance of the Companies and their respective
Subsidiaries as of the Closing Date derived therefrom ("Preliminary Cash
Balance").
(c) The Sellers shall have 10 business days following receipt of the
certificate referenced in Section 7.8(b) (the "Cash Balance Review Period") in
which to review the Preliminary Transaction Record and Preliminary Cash
Balance. In the event the Sellers do not object to the contents of the
Preliminary Transaction Record and the Preliminary Cash Balance prior to
expiration of the Cash Balance Review Period, such Preliminary Cash Balance
shall become the "Closing Date Cash Balance" for the purposes of determining
the adjustment (if any) specified in Section 7.8(e) of this Agreement. In the
event the Sellers object to the Preliminary Transaction Record and Preliminary
Cash Balance, the Sellers shall send a written notice to the Buyer specifying
its objections in reasonable detail and the basis therefore, prior to
expiration of the Cash Balance Review Period ("Cash Balance Objection Notice").
During the 10 business day period following the Buyer's receipt of the Cash
Balance Objection Notice (the "Cash Balance Resolution Period"). Buyer and the
Sellers shall attempt to resolve the differences specified in the Cash Balance
Objection Notice and any resolution by them (evidenced in writing) of such
differences shall be final, binding and conclusive.
(d) If at the conclusion of the Cash Balance Resolution Period any
transaction or amounts remain in dispute, then the transaction and amounts so
in dispute (the "Cash Balance Disputed Items") shall be submitted to a firm of
independent public accountants (the "Cash Balance Arbitrator") mutually
selected by the Sellers and Buyer within 30 days after the expiration of the
Cash Balance Resolution Period. The Cash Balance Arbitrator shall determine and
resolve, by independent review, the Cash Balance Disputed Items. The Cash
Balance Arbitrator's determination shall be made within 30 business days of its
selection, shall be set forth in a written statement delivered to the Sellers
and Buyer and shall be final, binding and conclusive on the parties hereto. The
Preliminary Transaction Record and the Preliminary Cash Balance as of the
Closing Date shall be adjusted to reflect all agreed upon changes and the
resolution of all Cash Balance Disputed Items by the Cash Balance Arbitrator.
The Preliminary Cash Balance, as so adjusted, shall be the "Closing Date Cash
Balance" for the purposes of determining the adjustment (if any) specified in
Section 7.8(e). All fees and expenses of the Cash Balance Arbitrator shall be
paid one-half by Buyer and one-half by the Sellers.
(e) Promptly (but not later than five days) after the determination of
the Closing Date Cash Balance pursuant to Section 7.8(d):
(i) if the Closing Date Cash Balance exceeds the Target Cash Amount as of
the Closing Date, Buyer shall pay to the Sellers, by wire transfer of
immediately available funds to such bank accounts of the Sellers as the
Sellers shall designate in writing to
28
Buyer, an aggregate amount equal to the excess of the Closing Date Cash
Balance over the Target Cash Amount plus interest on such excess from the
Closing Date to the date of payment thereof at the Agreed Rate; or
(ii) if the Closing Date Cash Balance is less than the Target Cash
Amount, the Sellers shall pay to Buyer, by wire transfer of immediately
available funds to such bank account of Buyer as Buyer shall designate in
writing to the Sellers, an aggregate amount equal to the absolute value of
the Closing Date Cash Balance plus interest on such amount from the Closing
Date to the date of payment thereof at the Agreed Rate.
The Sellers shall endeavor, on or prior to the Closing Date, to pay,
settle or cancel all intercompany payables, receivables, accounts, indebtedness
and other liabilities between the IPC Entities, on the one hand, and the
Sellers and their respective other Affiliates, on the other hand, (i) by
offsetting such liabilities or payables owing by the IPC Entities, on the one
hand, and any of the Sellers or their respective other Affiliates, on the other
hand, against each other, (ii) by capitalizing such liabilities or payables,
(iii) by means of a capital contribution by the Sellers to the relevant Company
or (iv) through the dividend of receivables to the Sellers or their respective
other Affiliates whether or not in the ordinary course of business. No
adjustment shall be made to the Purchase Price as a result of any such payment,
cancellation or settlement.
SECTION 7.9. Use of Names and Logos.
(a) Except as set forth in Schedule 7.9(a) and specifically contemplated
in this Section 7.9, it is expressly agreed that the Buyer is not purchasing or
acquiring any right, title or interest in: (i) the names of the Sellers or
their respective Affiliates (other than the IPC Entities); (ii) any trade
names, trademarks, trademark applications, logos, service marks, domain names
or other source indicators using the words "Global Crossing," "Asia Global
Crossing" or any part or variation thereof, including the names "GX" and "AX";
or (iii) any trade name, trademark, logo or domain name confusingly similar
thereto (collectively, the "Sellers' Trademarks"). Notwithstanding anything to
the contrary contained in this Agreement (except as provided in the previous
sentence), it is expressly agreed that the Buyer is purchasing and acquiring
all IPC Intellectual Property and any other Intellectual Property used in
connection with the conduct of the business of the IPC Entities as currently
conducted or currently proposed to be conducted.
(b) As promptly as practicable, but in no event later than 90 days
following the Closing Date, the Buyer shall, and shall cause each IPC Entity
to, remove, strike over or otherwise eliminate all the Sellers' Trademarks from
all materials, including any business cards, schedules, stationery, displays,
signs, promotional materials, forms and other similar materials, if such
materials are distributed or made available or proposed to be distributed or
made available to third parties; provided that (i) the Buyer and each IPC
Entity shall cease using invoices, stationery and business cards containing the
Sellers' Trademarks no later than 60 days after the Closing Date and (ii)
nothing herein contained shall require or be construed to require the Buyer or
any IPC Entity to cause customers of the Buyer and the IPC Entities to take any
action with respect to any such materials in the possession of any such
customers. Notwithstanding anything to the contrary contained in this
Agreement, (i) for 180 days following the Closing Date, the Buyer and the IPC
Entities shall be permitted to manufacture any of the products of the IPC
Entities bearing, containing or otherwise displaying any of the Sellers'
Trademarks and (ii) the
29
Buyer and the IPC Entities shall not be prohibited from selling, disposing or
otherwise transferring any of the products of the IPC Entities by virtue of the
fact that such products bear, contain or otherwise display any of the Sellers'
Trademarks. Other than set forth in this Section 7.9(b), the Buyer agrees that
none of it, the IPC Entities or any of their Affiliates shall make any use of
the Sellers' Trademarks from and after the expiration of 90 days after the
Closing Date.
(c) As promptly as practicable, but in no event later than 90 days
following the Closing Date, the Sellers shall, and shall cause each of their
respective Affiliates to, remove, strike over or otherwise eliminate any trade
names, trademarks, trademark applications, logos, service marks, domain names
or other source indicators using the words "IPC" or "IPC Trading Systems" or
any trade name, trademark, logo or domain name confusingly similar thereto
(collectively the "IPC Trademarks"), from all materials constituting their
properties and assets, including any business cards, schedules, stationery,
displays, signs, promotional materials, manuals, forms and other materials, if
such materials are distributed or made available or proposed to be distributed
or made available to third parties; provided that (i) the Sellers and of their
respective Affiliates shall cease using invoices, stationery and business cards
containing the IPC Trademarks no later than 60 days after the Closing Date and
(ii) nothing herein contained shall require or be construed to require the
Sellers or any of their respective Affiliates to cause customers of the Sellers
and or their respective Affiliates to take any action with respect to property
of any IPC Entity in the possession of any such customers. The Sellers agree
that none of it or any of their Affiliates shall make any use of the IPC
Trademarks from and after the expiration of 90 days after the Closing Date.
SECTION 7.10. Benefit Plans
(a) General. Except as otherwise set forth herein, effective as of the
Closing Date, IPC Employees shall cease participation in all plans, programs,
policies and arrangements maintained for their benefit by the Sellers or any of
their Affiliates (other than those maintained by the IPC Entities). During the
six (6) month period following the Closing Date, the Buyer shall, or shall
cause the IPC Entities (or any successor thereof) to, provide IPC Employees and
former IPC Employees with compensation (including base pay, cash compensation
opportunity and severance, but excluding all equity related compensation) and
benefits (to the extent provided in the Network and Transition Services
Agreement) that are comparable, in the aggregate, to those currently provided
to such employees. In order to effectuate the foregoing, the Sellers shall
permit the IPC Employees to continue to participate in certain Benefit Plans,
as may be requested by the Buyer, for a period not to exceed six (6) month
after the Closing Date (which period of time may, at the election of the Buyer,
on a plan-by-plan basis, be shorter) (collectively, the "Transition Services");
provided, however, that the Buyer shall promptly reimburse the Sellers for all
costs associated with such IPC Employee participation in such plans; and
provided, further, however, that the Buyer shall indemnify the Sellers and
their respective Affiliates and their respective officers, directors,
employees, agents and representatives against, and hold them harmless from, any
loss, liability, third-party claim, damage or expenses (including reasonable
legal fees and expenses) arising from the Sellers' provision of such Transition
Services. The complete agreement regarding the Sellers' provision of the
Transition Services shall be set forth in the Network and Transition Services
Agreement.
30
(b) Service Credit. The Buyer shall cause each IPC Employee to be given
credit for all purposes (except for accrual of benefits under any defined
benefit plans) for all service prior to the Closing Date with the IPC Entities
and their Affiliates (to the extent taken into account under the applicable IPC
Plan in effect immediately prior to the Closing Date) under each employee
benefit plan, program and arrangement maintained for his or her benefit on or
after the Closing Date.
(c) Welfare Plan Claims. The applicable Seller shall retain
responsibility for and continue to pay all medical, life insurance, disability
and other welfare plan expenses and benefits for each IPC Employee with respect
to claims incurred by such employees or their covered dependents prior to the
Closing Date. Expenses and benefits with respect to claims incurred by IPC
Employees or their covered dependents on or after the Closing Date shall be the
responsibility of the Buyer. For purposes of this paragraph, a medical, life
insurance, disability and other welfare benefit claim shall be deemed incurred
when the services that are the subject of such claim are performed. The
applicable Seller shall be responsible for all legally mandated continuation of
health care coverage for any former IPC Employees and their covered dependents
who participated in a plan maintained by such Seller and who had or have a loss
of health care coverage due to a qualifying event (as defined under the
Applicable Law) occurring prior to the Closing Date. Legally mandated health
care coverage to which a former IPC Employee is entitled as a result of a
qualifying event occurring on or after the Closing Date shall be the
responsibility of the Buyer.
(d) Pre-Existing Conditions. With respect to any welfare benefit plans
maintained for the benefit of IPC Employees on and after the Closing Date, the
Buyer shall (i) cause there to be waived any pre-existing condition limitations
in respect of the year in which the Closing Date occurs and (ii) give effect,
in determining any deductible and maximum out-of-pocket limitations, to claims
incurred and amounts paid by, and amounts reimbursed to, such employees with
respect to similar plans maintained by the applicable Seller (or any Affiliate
thereof) for their benefit immediately prior to the Closing Date.
(e) Vacation and Sick Leave. With respect to any accrued but unused
vacation time and sick leave to which any IPC Employee is entitled pursuant to
the vacation and sick leave policy applicable to such employee immediately
prior to the Closing Date, the Buyer shall allow such employee to utilize such
accrued vacation time and sick leave; provided, however, that, to the extent
permitted under Applicable Law, if the Buyer deems it necessary to disallow
such employee from taking such accrued time off or the employment of such
employee terminates for any reason prior to the time such time off can be
utilized, the Buyer shall be liable for and pay in cash to each such employee
an amount equal to salary and wages in respect of such accrued time off.
(f) Section 280G Indemnity. Sellers shall indemnify and hold harmless
the Buyer and its Affiliates and their successors and assigns from any loss,
liability, third-party claim, damage or expense (including by way of any
indemnification or gross-up agreement) arising out of or in connection with any
"excess parachute payments" within the meaning of Section 280G(b) of the Code
made to any individuals in connection with the consummation of the transactions
contemplated by the Agreement and Plan of Merger dated as of February 22, 2000
31
among GC, Georgia Merger Sub, IPC Communications Inc., Idaho Information
Systems Inc., Idaho Merger Sub Corporation and IXnet, Inc. subject to the
Applicable Cap Amounts.
(g) Continuation of Employment; Assumption of Agreements. (a) Buyer
shall, or shall cause the IPC Entities to, (i) on the Closing Date, provide
employment to all IPC Employees (to be listed on Schedule 7.10(g) as of the
Closing Date) and (ii) honor all collective bargaining agreements listed on
Schedule 5.10(a) as of the Closing Date. After the signing of this Agreement
but prior to the Closing Date, the Sellers shall update Schedule 7.10(g) as
necessary in order to provide the Buyer with a complete and accurate list of
IPC Employees as of the Closing Date. Effective as of the Closing Date, the
Buyer shall assume and agree to perform each change in control agreement
between IPC and the individuals listed on Schedule 7.10(g)-l in the same manner
and to the same extent that the Sellers or IPC would be required to perform if
no such succession had taken place, and the Sellers shall assign all right,
title and interest in and to each such agreement and shall thereafter cease to
be liable for any obligations under such agreements.
(h) WARN. The Buyer shall not, on, or at any time prior to 90 days
after, the Closing Date, effectuate a "plant closing" or "mass layoff", as
those terms are defined in the Worker Adjustment and Retraining Notification
Act of 1988 ("WARN"), affecting in whole or in part any site of employment,
facility, operating unit or employee without complying with the notice
requirements and other provisions of WARN.
(i) IPC 401(k) Plan. Prior to the Closing Date, the Sellers shall cause
the IPC Information Systems 401(k) and Profit Sharing Plan (the "IPC 401(k)
Plan") to be assumed by GC or one of its Affiliates (other than one of the
Companies) as a successor sponsor of the IPC 401(k) Plan, and to cause the
Companies to have no liability with respect thereto.
SECTION 7.11. Network and Transition Services Agreement. On the Closing
Date, an Affiliate of the applicable Sellers and the Buyer will execute the
Network and Transition Services Agreement.
SECTION 7.12. Non Solicitation.
(a) For a period of two (2) years following the Closing Date, each
Seller shall not, and shall cause its Affiliates not to, directly or
indirectly, solicit or hire for employment, any employee of any IPC Entity as
of the Closing Date; provided, however, that the foregoing provision will not
prevent any Seller from hiring any such person (i) who contacts such Seller on
his or her own initiative without any direct or indirect solicitation by or
encouragement from such Seller (it being understood that a bona fide public
advertisement for employment placed by such Seller and not specifically
targeted at the employees of such IPC Entity shall not constitute direct or
indirect solicitation or encouragement) or (ii) who has been terminated by such
IPC Entity.
(b) For a period of two (2) years following the Closing Date, except as
set forth on Schedule 7.12, and except for the employees of the IPC Entities
the Buyer shall not, and shall cause its Subsidiaries not to, directly or
indirectly, solicit or hire for employment, any employee of any Seller or any
Affiliate of such Seller as of the Closing Date; provided, however, that the
32
foregoing provision will not prevent the Buyer from hiring any such person (i)
who contacts the Buyer on his or her own initiative without any direct or
indirect solicitation by or encouragement from the Buyer (it being understood
that a bona fide public advertisement for employment placed by the Buyer and
not specifically targeted at the employees of such Seller or any Affiliate
thereof shall not constitute direct or indirect solicitation or encouragement)
or (ii) who has been terminated by such Seller or any Affiliate thereof.
SECTION 7.13. Insurance Matters. Except as set forth in the Network and
Transition Services Agreement, effective as of the Closing Date, the Sellers
will have no obligation to provide insurance coverage for any IPC Entity for
occurrences after the Closing Date and the Buyer will become solely responsible
for all insurance coverage and related risk of loss based on events occurring
on and after the Closing Date with respect to all IPC Entities. To the extent
that (i) any insurance policies controlled by the Sellers (the "Sellers'
Insurance Policies"), cover any loss, liability, claim, damage or expense
relating to the IPC Entities (the "Subject Liabilities") and relating to or
arising out of occurrences prior to the Closing Date, and (ii) the Sellers'
Insurance Policies continue after the Closing to permit claims to be made
thereunder with respect to the Subject Liabilities relating to or arising out
of occurrences prior to the Closing Date ("Subject Claims"), the Sellers shall
cooperate with the Buyer in submitting Subject Claims on behalf of the Buyer or
any IPC Entity under the Sellers' Insurance Policies and the Buyer shall
reimburse, indemnify and hold the Sellers harmless from all out-of-pocket,
costs and expenses (including, without limitation, all retroactive or
retrospective premiums related to the Subject Claims (but not any other present
or future premiums), deductibles, out-of-pocket legal and administrative costs,
net Tax costs to the Sellers resulting from the receipt and payment to the
Buyer of any insurance proceeds relating to any Subject Claim and attorneys'
fees under the Sellers' Insurance Policies) of any nature actually incurred by
the Sellers as a result of Subject Claims made under the Sellers' Insurance
Policies. The Sellers shall exercise reasonable best efforts (which efforts
shall not require the Sellers to incur any out-of-pocket costs or expenses not
reimbursed by the Buyer or any other adverse consequences) to cause the
Sellers' Insurance Policies to be modified to allow for the assignment to the
Buyer of all benefits, rights and obligations thereunder in respect of any
Subject Liabilities. To the extent any such policies are not so assigned, upon
receipt by the Sellers of any insurance proceeds relating to any Subject Claims
made under the Sellers' Insurance Policies, the Sellers will promptly pay such
insurance proceeds to the Buyer, net of any unreimbursed costs and expenses
described above.
SECTION 7.14. Non-Competition; Confidentiality. For a period of three
(3) years following the Closing Date, (i) each Seller shall not, and shall
cause its Affiliates not to, directly or indirectly, engage in any service or
activity within the scope of the Business and (ii) each Seller shall, and shall
cause its Affiliates, directors, officers, employees, consultants and
contractors to, hold in strict confidence all data and information relating to
the Business obtained in connection with the ownership and participation in
management of the IPC Entities.
(b) Each Seller acknowledges that the performance of the obligations of
this Section 7.14 are special, unique and extraordinary in character, and that
in the event of a breach by any Seller or any of its respective Affiliates of
the terms and conditions of this Section 7.14, the Buyer shall be entitled, if
it so elects (in addition to any other remedy that may be available to it), to
the extent permitted by applicable law, to institute and prosecute proceedings
in any
33
court of competent jurisdiction, either at law or in equity, to enforce the
specific performance thereof by any Seller or any of its respective Affiliates
or to enjoin such Seller or any of its respective Affiliates or any or its or
their employees, officers, directors or advisors from violating the provisions
of this Section 7.14.
SECTION 7.15. Termination of Guarantees. (a) The Sellers and their
respective Affiliates shall (i) use their commercially reasonable efforts to
terminate the IPC Contract Guarantees and (ii) after the Closing Date, not
incur additional obligations under the contracts or other agreements or
arrangements guaranteed by the IPC Contract Guarantees (to the extent such
additional obligations increase the contingent obligations under the IPC
Contract Guarantees).
(b) The Sellers or their respective Affiliates shall use their
commercially reasonable efforts to terminate IPC Guaranteed Debt.
SECTION 7.16. [INTENTIONALLY OMITTED]
SECTION 7.17. Further Assurances. At any time or from time to time after
the Closing Date, the Sellers, on one hand, and the Buyer, on the other hand,
shall execute and deliver any further instruments or documents and take all
such further action as may reasonably requested of them by the other to
consummate the transactions contemplated hereby.
SECTION 7.18. Delivery of Certain Financial Statements. (a) (i) The
Sellers shall use their reasonable best efforts to deliver by December 4, 2001
(A) the audited combined balance sheets of the IPC Entities as at September 30,
2000 and unaudited combined balance sheet of the IPC Entities as at September
30, 2001 and (B) the audited combined statements of operations of the
Predecessor Company for the twelve-month period ended September 30, 1999 and
the period from October 1, 1999 through June 14, 2000, and of the IPC Entities
for the period from June 15, 2000 through September 30, 2000 and the unaudited
combined statements of operations of the IPC Entities for the twelve-month
period ended September 30, 2001.
(ii) The Sellers shall use their reasonable best efforts to deliver by
December 15, 2001 (A) the audited combined balance sheet of the IPC Entities
as at September 30, 2001 and (B) the audited combined statements of
operations of the IPC Entities for the twelve-month period ended September
30, 2001.
(b) The unaudited combined balance of the IPC Entities as at September
30, 2001 and the unaudited combined statements of operations of the IPC
Entities for the twelve-month period ended September 30, 2001, when delivered
by the Sellers to the Buyer pursuant to this Section, shall have been reviewed
in accordance with the procedures set forth in SAS No. 71. The audited combined
balance sheets of the IPC Entities and the audited combined statements of
operations of the Predecessor Company and the IPC Entities, when delivered by
the Sellers to the Buyer pursuant to this Section, shall (i) have been prepared
in accordance with GAAP throughout the periods covered thereby, (ii) reflect
the financial position of the IPC Entities as of the dates thereof, (iii)
fairly present, in all material respects, the financial condition and results
of operations as of and for the periods to which they relate and (iv) be
consistent with the books and records of the Predecessor Company or the IPC
Entities, as applicable.
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SECTION 7.19. Obtaining Tibco License. The Sellers and their respective
Affiliates shall use their commercially reasonable efforts to obtain the
consent from Tibco Technology, Inc. ("Tibco") or its Affiliates for the
assignment of certain Tibco software used by the IPC Entities.
SECTION 7.20. Removal of Liens. At or prior to the Closing Date, GC
shall cause all liens, claims, encumbrances, security interests, options,
charges or restrictions of any kind on IPC Inc. Shares to be released.
SECTION 7.21. Foreign Operations. If the Closing shall have occurred but
a consent of the anti-trust authority in a jurisdiction in which the IPC
Entities conduct immaterial operations has not been obtained by the Buyer, the
Sellers and their respective Affiliates shall continue to conduct the business
in that jurisdiction in the ordinary course of business consistent with past
practice on behalf of the Buyer until such time as such consent shall have been
obtained.
SECTION 7.22. Connecticut Transfer Act. In addition to and not in
limitation of the Sellers' covenants contained in Article VII, the Sellers will
take all actions necessary to comply with Section 22a-134 through 22a-134e of
the Connecticut General Statutes (the "Connecticut Transfer Act") to the extent
applicable as a result of any transfer effectuated by this Agreement,
including, making all required filings and notifications, completing all
required declarations, certifications and environmental assessments and
conducting any required investigative and remedial activities.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1. Conditions to Obligation of the Buyer. The obligation of
the Buyer to consummate the Closing is subject to the reasonable satisfaction
(or waiver by the Buyer) on and as of the Closing Date of each of the following
conditions:
(a) (i) Each Seller shall have performed and satisfied in all material
respects each of its agreements and obligations set forth in this Agreement
(other than Section 7.22) required to be performed and satisfied by it on or
prior to the Closing Date; (ii) the representations and warranties of each
Seller contained in this Agreement shall be complete and correct in all
material respects (other than Section 5.5 which shall be true and correct in
all respects) at and as of the date of this Agreement and as of the Closing
Date, as if made at and as of each such date, except that those representations
and warranties which are made as of a specific date shall be complete and
correct in all material respects only as of such date; and (iii) the Buyer
shall have received a certificate signed by an authorized officer of each
Seller to the foregoing effect.
(b) The waiting period applicable to the purchase and sale of the Shares
under the HSR Act shall have been terminated or shall have expired and all
material Consents of and Filings with any Governmental Entity disclosed on
Schedule 4.3 or which are required for or in connection with the execution and
delivery by the Buyer of this Agreement necessary for the
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consummation by the Buyer of the transactions contemplated by this Agreement
shall have been obtained or made.
(c) No temporary restraining order, preliminary or permanent injunction,
cease and desist order or other legal restraint or prohibition preventing the
purchase and sale contemplated hereby or the consummation of the transactions
to be effected by the Buyer at the Closing shall be in effect.
(d) The Buyer shall have received the written resignations, effective as
of the Closing Date, of such directors of the IPC Entities as are requested in
writing by the Buyer not fewer than ten days prior to the date of satisfaction
or waiver of the other conditions set forth in this Article VIII.
(e) The Sellers shall have delivered the Audited Financial Statements
and EBITDA as calculated based on the Audited Financial Statements for each
period presented shall be substantially similar to EBITDA calculated based on
the Financial Statements for each period presented; provided, that, if EBITDA
calculated based on the Audited Financial Statements for any period presented
is greater than the EBITDA for that period calculated based upon the Financial
Statements, the EBITDA calculated based on the Audited Financial Statements
need not be substantially similar to the EBITDA for that period calculated
based upon the Financial Statements; provided further that EBITDA calculated
based on the Audited Financial Statements for all periods presented shall be
adjusted to take into account the exceptions set forth on Schedule 5.4(c) so
that EBITDA calculated based on the Financial Statements and EBITDA calculated
based on the Audited Financial Statements shall be calculated on a consistent
basis.
(f) The Buyer shall have received the financing in accordance with the
terms of the Commitment Letters (as such terms may be amended, supplemented or
otherwise modified in accordance with the terms thereof).
(g) The Buyer shall have received a certificate signed by an authorized
officer of GC North America that sets forth the amount outstanding as of the
Closing Date of the IPC Guaranteed Debt and the amount outstanding as of the
Closing Date of liabilities incurred by the Sellers and their Affiliates (other
than the IPC Entities) in connection with contracts or other agreements or
arrangements guaranteed by the IPC Contract Guarantees.
SECTION 8.2. Conditions to Obligation of the Sellers. The obligations of
each Seller to consummate the Closing are subject to the reasonable
satisfaction (or waiver by such Seller) of each of the following conditions:
(a) (i) The Buyer shall have performed and satisfied in all material
respects each of its agreements and obligations set forth in this Agreement
required to be performed and satisfied by it on or prior to the Closing Date;
(ii) the representations and warranties of the Buyer contained in this
Agreement shall be complete and correct in all material respects at and as of
the date of this Agreement and as of the Closing Date, as if made at and as of
each such date, except that those representations and warranties which are made
as of a specific date shall be complete and correct in all material respects
only as of such date; and (iii) each of the Sellers shall have received a
certificate signed by an authorized officer of the Buyer to the foregoing
effect.
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(b) The waiting period applicable to the purchase and sale of the Shares
under the HSR Act shall have been terminated or shall have expired and all
material Consents of and Filings with any Governmental Entity disclosed on
Schedule 4.3 or which are required for or in connection with the execution and
delivery by the Sellers of this Agreement necessary for the consummation of the
transactions by the Sellers contemplated by this Agreement shall have been
obtained or made.
(c) No temporary restraining order, preliminary or permanent injunction,
cease and desist order or other legal restraint or prohibition preventing the
purchase and sale contemplated hereby or the consummation of the transactions
to be effected by the Sellers at the Closing shall be in effect.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1. Indemnification by the Sellers Other than for Tax Matters.
Subject to the other provisions of this Article IX, following the Closing, each
Seller shall, severally but not jointly, indemnify the Buyer and its respective
Affiliates and their officers, directors, employees, agents and representatives
against, and shall hold them harmless from, any loss, liability, third-party
claim, damage or expense (including reasonable legal fees and expenses but
excluding loss of profits or other special, punitive or consequential damages)
(other than any such items relating to Taxes, for which the agreed-upon
indemnification provisions are set forth in Section 9.4), (i) arising from any
breach on the part of such Seller of any representation or warranty contained
in Articles IV and V (other than those contained in Section 5.11, for which the
agreed-upon indemnification provisions are set forth in Section 9.4); provided
that, for the purposes of this Section 9.1(i), references to materiality or
Material Adverse Effect in Articles IV and V shall be disregarded in
determining whether any such breaches shall have occurred, (ii) arising from
any breach on the part of such Seller of any covenant made by such Seller
contained in this Agreement, (iii) with respect to any IPC Contract Guarantee
or IPC Guaranteed Debt or (iv) with respect to any IXnet Restructuring Action.
SECTION 9.2. Indemnification by the Buyer. Subject to the other
provisions of this Article IX, following the Closing, the Buyer shall indemnify
the Sellers and their respective Affiliates and their respective officers,
directors, employees, agents and representatives against, and shall hold them
harmless from, any loss, liability, third-party claim, damage or expense
(including reasonable legal fees and expenses but excluding loss of profits or
other special, punitive or consequential damages) (i) arising from any breach
on the part of the Buyer of any representation, warranty or covenant made by it
contained in this Agreement or (ii) with respect to any Global Crossing
Guaranteed Debt.
SECTION 9.3. Indemnification Procedures for Claims Other than Tax
Matters. (a) Any party seeking indemnification (the "Indemnified Party") shall
give promptly to the party obligated to provide indemnification to such
Indemnified Party (the "Indemnifying Party") under this Article IX a notice (a
"Claim Notice") describing in reasonable detail the facts giving rise to the
claim for indemnification under this Article IX and shall include in such Claim
Notice (if
37
then known) the amount or the method of computation of the amount of such
claim, and a reference to the provision of this Agreement in connection
herewith upon which such claim is based. In the event that a Claim Notice
relates to a claim or demand asserted against or sought to be collected from
any Indemnified Party by a third party, such Indemnified Party shall promptly,
but in no event more than 15 days following such Indemnified Party's receipt of
such claim or demand, deliver a Claim Notice to the Indemnifying Party with
respect to such claim or demand; provided, however, that failure to give such
Claim Notice shall not affect the indemnification provided hereunder except to
the extent the Indemnifying Party shall have been actually prejudiced as a
result of such failure. The Indemnifying Party shall have 15 days from the
personal delivery or mailing of a Claim Notice (the "Notice Period") with
respect to a third-party claim or demand to notify the Indemnified Party
whether or not it desires to defend the Indemnified Party against such claim or
demand.
(b) All costs and expenses incurred by the Indemnifying Party in
defending against a third-party claim or demand shall be a liability of, and
shall be paid by, the Indemnifying Party. Except as hereinafter provided, in
the event that the Indemnifying Party notifies the Indemnified Party within the
Notice Period that it desires to defend the Indemnified Party against such
third-party claim or demand, the Indemnifying Party shall have the right to
defend the Indemnified Party by appropriate proceedings and shall have the sole
power to direct and control such defense. In the event the Indemnifying Party
elects to direct such defense, the Indemnifying Party shall not settle any
claim without the prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld.
(c) If any Indemnified Party desires to participate in any such defense
against such a third-party claim or demand it may do so at its sole cost and
expense. The Indemnified Party shall not settle a third-party claim or demand
for which it seeks or may seek to be indemnified by the Indemnifying Party
without the written consent of the Indemnifying Party, which consent shall not
be unreasonably withheld. If the Indemnifying Party elects not to defend the
Indemnified Party against such claim or demand whether by not giving the
Indemnified Party timely notice as provided above or otherwise, then the amount
of any such claim or demand (so long as it is a claim or demand in respect of
which indemnification is available hereunder) or, if the same be contested by
the Indemnified Party, then that portion thereof as to which such defense is
unsuccessful (and the reasonable costs and expenses pertaining to such defense)
shall be the liability of the Indemnifying Party hereunder. To the extent the
Indemnifying Party shall direct, control or participate in the defense or
settlement of any third-party claim or demand or participate in the defense or
settlement of any third party claim or demand, the Indemnified Party will give
the Indemnifying Party and its counsel access to, during Normal Business Hours,
the relevant business records and other documents, and shall permit them to
consult with the employees and counsel of the Indemnified Party.
(d) (i) Notwithstanding anything in this Agreement to the contrary, the
following procedures exclusively govern any claim for indemnification Buyer may
assert regarding Environmental Laws or Hazardous Materials under this Agreement
("Environmental Claim").
(ii) If the Buyer receives notice of any order, directive, decree,
demand, notice of potential liability, or complaint by any governmental
authority or other third party, or the commencement of any action,
proceeding or investigation by any governmental
38
authority or other third party, or becomes aware of any other events or
conditions other than a third-party claim, in each case that may result in
any Environmental Claim, Buyer shall provide to the Sellers a Claim Notice
in accordance with Section 9.3(a), which shall be subject to Section 9.3(a)
except for the last sentence thereof. Failure of the Buyer to give notice
pursuant to this Section 9.3(d)(ii) shall not relieve the Sellers of their
obligations, except to the extent that the Sellers are actually prejudiced
by such failure.
(iii) With respect to any Environmental Claim concerning conditions of
any of the Assets or any property owned, leased or operated by any of the
IPC Entities, within thirty (30) days of providing the Claim Notice referred
to in subsection (ii) of this Section 9.3(d), the Buyer shall elect whether
to assume the defense or control of the Environmental Claim described
therein. If the Buyer elects to assume the defense or control (including the
planning or implementation of any investigation, remediation or other
response action) of the Environmental Claim, the Buyer shall, without
prejudice to any of the Buyer's rights hereunder, defend or control the
Environmental Claim at the Sellers' expense, subject to all limitations and
defenses available to Sellers. If the Buyer does not respond within such
30-day period or responds during such 30-day period but elects not to assume
the defense or control of the Environmental Claim, then the Sellers shall be
obligated to defend or control the Environmental Claim, subject to all
limitations and defenses available to Sellers.
(iv) With respect to any Environmental Claims other than those referred
to in Section 9.3(d)(iii), within thirty (30) days of receiving from Buyer a
Claim Notice in accordance with Section 9.3(d)(ii), the Sellers shall elect
whether to assume the defense or control of the Environmental Claim
described in the Claim Notice. If a Seller elects to assume the defense or
control (including the planning or implementation of any investigation,
remediation or other response action) of the Environmental Claim, the Seller
shall, without prejudice to any of the Buyer's rights hereunder, defend or
control the Environmental Claim at its own expense, subject to all
limitations and defenses available to Sellers. If the Seller does not
respond within such 30-day period or responds during such 30-day period but
elects not to assume the defense or control of the Environmental Claim, then
the Buyer shall be obligated to defend or control the Environmental Claim.
(v) The party controlling the defense or conduct of an Environmental
Claim pursuant to this Section 9.3(d) (the "Controlling Party") shall
exercise such defense or conduct in a commercially reasonable manner
(without regard to the availability of indemnification hereunder) and the
non-controlling party (the "Non-controlling Party") shall be consulted in
relation to such control and defense. The Controlling Party and the
Non-controlling Party shall exchange information and otherwise cooperate in
order to facilitate the expeditious and cost-effective resolution of each
Environmental Claim. The Non-controlling Party shall be given a reasonable
opportunity (a) to attend any material site visits or meetings; (b) to
comment in advance on any instructions, scope of work, specifications,
proposals, statements, reports, filings, or other material documents or
correspondence; and (c) to attend and inspect the carrying out of any
investigative or remedial activities. The written consent of the
Non-controlling Party shall be obtained
39
before the Controlling Party agrees to, makes or offers any settlement. Such
consent shall not be unreasonably withheld, conditioned, or delayed.
(vi) Buyer shall cooperate, and shall cause the IPC Entities to
cooperate, in effectuating any assignment to the Sellers of any rights to
recovery on any Environmental Claim as any of them may have against any
other Person, and in such Sellers realizing such rights.
SECTION 9.4. Tax Indemnification. (a) Following the Closing, GC, on
behalf of itself, (in the case of a liability regarding IPC Inc. and its
Subsidiaries or IPC Trading Systems and its Subsidiaries (if any)) shall
indemnify the Buyer and its Affiliates (including IPC Inc. and its Subsidiaries
and IPC Trading Systems and its Subsidiaries (if any)) and each of their
respective officers, directors, employees, agents and other representatives and
hold them harmless from (i) any breach on the part of GC of any representation
or warranty contained in Section 5.11 hereof, (ii) all liability for Taxes of
IPC Inc. and its Subsidiaries and of IPC Trading Systems and its Subsidiaries
(if any) for all Pre-Closing Tax Periods (including any liability for Taxes
arising from the IXnet Restructuring Actions prior to the Closing), and (iii)
all liability (as a result of Treasury Regulation (S) 1.1502-6(a) or any
similar provision of state, local or foreign law) for Taxes of GC North America
or any of its Affiliates or any other entity which is or has been affiliated
with IPC Inc. and its Subsidiaries (other than IPC Inc. and its Subsidiaries)
or for the Taxes of any Person for which IPC Inc. or any of its Subsidiaries is
liable as a result of being a transferee or successor, by contract or
otherwise. Following the Closing, Asia GC, on behalf of itself and Saturn, on
behalf of itself (in each case regarding a liability of IPC Trading Systems and
its Subsidiaries (if any)) shall indemnify the Buyer and its Affiliates
(including IPC Trading Systems and its Subsidiaries (if any)) and each of their
respective officers, directors, employees, agents and other representatives and
hold them harmless from (i) any breach on the part of Asia GC or Saturn, as the
case may be, of any representation or warranty contained in Section 5.11
hereof, (ii) all liability for Taxes of IPC Trading Systems and its
Subsidiaries (if any) for all Pre-Closing Tax Periods and (iii) all liability
(as a result of Treasury Regulation (S) 1.1502-6(a) or any similar provision of
state, local or foreign law) for Taxes of Saturn or any of its Affiliates or
any other entity which is or has been affiliated with IPC Trading Systems
(other than IPC Trading Systems and its Subsidiaries (if any)) or for the Taxes
of any Person for which IPC Trading Systems and its Subsidiaries (if any) is
liable as a result of being a transferee or successor, by contract or
otherwise. Following the Closing, GC North America, on behalf of itself, (in
the case of a liability regarding IPC Inc. and its Subsidiaries) shall
indemnify the Buyer and its Affiliates (including IPC Inc. and its
Subsidiaries) and each of their respective officers, directors, employees,
agents and other representatives and hold them harmless from (i) any breach on
the part of GC North America of any representation or warranty contained in
Section 5.11 hereof, (ii) all liability for Taxes of IPC Inc. and its
Subsidiaries for all Pre-Closing Tax Periods (including any liability for Taxes
arising from the IXnet Restructuring Actions prior to the Closing), and (iii)
all liability (as a result of Treasury Regulation (S) 1.1502-6(a) or any
similar provision of state, local or foreign law) for Taxes of GC North America
or any of its Affiliates or any other entity which is or has been affiliated
with IPC Inc. and its Subsidiaries (other than IPC Inc. and its Subsidiaries)
or for the Taxes of any Person for which IPC Inc. or any of its Subsidiaries is
liable as a result of being a transferee or successor, by contract or otherwise.
40
(b) Following the Closing, the Buyer shall, and shall cause each of the
Companies to, indemnify GC, Asia GC, GC North America and its Affiliates and
Saturn and its Affiliates, as applicable, and each of their respective
officers, directors, employees, and agents and hold them harmless from (i) all
liability for Taxes of the Companies for any taxable period ending after the
Closing Date (except to the extent such taxable period began before the Closing
Date, in which case the Buyer's indemnity will cover only that portion of any
such Taxes that are not attributable to the Pre-Closing Tax Period).
(c) For purposes of allocating liability for Taxes to the Pre-Closing
Tax Period:
(i) real, personal and intangible property Taxes ("property Taxes") of
each of the IPC Entities for a Straddle Period shall be equal to the amount
of such property Taxes of such IPC Entity for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days
during the Straddle Period that are in the Pre-Closing Tax Period and the
denominator of which is the total number of days in the Straddle Period; and
(ii) the income Taxes of each of the IPC Entities for any taxable period
or portion of a taxable period that is in the Pre-Closing Tax Period shall
be computed as if such taxable period or portion of a taxable period ended
as of the close of business on the Closing Date (and for such purpose, the
taxable period of any partnership or other pass-through entity in which any
of the IPC Entities holds a beneficial interest shall be deemed to terminate
at such time).
(iii) All other taxes (other than those specified in clause (i) and (ii))
shall accrue in accordance with generally accepted accounting principles in
the United States.
(d) All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of the
relevant party.
(e) Procedures Relating to Indemnification of Tax Claims. If a claim
shall be made by any Taxing Authority, which, if successful, might result in an
indemnity payment to a party (the "First Party"), one of its Affiliates or any
of their respective officers, directors, employees, agents or representatives
pursuant to this Section 9.4, the First Party shall promptly and in any event
no more than 30 days following the First Party's receipt of such claim, give
notice to the other party (the "Second Party") in writing of such claim (a "Tax
Claim"); provided, however, that failure to give such notice shall not affect
the indemnification provided hereunder except to the extent the Indemnifying
Party shall have been actually prejudiced as a result of such failure.
With respect to any Tax Claim relating to any Pre-Closing Tax Period or
any Straddle Period, the applicable Seller shall control all proceedings and
may make all decisions taken in connection with such Tax Claim (including
selection of counsel) and, without limiting the foregoing, may in its sole
discretion pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any Taxing Authority with respect thereto, and
may, in its sole discretion, either pay the Tax claimed (with its own funds)
and xxx for a refund where applicable law permits such refund suits or contest
the Tax Claim in any permissible manner;
41
provided, however, that to the extent that the settlement of an issue raised in
such a proceeding could materially affect the liability for Taxes of Buyer or
an IPC Entity for any period ending after the Closing Date, the applicable
Seller shall not settle such issue without the consent of Buyer, which shall
not be unreasonably withheld. The applicable Seller shall keep Buyer informed
of the progress of any such Tax Claim and proceeding. The Buyer shall control
all proceedings with respect to any Tax Claim relating to a taxable period
beginning after the Closing Date; provided, however, that to the extent that
the settlement of an issue raised in such a proceeding could materially affect
the liability for Taxes of the applicable Seller or an IPC Entity for any
Pre-Closing Tax Period (or portion thereof), the Buyer shall not settle such
issue without the consent of the applicable Seller, which shall not be
unreasonably withheld. The Buyer shall keep the applicable Seller informed of
the progress of any such Tax Claim and proceeding.
The Seller, the Buyer, each of the Companies (as applicable) and each of
their respective Affiliates shall reasonably cooperate with each other in
contesting any Tax Claim, which cooperation shall include the retention and,
upon the request of the party or parties controlling proceedings relating to
such Tax Claim, the provision to such party or parties of records and
information which are reasonably relevant to such Tax Claim, and making
employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such Tax Claim.
SECTION 9.5. Limitations Upon Indemnification. (a) The parties agree
that the remedies provided in this Article IX are the exclusive remedies for
any breach of representation or warranty, and for misrepresentation, under this
Agreement. Any claim based, in whole or in part, upon any untrue or incorrect
statement set forth in this Agreement shall be deemed to be a claim for a
breach of representation, warranty, or misrepresentation, under this Agreement.
Notwithstanding anything in this Article IX to the contrary:
(i) No Seller shall be obligated to provide any indemnification under
Section 9.l(i) unless and until the aggregate amount of one or more
occurrences for which such Seller is obligated to provide exceeds the
Applicable Basket Amount after which such Seller shall be obligated to pay
the entire amount of any such excess which is payable by it pursuant to the
provisions of Section 9.1(i); provided that in calculating whether the
Applicable Basket Amount has been obtained, only indemnification obligations
under Section 9.1(i) in excess of the Applicable Threshold Amount shall be
considered; and
(ii) In no event shall the aggregate liability of any Seller under
Section 9.l(i) (including, without limitation, the liability of any Seller
as set forth in Section 9.5(a)(iii), below) exceed the Applicable Cap Amount.
Notwithstanding anything set forth herein to the contrary, however, the
Sellers shall be obligated to provide indemnification under Section 9.1(i)
without regard to whether the aggregate amount of one or more occurrences
for which the Sellers shall be obligated to provide indemnification exceeds
either the Applicable Basket Amount or the Applicable Threshold Amount in
the event any Seller's obligation arises as a result of a breach on the part
of any member of GC's Controlled Group (other than any IPC Entity) of any
42
representation or warranty contained in Section 5.10(b)(iii) or Section
5.10(c)(i) hereof, but only if such representation or warranty relates to
any liability of any member of GC's Controlled Group in respect of any
"employee benefit plan" (within the meaning of Section 3(3) of ERISA) that
is subject to Title IV of ERISA, other than any such benefit plan that is
contributed to, sponsored or maintained by any IPC Entity under which any
IPC Employee has any present or future entitlements to benefits.
(b) The representations and warranties in this Agreement (other than
those representations and warranties contained in Section 5.11) and the
indemnification provisions in this Agreement in respect thereof shall survive
the Closing until eighteen months following the Closing Date, at which time
they shall terminate; provided, that (i) the representations and warranties
made in Sections 4.2, 4.5(a) and 5.2 shall not terminate and shall continue in
full force and effect, (ii) the representations and warranties made in Sections
5.10 and 5.11 shall survive until 30 days following the expiration of the
applicable statute of limitations (including any extensions thereof) and (iii)
the representations and warranties made in Sections 5.12 shall survive the
Closing until three years following the Closing Date. The termination of any
representation or warranty pursuant to this Section 9.5 shall not affect any
claim for breaches of representations or warranties if written notice thereof,
in reasonable detail, is given to the breaching party or parties prior to such
termination date. The indemnification provisions in this Agreement relating to
Taxes shall survive the Closing until ninety days after the expiration of the
applicable statute of limitations (including any extensions thereof).
(c) With respect to any Environmental Claims, in addition to any other
limitations that may apply, Buyer shall not be entitled to recovery for any
Environmental Costs to the extent resulting from or increased by: (i) a change
in the nature of the use of, or the level of activity at, the property that is
the subject of the Environmental Claim from the manner in which such property
is used as of the date hereof; or (ii) any change in any Environmental Law
after the Closing Date. "Environmental Costs" means any actual or potential
investigation, clean up, remediation, removal, or other response costs,
expenses, losses, liabilities or obligations, payments, damages, civil or
criminal fines or penalties, judgments, and amounts paid in settlement arising
out of or relating to Environmental Law. For the avoidance of doubt, it is
agreed that Buyer's rights to indemnification under this Agreement shall
constitute Buyer's sole and exclusive remedy against Sellers with respect to
any Environmental Costs or any other loss, liability, third-party claim, damage
or expense of any kind arising out of any Environmental Laws or with respect to
Hazardous Substances which Buyer may sustain or incur or to which Buyer may
become subject resulting from or arising out of this Agreement, the
transactions contemplated hereby, or any assets or operations acquired
hereunder; and Buyer hereby waives, on behalf of itself and its Affiliates and
of any of their officers, directors, employees, stockholders, agents and
representatives, to the fullest extent permitted under applicable law, any and
all rights, claims and causes of action any of them may now or hereafter have
against any of the Sellers or any of their officers, directors, employees,
stockholders, agents or representatives with respect any such loss, liability,
third-party claim, damage, or expense.
SECTION 9.6. Computation of Indemnifiable Losses. Any amount payable
pursuant to this Article IX shall be decreased to the extent of (a) with
respect to any payment made relating to a liability of any foreign subsidiary
of IPC Inc., or with respect to a liability of IPC Trading Systems, any net
reduction in Tax liability actually realized by the indemnified
43
party that arises in connection with the payment or incurrence of an
indemnifiable loss and (b) any insurance proceeds received or receivable by the
indemnified party in respect of an indemnifiable loss. If an Indemnified Party
receives a payment with respect to a liability of a foreign subsidiary of IPC
Inc. or with respect to a liability of IPC Trading Systems in accordance with
this Article IX that when paid is not reduced under the preceding sentence, and
if in the same or another taxable year a net reduction in Tax liability is
actually realized, then such Indemnified Party shall promptly pay to the party
making such payment under this Article IX, at the time of such realization, the
amount of such net reduction in Tax liability.
SECTION 9.7. Scope of Representations and Warranties. Notwithstanding
anything contained in Articles IV and V or any other provision of this
Agreement, it is the explicit intent of each party hereto that each Seller is
not making any representations or warranties whatsoever, express or implied,
except those representations and warranties of such Seller set forth in
Articles IV and V.
SECTION 9.8. Application of Holdback Account. To the extent the Buyer is
entitled to withdraw funds from the Holdback Account as a result of any
payments to third parties with respect to any of the matters set forth in
Sections 3.3(i), (ii) and (iii), the Buyer shall not be entitled to claim
indemnification from the Sellers for such matters pursuant to this Article IX.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.1. Termination. (a) Notwithstanding anything to the contrary
in this Agreement, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing (i) by mutual
written consent of the parties hereto, (ii) by the Sellers, (x) in the event
Sellers comply with their obligations under Section 7.18, after December 31,
2001 or (y) if the Sellers do not comply on a timely basis with their
obligations under Section 7.18, after the later of (x) January 31,2002 or (y)
thirty days after the Sellers deliver all of the Audited Financial Statements
required by Section 7.18.; (iii) by the Buyer, after January 31, 2002; (iv) by
the Sellers if, as a result of action or inaction by the Buyer, the Closing
shall not have occurred on or prior to the date that is 10 business days
following the date on which all of the conditions to Closing set forth in
Section 8.1 are satisfied or waived or (v) by the Buyer, as a result of action
or inaction by the Sellers, the Closing shall not have occurred on or prior to
the date that is ten (10) business days following the date on which all the
conditions to Closing Set forth in Section 8.1 are satisfied or waived;
provided, however, that the party seeking termination pursuant to clauses (ii)
or (iii) above is not in breach in any material respects of any of its
representations, warranties, covenants or agreements contained in this Agreement
(b) In the event of termination by any party hereto pursuant to this
Section 10.1, written notice thereof shall forthwith be given to the other
party and the transactions contemplated by this Agreement shall be terminated,
without further action by any party. If the transactions contemplated by this
Agreement are terminated as provided herein, the Buyer shall promptly return to
the Sellers and their respective Affiliates all documents and other material
44
received from or on behalf of such Persons relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof.
(c) If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Section 10.1, this Agreement shall
become null and void and of no further force and effect, except for the
provisions of (i) this Section 10.1, (ii) Section 12.7 relating to publicity
and (iii) Section 7.5 regarding certain expenses, and provided that the
provisions of the Confidentiality Agreement shall continue in full force and
effect. Nothing in this Section 10.1 shall be deemed to release any party from
any liability for any breach by such party of the terms and provisions of this
Agreement.
SECTION 10.2. Amendments and Waivers. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. Any of the parties hereto may, by an instrument in writing signed on
behalf of such party, waive compliance by any other party with any term or
provision of this Agreement that such other party was or is obligated to comply
with or perform.
ARTICLE XI
TAX MATTERS
SECTION 11.1. Tax Matters. The following provisions shall govern the
allocation of responsibility as between Buyer and Seller for certain tax
matters following the Closing Date:
(a) Taxable Periods Ending on or Before the Closing Date: The applicable
Seller shall prepare or cause to be prepared and shall timely file or cause to
be timely filed all Tax Returns that are required to be filed for or with
respect to each IPC Entity for all Taxable Periods ending on or prior to the
Closing Date and shall pay all Taxes shown as due on such Tax Returns. Such Tax
Returns shall be prepared in a manner consistent with prior practice except to
the extent required by applicable law.
(b) Taxable Periods Beginning Before and Ending After the Closing Date:
(i) The applicable Seller shall prepare or cause to be prepared and file
or cause to be filed any Tax Returns for or with respect to each IPC Entity
that are required to be filed for Taxable Periods which begin before the
Closing Date and end after the Closing Date. Such Tax Returns shall be
prepared in a manner consistent with prior practice except to the extent
required by applicable law. Seller shall provide to the Buyer copies of all
such Returns at least twenty (20) calendar days before such Returns are
required to be filed, taking into account all extensions, for the Buyer's
approval, which approval shall not be unreasonably withheld. The Buyer shall
notify the applicable Seller of any proposed revisions that relate to the
Post-Closing Portion (as defined below) of such Returns within fifteen (15)
calendar days after receipt of such Returns from the applicable Seller.
Buyer and the applicable Seller agree to attempt to resolve in good faith
any dispute concerning the reporting of any item on such Return. In the
event Buyer and the applicable Seller are unable to resolve such dispute,
such Seller shall
45
determine the final form of such Return without prejudice to such Buyer's
right to dispute the amount of the Post-Closing Portion of such Tax, and
Buyer and the applicable Seller shall select an independent public
accounting firm to determine such amount, and agree that the decision of
such firm shall be binding and conclusive on both Buyer and the applicable
Seller. If Buyer does not dispute the amount of the Post-Closing Portion of
any Tax, based on the amount shown to be due on any Tax Return prepared
pursuant to this paragraph (A), it shall pay that amount. If Buyer does
dispute the amount of the Post-Closing Portion of any Tax, and such dispute
is not resolved prior to the time that the Tax is required to be paid, Buyer
shall pay the undisputed portion of such Tax to the applicable Seller. In
either case, such amount shall be paid by Buyer to the applicable Seller no
later than three (3) calendar days prior to the date on which Taxes are
required to be paid with respect to such periods. In the event that any
dispute regarding the Post-Closing Portion of such Taxes is resolved
following the date on which Taxes are paid with respect to such period, and
Buyer's liability, as so determined, exceeds the amount previously paid by
Buyer hereunder, Buyer shall make an additional payment equal to such
excess, together with interest thereon at the Applicable Rate.
(ii) For purposes of this Section 11.1, in the case of any Taxes for a
Taxable Period that includes (but does not end on) the Closing Date, the
portion of such Tax that relates to the portion of such Taxable Period
beginning on the day after the Closing Date (the "Post-Closing Portion")
shall be determined as prescribed in Section 9.4(c).
(c) Refunds and Credits. Any Tax refunds and any amounts credited
against Tax that are actually realized by or with respect to an IPC Entity that
relate to Pre-Closing Tax Periods (other than as are attributable to Tax Assets
of an IPC Entity arising after the Closing Date) shall be for the account of
the applicable Seller, and Buyer shall pay over to such Seller the net amount
of any such refund or credit within fifteen (15) days after receipt of such
refund or utilization of such credit.
(d) Tax Assets. Buyer may, at its option, cause any IPC Entity to elect,
where permitted by applicable law, to carry forward any Tax Asset arising in a
Post-Closing Tax Period that would, absent such election, be carried back to a
Pre-Closing Tax Period in which such member was included in a consolidated,
combined or unitary Tax return filed by Seller or any of its Affiliates.
(e) The applicable Seller, each Company (and its Subsidiaries, if
applicable) and the Buyer shall reasonably cooperate, and shall cause their
respective Affiliates, officers, employees, agents, auditors and other
representatives reasonably to cooperate, in preparing and filing all Tax
Returns, including maintaining and making available to each other all records
necessary in connection with Taxes and in resolving all disputes and audits
with respect to all taxable periods relating to Taxes. The Buyer and the
Sellers recognize that the Sellers and their respective Affiliates will need
access, from time to time, after the Closing Date, to certain accounting and
Tax records and information held by the Companies to the extent such records
and information pertain to events occurring prior to the Closing Date;
therefore, the Buyer agrees, and agrees to cause each of the Companies, (i) to
use its reasonable efforts to properly retain and maintain such records for 6
years from the Closing Date and (ii) to allow the Sellers and their respective
agents and other representatives (and agents or other representatives of any
46
of their respective Affiliates), at times and dates mutually acceptable to the
parties, to inspect, review and make copies of such records as the Sellers may
deem necessary or appropriate from time to time, such activities to be
conducted during normal business hours and at the Sellers' expense. Unless
otherwise required by law, none of the Buyer or any of the Companies (nor any
transferee) shall file or cause to be filed any amended Tax Return of any of
the Companies for any taxable period ending on the Closing Date without the
prior written consent of the applicable Seller, which consent shall not be
unreasonably withheld.
(f) All transfer, documentary, sales, use, registration and other such
Taxes (including all applicable real estate transfer or gains Taxes) and
related fees (including any penalties, interest and additions to Tax) incurred
in connection with this Agreement, the other Transaction Documents and the
transactions contemplated hereby shall be shared equally by the Buyer and the
Sellers, and the Sellers and the Buyer shall cooperate in timely making all
filings, returns, reports and forms as may be required to comply with the
provisions of such Tax laws. Notwithstanding anything to the contrary in the
foregoing sentence, all transfer, documentary, sales, use, registration and
other such Taxes (including all applicable real estate transfer or gains Taxes)
and related fees (including any penalties, interest or additions to Tax)
incurred in connection with the IXnet Restructuring Actions shall be paid by GC
North America.
(g) GC North America shall deliver to the Buyer at the Closing a
certificate complying with the Code and Treasury Regulations, in form and
substance satisfactory to the Buyer, duly executed and acknowledged, certifying
that the transactions contemplated hereby are exempt from withholding under
Section 1445 of the Code.
(h) Any Tax sharing agreement between any Seller or any Affiliate of a
Seller, on the one hand, and any of the Companies or Subsidiaries on the other
hand, shall be terminated on or before the Closing Date. After the Closing
Date, no party shall have any rights or obligations under any such tax sharing
agreement.
(i) The applicable Seller and the Buyer agree to treat any amounts
payable pursuant to Article IX as an adjustment to the Purchase Price, unless a
final "determination" (within the meaning of Section 1313 of the Code or any
analogous provision of state, local or foreign law) causes any such payment not
to be treated as an adjustment to the Purchase Price for Federal income tax
purposes.
(j) GC North America will join with the Buyer in making an election
under Section 338(h)(10) of the Code (and any corresponding election under
state and local Tax law) with respect to the purchase of the IPC Inc. Shares
hereunder (the "Elections"). The Election shall apply to IPC Inc. and any
Subsidiary of IPC Inc. that is a domestic corporation within the meaning of
Section 7701(a)(4) of the Code (a "Domestic Subsidiary"). GC and GC North
America shall reasonably cooperate with Buyer to take all actions necessary and
appropriate (including, timely preparing and filing such additional forms, Tax
Returns, elections, schedules and other documents separately or jointly with
Buyer) as may be required to effect and preserve timely Elections in accordance
with Section 338(h)(10), and the regulations promulgated thereunder, and any
corresponding provisions of state, local or foreign Tax Law. GC and GC North
America shall report the purchase by Buyer of the IPC Inc Shares in a manner
consistent
47
with the Section 338(h)(10) Elections and shall take no position inconsistent
therewith in any Tax Return or Tax audit or otherwise.
(i) GC and GC North America shall prepare and deliver to the Buyer, prior
to the Closing, a validly executed IRS form 8023 (and, as applicable,
analogous forms required pursuant to state or local Tax Law) providing for
an Election with respect to the purchase and sale of the IPC Inc. Shares
(and of any Domestic Subsidiary), with such portions of the forms as relate
to IPC Inc. (and of any Domestic Subsidiary) and GC and GC North America
properly completed. The Buyer shall be responsible for the filing of such
forms and such forms shall not be filed until the Final Allocation has been
resolved in accordance with Section 11.1(j)(ii) below.
(ii) The Buyer shall reasonably determine the "modified aggregate deemed
sales price" ("MADSP") of the assets of IPC Inc. (and any Domestic
Subsidiary of IPC Inc.) and shall reasonably allocate the MADSP of IPC Inc.
among the assets of IPC Inc. (and any Domestic Subsidiary of IPC Inc.) and
other relevant items in each case in accordance with Section 338 and the
regulations promulgated thereunder, and any comparable provisions of state
or local law, as appropriate (the "Preliminary Allocation"). Such
Preliminary Allocation shall be set forth on a schedule to be prepared by
the Buyer and delivered to GC North America within 135 days of the Closing.
GC North America shall have 30 days to review and comment on such
Preliminary Allocation. If in such period, GC North America disputes the
Preliminary Allocation and, if Buyer and Seller cannot agree on an
allocation within 15 days after the termination of the Seller's review
period, such dispute shall be submitted to an Arbitrator provided that the
Buyer's allocation shall be upheld unless the Arbitrator determines it to be
unreasonable. If the Preliminary Allocation is submitted to an Arbitrator,
it shall be adjusted to reflect all agreed upon changes and the resolution
of all disputed items by the Arbitrator, (such allocation as adjusted either
as a result of negotiation between the parties or as a result of the
Arbitrator's decision, the "Final Allocation"). GC North America and the
Buyer (x) shall be bound by, (y) shall file all Tax Returns on a basis
consistent with, and (z) shall take no position in any Tax Return or Tax
audit or otherwise which is inconsistent with the Final Allocation.
(k) Buyer shall be permitted to make elections pursuant to Section
338(g) of the Code with respect to any IPC Entity that is a foreign corporation.
(l) In the event that the Closing does not occur prior to December 26,
2001, then on or prior to December 31, 2001, (i) at Buyer's election (the "LLC
Election"), GC North America shall cause IPC Inc. to convert to a Delaware
Limited Liability Company ("IPC LLC"), pursuant to (S) 266 of the Delaware
General Corporation Law and (S) 18-214 of the Delaware Limited Liability
Company Act (the "Acts") and pursuant to an LLC agreement (the "LLC Agreement")
that has been approved by Buyer (which approval shall not be unreasonably
withheld) and which shall require that an election pursuant to Section 754 of
the Code be made for its first taxable year (which election shall remain in
effect on the Closing Date), (ii) if Buyer has made the LLC Election, then at
Buyer's further election, GC North America shall then cause all the domestic
subsidiaries of IPC Inc. to convert to limited liability companies pursuant to
the Acts which shall thereafter be treated as disregarded entities for federal,
and to the extent
48
permitted by applicable law, state and local tax purposes, (iii) if the LLC
Election has been made, GC North America shall then transfer 50% of the
interests (the "50% Interest") in IPC LLC to a Delaware corporation that is a
newly formed wholly owned Subsidiary of GC North America which has carried on
no activities prior to receiving the 50% Interest, and (iv) at the Closing,
Buyer and/or one or more of its Affiliates shall acquire all of the interests
in IPC LLC rather than the IPC Inc. Shares and the other provisions of this
Agreement shall be reasonably adjusted as is necessary to conform to the
changes required by this Section 11.1 (1) (clauses (i), (ii), (iii) and (iv)
collectively, the "Alternative Structure"). GC and its Affiliates agree to
treat IPC LLC as a partnership for federal, state and local tax purposes (to
the extent permitted by applicable law), will take no action inconsistent
therewith or that could reasonably be expected to cause IPC LLC to be treated
other than as a partnership for such purposes (unless otherwise required by
applicable law) and will file all relevant Tax Returns on that basis. GC and
its Affiliates agree that all IXnet Restructuring Actions shall be completed
prior to any LLC Election. The reasonable legal and accounting costs incurred
in carrying out the Alternative Structure shall be shared equally by the Buyer
and the Seller. Notwithstanding anything to the contrary in this Agreement, if,
on or prior to December 26, 2001, all of the conditions in Section 8.1 of this
Agreement, other than Section 8.1(f), have been satisfied ("Section 8.1
Compliance"). Buyer shall pay any Incremental Taxes (as defined below) caused
by the Alternative Structure. For these purposes, Incremental Taxes shall mean
the difference between (i) the Taxes arising under the Alternative Structure
and (ii) the Taxes that would have been paid by GC North America had the LLC
Election not been made and the sale of the IPC Inc. Shares was consummated on
the Closing Date in accordance with the provisions of this Agreement, and as if
an Election (as defined in Section 11.1 (j) of this Agreement) had been made by
Buyer and Seller. If there has not been Section 8.1 Compliance, Sellers shall
pay any Incremental Taxes. Prior to December 26, 2001, Buyer and Seller shall
in good faith calculate an estimate of the Incremental Taxes.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Notices. All notices, requests and other communications
hereunder shall be in writing (including wire, telefax or similar writing) and
shall be sent, delivered or mailed, addressed, or telefaxed:
(a) if to the Buyer, to:
GS Capital Partners 2000, L.P.
c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to:
49
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
(b) if to the Sellers, to:
Global Crossing Ltd.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx and Xxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
and
Asia Global Crossing Ltd.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attn: General Counsel
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
0000 "Xxx" Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Each such notice, request or other communication shall be given (i) by mail
(postage prepaid, registered or certified mail, return receipt requested), (ii)
by hand delivery, (iii) by nationally recognized courier service or (iv) by
telefax, receipt confirmed (with a confirmation copy to be sent by first class
mail; provided that the failure to send such confirmation copy shall not
prevent such telefax notice from being effective). Each such notice, request or
communication shall be effective (i) if mailed, three days after mailing at the
address specified in this Section 12.1 (or in accordance with the latest
unrevoked written direction from such party), (ii) if delivered by hand or by
nationally recognized courier service, when delivered at the address specified
in this Section 12.1 (or in accordance with the latest unrevoked written
direction from the receiving party) and (iii) if given by telefax, when such
telefax is transmitted to the telefax number
50
specified in this Section 12.1 (or in accordance with the latest unrevoked
written direction from the receiving party), and the appropriate confirmation
is received.
SECTION 12.2. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If
any provision of this Agreement, or the application thereof to any Person or
any circumstance, is found to be invalid or unenforceable in any jurisdiction,
(a) a suitable and equitable provision shall be substituted therefore in order
to carry out, so far as may be valid or enforceable, such provision and (b) the
remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in
any other jurisdiction.
SECTION 12.3. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
shall, taken together, be considered one and the same agreement.
SECTION 12.4. Entire Agreement; No Third Party Beneficiaries. This
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (b) except as set forth in Sections
9.1 and 9.2, is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder; provided that nothing herein shall be
construed to modify or supersede the Confidentiality Agreement, it being
understood that such Confidentiality Agreement shall continue to be in full
force and effect notwithstanding the execution or termination of this Agreement.
SECTION 12.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 12.6. Consent to Jurisdiction. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Southern District of New York located in the borough of Manhattan
in the City of New York, or if such court does not have jurisdiction, the
Supreme Court of the State of New York, New York County, for the purposes of
any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of the parties hereto further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such party's respective address set forth in Section 12.1 shall be effective
service of process for any action, suit or proceeding in New York with respect
to any matters to which it has submitted to jurisdiction as set forth above in
the immediately preceding sentence. Each of the parties hereto irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (a) the United States District Court for the Southern District of New
York or (b) the Supreme Court of the State of New York, New York County, and
hereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.
51
SECTION 12.7. Publicity. None of the parties hereto nor their respective
Affiliates shall issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by this
Agreement without the consent of the other parties, which consent shall not be
unreasonably withheld or withdrawn, except as may be required by law or the
regulations or policies of any securities exchange, in which case the party
required to make the release or statement shall allow the other party
reasonable time to comment on such release or statement in advance of such
issuance.
SECTION 12.8. Assignment. Neither this Agreement nor any of the rights
or obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of each of the other parties; provided, however, that
any Seller may assign the rights or obligations hereunder to any of its
respective Affiliates if any such Affiliate is the owner of record of any of
the Assets described in this Agreement as being owned by such Seller; provided,
further, that the Buyer may assign any rights or obligations hereunder to any
Affiliate (provided that such assignment shall not relieve the Buyer from any
of its obligations under this Agreement). Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and permitted assigns. Any
attempted assignment in violation of the terms of this Section 12.8 shall be
null and void, ab initio.
SECTION 12.9. Obligations of GS Funds. Notwithstanding anything
contained in this Agreement to the contrary, the GS Funds shall be severally
liable for the payment of the Purchase Price in the percentages opposite the
name of each such GS Fund on the signature page hereto. Other than such
liability, no GS Fund shall have any other obligation or liability under this
Agreement or in connection with the transactions contemplated hereby.
52
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
GLOBAL CROSSING LTD.
By: /S/ ILLEGIBLE
-----------------------------
Name:
Title:
ASIA GLOBAL CROSSING LTD.
By: /S/ XXXXX XXXXX
-----------------------------
Name: Xxxxx Xxxxx
Title: Attorney-in-fact
GLOBAL CROSSING NORTH
AMERICAHOLDINGS INC.
By: /S/ ILLEGIBLE
-----------------------------
Name:
Title:
SATURN GLOBAL NETWORK
SERVICESHOLDINGS LIMITED
By: /S/ XXXXX XXXXX
-----------------------------
Name: Xxxxx Xxxxx
Title: Attorney-in-fact
IXNET HONG KONG LTD.
By: /S/ XXXXX XXXXX
-----------------------------
Name: Xxxxx Xxxxx
Title: Attorney-in-fact
53
ASIA GLOBAL CROSSING (SINGAPORE)
PTELTD.
By: /s/ XXXXX XXXXX
-----------------------------
Name: Xxxxx Xxxxx
Title: Attorney-in-fact
GS IPC ACQUISITION CORP.
By: /s/ Illegible
-----------------------------
Name:
Title:
Solely with respect to Section
12.9
[56.8476%] GS CAPITAL PARTNERS 2000, L.P.
By: GS Advisors 2000, L.L.C., its
general partner
By: /s/ Illegible
-----------------------------
Name:
Title:
[20.6562%] GS CAPITAL PARTNERS 2000
OFFSHORE, L.P.
By: GS Advisors 2000, L.L.C., its
general partner
By: /s/ Illegible
-----------------------------
Name:
Title:
[2.3761%] GS CAPITAL PARTNERS 2000 GMBH &
CO.BETEILIGUNGS KG
By: Xxxxxxx Xxxxx Management
GPGmbH, itsgeneral partner
By: /s/ Illegible
-----------------------------
Name:
Title:
00
[.0000%] XXXXXX XXXXXX SPECIAL
OPPORTUNITIESFUND 2000, L.P.
By: Bridge Street Special
Opportunities 2000,L.L.C., its
general partner
By: /S/ ILLEGIBLE
-----------------------------
Name:
Title:
[18.0511%] GS CAPITAL PARTNERS 2000
EMPLOYEEFUND, L.P.
By: GS Employee Funds 2000 GP,
L.L.C., itsgeneral partner
By: /S/ ILLEGIBLE
-----------------------------
Name:
Title:
[1.3793%] STONE XXXXXX XXXX 0000, X.X.
By: Stone Street 2000, L.L.C.,
its general partner
By: /S/ ILLEGIBLE
-----------------------------
Name:
Title:
55
Appendix A
As used in the Agreement, the following terms shall have the following
meanings:
"Additional New Working Capital" shall have the meaning set forth in
Section 2.4.
An "Affiliate" of any Person shall mean any other Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first Person.
"AGC Singapore" shall have the meaning set forth in the heading of the
Agreement.
"AGC Singapore Assets" shall have the meaning set forth in Section
2.2(a).
"AGC Singapore Assets Purchase Price" shall have the meaning and value
determined in accordance with Section 2.5.
"AGC Singapore Percentage" shall mean the AGC Singapore Assets Purchase
Price divided by the Purchase Price.
"Agreed Rate" means the fluctuating prime rate of interest in effect
from time to time as published in the "Money Rates" section of The Wall Street
Journal (Eastern Edition).
"Agreement" shall mean the Purchase Agreement dated as of November 16,
2001, between the Sellers and Buyer, including the Appendix, Schedules and the
Exhibits hereto, as it may be amended from time to time.
"Applicable Basket Amount" shall mean the following: (a) with respect to
GC, $3,600,000, (b) with respect to Asia GC, $225,000, (c) with respect to GC
North America, an amount equal to the GC North America Percentage multiplied by
the Basket Multiplier, (d) with respect to Saturn, an amount equal to the
Saturn Percentage multiplied by the Basket Multiplier, (e) with respect to
IXnet HK, an amount equal to the IXnet HK Percentage multiplied by the Basket
Multiplier and (f) with respect to AGC Singapore, an amount equal to the AGC
Singapore Percentage multiplied by the Basket Multiplier.
"Applicable Cap Amount" shall mean the following: (a) with respect to
GC, $118,800,000, (b) with respect to Asia GC, $7,425,000, (c) with respect to
GC North America, an amount equal to the GC North America Percentage multiplied
by the Cap Multiplier, (d) with respect to Saturn, an amount equal to the
Saturn Percentage multiplied by the Cap Multiplier, (e) with respect to IXnet
HK, an amount equal to the IXnet HK Percentage multiplied by the Cap Multiplier
and (f) with respect to AGC Singapore, an amount equal to the AGC Singapore
Percentage multiplied by the Basket Multiplier.
"Applicable Law" shall mean, with respect to any Person, any domestic or
foreign, Federal, state, provincial or local statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree or other
requirement of any Governmental Entity applicable to such Person or any of
their respective properties or assets.
"Applicable Threshold Amount" shall mean, with respect to an occurrence
or series of related occurrences, the following: (a) with respect to GC,
$50,000, (b) with respect to Asia GC, $10,000, (c) with respect to GC North
America, an amount equal to the GC North America Percentage multiplied by the
Threshold Multiplier, (d) with respect to Saturn, an amount equal to the Saturn
Percentage multiplied by the Threshold Multiplier, (e) with respect to IXnet
HK, $10,000 and (f) with respect to AGC Singapore, $10,000.
"Assets" shall have the meaning set forth in Section 2.2(a).
"Assets Purchase Price" shall have the meaning set forth in Section
2.2(b).
"Basket Multiplier" shall mean $3,600,000.
"Business" shall mean (a) the design, manufacture, installation,
servicing, consultation and other professional services, and applications, of
Turret Systems and (b) the design and implementation of the in-building cabling
and infrastructure necessary for customers.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks and foreign exchange markets in London and New
York City are authorized or required by law to close.
"Buyer" shall have the meaning set forth in the heading of the Agreement.
"Cap Multiplier" shall mean $118,800,000
"Cash Balance" shall mean the sum of all (i) cash and cash equivalents
on deposit in any bank account, money market account, certificate of deposit or
comparable accounts in the name of any IPC Entity, (ii) xxxxx cash held by any
IPC Entity and (iii) undeposited checks in the possession of any IPC Entity, in
each case at the close of business on the Closing Date; provided that "Cash
Balance" shall not include amounts with respect to (A) outstanding checks in
which any IPC Entity is the payee, (B) undrawn letters of credit and (C) wire
and interbank transfers that have been entered into, but have yet been deducted
from, any of the accounts set forth in clause (i) of the preceding sentence.
"Cash Balance Arbitrator" shall have the meaning set forth in Section
7.8(d).
"Cash Balance Disputed Items" shall have the meaning set forth in
Section 7.8(d).
"Cash Balance Objection Notice" shall have the meaning set forth in
Section 7.8(c).
"Cash Balance Resolution Period" shall have the meaning set forth in
Section 7.8(b).
"Cash Balance Review Period" shall have the meaning set forth in Section
7.8(c).
2
"Claim Notice" shall have the meaning set forth in Section 9.3(a).
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Closing Date Balance Sheet" shall have the meaning set forth in Section
2.3(b).
"Closing Date Cash Balance" shall have the meaning set forth in Section
7.8(c).
"Closing Date Deferred Maintenance Revenue Amount" has the meaning
specified in Section 2.3(b).
"Closing Date Net Working Capital Amount" has the meaning specified in
Section 2.3(b).
"Closing Date Deferred Turret Revenue Amount" has the meaning specified
in Section 2.3(b).
"Closing Date Work-In-Process" shall have the meaning set forth in
2.3(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment Letters" shall have the meaning set forth in Section 6.9.
"Company" or "Companies" shall have the meanings set forth in the
recitals to the Agreement.
"Confidentiality Agreement" shall mean the Non-Disclosure Agreement,
agreed and accepted as of October 12, 2001, among Global Crossing Ltd. and Asia
Global Crossing Ltd. and Xxxxxxx Sachs & Co.
"Connecticut Transfer Act" shall have the meaning set forth in Section
7.22.
"Consent" shall have the meaning set forth in Section 4.3.
The term "control" (including its correlative meanings "controlled by"
and "under common control with") shall mean possession, directly or indirectly,
of the power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
"Deferred Maintenance Revenue Adjustment" has the meaning specified in
Section 2.4(b).
"Deferred Turret Revenue Adjustment" has the meaning specified in
Section 2.4(e).
"Disputed Items" has the meaning specified in Section 2.3(c).
3
"EBITDA" shall mean (i) net income plus (ii) interest expense, net plus
(iii) income tax provision and less the income tax benefit plus (iv)
depreciation and amortization less (v) extraordinary loss on senior notes plus
(vi) merger costs related to the acquisition of the IPC Entities by GC plus
(vii) restructuring charges plus less (viii) Dividend Income-UK Tax Refund and
(ix) expenses incurred by the IPC Entities in this transaction.
"Environmental Claim" shall have the meaning set forth in Section
9.3(d)(i).
"Environmental Costs" shall have the meaning set forth in Section 9.5(c).
"Environmental Law" shall have the meaning set forth in Section 5.12(d).
"ERISA" shall have the meaning set forth in Section 5.10(a).
"Excess Net Working Capital" shall have the meaning set forth in Section
2.4.
"Filing" shall have the meaning set forth in Section 4.3.
"Financial Statements" shall have the meaning set forth in Section
5.4(a).
"First Party" shall have the meaning set forth in Section 9.4(e).
"GAAP" shall mean United States generally accepted accounting principles
consistently applied.
"GC North America" shall have the meaning set forth in the heading of
the Agreement.
"GC North America Percentage" shall mean the IPC Inc. Shares Purchase
Price divided by the Purchase Price.
"GS Funds" shall have the meaning set forth in the heading of the
Agreement.
"Global Crossing Leases" shall mean the leases listed on Schedules A and
B to the Network and Transition Services Agreement in which GC or any of its
Affiliates (other than an IPC Entity) is the lessee.
"Governmental Entity" shall mean any Federal, state, foreign, provincial
or local governmental authority, court, government or self-regulatory
organization, commission, tribunal or organization or any regulatory,
administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.
"Hazardous Substances" shall have the meaning set forth in Section
5.12(d).
"Holdback Amount" shall have the meaning set forth in Section 3.3.
"Holdback Bank" shall have the meaning set forth in Section 3.3.
"HSR Act" shall have the meaning set forth in Section 4.3.
4
"Indemnified Party" shall have the meaning set forth in Section 9.3(a).
"Indemnifying Party" shall have the meaning set forth in Section 9.3(a).
"IPC Contract Guarantees" shall have the meaning set forth in Section
4.9.
"IPC Employees" shall have the meaning set forth in Section 5.10(a).
"IPC Entities" shall have the meaning set forth in Section 5.4.
"IPC Guaranteed Debt" shall have the meaning set forth in Section 4.10.
"IPC Inc." shall have the meaning set forth in the recitals to the
Agreement.
"IPC Inc. Shares" shall have the meaning set forth in the recitals to
the Agreement.
"IPC Intellectual Property" shall have the meaning set forth in Section
5.9(a).
"IPC Inc. Shares Purchase Price" shall have the meaning and value
determined in accordance with Section 2.5.
"IPC Plans" shall have the meaning set forth in Section 5.10(a).
"IPC Trading Systems" shall have the meaning set forth in the recitals
to the Agreement.
"IPC Trading Systems Shares" shall have the meaning set forth in the
recitals to the Agreement.
"IPC Trading Systems Shares Purchase Price" shall have the meaning set
forth in Section 2. l(b).
"IXnetHK" shall have the meaning set forth in the heading of the
Agreement.
"IXnet HK Assets" shall have the meaning set forth in Section 2.2(a).
"IXnet HK Assets Purchase Price" shall have the meaning and value
determined in accordance with Section 2.5.
"IXnet Percentage" shall mean the IXnet HK Assets Purchase Price divided
by the Purchase Price.
"IXnet Restructuring Actions" shall have the meaning set forth in
Section 7.1.
"knowledge" of any Seller or the Sellers shall mean the actual knowledge
of the key persons set forth on Schedule A-l hereto.
5
"Material Adverse Effect" shall mean any change, effect, circumstance or
event that, individually or in the aggregate, is materially adverse to the
business, results of operations, assets or liabilities or financial condition
of the IPC Entities taken as a whole, other than as a result of (i) the public
announcement of the Sellers' intent to sell the business of the IPC Entities,
(ii) changes in prevailing interest rates, (iii) changes in general economic
conditions or (iv) changes in the telecommunications manufacturing industry
(but not including the turret manufacturing industry).
"Material Contracts" shall have the meaning set forth in Section 5.8.
"Network and Transition Services Agreement" shall mean an agreement
among the Buyer and an Affiliate of the applicable Sellers substantially in the
form of Exhibit B attached hereto.
"Network Services" shall have the meaning set forth in the Network and
Transition Services Agreement.
"Normal Business Hours" shall mean the hours Monday through Friday
(other than legal holidays) between 9:00 a.m. and 5:00 p.m., local time.
"Notice Period" shall have the meaning set forth in Section 9.3(a).
"Objection Notice" shall have the meaning set forth in Section 2.3(b).
"Person" shall mean any individual, corporation, partnership, joint
venture, trust, association, organization, Governmental Entity or other entity.
"Predecessor Company" shall mean the Companies prior to the acquisition
by GC on June 14, 2001.
"Pre-Closing Tax Period" shall mean all taxable periods ending on or
before the Closing Date and the portion ending on the Closing Date of any
Straddle Period.
"Preliminary Amounts" has the meaning specified in Section 2.3(a).
"Preliminary Cash Balance" shall have the meaning set forth in Section
7.8(b).
"Preliminary Closing Date Balance Sheet" has the meaning specified in
Section 2.3(a).
"Preliminary Closing Date Net Working Capital Amount" has the meaning
specified in Section 2.3(a).
"Preliminary Deferred Maintenance Revenue Amount" has the meaning
specified in Section 2.3(a).
"Preliminary Deferred Turret Revenue Amount" has the meaning specified
in Section 2.3(a).
6
"Preliminary Transaction Record" shall have the meaning set forth in
Section 7.8(b).
"Preliminary Work-In-Process" shall have the meaning set forth in
2.3(a)(ii).
"Property Taxes" shall have the meaning set forth in Section 9.4(b).
"Purchase Price Adjustment" shall mean the Additional Net Working
Capital minus the Excess Net Working Capital minus the Deferred Maintenance
Revenue Adjustment and minus the Deferred Turret Revenue Adjustment.
"Purchase Price" shall mean the Assets Purchase Price plus the Shares
Purchase Price plus the Additional Net Working Capital minus the Excess Net
Working Capital minus the Deferred Maintenance Revenue Adjustment and minus the
Deferred Turret Revenue Adjustment.
"Reference Balance Sheet" shall have the meaning set forth in Section
5.4(a).
"Reference Net Working Capital Amount" shall have the meaning set forth
in Section 2.4.
"Resolution Period" has the meaning specified in Section 2.3(b).
"Review Period" has the meaning specified in Section 2.3(b).
"Saturn" shall have the meaning set forth in the heading of the
Agreement.
"Saturn Percentage" shall mean the IPC Trading Systems Purchase Price
divided by the Purchase Price.
"Second Party" shall have the meaning set forth in Section 9.4(d).
"Sellers" shall have the meaning set forth in the heading of the
Agreement.
"Sellers' Trademarks" shall have the meaning set forth in Section 7.9.
"Shares" shall have the meaning set forth in the recitals to the
Agreement.
"Shares Purchase Price" shall have the meaning set forth in Section
2.1(b).
"Straddle Period" shall mean any taxable period beginning prior to and
ending after the Closing Date.
"Subsidiary" shall mean, with respect to any Person, any other Person
50% or more of the voting equity of which is owned, directly or indirectly, by
such first Person; provided that, with respect to IPC Inc. only, the term
"Subsidiary" shall not include Global Crossing USA Inc., Global Crossing
Holdings USA Inc., IXnet, Inc. or any of their direct or indirect subsidiaries.
The parties furthermore acknowledge, consistent with Schedule 5.3, that IPC
Trading Systems does not have any Subsidiaries as of the date hereof.
7
"Target Cash Amount" shall have the meaning set forth in Section 7.8(a).
"Tax or Taxes" shall mean all income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, real estate, excise, value
added, estimated, stamp, alternative or add-on minimum, environmental,
withholding and any other taxes, duties or assessments imposed by any Tax
Authority together with all interest, penalties and additions imposed with
respect to such amounts.
"Tax Asset" means any net operating loss, net capital loss, investment
tax credit, foreign tax credit, charitable deduction or any other credit or tax
attribute that could be carried forward or back to reduce Taxes (including
without limitation deductions and credits related to alternative minimum Taxes).
"Tax Authority" and "Taxing Authority" shall mean any domestic, foreign,
federal, national, state, county or municipal or other local government, any
subdivision, agency, commission or authority thereof, or any quasi-governmental
body exercising any taxing authority or any other authority exercising Tax
regulatory authority.
"Tax Claim" shall have the meaning set forth in Section 9.4(e).
"Tax Return or Tax Returns" shall mean all returns, declarations,
reports, claims for refund or information returns or statements relating to
Taxes, including any schedule or attachment thereto, and including any
amendment thereof filed or to be filed with any Tax Authority in connection
with the determination, assessment or collection of Taxes.
"Threshold Multiplier" shall mean $50,000.
"Transfer Agreement" shall have the meaning set forth in Section 2.2(b).
"Turret Systems" shall mean telecommunications equipment and software to
enable communications (including voice, video and data) primarily among
traders, counterparties and associated support personnel, in each case other
than Network Services.
"WARN" shall have the meaning set forth in Section 7.10(h).
8
Rules of Construction
References in this Agreement to any gender include references to all
genders, and references to the singular include references to the plural and
vice versa. The words "include", "includes" and "including" when used in this
Agreement shall be deemed to be followed by the phrase "without limitation".
Unless the context otherwise requires, references in this Agreement to
Articles, Sections, Exhibits, Schedules and Appendices shall be deemed
references to Articles and Sections of, and Exhibits, Schedules and Appendices
to, such Agreement. Unless the context otherwise requires, the words "hereof",
"hereby" and "herein" and words of similar meaning when used in this Agreement
refer to this Agreement in its entirety and not to any particular Article,
Section or provision of this Agreement. Unless otherwise indicated, references
in this Agreement to dollars are to United States dollars.
i
