Exhibit 10.1
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
BY AND BETWEEN
PITNEY BOWES INC.
AND
JCC MANAGEMENT LLC
DATED AS OF
May 16, 2006
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TABLE OF CONTENTS
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ARTICLE I Definitions .........................................................2
ARTICLE II Sale, Purchase and Repurchase .....................................16
SECTION 2.01. Agreement to Sell and to Purchase; Purchase Price .........16
SECTION 2.02. Closing ...................................................17
SECTION 2.03. Purchase Price Adjustment .................................18
ARTICLE III Representations and Warranties of the Seller .....................20
SECTION 3.01. Organization and Standing .................................20
SECTION 3.02. Ownership of Shares; Capitalization .......................21
SECTION 3.03. Authorization; Enforceability .............................22
SECTION 3.04. No Violation; Consents ....................................22
SECTION 3.05. Financial Statements ......................................23
SECTION 3.06. Material Adverse Change ...................................24
SECTION 3.07. Assets ....................................................24
SECTION 3.08. Intellectual Property .....................................25
SECTION 3.09. Employee Benefit Plans ....................................26
SECTION 3.10. Employees and Labor Relations .............................27
SECTION 3.11. No Undisclosed Material Liabilities .......................27
SECTION 3.12. Compliance with Laws ......................................28
SECTION 3.13. Litigation ................................................28
SECTION 3.14. Compliance with Constituent Documents .....................28
SECTION 3.15. Environmental Matters .....................................28
SECTION 3.16. Real Property .............................................28
SECTION 3.17. Taxes .....................................................29
SECTION 3.18. Financings ................................................29
SECTION 3.19. Contracts .................................................30
SECTION 3.20. Certain Business Practices ................................32
SECTION 3.21. Insurance .................................................32
SECTION 3.22. Licenses and Permits; Governmental Notices ................33
SECTION 3.23. Affiliated Transactions ...................................33
SECTION 3.24. Vote Required .............................................33
SECTION 3.25. Representations and Warranties ............................33
ARTICLE IV Representations and Warranties of the Purchaser ...................34
SECTION 4.01. Organization; Authorization; Enforceability ...............34
SECTION 4.02. Purchaser as a Corporation and U.S. Citizen ...............35
SECTION 4.03. Purchase for Investment ...................................35
SECTION 4.04. No Violation; Consents ....................................35
SECTION 4.05. Litigation ................................................36
SECTION 4.06. Financing .................................................36
SECTION 4.07. Antitrust .................................................36
SECTION 4.08. Representations and Warranties ............................36
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ARTICLE V Covenants of the Seller ............................................36
SECTION 5.01. Compliance with Conditions; Commercially
Reasonable Efforts .................................36
SECTION 5.02. Access to Books and Records ...............................36
SECTION 5.03. Consents and Approvals ....................................37
SECTION 5.04. Intentionally Omitted .....................................37
SECTION 5.05. No Solicitation of Other Offers ...........................37
SECTION 5.06. Confidentiality; Information ..............................38
SECTION 5.07. The Distribution Agreements ...............................39
SECTION 5.08. Conduct of Business .......................................39
SECTION 5.09. Monthly Management Reports; Delivery of
Financial Statements ...............................42
SECTION 5.10. Scheduled Payments ........................................42
SECTION 5.11. Taxes .....................................................42
SECTION 5.12. Statute of Limitations ....................................44
SECTION 5.13. Directors and Officers ....................................44
SECTION 5.14. Closing Date Operations Expense Statement .................44
SECTION 5.15. Assistance ................................................44
ARTICLE VI Covenants of the Purchaser ........................................45
SECTION 6.01. Compliance with Conditions; Commercially
Reasonable Efforts .................................45
SECTION 6.02. Consents and Approvals ....................................45
SECTION 6.03. Confidentiality; Information ..............................46
SECTION 6.04. Prohibition on Solicitation and Hiring ....................46
SECTION 6.05. Financing Commitment Letter ...............................47
ARTICLE VII Conditions Precedent to Closing ..................................48
SECTION 7.01. Conditions to the Seller's Obligations in
Respect of the Closing .............................48
SECTION 7.02. Conditions to the Purchaser's Obligations in
Respect of the Closing .............................49
ARTICLE VIII Indemnification .................................................50
SECTION 8.01. Indemnification by the Seller .............................50
SECTION 8.02. Indemnification by Purchaser ..............................51
SECTION 8.03. Claims Procedure ..........................................51
SECTION 8.04. Third Party Claims ........................................52
SECTION 8.05. Termination of Indemnification for Breaches
of Representations and Warranties ..................53
SECTION 8.06. Limitations on Indemnity Obligations ......................53
SECTION 8.07. Losses Net of Insurance, Etc ..............................53
SECTION 8.08. Indirect Losses; Mitigation ...............................54
SECTION 8.09. Other Limitations .........................................54
SECTION 8.10. Sole Remedy/Waiver ........................................54
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TABLE OF CONTENTS
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ARTICLE IX 54
SECTION 9.01. Tax Returns ...............................................54
SECTION 9.02. Payment of Taxes ..........................................56
SECTION 9.03. Audits and Contests .......................................56
SECTION 9.04. Third Party Indemnities ...................................58
SECTION 9.05. Cooperation ...............................................58
SECTION 9.06. Retention of Records and Returns ..........................59
SECTION 9.07. Indemnification for Taxes ................................599
ARTICLE X 60
Miscellaneous 60
SECTION 10.01. Survival .................................................60
SECTION 10.02. Notices ..................................................61
SECTION 10.03. Termination ..............................................62
SECTION 10.04. Governing Law ............................................64
SECTION 10.05. Waiver Of Jury Trial .....................................64
SECTION 10.06. Attorney Fees ............................................65
SECTION 10.07. Entire Agreement .........................................65
SECTION 10.08. Modifications and Amendments .............................65
SECTION 10.09. Waivers and Extensions ...................................65
SECTION 10.10. Exhibits and Schedules ...................................65
SECTION 10.11. Expenses; Brokers ........................................65
SECTION 10.12. Press Releases and Public Announcements ..................66
SECTION 10.13. Assignment; No Third Party Beneficiaries .................66
SECTION 10.14. Severability .............................................67
SECTION 10.15. Counterparts .............................................67
SECTION 10.16. Remedies; Specific Performance ...........................67
SECTION 10.17. Transition Services Agreement ............................67
SCHEDULES
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Schedule 1.02 Specified Leases
Schedule 2.03(e) Certain Transactions
Schedule 3.01(c)(i) Capital Stock of Subsidiaries
Schedule 3.01(c)(ii) Arrangements with Respect to Capital Stock
Schedule 3.01(c)(iii) Ownership Interests of the Company in its Subsidiaries
Schedule 3.04 No Violation; Consents
Schedule 3.05(a) Unaudited Financial Statements
Schedule 3.05(b) Audited Financial Statements
Schedule 3.05(c) Operation Expenses
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Schedule 3.06 Material Adverse Change
Schedule 3.07 Assets
Schedule 3.08(d) Company Intellectual Property
Schedule 3.08(i) Computer Software
Schedule 3.09(a)(i) Employee Benefit Plans
Schedule 3.09(a)(ii) Benefits to Retirees or Other Terminated Employees
Schedule 3.09(a)(iii) No Violation of Certain Applicable Law
Schedule 3.09(a)(iv) No Increase in Benefits or Payments
Schedule 3.09(a)(v) No "Excess Parachute Payment"
Schedule 3.10 Employees and Labor Relations
Schedule 3.11 No Undisclosed Material Liabilities
Schedule 3.13 Litigation
Schedule 3.15 Environmental Matters
Schedule 3.16 Real Property
Schedule 3.17 Taxes
Schedule 3.18(a) Financings
Schedule 3.18(b) Financing Defaults
Schedule 3.18(g) Bankruptcies
Schedule 3.19 Material Contracts
Schedule 3.22 Licenses and Permits; Governmental Notices
Schedule 5.02 Access to Books and Records
Schedule 5.03 Consents and Approvals
Schedule 6.05(b) Acceptable Financial Institutions
Schedule 7.02(k) Transaction Consents
Schedule 7.02(l) Third Party Agreements
EXHIBITS
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Exhibit A Employee Benefits Agreement
Exhibit B Form of Intellectual Property Agreement
Exhibit C Form of Separation and Distribution Agreement
Exhibit D Form of Transition Services Agreement
Exhibit E Form of Legal Opinion
Exhibit F Financing Commitment Letter
Exhibit G Acceptable Form of Commitment Letter
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of May
16, 2006, is made by and between Pitney Bowes Inc., a Delaware corporation (the
"SELLER"), being the sole stockholder of Pitney Bowes Credit Corporation, a
Delaware corporation (the "COMPANY"), and JCC Management LLC, a Delaware limited
liability company (the "PURCHASER"). The Company is a party to this Agreement
solely for the purposes of Section 10.07 hereof. Unless otherwise expressly set
forth in this Agreement, capitalized terms used herein shall have the meaning
ascribed to such terms in Article I of this Agreement.
WHEREAS, the Seller owns four hundred and sixty (460) shares (the
"SHARES") of common stock of the Company, par value $0.001 per share (the
"COMMON STOCK"), such Shares being all of the issued and outstanding shares of
capital stock of the Company;
WHEREAS, the Seller desires to sell, and the Purchaser desires to
purchase, each of the Shares pursuant to the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, it is the intention of the parties hereto that, upon
consummation of the sale and purchase of the Shares pursuant to this Agreement,
the Purchaser shall own one hundred percent (100%) of the issued and outstanding
shares of capital stock of the Company;
WHEREAS, pursuant to the terms of this Agreement, the Seller and
the Purchaser shall jointly complete and make a timely election under Section
338(h)(10) of the Code with respect to the Company and each of the eligible
members of the Company Group (as defined below) on Form 8023 or in such other
manner as may be required by rule or regulation of the IRS (as defined below)
and shall jointly make an election in the manner required under any analogous
provisions of state or local law with respect to the Company and each of the
eligible members of the Company Group;
WHEREAS, contemporaneously herewith, the Company, the Seller and
the Purchaser are entering into an Employee Benefits Agreement, a copy of which
is attached hereto as EXHIBIT A (the "EMPLOYEE BENEFITS AGREEMENT");
WHEREAS, as a condition to the consummation of the Transactions
(as defined below) contemplated hereby, the Seller and the Company will enter
into the Distribution Agreements (as defined below);
WHEREAS, as a condition to the consummation of the Transactions
and in accordance with the Separation and Distribution Agreement (as defined
below) and subject to the terms and conditions thereof, following the date
hereof, the Seller and its Subsidiaries (as defined below) will engage in an
internal restructuring to effectuate the PBGFS Contribution (as defined below),
the Company Contribution (as defined below) and the PBGFS Distribution (as
defined below) as more fully described in Schedules 2.2(a)(i), 2.2(a)(iii) and
2.6(a)(iv) and Article III of the Separation and Distribution Agreement and the
PBG Restructuring (as defined in Section 9.07(c) below) (the transactions
contemplated by this recital, the "INTERNAL RESTRUCTURING");
WHEREAS, as a condition to the consummation of the Transactions
and in accordance with the Separation and Distribution Agreement and subject to
the terms and
conditions thereof, following the date hereof and after the consummation of the
Internal Restructuring, the Company will contribute to Pitney Bowes Global
Financial Services LLC (f/k/a PB Mailing Financial Services Inc.), a Delaware
limited liability company, and as of the date hereof a Subsidiary of the Company
("PBGFS"), certain of its assets and transfer certain of its liabilities,
including, the Company's outstanding Indebtedness with respect to the Indentures
(as defined below) (collectively, the "PBGFS CONTRIBUTION");
WHEREAS, as a condition to the consummation of the Transactions
and in accordance with the Separation and Distribution Agreement and subject to
the terms and conditions thereof, after the PBGFS Contribution and prior to the
PBGFS Distribution, the Seller will contribute to the Company certain of its
assets and transfer certain of its liabilities and the Seller will assume or
otherwise retire, cancel or forgive certain outstanding intercompany
Indebtedness of the Company and the Company will satisfy the remaining
outstanding intercompany Indebtedness that was not assumed or otherwise retired,
cancelled or forgiven by the Seller (collectively, the "COMPANY CONTRIBUTION");
and
WHEREAS, as a condition to the consummation of the Transactions
and in accordance with the Separation and Distribution Agreement and subject to
the terms and conditions thereof, after the Company Contribution and immediately
prior to the Closing, the Company will distribute all of the membership
interests of PBGFS held by the Company to the Seller (the "PBGFS DISTRIBUTION").
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
DEFINITIONS
(a) As used in this Agreement, the following terms shall have
the following meanings:
"ACQUISITION PROPOSAL" means (a) any inquiry, proposal or offer
(whether or not in writing) from any Person or group directly or indirectly to
acquire or purchase, in a single transaction or series of transactions, by stock
acquisition, asset acquisition, merger, consolidation, liquidation, dissolution,
business combination, recapitalization or similar transaction (i) at least 10%
or more of the consolidated assets of the Company and its Subsidiaries (after
taking into effect the PBGFS Contribution, the Company Contribution and the
PBGFS Distribution), (ii) at least 10% or more of any class of equity or debt
securities of the Company (after taking into effect the PBGFS Contribution, the
Company Contribution and the PBGFS Distribution) or (iii) at least 10% or more
of any class of equity or debt securities of one or more of the Company's
Subsidiaries (after taking into effect the PBGFS Contribution, the Company
Contribution and the PBGFS Distribution) which in the aggregate constitute 10%
or more of the net revenues, net income or assets (including equity securities)
of the Company and its Subsidiaries (after taking into effect the PBGFS
Contribution, the Company Contribution and the PBGFS Distribution) or (b) any
public announcement by or on behalf of the Company or any of its Affiliates of a
proposal, plan or intention to engage in any of the foregoing or enter into any
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agreement with respect to the foregoing, in each case other than the
Transactions or the Internal Restructuring.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition and the
"Company Group" definition, "control" when used with respect to any Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, whether or not
through one or more intermediaries, by Contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"APPLICABLE LAW" means any United States Federal, state, local or
foreign law, statute, rule, regulation, order, writ, injunction, judgment,
decree or Permit of any Governmental Authority.
"BIG FOUR PUBLIC ACCOUNTING FIRMS" means each of Deloitte & Touche
LLP, Ernst & Young LLP, KPMG LLP, and PricewaterhouseCoopers LLP.
"BOARD OF DIRECTORS" means, with respect to any Person, its board
of directors or similar governing body.
"BUSINESS" means the business and operations of providing Large
Ticket Financing and syndication for a wide variety of real property and
personal property as of the Closing Date, but in any event not the PBGFS
Business or the Seller Business.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or a
day when banks in the City of New York are required or authorized by Applicable
Law to be closed.
"CAPITAL STOCK" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock and (b) with respect to any
other Person, any and all partnership or other equity interests of such Person.
"CERBERUS" means Cerberus Capital Management, L.P., a Delaware
limited partnership.
"CLOSING DATE BALANCE SHEET" means the unaudited combined pro
forma balance sheet of Pitney Bowes Capital Services (after taking into effect
the Internal Restructuring, the PBGFS Contribution, the Company Contribution and
the PBGFS Distribution) as of the Closing Date prepared in accordance with the
same accounting policies, principles, practices and methods used in preparing
the Unaudited Balance Sheet as reflected in the notes thereto and the Company
Audited Financial Statements.
"CLOSING DATE NET WORKING CAPITAL" of Pitney Bowes Capital
Services shall mean the following from the Closing Date Balance Sheet: the
difference between Current Assets LESS Current Liabilities.
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"CLOSING DATE WORKING CAPITAL SHORTFALL" shall mean the amount by
which the Company's Closing Date Net Working Capital is negative.
"CLOSING DATE WORKING CAPITAL SURPLUS" shall mean the amount by
which the Company's Closing Date Net Working Capital is positive.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMBINED TAX RETURN" means a consolidated, combined or unitary
Income Tax Return that actually includes, by election or otherwise, one or more
members of the Pitney Bowes Group and one or more members of the Company Group.
"COMPANY 2006 FIRST QUARTER FINANCIAL STATEMENTS" means the
unaudited pro forma balance sheet of Pitney Bowes Capital Services as of March
31, 2006 and the unaudited pro forma statement of operations and cash flows of
Pitney Bowes Capital Services for the three (3) month period ended March 31,
2006 (in each case after taking into effect the Internal Restructuring, the
PBGFS Contribution, the Company Contribution and the PBGFS Contribution) and
related footnotes thereof prepared in accordance with GAAP (except as disclosed
in footnote 1 thereto) on a basis consistent with the Unaudited Financial
Statements.
"COMPANY 2005 AUDITED FINANCIAL STATEMENTS" means the audited
combined balance sheet of Pitney Bowes Capital Services as of December 31, 2005
and combined statements of income, changes in invested equity and cash flows of
Pitney Bowes Capital Services (in each case after taking into effect the
Internal Restructuring, the PBGFS Contribution, the Company Contribution and the
PBGFS Distribution) for the year ended, December 31, 2005 and all related
footnotes thereof prepared in accordance with GAAP (except as disclosed in
footnote 1 thereto) on a basis consistent with the Unaudited Financial
Statements.
"COMPANY AUDITED FINANCIAL STATEMENTS" means the audited combined
balance sheet of Pitney Bowes Capital Services as of December 31, 2005, 2004 and
2003 and combined statements of income, changes in invested equity and cash
flows of Pitney Bowes Capital Services (in each case after taking into effect
the Internal Restructuring, the PBGFS Contribution, the Company Contribution and
the PBGFS Distribution) for the years ended, December 31, 2005, 2004 and 2003
and all related footnotes thereof prepared in accordance with GAAP (except as
disclosed in footnote 1 thereto) on a basis consistent with the Unaudited
Financial Statements.
"COMPANY GROUP" means the Company, each Subsidiary of the Company
and each other Person that is or will be controlled directly or indirectly by
the Company immediately after the Closing; for the avoidance of doubt, it shall
not include PBGFS.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement,
dated September 27, 2004, by and between J.P. Morgan Securities Inc., as agent
for Seller, and Cerberus, as amended from time to time.
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"CONTRACT" means with respect to any specified Person, any written
contract, Lease, license, loan agreement, mortgage, security agreement, trust
indenture, note, bond, or other commitment, agreement, Financing Document or
instrument to which such Person is legally bound or under which such Person is
legally obligated.
"CURRENT ASSETS" means the lesser of (i) Non-Cash Current Assets
and (ii) ten percent (10%) of Current Liabilities.
"NON-CASH CURRENT ASSETS" means the amount of non-cash current
assets of Pitney Bowes Capital Services (after giving effect to the exclusion of
current assets of PBG Holdings) equal to the sum of (i) reimbursable expenses,
(ii) prepaid expenses, (iii) prepaid rent and (iv) other current assets, but
excluding leases, loans and other rents receivables.
"CURRENT LIABILITIES" means the amount of current liabilities of
Pitney Bowes Capital Services (after giving effect to the exclusion of current
liabilities of PBG Holdings), equal to the sum of (i) accounts payable and
accrued liabilities, (ii) customer advances and deposits, (iii)
commissions/retention payable and (iv) other current liabilities, but excluding
deferred Taxes, Tax liabilities and the current portion of non-recourse
Indebtedness.
"DISTRIBUTION AGREEMENTS" means the Separation and Distribution
Agreement, the Employee Benefits Agreement, the Intellectual Property Agreement,
the Transition Services Agreement and any other documents, agreements or
instruments to be entered into in connection with the Transactions, the Internal
Restructuring, the PBGFS Contribution, the Company Contribution and the PBGFS
Distribution, and the exhibits, schedules and annexes thereto.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA and any other employee benefit plan or
agreement, including but not limited to, any bonus, deferred compensation,
profit-sharing, pension, severance, stay-bonus, retention, change in control, or
stock option plan or agreement, (a) that is currently maintained, sponsored,
contributed to, or required to be contributed to by the Company or any of its
Subsidiaries with respect to any employees or former employees of the Company or
any of its Subsidiaries or (b) with respect to which the Company or any of its
Subsidiaries may otherwise have any liability, including but not limited, to a
plan subject to Title IV of ERISA or Section 412 of the Code to which an ERISA
Affiliate currently contributes.
"ENVIRONMENTAL CLAIMS" refers to any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, notice of violation,
judicial or administrative proceeding, judgment, letter or other communication
from any governmental agency, department, bureau, office or other authority, or
any third party involving violations of Environmental Laws or Releases (a) from
any assets, properties or businesses of the Company or any predecessor in
interest or (b) from or onto any facilities which received Hazardous Substances
generated by the Company, its Subsidiaries or any predecessor in interest.
"ENVIRONMENTAL LAW" means any applicable federal, state, local,
common or foreign law, statute, ordinance, rule, regulation, code, license,
Permit, authorization, approval, consent, judgment, decree, injunction,
requirement or enforceable agreement with any governmental entity relating to
(a) the protection, preservation or restoration of the environment
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(including air, water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource) or (b) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, Release or disposal
of Hazardous Substances, including the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 ET SEQ., as amended; the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 ET SEQ., as amended; the Clean Air
Act, 42 U.S.C. 7401 ET SEQ., as amended; the Clean Water Act, 33 U.S.C. 1251 ET
SEQ., as amended; the Occupational Safety and Health Act, 29 U.S.C. 655 ET SEQ.,
in each case as amended.
"EQUITY COMMITMENT LETTER" means the Equity Commitment Letter,
dated as of the date hereof, by and between the Purchaser (or its permitted
assigns in accordance with Section 10.13) and Cerberus.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is part of the same controlled group, or under common control
with, or part of an affiliated service group that includes the Company, within
the meaning of Code Section 414(b) or (c) and with respect to an Employee
Benefit Plan subject to Code Section 412 or Title IV of ERISA, within the
meaning of Code Section 414(b), (c), (m) or (o).
"ESTIMATED CLOSING DATE NET WORKING CAPITAL" of Pitney Bowes
Capital Services shall mean the following from the Estimated Closing Date
Balance Sheet: the difference between Current Assets LESS Current Liabilities.
"ESTIMATED TAX RETURN" means any Tax Return filed with estimated
Tax payments due on or before the Closing Date.
"ESTIMATED WORKING CAPITAL SHORTFALL" shall mean the amount by
which the Company's Estimated Closing Date Net Working Capital is negative.
"ESTIMATED WORKING CAPITAL SURPLUS" shall mean the amount by which
the Company's Estimated Closing Date Net Working Capital is positive.
"FINANCING" means a transaction, which the Company, any Affiliate
of the Company or the PBG Partnership has entered into on behalf of the Business
whereunder such Person has extended credit to or is otherwise owed Indebtedness
from another party, including a loan, lease or conditional sale, in each case,
where the obligation of the other party is secured by, or such transaction
otherwise involves the financing of, Real Property or personal property; for the
avoidance of doubt, a Financing shall include any sale-leaseback of Real
Property but not include a PBGFS Financing.
"FINANCING COMMITMENT LETTER" means that certain commitment
letter, dated May 16, 2006, addressed to the Purchaser from the lenders party
thereto or such other reputable financial institution(s) reasonably acceptable
to the Purchaser, a copy of which is attached hereto as EXHIBIT F.
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"FINANCING DOCUMENTS" means, with respect to each Financing, each
lease, loan or conditional sale agreement, credit and sale agreement, tax
indemnity agreement, security agreement, promissory note, pledge agreement,
mortgage, guarantee, or other similar agreement, and including any amendment,
modification or extension thereof and all material agreements entered into
pursuant thereto or in connection therewith.
"FINANCING FILE" means, as to each Financing: (a) the fully
executed copies of the Financing Documents; (b) the original title document for
the related leased property or a duplicate certified by the appropriate
Governmental Authority that issued the original thereof or the application for
such title document; (c) documents evidencing or relating to liability, casualty
or insurance policies; (d) documents evidencing any vendor recourse; (e) the
credit application of each Obligor; (f) the fully executed acceptance
certificates with respect to property covered by the applicable large ticket
financing; and (g) all material correspondence and other documents relating to
any breach or default by the Obligor under such Financing.
"GAAP" means United States generally accepted accounting
principles, consistently applied.
"GOVERNMENTAL AUTHORITY" means any instrumentality, subdivision,
court, administrative agency, commission, official or other authority of the
United States or any other country or any state, province, prefect,
municipality, locality or other government or political subdivision thereof, or
any quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"HAZARDOUS SUBSTANCE" means, without regard to amount and/or
concentration (a) any element, compound, or chemical that is defined, listed or
otherwise classified as a contaminant, pollutant, toxic pollutant, toxic or
hazardous substances, extremely hazardous substance or chemical, hazardous
waste, medical waste, biohazardous or infectious waste, special waste, or solid
waste under Environmental Laws, (b) petroleum, petroleum-based or
petroleum-derived products, (c) polychlorinated biphenyls, (d) any substance
exhibiting a hazardous waste characteristic, including but not limited to
corrosivity, ignitibility, toxicity or reactivity, as well as any radioactive or
explosive materials and (e) any asbestos-containing materials in friable form.
"HSR ACT" shall mean the Hart Scott Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"INCOME TAX" means federal income tax and any other income or
franchise tax imposed on or measured by net income.
"INCOME TAX RETURN" means any Tax Return in respect of Income
Taxes.
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"INDEBTEDNESS" means as to any Person, all indebtedness to any
other Person for borrowed money, including capitalized lease obligations,
synthetic lease obligations, sale leaseback obligations and other similar
indebtedness obligations, whether secured or unsecured, and all such
indebtedness of any other Person which is directly or indirectly guaranteed by
such Person or which such Person has agreed to purchase or otherwise acquire or
in respect of which it has otherwise assured against loss.
"INDENTURES" means collectively, the (a) Indenture, dated May 1,
1985, by and between the Company and Suntrust Bank (as successor trustee to
Bankers Trust Company), with supplemental indentures, dated December 1, 1986,
February 15, 1989, May 1, 1989 and February 4, 2005 and (b) Indenture, dated
July 31, 1999, by and between the Company and Suntrust Bank, with a supplemental
indenture, dated February 4, 2005.
"INDUSTRY" means the equipment and Real Property Large Ticket
Financing and syndication industry and any related industries.
"INTELLECTUAL PROPERTY" means (a) all foreign and domestic patents
(including all reissues, divisions, continuations, renewals and extensions
thereof), patent applications and registrations, patent rights, trademarks,
trademark applications and registrations, service marks, trade names, brand
names, d/b/a's, domain names, logos, trade dress, other indicia of origin,
copyrights, copyright registrations and applications, confidential information,
trade secrets, proprietary technology, know-how, inventions, discoveries, and
improvements, (b) all information and data, whether in printed or electronic
form and whether contained in a database or otherwise, including customer lists
(collectively, "DATA") and (c) all other forms of intellectual property or
proprietary rights and claims or causes of action arising out of or related to
any infringement, misappropriation or other violation of any of the foregoing,
including rights to recover for past, present and future violations thereof.
"INTELLECTUAL PROPERTY AGREEMENT" means the Intellectual Property
Agreement by and between the Company and the Seller substantially in the form of
EXHIBIT B attached hereto to be entered into in connection with the terms and
subject to the conditions set forth in this Agreement.
"IRS" means the Internal Revenue Service.
"IT SYSTEMS" means electronic data processing, information,
recordkeeping, communications, telecommunications, networking, account
management, inventory management and other such applications, software, and
hardware, equipment and services (including applications and software installed
on hardware and equipment, and databases, firmware, and related documentation),
and Internet websites and related content.
"LARGE TICKET FINANCING" means a Financing similar to those in the
portfolio listed or described on SCHEDULE 3.18(A) hereto.
"LEASE" means any and all leases, subleases, tenancies, options,
concession agreements, rental agreements, occupancy agreements, franchise
agreements, access agreements and any other agreements (including all
amendments, extensions, replacements, renewals, modifications and/or guarantees
thereof), whether or not of record and whether now in existence
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or hereafter entered into, affecting the use or occupancy of all or any portion
of any Real Property.
"LIEN" means any mortgage, pledge, deed of trust, lien, security
interest, claim, restriction, charge or encumbrance of any kind.
"LOSS" or "LOSSES" shall mean the actual damages, losses,
liabilities, damages, obligations, deficiencies, penalties and fines sustained
by an Indemnified Party with respect to a claim, or which it is required to pay
or incur to a third party claimant by reason of a settlement or judgment in
respect of a claim, suit, action, proceeding or investigation, and includes
reasonable attorneys' fees, witness fees and other costs incurred or required to
be paid by the indemnified party in the ordinary course of reasonably
investigating, defending or resolving the claim.
"MATERIAL ADVERSE EFFECT" means any change in or any effect on the
Company (after taking into effect the PBGFS Contribution, the Company
Contribution and the PBGFS Distribution) or the Business that is, individually
or in the aggregate, materially adverse to the Company (after taking into effect
the PBGFS Contribution, the Company Contribution and the PBGFS Distribution), or
the assets (both tangible and intangible), liabilities, financial condition, or
results of operations of the Company Group (excluding the assets (both tangible
and intangible), liabilities and business to be contributed to PBGFS in
connection with the PBGFS Contribution); PROVIDED, HOWEVER, that in no event
shall any change or effect related to or resulting from the following, be
considered a Material Adverse Effect: (a) changes generally applicable to
companies in the Industry (including changes in interest rates or conditions in
financial markets, on an international, national or regional basis or changes in
the United States or global economy in general or any act of terrorism, war or
natural disaster), as opposed to changes specifically applicable to the Business
or changes that affect the Company in a disproportionate manner as compared to
other companies of similar size and credit rating in the Industry; (b) any
action or inaction by the Business' employees, vendors and non-Affiliate
counterparties to the Financings and the Relevant Contracts, which relate to the
Business, solely as a result of the execution of this Agreement or the
Transactions or the announcement thereof; (c) change to the senior management of
the Company or any other member of the Company Group, including the resignation
or termination of officers and executives of the Company or any other member of
the Company Group; (d) the Internal Restructuring; and (e) the audit of Seller'
consolidated tax returns for 1995 and subsequent years.
"OBLIGOR" means a Person (other than the Company or any of its
Affiliates) who is obligated under a Financing.
"OPERATION EXPENSES" means, with respect to any statement of
operations, an amount equal to the sum of the amount set forth in the selling,
general and administrative expenses line item of such statement of operations;
PROVIDED, HOWEVER, such line item shall not reflect deferred Taxes or Tax
liabilities or any expenses related to the Transactions or any predecessor
transaction between the parties.
"OUT-OF-POCKET EXPENSES" shall include, but not be limited to,
reasonable attorney's fees, accountant fees and other related professional fees
and disbursements.
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"PBGFS BUSINESS" means (a) the business and operations of
providing lease financing of equipment manufactured or supplied by the Seller,
(b) all other business (other than the Business) conducted by PBGFS (after
taking into effect the PBGFS Contribution), including small ticket financing and
(c) except as otherwise expressly provided herein, any terminated, divested or
discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the businesses and
operations as described in subsection (a) above as then conducted, but in any
event not the Business, the Seller Business and businesses and operations
related to the Excluded PBGFS Assets (as such term is defined in the Separation
and Distribution Agreement).
"PBG PARTNERSHIP" means PBG Capital Partners L.L.C., a Delaware
limited liability company.
"PBG PARTNERSHIP 2005 AUDITED FINANCIAL STATEMENTS" means the
audited statements of assets, liabilities and members' equity, revenue and
expenses, changes in members' equity and cash flows of the PBG Partnership as of
December 31, 2005 (after taking into effect the Internal Restructuring, the
PBGFS Contribution, the Company Contribution and the PBGFS Distribution) for the
year ended, December 31, 2005 and all related footnotes thereof prepared in
accordance with GAAP.
"PBG PARTNERSHIP AUDITED FINANCIAL STATEMENTS" means the audited
statements of assets, liabilities and members' equity, revenue and expenses,
changes in members' equity and cash flows of the PBG Partnership as of December
31, 2005, 2004 and 2003 (after taking into effect the Internal Restructuring,
the PBGFS Contribution, the Company Contribution and the PBGFS Distribution) for
the years ended, December 31, 2005, 2004 and 2003 and all related footnotes
thereof prepared in accordance with GAAP.
"PBGFS FINANCING" means a transaction (other than a Financing)
which relates to the PBGFS Business and in which Seller or any Subsidiary of the
Seller has extended credit to another party, including a loan, lease or
conditional sale, in each case, where the obligation of the other party is
secured by, or such transaction otherwise involves the financing of personal
property.
"PERMIT" means permits, licenses, franchises, variances,
exemptions, orders, registrations, certificates (including certificates of
occupancy), consents, approvals and other authorizations issued or granted by
Governmental Authorities and any other right or authorization held by a
specified Person granted or recognized by a Governmental Authority in any
jurisdiction and required for the conduct of the Business.
"PERMITTED LIENS" means (a) mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary course of
business consistent with past practice, Liens arising under original purchase
price conditional sales contracts and equipment leases with third parties
entered into in the ordinary course of business consistent with past practice
and Liens for Taxes that are not due and payable or that may thereafter be paid
without penalty, (b) Liens that secure obligations that are reflected as
liabilities in the Unaudited Financial Statements or the Company Audited
Financial Statements, (c) Liens that are permitted under any Financing Document,
(d) Liens that that do not materially impair, and could not
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reasonably be expected to materially impair, the continued use and operation of
the assets that relate to the Financings, (e) other leases, subleases and
similar agreements, imperfections of title or easements, covenants,
rights-of-way and encumbrances, if any, that do not materially impair, and could
not reasonably be expected to materially impair, the value of the ownership
interest in (whether it be fee, leasehold or other), or the continued use and
operation of the assets to which they relate in the conduct of the Business as
presently conducted and (f) to the extent that the following do not materially
impair, and could not reasonably be expected to materially impair, the value of
the ownership interest in (whether it be fee, leasehold or other), or continued
use and operation of, the assets to which they relate in the conduct of the
Business as presently conducted (i) zoning, building and other similar legal
restrictions, (ii) Liens that have been placed by any developer, landlord or
other third party on property over which the Company or any of its Subsidiaries
has easement rights or on any leased property and subordination or similar
agreements relating thereto and (iii) unrecorded easements, covenants, rights of
way and other similar restrictions.
"PERMITTED TRANSFEREE" means, with respect to the Purchaser or any
Permitted Transferee of the Purchaser, any Subsidiary of the Purchaser or any
Affiliate of the Purchaser (but excluding any portfolio company of any member of
the Purchaser's Group that does not engage in businesses similar to the
Business); PROVIDED, HOWEVER, that each Permitted Transferee must agree in
writing to be bound by the terms of this Agreement and the Equity Commitment
Letter to the same extent, and in the same manner, as the Purchaser or the
transferring Permitted Transferee prior to the transfer of any Shares to such
Permitted Transferee; PROVIDED, FURTHER, HOWEVER, that the transfer of Shares to
such Permitted Transferee is in compliance with all applicable securities laws.
"PERSON" means any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"PITNEY BOWES CONSOLIDATED GROUP" means the Seller and each direct
and indirect corporate subsidiary, including a member of the Company Group, that
is eligible to join with the Seller or a member of the Pitney Bowes Group in the
filing of a consolidated federal income tax return.
"PITNEY BOWES GROUP" means the Seller and each Person (other than
any member of the Company Group) that is an affiliate of the Seller immediately
after the Closing Date.
"POST-CLOSING TAXES" means all Taxes incurred by, imposed on or
asserted against any member of the Pitney Bowes Group or the Company Group for a
Post-Closing Tax Period and shall include any Taxes (including Taxes related to
a Straddle Period) incurred by any member of the Company Group as a result of
any transaction undertaken by such member that is not specifically set forth in
this Agreement or the Distribution Agreements that is outside of the ordinary
course of business on the Closing Date after the Closing.
"POST-CLOSING TAX PERIOD" means (i) any tax period beginning after
the Closing Date and (ii) with respect to a Straddle Period, the portion of the
Straddle Period that commences on the day immediately after the Closing Date.
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"PRE-CLOSING TAXES" means all Taxes incurred by, imposed on or
asserted against any member of the Pitney Bowes Group or the Company Group for a
Pre-Closing Tax Period but shall not include any Taxes (including Taxes related
to a Straddle Period) incurred by any member or the Purchaser of the Company
Group as a result of any transaction undertaken by such member that is not
specifically set forth in this Agreement or the Distribution Agreements and that
is outside of the ordinary course of business on the Closing Date after the
Closing including, without limitation, the Purchaser making an election under
Section 338(g) of the Code with respect to any member of the Company Group.
"PRE-CLOSING TAX PERIOD" means (i) any tax period ending on or
before the Closing Date and (ii) with respect to a Straddle Period, the portion
of the Straddle Period ending on and including the Closing Date.
"PRE-CLOSING TAX RETURN" means any Tax Return that includes Taxes
allocable to the Pre-Closing Tax Period but excluding any Tax Return related to
a Straddle Period.
"PREPAID TAXES" means all payments of Taxes made in respect of the
Tax liability of the Company or any member of the Company Group (whether by
reason of an estimated Tax payment or otherwise) on or prior to the Closing
Date, including any refunds or credits attributable to a Pre-Closing Tax Period,
applied to the Straddle Period.
"PURCHASER'S GROUP" means, collectively, any Person that is an
Affiliate of the Purchaser or Cerberus.
"REAL PROPERTY" means, collectively, all right, title and interest
(including any leasehold, mineral or other estate) in and to any and all parcels
of or interests in real property owned, leased or operated by any Person,
whether by lease, license or other means, together with, in each case, all
easements, hereditaments and appurtenances relating thereto, all improvements
and appurtenant fixtures and equipment, all general intangibles and Contract
rights and other property and rights incidental to the ownership, lease or
operation thereof.
"RELEASE" means any spilling, leaking, pumping, emitting,
emptying, discharging, injecting, escaping, leaching, migrating, dumping, or
disposing of Hazardous Substances (including the abandonment or discarding of
barrels, containers or other closed receptacles containing Hazardous Substances)
into the environment.
"RELEVANT CONTRACTS" means the following categories of Contracts
that solely relate to the Business: (a) any Contract to purchase or otherwise
acquire or sell or otherwise dispose of any interest in Real Property; (b) any
Lease or similar agreement to which a non-affiliated party is the lessee of, or
holds or uses, any machinery, equipment, vehicle or other tangible personal
property owned by the Company Group (at the time of the Closing); (c) any
Contract relating to a partnership, joint venture, strategic alliance,
exclusivity, consortium or other similar arrangement; (d) any Contract relating
to Indebtedness; (e) any outstanding customer option relating to any Contract;
and (f) any employment Contract.
"REPRESENTATIVES" means, collectively, with respect to any Person,
such Person's directors, partners, members, officers, employees, financial
advisors, lenders, insurers,
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consultants, accountants, attorneys, agents, representatives, equity investors,
rating agencies, controlled Affiliates and controlling persons of such Person or
its controlled Affiliates.
"SELLER BUSINESS" means (a) the business and operations of
providing integrated mail, messaging, and document management systems, services
and solutions for organizations of all sizes, (b) all other business (including
the business and operations (other than the Business) related to the Company)
and (c) except as otherwise expressly provided herein, any terminated, divested
or discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the businesses and
operations as described in subsection (a) above as then conducted, but in any
event not the Business, the PBGFS Business and businesses and operations related
to the Excluded PBGFS Assets (as such term is defined in the Separation and
Distribution Agreement).
"SEPARATION AND DISTRIBUTION AGREEMENT" means the Separation and
Distribution Agreement by and between the Seller and the Company substantially
in the form of EXHIBIT C attached hereto to be entered into in connection with
the Internal Restructuring, the PBGFS Contribution, the Company Contribution and
the PBGFS Distribution.
"SPECIFIED LEASES" means the Financings listed on SCHEDULE 1.02.
"STRADDLE PERIOD" means any taxable period that begins on or
before the Closing Date and ends after the Closing Date.
"STRADDLE PERIOD TAX RETURN" means any Tax Return that includes
Taxes allocable to the Straddle Period other than a Combined Tax Return.
"SUBSIDIARY" means, with respect to any Person (a) a corporation,
a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by a subsidiary of such Person, or by such Person and one or
more subsidiaries of such Person, (b) a partnership in which such Person or a
subsidiary of such Person is, at the date of determination, a general partner of
such partnership and has the power to direct the policies and management of such
partnership or (c) any other Person (other than a corporation) in which such
Person, a subsidiary of such Person or such Person and one or more subsidiaries
of such Person, directly or indirectly, at the date of determination thereof,
has (i) at least a majority ownership interest or (ii) the power to elect or
direct the election of a majority of the directors or other governing body of
such Person.
"SUIT" means any suit, claim, action, arbitration, mediation,
opposition, investigation or other proceeding.
"SUPERIOR PROPOSAL" means a written offer made by a Person other
than the Purchaser, its Affiliates or Persons acting on its behalf (a) on terms
(taken as a whole) that the Board of Directors of the Seller determines in good
faith would, if consummated, be more favorable to the Company or the Seller and
their respective stockholders, as applicable, than the Transactions and (b) that
the Board of Directors of the Seller determines in good faith is reasonably
capable of being consummated (after taking into account such factors as the
Board of Directors of the Seller in good faith deems relevant, including but not
limited to all legal,
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financial, regulatory and other aspects of such proposal and the likely
availability of any necessary financing).
"TAX" means any federal, state, local or foreign net income, gross
income, net receipts, gross receipts, profit, severance, property, production,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, AD VALOREM, value-added, transfer, stamp,
employment or other tax, custom duty, fee or other governmental charge of any
kind, together with any interest, fine, penalty, addition to tax or additional
amount imposed with respect thereto.
"TAX ATTRIBUTE" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, deduction or any loss, 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 MATERIALS" means all Pre-Closing Tax Returns involving
another party hereto (or its Subsidiaries) and all Straddle Period Tax Returns
involving another party hereto (or its Subsidiaries), or other books, records
and files relating to such Tax Returns.
"TAX MATTER" means any inquiry, claim, assessment, audit or
similar event with respect to Taxes.
"TAX RETURN" means any tax return, statement, report or form
(including estimated tax returns and reports, extension requests and forms, and
information returns and reports) required to be filed with any taxing authority
and any amended return (including any claims for refunds) with respect to the
foregoing.
"TRANSACTIONS" means solely the transactions contemplated by this
Agreement, which, for the avoidance of doubt, does not include the transactions
contemplated by the Internal Restructuring, the PBGFS Contribution, the Company
Contribution and the PBGFS Distribution.
"TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement by and between the Company and the Seller substantially in the form of
EXHIBIT D attached hereto to be entered into in connection with the terms and
subject to the conditions set forth in this Agreement.
(b) As used herein, the phrase "to the knowledge" of the Seller
as of any date shall mean the actual knowledge of Lawrence Osmanski, Michael
Costello, Stephen Wayne, Ann Schaumberger, David Kleinman, Jeffrey Ramos and
Christian Hughes.
(c) Titles and headings of sections of this Agreement are for
convenience only and shall not affect the construction of any provision of this
Agreement. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) "or" is not exclusive;
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(iii) "including" means including without limitation; and
(iv) words in the singular include the plural and words in the
plural include the singular.
(d) As used in this Agreement, the following terms shall have
the meanings given thereto in the Sections set forth opposite such terms:
TERM SECTION
---- -------
338 Valuations and Allocations 5.11(b)
Adjusted 338 Valuations and Allocations 5.11(c)
ADSP 5.11(b)
Agreement Preamble
Closing 2.02
Closing Date 2.02
Closing Date Operation Expenses Statement 5.14
Closing Financial Statements 2.03(b)
Collateral Source 8.07
Common Stock Recitals
Company Preamble
Company Contribution Recitals
Company Intellectual Property 3.08(a)
Company Lease 3.16(a)
Company Software 3.08(i)
Data Article I - definition of
"Intellectual Property"
Employee Benefits Agreement Recitals
Estimated Closing Date Balance Sheet 2.03(a)
Estimated Operation Expenses Statement 3.05(c)
Estimated Working Capital Surplus 2.03(a)
Extended Termination Date 10.03(a)(ii)
Expense Reimbursement 10.03(b)
Indemnified Party 8.03(a)
Indemnifying Party 8.03(a)
Independent Accounting Firm 2.03(c)
Internal Restructuring Recitals
Material Contracts 3.19(a)
Material Line Item 3.05(b)
Negotiation Period 10.17
Notice of Disagreement 2.03(c)
Participating Management Member 5.15
PBGFS Recitals
PBGFS Contribution Recitals
PBGFS Distribution Recitals
PBG Holdings 9.07(c)
PBG Restructuring 9.07(c)
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TERM SECTION
---- -------
Purchase Price 2.01(b)
Purchaser Preamble
Purchaser Cure Period 10.03(a)
Purchaser Indemnified Party(ies) 8.01(a)
Purchaser Transaction Documents 4.01
Resignation List 5.13
Scheduled Payments 5.10
Schedules 10.10
Seller Preamble
Seller Cure Period 10.03(a)
Seller Indemnified Party(ies) 8.02(a)
Seller's Option 10.03(a)(ii)
Settlement Date 2.03(d)
Shares Recitals
Subscription Agreement 10.07
Termination Date 10.03(a)(ii)
Termination Payment 10.03(b)
Transaction Financing 4.06
Transfer Taxes 9.02(c)
Unaudited Cash Flows 3.05(a)
Unaudited Balance Sheet 3.05(a)
Unaudited Financial Statements 3.05(a)
Unaudited Statement of Operations 3.05(a)
Update Notice 3.25(b)
Working Capital Statement 2.03(b)
ARTICLE II
SALE, PURCHASE AND REPURCHASE
SECTION 2.01. AGREEMENT TO SELL AND TO PURCHASE; PURCHASE PRICE.
(a) On the terms, and subject to the conditions, set forth in this Agreement,
the Seller agrees to sell, convey, assign, transfer and deliver free and clear
of all Liens to the Purchaser on the Closing Date, and the Purchaser agrees to
purchase from the Seller on the Closing Date, the Shares. Purchaser may, at any
time prior to the Closing and at its sole discretion, assign its rights to
purchase any or all of the Shares or other rights under this Agreement to one or
more Permitted Transferees.
(b) In full consideration for the purchase by the Purchaser of
the Shares, subject to the provisions of Section 2.03, the Purchaser shall pay
to the Seller, on the Closing Date, an aggregate of Seven Hundred Sixty-Six
Million Dollars ($766,000,000.00), as such amount may be adjusted pursuant to
Section 2.03(a) and 2.03(e) hereof (the "PURCHASE PRICE"), by wire transfer of
immediately available funds to the account or accounts identified by the Seller
at least two (2) Business Days prior to the Closing Date. The Purchase Price
shall also be subject to the post-Closing purchase price adjustments
contemplated in Section 2.03 hereof.
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SECTION 2.02. CLOSING. Subject to the satisfaction or waiver of
the conditions set forth in Article VII, the closing in respect of the sale
referred to in Section 2.01 (the "CLOSING") shall occur as soon as practicable,
but in any event not prior to (i) June 30, 2006, (ii) the expiration of the
15-day calendar period provided for in Section 3.25 hereof to the extent an
Update Notice is delivered to Purchaser thereunder and (iii) five (5) calendar
days after satisfaction or waiver of the conditions set forth in Article VII, in
each case unless the parties hereto agree otherwise (such date and time, the
"CLOSING DATE"). The Closing shall be held at the offices of White & Case LLP,
located at 1155 Avenue of the Americas, New York, New York 10036 or at such
other place as the parties hereto shall agree in writing.
On the Closing Date:
(a) The Purchaser shall deliver to the Company:
(i) the officer's certificate of the Purchaser as
contemplated by Section 7.01(c); and
(ii) an amount in cash equal to the Purchase Price.
(b) The Seller shall deliver to the Purchaser:
(i) the officer's certificate of the Seller as
contemplated by Section 7.02(c);
(ii) certificates representing the Shares, which shall be
in definitive form and registered in the name of the
Purchaser or a Permitted Transferee and in such
denominations as the Purchaser shall request not
later than three (3) Business Days prior to the
Closing Date and accompanied by stock or similar
powers duly endorsed in blank by the Seller or
accompanied by instruments of transfer duly executed
by the Seller;
(iii) good standing or equivalent certificates and
evidence representing foreign qualification of the
Company Group as of a date no less than three (3)
Business Days prior to the Closing Date;
(iv) duly executed counterparts of each of the
Distribution Agreements signed by each of the
parties thereto;
(v) a receipt duly executed by the Seller acknowledging
payment of the estimated Purchase Price;
(vi) the opinions of White & Case LLP, the Assistant
General Counsel of the Seller and the Assistant
General Counsel of the Company in the form of
EXHIBIT E, in each case dated as of the Closing Date
addressed to the Purchaser and its lenders;
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(vii) certificates of the Secretary of the Seller
attesting to the incumbency of its officers or
authorized representatives executing this Agreement
and the Distribution Agreements and the
authorization of the resolutions authorizing the
transactions contemplated hereby and thereby; and
(viii) the resignations of the officers and directors of
the Company Group set forth on the Resignation List.
SECTION 2.03. PURCHASE PRICE ADJUSTMENT. The Purchase Price shall
be adjusted as follows:
(a) PRE-CLOSING ADJUSTMENTS. At least five (5) days prior to
the Closing Date, Seller shall prepare and deliver to the Purchaser its good
faith estimated combined pro forma balance sheet of Pitney Bowes Capital
Services (after taking into effect the Internal Restructuring, the PBGFS
Contribution, the Company Contribution and the PBGFS Distribution) as of the
Closing, prepared in accordance with the same accounting policies, principles,
practices and methods used in preparing the Unaudited Balance Sheet as reflected
in the notes thereto and the Company Audited Financial Statements (the
"ESTIMATED CLOSING DATE BALANCE SHEET") and a statement derived from the
Estimated Closing Date Balance Sheet setting forth its good faith estimated
calculation of the Estimated Closing Date Net Working Capital and the components
thereof (the "ESTIMATED WORKING CAPITAL STATEMENT"). If the Estimated Working
Capital Statement reflects an Estimated Working Capital Shortfall, the Purchase
Price paid at Closing shall be reduced by the aggregate amount of such Estimated
Working Capital Shortfall. If the Estimated Closing Date Balance Sheet reflects
an Estimated Working Capital Surplus, the Purchase Price paid at Closing shall
be increased by the aggregate amount of such Estimated Working Capital Surplus.
During the preparation and calculation of the Estimated Closing Date Balance
Sheet and the Estimated Working Capital Statement, the Seller shall, and shall
cause its Subsidiaries, to afford the Purchaser reasonable opportunity to
observe, review and comment upon such preparation and calculation, including
supporting detail and during and after such preparation and calculation to have
reasonable access to any documents, schedules or work papers used in the
preparation of the Estimated Closing Balance Sheet and the Estimated Working
Capital Statement.
(b) POST-CLOSING ADJUSTMENTS. Promptly but in any event not
later than ninety (90) days following the Closing Date, the Purchaser shall
prepare and deliver to the Seller (i) the Closing Date Balance Sheet, (ii) a
statement derived from the Closing Date Balance Sheet setting forth a
calculation of the Closing Date Net Working Capital as of the date of the
Closing Date Balance Sheet (the "WORKING CAPITAL STATEMENT" and together with
the Closing Date Balance Sheet, the "CLOSING FINANCIAL STATEMENTS"). For
purposes of preparing the Working Capital Statement, (x) the Closing Date
Balance Sheet shall be prepared in accordance with the same accounting policies,
principles, practices and methods used in preparing the Unaudited Balance Sheet
as reflected in the notes thereto and the Company Audited Financial Statements,
and (y) the Working Capital Statement shall be prepared in accordance with the
same calculation methodology used in preparing the Estimated Working Capital
Statement.
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(c) DISPUTE RESOLUTION PROCEDURES. Within ten (10) Business
Days following the Seller's receipt of the Closing Financial Statements, the
Seller and its independent auditors shall be permitted to review the working
papers of the Purchaser relating to the Working Capital Statement. The Working
Capital Statement shall become final and binding upon the Seller and the
Purchaser on the eleventh (11th) Business Day following delivery thereof, unless
the Seller gives written notice of its disagreement with the Working Capital
Statement (a "NOTICE OF DISAGREEMENT") to the Purchaser prior to such date. Any
Notice of Disagreement shall (i) specify in reasonable detail the nature of any
disagreement so asserted and (ii) only include disagreements based on
mathematical errors or based on the Working Capital Statement not being prepared
or the Working Capital or the adjusted purchase price not being determined in
accordance with Section 2.03(b). During the seven (7) Business Day period
following the delivery of a Notice of Disagreement, the Seller and the Purchaser
shall seek in good faith to resolve in writing any differences that they may
have with respect to the matters specified in the Notice of Disagreement and
agree on a final determination of the disagreements set forth in the Notice of
Disagreement. During such period, the Purchaser and its auditors shall have
access to the working papers of the Seller and, if applicable, the Seller's
auditors' working papers prepared in connection with the Notice of Disagreement.
At the end of such seven (7) Business Day period, the Seller and the Purchaser
shall submit to a nationally recognized independent accounting firm (the
"INDEPENDENT ACCOUNTING FIRM") for arbitration of any and all matters that
remain in dispute and that were properly included in the Notice of Disagreement.
The Independent Accounting Firm shall be Ernst & Young, or, if such firm is
unable or unwilling to act, the first of the Big Four Public Accounting Firms
(on an alphabetical basis) that is not currently serving as the auditor of
either the Seller or the Purchaser shall be selected to resolve the dispute. The
Seller and the Purchaser shall instruct the Independent Accounting Firm to
render its reasoned written decision as promptly as practicable but in no event
later than fifteen (15) Business Days after submission of all matters in
dispute. The cost of any arbitration (including the fees and expenses of the
Independent Accounting Firm and reasonable attorney fees and expenses pursuant
to this Section 2.03(c) shall be borne by the Purchaser and the Seller in
inverse proportion as they may prevail in matters resolved by the Independent
Accounting Firm, which proportionate allocations shall also be determined by the
Independent Accounting Firm at the time the determination of the Independent
Accounting Firm is rendered on the merits of the matters submitted. Except as
otherwise provided herein, the procedures for resolution of disputes concerning
the Closing Financial Statements shall (i) be final, binding and conclusive on
the Seller and the Purchaser for purposes of the purchase price adjustments only
and for no other purpose in connection with this Agreement so that when the
Closing Financial Statements are deemed final hereunder, neither the Seller nor
the Purchaser will be entitled to subject the Closing Financial Statements, any
resolution by and between the Seller and the Purchaser under this Section
2.03(c) or the Independent Accounting Firm's decision to any court or tribunal,
for purposes of the purchase price adjustments and (ii) shall constitute an
arbitral determination upon which a judgment may be entered by a court of
competent jurisdiction.
(d) POST-CLOSING SETTLEMENT.
(i) If it is determined that there is a Closing Date Working
Capital Shortfall in excess of the Estimated Working Capital Shortfall,
the excess shall be paid by the Seller to the Purchaser within three (3)
Business Days following the date that the Closing Financial Statements
are final and binding in accordance with Section 2.03(c) (the
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"SETTLEMENT DATE") by wire transfer of immediately available funds to an
account designated in writing by the Purchaser; or
(ii) if it is determined that there is a Closing Date Working
Capital Shortfall less than the Estimated Working Capital Shortfall, the
difference shall be paid by the Purchaser to the Seller on the Settlement
Date by wire transfer of immediately available funds to an account
designated in writing by Seller; or
(iii) if it is determined that there is a Closing Date Working
Capital Surplus in lieu of an Estimated Working Capital Shortfall, the
Closing Date Working Capital Surplus plus the amount of any Estimated
Working Capital Shortfall deducted from the Purchase Price pursuant to
Section 2.03(a) shall be paid by the Purchaser to the Seller on the
Settlement Date by wire transfer of immediately available funds to an
account designated in writing by the Seller; or
(iv) if it is determined that there is a Closing Date Working
Capital Shortfall in lieu of an Estimated Working Capital Surplus, the
Closing Date Working Capital Shortfall plus the amount of any Estimated
Working Capital Surplus added to the Purchase Price pursuant to Section
2.03(a) shall be paid by the Seller to the Purchaser on the Settlement
Date by wire transfer of immediately available funds to an account
designated in writing by the Purchaser; or
(v) if it is determined that there is a Closing Date Working
Capital Surplus less than the Estimated Working Capital Surplus, the
difference shall be paid by the Seller to the Purchaser on the Settlement
Date by wire transfer of immediately available funds to an account
designated in writing by the Purchaser; or
(vi) if it is determined that there is a Closing Date Working
Capital Surplus in excess of the Estimated Working Capital Surplus, the
difference shall be paid by the Purchaser to the Seller on the Settlement
Date by wire transfer of immediately available funds to an account
designated in writing by the Seller.
(e) CERTAIN TRANSACTIONS. SCHEDULE 2.03(E) hereto sets forth a
description of (i) certain identified leasing transactions for which consent to
the Transactions is required pursuant to its terms and (ii) the manner in which
such transactions shall be treated pursuant to this Agreement in the event such
consent is not obtained.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser on the
date hereof, and on the Closing Date, as if made on such date, as follows:
SECTION 3.01. ORGANIZATION AND STANDING. (a) The Seller is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
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(b) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own its properties and assets and to carry on
the Business as it is now being conducted and as currently proposed to be
conducted immediately following the Closing. The Company is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities makes such qualification necessary, except where the failure
to be so qualified would not have or would not reasonably be expected to have a
Material Adverse Effect. The Seller has furnished to the Purchaser true and
correct copies of the Company's certificate of incorporation and by-laws as
amended through the date of this Agreement and as in effect on the date hereof.
(c) Each member of the Company Group (other than the Company)
is an entity duly incorporated, formed or organized, validly existing and, where
applicable, in good standing under the laws of its jurisdiction of
incorporation, formation or organization and has all requisite power and
authority to own its properties and assets and to carry on its business as it is
presently conducted and as currently proposed by the Company to be conducted
immediately following the Closing, and each such member is qualified to transact
business, and is in good standing, in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary; except in all cases as would not have or
would not reasonably be expected to have a Material Adverse Effect. Except as
set forth on SCHEDULE 3.01(c)(i) all of the outstanding shares of Capital Stock
of each such member set forth on SCHEDULE 3.01(c)(iii) are lawfully owned,
beneficially and of record, by the Company and validly issued, fully paid,
nonassessable and free of preemptive rights and immediately after the
consummation of the PBGFS Distribution will be owned directly or indirectly by
the Company free and clear of all Liens and (ii) except as set forth on SCHEDULE
3.01(c)(ii), there are no subscriptions, options, warrants, rights, calls,
Contracts, voting trusts, proxies or other commitments, understandings,
restrictions or arrangements relating to the issuance, sale, voting or transfer
of any shares of Capital Stock of any such member set forth on SCHEDULE
3.01(c)(iii), including any right of conversion or exchange under any
outstanding security, instrument or agreement. SCHEDULE 3.01(c)(iii) sets forth
a list of the ownership interests of the Company in each of the members of the
Company Group (other than the Company).
SECTION 3.02. OWNERSHIP OF SHARES; CAPITALIZATION. (a) The
authorized Capital Stock of the Company consists of twenty thousand (20,000)
shares, of which (i) ten thousand (10,000) shares are preferred stock with no
par value of which no shares are issued and outstanding and (ii) ten thousand
(10,000) shares are Common Stock, of which four hundred and sixty (460) shares
of Common Stock are issued and outstanding and are owned by the Seller.
(b) The Seller is the lawful owner, beneficially and of record,
of each of the Shares which have been validly issued and fully paid and
nonassessable, free and clear of all Liens. The delivery to the Purchaser of
each of the Shares pursuant to this Agreement will transfer to the Purchaser
good and valid title to all of the issued and outstanding capital stock of the
Company, free and clear of all Liens.
(c) Except as may otherwise be provided for in this Agreement
and the Transactions, there are no outstanding contractual obligations of the
Company to repurchase,
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redeem, or otherwise acquire any shares of Capital Stock of the Company. Except
as may otherwise be provided for in this Agreement, the Distribution Agreements,
the Transactions and the Internal Restructuring, there are no outstanding
contractual obligations of any of the Persons set forth on SCHEDULE 3.01(c)(iii)
to repurchase, redeem, or otherwise acquire any shares of Capital Stock of such
Persons.
(d) Except as provided for in this Agreement, there are (i) no
outstanding options, warrants, agreements, conversion rights, exchange rights,
preemptive rights or other rights (whether contingent or not) to subscribe for,
purchase or acquire any issued or unissued shares of Capital Stock of the
Company or options that will be converted into options to purchase shares of
Common Stock and (ii) no restrictions upon, or Contracts or understandings of
the Company with respect to, the voting or transfer of any shares of Capital
Stock of the Company.
SECTION 3.03. AUTHORIZATION; ENFORCEABILITY. The Seller has the
power and authority to execute, deliver and perform the terms and provisions of
this Agreement, and, as of the Closing Date will have taken all action necessary
to authorize the execution, delivery and performance by it of this Agreement and
each of the Distribution Agreements and to consummate the transactions
contemplated hereby and thereby and will have taken all action necessary to
cause the Company to authorize the execution, delivery and performance by it of
each of the Distribution Agreements and to consummate the transactions
contemplated thereby. As of the Closing Date, no other corporate proceeding on
the part of the Seller and the Company will be necessary for such authorization,
execution, delivery and consummation. The Seller has duly executed and delivered
this Agreement and, on the Closing Date, the Seller and the Company will have
duly executed and delivered each of the Distribution Agreements. This Agreement
constitutes, and each of the Distribution Agreements, when executed and
delivered by the Seller and assuming that they constitute a legal, valid and
binding obligation of each other party thereto, will constitute, a legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Each of the Distribution Agreements, when executed and delivered by the Company,
will constitute, a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
SECTION 3.04. NO VIOLATION; CONSENTS. (a) Subject to the
governmental filings and other matters referred to in Section 3.04(b), the
execution, delivery and performance by the Seller of this Agreement and each of
the Distribution Agreements, the execution, delivery and performance by the
Company of each of the Distribution Agreements and the consummation of the
Transactions do not and will not contravene any Applicable Law, except for any
such contravention that would not have or would not reasonably be expected to
have a Material Adverse Effect. Except as set forth on SCHEDULE 3.04, the
execution, delivery and performance by the Seller of this Agreement and each of
the Distribution Agreements, the execution, delivery and performance by the
Company of each of the Distribution Agreements and the consummation of the
Transactions (i) will not (A) violate, result in a breach of, constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or
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acceleration) under, or require the prior consent of any third party to, any
Contract to which the Company or any other member of the Company Group is a
party or by which the Company or any other member of the Company Group is bound
or to which any of the assets of the Business will be subject immediately
following the Closing or (B) result in the creation or imposition of any Lien
upon, or any right of first refusal, first offer or option to purchase any of
the assets of the Business, except, in each case, for any such violations,
breaches, defaults or Liens that would not have or would not reasonably be
expected to have a Material Adverse Effect and (ii) will not conflict with or
violate any provision of the certificate of incorporation or bylaws or other
organizational documents of the Company or any other member of the Company
Group.
(b) Except as set forth on SCHEDULE 3.04 no consent,
authorization or order of, or filing or registration with, any Governmental
Authority or other Person (including the stockholders of Seller) is required to
be obtained or made by the Seller, the Company, or any of their respective
Subsidiaries for the execution, delivery and performance of this Agreement, any
of the Distribution Agreements or the consummation of the Transactions, except
where the failure to obtain such consents, authorizations or orders, or make
such filings or registrations, would not have or would not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.05. FINANCIAL STATEMENTS. (a) The Seller has made
available to the Purchaser the unaudited combined pro forma balance sheet (after
taking into effect the Internal Restructuring, the PBGFS Contribution, the PBGFS
Distribution and the Company Contribution) (the "UNAUDITED BALANCE SHEET") as of
December 31, 2005 and the statement of operations (the "UNAUDITED STATEMENTS OF
OPERATIONS"), and the cash flows (the "UNAUDITED CASH FLOWS") of Pitney Bowes
Capital Services (after taking into effect the Internal Restructuring, the PBGFS
Contribution, the Company Contribution and the PBGFS Distribution) as of, and
for the year ended, December 31, 2005, copies of which are attached hereto as
SCHEDULE 3.05(a) (the Unaudited Statement of Operations and the Unaudited Cash
Flows, together with the Unaudited Balance Sheet, the "UNAUDITED FINANCIAL
STATEMENTS"). The Unaudited Financial Statements have been prepared in
accordance with the Company's accounting policies, principles, practices and
methods consistently applied, which policies, principles, practices and methods
are consistent with and comply with GAAP (except as otherwise disclosed in
footnote 1 thereto) as of such date and present fairly, in all material
respects, the financial positions and the results of operation and cash flows of
Pitney Bowes Capital Services (subject to the absence of footnotes and other
presentation items and of normal year end adjustments).
(b) The Seller has made available to the Purchaser the Company
Audited Financial Statements (other than the Company 2005 Audited Financial
Statements) and the PBG Partnership Audited Financial Statements (other than the
PBG Partnership 2005 Financial Statements), copies of which are attached hereto
as SCHEDULE 3.05(b). The Company Audited Financial Statements (other than the
Company 2005 Audited Financial Statements) and the PBG Partnership Audited
Financial Statements (other than the PBG Partnership 2005 Financial Statements)
have been, and each of the Company 2005 Audited Financial Statements, PBG
Partnership 2005 Financial Statements and the Company 2006 First Quarter
Financial Statements when delivered to the Purchaser shall have been, prepared
in accordance with the Company's accounting policies, principles, practices and
methods consistently applied, which policies, principles, practices and methods
are consistent with and comply with GAAP (except as otherwise disclosed in
footnote 1 thereto) as of the respective dates of such financial statements.
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The Company Audited Financial Statements (other than the Company 2005 Audited
Financial Statements) present fairly in all material respects, and the Company
2005 Audited Financial Statements and the Company 2006 First Quarter Financial
Statements when delivered to the Purchaser will present fairly in all material
respects, the combined financial position and the results of operations and cash
flows of Pitney Bowes Capital Services as of the dates of such financial
statements. The PBG Partnership Audited Financial Statements (other than the PBG
Partnership 2005 Financial Statements) present fairly in all material respects,
and the PBG Partnership 2005 Financial Statements when delivered to the
Purchaser will present fairly in all material respects, the financial position
and the results of operations and cash flows of the PBG Partnership as of the
dates of such financial statements. When delivered to the Purchaser, no line
item set forth in the Company 2005 Audited Financial Statements that is material
to the operations or financial position of the Company (each a "MATERIAL LINE
ITEM") will differ in a material amount from the same line item in the Unaudited
Financial Statements for the corresponding periods. To the knowledge of the
Company, as of the date hereof, no such material differences between the
Material Line Items in the Company 2005 Audited Financial Statements and the
Unaudited Financial Statements for the corresponding periods exist.
(c) Set forth on SCHEDULE 3.05(c) hereto is the unaudited
combined pro forma statement of Operation Expenses for the twelve-month period
ending on December 31, 2005. Also set forth on SCHEDULE 3.05(c) hereto is the
unaudited combined pro forma statement of Operation Expenses for the four-month
period ending on April 30, 2006, identifying on a line by line basis each
category of expenses incurred by the Pitney Bowes Capital Services and setting
forth the assumptions, exceptions and basis for deriving such amounts, prepared
in accordance with GAAP on a basis consistent with the policies, principles,
practices and methods set forth on SCHEDULE 3.05(c) (the "ESTIMATED OPERATION
EXPENSES STATEMENT"). The Estimated Operation Expenses Statement presents
fairly, in all material respects, the combined Operation Expenses of Pitney
Bowes Capital Services as of the date of such Estimated Operation Expenses
Statement. When delivered to the Purchaser pursuant to Section 5.14 hereof, the
quotient of (i) each line item set forth in the Closing Operation Expenses
Statement DIVIDED BY (ii) four, will not differ, on a line by line basis, by
more than 10% from the quotient of (i) the amount of the corresponding line item
set forth in the Estimated Operation Expenses Statement DIVIDED BY (ii) four.
SECTION 3.06. MATERIAL ADVERSE CHANGE. Since December 31, 2005,
except as set forth on SCHEDULE 3.06 or as contemplated by this Agreement and in
the Distribution Agreements, including the Transactions and the Internal
Restructuring, (a) the Company Group has conducted the Businesses in the
ordinary course of business consistent with past practices in all material
respects and (b) nothing has occurred which has had, or would reasonably be
expected to have a Material Adverse Effect.
SECTION 3.07. ASSETS. Except as set forth on SCHEDULE 3.07, the
Company and the other members of the Company Group own and have and, immediately
following the PBGFS Distribution, will own and have, good and valid title to, or
a valid leasehold interest in, and, immediately following the PBGFS Distribution
will have, sufficient rights to use, all of the properties and assets (real,
personal or mixed, tangible or intangible) reasonably necessary to conduct the
Business, free and clear of all Liens, except for Permitted Liens, and all of
the assets reflected in the Unaudited Financial Statements and the Company
Audited Financial Statements,
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other than those assets disposed of in the ordinary course of business
consistent with past practice. This Section 3.07 does not apply to Intellectual
Property (for which Section 3.08 is applicable). Following the consummation of
the Transactions, Seller shall remain in the business of the extension of credit
to third parties.
SECTION 3.08. INTELLECTUAL PROPERTY. (a) Immediately following the
PBGFS Distribution, in accordance with the Separation and Distribution
Agreement, the Transition Services Agreement and the Intellectual Property
Agreement, the Company and its Subsidiaries will have sufficient rights to use
the Intellectual Property (other than Company Software which is covered by
Section 3.08(i) hereof) that is reasonably necessary to conduct the Business as
currently conducted and as currently contemplated to be conducted by the Company
and its Subsidiaries, as applicable, immediately after the PBGFS Distribution
(the "COMPANY INTELLECTUAL PROPERTY").
(b) Nothing in this Agreement shall be construed as granting to
the Company any license, whether express or implied, to use any Intellectual
Property owned or controlled by the Seller or conveying any other rights to the
Company and the other members of the Company Group in any Intellectual Property
owned or controlled by the Seller.
(c) Since January 1, 2005, to the knowledge of the Seller,
neither the Company nor any of the other members of the Company Group has
received written notification that the conduct of the Business by the Company or
any of the other members of the Company Group has infringed upon or violated the
Intellectual Property rights of others in any material respects, and to the
knowledge of the Seller no material Company Intellectual Property is being used
or enforced by the Company or any other members of the Company Group in a manner
that would reasonably be expected to result in a violation or infringement of
the Intellectual Property rights of any Person or the abandonment, cancellation,
or unenforceability of any material Company Intellectual Property.
(d) Except as set forth on SCHEDULE 3.08(d), the Company or any
other member of the Company Group will, immediately following the Company
Contribution, have good title to each item of Company Intellectual Property
material to the conduct of the Business that is owned by the Company or any
other member of the Company Group, after giving effect to the transactions
contemplated by the Distribution Agreements, free and clear of any Liens other
than Permitted Liens.
(e) Since January 1, 2005, to the knowledge of the Seller,
there have been no Suits decided, settled, pending, or, threatened against the
Business that involve claims concerning the validity, enforceability, ownership
or license or other right to use any Company Intellectual Property or Data
comprising Company Intellectual Property that is owned by the Company or any
other member of the Company Group.
(f) The Company Group has timely made all filings, payments and
ownership recordations with the appropriate foreign and domestic agencies
required to maintain in subsistence all material Company Intellectual Property.
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(g) The Company Group has taken all reasonable measures to
protect the secrecy and confidentiality of all material trade secrets used or
held for use in the Business.
(h) Immediately following the PBGFS Distribution, in accordance
with the Separation and Distribution Agreement, the Transition Services
Agreement and the Intellectual Property Agreement, the IT Systems (other than
computer software which is covered by Section 3.08(i) hereof) that are used in
the Business are adequate in all material respects for their intended use and
for the operation of the Business, as currently operated and as currently
contemplated to be operated by the Company in the future, and are in good
working condition (normal wear and tear expected); PROVIDED, that this provision
provides no warranty of non interruption of operation.
(i) Set forth on SCHEDULE 3.08(i) hereto is a list of all
computer software programs (the "COMPANY SOFTWARE") that are necessary to
conduct the Business as currently conducted or as currently contemplated to be
conducted by the Company and the other members of the Company Group, as
applicable, immediately after the PBGFS Distribution. The Company Software will
either (x) be owned by the Company, licensed by a third party vendor to the
Company under an existing software license previously executed by the Company or
perpetually licensed by the Seller to the Company under the Intellectual
Property Agreement or (y) provided to the Company under the Transition Services
Agreement.
SECTION 3.09. EMPLOYEE BENEFIT PLANS. (a) SCHEDULE 3.09(a)(i) sets
forth a list of all Employee Benefit Plans currently in effect. The Seller has
delivered or made available to Purchaser complete and correct copies of each
Employee Benefit Plan, or written summaries of any unwritten material Employee
Benefit Plan. Except as set forth on SCHEDULE 3.09(a)(ii) or as would not have
or would not reasonably be expected to have a Material Adverse Effect, no
Employee Benefit Plan provides health, life insurance or other welfare benefits
to retirees or other terminated employees of the Company Group, other than
continuation coverage required by COBRA. Except as set forth on SCHEDULE
3.09(a)(iii) or as would not have or would not reasonably be expected to have a
Material Adverse Effect, each Employee Benefit Plan has been operated in
accordance with its terms, ERISA, the Code, and all other Applicable Laws. There
has been no "prohibited transaction" within the meaning of Section 406 of ERISA
or Section 4975 of the Code involving any Employee Benefit Plan except as would
not have or would not reasonably be expected to have a Material Adverse Effect.
No Employee Benefit Plan that is or was subject to Section 302 of ERISA or
Section 412 of the Code has incurred an accumulated funding deficiency, whether
or not waived except as would not have or would not reasonably be expected to
have a Material Adverse Effect. There are no pending or, to the knowledge of the
Seller, threatened investigations or claims by the IRS, Department of Labor,
Pension Benefit Guaranty Corporation or any other governmental agency or any
individual relating to any of the Employee Benefit Plans. Neither the Seller nor
any ERISA Affiliate is required to contribute to any "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) or has withdrawn from any multiemployer
plan where such withdrawal has resulted or would result in any "withdrawal
liability" (within the meaning of Section 4201 of ERISA) or "mass withdrawal
liability" (within the meaning of PBGC Regulation 4219.2) that has not been
fully paid. Except as set forth on SCHEDULE 3.09(a)(iv) and except as would not
have or would not reasonably be expected to have a Material Adverse Effect, the
consummation of the Transactions contemplated by this Agreement will not
increase any benefits or payments or result in the acceleration or creation of
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any rights of any Person to benefits under any Employee Benefit Plan or
agreement (including but not limited to, the acceleration of the vesting or
exercisability of any stock options or the acceleration of the accrual or
vesting of any benefits under any Employee Benefit Plan or agreement). Except as
set forth on SCHEDULE 3.09(a)(v) or as would not have or would not reasonably be
expected to have a Material Adverse Effect, no payment or benefit to be provided
to any employee of the Company or any other member of the Company Group in
connection with the consummation of the transactions contemplated by this
Agreement is reasonably expected to constitute an "excess parachute payment"
within the meaning of Section 280G of the Code.
SECTION 3.10. EMPLOYEES AND LABOR RELATIONS. Except as set forth
on SCHEDULE 3.10, as of the date hereof, neither the Company nor any other
member of the Company Group is a party to any employment or collective
bargaining agreement. The Seller has made available to the Purchaser complete
and correct copies of the agreements set forth on SCHEDULE 3.10. To the
knowledge of the Seller, no employee organizing efforts are pending with respect
to nonunionized employees of the Company or any other member of the Company
Group. There are no existing or, to the knowledge of the Seller, threatened
labor strikes, work stoppages or slowdowns affecting the Company or any other
member of the Company Group. There are no complaints, charges, grievances,
unfair labor practices, labor arbitration proceedings, or claims against the
Company or any other member of the Company Group pending or to the knowledge of
the Seller threatened in writing to be brought or filed, with any governmental
entity or arbitrator based on, arising out of, in connection with, or otherwise
relating to, the employment or termination of employment of any individual by
the Company or other member of the Company Group , in each case, that would have
or would reasonably be expected to have a Material Adverse Effect. The Company
Group is in compliance with all laws governing the employment of labor,
including, but not limited to, all such laws relating to wages, hours,
collective bargaining, discrimination, civil rights, safety and health, workers'
compensation and the collection and payment of withholding and/or Social
Security taxes and similar taxes, except where noncompliance would not have or
would not reasonably be expected to have a Material Adverse Effect. No event
giving rise to the requirement that notice be given to any employee of the
Company or any other member of the Company Group under the Worker Adjustment and
Retraining Notification Act or under any similar state or local law has occurred
or been announced during the ninety (90)-day period ending on the date of this
Agreement or any longer period required by any local legislation.
SECTION 3.11. NO UNDISCLOSED MATERIAL LIABILITIES. Except as set
forth on SCHEDULE 3.11, there are no liabilities of the Company Group (after
taking into effect the Internal Restructuring, the PBGFS Contribution, the
Company Contribution and the PBGFS Distribution) of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, other than
(a) liabilities disclosed, reflected or reserved against in the Unaudited
Balance Sheet or the Company Audited Financial Statements, as applicable, (b)
liabilities incurred in a manner consistent with past practice since December
31, 2005, (c) liabilities arising under this Agreement and the Distribution
Agreements, (d) liabilities to be retained or assumed by the Seller and from
which the Company shall be released, in accordance with the Distribution
Agreements, (e) Tax liabilities and (f) such other liabilities as would not have
or would not reasonably be expected to have a material negative impact,
individually or in the aggregate, on the Company Group. Except as set forth on
SCHEDULE 3.11, there are no franchise, construction,
-27-
fidelity, performance and other bonds, guaranties in lieu of bonds and letters
of credit posted by the Seller, the Company or any of their respective
Affiliates in connection with the Business and none would be required to be put
in place or replaced, if at all, as a result of the consummation of the
Transactions, the Internal Restructuring, the PBGFS Contribution, the Company
Contribution or the PBGFS Distribution.
SECTION 3.12. COMPLIANCE WITH LAWS. The Business and the Company
Group are in compliance in all material respects with all Applicable Laws,
except for (a) instances of noncompliance that have not had and would not
reasonably be expected to have a Material Adverse Effect, (b) compliance with
Environmental Laws (as to which certain representations and warranties are made
pursuant to Section 3.15) and (c) compliance with Tax laws (as to which certain
representations and warranties are made pursuant to Section 3.17).
SECTION 3.13. LITIGATION. Except as disclosed on SCHEDULE 3.13 or
with respect to Taxes, there are no (a) outstanding Suits or Governmental Orders
against or affecting the Company or any other member of the Company Group, (b)
proceedings pending or, to the knowledge of the Seller, threatened against or
affecting the Business, the Company or any other member of the Company Group or
(c) investigations by any Governmental Authority that are, to the knowledge of
the Seller, pending or threatened against or affecting the Business, the Company
or any other member of the Company Group that, individually or in the aggregate,
in any case would have or would reasonably be expected to have a Material
Adverse Effect.
SECTION 3.14. COMPLIANCE WITH CONSTITUENT DOCUMENTS. Neither the
Company nor any other member of the Company Group is in breach or violation of
or in default in the performance or observance of any material term or provision
of, and no event has occurred which, with lapse of time or action by a third
party, would result in a material default under the respective articles or
certificate of incorporation, bylaws or similar organizational instruments of
such entities.
SECTION 3.15. ENVIRONMENTAL MATTERS. Except as set forth on
SCHEDULE 3.15 and except as would not have or would not reasonably be expected
to have a Material Adverse Effect, (a) the Business and the operations of the
Company are conducted in material compliance with all applicable Environmental
Laws, (b) the Company has obtained and is in material compliance with all
material Permits or authorizations that are required under applicable
Environmental Laws to operate the facilities, assets and the Business, (c) no
Environmental Claims have been asserted against the Company or any other member
of the Company Group, nor does the Seller have knowledge or notice of any
threatened or pending Environmental Claim against the Company or any other
member of the Company Group and (d) there has been no Release (i) at any of the
properties owned or operated by the Company or other member of the Company Group
or (ii) as a result of any activity of the Business.
SECTION 3.16. REAL PROPERTY. (a) SCHEDULE 3.16 contains a list of
each interest in Real Property relating to the Business that is (i) owned by the
Company and describing the type of interest therein held by the Company and
whether the Company leases such owned Real Property and (ii) leased, subleased
or otherwise occupied or utilized by the Company, as lessee, sublessee,
franchisee or licensee, as of the date hereof and describing the type of
interest therein
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held by the Company (a "COMPANY LEASE") except, in each case, to interests in
Real Property in connection with a Financing.
(b) The Real Property described in clause (a)(i) of this
Section 3.16 is owned by the Company, free and clear of all Liens, except for
Permitted Liens.
(c) The Company's interest under each Company Lease is free and
clear of all Liens, except for Permitted Liens.
SECTION 3.17. TAXES. Each member of the Company Group has timely
filed or caused to be timely filed all material Tax Returns required to be filed
under the Code, or applicable state, local or foreign Tax laws. To the knowledge
of the Seller, all Taxes required to be paid with respect to the periods covered
by such Tax Returns have been paid in full, except for Taxes the nonpayment of
which are not, in the aggregate, material. Except as set forth on SCHEDULE 3.17,
(a) no Tax Liens have been filed and no claims are being asserted with respect
to any Taxes of the Company, except for Liens and claims (i) relating to the
Specified Leases or (ii) which are not, in the aggregate, material, (b) to the
knowledge of the Seller, no notice of lien with the meaning given thereto in
Section 6323(f) of the Code nor any notice of assessment under Section 6201 of
the Code has been filed by the IRS with respect to the Company or any member of
the Company Group, (c) no Tax examination or audit of any member of the Company
Group is currently being conducted by any taxing authority which examination or
audit is reasonably expected to result in an additional asserted Tax liability
in excess of $1,000,000, (d) each member of the Company Group has complied with
all Applicable Laws, rules and regulations relating to the payment and
withholding of material Taxes, (e) except for the tax indemnity provisions
contained in the Financing Documents, each member of the Company Group is not a
party to or otherwise bound by any agreement or understanding under which it has
obligations for the allocation and sharing of material Taxes that will survive
the Closing (which for the avoidance of doubt, does not include agreements or
understandings that do not relate solely or primarily to Tax Matters but that
include tax indemnities or in which payment of non-Tax items are adjusted with
reference to Taxes), (f) each member of the Company Group is not required to
include in income any adjustment pursuant to Section 481(a) of the Code and (g)
neither the Company nor any other member of the Company Group is a party to any
lease made pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954,
as amended.
SECTION 3.18. FINANCINGS. (a) SCHEDULE 3.18(a) sets forth a list
of all Large Ticket Financings, including the name of the Obligor and a
statement of payments due or scheduled to become due in accordance with the
terms of the leases related to each Financing. Each Financing has been
administered substantially in accordance with its Financing Documents.
(b) Except as set forth on SCHEDULE 3.18(b), to the knowledge
of the Seller, no material default or material event of default that has been
declared by the Company as such (as defined in the applicable Financing
Documents relating to the Financings) is continuing (i) relating to any payment
obligations with respect to any Financing or (ii) relating to any obligations
other than payment obligations with respect to such Financing. To the knowledge
of the Seller, no valid offset, defenses or counterclaims may be asserted
against the Company or the other members of the Company Group, the Purchaser or
its assigns with respect to any Financing
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and no Suit or any legal proceeding, administrative, judicial or otherwise has
been brought by or against the Company or the other members of the Company Group
in connection therewith.
(c) Each Financing Document to which the Company or any other
member of the Company Group is a party (i) constitutes the legal, valid and
binding obligation of the Company or such member, as applicable, and, to the
knowledge of the Seller, each Obligor thereunder; and (ii) is enforceable in
accordance with its respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. There are no oral agreements or understandings, which modify or
amend the terms of the Financing Documents.
(d) With respect to each Financing, either (i) the Company or
another member of the Company Group or any of their respective Affiliates is the
legal title owner of the property financed thereunder and in the case of assets
held in trust, is the beneficial owner, and has good title to such property free
and clear of all Liens other than Permitted Liens and other Liens permitted
under the Financings Documents relating to such Financing, subject to the
purchase options of the Obligors under the applicable Financing Documents or
(ii) the Company or another member of the Company Group has filed all Uniform
Commercial Code financing statements (including all amendments) with respect to
the Financings as are necessary to create a first priority security interest in
such property.
(e) In connection with each Financing, neither the Company nor
the other members of the Company Group have made any representations or
warranties to the Obligors or to third party purchasers with respect to any
manufacturer warranties, including product performance standards of any financed
property.
(f) Neither the Company nor any other member of the Company
Group has maintenance, product liability, manufacturer warranty, or equipment
servicing obligations in connection with the property financed under any
Financing, or pursuant to any Financing Documents relating thereto, in each
case, during the term of such Financing.
(g) Except as set forth on SCHEDULE 3.18(g), to the knowledge
of the Seller, no Obligor is the subject of any bankruptcy or insolvency
proceeding.
SECTION 3.19. CONTRACTS. (a) SCHEDULE 3.19 sets forth the
following categories of Contracts (other than Financing Documents) which are
material to the Company and the other members of the Company Group, taken as a
whole, which solely relate to the Business and to which the Company or any of
the other members of the Company Group is a party or by which the Company, any
of the other members of the Company Group, or any of their respective assets is
in any way affected or bound, including all material amendments and supplements
thereto and modifications thereof ("MATERIAL CONTRACTS"):
(i) any Contract (A) involving the obligation of the Company to
purchase products or services pursuant to which the aggregate of payments
to become due from the Company is equal to or exceeds $750,000 in any
calendar year or $1,000,000 in the aggregate, and which is not terminable
on ninety (90) calendar days' or less notice or (B)
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any Contract which involves the obligation for a payment to be made, or
expected to be made, to the Company in excess of $750,000 or pursuant to
which payments have been made to the Company during the six months prior
to the date hereof in excess of $750,000, either pursuant to a Contract
with a customer of the Company or pursuant to any other Contract;
(ii) (A) any finder, promotion, sales, advertising, agency,
consultant, lobbying, franchise or similar Contract or (B) any other
Contract, in each case, requiring the payment of any commissions or other
similar payments or commitments by the Company in excess of $750,000 per
calendar year;
(iii) any Contract to purchase or otherwise acquire or sell or
otherwise dispose of any interest in Real Property for consideration in
excess of $750,000;
(iv) any commitment of the Company to make a capital expenditure
or to purchase a capital asset of at least $750,000;
(v) any Contract that contains a covenant not to compete or any
other agreement or obligation that materially limits or will materially
limit the Company and following consummation of the Transactions the
Purchaser, from engaging in any business related to the Industry;
(vi) any Lease or similar agreement under which the Company is
the lessee, or pursuant to which the Company holds or uses, any
machinery, equipment, vehicle or other tangible personal property owned
by any third Person for an annual rent in excess of $250,000;
(vii) any Contract establishing or relating to a partnership,
joint venture, strategic alliance, vendor financing arrangement or
program or exclusivity, consortium or other similar arrangement;
(viii) any asset purchase agreements, stock purchase agreements
and other acquisition or divestiture agreements and similar Contracts
relating to the sale, lease or disposal of any material properties or
assets of the Company, for consideration in excess of $500,000;
(ix) any Contract relating to Indebtedness in excess of
$750,000;
(x) any Contract under which Company has directly or indirectly
guaranteed any liabilities in excess of $750,000;
(xi) any outstanding or pending customer bid or proposal or any
outstanding customer option relating to any Contract in excess of
$500,000;
(xii) any Contract containing any "change in control" provision
(or similar provisions);
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(xiii) any Contract relating to any Suit or Governmental Order
which involves any unpaid liability of the Company in excess of $750,000;
(xiv) (A) any employment Contract or (B) any agreement with any
executive officer or other key employee of the Company, including such
Contracts, the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction involving
the Company or of the consummation of the Transactions contemplated by
this Agreement, providing any compensation guarantee of more than
$100,000 per calendar year;
(xv) any Contract granting a right to first refusal or first
negotiation with respect to the sale of any portion of the equity of the
Company or of all or any material portion of Company's assets (including
the equity interests in any other member of the Company Group);
(xvi) any Contract under which the Company has agreed to
indemnify any third Person with respect to, or to share, the Tax
liability of any third Person other than Contracts with suppliers or
customers in the ordinary course of business in which no payments on
account of Tax liabilities have been made or incurred or are reasonably
expected to be made or incurred; and
(xvii) all commitments and agreements to enter into any of the
foregoing.
For purposes of this Section 3.19(a), all references to the
Company shall include the Company and any other member of the Company Group
unless the context otherwise provides.
(b) Except as set forth on SCHEDULE 3.19, all Material
Contracts are legally valid and binding obligations of the Company or any
other member of the Company Group, as the case may be, and, to the
knowledge of the Seller, represent valid and binding obligations of the
other respective parties thereto, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles. Except as set forth on SCHEDULE 3.19 and
except as would not have or not reasonably be expected to have a Material
Adverse Effect, there are no defaults or breaches by the Company or any
other member of the Company Group, as the case may be, thereunder, and
there are no defaults or breaches by other parties thereunder.
SECTION 3.20. CERTAIN BUSINESS PRACTICES. None of the Company, any
other member of the Company Group nor, to the knowledge of the Seller, any of
their respective directors, officers, agents or employees (in their capacities
as such) have (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity or (b)
made any unlawful payment to any foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns or
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended.
SECTION 3.21. INSURANCE. To the knowledge of the Seller, all
material insurance policies maintained by, or for the benefit of, the Company
Group in connection with the Business: (a) are in full force and effect, (b) are
sufficient for compliance by the Company
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Group with all requirements of Applicable Law, and (c) are valid and outstanding
policies and enforceable against the insurer. To the knowledge of the Seller,
each of the Company Group has complied in all material respects with the terms
of such policies.
SECTION 3.22. LICENSES AND PERMITS; GOVERNMENTAL NOTICES. (a)
SCHEDULE 3.22 sets forth a list of all material Permits of or with any
Governmental Authority, which are held by the Company Group and relate to the
Business or otherwise affect any Real Property. The Company Group possesses all
Permits that are necessary under Applicable Law to conduct the Business and to
own and operate their respective assets and such Permits are valid and in full
force and effect, except where the failure to have such Permits would not have
or would not be reasonably likely to have a Material Adverse Effect. No material
defaults or violations exist or have been recorded in respect of any such Permit
of the Company Group. There are no proceedings pending, or, to the knowledge of
the Seller, threatened, seeking the revocation, limitation or non-renewal of any
such material Permits.
(b) Since December 31, 2003, except as set forth on SCHEDULE
3.22, none of the Company and the other members of the Company Group have
received any written notice regarding, and have not been made a party to, any
proceeding brought by any Governmental Authority alleging that (i) any such
Person is in, or may be in, violation in any material respect of any Applicable
Law or Governmental Order, (ii) any such Person must change in any material
respect any of its business practices to remain in compliance with any
Applicable Law or Governmental Order, (iii) any such Person has failed to obtain
any material Permit required for the conduct of its business or (iv) any such
Person is in default under or in violation of any material Permit.
SECTION 3.23. AFFILIATED TRANSACTIONS. Immediately following the
Closing, there will be no material Contracts by and between the Company and/or
any other member of the Company Group, or officers or directors of the Company
(and/or any family members of such officers or directors), on the one hand, and
Seller and/or its Subsidiaries, or officers or directors of Seller (and/or any
family members of such officers or directors), on the other hand, other than the
Distribution Agreements and any and all Contracts that relate to the Internal
Restructuring, the PBGFS Contribution, the Company Contribution and the PBGFS
Distribution and survive the Closing in accordance with the provisions of the
Separation and Distribution Agreement.
SECTION 3.24. VOTE REQUIRED. The affirmative vote of the holders
of a majority of the outstanding shares of Capital Stock of the Company is the
only vote of the holders of any class or series of the Company's Capital Stock
or the Seller's Capital Stock necessary to approve the Transactions contemplated
hereby.
SECTION 3.25. REPRESENTATIONS AND WARRANTIES.
(a) Except for the representations and warranties expressly set
forth in this Agreement, the Purchaser acknowledges, for itself and on behalf of
its Representatives, that neither the Seller nor any of its Representatives or
any other Person makes any other express or implied representation or warranty
with respect to the Company, the Business, the Transactions, the documents
related hereto or otherwise or with respect to any other information provided to
the Purchaser or any of its Representatives, whether on behalf of the Company or
such other
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Persons, including, as to the operation, probable success, prospects,
projections or profitability of the Company or the Business.
(b) During the period between the date hereof and the Closing
Date, the Seller shall, from time to time, amend or add Schedules, to make such
additions to, or modifications of such Schedules, as are necessary to make the
information set forth therein true, accurate and complete in all material
respects on the date of this Agreement and the Closing Date, as applicable. Such
amendments, additions or modifications shall be specified in a written notice
delivered to the Purchaser (an "UPDATE NOTICE") no less than 15 calendar days
prior to the anticipated Closing Date, which shall identify the Schedules
affected by such amendments, additions or modifications and enclose such amended
Schedules.
(c) The Purchaser shall, within fifteen (15) calendar days of
the delivery of the Update Notice, have the right to terminate this Agreement
pursuant to the terms and conditions of Section 10.03(a)(vii) in connection with
any breach or violation of any representation or warranty on the part of the
Seller that occurred on or prior to the delivery date of the Update Notice and
meets the standard set forth in Sections 7.02(a) and follows the procedure in
Section 10.03(a)(vii), as a result of the information disclosed in such Update
Notice. If the Purchaser does not exercise such termination right within the
fifteen (15) day-period, the Purchaser shall be deemed to waive its right to
terminate this Agreement and such Schedules shall thereupon be deemed amended to
reflect such amendments, additions and modifications and the truth and accuracy
of the representations and warranties of the Seller contained in this Agreement
solely for determining whether any breach thereof shall have occurred for
purposes of 7.02(a), shall be determined by reference to such Schedules as so
amended; PROVIDED, that such amendments, additions or modifications shall not be
deemed to cure any breach for any other purpose of this Agreement, including
without limitation Article VIII.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller on the
date hereof and on the Closing Date, as follows:
SECTION 4.01. ORGANIZATION; AUTHORIZATION; ENFORCEABILITY. The
Purchaser is duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and authority to own
its properties and assets and to carry on its business as it is now being
conducted and as currently proposed to be conducted immediately following the
Closing. The Purchaser has the power to execute, deliver and perform its
obligations under the Financing Commitment Letter, the Equity Commitment Letter,
the Employee Benefits Agreement (collectively, the "PURCHASER TRANSACTION
DOCUMENTS") and this Agreement and has taken all necessary action to authorize
the execution, delivery and performance by it of this Agreement and the
Purchaser Transaction Documents and to consummate the Transactions. No other
proceedings on the part of the Purchaser are necessary for such authorization,
execution, delivery and consummation. The Purchaser has duly executed and
delivered this Agreement, the Financing Commitment Letter and the Equity
Commitment
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Letter. Each of this Agreement, the Employee Benefits Agreement, the Financing
Commitment Letter and the Equity Commitment Letter constitutes a legal, valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
SECTION 4.02. PURCHASER AS A CORPORATION AND U.S. CITIZEN. (a) The
Purchaser is a corporation for all U.S. federal tax purposes that is eligible to
make an election under Section 338(h)(10) of the Code.
(b) The Purchaser is a U.S. citizen for all purposes required
with respect to the transactions included in the Financing, including as
required under the Federal Aviation Act of 1958, as amended, the Jones Act and
other Applicable Laws governing the ownership or use of the assets subject to
such Financings.
SECTION 4.03. PURCHASE FOR INVESTMENT. The Purchaser is acquiring
the Shares to be acquired hereunder for its own account (or for accounts over
which it or its Affiliates exercises investment authority), for investment and
not with a view to the resale or distribution thereof in violation of any
securities law.
SECTION 4.04. NO VIOLATION; CONSENTS. (a) Subject to the
governmental filings and other matters referred to in Section 4.04(b), the
execution, delivery and performance by the Purchaser of each of the this
Agreement and the Purchaser Transaction Documents and the consummation by the
Purchaser of the Transactions do not and will not contravene any Applicable Law,
except for any such contravention that would not have and would not reasonably
be expected to have a material adverse effect on the ability of the Purchaser to
timely perform its obligations under this Agreement and the Purchaser
Transaction Documents. The execution, delivery and performance by the Purchaser
of this Agreement and the Purchaser Transaction Documents and the consummation
of the Transactions (i) will not (A) violate, result in a breach of or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under any
Contract to which the Purchaser is party or by which the Purchaser is bound or
to which any of its assets is subject or (B) result in the creation or
imposition of any Lien upon any of the assets of the Purchaser, except for any
such violations, breaches, defaults or Liens that would not have or would not
reasonably be expected to have a material adverse effect on the ability of the
Purchaser to timely perform its obligations under this Agreement and (ii) will
not conflict with or violate any provision of the certificate of formation or
operating agreement (or similar agreement) or other governing documents of the
Purchaser.
(b) No consent, authorization or order of, or filing or
registration with, any Governmental Authority or other Person is required to be
obtained or made by the Purchaser for the execution, delivery and performance of
any of this Agreement and the Purchaser Transaction Documents or the
consummation of any of the Transactions, except where the failure to obtain such
consents, authorizations or orders, or make such filings or registrations, would
not have or would not reasonably be expected to have a material adverse effect
on the ability of the Purchaser to timely perform its obligations under this
Agreement and the Purchaser Transaction Documents.
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SECTION 4.05. LITIGATION. There are no (a) outstanding Suits or
Governmental Orders against or affecting the Purchaser or any of its
Subsidiaries, (b) proceedings pending or, to the knowledge of the Purchaser,
threatened against or affecting the Purchaser or any of its Subsidiaries or (c)
investigations by any Governmental Authority that are, to the knowledge of the
Purchaser, pending or threatened against or affecting the Purchaser or any of
its Subsidiaries that, in any case would have or would reasonably be expected to
have a material adverse effect on the ability of the Purchaser to timely perform
its obligations under this Agreement.
SECTION 4.06. FINANCING. The Purchaser has obtained the Financing
Commitment Letter which, on the terms and subject to the conditions thereof,
provides all funds necessary, together with the funds available to the Purchaser
under the Equity Commitment Letter, to acquire all of the Shares and to pay any
other amount required to consummate the Transactions. A true, complete and
correct copy of the Financing Commitment Letter has been furnished to Seller.
The financing required to consummate the transactions contemplated by this
Agreement is referred to in this Agreement collectively as the "TRANSACTION
FINANCING."
SECTION 4.07. ANTITRUST. The Purchaser has determined in good
faith, in accordance with 16 C.F.R. ss. 801.10(c)(3), that the fair market value
of the assets held by the Company (together with all entities controlled by the
Company) that are not exempt under Section 7a(c)(1) of the HSR Act or 16 C.F.R.
Sections 802.1 or 802.4 at the time of the Closing (taking into account the
Internal Restructuring, the PBGFS Contribution, the Company Contribution and the
PBGFS Distribution) does not exceed $56.7 million. For the purposes of this
Section 4.07, "controlled by" shall have the same meaning as in 16 C.F.R.
Section 801.1(b).
SECTION 4.08. REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties expressly set forth in this Agreement, the Seller
acknowledges, for itself and on behalf of its Representatives, that neither the
Purchaser nor any of its Representatives or any other Person makes any other
express or implied representation or warranty with respect to the Purchaser, the
Transactions, the documents related hereto or otherwise or with respect to any
other information provided to the Seller or any of its Representatives, whether
on behalf of the Purchaser or such other Persons.
ARTICLE V
COVENANTS OF THE SELLER
SECTION 5.01. COMPLIANCE WITH CONDITIONS; COMMERCIALLY REASONABLE
EFFORTS. The Seller shall use all commercially reasonable efforts to cause all
conditions precedent to the obligations of the Seller and the Purchaser to be
satisfied. Upon the terms and subject to the conditions of this Agreement, the
Seller shall use all commercially reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable consistent with Applicable Law to consummate and make effective in
the most expeditious manner practicable the Transactions and the Internal
Restructuring in accordance with the terms of this Agreement and the Separation
and Distribution Agreement.
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SECTION 5.02. ACCESS TO BOOKS AND RECORDS
(a) The Seller shall and shall cause the Company to (i) afford
to the Purchaser and its Representatives, under the supervision of the Seller,
reasonable access during normal business hours throughout the period prior to
the Closing Date (or the earlier termination of this Agreement pursuant to
Section 10.03) to (A) the properties, books, Contracts and records related to
the Business, (B) such employees of the members of the Company Group as
reasonably agreed upon by the Seller and the Purchaser and (C) the lessees named
on SCHEDULE 5.02 hereto, and, during such period, shall, upon request, furnish
as soon as reasonably practicable to the Purchaser all other information
concerning the Business as the Purchaser may reasonably request; PROVIDED, that
(x) such access shall not interfere with the day-to-day operations of the
Company Group and (y) no investigation or receipt of information pursuant to
this Section 5.02 shall affect any representation or warranty of the Company or
the conditions to the obligations of the Purchaser and (ii) provide to the
Purchaser copies of the execution copies of the Distribution Agreements
concurrently with the execution thereof and in no event later than five (5)
Business Days before the Closing Date.
(b) All requests pursuant to this Section 5.02 shall be made to
the Persons designated from time to time by the Seller for this purpose, who
shall initially be the individuals listed on SCHEDULE 5.02.
SECTION 5.03. CONSENTS AND APPROVALS. Except as set forth on
SCHEDULE 5.03, the Seller shall, and shall cause the Company to, (a) use all
commercially reasonable efforts to obtain all necessary consents, waivers,
authorizations and approvals of all Governmental Authorities and of all other
Persons required in connection with the execution, delivery and performance of
this Agreement or the consummation of the Transactions by the Seller and (b)
shall diligently assist and cooperate with the Purchaser in preparing and filing
all documents required to be submitted by the Purchaser to any Governmental
Authority in connection with the issuances pursuant to this Agreement (which
assistance and cooperation shall include timely furnishing to the Purchaser all
information concerning the Company Group that counsel to the Purchaser
reasonably determines is required to be included in such documents or would be
helpful in obtaining any such required consent, waiver, authorization or
approval).
SECTION 5.04. INTENTIONALLY OMITTED.
SECTION 5.05. NO SOLICITATION OF OTHER OFFERS. (a) The Seller and
its Affiliates and their respective Representatives have ceased any activities,
discussions or negotiations with any Person or Persons other than the Purchaser
or Persons acting on its behalf that were conducted prior to March 7, 2006 with
respect to any Acquisition Proposal.
(b) The Seller and its Subsidiaries shall not take, and shall
use commercially reasonable efforts to cause their respective Representatives
and Affiliates not to take, any action to (i) knowingly solicit the making or
submission of any Acquisition Proposal or (ii) knowingly initiate or participate
in any discussions or negotiations with any Person (other than the Purchaser) in
furtherance of any proposal that constitutes or could reasonably be expected to
lead to any Acquisition Proposal; PROVIDED, HOWEVER, that the Seller and the
Representatives, in response to a bona fide unsolicited proposal that
constitutes an Acquisition Proposal, may participate in discussions or
negotiations with, or furnish or disclose any non-public information to, any
Person which makes such Acquisition Proposal if (A) the Board of Directors of
the Seller
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reasonably determines in good faith, after consultation with its independent
financial advisors, that such Acquisition Proposal is, or may reasonably be
expected to lead to, a Superior Proposal and (B) the Seller shall have provided
(1) prompt notice to the Purchaser of its intent, intent to take such action,
the identity of the Person making the Acquisition Proposal and the material
terms and conditions of such proposal and (2) received from such Person an
executed confidentiality agreement in reasonably customary form on terms not in
the aggregate materially more favorable to such Person than the terms contained
in the Confidentiality Agreement. Notwithstanding the foregoing, nothing in this
Section 5.05 or any other provision of this Agreement shall prohibit the Seller,
its Representatives or the Board of Directors of the Seller from making any
disclosure to the stockholders of the Seller as, in the good faith judgment of
the Board of Directors of the Seller is required under Applicable Law or that
the failure to make such disclosure is reasonably likely to cause the Board of
Directors of the Seller to violate its respective fiduciary duties.
(c) The Board of Directors of the Seller (or any committee
thereof) shall not (i) approve or recommend, or propose to approve or recommend,
any Acquisition Proposal or (ii) cause the Seller or any of its Subsidiaries to
enter into and approve any letter of intent, agreement in principle or similar
agreement relating to any Acquisition Proposal; PROVIDED, HOWEVER, that the
Board of Directors of the Seller may recommend to their respective stockholders
an Acquisition Proposal if (x) the Board of Directors of the Seller, has
received an Acquisition Proposal that the Board of Directors of the Seller has
determined in good faith, is a Superior Proposal and has complied with its
obligations under this Section 5.05 and (y) the Seller has notified the
Purchaser in writing of the terms of the Superior Proposal and of its intent to
take such action, and has taken into account any revised proposal made by the
Purchaser to the Company within five (5) Business Days after delivery to the
Purchaser of such notice and again has determined in good faith that such
Acquisition Proposal (as if the same may have been modified or amended) remains
a Superior Proposal.
(d) In addition to the obligations set forth in Section
5.05(c), the Seller shall as promptly as practicable (and in any event within
two (2) Business Days) advise the Purchaser of any request for information with
respect to any Acquisition Proposal or of any Acquisition Proposal, or any
inquiry with respect to any Acquisition Proposal, including the terms and
conditions of such Acquisition Proposal (but not modifications to terms and
conditions proposed during discussions or negotiations permitted by this Section
5.05). The Seller shall as promptly as practicable provide to the Purchaser any
non-public information concerning the Company provided to any other Person in
connection with any Acquisition Proposal or any inquiry with respect to any
Acquisition Proposal, which was not previously provided or made available to the
Purchaser.
SECTION 5.06. CONFIDENTIALITY; INFORMATION. (a) The Seller and
each of its Subsidiaries shall and shall cause their respective Representatives
to keep all information received by it or them in connection with the
negotiations and execution of this Agreement and the consummation of the
Transactions from the Purchaser or its Representatives confidential, and the
Seller shall not, without the Purchaser's prior written consent, disclose such
information in any manner whatsoever, in whole or in part, except (i) for
disclosure to the Representatives of the Seller and its Subsidiaries who have a
need to know such information for the purpose of assisting in the consummation
of the Transactions, (ii) to the extent, in the sole judgment of the
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Seller, disclosure is required by Applicable Law, court process or by applicable
rules or listing agreements with any national securities exchange or quotation
system on which the Seller lists securities and (iii) to the extent disclosure
is requested by any Governmental Authority having jurisdiction over the Seller,
any of its Subsidiaries or any Seller Representative. The Seller shall use all
commercially reasonable efforts to cause its Representatives and its
Subsidiaries' Representatives to comply with the foregoing requirement.
(b) Section 5.06(a) shall not apply to any such information
that (i) is or becomes generally available to the public other than as a result
of any disclosure or other action or inaction by the Seller or its Subsidiaries
or any of their respective Representatives, (ii) is or becomes known or
available to the Seller or its Subsidiaries on a non-confidential basis from a
source (other than the Purchaser or its Representatives) that, to the knowledge
of the Seller, is not under a legal obligation to disclose such information or
(iii) was independently developed by the Seller or its Subsidiaries or any of
their respective Representatives without reference to any information provided
by the Purchaser or any of its Representatives (except pursuant to clauses (i)
or (ii)) that was known to the Seller or its Subsidiaries prior to such
disclosure by the Purchaser or its Representatives.
(c) In the event that the Seller or its Subsidiaries or any of
their respective Representatives become legally compelled (by oral questions,
interrogatories, requests for information or documents, subpoenas, civil
investigative demands or otherwise), to disclose any information referred to in
Section 5.06(a), the Seller shall or shall cause its Subsidiaries to provide the
Purchaser with prompt written notice so that the Purchaser may seek a protective
order or other appropriate remedy. Failing the entry of a protective order or
other appropriate remedy or receipt of a waiver hereunder, the Seller shall or
shall cause its Subsidiaries, as applicable, to furnish only that portion of the
information which it is advised by its counsel is legally required to be
furnished and shall exercise its commercially reasonable efforts to obtain
reliable assurance that confidential treatment shall be accorded such
information.
SECTION 5.07. THE DISTRIBUTION AGREEMENTS. (a) Prior to the
Closing Date, the Seller shall, and the Seller shall cause the Company to, enter
into each of the Distribution Agreements.
(b) From the date of execution of any of the Distribution
Agreements pursuant to Section 5.07(a) until the Closing Date, the Seller shall
not materially alter, amend or modify such Distribution Agreement without the
prior written consent of the Purchaser; PROVIDED, that, notwithstanding the
foregoing, nothing in this Section 5.07 or any other provision of this Agreement
shall prohibit the Seller from, at any time prior to the Closing Date, amending
any schedules of the Separation and Distribution Agreement, to make such
additions to or modifications of such Schedules as are necessary to make the
information set forth therein true, accurate and complete in all material
respects; PROVIDED, HOWEVER, that the Seller shall not make any such alteration,
amendment or modification to the schedules of the Separation and Distribution
Agreement that materially adversely affects the financial interests of the
Purchaser.
SECTION 5.08. CONDUCT OF BUSINESS. During the period from the date
hereof to the Closing Date (unless earlier terminated in accordance with Section
10.03), the Seller shall, and shall cause each member of the Company Group to
(a) conduct and maintain the Business in
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the ordinary course of business consistent with past practice and (b) take all
reasonable steps available to maintain the goodwill of the Business.
Notwithstanding the immediately preceding sentence, unless otherwise
contemplated by this Agreement, the Distribution Agreements, the Transactions or
the Internal Restructuring, during the period from the date hereof to the
Closing (unless earlier terminated in accordance with Section 10.03), the Seller
shall not, and shall cause each of its Subsidiaries not to take any of the
following actions solely with respect to the Company, the other members of the
Company Group and the Business without the prior written consent of the
Purchaser (which such consent shall not be unreasonably withheld, delayed or
conditioned):
(a) amend the certificate of incorporation, bylaws or other
similar corporate governance instrument of the Company or any of the other
members of the Company Group, or subdivide or reclassify in any way any of the
Company's Capital Stock or change or agree to change in any manner the rights of
the Company's outstanding Capital Stock;
(b) redeem, purchase or otherwise acquire any of the Capital
Stock or other equity interests of any Person;
(c) issue or sell any shares of Capital Stock or other equity
interests of the Company or any of the other members of the Company Group, or
securities convertible into or exchangeable for, or options, warrants or rights
to purchase or subscribe to, such Capital Stock of the Company or any of the
other members of the Company Group;
(d) adopt or amend any collective bargaining agreement that is
a Material Contract other than in the ordinary course of business consistent
with past practice;
(e) except to the extent necessary to effectuate a plan of
liquidation of the Company for income tax purposes in connection with the PBGFS
Distribution and the deemed liquidation of the Company Group under Section
338(h)(10) of the Code, adopt a plan of liquidation or resolutions providing for
the liquidation, dissolution, merger, consolidation or other reorganization of
the Company or any of the other members of the Company Group having assets or
liabilities in excess of $50,000;
(f) grant to any employee of the Business any material increase
in compensation or benefits; PROVIDED, HOWEVER, that an increase of five percent
(5.0%) or less in compensation or benefits shall not be considered a material
increase for purposes of this Section 5.08(f) if such increases shall not result
in an aggregate of a five percent (5.0%) increase in compensation or benefits of
all employees of the Business;
(g) permit the Company or any of the other members of the
Company Group to incur or assume any liabilities, obligations or Indebtedness
for borrowed money or guarantee any such liabilities, obligations or
Indebtedness or, incur or assume any debt, obligation or liability (whether
absolute or contingent and whether or not currently due and payable) that in the
aggregate exceeds $1,000,000;
(h) permit the Company or any of the other members of the
Company Group to make any loan or advance to its officers, directors, employees,
consultants, agents or equity
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holders, other than travel advances, expense reimbursement and similar payments,
which is in the ordinary course of business consistent with past practice as
provided above;
(i) permit, allow or suffer any of assets of the Business to
become subjected to any Lien, other than Permitted Liens;
(j) make any change in any method of accounting or accounting
practice or policy applied to the Company Group or the Business other than those
required by Applicable Law or by GAAP;
(k) permit the Company or any of the other members of the
Company Group to merge or consolidate with, or acquire all or any significant
portion of the assets of any business or any Person, or agree to change in any
material respect the character of its Business;
(l) permit the Company or any of the other members of the
Company Group to make or incur any capital expenditure that in the aggregate
exceeds $500,000;
(m) permit the Company or any of the other members of the
Company Group to enter into, materially modify or terminate any lease of Real
Property other than in the ordinary course of business consistent with past
practice;
(n) permit the Company or any of the other members of the
Company Group to enter into any (i) employment or consulting Contract other than
in the a manner consistent with past practice or (ii) any other Contract either
involving consideration in excess of $500,000 under each such Contract or
$1,000,000 under such Contracts in the aggregate;
(o) permit the Company or any of the other members of the
Company Group in the ordinary course of business to accelerate, terminate,
materially modify or cancel any Contract involving consideration in excess of
$1,500,000 under each such Contract or $3,000,000 under such Contracts in the
aggregate;
(p) permit the Company or any of the other members of the
Company Group outside of the ordinary course of business to accelerate,
terminate, materially modify or cancel any Contract involving consideration in
excess of $100,000 under each such Contract or $500,000 under such Contracts in
the aggregate;
(q) materially change any of its business policies material to
the Business, including advertising, marketing, pricing, purchasing, personnel,
sales, returns, budget or product acquisition policies other than in the
ordinary course of business consistent with past practice;
(r) transfer to or from the Company any employees from or to,
respectively, Seller or any of its Affiliates or removal of any employee of the
Company or any other member of the Company Group other than in the ordinary
course of business consistent with past practice;
(s) permit the Company or any of the other members of the
Company Group to sell, lease, distribute or otherwise dispose of any material
assets of the Business (other than
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off-lease or returned assets in the ordinary course of business) that in the
aggregate exceeds $1,000,000;
(t) originate or service any Financing other than in the
ordinary course of business consistent with past practice;
(u) permit the Company or any of the other members of the
Company Group to hire any single employee whose annual base salary will exceed
$120,000 or hire more than one employee whose annual base salaries will in the
aggregate exceed $240,000;
(v) permit the Company or any of the other members of the
Company Group to enter into any Contract with respect to any IT System or
component thereof involving consideration in excess of $100,000 under each such
Contract or $200,000 under such Contracts in the aggregate; and
(w) agree or resolve, whether or not in writing, to do any of
the foregoing.
SECTION 5.09. MONTHLY MANAGEMENT REPORTS; DELIVERY OF FINANCIAL
STATEMENTS. As soon as available and in any event within twenty (20) Business
Days after the end of each month in each fiscal year of the Company, the Seller
shall provide to the Purchaser a copy of the Company's management report with
respect to the Business for such month, which shall include a balance sheet, an
income statement, portfolio statistics, volume (new business), delinquency and
write-off report for such month prepared in the ordinary course of business
consistent with past practice. As soon as reasonably practicable, but in no
event later than June 23, 2006, the Seller shall furnish to the Purchaser the
Company 2005 Audited Financial Statements, the PBG Partnership 2005 Financial
Statements and the Company 2006 First Quarter Financial Statements.
SECTION 5.10. SCHEDULED PAYMENTS
Subject to consummation of the Transactions, (a) all payments
scheduled to become due in accordance with the terms of the leases related to
each Financing (the "SCHEDULED PAYMENTS") payable to the Company or any of its
Subsidiaries on or prior to June 30, 2006 shall be for the benefit of the
Seller, and the Purchaser shall cause the Company to hold any such payments
received by the Company as agent, in trust and on behalf of the Seller and shall
pay and deliver the same, in the form received, promptly to the Seller, but in
any event no later than (3) Business Days after receipt of such Scheduled
Payments and (b) the Company shall not dividend, distribute or release to the
Seller or any other Person prior to the earlier of the Closing or the
Termination Date any Scheduled Payments payable to the Company or any of its
Subsidiaries following June 30, 2006, which payments shall be for the benefit of
the Company and shall be held by the Company.
SECTION 5.11. TAXES. (a) Notwithstanding anything herein to the
contrary, the Seller and the Purchaser shall jointly complete and make a timely
election under Section 338(h)(10) of the Code with respect to the Company and
each of the eligible members of the Company Group on Form 8023 or in such other
manner as may be required by rule or regulation
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of the IRS and shall jointly make an election in the manner required under any
analogous provisions of state or local law with respect to the Company and each
of the eligible members of the Company Group. The Seller and the Purchaser shall
prepare Form 8023 and all such forms as are required as attachments to Form 8023
(and all forms under analogous provisions of state or local law) in accordance
with applicable Tax laws. Such duly executed and completed forms as are required
to be filed under Section 338(h)(10) of the Code (and analogous provisions of
state or local law) shall be delivered by the Seller and Purchaser to each
other.
(b) The Seller and the Purchaser agree to use commercially
reasonable efforts to perform or cause to be performed on or prior to the
Closing Date: (i) an initial valuation of assets of the Company and the eligible
members of the Company Group for purposes of Section 338 of the Code; (ii) a
computation of the aggregate deemed sale price ("ADSP") (as defined under
Treasury Regulations Section 1.338-4) with respect to the Company and each of
the eligible members of the Company Group; and (iii) an allocation of ADSP of
the Company and the eligible members of the Company Group for purposes of
Section 338 of the Code (collectively, the "338 VALUATIONS AND ALLOCATIONS").
(c) If the Seller and the Purchaser agree upon the 338
Valuations and Allocations on or prior to the Closing Date, then on or prior to
the date that is 120 days following the Closing Date, the 338 Valuations and
Allocations shall be adjusted appropriately to reflect any purchase price
adjustment under Section 2.03 hereof (the "ADJUSTED 338 VALUATIONS AND
ALLOCATIONS"). The Adjusted 338 Valuations and Allocations determined pursuant
to this Section 5.11(c) shall be used for purposes of all relevant Tax Returns,
reports and filings, and neither the Seller nor the Purchaser shall take any
position that is inconsistent therewith.
(d) If the Seller and the Purchaser cannot agree upon the 338
Valuations and Allocations on or prior to the Closing Date, then the first Big
Four Public Accounting Firm (on an alphabetical basis) that is not currently
serving as the auditor of any of the Seller, Company or Purchaser shall be
selected to determine the 338 Valuations and Allocations in accordance with
Section 5.11(c) hereof. The 338 Valuations and Allocations determined by such
independent public accounting firm shall be final and binding. The fees and
expenses incurred with respect to the independent public accounting firm
performing the 338 Valuations and Allocations shall be allocated fifty percent
(50%) to the Seller and fifty percent (50%) to the Purchaser. The 338 Valuations
and Allocations determined pursuant to this Section 5.11(d) shall be used for
purposes of all relevant Tax Returns, reports and filings, and neither the
Seller nor the Purchaser shall take any position that is inconsistent therewith.
(e) This Agreement and the Separation and Distribution
Agreement shall constitute the Company's plan of complete liquidation for
purposes of Section 332 of the Code. The Purchaser and the Seller acknowledge
and agree that the PBGFS Distribution will be part of a complete liquidation
under Treasury Regulations Sections 1.338(h)(10)-1(d)(4) and 1.338(h)(10)-1(e),
Ex.2.
(f) Except as provided in paragraph (a) of this Section 5.11,
the Purchaser shall not make any election under Section 338 of the Code.
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SECTION 5.12. STATUTE OF LIMITATIONS. The Company shall prepare
and deliver to the Purchaser a list of all outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect to
any material non-income Taxes or material non-income Tax Returns of the Company
or its Subsidiaries.
SECTION 5.13. DIRECTORS AND OFFICERS. Within ten (10) Business
Days of the Closing, the Seller shall deliver in writing to the Purchaser a list
setting forth the identity and title of each director and officer of the Company
Group. At least five (5) Business Days prior to Closing, the Purchaser shall
deliver in writing to the Seller a list (the "RESIGNATION LIST") which
identifies by name, title and employer those directors and officers of the
Company Group whom Purchaser would like to resign effective as of Closing.
SECTION 5.14. CLOSING DATE OPERATIONS EXPENSE STATEMENT. On the
Closing Date, the Seller shall deliver to the Purchaser an unaudited combined
pro forma statement of Operation Expenses for the four month period ending as of
the last day of the month immediately preceding the Closing Date identifying on
a line by line basis each category of expenses incurred by Pitney Bowes Capital
Services and setting forth the assumptions, exceptions and basis for deriving
such amounts, prepared in accordance with GAAP on a basis consistent with the
policies, principles, practices and methods set forth on SCHEDULE 3.05(c) (the
"CLOSING DATE OPERATIONS EXPENSE STATEMENT").
SECTION 5.15. ASSISTANCE. The Seller shall cooperate with the
Purchaser in connection with the financing contemplated by the Financing
Commitment Letter, including, under the supervision of the Seller, providing the
Purchaser and its financing sources and their respective representatives
reasonable access during normal business hours from the date of execution and
delivery of this Agreement to the Closing Date (or the earlier termination
hereof) to the books and records and employees of the Company and its
Subsidiaries related to the Business (after taking into effect the Internal
Restructuring, the PBGFS Contribution, the Company Contribution and the PBGFS
Distribution) and using (and causing its Subsidiaries to use) commercially
reasonable efforts to satisfy all conditions precedent in the Financing
Commitment Letter within the control of the Seller and its Subsidiaries to be
satisfied by the Seller and its Subsidiaries; PROVIDED, that such access and
efforts shall not interfere with the day-to-day operations of the Seller, the
Company and its Subsidiaries. For the avoidance of doubt, the Seller shall not
be obligated to provide any information relating to any financial statements
other than the financial statements related to the Business and furnished as
contemplated by this paragraph, and the Seller shall not be required to incur
any expenses in connection with providing such access. Upon reasonable notice
from the Purchaser, the Seller shall permit members of senior management of the
Company Group (the "PARTICIPATING MANAGEMENT MEMBERS") to participate, under the
supervision of the Seller, in meetings with prospective investors, "road shows"
in connection with the financing, meetings with rating agencies and in drafting
sessions related to the offering materials for the Transaction Financing and
Seller shall use reasonable efforts to cause the present and former independent
accountants for the Seller to participate in drafting sessions related to the
offering materials for the Transaction Financing and making work papers
available to the Purchaser, the underwriters or placement agents for the
Transaction Financing and their respective representatives; PROVIDED that the
Purchaser shall endeavor to minimize the interference with the ability of the
Participating Management Members to carry out their normal responsibilities for
ongoing management of the Business resulting from
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such participation in drafting sessions and the road show; PROVIDED FURTHER that
the Purchaser shall indemnify and hold harmless the Seller, the Company and its
Subsidiaries against any and all Losses to which they may become subject under
any securities laws including, without limitation, the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, or any other
statute or common law of the United States or any other country or political
subdivision thereof, or otherwise, including the amount paid in settlement of
any litigation commenced or threatened, and shall promptly reimburse them, as
and when incurred, for any legal or other expenses incurred by them in
connection with investigating any claims and defending any actions, insofar as
any such Losses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact by any Participating Management
Member at any such drafting session or road show presentation or (ii) the
omission or alleged omission to state a material fact required to be stated by
such Participating Management Member in order to make his/her statements not
misleading to a prospective investor; PROVIDED FURTHER that the foregoing
indemnity shall not apply to any statements by Participating Management Members
which (x) are slanderous against the Purchaser or its Affiliates, (y) are based
on the gross negligence or willful misconduct of such Participating Member or
(z) such Participating Member knows to be untrue or misleading. The Purchaser
shall promptly, upon request by the Seller, reimburse the Seller for all
documented out-of-pocket expenses incurred by the Seller or its Affiliates or
representatives in connection with such cooperation. Nothing contained in this
Section 5.15 shall be deemed to limit the indemnification rights of any
Purchaser Indemnified Party under Article VIII hereof.
ARTICLE VI
COVENANTS OF THE PURCHASER
SECTION 6.01. COMPLIANCE WITH CONDITIONS; COMMERCIALLY REASONABLE
EFFORTS. The Purchaser shall use all commercially reasonable efforts to cause
all conditions precedent to the obligations of the Purchaser to be satisfied,
including, without limitation, maintaining in full force and effect the Equity
Commitment Letter and the Employee Benefits Agreement. The Purchaser shall
cooperate to cause all conditions precedent to the obligations of the Seller to
be satisfied in which the Purchaser's participation is reasonably required by
the Seller to satisfy such conditions precedent. Upon the terms and subject to
the conditions of this Agreement, the Purchaser shall use all commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
Applicable Law to consummate and make effective in the most expeditious manner
practicable the Transactions and the Internal Restructuring in accordance with
the terms of this Agreement and the Separation and Distribution Agreement.
SECTION 6.02. CONSENTS AND APPROVALS. The Purchaser (a) shall use
all commercially reasonable efforts to obtain all necessary consents, waivers,
authorizations and approvals of all Governmental Authorities and of all other
Persons required in connection with the execution, delivery and performance of
this Agreement and the Purchaser Transaction Documents or the consummation of
the Transactions by the Purchaser and (b) shall diligently assist and cooperate
with the Seller in preparing and filing all documents required to be
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submitted by the Seller to any Governmental Authority in connection with the
Transactions (which assistance and cooperation shall include timely furnishing
to the Seller all information concerning the Purchaser that counsel to the
Seller reasonably determines is required to be included in such documents or
would be helpful in obtaining any such required consent, waiver, authorization
or approval).
SECTION 6.03. CONFIDENTIALITY; INFORMATION. (a) The Purchaser
shall and shall cause its Representatives to keep all information received by it
or them in connection with the negotiations and execution of this Agreement and
the consummation of the Transactions from the Seller or its Representatives
confidential, and the Purchaser shall not, without the Seller's prior written
consent, disclose such information in any manner whatsoever, in whole or in
part, except (i) for disclosure to the Representatives of the Seller who have a
need to know such information for the purpose of assisting in the consummation
of the Transactions, (ii) to the extent, in the sole judgment of the Seller,
disclosure is required by Applicable Law or court process and (iii) to the
extent disclosure is requested by any Governmental Authority having jurisdiction
over the Seller, any of its Subsidiaries or any Seller Representative. The
Purchaser shall use its commercially reasonable efforts to cause its
Representatives to comply with the foregoing requirement.
(b) Section 6.03(a) shall not apply to any such information
that (i) is or becomes generally available to the public other than as a result
of any disclosure or other action or inaction by the Purchaser or any of its
Representatives, (ii) is or becomes known or available to the Purchaser on a
non-confidential basis from a source (other than the Seller or its
Representatives) that, to the knowledge of the Purchaser, is not under a legal
obligation to disclose such information to the Purchaser or (iii) was
independently developed by the Purchaser or its Representatives without
reference to any information provided by the Seller or its Representatives
(except pursuant to clauses (i) or (ii)) that was known to the Purchaser prior
to such disclosure by the Seller or its Representatives.
(c) In the event that the Purchaser or its Representatives
become legally compelled (by oral questions, interrogatories, requests for
information or documents, subpoenas, civil investigative demands or otherwise),
to disclose any information referred to in Section 6.03(a), the Purchaser shall
provide the Seller with prompt written notice so that the Seller may seek a
protective order or other appropriate remedy. Failing the entry of a protective
order or other appropriate remedy or receipt of a waiver hereunder, the
Purchaser shall furnish only that portion of the information which it is advised
by its counsel is legally required to be furnished and shall exercise its
commercially reasonable efforts to obtain reliable assurance that confidential
treatment shall be accorded such information.
SECTION 6.04. PROHIBITION ON SOLICITATION AND HIRING. (a) The
Purchaser shall not, nor shall it permit any Affiliate (other than a portfolio
company) to, for a period of two (2) years from the date hereof, directly or
indirectly, solicit for employment or hire any senior management employee or
senior technical employee of the Business, the Seller or any of its
Subsidiaries, with whom the Purchaser came into contact as a result of either
the due diligence process in respect of the Transactions, whether or not such
Person would commit a breach of his or her contract of service in leaving such
employment; PROVIDED, HOWEVER, that the foregoing shall not prohibit the
Purchaser or an Affiliate of the Purchaser from making general solicitations
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of employment (or engaging search firms to make such solicitations) not
specifically directed toward employees of the Seller or any of its Subsidiaries
and/or hiring any employee who responds to any such general solicitation or
initiates contact with the Purchaser or Affiliate without solicitation.
(b) If this Agreement is terminated pursuant to Section 10.03,
the Purchaser shall not, nor shall it permit any Affiliate (other than a
portfolio company to the extent permitted below) to, for a period of two (2)
years from the date hereof, directly or indirectly, assist (including through
identification, introduction or otherwise for the purpose of inducing
employment) a portfolio company of the Purchaser or Affiliate in soliciting for
employment any senior management employee or senior technical employee of the
Business, the Seller or any of its Subsidiaries, with whom the Purchaser came
into contact as a result of either the due diligence process in respect of the
Transactions, whether or not such Person would commit a breach of his or her
contract of service in leaving such employment; PROVIDED, HOWEVER, that the
foregoing shall not prohibit any portfolio company of the Purchaser or an
Affiliate of the Purchaser from making general solicitations of employment (or
engaging search firms to make such solicitations) not specifically directed
toward employees of the Seller or any of its Subsidiaries and/or hiring any
employee who responds to any such general solicitation or initiates contact with
the portfolio company of the Purchaser or Affiliate without solicitation.
SECTION 6.05. FINANCING COMMITMENT LETTER. (a) The Purchaser shall
use its commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to (i) maintain in effect the Transaction Financing and the Financing
Commitment Letter, (ii) enter into definitive financing agreements with respect
to the Transaction Financing, so that such agreements are in effect as promptly
as practicable but in any event no later than the Closing Date and (iii)
consummate the Transaction Financing at or prior to Closing.
(b) If, notwithstanding the use of commercially reasonable
efforts by the Purchaser to satisfy its obligations under Section 6.05(a), any
of the Transaction Financing or the Financing Commitment Letter (or any
definitive financing agreement relating thereto) expire or are terminated prior
to the Closing, in whole or in part, for any reason, the Purchaser shall (i)
promptly notify the Seller of such expiration or termination and the reasons
therefor and (ii) promptly arrange for alternative debt or equity financing to
replace the financing contemplated by such expired or terminated commitments or
agreements (A) in an amount sufficient to consummate the Transactions
contemplated by this Agreement, (B) on substantially the same terms and
conditions as set forth in the draft Commitment Letter attached hereto as
EXHIBIT G and (C) from a reputable financial institution(s) reasonably
acceptable to the Seller, which shall include those institutions set forth on
SCHEDULE 6.05(b).
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ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
SECTION 7.01. CONDITIONS TO THE SELLER'S OBLIGATIONS IN RESPECT OF
THE CLOSING. The obligations of the Seller to sell the Shares hereunder shall be
subject, at the election of the Seller, to the satisfaction or waiver, on the
Closing Date, of the following conditions:
(a) The representations and warranties of the Purchaser in this
Agreement shall be true and correct in all respects (without regard to any
material adverse effect or materiality qualification) on and as of the Closing
Date with the same force and effect as though such representations and
warranties were made as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct on and as of
such earlier date); PROVIDED, that the condition set forth in this Section
7.01(a) shall only be deemed to not have been satisfied if the failure of any
such representation(s) and warranty(ies) to be true and correct have or would
reasonably be likely to have, individually or in the aggregate, a material
adverse effect on the ability of the Purchaser to consummate the Transactions.
(b) The Purchaser shall have performed in all material respects
all obligations and agreements, and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by the
Purchaser on the Closing Date.
(c) The Purchaser shall have delivered to the Seller a
certificate executed by it or on its behalf by a duly authorized representative,
dated the Closing Date, to the effect that each of the conditions specified in
paragraphs (a) and (b) of this Section 7.01 has been satisfied.
(d) No provision of any Applicable Law or Governmental Order
shall be in effect which has the effect of making the Transactions or the
ownership by the Purchaser of the Shares illegal or shall otherwise prohibit the
consummation of the Transactions.
(e) The Internal Restructuring, the PBGFS Contribution, the
Company Contribution and the PBGFS Distribution shall have been consummated.
(f) The Purchaser shall have executed and delivered to the
Seller a copy of Form 8023, including an election under Section 338(h)(10) of
the Code for the Company and each of the eligible members of the Company Group.
(g) The Employee Benefits Agreement shall be in full force and
effect.
(h) No action, suit or proceeding shall have been instituted or
threatened prior to the Closing to restrain, prohibit or obtain damages or other
relief, or otherwise interfere with the performance of any material obligation
of any party under this Agreement or the Distribution Agreements, the
consummation of any transaction contemplated hereby or thereby, or the ownership
of the Shares by the Purchaser, or which otherwise questions the legality or
validity of any transaction contemplated hereby or thereby or which might affect
the right of the Purchaser to own, operate or control, after the Closing, the
Business and the assets, properties and businesses of the Company Group or which
has or may have a Material Adverse Effect, and no
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temporary, preliminary or permanent injunction or restraining order shall have
been issued by any judicial or administrative tribunal of competent jurisdiction
which would have any of the foregoing effects.
(i) The Equity Commitment Letter shall be in full force and
effect.
SECTION 7.02. CONDITIONS TO THE PURCHASER'S OBLIGATIONS IN RESPECT
OF THE CLOSING. The obligations of the Purchaser to purchase the Shares
hereunder shall be subject to the satisfaction or waiver, on the Closing Date,
of the following conditions:
(a) The representations and warranties of the Seller in this
Agreement shall be true and correct in all respects (without regard to any
Material Adverse Effect or materiality qualification) on and as of the Closing
Date with the same force and effect as though such representations and
warranties were made as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct on and as of
such earlier date); PROVIDED, that the condition set forth in this Section
7.02(a) shall only be deemed to not have been satisfied if the failure of any
such representation(s) and warranty(ies) to be true and correct have or would
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect.
(b) The Seller shall have performed in all material respects
all of its obligations, agreements and covenants contained in this Agreement to
be performed and complied with at or prior to the Closing Date.
(c) The Seller shall have delivered to the Purchaser a
certificate executed by it or on its behalf by a duly authorized representative,
dated the Closing Date, to the effect that each of the conditions specified in
paragraphs (a) and (b) of this Section 7.02 has been satisfied.
(d) No provision of any Applicable Law or Governmental Order
shall be in effect which has the effect of making the Transactions or the
ownership by the Purchaser of the Shares illegal or shall otherwise prohibit the
consummation of the Transactions.
(e) The Seller shall have delivered to the Purchaser the
Company 2005 Audited Financial Statements, the PBG Partnership 2005 Financial
Statements and the Company 2006 First Quarter Financial Statements.
(f) Each of the individuals set forth on the Resignation List
shall have resigned from the board of director and/or officer position(s) of the
Company Group set forth opposite his or her name on the Resignation List
effective as of the Closing.
(g) The Internal Restructuring, the PBGFS Contribution, the
Company Contribution and the PBGFS Distribution shall have been consummated.
(h) The Seller and the Company shall have entered into each of
the Distribution Agreements which shall be in full force and effect and
delivered a copy of each of the fully executed Distribution Agreements to the
Purchaser.
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(i) No action, suit or proceeding shall have been instituted or
threatened prior to the Closing to restrain, prohibit or obtain damages or other
relief, or otherwise interfere with the performance of any material obligation
of any party under this Agreement or the Distribution Agreements, the
consummation of any transaction contemplated hereby or thereby, or the ownership
of the Shares by the Purchaser, or which otherwise questions the legality or
validity of any transaction contemplated hereby or thereby or which might affect
the right of the Purchaser to own, operate or control, after the Closing, the
Business and the assets, properties and businesses of the Company Group or which
has or may have a Material Adverse Effect, and no temporary, preliminary or
permanent injunction or restraining order shall have been issued by any judicial
or administrative tribunal of competent jurisdiction which would have any of the
foregoing effects.
(j) The Seller shall have complied with each of its delivery
obligations pursuant to Section 2.02(b) hereto.
(k) The consents listed on SCHEDULE 7.02(k) shall have been (i)
obtained and the evidence of such consents delivered to the Purchaser or (ii)
otherwise dealt with in accordance with SCHEDULE 2.03(e) hereof.
(l) The third party agreements set forth on SCHEDULE 7.02(l)
shall have been executed and delivered by the parties thereto and shall be in
full force and effect.
(m) The Seller shall have executed and delivered to the
Purchaser a copy of Form 8023, including an election under Section 338(h)(10) of
the Code for the Company and each of the eligible members of the Company Group.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. INDEMNIFICATION BY THE SELLER
(a) For the time periods and subject to the limitations and
conditions set forth below or elsewhere in this Article VIII, the Seller agrees
to indemnify and hold the Purchaser, the Company Group and each of their
respective successors and permitted assigns and their respective officers,
directors, employees, representatives, attorneys, consultants and agents
(individually a "PURCHASER INDEMNIFIED PARTY" and collectively, the "PURCHASER
INDEMNIFIED PARTIES") harmless from and against all Losses that are sustained or
incurred by any of the Purchaser Indemnified Parties by reason of, resulting
from or arising out of all or any of the following:
(i) any breach or inaccuracy of a representation or
warranty of the Seller contained in this Agreement or in any Distribution
Agreement (without regard to any Material Adverse Effect qualification
and without regard to any amendment, addition or modification to the
Schedules as contemplated by Section 3.25 hereof);
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(ii) any breach of or failure by the Seller to perform
any of its covenants, agreements or other obligations contained in this
Agreement or in any Distribution Agreement;
(iii) any actions or operations of the Company Group prior
to the Closing that result in a breach or inaccuracy of a representation
or warranty of the Seller contained in this Agreement or in any
Distribution Agreement (without regard to any Material Adverse Effect
qualification and without regard to any amendment, addition or
modification to the Schedules as contemplated by Section 3.25 hereof);
(iv) any failure of the Company's Financing Files
pertaining to each Financing to be complete in all material respects with
respect to the Company's interest in such Financing; or
(v) any claims of stockholders of the Seller in
connection with the transactions contemplated hereby or by the
Distribution Agreements.
(b) Any claims for indemnification made pursuant to Section
8.01(a)(i), Section 8.01(a)(iii) and 8.01(a)(iv) will be paid only to the extent
that the aggregate amount of all such claims exceeds Two Million Two Hundred
Fifty Thousand Dollars ($2,250,000), at which point the Seller shall be liable
for the full amount of such Losses back to the first dollar thereof.
SECTION 8.02. INDEMNIFICATION BY PURCHASER.
(a) The Purchaser agrees to indemnify and hold the Seller, its
Affiliates and each of their respective successors and permitted assigns and
their respective officers, directors, employees, representatives, attorneys,
consultants and agents (individually a "SELLER INDEMNIFIED PARTY" and
collectively, the "SELLER INDEMNIFIED PARTIES") harmless from and against any
and all Losses that are sustained or incurred by any of the Seller Indemnified
Parties by reason of, resulting from or arising out of all or any of the
following:
(i) any breach or inaccuracy of a representation or
warranty of the Purchaser contained in this Agreement or in any
Distribution Agreement to which the Purchaser is a party;
(ii) any breach of or failure by the Purchaser to perform
any of its covenants, agreements or other obligations contained in this
Agreement or in any Distribution Agreement to which the Purchaser is a
party; or
(iii) any actions or operations of the Company Group after
the Closing.
(b) Any claims for indemnification made pursuant to Section
8.02(a)(i) will be paid only to the extent that the aggregate amount of all such
claims exceeds Two Million Two Hundred Fifty Thousand Dollars ($2,250,000), at
which point the Purchaser shall be liable for the full amount of such Losses
back to the first dollar thereof.
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SECTION 8.03. CLAIMS PROCEDURE.
(a) Except with respect to third party claims, actions or suits
covered by Section 8.04, any Purchaser Indemnified Party or any Seller
Indemnified Party who wishes to make a claim for indemnification for a Loss
pursuant to this Article VIII (an "INDEMNIFIED PARTY") shall give written notice
to each Person from whom indemnification is being claimed (an "INDEMNIFYING
PARTY") with reasonable promptness after the Indemnified Party's discovery of
the facts and circumstances giving rise to the indemnification claim. The
Indemnified Party shall supply the Indemnifying Party such information and
documents as it has in its possession regarding such claim, together with all
pertinent information in its possession regarding the amount of the Loss it
asserts it has sustained or incurred, and will permit the Indemnifying Party to
inspect such other records and books in the possession of the Indemnified Party
and relating to the claim and asserted Loss as the Indemnifying Party shall
reasonably request. The Indemnifying Party shall have a period of thirty (30)
days after receipt by the Indemnifying Party of such notice and such evidence to
either (i) agree to the payment of the Loss to the Indemnified Party or (ii)
contest the payment of the Loss. If the Indemnifying Party does not agree to or
contest the payment of the Loss within such thirty (30) day period, the
Indemnifying Party shall be deemed to have accepted all of the Loss. If the
Indemnifying Party agrees to the payment of the Loss or has been deemed to have
accepted all of the Loss, then the Indemnifying Party shall, within ten (10)
Business Days after such agreement or acceptance, pay to the Indemnified Party
the amount of the Loss that is payable pursuant to, and subject to the
limitations set forth in, this Article VIII. The failure of the Indemnified
Party to give the notice referred to herein with reasonable promptness shall not
relieve the Indemnifying Party of its indemnification obligations hereunder
except to the extent that the Indemnifying Party is actually prejudiced as a
result of the failure to give such notice.
SECTION 8.04. THIRD PARTY CLAIMS
(a) If any claim, action at law or suit in equity is instituted
by a third party against an Indemnified Party with respect to which an
Indemnified Party intends to claim indemnification for any Losses under this
Article VIII, such Indemnified Party shall give written notice to the
Indemnifying Party of such claim, action or suit with reasonable promptness. The
failure to give the notice required by this Section 8.04(a) with reasonable
promptness shall not relieve the Indemnifying Party of its indemnification
obligations hereunder except to the extent that the Indemnifying Party is
actually prejudiced as a result of the failure to give such notice.
(b) The Indemnifying Party shall have thirty (30) days after
receipt of such notice to assume the conduct and control, at the expense of the
Indemnifying Party, of the settlement or defense thereof and the Indemnified
Party shall cooperate with it in connection therewith. Any Indemnified Party
shall have the right to employ separate counsel in any such action or claim and
to participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the Indemnifying Party.
(c) The Indemnified Party and the Indemnifying Party shall
cooperate with each other to the fullest extent possible in regard to all
matters relating to the third-party claim, including, without limitation,
corrective actions required by Applicable Law, assertion of defenses, the
determination, mitigation, negotiation and settlement of all amounts, costs,
actions, penalties, damages and the like related thereto, access to the books
and records of the parties hereto and their Subsidiaries, and, if necessary,
providing the party controlling the defense of the
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third party claim and its counsel with any powers of attorney or other documents
required to permit the party controlling the defense of the third party claim
and its counsel to act on behalf of the other party.
(d) Neither the Indemnified Party nor the Indemnifying Party
shall settle any such third party claim without the consent of the other party,
which consent shall not be unreasonably withheld, conditioned or delayed;
PROVIDED, HOWEVER, that if such settlement involves the payment of money only
and the release of all claims and the Indemnified Party is completely
indemnified therefore and nonetheless refuses to consent to such settlement, the
Indemnifying Party shall cease to be obligated for such third party claim. Any
compromise or settlement of the claim under this Section 8.04 shall include as
an unconditional term thereof the giving by the claimant in question to the
Indemnifying Party and the Indemnified Party of a release of all liabilities in
respect of such claims.
SECTION 8.05. TERMINATION OF INDEMNIFICATION FOR BREACHES OF
REPRESENTATIONS AND WARRANTIES. The obligations to indemnify and hold harmless a
party hereto pursuant to (i) Sections 8.01(a)(i) and 8.02(a)(i) shall terminate
when the applicable representation or warranty terminates pursuant to Section
10.01; PROVIDED, HOWEVER, that such obligation to indemnify and hold harmless
shall not terminate with respect to any item as to which the Indemnified Party
shall have, before the expiration of the applicable period, previously made a
claim, with reasonable specificity, in accordance with Section 8.03 to the
Indemnifying Party.
SECTION 8.06. LIMITATIONS ON INDEMNITY OBLIGATIONS.
Notwithstanding any contrary provision of this Agreement, the maximum aggregate
liability of any Indemnifying Party (including any costs and expenses incurred
by any Indemnified Party in connection with defending any third party claims)
pursuant to Sections 8.01(a)(i), 8.01(a)(iii), 8.01(a)(iv) and 8.02(a)(i), as
applicable, shall not exceed Seventy Million Dollars ($70,000,000); PROVIDED,
HOWEVER, that notwithstanding the foregoing, the maximum aggregate liability of
the Seller (including any costs and expenses incurred by any Purchaser
Indemnified Party in connection with defending any third party claims) for
breach of any of the representations and warranties provided in Section 3.09
(Employee Benefit Plans), Section 3.15 (Environmental Matters), Section 3.17
(Taxes) and Section 3.18 (Financing) shall not exceed an amount equal to
twenty-four percent (24%) of the Purchase Price.
SECTION 8.07. LOSSES NET OF INSURANCE, ETC. The amount of any
Losses for which indemnification is provided under this Article VIII shall be
net of (a) any amounts actually received by the Indemnified Party or any of its
Subsidiaries pursuant to any indemnification by or indemnification agreement
with any third party in relation to such Losses, (b) any insurance proceeds or
other cash receipts or sources of reimbursement received by the Indemnified
Party or any of its Subsidiaries as an offset against such Losses (each Person
named in clauses (a) and (b), a "COLLATERAL SOURCE"), and (c) an amount equal to
the present value of the Tax benefit, if any, attributable to such Losses. The
Indemnifying Party may require an Indemnified Party to assign the rights to seek
recovery from Collateral Sources; PROVIDED, HOWEVER, that the Indemnifying Party
will then be responsible for pursuing such claim at its own expense. If the
amount to be netted hereunder in connection with a Collateral Source from any
payment required under Section 8.01 or 8.02 is determined after payment by the
Indemnifying Party of any amount otherwise required to be paid to an Indemnified
Party under this Article VIII, the Indemnified
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Party shall repay to the Indemnifying Party, promptly after such determination,
any amount that the Indemnifying Party would not have had to pay pursuant to
this Article VIII had such determination been made at the time of such payment,
and any excess recovery from a Collateral Source shall be applied to reduce any
future payments to be made by the Indemnifying Party pursuant to Section 8.01 or
8.02.
SECTION 8.08. INDIRECT LOSSES; MITIGATION. The parties hereto
agree that Losses hereunder shall not include any incidental damages,
consequential damages, special damages, damages arising out of business
interruption or lost profits, damages arising through the application of any
statutory multiplier to any Losses or punitive damages. Any party hereto seeking
indemnification under this Agreement shall take and shall cause its Affiliates
and their respective directors and officers to take all commercially reasonable
steps to mitigate the amount of any Losses upon becoming aware of any event
which would reasonably be expected to, or does, give rise thereto, including
incurring costs only to the minimum extent necessary to remedy the breach or
inaccuracy which gives rise to such Losses.
SECTION 8.09. OTHER LIMITATIONS.(a) Notwithstanding any contrary
provision of this Agreement, under no circumstances shall the Seller indemnify
any Purchaser Indemnified Party for Taxes relating to Post Closing Tax Periods.
To the extent permitted by law, indemnification payments made hereunder shall be
treated as adjustments to purchase price for tax purposes.
SECTION 8.10. SOLE REMEDY/WAIVER. The parties hereto acknowledge
and agree that the remedies provided for in this Article VIII shall be their
sole and exclusive remedy for any misrepresentations or breach of warranties
contained in this Agreement. In furtherance of the foregoing, the parties hereto
hereby waive to the fullest extent permitted by applicable Law, any and all
other rights and claims (including rights of contributions, if any) known or
unknown, foreseen or unforeseen, which exist or may arise in the future, that it
may have against the other party hereto or any of its Representatives, arising
under or based upon any law (including any such law relating to environmental
matters or arising under or based upon any securities law, common law or
otherwise) for any misrepresentations or breach of warranties contained in this
Agreement, except for rights and claims arising from fraud.
ARTICLE IX
TAX MATTERS
SECTION 9.01 TAX RETURNS
(a) The Seller shall have the exclusive authority to prepare
and file or cause to be prepared and filed (i) all Tax Returns for all members
of the Company Group for all Taxable years or periods ending on or before the
Closing Date including any Estimated Tax Returns due on or prior to the Closing
Date, (ii) all consolidated federal Income Tax Returns of the Pitney Bowes
Consolidated Group, (iii) any other Combined Tax Return, and (iv) any Tax Return
of any member of the Pitney Bowes Group.
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(b) The Purchaser shall prepare (in accordance with the past
practices of the Company and its subsidiaries) the initial draft of all Straddle
Period Tax Returns of the Company and its subsidiaries (other than Estimated Tax
Returns due on or prior to the Closing Date) and shall submit such Tax Returns,
along with a calculation of the Seller's portion of any Pre-Closing Taxes
(reduced by any Prepaid Taxes) set forth on such Tax Returns, to the Seller for
approval no later than thirty (30) days prior to the due date thereof. No later
than fifteen (15) days after the receipt of such Tax Return from the Purchaser,
the Seller shall notify the Purchaser of any reasonable objections the Seller
may have to items set forth in such draft Tax Returns and/or the calculation of
such Taxes for which the Seller is responsible. The Purchaser and Seller agree
to consult and resolve in good faith any such objection, it being understood and
agreed that in the absence of any such resolution, any and all such objections
shall be resolved in a manner consistent with the past practices of with respect
to such items unless otherwise required by law. If the Seller and the Purchaser
cannot resolve such matter, the issue involved shall be submitted to an
independent public accounting firm acceptable to both the Seller and the
Purchaser; PROVIDED, HOWEVER, that if the dispute or disagreement involves a
matter of legal interpretation, then upon the written consent of both parties
such dispute shall be resolved by such independent public accounting firm,
otherwise such independent accounting firm shall select an outside attorney (1)
experienced in federal income tax law and (2) mutually acceptable to the Seller
and the Purchaser (which acceptance shall not be unreasonably withheld) to
resolve such dispute or disagreement. If the Seller and the Purchaser cannot
agree on an independent public accounting firm, the first Big Four Public
Accounting Firm (on an alphabetical basis) that is not currently serving as the
auditor of any of the Seller, Company or Purchaser shall be selected to resolve
the dispute. The decision of the independent public accounting firm (and any
outside attorney selected by such accounting firm) in resolving the dispute
shall be final and binding. The fees and expenses incurred with respect to the
independent public accounting firm resolving the dispute shall be allocated
fifty percent (50%) to the Seller and fifty percent (50%) to the Purchaser. All
other fees and expenses incurred in resolving the dispute shall be borne by the
party hereto that incurs such fees and expenses. All such Tax Returns shall not
be filed without the prior written consent of the Seller, such consent not to be
unreasonably withheld, conditioned or delayed.
(c) For purposes of this Agreement, Taxes related to a Straddle
Period shall be apportioned between the Pre-Closing Tax Period and the
Post-Closing Tax Period as follows: (A) in the case of Taxes other than income,
sale and use and withholding Taxes, on a per-diem basis and (B) in the case of
income, sales and use and withholding Taxes, as determined from the books and
records of the Seller, the Company and/or the relevant subsidiary as though the
taxable year of the Seller, the Company and/or the relevant subsidiary
terminated at the close of business on the Closing Date.
(d) The Purchaser shall have the exclusive authority to prepare
and file or cause to be prepared and filed all Tax Returns for all members of
the Company Group for Taxable years or periods beginning after the Closing Date.
(e) The Seller and the Purchaser agree that Combined Tax
Returns and Income Tax Returns filed for tax periods that begin prior to the
Closing Date will reflect a short taxable year for the Company ending on the
Closing Date in any state, local or foreign taxing
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jurisdiction in which such tax year is allowed by administrative practice,
whether or not required by law.
(f) Each Party hereto shall bear all costs incurred by it in
preparing and filing the Tax Returns they are responsible for under this
Agreement.
SECTION 9.02 PAYMENT OF TAXES. (a) the Seller shall be responsible
and liable for the timely payment of any and all Taxes imposed on or with
respect to the properties, income and operations of the Company and its
subsidiaries for all Pre-Closing Periods, to the extent such Taxes exceed the
amount of liability accrued for such Taxes on the Estimated Closing Date Balance
Sheet of the Company and its subsidiaries as of the Closing Date.
(b) The Seller will pay the Seller's portion of the Pre-Closing
Taxes related to a Straddle Period Tax Return (as determined pursuant to 9.01(b)
above) no later than the later of: one (1) day prior to the due date of the Tax
Return for which such Taxes relate to the extent the Seller and the Purchaser
have reached an agreement on the amount of such Taxes by that date or the only
dispute relates solely to the total amount of Tax shown on the Tax Return and in
the case of a dispute between the Seller and the Purchaser that solely relates
to the percentage of the total amount of Tax shown on the Straddle Period Tax
Return allocated to the Seller, the Seller shall pay (i) the amount it believes,
in good faith, is its allocable portion of such Taxes within one (1) day prior
to the due date of the Tax Return for which such Taxes relate and (ii) the
remainder, if any, determined to be owed by the Seller by the independent
accounting firm described in paragraph (b) above within two (2) days after such
accounting firm has determined the Seller's liability with respect to such
amounts. In the event a payment is made pursuant to this paragraph (c) with
respect to amounts that are in dispute, such payment will be adjusted following
the resolution of the dispute.
(c) All transfer, sales and use, value added, registration,
documentary, stamp and similar Taxes (the "Transfer Taxes") arising from the
sale of the Shares under Section 2.01(a) hereof or the deemed sale of assets
under Section 338(h)(10) shall be paid by the Purchaser.
(d) To the extent the Prepaid Taxes exceed the Taxes owed by
the Seller for such Straddle Period (as determined pursuant to Section 9.01(b)
above)), the Purchaser shall pay the Seller such excess.
(e) No member of the Company Group shall carry back losses,
credits or other Tax Attributes attributable to a Post-Closing Tax Period to
offset Taxes attributable to any Pre-Closing Tax Period.
SECTION 9.03 AUDITS AND CONTESTS. (a) The Purchaser shall promptly
notify the Seller in writing upon receipt by the Purchaser or any affiliate of
the Purchaser (including the Company or any member of the Company Group) of any
communication with respect to any Tax Matter (or pending or threatened Tax
Matter) relating to any Tax period beginning on or before the Closing Date or to
the Specified Leases. The Purchaser shall include with such notification a
complete copy of any written communication received by the Purchaser or any
affiliate of the Purchaser (including the Company or any member of the Company
Group) in respect of such
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Tax Matter. The failure of the Purchaser to promptly forward such notification
in accordance with the immediately preceding sentence shall not relieve the
Seller of any obligation under this Agreement, except to the extent that the
failure to promptly forward such notification actually prejudices the ability of
the Seller to contest such Tax Matter.
(b) The Seller (or such member of the Pitney Bowes Group as the
Seller shall designate) shall have the sole right to represent the interests of
the members of the Pitney Bowes Group and the members of the Company Group, to
employ counsel of its choice at its expense and to make decisions with respect
to settlements in any Tax Matter relating to (A) any consolidated federal Income
Tax Returns of the Pitney Bowes Consolidated Group, (B) any Combined Tax Return,
(C) any Tax Return of any member of the Pitney Bowes Group, (D) any Tax Returns
for all members of the Company Group for all taxable years or periods ending on
or before the Closing Date and (E) the elections contemplated by this Agreement
under Section 338(h)(10) of the Code or under any analogous provisions of state
or local law.
(c) The Purchaser (or such member of the Company Group as the
Purchaser shall designate) shall have the sole right to represent the interests
of the members of the Company Group, to employ counsel of its choice at its
expense and to make decisions with respect to settlements in any Tax Matter
relating to any Tax Returns of the Company or its subsidiaries relating to
Post-Closing Taxable Periods (other than Straddle Period Tax Returns); PROVIDED,
HOWEVER, that, to the extent that such Tax Matter involves any issue that could
materially affect the amount of Taxes for which any member of the Pitney Bowes
Group is liable in a Pre-Closing Tax Period (or for other Taxes with respect to
which the Seller is required to indemnify the Purchaser pursuant to Section
9.07(a)), the Purchaser shall (i) keep the Seller informed of all material
developments relating to such Tax Matter; (ii) act in a reasonable manner and in
good faith in discussing such issue with the relevant tax authority and
contesting such Tax Matter; and (iii) contest, and shall not settle or
compromise such Tax Matter unless the Purchaser reasonably determines in good
faith that (x) based on discussions with tax counsel, such settlement or
compromise is an appropriate resolution of such Tax Matter taking into account
only the applicable facts, applicable law and hazards and costs of controversy
in respect of such Tax Matter standing alone and (y) the Purchaser would find
such settlement acceptable if the Purchaser (and not any member of the Pitney
Bowes Group) were required to bear the tax consequences of the settlement of
such Tax Matter for all relevant Tax periods.
(d) The Seller (or such member of the Pitney Bowes Group as the
Seller shall designate) shall have the sole right to represent the interests of
the members of the Pitney Bowes Group and the members of the Company Group and
to employ counsel of its choice in any Tax Matter related to any Straddle Period
Tax Return. The Seller shall have absolute discretion with respect to any
decisions to be made, or the nature of any action to be taken, with respect to
any Tax Matter related to a Straddle Period Tax Return described in the
preceding sentence; PROVIDED, HOWEVER, with respect to Tax Matters that affect
the Company's Tax liability, (i) the Seller shall keep the Purchaser informed of
all material developments and events relating to such matters to the extent they
affect the Company's Tax liability, (ii) at its own cost and expense, the
Purchaser shall have the right to participate in the defense of any such tax
claim, and (iii) neither the Seller nor the Purchaser shall take any action in
respect of such claim without the consent of the other party hereto, such
consent not to be unreasonably withheld, conditioned or delayed.
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SECTION 9.04 THIRD PARTY INDEMNITIES. (a) If a member of the
Company Group has the right to receive (or actually receives) a payment from a
Person that is not a member of the Company Group (whether by reason of
indemnity, reimbursement agreement or otherwise) with respect to (or items
related to) (i) Pre-Closing Taxes of a member of the Company Group or (ii) Taxes
of a member of the Pitney Bowes Group in each case, other than such Taxes for
which the Purchaser is liable under this Agreement, such payment shall be for
the account of the Seller and the Purchaser shall pay to the Seller the amount
of any such payment within ten (10) days after a member of the Company Group
receives such payment. The Purchaser shall use all reasonable efforts to obtain
any payment described in the preceding sentence; PROVIDED, HOWEVER, that the
Seller shall pay or promptly reimburse the Purchaser for all Out-of-Pocket
Expenses incurred in such attempt. To the extent it is legally permitted to do
so, the Purchaser shall cause the Company to assign to the Seller all rights to
receive such payment, including any rights to enforce such payment (and shall
take all actions to facilitate such assignment, such as providing any required
notice to any Person and executing any documents) so long as the Seller pays or
promptly reimburses the Purchaser for all Out-of-Pocket Expenses related
thereto. If the Purchaser is unable to cause the Company to assign all of its
rights to such payment, the Purchaser shall permit the Seller to control all
aspects of the enforcement of such rights and shall cooperate with the Seller
consistent with the principles set forth in Section 9.05 hereof so long as the
Seller pays or promptly reimburses the Purchaser for all Out-of-Pocket Expenses
related thereto.
(b) If a member of the Pitney Bowes Group has the right to
receive (or actually receives) a payment from a Person that is not a member of
the Pitney Bowes Group (whether by reason of indemnity, reimbursement agreement
or otherwise) with respect to (or items related to) Taxes of a member of the
Company Group for any Post-Closing Tax Period other than such Taxes for which
the Seller is liable under this Agreement, such payment shall be for the account
of the Company and the Seller shall pay to the Purchaser the amount of any such
payment within ten (10) days after a member of the Pitney Bowes Group receives
such payment. The Seller shall use all reasonable efforts to obtain any payment
described in the preceding sentence; PROVIDED, HOWEVER, that the Purchaser shall
pay or promptly reimburse the Seller for all Out-of-Pocket Expenses incurred in
such attempt. To the extent it is legally permitted to do so, the Seller shall
assign (or cause to be assigned) to the Company all rights to receive such
payment, including any rights to enforce such payment (and shall take all
actions to facilitate such assignment, such as providing any required notice to
any Person and executing any documents) so long as the Purchaser pays or
promptly reimburses the Seller for all Out-of-Pocket Expenses related thereto.
If the Seller is unable to assign all of its rights to such payment, the Seller
shall permit the Purchaser to control all aspects of the enforcement of such
rights and shall cooperate with the Purchaser consistent with the principles set
forth in Section 9.05 hereof so long as the Purchaser pays or promptly
reimburses the Seller for all Out-of-Pocket Expenses related thereto.
SECTION 9.05 COOPERATION. (a) Beginning on the Closing Date, each
of the Seller and the Purchaser, on behalf of itself and each member of the
Pitney Bowes Group and the Company Group, respectively, agrees to use good faith
efforts to provide the other party hereto with such cooperation or information
as such other party hereto reasonably shall request in connection with the
determination of any payment or any calculations described in this
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Agreement, the preparation or filing of any Pre-Closing Tax Return, Straddle
Period Tax Return, Tax Return related to any Tax period beginning after the
Closing Date or claim for refund, or the conduct of any Tax Matter. Such
cooperation and information shall include, without limitation preparing and
submitting to the Seller (in a time frame consistent with past practice), at the
Purchaser's expense, all information within the Company's possession and not
otherwise reasonably available to the Seller that the Seller shall reasonably
request, in such form as the Seller shall reasonably request, to enable the
Seller to prepare any Tax Returns required to be filed by the Seller pursuant to
Section 9.01.
(b) Any request for information or documents pursuant to this
Section 9.05 shall be made by the requesting party in writing. The other party
hereto shall promptly (and in no event later than thirty (30) days after receipt
of the request) provide the requested information. Except as otherwise provided
in paragraph (a), the requesting party shall indemnify the other party for any
Out-of-Pocket Expenses incurred by such party in connection with providing any
information or documentation pursuant to this Section 9.05. Upon reasonable
notice, each of the Seller and the Purchaser shall make its, or shall cause the
members of the Pitney Bowes Group or the Company Group, as applicable, to make
their, employees and facilities available on a mutually convenient basis to
provide explanation of any documents or information provided hereunder. Any
information obtained under this Section 9.05 shall be kept confidential, except
as otherwise reasonably may be necessary in connection with the filing of Tax
Returns or claims for refund or in conducting any Tax Matter.
SECTION 9.06 RETENTION OF RECORDS AND RETURNS. (a) For at least
seven (7) years following the Closing Date, each party hereto will retain such
records, documents, accounting data and other information (including computer
data) in its possession in the ordinary course of business reasonably necessary
for (i) the preparation and filing of all Pre-Closing Tax Returns and Straddle
Period Tax Returns required to be filed by, on behalf of, or with respect to
another party hereto, and (ii) any Tax Matters relating to such Pre-Closing Tax
Returns, Straddle Period Tax Returns, or to any Pre-Closing Taxes payable by, on
behalf of, or with respect to, another party hereto.
(b) The parties hereto shall, from and after the Closing Date,
preserve all Tax Materials for such seven (7) year period, and, thereafter, not
destroy or dispose of or allow the destruction or disposition of such Tax
Materials without first having offered in writing to deliver such Tax Materials
to the other party hereto at such other party's hereto expense. If such party
fails to request such Tax Materials within ninety (90) days after receipt of the
notice described in the preceding sentence, the other party hereto may dispose
of such Tax Materials.
SECTION 9.07 INDEMNIFICATION FOR TAXES. (a) The Seller shall be
liable for and shall indemnify, defend and hold harmless the Purchaser on an
after-tax basis against (i) all Pre-Closing Taxes of the Company and members of
the Company Group, and (ii) all Income Taxes incurred by or imposed on the
Company or the Company Group solely as a result of the provisions of Treasury
Regulations Section 1.1502-6 or the similar or analogous provisions of any
state, local or foreign law with respect to any period during which the Seller
and the Company filed a Combined Tax Return.
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(b) The Purchaser shall be liable for and shall indemnify,
defend and hold harmless the Seller and members of the Pitney Bowes Group on an
after-tax basis against, (i) all Transfer Taxes arising from the sale of the
Shares under Section 2.01(a) hereof or the deemed sale of assets under Section
338(h)(10) of the Code, (ii) all Post-Closing Taxes that are incurred by or
imposed on the Company Group and (iii) any Taxes resulting from the Purchaser or
an Affiliate of the Purchaser making an election under Section 338(g) of the
Code other than a deemed election under Treasury Regulations Section
1.338(h)(10)-1(c)(4).
(c) The Purchaser shall have no right to indemnification from
the Seller for any Losses incurred by the Purchaser in connection with any
restructuring involving PBG Holdings Inc. ("PBG HOLDINGS") or its direct or
indirect shareholders that results in PBG Holdings becoming a member for the
Pitney Bowes Consolidated Group (the "PBG RESTRUCTURING") or as a result of a
Section 338 election for PBG Holdings not being effective. The Purchaser shall
be liable for and shall indemnify, defend and hold harmless the Seller and
members of the Pitney Bowes Group for any Tax or liability (including any costs
and expenses incurred by the Seller in connection with defending any third party
claims) resulting from (i) the PBG Restructuring, or (ii) the sale of PBG
Holdings failing to be eligible for an election under Section 338(h)(10) of the
Code; PROVIDED, that the maximum aggregate liability of the Purchaser pursuant
to this Section 9.07(c) shall be Seven Million Five Hundred Thousand Dollars
($7,500,000.00).
ARTICLE X
MISCELLANEOUS
SECTION 10.01. SURVIVAL. The representations and warranties given
by the parties in Article III and Article IV and the indemnities provided in
Sections 8.01(a)(i)(iii) and 8.01(a)(iv) shall survive the Closing until the
first anniversary of the Closing Date, at which time such representations and
warranties and indemnities will terminate, PROVIDED, that the representations
and warranties contained in Section 3.09 (Employee Benefit Plans), Section 3.15
(Environmental Matters) and Section 3.17 (Taxes) shall survive until the
expiration of the applicable statute of limitations and, PROVIDED, FURTHER, that
the representations and warranties contained in Sections 3.01 (Organizational
and Standing), 3.02(a) (Ownership of Shares), Section 3.03 (Authorization;
Enforceability), Section 3.04 (No Violation; Consents), Section 3.18
(Financing), Section 4.01 (Organization; Authorization; Enforceability), Section
4.03 (Purchase for Investment), Section 4.04 (No Violation; Consents) and
Section 4.07 (Antitrust) shall survive indefinitely and not terminate.
Notwithstanding the foregoing, (i) those agreements and covenants of the parties
contained in Sections 2.01, 2.02 and 2.03, Article V, Article VI, Article VIII
(except the indemnities in Sections 8.01(a)(iii) and 8.01(a)(iv) which shall
only survive until the first anniversary of the Closing Date as described
above), Article IX and this Article X and expressly requiring performance after
the Closing Date shall survive the Closing Date and (ii) Sections 10.02, 10.04,
10.05, 10.06, 10.07, 10.11, 10.12, 10.13, 10.14 and 10.16 shall survive the
Closing Date. The Confidentiality Agreement and Section 6.04 shall survive any
termination of this Agreement.
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SECTION 10.02. NOTICES. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder or
which are given with respect to this Agreement shall be in writing and shall be
personally served, delivered by reputable air courier service with charges
prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein shall be deemed
given on the next Business Day following delivery of such notice to a reputable
air courier service.
To the Seller:
Pitney Bowes Inc.
One Elmcroft Road
Stamford, CT 06926
Attn: Michele Mayes
Telephone: (203) 351-7924
Fax: (203) 351-7984
with copies to (which shall not constitute a notice):
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attn: Mark L. Mandel, Esq.
Telephone: (212) 819-8200
Fax: (212) 354-8113
To the Purchaser:
JCC Management LLC
c/o Cerberus Capital Management, L.P.
299 Park Avenue
New York, NY 10171
Attention: W. Brett Ingersoll
Telephone: (212) 891-2100
Fax: (212) 891-1540
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with a copy to (which shall not constitute a notice):
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attn: Robert R. Kiesel, Esq.
Telephone: (212) 756-2000
Fax: (212) 593-5955
and to
Watson Farley and Williams
100 Park Avenue
New York, NY 10017
Attn. Stephen Millman, Esq.
Telephone: (212) 922-2205
Fax: (212) 864-1396
SECTION 10.03. TERMINATION. (a) This Agreement may be terminated:
(i) at any time prior to the Closing by mutual written
agreement of the Seller and the Purchaser;
(ii) by either the Seller or the Purchaser, if the Closing shall
not have occurred on or prior to July 14, 2006 (the "TERMINATION DATE");
PROVIDED that the Seller shall not have the right to terminate this
Agreement under this Section 10.03(a)(ii) until the later of the
Termination Date and the expiration of the fifteen (15) calendar day
period after delivery of the Update Notice, if any; notwithstanding the
foregoing or anything else herein to the contrary, if (i) all of the
conditions set forth in Section 7.02 have been satisfied other than (x)
the condition set forth in Section 7.02(g) and (y) any other condition
set forth in Section 7.02 to the extent that such condition is not
satisfied due to the failure of the Internal Restructuring, the PBGFS
Contribution, the Company Contribution and the PBGFS Distribution to be
consummated, and (ii) the Seller shall have delivered to the Purchaser on
or prior to the Termination Date a certificate from an executive officer
of the Seller certifying that all such conditions have been satisfied,
the Seller shall have the option, in its sole discretion (the "SELLER'S
OPTION"), to extend the Termination Date until August 28, 2006 (the
"EXTENDED TERMINATION DATE") in order to satisfy the condition set forth
in Sections 7.01(e) and 7.02(g) hereof, in which case the Purchaser shall
not have the right to terminate this Agreement under this Section
10.03(a)(ii) until the Extended Termination Date;
(iii) by either the Seller or the Purchaser, if any Governmental
Authority shall have issued a nonappealable Order or taken any other
action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Closing or the transactions contemplated by
this Agreement;
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(iv) by the Seller if a third party, including any group of
Persons, shall have made a Superior Proposal and the Seller has taken any
of the actions referred to in clauses (i) or (ii) of Section 5.05(c) (but
only after complying with the requirements of clauses (x) and (y)
thereof) prior to any termination of this Agreement; PROVIDED that
simultaneously with exercising its rights hereunder the Seller shall have
paid, and the Purchaser shall have received, the Termination Payment;
(v) by the Purchaser if a third party, including any group of
Persons, shall have made a Superior Proposal and the Seller has taken any
of the actions referred to in clauses (i) or (ii) of Section 5.05(c)
prior to termination of this Agreement;
(vi) by the Seller upon a material breach or violation of any
representation, warranty, covenant or agreement on the part of the
Purchaser set forth in this Agreement, which breach or violation would
result in the failure to (A) satisfy the conditions set forth in Sections
7.01 (except for the condition in Sections 7.01(d), which are provided
for in other applicable provisions of this Section 10.03(a)) or (B)
consummate the Transactions except that, if such breach or violation is
curable by the Purchaser through the exercise of its commercially
reasonable efforts, then, for a period of up to thirty (30) calendar
days, but only as long as the Purchaser continues to use its commercially
reasonable efforts to cure such breach or violation (the "PURCHASER CURE
PERIOD"), such termination shall not be effective, and such
termination shall become effective only if the breach or violation is not
cured within the Purchaser Cure Period;
(vii) by the Purchaser upon a material breach or violation of any
representation, warranty, covenant or agreement on the part of the Seller
set forth in this Agreement, which breach or violation would result in
the failure to (A) satisfy the conditions set forth in Sections 7.02
(except for the conditions in Sections 7.02(d), which are provided for in
other applicable provisions of this Section 10.03(a)) or (B) consummate
the Transactions except that, if such breach or violation is curable by
the Seller through the exercise of its commercially reasonable efforts,
then, for a period of up to thirty (30) calendar days, but only as long
as the Seller continues to use its commercially reasonable efforts to
cure such breach or violation (the "SELLER CURE PERIOD"), such
termination shall not be effective, and such termination shall become
effective only if the breach or violation is not cured within the Seller
Cure Period; or
(b) In the event this Agreement is duly terminated:
(i) by (A) the Purchaser or the Seller at a time when such
party is entitled to terminate this Agreement in accordance with Section
10.03(a)(ii) or (B) the Purchaser when the Purchaser is entitled to
terminate this Agreement in accordance with Section 10.03(a)(vii), then
the Seller shall pay in cash to the Purchaser, within three (3) Business
Days following the later of (x) the date of such termination or (y) the
receipt by the Seller of invoices evidencing such expenses, such amount
of actual expenses incurred by the Purchaser in connection with this
Agreement and the Transactions in an amount not to exceed $12,500,000.00
(the "EXPENSE REIMBURSEMENT");
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(ii) (A) by the Purchaser in accordance with Section 10.03(a)(v)
or (B) the Seller in accordance with Section 10.03(a)(iv), then the
Seller shall pay an amount equal to the sum of the Expense Reimbursement
plus $7,500,000.00 (the "TERMINATION PAYMENT") in cash to the Purchaser
simultaneously with the termination of this Agreement by such party as
contemplated hereby;
(iii) by the Purchaser or the Seller in accordance with Section
10.03(a)(ii), then if, within twelve (12) months after this Agreement is
terminated in accordance with Section 10.03(a)(ii) on or after the
Termination Date in the event the Seller's Option is not exercised, the
Seller enters into an agreement with respect to a sale of all or
substantially all of the Business in a transaction or a series of
transactions, the Seller shall pay in cash to the Purchaser, not later
than the date on which such sale is consummated, the Termination Payment;
or
(iv) by the Purchaser or the Seller in accordance with Section
10.03(a)(ii), then if, within twelve (12) months after this Agreement is
terminated in accordance with Section 10.03(a)(ii) on or after the
Extended Termination Date in the event the Seller's Option is exercised,
the Seller enters into an agreement with respect to a sale of all or
substantially all of the Business in a transaction or a series of
transactions, the Seller shall pay in cash to the Purchaser, not later
than the date on which such agreement is executed by the Seller,
$8,500,000.00.
As used in this Section 10.03(b), a "sale of all or substantially all of
the Business" shall mean a sale of 51% or more of the assets of the
Business in a transaction or a series of transactions whether or not
related.
SECTION 10.04. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
SECTION 10.05. WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY OTHER EQUITY DOCUMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH PARTY (A) CERTIFIES THAT NO
REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER EQUITY DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.05.
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SECTION 10.06. ATTORNEY FEES. A party in breach of this Agreement
shall, on demand, indemnify and hold harmless the other party for and against
all reasonable out-of-pocket expenses, including reasonable legal fees, incurred
by such other party by reason of the enforcement and protection of its rights
under this Agreement. The payment of such expenses is in addition to any other
relief to which such other party may be entitled.
SECTION 10.07. ENTIRE AGREEMENT. This Agreement (including all
agreements entered into pursuant thereto and all certificates and instruments
delivered pursuant thereto) constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and supersede and terminate all
prior and contemporaneous agreements, representations, understandings,
negotiations and discussions between the parties hereto, whether oral or
written, with respect to the subject matter hereof, including, without
limitation, that certain Subscription Agreement, dated as of March 31, 2005 (as
the same may have been amended from time to time, the "SUBSCRIPTION AGREEMENT"),
by and between the Company and the Purchaser, and the Purchaser, the Seller and
the Company agree and acknowledge that the Purchaser and the Company shall have
no rights, claims, remedies, interests or obligations of any kind under the
Subscription Agreement. The Purchaser hereby fully releases, acquits, satisfies
and forever discharges the Company and the Seller and their respective
Representatives, and each of the Company and the Seller hereby fully releases,
acquits, satisfies and forever discharges the Purchaser and its Representatives,
of and from all manner of action and actions, cause and causes of action, suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, executions, claims, demands and liabilities
whatsoever, in law or in equity, resulting from, or arising out of, the
Subscription Agreement, which from the beginning of the world to the date hereof
such Person ever had, now has, or shall or may have in the future.
SECTION 10.08. MODIFICATIONS AND AMENDMENTS. (a) No amendment,
modification or termination of this Agreement shall be binding upon any party
unless executed in writing by the parties hereto intending to be bound thereby.
SECTION 10.09. WAIVERS AND EXTENSIONS. Subject to Section 3.25(c),
any party to this Agreement may waive any condition, right, breach or default
that such party has the right to waive; PROVIDED, that such waiver will not be
effective against the waiving party unless it is in writing, is signed by such
party, and specifically refers to this Agreement. Waivers may be made in advance
or after the right waived has arisen or the breach or default waived has
occurred. Subject to Section 3.25(c), any waiver may be conditional. Subject to
Section 3.25(c), no waiver of any breach of any agreement or provision contained
herein shall be deemed a waiver of either of any preceding or succeeding breach
thereof or of any other agreement or provision herein contained. No waiver or
extension of time for performance of any obligations or acts shall be deemed a
waiver or extension of the time for performance of any other obligations or
acts.
SECTION 10.10. EXHIBITS AND SCHEDULES. Each of the exhibits and
schedules ("Schedules") referred to herein and attached hereto is an integral
part of this Agreement and is incorporated herein by reference.
SECTION 10.11. EXPENSES; BROKERS. (a) Except as provided in
Section 10.06 and Section 10.11(b), all costs and expenses incurred in
connection with this Agreement or the
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Transactions shall be paid by the party incurring such costs and expenses,
whether or not the Transactions shall be consummated, including all fees and
expenses of its legal counsel, financial advisors and accountants.
(b) Other than the use of JPMorgan Securities Inc. by the
Seller and Lehman Brothers and IXIS Capital Markets by the Purchaser, each of
the parties represents to the other that neither it nor any of its Affiliates
has used a broker or other intermediary in connection with the Transactions for
whose fees or expenses any other party will be liable.
(c) The parties acknowledge that each of the Expense
Reimbursement and the Termination Payment provided for in Section 10.03(b) is an
integral part of the Transactions and not a penalty, and that, without the
Expense Reimbursement and Termination Payment the Purchaser would not have
entered into this Agreement.
(d) Nothing in this Section 10.11 shall be deemed to limit any
liability of any party for any breach in any material respect of any provisions
of this Agreement that remain in effect after the termination of this Agreement.
The Seller shall indemnify the Purchaser, and the Purchaser shall indemnify the
Seller, against, and each of them agrees to hold the other of them harmless
from, all losses, liabilities and expenses (including, but not limited to,
reasonable fees and expenses of counsel and costs of investigation) incurred as
a result of any claim by anyone for compensation as a broker, a finder or in any
similar capacity by reason of services allegedly rendered to the indemnifying
party in connection with the Transactions.
SECTION 10.12. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. All public
announcements or public disclosures relating to the Transactions or the Internal
Restructuring shall be made only if mutually agreed upon by the Seller and the
Purchaser, except to the extent such disclosure is required by law or by stock
exchange regulation; PROVIDED, that (a) to the extent reasonably practicable, a
party hereto shall provide the other party hereto with a reasonable opportunity
to review any public announcement prior to its release, (b) no such announcement
or disclosure (except as required by law or by stock exchange regulation) shall
identify the Purchaser without the Purchaser's prior consent.
SECTION 10.13. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. (a) This
Agreement and the rights, duties and obligations hereunder may not be assigned
or delegated, in whole or in part, by any party hereto without the prior written
consent of the other party hereto; PROVIDED, HOWEVER, that, subject to the last
sentence of this Section 10.13(a), the Purchaser may assign this Agreement and
its rights, duties and obligations hereunder to any of its Affiliates without
the prior written consent of the Seller; PROVIDED FURTHER, that the Purchaser
may, without the prior written consent of the Seller, grant Liens in respect of
its rights and interests hereunder to its lenders, and the parties hereto
consent to any exercise by such lenders of their rights and remedies with
respect to such collateral; PROVIDED FURTHER that any such grant of Liens to the
Purchaser's lenders pursuant to the preceding proviso shall not relieve the
Purchaser of its duties or obligations hereunder. Each assignee (pursuant to the
terms and conditions of this Section 10.13) must agree in writing to be bound by
the terms of this Agreement and each of the Purchaser Transaction Documents, if
applicable, to the same extent, and in the same manner, as the Purchaser or the
transferring assignee prior to the assignment or delegation, in whole or in
part, of this Agreement and the rights, duties and obligations hereunder to such
assignee. Any
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purported assignment or delegation of rights, duties or obligations hereunder
made in violation of this Section 10.13(a) shall be void and of no effect.
(b) This Agreement and the provisions hereof shall be binding
upon and shall inure to the benefit of each of the parties hereto and their
respective successors. This Agreement is not intended to confer any rights or
benefits on any Persons other than as expressly set forth in this Section 10.13,
Article VIII or Article IX hereof.
SECTION 10.14. SEVERABILITY. This Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this Agreement or of
any other term or provision hereof. Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties hereto intend that there shall be
added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
SECTION 10.15. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
SECTION 10.16. REMEDIES; SPECIFIC PERFORMANCE. Notwithstanding any
other provision of this Agreement that may provide for a remedy, each of the
Seller and the Purchaser acknowledges that money damages would not be an
adequate remedy under any Applicable Law if a party hereto fails to perform in
any material respect any of its obligations hereunder (including, without
limitation, any and all obligations under Section 5.06 or Section 6.03) and
accordingly agree that each party hereto (in addition to any other remedy to
which it may be entitled under Applicable Law or in equity) shall be entitled to
seek to compel specific performance of the obligations of the other party hereto
under this Agreement, without the posting of any bond, in accordance with the
terms and conditions of this Agreement, and if any action should be brought in
equity to enforce any of the provisions of this Agreement, no party hereto shall
raise the defense that there is an adequate remedy under Applicable Law.
SECTION 10.17. TRANSITION SERVICES AGREEMENT. For a period of ten
(10) calendar days following the date hereof (the "NEGOTIATION PERIOD"), the
Purchaser and the Seller shall jointly (i) review the scope of the Services (as
such term is defined in the Transition Services Agreement) described and listed
on the schedules of the Transition Services Agreement to determine which
Services can be deleted from such schedules and (ii) negotiate in good faith the
term for which such Services shall be provided by the Seller following the
Closing; PROVIDED, that in no event shall the term of any Service to be provided
pursuant to the Transition Services Agreement exceed a period of nine (9) months
commencing on the Closing Date. All other terms and conditions for transition
services shall be as set forth in the Transition Services Agreement attached
hereto as EXHIBIT B and are not subject to further negotiation. If by the
expiration of the Negotiation Period the Purchaser and the Seller cannot resolve
any differences that they may have with respect to the scope of transition
services to be provided and term thereof, the term for all Services to be
provided pursuant to the Transition Services Agreement shall be for a term of 6
months and the Transition Services Agreement attached hereto as EXHIBIT B shall
be modified accordingly and thereafter shall be deemed final, and delivery of a
fully executed copy of such agreement to the Purchaser by the Seller and the
Company at or prior to
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Closing shall satisfy in full Seller's obligation to deliver the Transition
Services Agreement pursuant to Sections 2.02(b) and 7.02 hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PITNEY BOWES INC.
By /s/ Bruce P. Nolop
--------------------------------
Name: Bruce P. Nolop
Title: Executive Vice President and
Chief Financial Officer
JCC MANAGEMENT LLC
By /s/ W. Brett Ingersoll
--------------------------------
Name: W. Brett Ingersoll
Title: Managing Director
FOR PURPOSES OF SECTION 10.07 HEREOF ONLY:
PITNEY BOWES CREDIT CORPORATION
By /s/ David Kleinman
--------------------------------
Name: David Kleinman
Title: Senior Vice President
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