EXECUTION COPY
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SUBSCRIPTION AGREEMENT
BY AND BETWEEN
PITNEY BOWES CREDIT CORPORATION
AND
JCC MANAGEMENT LLC
DATED AS OF
March 31, 2005
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TABLE OF CONTENTS
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ARTICLE I Definitions............................................................................... 2
ARTICLE II Sale, Purchase and Repurchase............................................................ 18
SECTION 2.01. Agreement to Sell and to Purchase; Purchase Price............................ 18
SECTION 2.02. Tranche I Closing............................................................ 19
SECTION 2.03. Distribution................................................................. 20
SECTION 2.04. Tranche II Closing........................................................... 21
SECTION 2.05. Preparation of Closing Date Balance Sheet; Purchase Price
Adjustment...................................................... 21
SECTION 2.06. Specified Lease Purchase Price Adjustment.................................... 23
SECTION 2.07. Stock Split; Common Stock Issuances.......................................... 23
SECTION 2.08. Repurchase of the Tranche I Stock............................................ 24
ARTICLE III Representations and Warranties of the Company........................................... 24
SECTION 3.01. Organization and Standing.................................................... 24
SECTION 3.02. Capital Stock................................................................ 25
SECTION 3.03. Authorization; Enforceability................................................ 26
SECTION 3.04. No Violation; Consents....................................................... 26
SECTION 3.05. Financial Statements......................................................... 27
SECTION 3.06. Material Adverse Change...................................................... 27
SECTION 3.07. Assets....................................................................... 28
SECTION 3.08. Intellectual Property........................................................ 28
SECTION 3.09. Employee Benefit Plans....................................................... 29
SECTION 3.10. Employees and Labor Relations................................................ 30
SECTION 3.11. No Undisclosed Material Liabilities.......................................... 30
SECTION 3.12. Compliance with Laws......................................................... 31
SECTION 3.13. Litigation................................................................... 31
SECTION 3.14. Compliance with Constituent Documents........................................ 31
SECTION 3.15. Environmental Matters........................................................ 31
SECTION 3.16. Real Property................................................................ 31
SECTION 3.17. Taxes........................................................................ 32
SECTION 3.18. Financings................................................................... 32
SECTION 3.19. Financing Policies........................................................... 33
SECTION 3.20. Contracts.................................................................... 34
SECTION 3.21. Certain Business Practices................................................... 35
SECTION 3.22. Insurance.................................................................... 36
SECTION 3.23. Licenses and Permits; Governmental Notices................................... 36
SECTION 3.24. Affiliated Transactions...................................................... 36
SECTION 3.25. Vote Required................................................................ 36
SECTION 3.26. Representations and Warranties............................................... 37
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ARTICLE IV Representations and Warranties of the Purchaser.......................................... 37
SECTION 4.01. Organization; Authorization; Enforceability.................................. 38
SECTION 4.02. Private Placement............................................................ 38
SECTION 4.03. No Violation; Consents....................................................... 39
SECTION 4.04. Litigation................................................................... 39
SECTION 4.05. Financing.................................................................... 40
SECTION 4.06. Ownership of Shares.......................................................... 40
SECTION 4.07. Future Acquisitions.......................................................... 40
SECTION 4.08. Future Dispositions.......................................................... 40
SECTION 4.09. Conversion of the Non-Voting Preferred Stock................................. 40
SECTION 4.10. HSR.......................................................................... 40
SECTION 4.11. Representations and Warranties............................................... 40
ARTICLE V Covenants of the Company.................................................................. 40
SECTION 5.01. Compliance with Conditions; Commercially Reasonable Efforts.................. 40
SECTION 5.02. Access to Books and Records.................................................. 41
SECTION 5.03. Consents and Approvals....................................................... 41
SECTION 5.04. Certificate of Incorporation, Certification of Designation
and Bylaws...................................................... 41
SECTION 5.05. Use of Proceeds.............................................................. 42
SECTION 5.06. Board of Directors........................................................... 42
SECTION 5.07. No Solicitation of Other Offers.............................................. 42
SECTION 5.08. Confidentiality; Information................................................. 43
SECTION 5.09. Registration Rights Agreement and Subordinated Debt Agreement................ 45
SECTION 5.10. Escrow Agreement............................................................. 45
SECTION 5.11. The Distribution Agreements.................................................. 45
SECTION 5.12. Rights Agreement............................................................. 46
SECTION 5.13. Reservation of Shares........................................................ 46
SECTION 5.14. Listing of Shares............................................................ 46
SECTION 5.15. Preemptive Rights............................................................ 46
SECTION 5.16. Conduct of Business.......................................................... 49
SECTION 5.17. Registration Statement; Information Statement or Prospectus.................. 52
SECTION 5.18. Compliance with Sarbanes-Oxley Act of 2002................................... 53
SECTION 5.19. Imagistics................................................................... 53
SECTION 5.20. Financial Statements......................................................... 53
SECTION 5.21. Monthly Management Reports................................................... 53
SECTION 5.22. Ruling Request............................................................... 54
SECTION 5.23. Tax Elections; Tax Accounting Changes........................................ 54
SECTION 5.24. Statute of Limitations....................................................... 54
SECTION 5.25. Financing Transactions....................................................... 54
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TABLE OF CONTENTS
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ARTICLE VI Covenants of the Purchaser............................................................... 54
SECTION 6.01. Compliance with Conditions; Commercially Reasonable Efforts.................. 54
SECTION 6.02. Consents and Approvals....................................................... 54
SECTION 6.03. Restrictions on Transfer..................................................... 55
SECTION 6.04. Standstill................................................................... 55
SECTION 6.05. Confidentiality; Information................................................. 56
SECTION 6.06. Compliance with Section 355 of the Code...................................... 57
SECTION 6.07. Prohibition on Solicitation and Hiring....................................... 57
SECTION 6.08. Registration Rights Agreement and Subordinated Debt Agreement................ 58
SECTION 6.09. Escrow Agreement............................................................. 58
SECTION 6.10. Warehouse Financing Agreement................................................ 58
ARTICLE VII Conditions Precedent to Tranche I Closing, the Distribution and Tranche II Closing...... 58
SECTION 7.01. Conditions to the Company's Obligations in Respect of the
Tranche I Closing............................................... 58
SECTION 7.02. Conditions to the Purchaser's Obligations in Respect of the
Tranche I Closing............................................... 59
SECTION 7.03. Conditions to the Company's Obligations in Respect of the
Distribution.................................................... 61
SECTION 7.04. Conditions to the Purchaser's Obligations in Respect of the
Distribution.................................................... 61
SECTION 7.05. Conditions to Each Party's Obligations in Respect of the
Tranche II Closing.............................................. 62
ARTICLE VIII Miscellaneous.......................................................................... 63
SECTION 8.01. Survival..................................................................... 63
SECTION 8.02. Legends...................................................................... 63
SECTION 8.03. Notices...................................................................... 64
SECTION 8.04. Termination.................................................................. 65
SECTION 8.05. Governing Law................................................................ 67
SECTION 8.06. Waiver Of Jury Trial......................................................... 67
SECTION 8.07. Attorney Fees................................................................ 67
SECTION 8.08. Entire Agreement............................................................. 68
SECTION 8.09. Modifications and Amendments................................................. 68
SECTION 8.10. Waivers and Extensions....................................................... 68
SECTION 8.11. Exhibits and Schedules....................................................... 68
SECTION 8.12. Expenses; Brokers............................................................ 68
SECTION 8.13. Press Releases and Public Announcements...................................... 69
SECTION 8.14. Assignment; No Third Party Beneficiaries..................................... 69
SECTION 8.15. Severability................................................................. 70
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SECTION 8.16. Counterparts................................................................. 70
SECTION 8.17. Remedies; Specific Performance............................................... 70
SCHEDULES
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Schedule 1.01 Projections
Schedule 1.02 Specified Leases
Schedule 2.06(b) Illustration of Specified Lease Purchase Price Adjustment
Schedule 3.01(b)(i) Capital Stock of Subsidiaries
Schedule 3.01(b)(ii) Arrangements with Respect to Capital Stock
Schedule 3.01(b)(iii) Ownership Interests of the Company in its Subsidiaries
Schedule 3.04 No Violation; Consents
Schedule 3.06 Material Adverse Change
Schedule 3.07 Assets
Schedule 3.08(d) Company Intellectual Property
Schedule 3.09(a) Employee Benefit Plans
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)(i) Large Ticket Financings
Schedule 3.18(a)(ii) Small Ticket Financings
Schedule 3.18(b)(i) Large Ticket Financing Defaults
Schedule 3.18(b)(ii) Delinquency Reports
Schedule 3.18(g) Bankruptcies
Schedule 3.19 Financing Policies
Schedule 3.20 Material Contracts
Schedule 3.23 Licenses and Permits; Governmental Notices
Schedule 5.02 Access to Books and Records
Schedule 5.03 Consents and Approvals
Schedule 5.06 Board of Directors
Schedule 7.02(m) Conditions to the Purchaser's Obligations in Respect of the Tranche I Closing
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TABLE OF CONTENTS
EXHIBITS Page
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Exhibit A Form of Certificate of Designation
Exhibits B-1 - B-3 Distribution Term Sheets
Exhibit C Form of Escrow Agreement
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of Separation and Distribution Agreement
Exhibit F Form of Subordinated Debt Agreement
Exhibit G Form of Tax Sharing Agreement
Exhibit H Unaudited Balance Sheet
Exhibit I Form of Amended and Restated Certificate of Incorporation
Exhibit J Form of Amended Bylaws
Exhibit K Warehouse Financing Term Sheet
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SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of March
31, 2005, is made by and between Pitney Bowes Credit Corporation, a Delaware
corporation (the "Company"), and a wholly owned subsidiary of Pitney Bowes Inc.,
a Delaware corporation ("Pitney Bowes"), and JCC Management LLC, a Delaware
limited liability company (the "Purchaser"). 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, as a condition to the consummation of the Transactions
contemplated hereby, Pitney Bowes and the Company will enter into the
Distribution Agreements;
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, prior to the PBGFS Distribution, the Company will
contribute to Pitney Bowes Global Financial Services Inc. (f/k/a PB Mailing
Financial Services Inc.), a Delaware corporation, 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 (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
Company Contribution, the Company will obtain all of the Capital Stock of PBGFS
and thereafter will distribute all of the Capital Stock of PBGFS to Pitney Bowes
(the "PBGFS Distribution");
WHEREAS, as a condition to the consummation of the Transactions and
in accordance with the Separation and Distribution Agreement, prior to the
Company Contribution, the Company shall consummate one or more transactions
taking the form of a high yield debt offering, a revolving credit facility,
securitization of certain financial assets of the Company or any other similar
transactions (the "Financing Transactions");
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 Distribution and Financing
Transactions and prior to the Distribution, Pitney Bowes will contribute to the
Company certain of its assets and transfer certain of its liabilities and Pitney
Bowes 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 Pitney Bowes (collectively, the
"Company 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 Company Contribution, Pitney Bowes will
distribute all of the shares of the Common Stock held by Pitney Bowes (the
"Distribution") to the holders of record of
Pitney Bowes common stock as of the record date set forth in the Information
Statement or Prospectus, as applicable;
WHEREAS, the Company desires, subject to the terms and conditions
set forth herein, to issue and sell to the Purchaser, immediately following the
consummation of the Company Contribution and prior to the Distribution, 114.2821
shares (as adjusted pursuant to Section 2.07) (the "Tranche I Stock") of Common
Stock of the Company, par value $0.001 per share (the "Common Stock");
WHEREAS, the Company desires, subject to the terms and conditions
set forth herein, to issue and sell to the Purchaser, as soon as practicable
following the consummation of the Distribution, a number of shares (as adjusted
pursuant to Section 2.07) of the Company's Non-Voting Series A Convertible
Preferred Stock, par value $0.001 per share (the "Non-Voting Preferred Stock")
that are convertible into 310.3332 shares of Common Stock (in accordance with
the terms of the Certificate of Designation) (the "Tranche II Stock"); and
WHEREAS, the Purchaser desires to purchase the Shares from the
Company and the Company desires to issue and sell the Shares to the Purchaser,
in each case subject to the terms and conditions set forth herein.
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 PBGFS Distribution, the Financing
Transactions and the Company Contribution), (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 PBGFS Distribution, the Financing Transactions and the
Company Contribution) 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 PBGFS Distribution, the Financing
Transactions and the Company Contribution) 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 PBGFS Distribution, the Financing Transactions and the Company
Contribution) 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
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the foregoing or enter into any agreement with respect to the foregoing, in each
case other than the Transactions or the Internal Restructuring.
"Adjusted Net Worth Difference Amount" means in case the Net Worth
Difference Amount is adjusted pursuant to Section 2.06, an amount equal to the
Net Worth Difference Amount adjusted upward or downward as set forth in Section
2.06, and, in case the Net Worth Difference Amount is not adjusted pursuant to
Section 2.06, an amount equal to the New Worth Difference Amount.
"Adjusted Projections" means the Projections adjusted solely to take
into account all adjustments to Projection Inputs with respect to the Specified
Leases in each taxable period within the Relevant Periods as prescribed by the
most recent Final Resolution of an SL Tax Matter and any prior Final Resolution
of an SL Tax Matter, regardless of whether a change to net taxable income is
actually reported on the Tax Return of any Party as a result of such adjustment.
"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, "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.
"Aggregate PV Audit Result Excess Amount" means the aggregate amount
of the PV Audit Result Excess in each taxable period within the Relevant
Periods.
"Aggregate PV Base Case Excess Amount" means the aggregate amount of
the PV Base Case Excess in each taxable period within the Relevant Periods.
"Applicable Law" means (a) any United States Federal, state, local
or foreign law, statute, rule, regulation, order, writ, injunction, judgment,
decree or Permit of any Governmental Authority and (b) any rule or regulation of
the Commission or any rule or listing requirement of any national stock
exchange, NASDAQ or Commission-recognized trading market on which securities
issued by the Company or any of its Subsidiaries are listed or quoted.
"Audit Result Amount" means the net taxable income for the Specified
Leases in each taxable period based on the Adjusted Projections.
"Audit Result Excess" means the amount by which the Audit Result
Amount exceeds the Base Case Amount. In the event the Audit Result Amount does
not exceed the Base Case Amount, the Audit Result Excess shall be zero and
deemed not to exist.
"Audit Result Excess Amount" means forty percent (40%) of the Audit
Result Excess.
"Base Case Amount" means the net taxable income for the Specified
Leases in each taxable period based on the Projections.
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"Base Case Excess" means the amount by which the Base Case Amount
exceeds the Audit Result Amount. In the event the Base Case Amount does not
exceed the Audit Result Amount, the Base Case Excess shall be zero and deemed
not to exist.
"Base Case Excess Amount" means forty percent (40%) of the Base Case
Excess.
"Base Line Equity" means $115,000,000.
"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 financing
and syndication for a wide variety of real property and personal property not
manufactured or owned by Pitney Bowes as of the Distribution Date, including
vendor finance, single investor finance and large-ticket financing, but in any
event not the PBGFS Business or the Pitney Bowes 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.
"Cash Adjustment Amount" means an amount equal to the aggregate
amount of cash dividended or distributed by the Company to Pitney Bowes between
the date hereof and the Distribution Date (excluding any amounts dividended or
distributed to Pitney Bowes out of the proceeds of the Financing Transactions).
"Cerberus" means Cerberus Capital Management, L.P., a Delaware
limited partnership.
"Certificate of Designation" means the Certificate of Designation of
Non-Voting Series A Convertible Preferred Stock relating to the Non-Voting
Preferred Stock in the form attached hereto as Exhibit A.
"Closing Date Balance Sheet" means the unaudited consolidated pro
forma balance sheet of the Company (taking into account the Internal
Restructuring (including the Financing Transactions), the PBGFS Contribution,
the PBGFS Distribution, the Company Contribution, and the non-capitalized
Transactions Expenses but excluding the Interim Warehouse Financing and any
accounting impact as a result of any and all Final Resolutions of any SL Tax
Matter) as of the last day of the month immediately preceding the month in which
the Closing Notice was delivered to the Purchaser prepared in accordance with
the same
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accounting policies, principles, practices and methods used in preparing the
Unaudited Balance Sheet as reflected in the notes thereto.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the U.S. Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act and the
Exchange Act.
"Confidentiality Agreement" means the Confidentiality Agreement,
dated September 27, 2004, by and between J.P. Morgan Securities Inc., as agent
for Pitney Bowes, and Cerberus, as amended from time to time.
"Contract" means with respect to any specified Person, any written
contract, Lease, license, loan agreement, mortgage, security agreement, trust
indenture, note, bond, or other commitments, agreement or instrument to which
such Person is legally bound or under which such Person is legally obligated.
"Cost Amounts" means the aggregate amount equal to the Pension Plan
Costs and the Pre-Distribution Costs.
"Discount Rate" means fourteen percent (14%).
"Distribution Agreements" means the Separation and Distribution
Agreement, the Employee Benefits Agreement, the Intellectual Property Agreement,
the Tax Sharing Agreement, and the Transition Services Agreement, and the
exhibits, schedules and annexes thereto.
"Distribution Term Sheets" means, collectively each of the term
sheets containing the material terms and conditions of the Employee Benefits
Agreement (the "Employee Benefits Agreement Term Sheet"), the Intellectual
Property Agreement and the Transition Services Agreement (the "Transition
Services Agreement Term Sheet") attached hereto as Exhibit B-1 through Exhibit
B-3.
"Effective Date" means the date the Registration Statement is first
declared effective by the Commission.
"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.
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"Employee Benefits Agreement" means the Employee Benefits Agreement
by and between the Company and Pitney Bowes to be entered into in connection
with the Distribution.
"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 of
Hazardous Substances (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 (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 8.14) and Cerberus.
"Equity Documents" means this Agreement and the Escrow Agreement.
"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).
"Escrow Agent" means the party identified as such in the Escrow
Agreement.
"Escrow Agreement" means the escrow agreement by and among the
Purchaser, the Company and the Escrow Agent substantially in the form of Exhibit
C attached hereto to be entered into in accordance with this Agreement.
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"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Final Net Worth" means the Net Worth, plus the aggregate amount of
the Tranche I Stock Purchase Price and the Tranche II Stock Purchase Price.
"Final Resolution" means the final resolution of liability for any
Income Tax, which resolution may be for a specific issue or adjustment or for a
taxable period, (a) by IRS Form 870 or 870-AD (or any successor forms thereto),
on the date of acceptance by or on behalf of the taxpayer, or by a comparable
form under the laws of a state, local, or foreign taxing jurisdiction, except
that a Form 870 or 870-AD or comparable form shall not constitute a Final
Resolution to the extent that it reserves (whether by its terms or by operation
of law) the right of the taxpayer to file a claim for refund or the right of the
Tax authority to assert a further deficiency in respect of such issue or
adjustment or for such taxable period (as the case may be); (b) by a decision,
judgment, decree, or other order by a court of competent jurisdiction that has
become final and unappealable; (c) by a closing agreement or accepted offer in
compromise under Sections 7121 or 7122 of the Code, or a comparable agreement
under the laws of a state, local, or foreign taxing jurisdiction; or (d) by any
other final disposition, including by mutual agreement of the parties.
"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 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 not
include a PBGFS Financing.
"Financing Documents" means, with respect to each Financing, the
lease, loan or conditional sale agreement, including any lease, loan agreement,
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.
"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.
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"Governmental Authority" means (a) any foreign, Federal, state or
local court or governmental or regulatory agency or authority, (b) any
arbitration board, tribunal or mediator and (c) any national stock exchange or
Commission-recognized trading market on which securities issued by the Company
or any of its Subsidiaries are listed or quoted.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations promulgated thereunder.
"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.
"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 financing and
syndication industry and any related industries.
"Information Statement" means the information statement (including
any exhibits, schedules, or annexes attached thereto) and any amendments or
supplements thereof forming a part of the Registration Statement on Form 10.
"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
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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 Pitney Bowes to be entered into in
connection with the Distribution.
"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 that is not a Small
Ticket Financing.
"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 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.
"Material Adverse Effect" means any change in or any effect on the
Company (after taking into effect the PBGFS Contribution, the PBGFS
Distribution, the Financing Transactions, the Warehouse Financing Transaction
and the Company Contribution) or the Business that is, individually or in the
aggregate, materially adverse to the Company (after taking into effect the PBGFS
Contribution, the PBGFS Distribution, the Financing Transactions, the Warehouse
Financing Transaction and the Company Contribution), or the assets (both
tangible and intangible), liabilities, financial condition, or results of
operations of the Company and its Subsidiaries (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
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Agreement or the Transactions or the announcement thereof; (c) the transactions
(including, the Financing Transactions) contemplated by the proposed
reorganizations in connection with the PBGFS Contribution, the PBGFS
Distribution, the Company Contribution and the Distribution 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 (the "Internal Restructuring"); (d)
the termination of the Operating Agreement, dated as of November 1, 2001, by and
between Imagistics International Inc. ("Imagistics") and the Company, as
supplemented and amended from time to time; and (e) the audit of Pitney Bowes'
consolidated tax returns for 1995 and subsequent years.
"NASDAQ" means the National Association of Securities Dealers, Inc.,
Automated Quotations Systems.
"Net Proceeds Amount" means an amount equal to $438,000,000, minus
the sum of (i) the Cash Adjustment Amount and (ii) the Cost Amounts.
"Net Worth" means (a) the aggregate amount by which (i) the total
assets of the Company and its Subsidiaries exceed (ii) the total liabilities of
the Company and its Subsidiaries (excluding the impact of the Financing
Transactions and the Transactions Expenses on the assets and liabilities), minus
(b) the aggregate outstanding principal amount of the Financing Transactions,
minus (c) the aggregate amount of non-capitalized Transactions Expenses, in each
case, derived from the Closing Date Balance Sheet.
"Net Worth Difference Amount" means an amount equal (in the positive
or negative) to the difference between the Net Worth and the Base Line Equity.
"Obligor" means a Person (other than the Company or any of its
Affiliates) who is obligated under a Financing.
"PBG Partnership" means PBG Capital Partners L.L.C., a Delaware
limited liability company.
"PBGFS Business" means (a) the business and operations of providing
lease financing of equipment manufactured or supplied by Pitney Bowes, (b) all
other business (other than Company Business) conducted by PBGFS 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 Pitney Bowes Business and businesses and operations related to the Excluded
PBGFS Assets (as such term is defined in the Separation and Distribution
Agreement).
"PBGFS Financing" means a transaction (other than a Financing) which
relates to the PBGFS Business and in which Pitney Bowes or any Subsidiary of
Pitney Bowes 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 manufactured or supplied by Pitney Bowes.
"Pension Plan Costs" has the meaning set forth in the Employee
Benefits Agreement Term Sheet.
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"Permit" means permits, licenses, franchises, variances, exemptions,
orders, registrations, certificates, 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, Liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business 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 Audited
Financial Statements, (c) Liens that are permitted under any Financing Document,
(d) Liens that that do not materially impair, and could not 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 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,
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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).
"Pre-Distribution Costs" has the meaning set forth in the Transition
Services Agreement Term Sheet.
"Preferred Premium" means twelve and one-half percent (12.5%).
"Present Value" means the value as of the Distribution Date of each
future Base Case Excess Amount and Audit Result Excess Amount, as applicable,
discounted from the end of each calendar year to which such Base Case Excess
Amount and Audit Result Excess Amount relates, as applicable, at the Discount
Rate and assuming annual compounding.
"Private Letter Ruling" means the private letter ruling from the
IRS, in which the IRS rules that: (a) no gain or loss will be recognized by, and
no amount will be included in the income of, the Company or Pitney Bowes upon
the distribution of all of the PBGFS Capital Stock held by the Company to Pitney
Bowes in the PBGFS Distribution, (b) no gain or loss will be recognized by, and
no amount will be included in the income of, Pitney Bowes or the stockholders of
Pitney Bowes upon the distribution of all of the Common Stock held by Pitney
Bowes to the stockholders of Pitney Bowes in the Distribution, (c) no gain or
loss will be recognized by, and no amount will be included in the income of, the
Company as a result of the PBGFS Contribution, and (d) provided the merger of PB
Equipment Management Inc. with and into the Company (the "PB Equipment Merger")
qualifies as a statutory merger under applicable state law, the PB Equipment
Merger will qualify as a reorganization within the meaning of Section
368(a)(1)(A) of the Code.
"Projection Inputs" means (a) the following inputs set forth in the
Projections that were used to calculate net taxable income for purposes of the
Projections: "rents and residuals", "interest" (on non-recourse debt),
"depreciation" and "fees and other revenues and expenses", (b) any
recharacterization by the IRS of the inputs enumerated in clause (a), and (c)
any new or different item of income, gain, loss, deduction or credit in respect
of the Specified Leases, without regard to whether such item is enumerated in
clause (a).
"Projections" means the hypothetical net taxable income or loss of
the Company with respect to the Specified Leases set forth in the projections
attached hereto on Schedule 1.01.
"Prospectus" means the prospectus (including any exhibits,
schedules, or annexes attached thereto) and any amendments thereof or
supplements thereto forming a part of the Registration Statement on Form S-1, if
any.
"Purchase Price Adjustment Amounts" means the Tranche I Adjustment
Amount and the Tranche II Adjustment Amount.
"Purchaser's Group" means, collectively, any Person that is an
Affiliate of the Purchaser or Cerberus.
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"PV Audit Result Excess" means the Present Value of the Audit Result
Excess Amount for each period within the Relevant Periods.
"PV Base Case Excess" means the Present Value of the Base Case
Excess Amount for each period within the Relevant Periods.
"Qualified Equity Offering" means a public or nonpublic offering of
shares of Common Stock or securities convertible into or exchangeable or
exercisable for shares of Common Stock (collectively, "New Stock") solely for
cash; provided, however, that none of the following shall constitute a Qualified
Equity Offering: (a) the Tranche II Issuance; (b) any offering pursuant to any
Employee Benefits Plan, stock purchase plan, stock ownership plan, stock option
plan or other similar plan where stock is being issued or offered to a trust,
other entity or otherwise, for the benefit of any employees, officers,
consultants or directors of the Company or any of its Subsidiaries; (c) any
offering made as part of or in connection with any non-capital-raising
transactions (including a partnership or joint venture or strategic alliance or
investment or in consideration of an acquisition, merger or other business
combination transaction approved by the Board of Directors of the Company); (d)
any offering to any employee, consultant or director of the Company or any of
its Subsidiaries made pursuant to any employment agreement or other written
arrangement approved by the Board of Directors of the Company; (e) any issuance
of Series B Preferred Stock or any other securities of the Company pursuant to
the Rights Agreement; and (f) any issuance in connection with an antidilution
adjustment to the Non-Voting Preferred Stock as a result of Section 8 of the
Certificate of Designation.
A "Qualifying Ownership Interest" shall be deemed to exist at any
time the Purchaser and the Permitted Transferees collectively own a number of
shares of Common Stock (giving effect to the conversion of the Non-Voting
Preferred Stock into Common Stock) that in the aggregate represent not less than
fifteen percent (15%) of the aggregate number of shares of Common Stock (giving
effect to the conversion of the Non-Voting Preferred Stock into Common Stock)
and initially acquired by the Purchaser pursuant to this Agreement.
"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.
"Registration Rights Agreement" means the Registration Rights
Agreement by and between the Company and the Initial Holders (as defined in the
Registration Rights Agreement) in the form of Exhibit D attached hereto to be
entered into in accordance with this Agreement.
"Registration Statement" means the registration statement on Form 10
(including any and all exhibits filed thereto) to be filed under the Exchange
Act or the registration statement on Form S-1 (including any and all exhibits
filed thereto) to be filed under the Securities Act and the Form 8-A (including
any and all exhibits filed thereto) to be filed under the Exchange Act, as
-13-
applicable, pursuant to which the shares of Common Stock to be issued in
connection with the Distribution will be registered, together with all
amendments thereto.
"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
(excluding the Financing Documents) 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 or
any of its Subsidiaries (at the time of the Distribution); (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.
"Relevant Periods" means all taxable periods beginning after the
Distribution Date and ending on December 31, 2022.
"Representatives" means, collectively, with respect to any Person,
such Person's directors, partners, members, officers, employees, financial
advisors, lenders, insurers, consultants, accountants, attorneys, agents,
representatives, equity investors, rating agencies, controlled Affiliates and
controlling persons of such Person or its controlled Affiliates.
"Rights Agreement" means the Rights Agreement by and between the
Company and EquiServe Trust Company, N.A., as rights agent, substantially in the
form of Exhibit D attached to the Separation and Distribution Agreement.
"Ruling Request" means the submission to the IRS requesting the
Private Letter Ruling and any supplemental submissions or other material
correspondence in respect of the Private Letter Ruling.
"Securities Act" means the U.S. Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Separation and Distribution Agreement" means the Separation and
Distribution Agreement by and between the Company and Pitney Bowes substantially
in the form of Exhibit E attached hereto to be entered into in connection with
the PBGFS Distribution and the Distribution.
"Series B Preferred Stock" has the meaning ascribed to such term in
the Rights Agreement.
"Shares" means collectively the shares of Tranche I Stock and
Tranche II Stock.
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"SL Tax Matter" means any Tax Matter related to an IRS audit of any
Specified Lease.
"Small Ticket Financing" means a Financing within the Dictaphone
portfolio listed or described on Schedule 3.18(a)(ii) hereto or within the
Imagistics portfolio listed or described on Schedule 3.18(a)(ii) hereto.
"Specified Leases" means the Financings listed on Schedule 1.02.
"Subordinated Debt Agreement" means the Note Purchase Agreement by
and between the Company and the Purchaser substantially in the form of Exhibit F
attached hereto to be entered into in accordance with this Agreement.
"Subordinated Notes" means the Notes as such term is defined in the
Subordinated Debt Agreement.
"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 either the Board of Directors of the Company or the
Board of Directors of Pitney Bowes determines in good faith would, if
consummated, be more favorable to the Company or Pitney Bowes and their
respective stockholders, as applicable, than the Transactions and (b) that
either the Board of Directors of the Company or the Board of Directors of Pitney
Bowes determines in good faith is reasonably capable of being consummated
(taking into account such factors as the Board of Directors of the Company or
Board of Directors of Pitney Bowes, as applicable, in good faith deems relevant,
including but not limited to all legal, 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.
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"Tax Sharing Agreement" means the Tax Sharing Agreement by and
between the Company and Pitney Bowes substantially in the form of Exhibit G
attached hereto to be entered into in connection with the Distribution.
"Transactions" means solely the transactions contemplated by the
Equity Documents, which, for the avoidance of doubt, does not include the
transactions contemplated by the Internal Restructuring, including the PBGFS
Contribution, the PBGFS Distribution, the Financing Transactions, the Company
Contribution and the Distribution.
"Transactions Expenses" means any and all expenses incurred in
connection with the Transactions, the Internal Restructuring, the PBGFS
Contribution, the PBGFS Distribution, the Company Contribution and the
Distribution calculated and determined in accordance with GAAP.
"Transition Services Agreement" means the Transition Services
Agreement by and between the Company and Pitney Bowes to be entered into in
connection with the Distribution.
(b) As used herein, the phrase "to the knowledge" of the Company as
of any date shall mean the actual knowledge of Keith Williamson, Lawrence
Osmanski, Michael Costello, Stephen Wayne, Ann Schaumberger, David Kleinman,
Christian Schulitz, Jeffrey Ramos, Michael Ryan 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;
(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
- ---- -------
Agreement Preamble
Amended Bylaws 5.04
Audited Balance Sheet 3.05(b)
Audited Financial Statements 3.05(b)
Cash Flows 3.05(a)
Closing Financial Statements 2.05(a)
Closing Notice 2.05(a)
Common Stock Recitals
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Term Section
- ---- -------
Company Preamble
Company Contribution Recitals
Company Cure Period 8.04(a)
Company Intellectual Property 3.08(a)
Company Lease 3.16(a)
Data Article I - definition of
"Intellectual Property"
Designated Stock 5.15(a)
Distribution Recitals
Distribution Date 2.03
Eligible Purchasers 5.15(a)
Employee Benefits Agreement Term Sheet Article I - definition of
"Distribution Term Sheet"
Escrow Funds 2.02(a)
Expense Reimbursement 8.04(b)
Financing Policies 3.19
Financing Transactions Recitals
Imagistics Article I - definition of
"Material Adverse Effect"
Independent Accounting Firm 2.05(b)
Initial Directors 5.06(a)
Interim Warehouse Financing 6.10
Internal Restructuring Article I - definition of
"Material Adverse Effect"
Material Contracts 3.20(a)
Net Worth Statement 2.05(a)
New Stock Article I - definition of
"Qualified Equity
Offering"
Non-Voting Preferred Stock Recitals
Notice of Disagreement 2.05(b)
PB Equipment Merger Article I - definition of
"Private Letter Ruling"
PBGFS Recitals
PBGFS Contribution Recitals
PBGFS Distribution Recitals
Pitney Bowes Preamble
Private Placement 5.15(c)
Preferred Director 5.06
Purchaser Preamble
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Term Section
- ---- -------
Purchaser Cure Period 8.04(a)
Repurchase Date 2.08(a)
Restated Certificate 5.04
Schedules 8.11
Specified Lease Adjustment Amount 2.05(a)
Statements of Operations 3.05(a)
Tax Returns 3.17
Termination Payment 8.04(b)
Tranche I Adjustment Amount 2.05(d)
Tranche I Closing 2.02
Tranche I Closing Date 2.02
Tranche I Issuance 2.01(a)
Tranche I Stock Recitals
Tranche I Stock Purchase Price 2.01(a)
Tranche II Adjustment Amount Section 2.05(e)
Tranche II Closing 2.04
Tranche II Closing Date 2.04
Tranche II Issuance 2.01(a)
Tranche II Stock Recitals
Tranche II Stock Certificates 2.04(a)
Tranche II Stock Purchase Price 2.01(a)
Transition Services Agreement Term Sheet Article I - definition of
"Distribution Term Sheet"
Unaudited Balance Sheet 3.05(a)
Unaudited Financial Statements 3.05(a)
Update Notice 3.26(b)
ARTICLE II
Sale, Purchase and Repurchase
SECTION 2.01. Agreement to Sell and to Purchase; Purchase Price. (a)
Upon the terms and subject to the conditions set forth in this Agreement and, in
case of the Tranche II Issuance, this Agreement and the Escrow Agreement:
(i) immediately following the consummation of the Company
Contribution and immediately prior to the Distribution, the Company shall
issue and sell to the Purchaser, and the Purchaser shall purchase and
accept from the Company the Tranche I Stock (the "Tranche I Issuance"),
for an aggregate purchase price equal to $28,570,536.83, subject to
adjustment as set forth in Section 2.05(d) (the "Tranche I Stock Purchase
Price"); and
(ii) as soon as practicable following the consummation of the
Distribution, the Company shall issue and sell to the Purchaser, and the
Purchaser shall purchase and accept from the Company the Tranche II Stock
(the "Tranche II Issuance") for a
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purchase price equal to $87,281,222.99, subject to adjustment as set forth
in Section 2.05(e) (the "Tranche II Stock Purchase Price").
(b) An aggregate amount equal to the Tranche I Stock Purchase Price
shall be paid by wire transfer of immediately available funds to a bank account
or bank accounts designated by the Company on or before the Tranche I Closing
Date.
(c) An aggregate amount equal to the Tranche II Stock Purchase Price
shall be paid by wire transfer of immediately available funds to the Escrow
Agent on or before the Tranche I Closing Date to be held in escrow in accordance
with the terms of this Agreement and the Escrow Agreement.
(d) The Company shall not be required to issue and sell any shares
of Tranche I Stock to the Purchaser, and the Purchaser shall not be required to
purchase any shares of Tranche I Stock from the Company, unless the conditions
set forth in Section 2.02, Section 7.01 and Section 7.02 to the issuance and
sale of the Tranche I Stock to the Purchaser shall have been satisfied or
waived.
(e) The Company shall not be required to issue and sell any shares
of Tranche II Stock to the Purchaser, and the Purchaser shall not be required to
purchase any shares of Tranche II Stock from the Company, unless the conditions
set forth in Section 2.04 and Section 7.05 to the issuance and sale of the
Tranche II Stock to the Purchaser shall have been satisfied or waived.
SECTION 2.02. Tranche I Closing. Subject to the satisfaction or
waiver of the conditions set forth in Sections 7.01 and 7.02, the closing in
respect of the Tranche I Issuance (the "Tranche I Closing") shall occur
immediately after the Company Contribution and immediately prior to the
Distribution, which is expected to occur no later than 12 months from the date
hereof, or at such other time and date as the parties hereto shall agree in
writing (such date and time, the "Tranche I Closing Date"). The Tranche I
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 Tranche I Closing Date:
(a) The Purchaser shall deliver:
(i) to the Company, the officer's certificate of the
Purchaser as contemplated by Section 7.01(c);
(ii) to each of the Company and the Escrow Agent, a copy of
the Escrow Agreement executed by the Purchaser;
(iii) to the Company, a copy of the Registration Rights
Agreement executed by the Purchaser;
(iv) to the Company, an amount in cash equal to the Tranche I
Stock Purchase Price; and
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(v) to the Escrow Agent, an amount in cash equal to the
Tranche II Stock Purchase Price (the "Escrow Funds").
(b) The Company shall deliver:
(i) to the Purchaser, the officer's certificate of the
Company as contemplated by Section 7.02(c);
(ii) to each of the Purchaser and the Escrow Agent, a copy of
the Escrow Agreement executed by the Company;
(iii) to the Purchaser, a copy of the Registration Rights
Agreement executed by the Company; and
(iv) to the Purchaser, certificates representing the shares
of Tranche I Stock being purchased by the Purchaser
pursuant to Section 2.01(a)(i), 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 Tranche I
Closing Date.
(c) The Escrow Agent shall deliver to each of the Company and the
Purchaser a copy of the Escrow Agreement executed by the Escrow Agent.
SECTION 2.03. Distribution. Subject to the satisfaction or waiver of
the conditions set forth in Sections 7.03 and 7.04, the Distribution shall occur
immediately after the Tranche I Closing (the "Distribution Date").
On the Distribution Date:
(a) The Purchaser shall deliver:
(i) to the Company, the officer's certificate of the
Purchaser as contemplated by Section 7.03(c);
(ii) to the Company, a copy of the Subordinated Debt
Agreement executed by the Purchaser; and
(iii) to the Company, an amount in cash equal to $5,000,000,
constituting full payment for the Subordinated Notes.
(b) The Company shall deliver:
(i) to the Purchaser, the officer's certificate of the
Company as contemplated by Section 7.04(c); and
(ii) to the Purchaser, a copy of the Subordinated Debt
Agreement and the Subordinated Notes executed by the
Company.
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SECTION 2.04. Tranche II Closing. Subject to the satisfaction or
waiver of the conditions set forth in Section 7.05, the closing in respect of
the Tranche II Issuance (the "Tranche II Closing") shall occur as soon as
practicable after the Distribution or at such other time and date as the parties
hereto shall agree in writing (such date and time, the "Tranche II Closing
Date"). The Tranche II 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 Tranche II Closing Date:
(a) The Company shall deliver to the Purchaser, certificate(s)
representing the shares of the Tranche II Stock (the "Tranche II Stock
Certificates") being purchased by the Purchaser pursuant to Section 2.01(a)(ii),
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
no later than three (3) Business Days prior to the Tranche II Closing Date.
(b) Each of the Company and the Purchaser shall deliver to the
Escrow Agent the Tranche II Instructions (as such term is defined in the Escrow
Agreement) and the Tranche II Certificate (as such term is defined in the Escrow
Agreement), in each case in accordance with the terms of the Escrow Agreement.
(c) The Escrow Agent shall release and deliver to the Company the
Escrow Funds and shall release and deliver to the Purchaser the Earned Income
(as such term is defined in the Escrow Agreement), in accordance with the terms
of the Escrow Agreement.
SECTION 2.05. Preparation of Closing Date Balance Sheet; Purchase
Price Adjustment. The Tranche I Stock Purchase Price and the Tranche II Stock
Purchase Price shall be adjusted as follows:
(a) The Company shall deliver to the Purchaser a notice notifying
the Purchaser of the proposed Tranche I Closing Date (the "Closing Notice"),
which proposed Tranche I Closing Date shall be no less than 30 calendar days and
no more than 60 calendar days from the date such Closing Notice is delivered to
the Purchaser. The Company shall prepare and deliver to the Purchaser at least
fifteen (15) Business Days prior to the proposed Tranche I Closing Date (i) the
Closing Date Balance Sheet, (ii) a statement derived from the Closing Date
Balance Sheet setting forth a calculation of the Net Worth, the Net Worth
Difference Amount, the Adjusted Net Worth Difference Amount and the Purchase
Price Adjustment Amounts as of the date of the Closing Date Balance Sheet (the
"Net Worth Statement", and, together with the Closing Date Balance Sheet, the
"Closing Financial Statements") and (iii) if applicable, a statement setting
forth the calculation of the Aggregate PV Audit Result Excess Amount and the
Aggregate PV Base Case Excess Amount, including the calculation adjusting the
Net Worth Difference Amount (the "Specified Lease Adjustment Statement"). For
purposes of preparing the Net Worth Statement, it will be assumed by the Company
that the Internal Restructuring (which includes the Financing Transactions), the
PBGFS Contribution, the PBGFS Distribution, and the Company Contribution were
consummated as of the date of the Net Worth Statement and the Closing Date
Balance Sheet shall be prepared in accordance with the same accounting
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policies, principles, practices and methods used in preparing the Unaudited
Balance Sheet as reflected in the notes thereto.
(b) Within ten (10) Business Days following the Purchaser's receipt
of the Net Worth Statement and the Specified Lease Adjustment Statement, if
applicable, the Purchaser and its independent auditors shall be permitted to
review the working papers of the Company relating to the Net Worth Statement and
the Specified Lease Adjustment Statement, if applicable. The Net Worth Statement
and the Specified Lease Adjustment Statement, if applicable, shall become final
and binding upon the Company and the Purchaser on the eleventh (11th) Business
Day following delivery thereof, unless the Purchaser gives written notice of its
disagreement with the Net Worth Statement and/or the Specified Lease Adjustment
Statement, if applicable, (a "Notice of Disagreement") to the Company prior to
such date.
(c) 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 Net Worth Statement
not being prepared or any of the Net Worth, the Net Worth Difference Amount, the
Adjustment Net Worth Difference Amount or the Adjusted Purchase Price Amounts
not being determined in accordance with this Section 2.05 or the Specified Lease
Adjustment Statement not being prepared or the Aggregate PV Audit Result Amount
or the Aggregate PV Base Case Excess Amount not being determined in accordance
with Section 2.06. During the seven (7) Business Day period following the
delivery of a Notice of Disagreement, the Company 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 Company and its auditors shall have access
to the working papers of the Purchaser and, if applicable, the Purchaser's
auditors' working papers prepared in connection with the Notice of Disagreement.
At the end of such seven (7) Business Day period, the Company 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 Company or the Purchaser shall be selected to resolve the dispute.
The Company 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 2.05 shall be borne by the Purchaser and the Company 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 and the Specified Lease Adjustment Statement,
if applicable, shall (i) be final, binding and conclusive on the Company 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 and the Specified Lease Adjustment Statement, if applicable, are
deemed final hereunder, neither the Company nor
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the Purchaser will be entitled to subject the Closing Financial Statements, any
resolution by and between the Company and the Purchaser under this Section
2.05(b) 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)In the event that the Net Worth is not equal to the Base Line
Equity, the Tranche I Stock Purchase Price shall be adjusted downward or upward,
as applicable, by an amount equal to the product of (i) the quotient of (x) the
Adjusted Net Worth Difference Amount, divided by (y) 0.801, times (ii) 0.199
(the "Tranche I Adjustment Amount"). This formula is set forth immediately
below.
(Adjusted Net Worth Difference Amount / 0.801) x 0.199 = Tranche I
Adjustment Amount
(e) In the event that the Net Worth is not equal to the Base Line
Equity, the Tranche II Stock Purchase Price shall be adjusted downward or
upward, as applicable by an amount equal to (i) the product of (x) the quotient
of (A) the Adjusted Net Worth Difference Amount, divided by (B) 0.52, times (y)
0.48, minus (ii) the Tranche I Adjustment Amount, times (iii) the sum of 1, plus
the Preferred Premium (the "Tranche II Adjustment Amount"). This formula is set
forth immediately below.
(((Adjusted Net Worth Difference Amount / 0.52) x 0.48) - Tranche I Adjustment
Amount) x (1 + Preferred Premium) = Tranche II Adjustment Amount
SECTION 2.06. Specified Lease Purchase Price Adjustment. (a) In the
event that a Final Resolution of an SL Tax Matter occurs prior to the delivery
of the Specified Lease Adjustment Statement to the Purchaser in accordance with
Section 2.05(a) then:
(i) If the Aggregate PV Audit Result Excess Amount exceeds the
Aggregate PV Base Case Excess Amount, then the Net Worth Difference Amount shall
be reduced by any amount equal to such excess; or
(ii) If the Aggregate PV Base Case Excess Amount exceeds the
Aggregate PV Audit Result Excess Amount, then the Net Worth Difference Amount
shall be increased by an amount equal to such excess.
(b) An example of the purchase price adjustment set forth in this
Section 2.06 is attached as Schedule 2.06(b) hereto solely for illustrative
purposes.
SECTION 2.07. Stock Split; Common Stock Issuances. (a) In the event
that the Company effects a stock split for its Common Stock on or prior to the
Tranche I Closing Date, the number of shares of (i) Tranche I Stock and (ii)
Common Stock upon conversion of the Tranche II Stock, each to be purchased by
the Purchaser in accordance with Section 2.01 shall be adjusted proportionately
based on the stock split ratio. All fractions of a share of Common Stock shall
be rounded down.
(b) In the event that the Company, between the date hereof and the
Tranche I Closing Date, consummates issuances of shares of Common Stock of the
Company in
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accordance with Section 5.16(d), the number of shares of (i) the Tranche I Stock
to be purchased by the Purchaser in accordance with Section 2.01(a)(i) shall be
adjusted to represent an economic interest in the Company of 12.9% of the then
issued and outstanding shares of Common Stock on a fully diluted basis
(including taking into account the shares of Common Stock to be issued upon
conversion of the Tranche II Stock) as of the Tranche II Closing Date and (ii)
Common Stock upon conversion of the Tranche II Stock to be purchased by the
Purchaser in accordance with Section 2.01(a)(ii) shall be adjusted to represent
an economic interest in the Company of 35.1% of the then issued and outstanding
shares of Common Stock on a fully diluted basis (including taking into account
the shares of Common Stock to be issued upon conversion of the Tranche II Stock)
as of the Tranche II Closing Date. For the avoidance of doubt, following the
issuance of any of the Shares, such Shares shall be subject to dilution as a
result of any issuance by the Company of any of its securities after the Tranche
II Closing Date.
SECTION 2.08. Repurchase of the Tranche I Stock. (a) If the
Distribution has not been consummated on or prior to the next Business Day
immediately succeeding the Tranche I Closing Date, then, on the third Business
Day immediately succeeding the Tranche I Closing Date (the "Repurchase Date"),
the Company, shall (subject to all Applicable Laws and the next sentence)
repurchase from the Purchaser all shares of Tranche I Stock purchased by the
Purchaser free from all claims, charges, Liens, rights of preemption or equities
whatsoever for an aggregate amount equal to the Tranche I Stock Purchase Price.
For the avoidance of doubt, if the Distribution shall have occurred prior to the
third Business Day immediately succeeding the Tranche I Closing Date, the
Company shall have no obligation to repurchase from the Purchaser the shares of
Tranche I Stock purchased by the Purchaser.
(b) On the Repurchase Date, (i) the Purchaser shall deliver to the
Company the share certificate(s) for the Tranche I Stock, (ii) the Company shall
pay to the Purchaser an aggregate amount equal to the Tranche I Stock Purchase
Price as payment in full for the repurchase of the shares of Tranche I Stock,
(iii) the Purchaser and the Company shall each execute and deliver to the Escrow
Agent the Termination Instructions and the Termination Certificate (as such
terms are defined in the Escrow Agreement) to the Escrow Agent and (iv) the
Escrow Agent shall release the Escrow Amount, (as such term is defined in the
Escrow Agreement) to the Purchaser in accordance with the terms of the Escrow
Agreement.
ARTICLE III
Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchaser on the
date hereof, on the Tranche I Closing Date and on the Distribution Date, as if
made on such date, as applicable, as follows:
SECTION 3.01. Organization and Standing. (a) 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 proposed to be conducted immediately following the Distribution. The
Company is duly qualified as a foreign corporation to do
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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
Company 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 true and correct copies of the Restated Certificate, the Amended
Bylaws and the Certificate of Designation in substantially the form as will be
in effect as of the Distribution (exclusive of the certificate of designation to
be filed in connection with the Rights Agreement).
(b) Each Subsidiary of 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 or as it is proposed to be
conducted immediately following the Distribution, and each such Subsidiary 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(b)(i) all of the outstanding shares
of Capital Stock of each such Subsidiary set forth on Schedule 3.01(b)(iii) are
validly issued, fully paid, nonassessable and free of preemptive rights and upon
consummation of the Distribution will be owned directly or indirectly by the
Company and (ii) except as set forth on Schedule 3.01(b)(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 Subsidiary set forth on Schedule 3.01(b)(iii), including any
right of conversion or exchange under any outstanding security, instrument or
agreement. Schedule 3.01(b)(iii) sets forth a list of the ownership interests of
the Company in each of its Subsidiaries as of immediately after the
Distribution.
SECTION 3.02. Capital Stock. (a) The authorized Capital Stock of the
Company as of the date hereof consists of 20,000 shares, of which (i) 10,000
shares are preferred stock with no par value of which no shares are issued and
outstanding and (ii) 10,000 shares are common stock with the par value of $0.001
per share, of which 460 Common Shares are issued and outstanding and are owned
by Pitney Bowes as of the date hereof.
(b) Each share of Capital Stock of the Company that will be issued
and outstanding immediately following the Tranche I Closing and Tranche II
Closing, as applicable, will be duly authorized and validly issued and fully
paid and nonassessable, and the issuance thereof, subject to Section 5.15, will
not be subject to any preemptive rights or made in violation of any Applicable
Law. Except as may otherwise be provided for in this Agreement, the Internal
Restructuring and the Transactions, there are no outstanding material
contractual obligations of the Company to repurchase, 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 material contractual
obligations of any of the Subsidiaries set forth on Schedule 3.01(b)(iii) to
repurchase, redeem, or otherwise acquire any shares of Capital Stock of such
Subsidiaries.
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(c) Except as provided for in the Equity Documents, the Certificate
of Designation, the Rights Agreement and the certificate of designation to be
filed in accordance with the Rights 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 or
Non-Voting Preferred 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 Company has the
power and authority to execute, deliver and perform the terms and provisions of
each of the Equity Documents and the Registration Rights Agreement, and, as of
the Tranche I Closing Date, and the Distribution Date, as applicable, will have
taken all action necessary to authorize the execution, delivery and performance
by it of each of such Equity Documents, the Registration Rights Agreement, the
Subordinated Debt Agreement and the Distribution Agreements and to consummate
the transactions contemplated thereby. As of the Tranche I Closing Date and the
Distribution Date, as applicable, no other corporate proceeding on the part of
the Company will be necessary for such authorization, execution, delivery and
consummation. The Company has duly executed and delivered this Agreement and, on
the Tranche I Closing Date, the Company will have duly executed and delivered
each of the other Equity Documents and the Registration Rights Agreement to be
executed and delivered on or prior to the Tranche I Closing Date and, on the
Distribution Date, the Company will have duly executed and delivered the
Subordinated Debt Agreement. This Agreement constitutes, and each of the Escrow
Agreement, the Registration Rights Agreement, the Subordinated Debt Agreement
and the Subordinated Notes, 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 Company of each of the Equity
Documents, the Registration Rights Agreement and the Subordinated Debt Agreement
and the consummation by the Company 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(a), the execution, delivery and performance
by the Company of each of the Equity Documents, the Registration Rights
Agreement and the Subordinated Debt Agreement 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 Company or any of its Subsidiaries are a party or by which the Company or
any of its Subsidiaries are bound or to which any of the assets of the Business
will be subject immediately following the Distribution or (B) result in the
creation or imposition of any Lien upon 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 of its Subsidiaries.
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(b) Except as set forth on Schedule 3.04(b) and except for (i)
applicable filings, if any, with the Commission pursuant to the Securities Act
or the Exchange Act, (ii) filings under state securities or "blue sky" laws and
(iii) filing of the Restated Certificate and Certificate of Designation, each
with the Secretary of State of the State of Delaware, no consent, authorization
or order of, or filing or registration with, any Governmental Authority or other
Person (including the stockholders of Pitney Bowes) is required to be obtained
or made by the Company, Pitney Bowes or any of their respective Subsidiaries for
the execution, delivery and performance of any of the Equity Documents, the
Registration Rights Agreement, the Subordinated Debt Agreement 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 Company has made
available to the Purchaser the unaudited consolidated pro forma balance sheet
(taking into account the Internal Restructuring (which includes the Financing
Transactions), the PBGFS Contribution, the PBGFS Distribution, the Company
Contribution and $15,000,000 of expenses in the aggregate to be reimbursed by
the Company to Pitney Bowes and the Purchaser, but excluding the Interim
Warehouse Financing) (the "Unaudited Balance Sheet") as of December 31, 2004
attached hereto as Exhibit H and statements of operations (the "Statements of
Operations"), and cash flows (the "Cash Flows") of the Company and its
consolidated Subsidiaries (taking into account the Internal Restructuring (which
includes the Financing Transactions), the PBGFS Contribution, the PBGFS
Distribution, the Company Contribution and $15,000,000 of expenses in the
aggregate to be reimbursed by the Company to Pitney Bowes and the Purchaser, but
excluding the Interim Warehouse Financing) as of, and for the year ended,
December 31, 2004 (the Statements of Operations and the 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 are consistent with and comply with GAAP as of such date
and present fairly, in all material respects, the consolidated financial
positions and the results of operation and cash flows of the Company and its
consolidated Subsidiaries (subject to the absence of footnotes and other
presentation items and of normal year end adjustments).
(b) When delivered to the Purchaser, the audited consolidated pro
forma balance sheet (the "Audited Balance Sheet") and statements of operations,
and cash flows of the Company and its consolidated Subsidiaries (taking into
account the Internal Restructuring (which includes the Financing Transactions),
the PBGFS Contribution, the PBGFS Distribution, the Company Contribution and
$15,000,000 of expenses in the aggregate to be reimbursed by the Company to
Pitney Bowes and the Purchaser, but excluding the Interim Warehouse Financing)
as of, and for the year ended, December 31, 2004 and related footnotes thereof
(the "Audited Financial Statements"), shall have been prepared in accordance
with the Company's accounting policies, principles, practices and methods
consistently applied, which policies are consistent with and comply with GAAP as
of such date and present fairly, in all material respects, the consolidated
financial position and the results of operations and cash flows of the Company
and its consolidated Subsidiaries as of the date of the Audited Financial
Statements.
SECTION 3.06. Material Adverse Change. Since December 31, 2004,
except as set forth on Schedule 3.06 or as contemplated by this Agreement and in
the Distribution
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Agreements, including the Transactions and the Internal Restructuring, (a) the
Company and its Subsidiaries have 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 its Subsidiaries own and have and, immediately following the
Distribution, will own and have, good and valid title to, or a valid leasehold
interest in, and, immediately following the 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 Unauditied Financial Statements or the Audited Financial Statements,
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).
SECTION 3.08. Intellectual Property. (a) Immediately following the
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 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 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 Pitney Bowes or conveying any other rights to
the Company in any Intellectual Property owned or controlled by Pitney Bowes.
(c) Since January 1, 2003, to the knowledge of the Company, neither
the Company nor any of its Subsidiaries has received written notification that
the conduct of the Business by the Company or any of its Subsidiaries has
infringed upon or violated the Intellectual Property rights of others in any
material respects, and to the knowledge of the Company no material Company
Intellectual Property is being used or enforced by the Company or any of its
Subsidiaries 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 one of
its Subsidiaries will, immediately following the Distribution, 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 of its Subsidiaries, 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, 2003, to the knowledge of the Company, 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 that
is owned by the Company or any of its Subsidiaries.
-28-
(f) The Company and each of its Subsidiaries have timely made all
filings, payments and ownership recordations with the appropriate foreign and
domestic agencies required to maintain in subsistence all material Intellectual
Property that is owned by the Company or any of its Subsidiaries.
(g) The Company and each of its Subsidiaries have taken all
reasonable measures to protect the secrecy and confidentiality of all material
trade secrets used or held for use in the Business.
(h) To the knowledge of the Company, the conduct of the Business
does not require any license to any patent that Pitney Bowes licenses pursuant
to any patent cross license agreement previously entered into by Pitney Bowes
with any third party licensor.
(i) The IT Systems 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.
SECTION 3.09. Employee Benefit Plans. (a) Schedule 3.09(a)(i) sets
forth a list of all Employee Benefit Plans as of the date hereof. The Company
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 or any of its
Subsidiaries, 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 Company, 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 Company 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 any rights of any Person to benefits
under any Employee Benefit Plan or agreement (including but not limited to, the
acceleration of the vesting
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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 of its Subsidiaries 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 of its
Subsidiaries is a party to any employment or collective bargaining agreement.
The Company has made available to the Purchaser complete and correct copies of
the agreements set forth on Schedule 3.10. To the knowledge of the Company, no
employee organizing efforts are pending with respect to nonunionized employees
of the Company or any of its Subsidiaries. There are no existing or, to the
knowledge of the Company, threatened labor strikes, work stoppages or slowdowns
affecting the Company or any of its Subsidiaries. There are no complaints,
charges, grievances, unfair labor practices, labor arbitration proceedings, or
claims against the Company or any of its Subsidiaries pending or to the
knowledge of the Company 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 any of its Subsidiaries, in each case, that would
have or would reasonably be expected to have a Material Adverse Effect. The
Company and its Subsidiaries are 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 of its Subsidiaries 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
disclosed on Schedule 3.11, there are no liabilities of the Company and its
Subsidiaries (taking into effect the Internal Restructuring (including the
Financing Transactions), the PBGFS Contribution, the PBGFS Distribution and the
Company Contribution) 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
Audited Balance Sheet, as applicable, (b) liabilities incurred in the ordinary
course consistent with past practice since December 31, 2004, (c) liabilities
arising under the Equity Documents and the Distribution Agreements, (d)
liabilities not required by GAAP to be recognized or disclosed on the Unaudited
Balance Sheet or the Audited Balance Sheet or the notes thereto, as applicable,
(e) liabilities to be retained or assumed by Pitney Bowes and from which the
Company shall be released, in accordance with the Distribution Agreements, (f)
Tax liabilities and (g) such other liabilities as would not have or would not
reasonably be expected to have a Material Adverse Effect.
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SECTION 3.12. Compliance with Laws. The Business, the Company and
its Subsidiaries 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,
there are no (a) outstanding Suits or Governmental Orders against or affecting
the Company or any of its Subsidiaries, (b) proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Business, the
Company or any of its Subsidiaries or (c) investigations by any Governmental
Authority that are, to the knowledge of the Company, pending or threatened
against or affecting the Business, the Company or any of its Subsidiaries that,
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 of its Subsidiaries are 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 Business of the Company, (c) no Environmental Claims
have been asserted against the Company or any of its Subsidiaries, nor does the
Company have knowledge or notice of any threatened or pending Environmental
Claim against the Company or its Subsidiaries and (d) there has been no Release
(i) at any of the properties owned or operated by the Company or its
Subsidiaries 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 as of the date hereof 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 held by such 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.
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SECTION 3.17. Taxes. The Company and its Subsidiaries have timely
filed or caused to be timely filed all material tax returns, reports, statements
and forms for Taxes ("Tax Returns") required to be filed under the Code, or
applicable state, local or foreign Tax laws and to the knowledge of the Company
such Tax Returns are true, correct and complete. To the knowledge of the
Company, all Taxes required to be paid with respect to the periods covered by
the Tax Returns have been paid in full, except for Taxes the nonpayment of which
are not, in the aggregate, material. Except as described in 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) no Tax
examination or audit of the Company or including the Company is currently being
conducted by any taxing authority which examination or audit is reasonably
expected to result in an additional Tax liability of in excess of $50,000, (c)
the Company has complied with all Applicable Laws, rules and regulations
relating to the payment and withholding of material Taxes, (d) except for the
Tax Sharing Agreement and except for tax indemnity provisions contained in the
Financing Documents, the Company is not a party to or otherwise bound by any
agreement or understanding under which the Company has obligations for the
allocation and sharing of material Taxes that will survive the Distribution
(which for the avoidance of doubt, does not include agreements or understandings
that do not relate solely or primarily to Tax Maters but that include tax
indemnities or in which payment of non-Tax items are adjusted with reference to
Taxes), (e) the Company is not required to include in income any adjustment
pursuant to Section 481(a) of the Code, (f) neither the Company nor any
Subsidiary is a party to any lease made pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, (g) other than the Specified Leases,
the Company has not entered into any transaction described in Treasury
Regulation Section 1.6011-4(b)(2), (3) or (4) and (h) there has been no
resolution of any Tax audit or examination, or any decision, judgment, decree or
order of any court, or the execution of any closing agreement, IRS Form 870 or
870-AD (or successor form), or the execution of any other agreement with any
Taxing authority that changes items of income or deductions relating to a
Financing.
SECTION 3.18. Financings. (a) Schedule 3.18(a)(i) sets forth a list
of all Large Ticket Financings, including the name of the Obligor and a
statement of cash flows related to each Large Ticket Financing. Schedule
3.18(a)(ii) sets forth a list of all Small Ticket Financings, including a
statement of cash flows related to the Small Ticket Financings in the aggregate.
Each Financing has been administered substantially in accordance with its
Financing Documents.
(b) Except as set forth on Schedule 3.18(b)(i), to the knowledge of
the Company, 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 Large Ticket Financings) is continuing (i) relating to
any payment obligations with respect to any Large Ticket Financing or (ii)
relating to any obligations other than payment obligations with respect to such
Large Ticket Financing. To the knowledge of the Company, no valid offset,
defenses or counterclaims may be asserted against the Company or its
Subsidiaries, the Purchaser or its assigns with respect to any Large Ticket
Financing and no Suit or any legal proceeding, administrative, judicial or
otherwise has been brought by or against the Company or its Subsidiaries in
connection therewith. Schedule 3.18(b)(ii) sets forth a report of payment
delinquency with respect to payment obligations of the Obligors under the Small
Ticket Financings as of the date set forth thereon. Except as set forth on
Schedule 3.18(b)(ii), to the knowledge of the Company,
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no default or event of default that has been declared by the Company as such (as
defined in the applicable Financing Documents relating to the Small Ticket
Financings) is continuing with respect to the Small Ticket Financings, which, in
the aggregate, would have or would reasonably be expected to have a Material
Adverse Effect.
(c) Each Financing Document to which the Company or one of its
Subsidiaries is a party (i) constitutes the legal, valid and binding obligation
of the Company or such Subsidiary, as applicable, and, to the knowledge of the
Company, 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 a
Subsidiary of the Company is the legal title owner of the property financed
thereunder 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 a Subsidiary of
the Company has filed all Uniform Commercial Code financing statements
(including all amendments) with respect to the Large Ticket Financings as are
necessary to create a first priority security interest in such property.
(e) In connection with each Financing, neither the Company nor its
Subsidiaries 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 of its Subsidiaries 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
Company, no Obligor is the subject of any bankruptcy or insolvency proceeding.
(h) The Company's Financing Files pertaining to each Financing are
complete in all material respects to the Company's interest in such Financing.
SECTION 3.19. Financing Policies. Schedule 3.19 sets forth a
description of the policies and practices of the Company and its Subsidiaries
used by the Company and its Subsidiaries in the origination, management and
administration of the Small Ticket Financings (the "Financing Policies"). Since
January 1, 2002, the Company and each of its Subsidiaries have utilized policies
and procedures substantially similar to the Financing Policies in the
origination, management and administration of the Small Ticket Financings.
Except as set forth on Schedule 3.19, each Small Ticket Financing has been
authorized, collateralized, guaranteed, documented and administered
substantially in accordance with the Financing Policies.
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SECTION 3.20. Contracts. (a) Schedule 3.20 sets forth the following
categories of Contracts (excluding the Financing Documents) which are material
to the Company and its Subsidiaries, taken as a whole, which solely relate to
the Business and to which the Company or any of its Subsidiaries is a party or
by which the Company, any of its Subsidiaries, 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 $1,000,000 in any
calendar year or $2,000,000 in the aggregate, and which is not terminable
on ninety (90) calendar days' or less notice or (B) any Contract which
involves the obligation for a payment to be made, or expected to be made,
to the Company in excess of $1,000,000 or pursuant to which payments have
been made to the Company during the six months prior to the date hereof in
excess of $1,000,000, 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 $1,000,000 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 $1,000,000;
(iv) any commitment of the Company to make a capital expenditure or
to purchase a capital asset of at least $1,000,000;
(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, any Subsidiary of 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 $1,000,000;
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(x) any Contract under which Company has directly or indirectly
guaranteed any liabilities in excess of $1,000,000;
(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);
(xiii) any Contract relating to any Suit or Governmental Order which
involves any unpaid liability of the Company in excess of $1,000,000;
(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 Subsidiary of the Company);
(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 (i) 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 (ii) the Tax Sharing Agreement; and
(xvii) all commitments and agreements to enter into any of the
foregoing.
For purposes of this Section 3.20(a), all references to the Company
shall include any Subsidiary of the Company unless the context otherwise
provides.
(b) Except as set forth on Schedule 3.20, all Material Contracts are
legally valid and binding obligations of the Company or a Subsidiary of the
Company, as the case may be, and, to the knowledge of the Company, 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 3.20 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
Subsidiary of the Company, as the case may be, thereunder, and there are no
defaults or breaches by other parties thereunder.
SECTION 3.21. Certain Business Practices. None of the Company, any
Subsidiary of the Company nor, to the knowledge of the Company, any of their
respective directors, officers, agents or employees (in their capacities as
such) have (a) used any funds for
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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 3.22. Insurance. To the knowledge of the Company, all
material insurance policies maintained by, or for the benefit of, the Company
and its Subsidiaries: (a) are in full force and effect, (b) are sufficient for
compliance by the Company and its Subsidiaries with all requirements of
Applicable Law, and (c) are valid and outstanding policies and enforceable
against the insurer. To the knowledge of the Company, each of the Company and
its Subsidiaries has complied in all material respects with the terms of such
policies.
SECTION 3.23. Licenses and Permits; Governmental Notices. (a)
Schedule 3.23 sets forth a list of all material Permits of or with any
Governmental Authority, which are held by the Company and its Subsidiaries, that
are necessary under Applicable Law to conduct the Business and to own and
operate their respective assets and such material 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 and its Subsidiaries. There are no proceedings pending, or, to
the knowledge of the Company, threatened, seeking the revocation, limitation or
non-renewal of any such material Permits.
(b) Since December 31, 2002, except as set forth on Schedule 3.23,
none of the Company and its Subsidiaries 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 3.24. Affiliated Transactions. Immediately following the
Distribution Date, there will be no material Contracts by and between the
Company and/or its Subsidiaries, or officers or directors of the Company (and/or
any family members of such officers or directors), on the one hand, and Pitney
Bowes and/or its Subsidiaries, or officers or directors of Pitney Bowes (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 (including the Financing Transactions), the PBGFS
Contribution, the PBGFS Distribution and the Company Contribution and survive
the Distribution in accordance with the provisions of the Separation and
Distribution Agreement.
SECTION 3.25. Vote Required. The affirmative vote of the holders of
a majority of the outstanding shares of Common Stock is the only vote of the
holders of any class or series of Company Capital Stock or Pitney Bowes Capital
Stock necessary to approve the Transactions
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contemplated hereby and approve and adopt the Restated Certificate, the Amended
Bylaws or the Certificate of Designation.
SECTION 3.26. 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 Company 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 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 Distribution
Date, the Company 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, the Tranche I Closing Date and the
Distribution Date, as applicable. Such amendments, additions or modifications
shall be specified in a written notice delivered to the Purchaser (an "Update
Notice"), which shall identify the Schedules affected by such amendments,
additions or modifications and enclose such amended Schedules. Subject to
Section 3.26(c) below, upon delivery of the Update Notice, 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 Company contained in this Agreement shall, for purposes of determining
whether any breach thereof shall have occurred, 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 purposes of this
Agreement, except as set forth in Section 3.26(c).
(c) The Purchaser shall, within thirty (30) calendar days of the
delivery of the Update Notice, have the right to terminate this Agreement
pursuant to Section 8.04(a)(ix) in connection with any breach or violation of
any representation or warranty on the part of the Company 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 7.04(a) and follows the procedure in Section
8.04(a)(ix), as a result of the information disclosed in such Update Notice. If
the Purchaser does not exercise such termination right within the thirty (30)
day-period, (i) the Purchaser shall be deemed to waive any such breach or
violation of the Agreement and to waive its right to terminate this Agreement
with respect thereto and (ii) the Update Notice shall be deemed to cure any such
breach or violation for purposes of this Agreement.
ARTICLE IV
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Company on the
date hereof, on the Tranche I Closing Date and on the Distribution Date, as
follows:
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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 after the Tranche I Closing.
The Purchaser has the power to execute, deliver and perform its obligations
under each of the Equity Documents, the Equity Commitment Letter, the
Registration Rights Agreement and the Subordinated Debt Agreement and has taken
all necessary action to authorize the execution, delivery and performance by it
of such Equity Documents, the Equity Commitment Letter, the Registration Rights
Agreement and the Subordinated Debt Agreement 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 and the Equity Commitment Letter and,
on the Tranche I Closing Date, the Purchaser will have duly executed and
delivered the Escrow Agreement and the Registration Rights Agreement to be
executed and delivered by it on or prior to the Tranche I Closing Date and, on
the Distribution Date, the Purchaser will have duly executed and delivered the
Subordinated Debt Agreement. This Agreement constitutes, and the Equity
Commitment Letter, the Escrow Agreement, the Registration Rights Agreement and
the Subordinated Debt Agreement to which the Purchaser is a party, when executed
and delivered by the Purchaser, will constitute, 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. Private Placement. (a) The Purchaser understands that
(i) the offering and sale of the Shares by the Company is intended to be exempt
from registration under the Securities Act pursuant to Section 4(2) thereof and
(ii) there is no existing public or other market for the Shares.
(b) The Purchaser (i) is a "qualified institutional buyer", as such
term is defined in Rule 144A under the Securities Act or (ii) is an "accredited
investor", as such term is defined in Rule 501(a) of Regulation D under the
Securities Act.
(c) The Purchaser is acquiring the Shares to be acquired hereunder
for its own account (or for accounts over which it exercises investment
authority), for investment and not with a view to the resale or distribution
thereof in violation of any securities law.
(d) The Purchaser understands that the Shares will be issued in a
transaction exempt from the registration or qualification requirements of the
Securities Act and applicable state securities laws, and that such Shares must
be held indefinitely unless a subsequent disposition thereof is registered or
qualified under the Securities Act and such laws or is exempt from such
registration or qualification.
(e) The Purchaser (i) has been furnished with or has had full access
to all the information that it considers necessary or appropriate to make an
informed investment decision with respect to the Shares and that it has
requested from the Company, (ii) has had an opportunity to discuss with
management of the Company the intended Business and financial affairs of the
Company and to obtain information (to the extent the Company possessed such
information
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or could acquire it without unreasonable effort or expense) necessary to verify
any information furnished to it or to which it had access, (iii) can bear the
economic risk of (x) an investment in the Shares indefinitely and (y) a total
loss in respect of such investment and (iv) has such knowledge and experience in
business and financial matters so as to enable it to understand and evaluate the
risks of and form an investment decision with respect to its investment in the
Shares and to protect its own interest in connection with such investment.
SECTION 4.03. No Violation; Consents. (a) Subject to the
governmental filings and other matters referred to in Section 4.03(b), the
execution, delivery and performance by the Purchaser of each of the Equity
Documents, the Equity Commitment Letter, the Registration Rights Agreement and
the Subordinated Debt Agreement 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 the Equity Documents, the Equity Commitment Letter, the
Registration Rights Agreement and the Subordinated Debt Agreement. The
execution, delivery and performance by the Purchaser of each of the Equity
Documents, the Equity Commitment Letter, the Registration Rights Agreement and
the Subordinated Debt Agreement 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) Except for applicable filings, if any, with the Commission
pursuant to the Exchange Act, 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 the Equity Documents, the Equity Commitment Letter, the Registration
Rights Agreement, the Subordinated Debt Agreement 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 the Equity
Documents, the Equity Commitment Letter, the Registration Rights Agreement and
the Subordinated Debt Agreement.
SECTION 4.04. 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 the Equity Documents and the Subordinated Debt Agreement.
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SECTION 4.05. Financing. The Purchaser has on call and will have on
the Tranche I Closing Date available funds sufficient to (a) consummate the
purchase of the Tranche I Stock to be purchased by it on the Tranche I Closing
Date and (b) consummate the purchase of the Tranche II Stock to be purchased by
it on the Tranche II Closing Date.
SECTION 4.06. Ownership of Shares. The Purchaser does not, and its
Affiliates do not, own, directly or indirectly, or have any option or right to
acquire, any securities of Pitney Bowes or the Company other than the Shares
being purchased by the Purchaser hereunder.
SECTION 4.07. Future Acquisitions. The Purchaser has no plan or
intention to acquire or to participate in a plan or arrangement to acquire,
directly or indirectly, 50% or more of the total voting power or total fair
market value (as such terms are interpreted for purposes of Section 355 of the
Code) of all shares of outstanding Capital Stock of the Company.
SECTION 4.08. Future Dispositions. The Purchaser has no plan or
intention to sell or transfer or to participate in a plan or arrangement to sell
or transfer any Capital Stock of the Company to a party participating in a plan
or arrangement to acquire, directly or indirectly, 50% or more of the total
voting power or total fair market value (as such terms are interpreted for
purposes of Section 355 of the Code) of all shares of outstanding Capital Stock
of the Company.
SECTION 4.09. Conversion of the Non-Voting Preferred Stock. The
Purchaser has no plan, intention or formal or informal understanding to convert
the Non-Voting Preferred Stock it will purchase in accordance with the terms and
conditions of this Agreement.
SECTION 4.10. HSR. The "ultimate parent entity" (as defined in the
HSR Act) of the Purchaser will not have total assets or annual net sales of
$10,700,000 or more (as calculated in accordance with the HSR Act) as of the
Tranche I Closing Date.
SECTION 4.11. Representations and Warranties. Except for the
representations and warranties expressly set forth in this Agreement, the
Company 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 Company or any of its
Representatives, whether on behalf of the Purchaser or such other Persons.
ARTICLE V
Covenants of the Company
SECTION 5.01. Compliance with Conditions; Commercially Reasonable
Efforts. The Company shall use all commercially reasonable efforts to cause all
conditions precedent to the obligations of the Company and the Purchaser to be
satisfied. Upon the terms and subject to the conditions of this Agreement, the
Company 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 Tranche I Issuance and the Tranche
II Issuance in accordance
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with the terms of the Equity Documents, the Restated Certificate, the
Certificate of Designation and the Amended Bylaws.
SECTION 5.02. Access to Books and Records
(a) The Company shall (i) afford to the Purchaser and its
Representatives reasonable access during normal business hours throughout the
period prior to the Tranche II Closing Date (or the earlier termination of this
Agreement pursuant to Section 8.04) to the properties, books, Contracts and
records related to the Business 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 and its Subsidiaries 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, (ii) provide to
the Purchaser copies of the execution copies of the Distribution Agreements
(other than the Tax Sharing Agreement) and the Rights Agreement concurrently
with the execution thereof and in no event later than five (5) Business Days
before the Tranche I Closing Date and (iii) shall provide to the Purchaser
copies of the execution copies of the Tax Sharing Agreement on the Distribution
Date.
(b) All requests pursuant to this Section 5.02 shall be made to the
Persons designated from time to time by the Company 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 Company (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 or the consummation of
the Transactions by the Company 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 and its Subsidiaries 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. Certificate of Incorporation, Certification of
Designation and Bylaws. On or prior to the Tranche I Closing Date, the Company
shall (a) file the Amended and Restated Certificate of Incorporation
substantially in the form attached hereto as Exhibit I with the Secretary of
State of the State of Delaware pursuant to Sections 242 and 245 of the Delaware
General Corporation Law (the "Restated Certificate"), (b) adopt the Amended
Bylaws substantially in the form attached hereto as Exhibit J (the "Amended
Bylaws") and (c) file the Certificate of Designation and the certificate of
designation to be filed in accordance with the Rights Agreement with the
Secretary of State of the State of Delaware, each pursuant to Section 151(g) of
the Delaware General Corporation Law.
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SECTION 5.05. Use of Proceeds. The Company shall use the proceeds
from the issuance of the Shares for payment of expenses incurred in connection
with the Transactions, the PBGFS Distribution and the Distribution and for
working capital and general corporate purposes. The Company shall hold the
proceeds from the Tranche I Issuance until the Distribution is consummated in
accordance with the terms of the Separation and Distribution Agreement.
SECTION 5.06. Board of Directors. (a) On the Tranche I Closing Date,
each of the directors of the Company (other than Keith Williamson or his duly
appointed successor who shall be serving as a member of the Board of Directors
of the Company at such time) shall resign from the Board of Directors of the
Company and each of the individuals designated on Schedule 5.06 as directors of
the Board of Directors of the Company shall be appointed or elected (subject to
reasonably satisfactory background checks and the individuals' willingness to
serve) to the applicable class of the Board of Directors of the Company as
specified on Schedule 5.06 (the "Initial Directors"). The term for each of the
Initial Directors shall be as provided for in the Restated Certificate and the
Amended Bylaws.
(b) On the Distribution Date, the Board of Directors of the Company
shall be comprised of seven (7) directors.
(c) Upon the Tranche II Stock Issuance, the Purchaser, as holder of
the Tranche II Stock, shall have the right to designate and elect one (1)
director to Class III of the Board of Directors of the Company in accordance
with the terms and conditions of the Certificate of Designation (the "Preferred
Director").
SECTION 5.07. No Solicitation of Other Offers. (a) The Company 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 December 24, 2004
with respect to any Acquisition Proposal.
(b) The Company and its Subsidiaries shall not take, and shall use
commercially reasonable efforts to cause their respective Representatives and
Affiliates (including Pitney Bowes) 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 Company 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) either
the Board of Directors of the Company or the Board of Directors of Pitney Bowes
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 Company shall have provided
(1) prompt notice to the Purchaser of its intent or Pitney Bowes, 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 5.07 or any
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other provision of this Agreement shall prohibit the Company, its
Representatives or the Board of Directors of the Company or the Board of
Directors of Pitney Bowes from making any disclosure to the stockholders of the
Company and Pitney Bowes as, in the good faith judgment of the Board of
Directors of the Company or the Board of Directors of Pitney Bowes is required
under Applicable Law or that the failure to make such disclosure is reasonably
likely to cause the Board of Directors of the Company or the Board of Directors
of Pitney Bowes to violate its respective fiduciary duties.
(c) The Board of Directors of the Company or the Board of Directors
of Pitney Bowes (or any committee thereof) shall not (i) approve or recommend,
or propose to approve or recommend, any Acquisition Proposal or (ii) cause the
Company 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 Company or the
Board of Directors of Pitney Bowes may recommend to their respective
stockholders an Acquisition Proposal if (x) the Board of Directors of the
Company or the Board of Directors of Pitney Bowes, has received an Acquisition
Proposal that the Board of Directors of the Company or the Board of Directors of
Pitney Bowes has determined in good faith, is a Superior Proposal and has
complied with its obligations under this Section 5.07 and (y) the Company has
notified the Purchaser in writing of the terms of the Superior Proposal and of
its or Pitney Bowes, 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 5.07(c), the
Company 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 5.07). The Company
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.
(e) Nothing in this Agreement shall prohibit or restrict the Board
of Directors of the Company or the Board of Directors of Pitney Bowes from
amending, modifying or withdrawing from the Transactions or this Agreement to
the extent that the Board of Directors of the Company or the Board of Directors
of Pitney Bowes determines in good faith that such action is necessary in order
for the Board of Directors of the Company or the Board of Directors of Pitney
Bowes to comply with their respective fiduciary duties to the Company's
stockholders or Pitney Bowes's stockholders, respectively.
SECTION 5.08. Confidentiality; Information. (a) The Company 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
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the Company 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 Company, its Subsidiaries and Pitney
Bowes 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 Company, 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 Company lists securities and (iii) to the extent
disclosure is requested by any Governmental Authority having jurisdiction over
the Company, any of its Subsidiaries or any Company Representative. The Company
shall use all commercially reasonable efforts to cause its Representatives and
its Subsidiaries' Representatives to comply with the foregoing requirement.
(b) Section 5.08(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 Company or its Subsidiaries or any
of their respective Representatives, (ii) is or becomes known or available to
the Company or its Subsidiaries on a non-confidential basis from a source (other
than the Purchaser or its Representatives) that, to the knowledge of the
Company, is not under a legal obligation to disclose such information or (iii)
was independently developed by the Company 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 Company or its Subsidiaries prior to such disclosure by
the Purchaser or its Representatives.
(c) In the event that the Company 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 5.08(a), the Company 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 Company
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.
(d) The Company acknowledges that the Purchaser may not have an
adequate remedy at law and may be irreparably harmed in the event that any of
the provisions of the Confidentiality Agreement or this Section 5.08 were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, the Purchaser shall be entitled to seek equitable relief, including
injunction and specific performance, in the event the Company or any of its
Subsidiaries or any of their respective Representatives breach or threaten to
breach any of the provisions of the Confidentiality Agreement or this Section
5.08, without the necessity of posting any bond or proving special damages or
irreparable injury. Such remedies shall not be deemed to be the exclusive
remedies for a breach or threatened breach of the Confidentiality Agreement or
this Section 5.08, but shall be in addition to all other remedies available at
law or equity.
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SECTION 5.09. Registration Rights Agreement and Subordinated Debt
Agreement. The Company shall enter into the Registration Rights Agreement on or
prior to the Tranche I Closing Date and the Subordinated Debt Agreement on the
Distribution Date. The Company shall have the right, at the Company's sole
discretion, to make any amendment, additions and modifications to the
Subordinated Debt Agreement as requested by lenders of the Corporation during
negotiations of the Financing Transactions with such lenders; provided, however,
that if any such amendments, additions or modifications shall, directly or
indirectly, or individually or in the aggregate, adversely affect the rights,
powers or financial interests of the Purchaser, the Company shall not make any
such amendments, additions and modifications without the prior written consent
of the Purchaser, which such consent shall not be unreasonably withheld, delayed
or conditioned; provided, further, however, that the Company shall not make any
amendments or modifications to Section 7.2 of the Subordinated Debt Agreement
without the prior written consent of the Purchaser, which such consent may be
withheld in Purchaser's sole and absolute discretion.
SECTION 5.10. Escrow Agreement. The Company shall enter into the
Escrow Agreement prior to the Tranche I Closing Date. The Company shall have the
right, at the Company's sole discretion, to make any such amendments, additions
and modifications to the Escrow Agreement as requested by the Escrow Agent;
provided, however, that if any such amendments, additions or modifications
shall, directly or indirectly, or individually or in the aggregate, adversely
affect the rights, powers or financial interests of the Purchaser, the Company
shall not make any such amendments, additions and modifications without the
prior written consent of the Purchaser, which such consent may be withheld in
Purchaser's sole and absolute discretion.
SECTION 5.11. The Distribution Agreements. (a) Prior to the Tranche
I Closing Date, the Company shall enter into (i) the Separation and Distribution
Agreement in substantially the same form of agreement attached hereto as Exhibit
F and (ii) the Employment Benefits Agreement, the Intellectual Property
Agreement and the Transition Services Agreement, in each case, on substantially
the same terms and conditions set forth in their respective Distribution Term
Sheet. On the Distribution Date, the Company shall enter into the Tax Sharing
Agreement in substantially the same form of agreement attached hereto as Exhibit
H.
(b) The Company shall not materially alter, amend or modify any of
the Distribution Term Sheets, or any of the Distribution Agreements without the
prior written consent of the Purchaser, which such consent shall not be
unreasonably withheld, delayed or conditioned; provided, however, that if any
such alteration, amendment or modification shall, directly or indirectly, or
individually or in the aggregate, adversely affect the rights, powers or
financial interests of the Purchaser, the Purchaser may withhold its consent in
its complete and absolute discretion.
(c) Notwithstanding the foregoing, nothing in this Section 5.11 or
any other provision of this Agreement shall prohibit the Company from, at any
time prior to the Tranche I 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 if any such alteration, amendment or modification shall, directly
or indirectly, or individually or in
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the aggregate, adversely affect the rights, powers or financial interests of the
Purchaser, such alteration, amendment or modification shall not occur without
the prior written consent of the Purchaser, which such consent shall not be
unreasonably withheld, delayed or conditioned.
SECTION 5.12. Rights Agreement. The Company shall have the right, at
the Company's sole discretion, to make any such amendments, additions and
modifications to the Rights Agreement as requested by the rights agent;
provided, however, that if any such amendments, additions or modifications
shall, directly or indirectly, or individually or in the aggregate, adversely
affect the rights, powers or financial interests of the Purchaser, the Company
shall not make any such amendments, additions and modifications without the
prior written consent of the Purchaser, which such consent may be withheld in
Purchaser's sole and absolute discretion.
SECTION 5.13. Reservation of Shares. Except as otherwise provided
herein, the Company shall (a) cause to be authorized and reserve and keep
available at all times during which any of the Shares remain outstanding, free
from preemptive rights, out of its treasury stock or authorized but unissued
shares of Capital Stock, or both, solely for the purpose of effecting the
conversion of the Non-Voting Preferred Stock pursuant to the terms of the
Certificate of Designation sufficient shares of Common Stock (including any
related rights issuable in respect thereof pursuant to the Rights Agreement) to
provide for the issuance of the maximum number of shares issuable upon
conversion of outstanding shares of the Non-Voting Preferred Stock and (b) issue
and cause the transfer agent to deliver such shares of Common Stock (including
any related rights issuable in respect thereof pursuant to the Rights Agreement)
as required upon conversion of the Non-Voting Preferred Stock, and take all
actions necessary to ensure that all such shares will, when issued and paid for
pursuant to the conversion of the Non-Voting Preferred Stock, be duly and
validly issued, fully paid and nonassessable.
SECTION 5.14. Listing of Shares. The Company shall use all
commercially reasonable efforts to cause the Tranche I Shares and the shares of
Common Stock issuable upon conversion of the Non-Voting Preferred Stock to be
listed or otherwise eligible for trading on the New York Stock Exchange or other
United States national securities exchanges or quoted on NASDAQ; provided,
however, the Company shall not seek to list the Tranche I Shares and the shares
of Common Stock issuable upon conversion of the Non-Voting Preferred Stock on a
United States national securities exchange other than the New York Stock
Exchange or quote such shares on NASDAQ without prior written consent of the
Purchaser, which such consent shall not be unreasonably withheld, delayed or
conditioned.
SECTION 5.15. Preemptive Rights. (a) So long as the Purchaser and
the Permitted Transferees own a Qualifying Ownership Interest, if at any time on
or prior to the second anniversary of the Distribution Date, the Company makes a
Qualified Equity Offering, the Purchaser and the Permitted Transferees who own
the securities constituting the Qualifying Ownership Interest (the "Eligible
Purchasers") shall be afforded the opportunity to acquire for the same price
(net of any underwriting discounts or sales commissions) and on the same terms
as such securities are proposed to be offered to others, in the aggregate, up to
the amount of New Stock that, if purchased by all the Eligible Purchasers, would
result in the Purchaser's ownership interest in the Company after giving pro
forma effect to the sale of New Stock (and assuming conversion of the Non-Voting
Preferred Stock into Common Stock after any applicable anti-
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dilution adjustments) being equal to the Purchaser's ownership interest
(including conversion of the Non-Voting Preferred Stock into Common Stock)
before giving effect to such sale of New Stock. The amount of New Stock to be
made available to the Eligible Purchasers calculated in accordance with the
preceding sentence is referred to herein as the "Designated Stock". The Eligible
Purchasers may allocate among themselves the aggregate amount of Designated
Stock made available to them for purchase pursuant to this Section 5.15.
(b) (i) So long as the Purchaser and the Permitted Transferees own a
Qualifying Ownership Interest if at any time on or prior to the second
anniversary of the Distribution Date, the Company proposes to make a Qualified
Equity Offering that is an underwritten public offering or a private offering
made to financial institutions for resale pursuant to Rule 144A, no later than
five (5) Business Days after the initial filing of a registration statement with
the Commission with respect to such underwritten public offering or the
commencement of such Rule 144A offering, the Company shall give the Eligible
Purchasers written notice of its intention (including in the case of a
registered public offering, a copy of the prospectus contained in the
registration statement filed in respect of such offering) describing, to the
extent possible, the anticipated amount of securities, price, timing and other
terms of such offering. Each Eligible Purchaser shall have five (5) Business
Days from the date of receipt of any such notice to notify the Company in
writing that it wishes to be offered the opportunity to exercise its preemptive
purchase rights. Such notice shall constitute a non-binding indication of
interest of the Eligible Purchaser to exercise its preemptive rights. The
failure to respond during such five (5) Business Day period shall constitute a
waiver of the preemptive rights in respect of such offering.
(ii) If any Eligible Purchaser indicates an interest in
participating in such underwritten public offering or Rule l44A offering,
the Company shall offer the Eligible Purchasers who have indicated an
interest in participating in such offering, if such underwritten offering
or Rule l44A offering is consummated, the Designated Stock (as adjusted to
reflect the actual size of such offering when priced) on the same terms as
the New Stock is offered to the underwriters. Each Eligible Purchaser
exercising its preemptive rights shall enter into a binding commitment to
purchase the Designated Stock to be acquired contemporaneously with the
execution of any underwriting agreement or purchase agreement entered into
by and between the Company and the underwriters of such underwritten
public offering or Rule l44A offering, and the failure to enter into such
an agreement at or prior to such time shall constitute a waiver of the
preemptive rights in respect of such offering. Any offers and sales
pursuant to this Section 5.15 in the context of a registered public
offering shall be conditioned on representations and warranties of each
Eligible Purchaser in form and substance reasonably satisfactory to the
Company regarding such Eligible Purchaser's status as the type of offeree
to whom a private sale can be made concurrently with a registered public
offering in compliance with applicable securities laws. If an Eligible
Purchaser elects not to or fails to consummate any purchase, the Company
shall thereafter be entitled for a period of ninety (90) calendar days to
sell or enter into an agreement to sell the Designated Stock not purchased
at a price and upon terms no more favorable to the purchaser of such
securities than were provided to the those offered to the Eligible
Purchaser.
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(c) (i) So long as the Purchaser and the Permitted Transferees own a
Qualifying Ownership Interest if at any time on or prior to the second
anniversary of the Distribution Date, the Company proposes to make a Qualified
Equity Offering that it is not an underwritten public offering or Rule 144A
offering (a "Private Placement"), the Company shall give the Eligible Purchasers
written notice of its intention, describing, to the extent possible, the
anticipated amount of securities, price and other terms upon which the Company
proposes to offer the same. Each Eligible Purchaser shall have five (5) Business
Days from the date of receipt of any such notice to notify the Company in
writing that it intends to exercise such preemptive purchase rights and as to
the amount of Designated Stock the Purchaser desires to purchase, up to the
maximum amount calculated pursuant to Section 5.15(a). Such notice shall
constitute a binding agreement of such Eligible Purchaser to purchase the amount
of Designated Stock so specified (or a proportionally lesser amount if the
amount of New Stock to be offered in such Private Placement is subsequently
reduced) upon the price and other terms set forth in the Company's notice to
Eligible Purchasers. The failure to respond during the five (5) Business Day
period shall constitute a waiver of the preemptive rights in respect of such
offering.
(ii) If an Eligible Purchaser exercises its preemptive purchase
rights in respect of a Private Placement, the closing of the purchase of
the New Stock with respect to which such right has been exercised shall
take place within thirty (30) calendar days after the giving of notice of
such exercise, which period of time shall be extended for a maximum of one
hundred thirty-five (135) calendar days in order to comply with Applicable
Laws and regulations; provided, however, that (i) such closing shall be
conditioned on consummation of the closing of the sale of shares of New
Stock in the transaction giving rise to the preemptive rights and (ii) the
actual amount of Designated Stock to be sold to such Eligible Purchaser
shall be reduced if the aggregate number of shares of New Stock sold in
the transaction giving rise to the preemptive rights is reduced and, at
the option of such Eligible Purchaser, may be proportionally increased if
the aggregate number of shares of New Stock sold in such transaction is
increased. Each of the Company and each Eligible Purchaser agree to use
its commercially reasonable efforts to secure any regulatory approvals or
other consents, and to comply with any law or regulation necessary in
connection with the offer, sale and purchase of, such New Stock.
(iii) In the event an Eligible Purchaser fails to exercise its
preemptive purchase rights provided in respect of a Private Placement
within said five (5) Business Day period or, if so exercised, such
Eligible Purchaser does not consummate such purchase, the Company shall
thereafter be entitled during the period of ninety (90) calendar days
following the conclusion of the applicable period to sell or enter into an
agreement (pursuant to which the sale of the New Stock covered thereby
shall be consummated, if at all, within thirty (30) calendar days from the
date of such agreement) to sell the Designated Stock not purchased
pursuant to this Section 5.15, at a price and upon terms no more favorable
to the purchaser of such securities than were specified in the Company's
notice to the Eligible Purchasers. In the event the Company has not sold
the New Stock or entered into an agreement to sell the New Stock within
said ninety (90)-day period, the Company shall not thereafter offer, issue
or sell such Designated Stock without first offering such securities to
the Eligible Purchasers in the manner provided above.
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(d) The Eligible Purchasers shall not have any rights to participate
in the negotiation of the proposed terms of any Private Placement and shall be
passive investors with respect to such Private Placement; provided, that they
shall have the same economic rights (including preemptive rights and rights
relating to closing conditions and indemnification, if any) as to the other
investors in such Private Placement; provided, however, that unless agreed to by
the Company and the lead purchaser in such Private Placement, the Eligible
Purchaser shall not have the corporate governance or other rights granted to the
other investors in such Private Placement.
(e) Subject to Sections 6.03 and 6.04, if registration rights are
granted to the investors in any Private Placement, the Company shall provide
registration rights to the Eligible Purchasers that exercised their preemptive
rights on a pari passu basis with such other investors in such Private
Placement. In all other instances, the Company will provide (subject to Sections
6.03 and 6.04) for the registration, on terms consistent with the Registration
Rights Agreement, for any shares of Common Stock acquired (or issuable upon
conversion, exercise or exchange of any other security acquired) within six
months after (i) the closing of the applicable acquisition (with respect to any
Common Stock acquired) or (ii) the earliest date on which such other securities
can be converted, exercised or exchanged for Common Stock (with respect to any
other security acquired).
(f) The Company and the Eligible Purchasers shall cooperate in good
faith to facilitate the exercise of the Eligible Purchasers' preemptive rights
in a manner that does not jeopardize the timing, marketing or execution of such
offering.
SECTION 5.16. Conduct of Business. During the period from the date
hereof to the Tranche II Closing Date (unless earlier terminated in accordance
with Section 8.04), the Company shall, and shall cause each of its Subsidiaries
to (a) conduct the Business in the ordinary course of business in a manner
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 Term
Sheets, the Distribution Agreements, the Transactions or the Internal
Restructuring, during the period from the date hereof to the Tranche I Closing
(unless earlier terminated in accordance with Section 8.04), the Company shall
not, and shall cause each of its Subsidiaries not to take any of the following
actions 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 (other than as a result
of a stock split of the Common Stock in connection with the Transactions or to
authorize additional shares to effect a capital contribution as permitted
hereunder), bylaws or other similar corporate governance instrument of the
Company or any of its Subsidiaries, or subdivide or reclassify in any way any of
its Capital Stock or change or agree to change in any manner the rights of its
outstanding Capital Stock (other than a stock split of the Common Stock in
connection with the Transactions or to authorize additional shares to effect a
capital contribution as permitted hereunder);
(b) declare or pay any dividend or make any other distribution
whether or not upon or in respect of any of its Capital Stock or other equity
interests of the Company in excess
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of $438,000,000 in the aggregate; provided, that the aggregate amount of all
dividend payments or cash distributions by the Company to Pitney Bowes shall
reduce (on a dollar-for-dollar basis) the aggregate amount of net proceeds the
Company is required to raise in connection with the Financing Transactions as
contemplated herein and in the Separation and Distribution Agreement.
(c) redeem, purchase or otherwise acquire any of the Capital Stock
or other equity interests of any Person;
(d) issue or sell any shares of Capital Stock or other equity
interests of the Company or any of its Subsidiaries, or securities convertible
into or exchangeable for, or options, warrants or rights to purchase or
subscribe to, such shares or equity interests other than issuances of shares of
Common Stock to Pitney Bowes or any of its wholly-owned Subsidiaries in
connection with any capital contributions made by Pitney Bowes or any of its
wholly-owned Subsidiaries to the Company;
(e) adopt or amend any collective bargaining agreement that is a
Material Contract other than in the ordinary course of business consistent with
past practice;
(f) adopt a plan of liquidation or resolutions providing for the
liquidation, dissolution, merger, consolidation or other reorganization of the
Company or any Subsidiary of the Company having assets or liabilities in excess
of $50,000;
(g) grant to any employee of the Business any material increase in
compensation or benefits; provided, however, that an increase of ten percent
(10.0%) or less in compensation or benefits shall not be considered a material
increase for purposes of this Section 5.16(g) if such increases shall not result
in an aggregate of a ten percent (10.0%) increase in compensation or benefits of
all employees of the Business;
(h) 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 $1,000,0000;
(i) make any loan or advance to its officers, directors, employees,
consultants, agents or equity 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;
(j) permit, allow or suffer any of assets of the Business to become
subjected to any Lien, other than Permitted Liens;
(k) make any change in any method of accounting or accounting
practice or policy other than those required by Applicable Law or by GAAP;
(l) 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;
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(m) make or incur any capital expenditure that in the aggregate
exceeds $1,000,000;
(n) enter into, materially modify or terminate any lease of Real
Property other than in the ordinary course of business consistent with past
practice;
(o) enter into any (i) employment or consulting Contract other than
in the ordinary course of business consistent with past practice or (ii) any
other Contract either involving consideration in excess of $1,000,000 under each
such Contract or $2,000,000 under such Contracts in the aggregate;
(p) accelerate, terminate, materially modify or cancel any Contract
involving consideration in excess of $1,000,000 under each such Contract or
$2,000,000 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, Pitney Bowes or any of its Affiliates other than in the ordinary
course of business consistent with past practice;
(s) sell, lease, distribute or otherwise dispose of any material
assets of the Business that in the aggregate exceeds $1,000,000;
(t) (i) make or change any Tax election or adopt or change any Tax
accounting method that, in each case, applies solely to and only affects the
Company or (ii) settle any Tax claim or assessment or surrender any right to
claim a Tax refund or credit, in each case, with respect to any tax examination
or audit of the Company or including the Company that is reasonably expected to
result in an additional Tax liability in excess of $1,000,000 and that is not
listed on Schedule 3.17 that, in the case of either clause (i) or (ii), would
materially increase the post-Distribution Tax liability of the Company or any of
its Subsidiaries after giving effect to the provisions of the Tax Sharing
Agreement;
(u) originate or service any Financing other than in accordance with
the Financing Policies or in the ordinary course of business consistent with
past practice;
(v) 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;
(w) 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
(x) agree, whether or not in writing, to do any of the foregoing.
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SECTION 5.17. Registration Statement; Information Statement or
Prospectus. (a) As promptly as practicable after the execution and delivery of
this Agreement, the Company shall:
(i) prepare and, after consultation with and review by the Purchaser
and its outside counsel (and after approval by the Purchaser of the
information in the Registration Statement that specifically relates to the
Purchaser or its Affiliates), file with the Commission the Registration
Statement relating to the Distribution, the Transactions and this
Agreement and use its commercially reasonable efforts (A) to obtain and
furnish the information required by the Commission to be included in the
Registration Statement after consultation with and review by the Purchaser
(and after approval by the Purchaser of the information in the
Registration Statement that specifically relates to the Purchaser or its
Affiliates) and (B) to respond promptly to any comments made by the
Commission with respect to the Registration Statement and promptly after
the Company is informed by the Commission or its outside nationally
recognized legal counsel (which may be its current outside legal counsel)
that it may do so, cause the Information Statement or Prospectus, as
applicable, to be mailed to Pitney Bowes's stockholders and, if necessary,
after the Information Statement or Prospectus, as applicable, shall have
been so mailed, promptly circulate amended or supplemental material;
provided, that no such amendment or supplemental material will be mailed
by the Company without consultation with and review by the Purchaser and
its outside counsel (and after approval by the Purchaser of the
information in the Registration Statement that specifically relates to the
Purchaser or its Affiliates); provided, however, that if the Purchaser has
not provided a response and/or comments to the Company (or a notice of
disapproval with respect to the information in the Registration Statement
that specifically relates to the Purchaser or its Affiliates) within (A)
seven (7) Business Days with respect to the initial filing of the
Registration Statement or (B) twenty-four (24) hours with respect to any
comments or amendments to the Registration Statement or any written
response to the Commission's comments, from receipt of the Company's
notice of the information to be delivered to the Commission, then the
Purchaser shall be deemed to waive its right of consultation and approval,
as applicable, with respect to such information and the Company may take
any action with respect to such filing, comments or amendments to the
Registration Statement or such written response to the Commission's
comments that relates to such Company's notice, without such consultation
with, and review by, the Purchaser and its outside counsel and without
approval by the Purchaser, as applicable.
(ii) simultaneously with the filing of the Registration Statement
and the Information Statement or the Prospectus, as applicable, or any
amendment or supplement thereto with the Commission, the Company shall
provide the Purchaser with a copy of such Registration Statement and
Information Statement or the Prospectus, as applicable, or amendment or
supplement thereto; and
(iii) if at any time after the Information Statement or Prospectus,
as applicable, is mailed and prior to the Distribution the Company shall
become aware of the occurrence of any event that is required by Applicable
Law to be set forth in an amendment of, or a supplement to, the
Information Statement or Prospectus, as applicable, in which case, the
Company will, as soon as practicable upon learning of such event, (x)
prepare and
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mail such amendment or supplement and (y) inform the Purchaser of the
occurrence of such event.
(b) The Registration Statement will not, at the respective times it
is filed with the Commission or first published, sent or given to stockholders,
contain a false or misleading statement with respect to any material fact or
omit to state any material fact required to be stated in it or necessary in
order to make the statements in it, not misleading or necessary to correct any
statement in any earlier communication with respect to the Distribution. The
Registration Statement (including any amendments thereto) will comply as to form
and substance in all material respects with the requirements of the Securities
Act or the Exchange Act, as applicable, and the rules and regulations
promulgated under it.
(c) The Information Statement or Prospectus, as applicable, will
not, at the date mailed to Pitney Bowes' stockholders and at the time of the
Distribution, contain a false or misleading statement with respect to any
material fact or omit to state any material fact required to be stated in it or
necessary in order to make the statements in it, in light of the circumstances
under which they are made, not misleading or necessary to correct any statement
in any earlier communication with respect to the Distribution. The definitive
Information Statement or Prospectus, as applicable, will comply as to form and
substance in all material respects with the requirements of the Exchange Act or
the Securities Act, as applicable, and the rules and regulations promulgated
under it.
SECTION 5.18. Compliance with Sarbanes-Oxley Act of 2002. On or
prior to the Effective Date, the Company will be in compliance with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as
of the date thereof, and any and all applicable rules and regulations
promulgated thereunder that are effective as of the date thereof, as and when
the requirements become applicable to the Company.
SECTION 5.19. Imagistics. The Company shall use commercially
reasonable efforts to preserve the relationship of the Company with Imagistics
as established under the Operating Agreement, dated November 1, 2001, by and
between the Company and Imagistics as supplemented by the Agreement, dated as of
the same date.
SECTION 5.20. Financial Statements. The Company shall deliver to the
Purchaser the Audited Financial Statements no later than June 29, 2005.
SECTION 5.21. Monthly Management Reports. 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 Company shall provide to the Purchaser a
copy of the Company's management report for such month, which shall include (a)
for the Small Ticket Financings (excluding the Dictaphone Portfolio) a balance
sheet, an income statement, portfolio statistics, volume (new business), yield,
delinquency and write-off report for such month and (b) for the Large Ticket
Financings a balance sheet, an income statement, portfolio statistics, volume
(new business), delinquency and write-off report for such month prepared in a
manner consistent with past practice.
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SECTION 5.22. Ruling Request. The Company shall provide the
Purchaser with a copy of the Ruling Request at or prior to the time the Ruling
Request is filed with the IRS.
SECTION 5.23. Tax Elections; Tax Accounting Changes. To the extent
reasonable and practicable, the Company will consult with the Purchaser prior to
making or changing any Tax election or adopting or changing any Tax accounting
method that, in each case, does not apply solely to and only affect the Company
and would materially increase the Tax liability of the Company or any of its
Subsidiaries in respect of the first five (5) taxable periods of the Company
after the Distribution, and to the extent practicable it will make reasonable
efforts, at the request of the Purchaser, to exclude the Company and its
Subsidiaries from such action.
SECTION 5.24. 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 Taxes or material Tax Returns of the Company or its Subsidiaries.
SECTION 5.25. Financing Transactions. At such time as the Company
deems appropriate, the Company shall commence a competitive bid process to
obtain financing through certain Financing Transactions that will in the
aggregate result in net proceeds to the Company in an amount of not less than
the Net Proceeds Amount. The Purchaser's Affiliates or designees shall have the
right to bid and participate in the competitive bid process. Notwithstanding the
foregoing, the Company, the Purchaser, and Pitney Bowes shall collaborate during
the competitive bid process in the selection of the lenders who will ultimately
provide the financing contemplated herein.
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.
The Purchaser shall cooperate to cause all conditions precedent to the
obligations of the Company to be satisfied in which the Purchaser's
participation is reasonably required by the Company to satisfy such conditions
precedent. Upon the terms and subject to the conditions of this Agreement, the
Purchaser will cooperate with the Company in its efforts to take, or cause to be
taken, all action, and to make, or cause to be made, all filings necessary,
proper or advisable under Applicable Laws and all things necessary, proper or
advisable consistent with Applicable Law to consummate and make effective in the
most expeditious manner practicable the Transactions to the Purchaser in
accordance with the terms of the Equity Documents, the Registration Rights
Agreement, the Restated Certificate, the Certificate of Designation and the
Amended Bylaws.
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
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the execution, delivery and performance of the Equity Documents, the Equity
Commitment Letter, the Registration Rights Agreement and the Subordinated Debt
Agreement or the consummation of the Transactions by the Purchaser and (b) shall
diligently assist and cooperate with the Company in preparing and filing all
documents required to be submitted by the Company to any Governmental Authority
in connection with the Transactions (which assistance and cooperation shall
include timely furnishing to the Company all information concerning the
Purchaser that counsel to the Company 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. Restrictions on Transfer. (a) Subject to the
Purchaser's compliance with Section 6.06, on or prior to the second anniversary
of the Distribution Date, the Purchaser and the Permitted Transferees shall not
knowingly sell, assign, transfer, pledge, hypothecate, deposit in a voting trust
or otherwise dispose of the Shares (giving effect to the conversion of the
Non-Voting Preferred Stock into Common Stock) to any Person or group (as defined
for purposes of Rule 13d under the Exchange Act) in a single transaction or
series of related transactions.
(b) If the Purchaser is not in violation of this Section 6.03, the
restrictions set forth in Section 6.03(a) shall not apply to any transfer of the
Shares (i) pursuant to a tender offer, exchange offer or any other business
combination available to all stockholders of the Company or (ii) as part of a
distribution of such Shares to a Permitted Transferee.
SECTION 6.04. Standstill. (a) The Purchaser agrees that, on or prior
to the second anniversary of the Distribution Date, it will not and will not
permit any member of the Purchaser's Group to, in any manner, whether publicly
or otherwise, directly or indirectly (i) acquire, agree to acquire or make any
public proposal to acquire, directly or indirectly, beneficial ownership of any
voting securities or assets of the Company or any of its Subsidiaries, (ii)
enter into or publicly propose to enter into, directly or indirectly, any merger
or other business combination or similar transaction or change of control
involving the Company or any of its Subsidiaries, (iii) make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" (as such
terms are used in the proxy rules of the Commission) to vote, or seek to advise
or influence any Person with respect to the voting of, any securities of the
Company or any of its Subsidiaries, (iv) call, or seek to call, a meeting of the
Company's stockholders or initiate any stockholder proposal for action by
stockholders of the Company, (v) bring any action or otherwise act to contest
the validity of this Section 6.04 or seek a release of the restrictions
contained herein, (vi) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) with respect to any
securities of the Company or any of its Subsidiaries, (vii) other than as
provided for in Section 5.06, seek representation on the Board of Directors of
the Company, (viii) seek the removal of any directors from the Board of
Directors of the Company or a change in the size or composition of the Board of
Directors of the Company (including voting for any directors not nominated by
the Board of Directors of the Company), (ix) enter into any discussions,
negotiations, arrangements, understandings or agreements (whether written or
oral) with any other Person regarding any possible purchase or sale of any
securities or assets of the Company or any of its Subsidiaries, (x) disclose any
intention, plan or arrangement inconsistent with the foregoing, (xi) take, or
solicit, propose to or agree with any other Person to take, any similar actions
designed to influence the management or control of the
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Company or (xii) advise, assist or encourage any other Persons in connection
with any of the foregoing.
(b) Nothing in this Section 6.04 shall (i) limit any action taken by
a Preferred Director in his or her capacity as a member of the Board of
Directors of the Company, (ii) prohibit or restrict the Purchaser or any member
of the Purchaser's Group from responding to any inquiries from any stockholders
of the Company as to such Person's intention with respect to the voting of
shares of Common Stock or any other voting securities of the Company
beneficially owned by the Purchaser or any member of the Purchaser's Group so
long as such response is consistent with the terms of this Agreement, (iii)
prohibit the purchase of the Shares pursuant to Article II, (iv) prohibit or
restrict any agreement, arrangement, understanding, negotiation, discussion,
disclosure or other action exclusively involving the Purchaser's Affiliates
(other than any portfolio companies), the Purchaser, any member of the
Purchaser's Group, and any employee, officer or director thereof or (v) prohibit
any notice to the holders of a Purchaser's Group member in respect of a proposed
distribution of securities of the Company to such holders.
SECTION 6.05. 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 Company or its Representatives
confidential, and the Purchaser shall not, without the Company'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 Purchaser 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 Purchaser,
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 Purchaser, any of its Subsidiaries or any Company Representative. The
Purchaser shall use its commercially reasonable efforts to cause its
Representatives and the Preferred Director to comply with the foregoing
requirement.
(b) Section 6.05(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 Company 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 Company or its Representatives
(except pursuant to clauses (i) or (ii)) that was known to the Purchaser prior
to such disclosure by the Company 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 6.05(a), the Purchaser shall provide the
Company with prompt written notice so that the Company 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
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to be furnished and shall exercise its commercially reasonable efforts to obtain
reliable assurance that confidential treatment shall be accorded such
information.
(d) The Purchaser acknowledges that the Company may not have an
adequate remedy at law and may be irreparably harmed in the event that any of
the provisions of the Confidentiality Agreement or this Section 6.05 were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, the Company shall be entitled to seek equitable relief, including
injunction and specific performance, in the event the Purchaser or its
Representatives breach or threaten to breach any of the provisions of the
Confidentiality Agreement or this Section 6.05, without the necessity of posting
any bond or proving special damages or irreparable injury. Such remedies shall
not be deemed to be the exclusive remedies for a breach or threatened breach of
the Confidentiality Agreement or this Section 6.05, but shall be in addition to
all other remedies available at law or equity.
(e) The Purchaser shall cause the Preferred Director (if designated
prior to the Effective Date) to provide such information to the Company as may
reasonably be required in connection with the Registration Statement and the
Information Statement or Prospectus, as applicable, or any other filings with
the Commission or any other Governmental Authority in connection with the
Distribution or the Transactions.
SECTION 6.06. Compliance with Section 355 of the Code. (a) The
Purchaser shall not, and shall cause its Subsidiaries and all members of the
Purchaser's Group not to, take any action that could result in the recognition
of gain to Pitney Bowes or the Company by virtue of the PBGFS Distribution or
the Distribution failing to qualify under Section 355(a) or (c) of the Code.
(b) The Purchaser shall not, and shall cause its Subsidiaries and
all members of the Purchaser's Group not to, omit to take any action (i)
required by the Equity Documents, the Separation and Distribution Agreement, the
Tax Sharing Agreement and the Subordinated Debt Agreement or (ii) that is
requested in writing by the Company or Pitney Bowes and reasonably available to
the Purchaser that in either case could result in the recognition of gain to
Pitney Bowes or the Company by virtue of the PBGFS Distribution or the
Distribution failing to qualify under Section 355(a) or (c) of the Code.
SECTION 6.07. 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 Company 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 or the exercise of the
Preferred Director's rights as provided in this Agreement, the Restated
Certificate and the Amended Bylaws, 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 of employment (or engaging
search firms to make such solicitations) not specifically directed toward
employees of the Company 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.
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(b) 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 Company 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 or the exercise of the Preferred Director's rights as provided in
this Agreement, the Restated Certificate and the Amended Bylaws, 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 Company or any
of its Subsidiaries.
SECTION 6.08. Registration Rights Agreement and Subordinated Debt
Agreement. The Purchaser shall enter into the Registration Rights Agreement on
or prior to the Tranche I Closing Date and the Subordinated Debt Agreement on
the Distribution Date.
SECTION 6.09. Escrow Agreement. The Purchaser shall enter into the
Escrow Agreement prior to the Tranche I Closing Date.
SECTION 6.10. Warehouse Financing Agreement. Provided that Pitney
Bowes has determined that entering into a warehouse financing agreement would
not compromise in any way Pitney Bowes' ability to obtain the Private Letter
Ruling, then, upon written notice from the Company, the Purchaser shall promptly
enter into a warehouse financing agreement on terms and conditions as set forth
in the Warehouse Financing Term Sheet attached as Exhibit K hereto (the "Interim
Warehouse Financing"), but, in any event, no later than fourteen (14) calendar
days after receipt of such notice
ARTICLE VII
Conditions Precedent to Tranche I Closing, the Distribution
and Tranche II Closing
SECTION 7.01. Conditions to the Company's Obligations in Respect of
the Tranche I Closing. The obligations of the Company to issue and sell the
shares of Tranche I Stock hereunder shall be subject, at the election of the
Company, to the satisfaction or waiver, on the Tranche I 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 Tranche I
Closing Date with the same force and effect as though such representations and
warranties were made as of the Tranche I 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
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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 Tranche I Closing Date.
(c) The Purchaser shall have delivered to the Company a certificate
executed by it or on its behalf by a duly authorized representative, dated the
Tranche I 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) Each of the Closing Financial Statements and the Specified Lease
Adjustment Statement, if any, shall have been final and conclusively determined
in accordance with Section 2.05.
(f) The Private Letter Ruling shall (i) have been obtained and
Pitney Bowes, in its good faith judgment, is not exposed to material Tax risk
and (ii) not have been withdrawn, invalidated or modified (or the IRS shall not
have notified Pitney Bowes that the consummation of the PBGFS Contribution, the
PBGFS Distribution, the Company Distribution or the Distribution would not be
tax free).
(g) The Purchaser shall have entered into the Escrow Agreement and
delivered it to the Company.
(h) The Escrow Funds shall have been delivered to the Escrow Agent.
(i) Pitney Bowes and the Company shall have entered into each of the
Distribution Agreements (other than the Tax Sharing Agreement) and delivered a
copy of each of the Distribution Agreements (other than the Tax Sharing
Agreement) to the Purchaser.
(j) The Registration Statement shall have been declared effective by
the Commission.
(k) The Final Net Worth shall be no less than $200,000,000.
(l) The Purchaser shall have entered into the Registration Rights
Agreement and delivered it to the Company.
(m) The Equity Commitment Letter shall be in full force and effect.
SECTION 7.02. Conditions to the Purchaser's Obligations in Respect
of the Tranche I Closing. The obligations of the Purchaser to purchase the
shares of Tranche I Stock
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hereunder shall be subject to the satisfaction or waiver, on the Tranche I
Closing Date, of the following conditions:
(a) The representations and warranties of the Company 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 Tranche I
Closing Date with the same force and effect as though such representations and
warranties were made as of the Tranche I 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 Company 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 Tranche I Closing Date.
(c) The Company shall have delivered to the Purchaser a certificate
executed by it or on its behalf by a duly authorized representative, dated the
Tranche I 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) Each of the Closing Financial Statements and the Specified Lease
Adjustment Statement, if any, shall have been final and conclusively determined
in accordance with Section 2.05.
(f) The Final Net Worth shall be no less than $200,000,000.
(g) The Company shall have filed the Restated Certificate with the
Secretary of State of the State of Delaware.
(h) The Company shall have filed the Certificate of Designation with
the Secretary of State of the State of Delaware, which shall be declared
effective.
(i) The Company shall have entered into the Escrow Agreement and
delivered it to the Purchaser.
(j) Pitney Bowes and the Company shall have entered into each of the
Distribution Agreements (other than the Tax Sharing Agreement) and delivered a
copy of each of the Distribution Agreements (other than the Tax Sharing
Agreement) to the Purchaser.
(k) The Registration Statement shall have been declared effective by
the Commission.
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(l) The Company shall have entered into the Registration Rights
Agreement and delivered it to the Purchaser.
(m) The consents listed on Schedule 7.02(m) will have been obtained.
SECTION 7.03. Conditions to the Company's Obligations in Respect of
the Distribution. The obligations of the Company hereunder to be performed on
the Distribution Date shall be subject, at the election of the Company, to the
satisfaction or waiver at the Distribution, 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
Distribution Date with the same force and effect as though such representations
and warranties were made as of the Distribution 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
7.03(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 or prior to the Distribution Date.
(c) The Purchaser shall have delivered to the Company a certificate
executed by it or on its behalf by a duly authorized representative, dated the
Distribution Date, to the effect that each of the conditions specified in
paragraphs (a) and (b) of this Section 7.03 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) Pitney Bowes and the Company shall have entered into the Tax
Sharing Agreement and delivered a copy to the Purchaser.
(f) The Equity Commitment Letter shall be in full force and effect.
(g) The Purchaser shall have delivered to the Company an amount in
cash equal to $5,000,000, constituting full payment for the Subordinated Notes.
SECTION 7.04. Conditions to the Purchaser's Obligations in Respect
of the Distribution. The obligations of the Purchaser hereunder to be performed
on the Distribution Date shall be subject, at the election of the Purchaser, to
the satisfaction or waiver at the Distribution, of the following conditions:
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(a) The representations and warranties of the Company 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
Distribution Date with the same force and effect as though such representations
and warranties were made as of the Distribution 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
7.04(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 Company 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 Distribution Date.
(c) The Company shall have delivered to the Purchaser a certificate
executed by it or on its behalf by a duly authorized representative, dated the
Distribution Date, to the effect that each of the conditions specified in
paragraphs (a) and (b) of this Section 7.04 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) Pitney Bowes and the Company shall have entered into the Tax
Sharing Agreement and delivered a copy to the Purchaser.
(f) The Company shall have issued the Subordinated Notes to the
Purchaser or its designees in accordance with the terms and conditions of the
Subordinated Debt Agreement.
SECTION 7.05. Conditions to Each Party's Obligations in Respect of
the Tranche II Closing. The respective obligations of the Company and the
Purchaser hereunder to be performed on the Tranche II Closing Date shall be
subject to the satisfaction or waiver at the Tranche II Closing Date, of the
following conditions:
(a) 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 (other than as a result of the Purchaser not being a U.S. person)
of the Shares illegal or shall otherwise prohibit the consummation of the
Transactions.
(b) Each of the Registration Statement, the Restated Certificate and
the Certificate of Designation shall continue to be effective.
(c) The Distribution shall have been consummated in accordance with
the Separation and Distribution Agreement.
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(d) The Equity Commitment Letter shall be in full force and effect;
provided, that satisfaction or waiver at the Tranche II Closing Date of this
condition shall be at the sole election of the Company.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Survival. All representations, warranties, agreements
and covenants of the parties shall not survive and shall expire and be
terminated on the earlier of the Distribution Date or the date this Agreement is
terminated in accordance with its terms. Notwithstanding the foregoing, (i)
those agreements and covenants of the parties contained in Sections 2.01, 2.02,
2.03, 2.04, 2.05, 2.06 and 2.07, Article V, Article VI and this Article VIII and
expressly requiring performance after the Distribution Date shall survive the
Distribution Date and (ii) Sections 2.08, 8.03, 8.05, 8.06, 8.07, 8.08, 8.12,
8.13, 8.14, 8.15 and 8.17 shall survive the Distribution Date. The
Confidentiality Agreement and Section 6.07 shall survive any termination of this
Agreement.
SECTION 8.02. Legends. (a) So long as applicable, each certificate
representing any portion of the shares of Common Stock or Non-Voting Preferred
Stock shall be stamped or otherwise imprinted with a legend in the following
form (in addition to any legend required under applicable state securities
laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS AND DELIVERY TO THE ISSUER OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO IT TO THE EFFECT THAT SUCH TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THOSE LAWS."
(b) In addition, so long as applicable, each certificate
representing any portion of the shares of the Tranche I Stock and the Tranche II
Stock shall be stamped or otherwise imprinted with a legend in the following
form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A SUBSCRIPTION AGREEMENT, DATED
AS OF THE 31ST DAY OF MARCH, 2005, BY AND BETWEEN PITNEY BOWES CREDIT
CORPORATION (THE "COMPANY") AND JCC MANAGEMENT LLC AS IT MAY BE AMENDED
FROM TIME TO TIME, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE COMPANY. NO REGISTRATION OF TRANSFER OF SUCH SHARES WILL BE
MADE ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL SUCH
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RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH. ANY TRANSFER NOT IN COMPLIANCE
WITH SUCH AGREEMENT SHALL BE VOID."
The legend referred to in this paragraph (b) shall be removed after
the second anniversary date of this Agreement and at such time as such security
is transferred to a Person other than the Purchaser or a Permitted Transferee.
SECTION 8.03. 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 Company:
Pitney Bowes Credit Corporation
27 Waterview Drive
Shelton, CT 6484
Attn: Christian D. Hughes
Telephone: (203) 922-4023
Fax: (203) 922-4034
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
SECTION 8.04. Termination. (a) This Agreement may be terminated:
(i) at any time prior to the Tranche I Closing by mutual written
agreement of the Company and the Purchaser;
(ii) by either the Company or the Purchaser, if the Tranche I
Closing shall not have occurred on or prior to March 31, 2006; provided,
that the right to terminate this Agreement under this Section 8.04(a)(ii)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement was the cause of or resulted in the
failure of the Tranche I Closing to occur on or before such date;
(iii) by either the Company 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 Tranche I Closing, the Tranche II Closing, the
Distribution or the transactions contemplated by this Agreement, including
not having obtained a Private Letter Ruling or the Private Letter Ruling
is withdrawn, invalidated or modified (or the IRS shall have notified
Pitney Bowes that the consummation of the PBGFS Contribution, the PBGFS
Distribution, the Company Distribution or the Distribution would not be
tax free); provided, that the right to terminate this Agreement pursuant
to this Section 8.04(a)(iii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement was the cause of,
or resulted in, such final Order;
(iv) by the Purchaser if the Distribution shall not have occurred on
or prior to (but not after) the Business Day immediately succeeding the
Tranche I Closing Date; provided, however, that the right to terminate
this Agreement pursuant to this Section 8.04(a)(iv) shall not be available
to the Purchaser if the failure to consummate the Distribution was due to
the Purchaser's actions or omissions;
(v) by the Purchaser if the Tranche II Closing shall not have
occurred on or prior to (but not after) the third (3rd) Business Day
immediately succeeding the Distribution Date; provided, however, that the
right to terminate this Agreement pursuant to this Section 8.04(a)(v)
shall not be available to the Purchaser if the failure to consummate the
Tranche II Closing was due to the Purchaser's actions or omissions;
(vi) by the Company if a third party, including any group of
Persons, shall have made a Superior Proposal and the Company has taken any
of the actions referred to in clauses (i) or (ii) of Section 5.07(c) (but
only after complying with the requirements of clauses (x) and (y)
thereof);
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(vii) by the Purchaser if the Company shall have entered into an
agreement to effect a Superior Proposal;
(viii) by the Company 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, 7.03 or 7.05 (except for the conditions in Sections 7.01(d),
7.01(f)(ii), 7.01(j), 7.05(a) and 7.05(b), which are provided for in other
applicable provisions of this Section 8.04(a)) or (B) consummate the
Tranche II Issuance 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;
(ix) by the Purchaser upon a material breach or violation of any
representation, warranty, covenant or agreement on the part of the Company
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, 7.04 or
7.05 (except for the conditions in Sections 7.02(d), 7.02(k), 7.04(d),
7.05(a) and 7.05(b), which are provided for in other applicable provisions
of this Section 8.04(a)) or (B) consummate the Tranche II Issuance except
that, if such breach or violation is curable by the Company 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 Company continues to
use its commercially reasonable efforts to cure such breach or violation
(the "Company 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 Company Cure Period; or
(x) by the Company, if the condition set forth in Section 7.01(k) is
not satisfied.
(b) In the event this Agreement is duly terminated:
(i) by any of the parties hereto at a time when the Purchaser is
entitled to terminate this Agreement in accordance with Section
8.04(a)(ii), 8.04(a)(iii), 8.04(a)(iv) or Section 8.04(a)(v) then the
Company shall pay in cash to the Purchaser, within three (3) Business Days
after such termination, (A) such amount of actual expenses incurred by the
Purchaser in an amount not to exceed $2,000,000 if the primary reason for
termination of this Agreement in accordance with Sections 8.04(a)(ii),
8.04(a)(iii), 8.04(a)(iv), or 8.04(a)(v) is that the Private Letter Ruling
has not been obtained or has been obtained and Pitney Bowes, in its good
faith judgment, is exposed to material Tax risk or the Private Letter
Ruling has been withdrawn, invalidated or modified (or the IRS shall not
have notified Pitney Bowes that the consummation of the PBGFS
Contribution, the PBGFS Distribution, the Company Distribution or the
Distribution would not be tax free) or (B) such amount of actual expenses
incurred by the Purchaser in an amount not to exceed $4,000,000 (the
"Expense Reimbursement") in case the primary reason for
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termination of this Agreement in accordance with Section 8.04(a)(ii),
Section 8.04(a)(iii), Section 8.04(a)(iv) or Section 8.04(a)(v) is other
than the reason set forth in Section 8.04(b)(i)(A);
(ii) by (1) the Purchaser in accordance with Section 8.04(a)(vii) or
(2) the Company in accordance with Section 8.04(a)(vi), then the Company
shall pay an amount equal to the sum of the Expense Reimbursement plus
$9,000,000.00 (the "Termination Payment") in cash to the Purchaser not
later than three (3) Business Days after the execution date of such
definitive agreement to effect such Superior Proposal; or
(iii) by the Purchaser in accordance with Section 8.04(a)(ix) or by
the Company in accordance with Section 8.04(a)(x), then the Company shall
pay in cash to the Purchaser, within three (3) Business Days after such
termination the Expense Reimbursement and if within twelve (12) months
after this Agreement is terminated in accordance with Section 8.04(a)(ix)
or Section 8.04(a)(x), the Company enters into an agreement with respect
to an Acquisition Proposal that is on substantially the same terms and
conditions as the Transactions, then the Company shall pay in cash to the
Purchaser, not later than the date on which such Acquisition Proposal is
consummated the Termination Payment.
(c) In the event this Agreement is duly terminated pursuant to this
Section 8.04, the Company and the Purchaser shall each execute and deliver to
the Escrow Agent within three (3) Business Days after such termination the
Termination Instructions and Termination Certificate (as such terms are defined
in the Escrow Agreement).
SECTION 8.05. 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 8.06. 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 8.06.
SECTION 8.07. 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-
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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 8.08. Entire Agreement. The Equity Documents (including all
agreements entered into pursuant thereto and all certificates and instruments
delivered pursuant thereto) constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements, representations, understandings, negotiations and discussions
between the parties, whether oral or written, with respect to the subject matter
hereof.
SECTION 8.09. Modifications and Amendments. (a) No amendment,
modification or termination of this Agreement shall be binding upon any other
party unless executed in writing by the parties hereto intending to be bound
thereby.
(b) Notwithstanding anything herein to the contrary, the Company may
amend or modify this Agreement if it first obtains written opinions from White &
Case LLP and Schulte Roth & Zabel LLP that, in each case, specifically recite
such amendment or modification and state that White & Case LLP and Schulte Roth
& Zabel LLP, in each case, is of the opinion that such amendment or modification
is reasonably necessary to obtain the Private Letter Ruling or otherwise comply
with Section 355 of the Code or the applicable treasury regulations promulgated
thereunder; provided, however, the written opinion of Schulte Roth & Zabel LLP
shall not be required in order for the Company to amend or modify Section
5.06(b) hereof, and no such opinion shall be rendered without the renderer
having first consulted with the relevant tax authority.
SECTION 8.10. Waivers and Extensions . Subject to Section 3.26(c),
Sections 5.15(b)(i), 5.15(b)(ii), 5.15(c)(i), and Section 5.17(a)(i), 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 3.26(c), Sections 5.15(b)(i), 5.15(b)(ii), 5.15(c)(i), and
Section 5.17(a)(i), any waiver may be conditional. Subject to Section 3.26(c),
Sections 5.15(b)(i), 5.15(b)(ii), 5.15(c)(i), and Section 5.17(a)(i), 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 8.11. 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 8.12. Expenses; Brokers. Except as provided in Section
8.04(b), Section 8.07 and Section 8.12(b), all costs and expenses incurred in
connection with the Equity Documents, the Registration Rights Agreement or the
Transactions shall be paid by the party
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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) The Company shall pay to the Purchaser such amount of actual
expenses incurred by the Purchaser in connection with the Equity Documents, the
Registration Rights Agreement or the Transactions in an amount not to exceed
$7,500,000 after receipt of invoices and cancelled checks showing payments by
the Purchaser of such actual expenses, or such other documents satisfactory in
form and substance to the Company as the Purchaser furnishes evidencing such
payments.
(c) Other than the use of JPMorgan Securities Inc. by the Company
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.
(d) The parties acknowledge that each of the Expense Reimbursement
and the Termination Payment provided for in Section 8.04(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.
(e) Nothing in this Section 8.12 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 Company shall indemnify the Purchaser, and the Purchaser shall indemnify the
Company, 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 8.13. Press Releases and Public Announcements. All public
announcements or public disclosures relating to the Transactions or the Internal
Restructuring (other than the Registration Statement) shall be made only if
mutually agreed upon by the Company 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, the Company shall provide the
Purchaser 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 and (c) the Company hereby consents to the publication
by Keith Williamson, on one occasion following the Tranche II Closing, but in as
many periodicals as Keith Williamson may elect, of a customary "tombstone"
advertisement announcing the investment made pursuant to this Agreement, which
shall be subject to the Company's reasonable review.
SECTION 8.14. 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 without the prior written
consent of the other party; provided, however, that, subject to the last
sentence of this Section 8.14(a), the Purchaser may assign this Agreement and
its rights, duties and obligations hereunder to any of its Affiliates without
the prior written
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consent of the Company; provided, that such assignment to an Affiliate shall not
adversely effect, in the Company's sole discretion, the Company or the Private
Letter Ruling (including the timing of obtaining the Private Letter Ruling, the
risk involved in obtaining the Private Letter Ruling in form and substance
reasonably satisfactory to the Company and the terms and conditions of the
Private Letter Ruling). Each assignee (pursuant to the terms and conditions of
this Section 8.14) must agree in writing to be bound by the terms of this
Agreement and the Equity Commitment Letter, 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 purported
assignment or delegation of rights, duties or obligations hereunder made in
violation of Section 6.06 hereof or otherwise made in violation of this Section
8.14(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 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 8.14.
SECTION 8.15. 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 8.16. 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 8.17. Remedies; Specific Performance. Each of the Company
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 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
PITNEY BOWES CREDIT CORPORATION
By ____________________________
Name:
Title:
JCC MANAGEMENT LLC
By ____________________________
Name:
Title: