UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 30, 1998
PITNEY BOWES INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 1-3579
State of Incorporation IRS Employer Identification No.
Delaware 06-0495050
World Headquarters
Stamford, Connecticut 06926-0700
Telephone Number: (203) 356-5000
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Pitney Bowes Inc. - Form 8-K
Page 2
Item 2 - Acquisition or Disposition of Assets.
On October 30, 1998, Colonial Pacific Leasing Corporation (CPLC), a wholly owned
subsidiary of the company, transferred the operations, employees and
substantially all assets related to its broker-oriented external financing
business to General Electric Capital Corporation (GECC), a subsidiary of the
General Electric Company. The company received approximately $790 million at
closing, which approximates the book value of net assets sold or otherwise
disposed of and related transaction costs. This transaction is subject to post
closing adjustments pursuant to the terms of the purchase agreement with GECC
entered into on October 12, 1998. Proceeds from the sale will be used to
reinvest in core businesses around the world, pay down consolidated debt and
repurchase shares of the company's stock.
Item 7 - Financial Statements and Exhibits.
b. Pro forma financial information.
The required pro forma financial information was previously filed under separate
cover on Form 8-K on November 16, 1998.
c. The following exhibits are furnished in accordance with the provisions of
Item 601 of Regulation S-K:
Exhibit Description
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(2.1) Pitney Bowes Credit Corporation, Colonial Pacific Leasing
Corporation, CPLC II Inc. and General Electric Capital
Corporation - Stock Purchase Agreement dated as of October
12, 1998 (Excluding Schedules, Annexes and Exhibits thereto
- will be furnished to the Commission upon request)
(2.2) Amendment to Stock Purchase Agreement
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Pitney Bowes Inc. - Form 8-K
Page 3
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PITNEY BOWES INC.
November 19, 1998
/s/ M. L. Reichenstein
------------------------------------------
M. L. Reichenstein
Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ A. F. Henock
------------------------------------------
A. F. Henock
Vice President - Controller
and Chief Tax Counsel
(Principal Accounting Officer)
Exhibit (2.1)
PITNEY BOWES CREDIT CORPORATION,
COLONIAL PACIFIC LEASING CORPORATION,
CPLC II INC.
-and-
GENERAL ELECTRIC CAPITAL CORPORATION
STOCK PURCHASE AGREEMENT
Dated as of October 12, 1998
<PAGE>
<TABLE>
ARTICLE 1
<S> <C>
DEFINITIONS..................................................................................................... 1
ARTICLE 2
SALE AND PURCHASE OF CPLC SHARES................................................................................ 24
2.1 Agreement to Sell and Purchase................................................................ 24
2.2 Purchase Price................................................................................ 24
2.3 Closing Payment............................................................................... 24
2.4 Settlement Payment............................................................................ 24
2.5 Transfer Taxes................................................................................ 25
ARTICLE 3
CLOSING ARRANGEMENTS; CONDITIONS OF CLOSING..................................................................... 25
3.1 Closing....................................................................................... 25
3.2 Conditions for the Buyer's Benefit............................................................ 25
3.3 Conditions for the Benefit of PBCC and the Seller............................................. 27
ARTICLE 4
REPRESENTATIONS AND WARRANTIES.................................................................................. 29
4.1 Representations and Warranties of the Seller.................................................. 29
(a) Corporate Power and Qualification................................................... 29
(b) Corporate Authority................................................................. 29
(c) Valid Authorization................................................................. 29
(d) Violation of Other Instruments and No Defaults...................................... 29
(e) Notices, Reports, Filings and Consents.............................................. 30
(f) Enforceable Agreements.............................................................. 30
(g) Shares.............................................................................. 30
(h) Litigation.......................................................................... 30
(i) No Brokers.......................................................................... 31
(j) Employee Benefit Plans, etc......................................................... 31
(k) Employees and Labor................................................................. 32
(l) Compliance with Applicable Laws..................................................... 33
(m) Transferred Financing Contracts..................................................... 34
(n) Taxes............................................................................... 36
(o) Chief Executive Office.............................................................. 40
(p) Undisclosed Liabilities............................................................. 40
(q) Personal and Real Properties........................................................ 40
(r) Intellectual Property............................................................... 41
(s) Material Contracts.................................................................. 41
(t) Year 2000 Compliance................................................................ 42
(u) Insurance........................................................................... 43
(v) Absence of Certain Changes; Conduct of Business..................................... 43
(w) Tax-Exempt Public Sector Financing Contracts........................................ 44
(x) Environmental Matters............................................................... 45
(y) Financial Reports................................................................... 45
4.2 Representations and Warranties of CPLC........................................................ 46
(a) Corporate Power and Qualification................................................... 46
(b) Corporate Authority................................................................. 47
(c) Valid Authorization................................................................. 47
(d) Violation of Other Instruments and No Defaults...................................... 47
(e) Notices, Reports, Filings, Consents................................................. 47
(f) Enforceable Agreements.............................................................. 48
(g) Title to Transferred Assets; Sufficiency............................................ 48
(h) No Brokers.......................................................................... 48
(i) Employee Benefit Plans.............................................................. 48
(j) Employees and Labor................................................................. 48
(k) Authorizations...................................................................... 49
(l) Chief Executive Office.............................................................. 49
(m) Has Not Conducted Business.......................................................... 49
4.3 Representations and Warranties of PBCC........................................................ 49
(a) Corporate Power; Corporate Authority................................................ 49
(b) Valid Authorization; Notices, Reports, Filings, Consents............................ 49
(c) Violation of Other Instruments and No Defaults...................................... 50
(d) Enforceable Agreements.............................................................. 50
(e) Litigation.......................................................................... 50
(f) No Brokers.......................................................................... 50
4.4 Representations and Warranties of the Buyer................................................... 50
(a) Corporate Power; Corporate Authority................................................ 50
(b) Valid Authorization; Notices, Reports, Filings, Consents............................ 51
(c) Violation of Other Instruments and No Defaults...................................... 51
(d) Enforceable Agreements.............................................................. 51
(e) Litigation.......................................................................... 51
(f) No Brokers.......................................................................... 51
(g) Acquisition of CPLC Shares for Investment........................................... 52
ARTICLE 5
COVENANTS....................................................................................................... 52
5.1 Noncompete; Nonsolicitation................................................................... 52
5.2 Investigations; Operation of the Business..................................................... 54
5.3 338(h)(10) Election........................................................................... 56
5.4 Indemnification; Assumptions of Liability and Related Matters................................. 57
5.5 Preparation of Closing Date Balance Sheet..................................................... 66
5.6 Employees..................................................................................... 69
5.7 Credit Loss Reimbursement..................................................................... 71
5.8 Closing Backlog Schedule; Closing Date Schedule of Assets and Liabilities..................... 74
5.9 Books and Records; Resignations............................................................... 75
5.10 Further Assurances............................................................................ 75
5.11 Contribution Transaction...................................................................... 76
5.12 Payment of Brokers' or Finders' Fees.......................................................... 78
5.13 Conduct of Business........................................................................... 78
5.14 No Successor Liability........................................................................ 78
5.15 Tax Indemnification........................................................................... 78
5.16 Supplements to Schedules; Post-Signing Information............................................ 81
5.17 Name Change; Use of Trademarks................................................................ 82
5.18 Insurance; Risk of Loss....................................................................... 83
5.19 No Liquidation or Dissolution................................................................. 83
5.20 LIAS Receivables.............................................................................. 83
ARTICLE 6
TERMINATION..................................................................................................... 84
6.1 Termination of Agreement...................................................................... 84
6.2 Effect of Termination......................................................................... 85
ARTICLE 7
GENERAL......................................................................................................... 85
7.1 Interpretation................................................................................ 85
7.2 Public Announcements.......................................................................... 85
7.3 Confidentiality............................................................................... 86
7.4 Expenses...................................................................................... 86
7.5 Entire Agreement; Amendment; Waiver........................................................... 86
7.6 Invalidity of Provisions...................................................................... 86
7.7 APPLICABLE LAW................................................................................ 86
7.8 Notices....................................................................................... 87
7.9 No Assignment................................................................................. 88
7.10 Counterparts.................................................................................. 88
7.11 Waiver of Jury Trial.......................................................................... 88
7.12 No Third Party Beneficiary.................................................................... 89
7.13 Conveyancing Documents........................................................................ 89
</TABLE>
<PAGE>
THIS STOCK PURCHASE AGREEMENT is made as of October 12, 1998
among PITNEY BOWES CREDIT CORPORATION, a Delaware corporation (hereinafter
referred to as "PBCC"), COLONIAL PACIFIC LEASING CORPORATION, a Massachusetts
corporation (hereinafter referred to as the "Seller"), CPLC II INC., a Delaware
corporation (hereinafter referred to as "CPLC"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (hereinafter referred to as the "Buyer").
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the broker-sourced equipment leasing
business; and
WHEREAS, the Seller desires to contribute to CPLC all of the
Seller's right, title and interest in and to the Transferred Assets (as
hereinafter defined) subject to the Assumed Liabilities (as hereinafter defined)
in exchange for the CPLC Shares (as hereinafter defined); and
WHEREAS, the Seller desires thereafter to sell, and the Buyer desires
thereafter to purchase, the CPLC Shares;
NOW THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein, the parties agree
as follows:
ARTICLE 1
DEFINITIONS
Definitions. Capitalized terms used in this Agreement shall
have the meanings set forth below:
1.1 "Accounting Principles" means (i) the accounting
principles (including accounting methods, practices and procedures) set forth on
Schedule 5.5(a) attached hereto and (ii) the Special Adjustments; provided,
however, that the Seller, PBCC, CPLC and the Buyer acknowledge and agree that,
notwithstanding the terms of, or the results required by, any of the accounting
principles, methods, practices or procedures set forth on Schedule 5.5(a), the
Special Adjustments shall be deemed to control in the event of any conflict
between any of the accounting principles, methods, practices or procedures set
forth on Schedule 5.5(a) and any of the Special Adjustments. To the extent the
accounting principles (including accounting methods, practices or procedures)
set forth on Schedule 5.5(a) or the Special Adjustments do not specifically
address a particular matter necessary to prepare the Audited Closing Date
Balance Sheet or calculate the Gross Receivables Amount or the amount of the
Receivables Deductions, the Other Assets, the Other Liabilities or the Loss
Reserve, then the accounting principles (including accounting methods, practices
and procedures) set forth on Schedule 5.5(a) and the Special Adjustments shall
be supplemented in accordance with generally accepted accounting principles as
in effect in the United States on the Closing Date, but only to the extent
necessary to address such matter.
1.2 "Active Broker" means any Person that originated and
conveyed or referred any Financing Contract or Backlog to the Seller since
September 1, 1997.
1.3 "Affiliate" means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such Person.
1.4 "Agreement" means this Stock Purchase Agreement, including
the Annexes, Schedules and Exhibits attached hereto and made a part hereof, as
the same may be amended from time to time in accordance with the provisions
hereof, and "hereof", "hereto", "hereunder" and similar expressions mean and
refer to this Agreement and not to any particular Article, Section or
subsection, and "Article", "Section", "subsection" or "paragraph" mean and refer
to the specified Article, Section, subsection or paragraph of this Agreement.
1.5 "Allocation Schedule" shall have the meaning ascribed thereto in
subsection 5.3(b) hereof.
1.6 "Annex" means one of the several written Annexes to this
Agreement, each of which: (i) is hereby incorporated into and made a part of
this Agreement for all purposes and (ii) has been initialed on the first page
thereof by the Chairman, the Vice Chairman, the President or one of the Vice
Presidents of the Seller and an authorized representative of the Buyer.
1.7 "Arbitrator" shall have the meaning ascribed thereto in subsection
5.7(d) hereof.
1.8 "Assumed Liabilities" means (i) all liabilities and
obligations created after the Closing by, through or under CPLC or the Buyer and
relating to the Transferred Assets, the Business or the CPLC Employees (and not
relating to any action, inaction, event or circumstance arising prior to the
Closing), (ii) all liabilities and obligations of the Seller relating to
security deposits or advance rents held by the Seller pursuant to any
Transferred Financing Contract or any related Credit Enhancement, (iii) all
other liabilities, obligations or contra accounts relating to the Transferred
Assets, (iv) all liabilities and obligations of the Seller existing immediately
prior to the Contribution Transaction for accrued but unpaid expenses with
respect to the CPLC Employees, including, without limitation, salary, vacation,
bonus and insurance premiums but, in the case of clauses (ii), (iii) and (iv),
only to the extent and in the amounts that such liabilities, obligations and
contra accounts are reflected on the Audited Closing Date Balance Sheet and
included in the calculation by the Buyer's Accountants of the Receivable
Deductions, the Other Liabilities or the Loss Reserve and (v) all liabilities
and obligations related to any Transferred Backlog that were incurred in the
ordinary course of the Seller's business consistent with its past practices.
1.9 "Audited Closing Date Balance Sheet" means the final
audited balance sheet of CPLC as of the Closing Date (after giving effect to the
Contribution Transaction) and the notes and schedules (if any) thereto, prepared
and certified by the Buyer's Accountants in accordance with the provisions
(including those pertaining to the resolution of disputes with respect thereto)
of Section 5.5 hereof.
1.10 "Authorization" means (i) with respect to any Person,
other than CPLC, any consent, license, permit, grant, authorization or approval
of any Governmental Authority required (A) in connection with the ownership, use
or operation by such Person of any Transferred Asset or (B) for such Person to
conduct the Business and (ii) with respect to CPLC, those consents, licenses,
permits, grants, authorizations and approvals set forth on Schedule 3.2(l).
1.11 "Backlog" means, as of any date, any legally binding and
enforceable duty or obligation of CPLC or the Seller as in effect on such date
(i) to make loans or advances under a Financing Contract or to make funds
available or otherwise provide financing or credit to, or on behalf of, an
Obligor under a Financing Contract or (ii) to enter into a contract or agreement
after such date which, if such contract or agreement were in existence as of the
Closing, would constitute a Financing Contract.
1.12 "Backlog Schedule" means a schedule listing, as of a
specified date, all Backlog and the following information with respect to each
item of Backlog: (i) the name of the Obligor thereunder, (ii) the date such
Backlog was approved by the Seller or CPLC, (iii) the expiration date of such
Backlog, (iv) the minimum acceptable yield with respect to such Backlog, (v) the
maximum loan or lease amount for which such Backlog was approved and (vi) the
other material terms of such Backlog, such as the description of the Property to
be subject to or governed by the loan or lease, the term of transaction and
purchase options.
1.13 "Bankruptcy Exception" means, in respect of any Contract,
any limitation thereon imposed (i) by any bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Law affecting creditors'
rights and remedies generally and (ii) with respect to the enforceability of any
Contract, by general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
1.14 "Benefit Plans" shall have the meaning ascribed thereto in
subsection 4.1(j)(i) hereof.
1.15 "Books and Records" means, with respect to any Person,
all Documents maintained by such Person relating to its business, operations,
Properties or obligations to the extent such Documents accurately reflect such
Person's business, operations, Properties or obligations.
1.16 "Business" means the broker-sourced equipment financing
business (including seller, supplier, manufacturer or vendor equipment financing
transactions generated or referred by, or acquired from, brokers) conducted by
the Seller immediately prior to the Contribution Transaction, consistent with
the Seller's past practices, other than the business to be conducted by the
Seller related to the Excluded Assets for the sole purpose of realizing the
value of such Excluded Assets (which purpose shall not be deemed to include the
origination or funding of new business or transactions).
1.17 "Buyer" shall have the meaning ascribed thereto in the prologue
hereof.
1.18 "Buyer Indemnified Parties" shall have the meaning ascribed
thereto in subsection 5.4(a) hereof.
1.19 "Buyer Related Documents" shall have the meaning ascribed thereto
in subsection 5.4(f) hereof.
1.20 "Buyer Vacation Policy" shall have the meaning ascribed thereto
in subsection 5.6(f) hereof.
1.21 "Buyer's Accountants" means KPMG Peat Marwick LLP or any
other public accounting firm with nationally recognized auditing expertise
(other than the Seller's Accountants), as selected by the Buyer.
1.22 "Buyer's Special Counsel" means Weil, Gotshal & Manges
LLP.
1.23 "Closing" means the effective time of the sale of the
CPLC Shares, which for all purposes shall be 5:00 p.m. local time in Portland,
Oregon on the date on which the Seller transfers the CPLC Shares to the Buyer
pursuant to the terms of this Agreement; "Closing Date" shall be deemed to refer
to such date.
1.24 "Closing Backlog Schedule" means the Backlog Schedule to
be dated as of the close of business (Oregon time) on the Closing Date and
delivered pursuant to Section 5.8 hereof.
1.25 "Closing Payment" shall have the meaning ascribed thereto in
Section 2.3 hereof.
1.26 "COBRA" means the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
1.27 "COBRA Election" shall have the meaning ascribed thereto in
subsection 5.6(d) hereof.
1.28 "Code" and "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended.
1.29 "Consent" means any approval, authorization, consent or
acquiescence of a Person.
1.30 "Contract" means any legally binding and enforceable
written agreement, arrangement, bond, commitment, franchise, indemnity,
indenture, instrument, lease, license or understanding, in each case, in effect
on or prior to the Closing Date.
1.31 "Contribution Transaction" means the contribution to CPLC
of all of the Seller's right, title and interest in and to the Transferred
Assets and the assumption by CPLC of the Assumed Liabilities in exchange for the
issuance to the Seller of the CPLC Shares; it being understood that the
Contribution Transaction shall include the transfer of the CPLC Employees to
CPLC.
1.32 "CPLC" shall have the meaning ascribed thereto in the
prologue hereof.
1.33 "CPLC Employees" means all of the Employees other than Larry
Osmanski and Jeff Macartney.
1.34 "CPLC Shares" means 1,000 shares of CPLC's common stock, $.01 par
value per share.
1.35 "Credit Enhancement" means any (i) security deposit,
unapplied advance rental payment or dealer investment, (ii) investment
certificate, certificate of deposit, authorization to hold funds, hypothecation
of account or like instrument, (iii) letter of credit, guarantee, lease
guarantee bond or postponement agreement, (iv) recourse agreement, (v) security
agreement, (vi) Property, (vii) certificate representing shares or the right to
purchase shares in the capital of any corporation or (viii) bond or debenture,
in each case pledged, assigned, mortgaged, made, delivered or transferred as
security for the performance of any obligation under or with respect to any
Transferred Financing Contract, Program Agreement or Funded Backlog.
1.36 "Credit Loss Amount" means, with respect to any
Transferred Financing Contract or Funded Backlog, an amount (calculated as of
the first date a Credit Loss Event occurred with respect to such Transferred
Financing Contract or Funded Backlog) equal to the result of (i) the Net Finance
Receivables Balance of such Transferred Financing Contract or Funded Backlog as
of such date; minus (ii) if applicable, the Residual of Portfolio Property or
Funded Backlog Portfolio Property subject to or governed by such Transferred
Financing Contract or Funded Backlog; minus (iii) any unpaid late charges
attributable to such Transferred Financing Contract or Funded Backlog as of such
date; minus (iv) any income in excess of 90 days' income that has been accrued
by CPLC on such Transferred Financing Contract or Funded Backlog as of such
date, but only to the extent any of the amounts described in clauses (iii) or
(iv) are included in the Net Finance Receivables Balance of such Transferred
Financing Contract or Funded Backlog; plus either (A) if the Portfolio Property
or Funded Backlog Portfolio Property subject to or governed by such Transferred
Financing Contract or Funded Backlog is not recovered by CPLC at the termination
of such Transferred Financing Contract or Funded Backlog, the lesser of (I) the
Residual of such Portfolio Property or Funded Backlog Portfolio Property or (II)
the fair market value of such Portfolio Property or Funded Backlog Portfolio
Property in the return condition required by such Transferred Financing Contract
or Funded Backlog or (B) if the Portfolio Property or Funded Backlog Portfolio
Property subject to or governed by such Transferred Financing Contract or Funded
Backlog is recovered by CPLC at the termination of such Transferred Financing
Contract or Funded Backlog but such Portfolio Property or Funded Backlog
Portfolio Property is not in the condition required by the terms of such
Transferred Financing Contract or Funded Backlog, the lesser of (I) the Residual
of such Portfolio Property or Funded Backlog Portfolio Property or (II) the cost
to return such Portfolio Property or Funded Backlog Portfolio Property to the
return condition required by the terms of such Transferred Financing Contract or
Funded Backlog.
1.37 "Credit Loss Event" means, with respect to any
Transferred Financing Contract or any Funded Backlog, that one of the following
events has occurred with respect to such Transferred Financing Contract or
Funded Backlog: (i) such Transferred Financing Contract or Funded Backlog is 180
Days Delinquent; (ii) the Seller or PBCC and the Buyer have agreed in writing
that a Credit Loss Event has occurred with respect to such Transferred Financing
Contract or Funded Backlog; (iii) the Obligor thereunder or substantially all of
such Obligor's Properties has become subject to a bankruptcy, insolvency,
reorganization, moratorium or similar proceeding or (iv) the Obligor thereunder
has ceased doing business.
1.38 "Credit Loss Objection Notice" shall have the meaning ascribed
thereto in subsection 5.7(c) hereof.
1.39 "Credit Loss Resolution Period" shall have the meaning ascribed
thereto in subsection 5.7(d) hereof.
1.40 "Cut-Off Date" shall have the meaning ascribed thereto in
subsection 5.7(b) hereof.
1.41 "Damages" means any and all losses (including liquidated
damages and any Environmental Costs and Liabilities), claims, damages,
liabilities, obligations, judgments, equitable relief granted, settlements,
awards (including arbitral or back-pay awards), demands, offsets, defenses,
counterclaims, actions or proceedings, reasonable out-of-pocket costs, expenses
and attorneys' fees (including any such reasonable costs, expenses and
attorneys' fees incurred in enforcing any right of indemnification against any
Indemnitor or with respect to any appeal), interest and penalties, if any, and,
with respect to the Buyer or any of its Affiliates (including, after the
Closing, CPLC), shall be deemed to include losses resulting from the failure of
the Buyer or any of its Affiliates to receive any amounts payable by any Person
with respect to any Transferred Assets to the extent the Buyer or such Affiliate
is entitled to be indemnified therefor under any Seller Related Document.
1.42 "Date-Sensitive System" means, with respect to the
Seller, any software, microcode or hardware system or component, including any
electronic or electronically controlled system or component, that processes any
data and that is installed in a development by the Seller for use in connection
with the Transferred Assets, the Assumed Liabilities or the Business or which
the Seller sells, leases, licenses, assigns or otherwise provides to, or the
provision or operation of which the Seller provides for the benefit of, its
customers, vendors, suppliers or any other third party in connection with the
Business.
1.43 "Document" means any book, record, file, paper, computer
tape, disk or other file (whether in hard copy or machine readable form),
microfilm, information storage device of any type or any other document.
1.44 "Draft Closing Date Balance Sheet" means the balance
sheet of CPLC as of the Closing Date (after giving effect to the Contribution
Transaction) and the notes and schedules, if any, thereto, prepared by CPLC
pursuant to subsection 5.5(a)(i) hereof and to be audited by the Buyer's
Accountants in accordance with the provisions, including those pertaining to the
resolution of disputes with respect thereto, of Section 5.5 hereof.
1.45 "Election" shall have the meaning ascribed thereto in subsection
5.3(a) hereof.
1.46 "Employees" means all of the individuals employed by the
Seller who are actively at work immediately prior to the Contribution
Transaction.
1.47 "Environmental Costs and Liabilities" means any and all
losses, liabilities, obligations, damages, fines, penalties, judgments, actions,
claims, costs and expenses (including, without limitation, reasonable fees,
disbursements and expenses of legal counsel, experts, engineers and consultants
and the costs of investigation and feasibility studies to clean up, remove,
treat, or in any way address, any Hazardous Material) necessary to comply with
or otherwise incurred or imposed in accordance with any Environmental Law.
1.48 "Environmental Law" means any Law (including common law)
relating to the environment, natural resources or public or employee health and
safety and includes, but is not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq.; the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.; the Clean Water Act,
33 U.S.C. ss. 1251 et seq.; the Clean Air Act, 33 U.S.C. ss. 2601 et seq.; the
Toxic Substances Control Act, 15 U.S.C. ss. 2602 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ss. 136 et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq.; and the Occupational Safety
and Health Act, 29 U.S.C. ss. 651 et seq., as such Laws have been amended or
supplemented.
1.49 "ERISA" shall have the meaning ascribed thereto in subsection
4.1(j)(i) hereof.
1.50 "ERISA Affiliate" shall have the meaning ascribed thereto in
subsection 4.1(j)(ii) hereof.
1.51 "Excluded Assets" means all right, title and interest of the
Seller in or to:
(i) (A) the Financing Contracts set forth on Annex A
attached hereto and any Property (including Credit Enhancements)
related thereto, (B) any Financing Contract and any Property (including
Credit Enhancements) related thereto that as of the effectiveness of
the Contribution Transaction (1) is 90 Days Delinquent or (2) shall
have been written-off, cancelled or terminated by the Seller or the
Obligor thereunder and (C) any Financing Contracts with Multinational
Systems Corp. or Celestar and, in each case, any Property (including
any Credit Enhancements) related thereto;
(ii) all New Scorecard Transactions and any Property
(including Credit Enhancements) related thereto;
(iii) all Securitized Financing Contracts and any Property
(including any Securitized Portfolio Property, LIAS Receivable and
Credit Enhancements) related thereto;
(iv) the Recomm Assets and any Property (including Credit
Enhancements) related thereto;
(v) up to an additional 50 Financing Contracts and 60
items of Backlog transactions to be identified by the Buyer within 120
days after the Closing Date and any Property (including Credit
Enhancements or any payments received by CPLC after the Closing in
respect of such Financing Contracts or Property) related thereto;
(vi) any transactions listed on Annex B attached hereto and any
Property related thereto;
(vii) any promissory notes or other liabilities or
obligations to pay made by (A) any broker or (B) any obligor, lessee or
borrower in satisfaction of such obligor's, lessee's or borrower's
obligations under any leasing or lending transactions, in each case,
that are payable to, or otherwise held by, the Seller including,
without limitation, those notes, liabilities and obligations listed on
Annex C attached hereto;
(viii) any equity ownership or interest or participation
interest in any Person owned, directly or indirectly, by the Seller,
other than the CPLC Shares;
(ix) any software or computer programs that are used by
both the Seller and its Affiliates and that are listed on Annex D
attached hereto; provided, however, that the Seller shall permit CPLC,
the Buyer and their respective employees, agents and representatives to
have access to all information, files and other Documents relating to
any of the Transferred Assets, Assumed Liabilities or CPLC Employees
that are contained in or are resident on such programs (which access
shall be made available during normal business hours and in such a
manner so as not to interfere unreasonably with the Seller's or any of
its Affiliates' business);
(x) the Program Agreement dated as of May 7, 1991 between
the Seller and LIAS (including, without limitation, any exhibits,
annexes or schedules attached thereto) and any amendments, supplements
or modifications thereto and the Liability Insurance Program Agreement
In House Finance between the Seller and LIAS and signed by the Seller
as of November 24, 1997 and signed by LIAS as of October 7, 1997
(including, without limitation, any exhibits, annexes or schedules
attached thereto) and any amendments, supplements or modifications
thereto.
(xi) any LIAS Receivables;
(xii) the Agreement dated November 20, 1995, between AT&T
and the Seller regarding the provision by AT&T of "T-1" leased lines;
(xiii) any Property held by the Seller for sale as of the
effectiveness of the Contribution Transaction, which Property was
previously subject to or governed by a lease or loan transaction that,
had it been in effect as of the Closing, would have constituted a
Financing Contract or a Credit Enhancement; and
(xiv) the Property described on Annex I.
1.52 "Excluded Liabilities" means (i) all debts, liabilities,
obligations, Damages or expenses (whether known or unknown, contingent or
absolute) arising before, on or after the effectiveness of the Contribution
Transaction, of the Seller or any of its Affiliates other than the Assumed
Liabilities and (ii) any liability for Taxes attributable to the Business or the
Transferred Assets relating to taxable periods ending on or before the Closing
Date and, with respect to any Straddle Period, the portion of the Straddle
Period deemed to end on and include the Closing Date, including, but not limited
to (A) any liability for Taxes pursuant to Treasury Regulation ss. 1.1502-6(a)
or any comparable provision of domestic or foreign state or local law and (B)
any Taxes that are the responsibility of the Seller under Section 2.5 hereof.
1.53 "Exhibit" means one of the several written exhibits to
this Agreement, each of which: (i) is hereby incorporated into and made a part
of this Agreement for all purposes and (ii) has been initialed on the first page
thereof by the Chairman, the Vice Chairman, the President or one of the Vice
Presidents of the Seller and an authorized representative of the Buyer.
1.54 "Final Schedule of Assets and Liabilities" means the
Schedule of Assets and Liabilities to be dated as of the Closing Date and
delivered pursuant to subsection 5.8(b) hereof after the delivery of the Audited
Closing Date Balance Sheet.
1.55 "Finance Lease" means any Transferred Financing Contract
or Funded Backlog that, as of a particular date, would be classified as a
"finance lease" under Financial Standards Board Statement No. 13, as amended
from time to time.
1.56 "Financing Contract" means any Contract, whether or not
in writing (including any schedule or amendment thereto or assignment,
assumption, renewal or novation thereof), in existence on or prior to the
Closing and any ancillary agreements thereto, which is in the form of a lease of
or rental agreement with respect to Property; or any sale contract (including an
installment sale contract or conditional sale agreement) arising out of the sale
of Property or any secured or unsecured financing of Property; or any secured or
unsecured loan, (i) with respect to which the Seller or CPLC is the lessor,
seller, lender, secured party or obligee (whether initially or as an assignee),
or (ii) which is between an Obligor, on one hand, and a lessor, seller, lender,
secured party, obligee or assignee of any of the foregoing, on the other hand,
and (A) which would be a Financing Contract if the Seller or CPLC were the
lessor, seller, lender, secured party, obligee or assignee of any of the
foregoing thereunder and (B) with respect to which the Seller or CPLC is
entitled by virtue of assignment of the revenues or claims with respect thereto
or otherwise.
1.57 "Funded Backlog" means any item of Transferred Backlog as
to which, on or after the Closing Date, CPLC has, prior to the expiration date
applicable to such item of Transferred Backlog (as reflected on the Closing
Backlog Schedule), (i) entered into one or more contracts or agreements that, if
such contracts or agreements were in existence as of the Closing, would, taken
as a whole, constitute a Financing Contract and (ii) made a loan or advance to,
or on behalf of, the Obligor thereunder or made funds available or otherwise
provided financing or credit to, or on behalf of, such Obligor; provided,
however, that with respect to any Transferred Backlog, if in connection with the
preparation, execution or delivery of any of the contracts or agreements
described in clause (i) or the making of loans or advances to, or on behalf of
any Obligor thereunder or making any funds available or otherwise providing
financing or credit to, or on behalf of, any Obligor thereunder, CPLC (A)
increases the maximum amount for which such Transferred Backlog was approved or
(B) changes or modifies in any material respect, the general kind or type of
Property to be subject to or governed by such Transferred Backlog, any Credit
Enhancement requirement, the minimum acceptable yield required by CPLC with
respect to such Transferred Backlog, the term of such Transferred Backlog or the
identity of the Obligor or any guarantor under such Transferred Backlog (in each
case, as such matters are reflected in the written credit approval relating to
such Transferred Backlog), then such Transferred Backlog shall not qualify as
Funded Backlog.
1.58 "Funded Backlog Portfolio Property" means Property with
respect to which CPLC is the lessor, seller or secured party, as the case may
be, pursuant to the terms of any Funded Backlog (whether initially or as an
assignee).
1.59 "Governmental Authority" means any domestic or foreign
court, tribunal, department, authority or agency of any nation, state,
municipality or political subdivision thereof exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
1.60 "Gross Receivables Amount" means, with respect to the
Transferred Financing Contracts reflected on the Audited Closing Date Balance
Sheet:
(i) with respect to any such Transferred Financing Contract
that is a Finance Lease, the sum of, without duplication, the following
amounts as they are reflected on the Audited Closing Date Balance
Sheet: (A) all unpaid scheduled contractual payments under such Finance
Lease whether such payments are due and payable or are in the form of
rent, fees or interest (but excluding any payments not associated with
the financing of any Portfolio Property subject to or governed by such
Finance Lease); plus (B) the Residual of the Portfolio Property that is
subject to or governed by such Finance Lease; plus (C) any unamortized
amounts incurred in connection with the origination or acquisition of
such Finance Lease including, without limitation, commissions,
incentive compensation, expenses or bonuses; and
(ii) with respect to any such Transferred Financing Contract
that is an Operating Lease, the sum of, without duplication, the
following amounts as they are reflected on the Audited Closing Date
Balance Sheet: (A) any unamortized amounts incurred in connection with
the origination or acquisition of such Operating Lease including,
without limitation, commissions, incentive compensation, expenses or
bonuses; plus (B) the aggregate amount of the Seller's original cost of
the Portfolio Property that is subject to or governed by such Operating
Lease.
1.61 "Hazardous Material" means any substance, material or
waste regulated by any Governmental Authority as "hazardous", "toxic",
"pollutant" or "contaminant", or words of similar meaning or regulatory effect,
including, but not limited to, petroleum, petroleum products, asbestos, urea
formaldehyde or polychlorinated biphenyls.
1.62 "HSR Filing" means the notice, if any, required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), in connection with the transactions contemplated hereby.
1.63 "Inactive Employee" shall have the meaning ascribed thereto in
subsection 5.6(b) hereof.
1.64 "Indemnification Event" means any event, action,
proceeding or claim for which a Person is entitled to indemnification under this
Agreement.
1.65 "Indemnitor" means the indemnifying Person in the case of
any obligation to indemnify pursuant to the terms of this Agreement.
1.66 "Intellectual Property" shall have the meaning ascribed thereto
in subsection 4.1(r) hereof.
1.67 "IRS" means the Internal Revenue Service.
1.68 "Knowledge" or any similar expression, means (i) whether
it is used in reference to PBCC, the Seller or CPLC, the knowledge that any
director or officer of the Seller or CPLC has, after due inquiry, and the
knowledge of any of David Kleinman, Gary Smith, Kirk Hudson, Larry Osmanski or
Jeff Macartney, after due inquiry, and (ii) as it applies to the Buyer, the
knowledge of any of Randy Wexler, Ron Rozier, Michael Maron, John Falcone or
Valerie Pagliaro, after due inquiry.
1.69 "Later Hire" means any Inactive Employee who is hired by
CPLC after the Closing in accordance with the terms of subsection 5.6(b).
1.70 "Law" means any domestic or foreign constitutional
provision, statute or other law, rule, regulation or interpretation of any
Governmental Authority and any decision, decree, injunction, judgment, order,
ruling, assessment or writ of any Governmental Authority or any arbitrator.
1.71 "LIAS" means Lease Insurance Agency Services Corporation.
1.72 "LIAS Receivable" means, with respect to any Financing
Contract or Securitized Financing Contract, all amounts payable by the Obligor
thereunder that are allocable to property or liability insurance coverage placed
through LIAS, whether such amounts constitute premium reimbursement or service
charges related to placement or administration of such insurance coverage.
1.73 "Lien" means any title defect, conflicting claim of
ownership, lease, sublease, bailment, conditional sales contract, option to
acquire, right of first refusal, assignment, privilege, levy, execution,
seizure, attachment, garnishment, security interest, ownership interest,
covenant, restriction, reservation, order, decree, judgment, stipulation,
settlement, objection, mortgage, charge, pledge, lien, claim or other
encumbrance whatsoever, whether fixed or floating and howsoever created or
arising.
1.74 "Limited Survival Tax Representations" means those
representations and warranties of the Seller, PBCC and CPLC, in subsections
4.1(n)(i), (ii), (iii), (iv), (v), (vi), (vii), (xi) and (xiv).
1.75 "Loss Reserve" means 4.46% of the excess of the Gross
Receivables Amount over the amount of Receivable Deductions, in each case as
such amounts are reflected on the Special Report.
1.76 "Material Adverse Effect" means a material adverse effect
on the Transferred Assets or on the operations or financial condition of the
Business, taken as a whole, other than any effect attributable to, or resulting
from, any general change in economic conditions or from the decreased dollar
volume of transactions submitted for funding to, and funded by, the Seller since
May 31, 1998.
1.77 "Material Contract" means any Contract, whether or not in
writing, (other than Financing Contracts) which (i) calls for the payment by or
on behalf of the Seller of $50,000 or more, or calls for the delivery by the
Seller of goods or services with a fair market value of $50,000 or more, or (ii)
provides for the Seller to receive any payments of, or any Property (other than
Portfolio Property) with a fair market value of, $50,000 or more or (iii)
otherwise is material to the Transferred Assets or the Business.
1.78 "May 31 Balance Sheet" means the pro forma balance sheet
of CPLC as of May 31, 1998, including the notes, schedules and exhibits thereto,
attached hereto as Annex E.
1.79 "Net Finance Receivables Balance" means, as of any date:
(i) with respect to any Transferred Financing Contract or
Funded Backlog that qualifies on such date as a Finance Lease, the sum
of the following amounts, as reflected on the general ledger of CPLC as
of such date: (A) all unpaid scheduled contractual payments under such
Finance Lease (whether or not due); plus (B) the Residual, if any, of
any Portfolio Property or Funded Backlog Portfolio Property that is
subject to or governed by such Finance Lease; plus (C) any unamortized
amounts incurred in connection with the origination or acquisition of
such Finance Lease including, without limitation, commissions,
incentive compensation, expenses or bonuses; plus (D) any other amounts
due and owing under such Finance Lease including, without limitation,
any Taxes, any amounts owed by the Obligor thereunder in respect of any
claims for any breach or default by such Obligor under such Finance
Lease or any unpaid late charges, out-of-pocket costs or expenses
(including collection costs), in each case attributable to, or incurred
in connection with, such Finance Lease; minus (E) the unearned finance
charges, interest or other charges in the nature of finance charges
related to such Finance Lease; minus (F) any funds held by CPLC as
collateral or security for the Obligor's performance under such Finance
Lease; and
(ii) with respect to any Transferred Financing Contract or
Funded Backlog that qualifies on such date as an Operating Lease, the
sum of the following amounts, as reflected on the general ledger of
CPLC as of such date: (A) the Seller's original cost of the Portfolio
Property or Funded Backlog Portfolio Property, as applicable, subject
to or governed by such Operating Lease; plus (B) all billed and unpaid
scheduled contractual payments under such Operating Lease as of such
date; plus (C) any unamortized amounts incurred in connection with the
origination or acquisition of such Operating Lease including, without
limitation, commissions, incentive compensation, expenses or bonuses as
of such date; minus (D) the accumulated depreciation attributed to such
Operating Lease and any related Portfolio Property or Funded Backlog
Portfolio Property, as applicable, as of such date; plus (E) any other
amounts due and owing under such Operating Lease as of such date,
including, without limitation, any Taxes, any amounts owed by the
Obligor thereunder in respect of any claims for any breach or default
by such Obligor under such Operating Lease or any unpaid late charges,
out-of-pocket costs or expenses (including collection costs) in each
case attributable to, or incurred in connection with, such Operating
Lease; minus (G) any funds held by CPLC as of such date as collateral
or security for the Obligor's performance under such Operating Lease.
1.80 "New Scorecard Transactions" means any Financing
Contract, the creditworthiness of which was evaluated by the Seller using the
credit evaluation policy implemented by the Seller on November 1, 1994 and which
is defined in the Seller's Lease Management System in a marketing database
information record under a database field entitled "scorecard" (Attribute #77)
that contains a value of "A" under such database field.
1.81 "90 Days Delinquent" means any Financing Contract that
the Seller's lease accounting system reports as 90 days delinquent, as of the
Closing Date.
1.82 "Non-Assumable Claim" means any claim, action or
proceeding (i) involving any Governmental Authority, (ii) seeking injunctive
relief, (iii) involving a class action, (iv) involving allegations of criminal
activities or (v) involving allegations of violations of any Laws.
1.83 "Noncompetition/Nonsolicitation Agreement" means a
Noncompetition/Nonsolicitation Agreement, dated as of the Closing Date, between
PBI and the Buyer, incorporating in substance all of the terms and conditions
set forth in Section 5.1 hereof.
1.84 "Obligor" means, with respect to any Financing Contract,
any Person that is an obligor or lessee under such Financing Contract and, with
respect to any Backlog, any Person that will be an obligor or lessee under any
contract or agreement entered into in the event such Backlog becomes Funded
Backlog.
1.85 "180 Days Delinquent" means any Transferred Financing
Contract or Funded Backlog that CPLC reports as 180 days delinquent, which shall
be calculated in a manner that is consistent with the method used by the
Seller's lease accounting system as in effect as of the Closing Date for
determining whether a Financing Contract is 180 days delinquent.
1.86 "Operating Bulletins" means all of the Operating
Bulletins of the Seller attached hereto as Annex J.
1.87 "Operating Lease" means any Transferred Financing
Contract or Transferred Backlog that, as of a particular date, would be
classified as an "operating lease" under Financial Standards Board Statement No.
13, as amended from time to time.
1.88 "Other Assets" means any assets reflected on the Audited
Closing Date Balance Sheet that are not included in the calculation of the Gross
Receivables Amount.
1.89 "Other Liabilities" means any liabilities, obligations or
contra accounts reflected on the Audited Closing Date Balance Sheet other than
(i) any liabilities, obligations or contra accounts that are included in the
calculation of the Receivable Deductions or (ii) the Loss Reserve.
1.90 "Partial Payment" shall have the meaning ascribed thereto in
subsection 5.20(c) hereof.
1.91 "PBCC" shall have the meaning ascribed thereto in the
prologue hereof.
1.92 "PBGC" means the Pension Benefit Guaranty Corporation
established under Section 4002 of ERISA, or any entity succeeding to any or all
of its functions.
1.93 "PBI" means Pitney Bowes Inc., a Delaware corporation.
1.94 "PBI Guaranty" means that certain Guaranty, dated as of
the Closing Date, substantially in the form attached hereto as Exhibit A.
1.95 "Permitted Lien" means (i) any Lien for Taxes not yet due
and payable, (ii) any mechanic's or materialman's lien which an Obligor under a
Transferred Financing Contract is required to remove and (iii) any other Lien
permitted in accordance with the terms of any Transferred Financing Contract
that does not materially affect the value of the Seller's or CPLC's interest in
the Portfolio Property subject to such Lien.
1.96 "Person" means an individual, corporation, partnership,
limited liability company, trust, unincorporated organization or any other
entity, including a Governmental Authority, and words having a similar meaning.
1.97 "Plans" shall have the meaning ascribed thereto in subsection
4.1(j)(i) hereof.
1.98 "Portfolio Property" means Property with respect to which
the Seller or CPLC is the lessor, seller or secured party, as the case may be,
pursuant to the terms of a Transferred Financing Contract (whether initially or
as an assignee).
1.99 "Program Agreement" means any Contract, whether or not in
writing, between the Seller or CPLC and any lessor, seller, lender, supplier,
broker, vendor, franchisor, manufacturer or contractor, pursuant to which such
lessor, seller, lender, supplier, broker, vendor, franchisor, manufacturer or
contractor refers or otherwise directs transactions to the Seller or CPLC, or
pursuant to which the Seller or CPLC acquires, or agrees from time to time to
acquire, financial instruments which, if acquired by the Seller or CPLC prior to
the Closing, would be Financing Contracts.
1.100 "Property" means all property and assets of whatsoever
nature, including, but not limited to, personal property (whether tangible or
intangible), claims, rights and choses in action.
1.101 "Public Sector Financing Contract" means any Financing
Contract (including any amendment thereto or any renewal, assignment, assumption
or novation thereof) to which any Governmental Authority is a party.
1.102 "Purchase Price" shall have the meaning ascribed thereto in
Section 2.2 hereof.
1.103 "Qualified Settlement Offer" shall have the meaning
ascribed thereto in subsection 5.4(h)(iii) hereof.
1.104 "Quarterly Credit Loss Report" shall have the meaning ascribed
thereto in subsection 5.7(b) hereof.
1.105 "Receivable Deductions" means, with respect to the
Transferred Financing Contracts reflected on the Audited Closing Date Balance
Sheet:
(i) with respect to any such Transferred Financing
Contract that is a Finance Lease, the sum of, without duplication, the
following amounts as they are reflected on the Audited Closing Date
Balance Sheet: (A) any unearned income related to such Finance Lease
(whether in the form of rent, fees or interest); plus (B) any amounts
required to be paid by the Seller or CPLC in connection with the
origination or acquisition of such Finance Lease including, without
limitation, commissions, incentive compensation, expenses or bonuses;
plus (C) any security deposits, unapplied advance rental, financing
payments or dealer investments related to such Finance Lease that are
held by CPLC as a result of the Contribution Transaction; and
(ii) with respect to any such Transferred Financing
Contract that is an Operating Lease, the sum of, without duplication,
the following amounts as they are reflected on the Audited Closing Date
Balance Sheet: (A) all of the accumulated depreciation relating to the
Portfolio Property subject to or governed by such Operating Lease; plus
(B) any amounts required to be paid by the Seller or CPLC in connection
with the origination or acquisition of such Operating Lease including,
without limitation, commissions, incentive compensation, expenses or
bonuses; plus (C) any security deposits, unapplied advance rental or
dealer investments related to such Operating Lease that are held by
CPLC as a result of the Contribution Transaction.
1.106 "Recomm" means Recomm International Ltd.
1.107 "Recomm Assets" means any Financing Contracts relating
to equipment supplied by Recomm or any of its Subsidiaries.
1.108 "Recoveries" shall have the meaning ascribed thereto in
subsection 5.7(g) hereof.
1.109 "Reimbursement Threshold" means an amount equal to 8.60%
of the excess of the Gross Receivables Amount over the amount of Receivable
Deductions, in each case as such amounts are reflected in the Special Report.
1.110 "Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal or leaching into the
indoor or outdoor environment of Hazardous Materials.
1.111 "Residual" means (i) with respect to any item of
Portfolio Property an amount equal to the excess of (A) the value of such item
of Portfolio Property upon the expiration of the Transferred Financing Contract
to which it is subject, as determined by the Seller and established and
reflected on its Books and Records at the inception of such Transferred
Financing Contract over (B) any write downs or reductions made by the Seller to
such value prior to the consummation of the Contribution Transaction, if any and
(ii) with respect to any item of Funded Backlog Portfolio Property as of any
date, an amount equal to the excess of (A) the value of such item of Funded
Backlog Portfolio Property upon the expiration of the Funded Backlog to which it
is subject, as determined by CPLC and established and reflected on its Books and
Records at the date such transaction first qualifies as Funded Backlog over (B)
any write downs or reductions made by CPLC to such value prior to such date, if
any.
1.112 "Retained Names and Marks" means, collectively, the
names set forth on Annex F attached hereto and any word, name, phrase, symbol,
logo or device in which PBCC or PBI has any interest, by itself or in
combination with any other word, name, phrase, symbol, logo or device, or any
similar variation of any of the foregoing.
1.113 "Schedule" means one of the several written schedules to
this Agreement, each of which (i) is hereby incorporated into and made a part of
this Agreement for all purposes and (ii) has been initialed on the first page
thereof by the Chairman, the Vice Chairman, the President or one of the Vice
Presidents of the Seller and an authorized representative of the Buyer.
1.114 "Schedule of Assets and Liabilities" means a report in
substantially the form attached hereto as Exhibit B.
1.115 "Securitized Financing Contracts" means the transactions
sold, transferred or otherwise conveyed by the Seller pursuant to any of the
agreements described on Annex G.
1.116 "Securitized Portfolio Property" means any Property with
respect to which the Seller was the lessor, seller or secured party (whether
initially or as an assignee) and which is subject to or governed by the terms of
one of the Securitized Financing Contracts.
1.117 "Selected Accounting Firm" means a public accounting
firm with nationally recognized auditing expertise, which shall be jointly
selected by the Buyer's Accountants and the Seller's Accountants to resolve any
dispute arising pursuant to Section 5.3, 5.5, 5.7 or 5.15 hereof.
1.118 "Seller" shall have the meaning ascribed thereto in the
prologue hereof.
1.119 "Seller FSA" shall have the meaning ascribed thereto in
subsection 5.6(g) hereof.
1.120 "Seller Indemnified Parties" shall have the meaning ascribed
thereto in subsection 5.4(f) hereof.
1.121 "Seller Related Documents" shall have the meaning ascribed
thereto in subsection 5.4(a) hereof.
1.122 "Seller's Accountants" means PricewaterhouseCoopers LLP
or any public accounting firm with nationally recognized auditing expertise
(other than the Buyer's Accountants), as selected by the Seller.
1.123 "Seller's Special Counsel" means Kelley Drye & Warren
LLP.
1.124 "Seller Vacation Policy" shall have the meaning ascribed thereto
in Section 5.6 hereof.
1.125 "Servicing Agreement" means the Servicing Agreement
among CPLC, the Buyer, the Seller and PBCC, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit C.
1.126 "Settlement Date" means the third business day following
the date of delivery to the Buyer and the Seller of the Audited Closing Date
Balance Sheet and the Special Report as provided in Section 5.5 hereof.
1.127 "Settlement Rate" means, on any date, the federal funds
rate reported in the "Money Rates" section of the Eastern edition of The Wall
Street Journal published for such date. In the event The Wall Street Journal
ceases publication of the federal funds rate or fails on any particular date to
publish such rate, the Settlement Rate shall mean the rate for the last
transaction in overnight federal funds arranged prior to such date by The Chase
Manhattan Bank.
1.128 "Special Adjustments" means any steps or actions
necessary to cause the Draft Closing Date Balance Sheet, the Audited Closing
Date Balance Sheet and the calculation of the Gross Receivables Amount and the
amount of the Receivable Deductions, the Other Assets, the Other Liabilities and
the Loss Reserve to (i) reflect all assets or liabilities, the existence of
which is known on the date the Buyer's Accountants deliver the audited Draft
Closing Date Balance Sheet to the Buyer and the Seller pursuant to the
provisions of subsection 5.5(a) hereof, and which, as of the Closing Date, were
assets or liabilities (as the case may be) of CPLC, including any asset or
liability that would not be deemed to be material to CPLC, under any of the
accounting principles (including accounting methods, practices or procedures)
set forth on Schedule 5.5(a) and (ii) exclude any asset or liability which
should not have been reflected on the Draft Closing Date Balance Sheet or in the
calculation of the Gross Receivables Amount or the amount of the Receivable
Deductions, the Other Assets, the Other Liabilities or the Loss Reserve
irrespective of whether such asset or liability would be deemed to be material
to CPLC under any of the accounting principles (including accounting methods,
practices or procedures) set forth on Schedule 5.5(a).
1.129 "Special Report" means the final audited calculation of
the Gross Receivables Amount and the amount of the Receivable Deductions, the
Other Assets, the Other Liabilities and the Loss Reserve and the Buyer's
Accountants' final special report thereon, each prepared and certified by the
Buyer's Accountants in accordance with the provisions (including those
pertaining to the resolution of disputes with respect thereto) of Section 5.5
hereof.
1.130 "Special Representation(s)" shall have the meaning ascribed
thereto in subsection 5.4(b)(i) hereof.
1.131 "Straddle Period" means any taxable year or period of
CPLC beginning before and ending after the Closing Date.
1.132 "Subsidiary" of any Person means any other Person
directly or indirectly controlled by such Person and, for this purpose "control"
means (i) the ownership of a majority of securities having the ability to elect
a majority of such other Person's directors, managers, trustees or other
officials having similar management functions, or (ii) the ability to control or
direct the management or policies of such other Person.
1.133 "Taxes" means all taxes, charges, fees, levies, imposts,
duties and other assessments, including, but not limited to, any income,
alternative minimum or add-on tax, estimated, gross income, gross receipts,
sales, use, transfer, transactions (including, but not limited to, intangibles,
ad valorem, value-added, franchise, registration, title, license, capital,
paid-up capital, profits, withholding, payroll, employment, excise (including,
but not limited to, the Federal communications excise tax under Code Section
4251), severance, stamp (including, but not limited to, the Florida Documentary
Stamp Tax), occupation, premium, real property, personal property, Federal
highway use, commercial rent, environmental (including, but not limited to,
taxes under Code Section 59A) or windfall profit tax, social services, goods and
services, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest, penalties, or
additions to tax.
1.134 "Tax Exempt Public Sector Financing Contract" means a
Public Sector Financing Contract in respect of which the interest income
received by the Seller has been treated on its Books and Records as exempt from
federal income tax pursuant to Section 103 of the Code or any predecessor
thereof.
1.135 "Tax Return" means any return, declaration, report,
claim for refund, information return, statement or other similar document
relating to Taxes, including any schedule or attachment thereto and any
amendment thereof.
1.136 "Tax Sharing Agreement" shall have the meaning ascribed
thereto in subsection 4.1(n)(xvi) hereof.
1.137 "Third Party Beneficiary" shall have the meaning ascribed
thereto in Section 7.12 hereof.
1.138 "Title IV Plans" shall have the meaning ascribed thereto in
subsection 4.1(j)(ii) hereof.
1.139 "Transfer Taxes" means any real property transfer or
gains tax, sales tax, use tax, stamp tax, stock transfer tax or other similar
tax, including any penalties, interest and additions to tax.
1.140 "Transferred Assets" means all of the assets,
Properties, Contracts or claims of any kind or description (whether tangible or
intangible, real, personal or mixed) of the Seller, wherever located (including,
without limitation, true, correct and complete copies of all Contracts
evidencing, constituting, relating to or otherwise arising out of, any of the
Securitized Financing Contracts) existing as of the effectiveness of the
Contribution Transaction but excluding the Excluded Assets.
1.141 "Transferred Backlog" means any Backlog in effect as of
the effectiveness of the Contribution Transaction that is not an Excluded Asset.
1.142 "Transferred Financing Contract" means any Financing
Contract in effect as of the effectiveness of the Contribution Transaction that
is not an Excluded Asset.
1.143 "Transferred Names and Marks" means, collectively, the
names set forth on Annex H attached hereto and any word, name, symbol or device
in which the Seller has any interest, by itself or in combination with any other
word, name, symbol or device, or any similar variation of any of the foregoing.
1.144 "WARN" means the Workers Adjustment and Retraining
Notification Act, 29 U.S.C. ss. 2101 et seq., and any comparable domestic or
foreign state or local Laws.
1.145 "Welfare Plans" shall have the meaning ascribed thereto in
Section 5.6 hereof.
1.146 "WPC" shall have the meaning ascribed thereto in subsection
4.1(i) hereof.
1.147 "Year 2000 Compliant" means, (i) with respect to data of
any type that includes date information or that is otherwise derived from,
dependent on or related to date information, that such data is in proper format
and is accurate for all dates in the twentieth and twenty-first centuries, and
(ii) with respect to any software, microcode or hardware system or component
(including any electronic or electronically controlled system or component) that
processes data of any type that includes date information or that is otherwise
derived from, dependent on or related to date information and that is installed
in a Vdevelopment by the Seller for use in the Business or which the Seller
sells, leases, licenses, assigns or otherwise provides to, or the provision or
operation of which the Seller provides for, the benefit of its customers,
vendors, suppliers or any third party in connection with the Business, that each
such system or component accurately processes all such data, including for the
twentieth and twenty-first centuries, without loss of any functionality or
performance, including, but not limited to, calculating, comparing, sequencing,
storing and displaying such data (including all leap year considerations), when
used as a stand-alone system or in combination with other software or hardware.
1.148 "Year 2000 Plan" shall have the meaning ascribed thereto in
subsection 4.1(t) hereof.
<PAGE>
ARTICLE 2
SALE AND PURCHASE OF CPLC SHARES
2.1 Agreement to Sell and Purchase. Subject to the terms and
conditions hereof, at the Closing, the Seller shall sell the CPLC Shares to the
Buyer and the Buyer shall purchase the CPLC Shares. At the Closing, the Seller
shall deliver to the Buyer the certificates representing the CPLC Shares duly
endorsed to the Buyer or accompanied by duly executed stock powers so as to
transfer and assign to the Buyer good and valid title to the CPLC Shares, free
and clear of all Liens, and to constitute the Buyer the sole beneficial and
record owner thereof.
2.2 Purchase Price. The purchase price (the "Purchase Price")
to be paid by the Buyer to the Seller for the CPLC Shares shall be an amount
equal to the aggregate of the following:
(a) 112.00% of an amount equal to the excess of (i) the Gross
Receivables Amount, over (ii) the sum of (A) the amount of the Receivable
Deductions plus (B) the amount of the Loss Reserve, as each such amount is
reflected on the Special Report; plus
(b) 100.00% of the amount of the Other Assets, as reflected on the
Special Report; minus
(c) 100.00% of the amount of the Other Liabilities, as
reflected on the Special Report.
2.3 Closing Payment. On or prior to 2:00 p.m. New York time,
on the Closing Date, the Buyer shall pay to the Seller $789,935,846 (the
"Closing Payment"), which amount shall be applied to the payment of the Purchase
Price. The Closing Payment shall be made by wire transfer of immediately
available funds to such account at such bank in the United States as the Seller
shall designate to the Buyer in writing prior to Closing.
2.4 Settlement Payment. On the Settlement Date, the following
amounts shall be paid by wire transfer of immediately available funds to an
account in a bank in the United States designated in writing, at least two
business days prior to the Settlement Date, by the recipient thereof, as
follows:
(a) if the Purchase Price exceeds the Closing Payment, the
Buyer shall pay the amount of such excess, if any, together with interest
thereon for the period from, and including, the Closing Date, to, but excluding
the payment date, at the Settlement Rate, to the Seller; or
(b) if the Closing Payment exceeds the Purchase Price, PBCC
shall cause the Seller to pay the amount of such excess, if any, together with
interest thereon at the Settlement Rate for the period from, and including, the
Closing Date to, but excluding, the payment date, at the Settlement Rate, to the
Buyer.
2.5 Transfer Taxes. Notwithstanding anything contained herein
to the contrary, in addition to all amounts payable by the Buyer and Seller
under this Agreement, the Buyer and Seller shall each be responsible for 50% of
any Transfer Taxes imposed on the Seller, Buyer or CPLC resulting from, arising
out of, based on or relating to, the sale of the CPLC Shares, the Election or
the Contribution Transaction as and when payable pursuant to applicable Law.
ARTICLE 3
CLOSING ARRANGEMENTS; CONDITIONS OF CLOSING
3.1 Closing. The Closing shall be held at the offices of the
Seller's Special Counsel, 101 Park Avenue, New York, New York, on the last
business day of the month in which the conditions precedent to the Closing set
forth in this Agreement have been satisfied or waived, or at such other time and
place as may be mutually agreed to by the parties hereto.
3.2 Conditions for the Buyer's Benefit. The Buyer is not
obligated to consummate the transactions provided for herein unless each of the
following conditions precedent has been satisfied, it being understood that
these conditions are included for the exclusive benefit of the Buyer and may be
waived in writing in whole or in part by the Buyer at any time, and the Seller
and PBCC shall use commercially reasonable efforts to ensure that such
conditions are fulfilled on or before the Closing Date:
(a) Representations; Covenants; Certificates. The
representations and warranties of the Seller, PBCC and CPLC contained herein
shall be true and correct in all material respects at the Closing, in each case
with the same effect as though made at and as of such time; each of the Seller,
PBCC and CPLC shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this Agreement
to be performed or complied with by it at or prior to the Closing (except to the
extent waived hereunder in writing); and each of the Seller, PBCC and CPLC shall
have delivered to the Buyer a certificate in form and substance reasonably
satisfactory to the Buyer, dated the Closing Date, and signed on its behalf by
its Chairman, Vice Chairman, President or Vice President, in his or her
representative capacity (and not individually), to all such effects and
certifying the satisfaction of the conditions set forth in this Section 3.2.
(b) No Action or Proceeding. No action or proceeding shall
have been instituted and, at what would otherwise have been the Closing Date,
remain pending before any Governmental Authority to restrain, prohibit or
otherwise challenge the consummation of the transactions contemplated hereby or
the performance of the material obligations of the parties hereto, nor shall any
Governmental Authority have notified any party to this Agreement that the
consummation of the transactions contemplated hereby would constitute a
violation of Law and that it intends to commence proceedings to restrain the
consummation of such transactions, to force divestiture if the same are
consummated or to materially modify the terms or results of such transactions
unless such Governmental Authority shall have withdrawn such notice, or has
otherwise indicated in writing that it will not take any action, prior to what
would otherwise have been the Closing Date.
(c) Notices, Reports, Filings, Consents. All notices, reports,
filings and Consents set forth on Schedule 3.2(c) attached hereto shall have
been delivered or obtained, as applicable, and the Seller and PBCC shall have
provided the Buyer with evidence thereof reasonably satisfactory to the Buyer.
(d) Contribution Transaction; Assurances. The Contribution
Transaction shall have been consummated and copies of all Documents as the
Buyer's Special Counsel considers reasonable, necessary or desirable validly and
effectively to complete the contribution of the Transferred Assets and
assignment of the Assumed Liabilities by the Seller to CPLC shall have been
executed by all parties thereto and delivered to the Buyer, including, but not
limited to, an Exchange Agreement and such other bills of sale or instruments of
conveyance or transfer as may be reasonably required by the Buyer or the Buyer's
Special Counsel.
(e) Good Title. The Seller shall have good title to the CPLC
Shares free and clear of all Liens.
(f) Servicing Agreement. The Servicing Agreement shall have
been duly executed and delivered to the Buyer by the Seller, PBCC and CPLC.
(g) Legal Opinion. The Buyer shall have received a favorable
legal opinion in form and scope reasonably satisfactory to the Buyer from each
of (i) Keith Williamson, Esq., General Counsel to the Seller and Pitney Bowes
Financial Services and (ii) the Seller's Special Counsel.
(h) Power of Attorney. The Seller shall have granted each of
CPLC and the Buyer a limited power of attorney appointing each of the Buyer,
CPLC and their respective designees as the Seller's attorney-in-fact, for
purposes of enabling each of the Buyer, CPLC and their respective designees to
execute all assignment or amendment documents, and take all such other action as
may be reasonably necessary, to assign, of record, to CPLC all financing
statements, Liens or other evidence of ownership or interest which relate to the
Transferred Assets.
(i) PBI Guaranty. The PBI Guaranty shall have been duly
executed and delivered to the Buyer by PBI.
(j) Noncompetition/Nonsolicitation Agreement. The
Noncompetition/ Nonsolicitation Agreement shall have been duly executed and
delivered to the Buyer by PBI.
(k) Taxes. The Seller shall have paid any Taxes that are due
and owing and that it is required to pay under Section 2.5 hereof and provided
the Buyer with evidence thereof reasonably satisfactory to the Buyer.
(l) Authorizations. CPLC shall have obtained all
Authorizations set forth on Schedule 3.2(l) attached hereto and provided the
Buyer with evidence thereof reasonably satisfactory to the Buyer.
(m) Reserves. The Seller shall have caused the aggregate
amount of the reserves for doubtful accounts reflected on the general ledger of
CPLC to be at least equal to the amount specified by the Buyer to the Seller
pursuant to subsection 5.16(c) hereof and provided the Buyer with evidence
thereof reasonably satisfactory to the Buyer.
(n) Modifications to Insurance Cover. The Seller shall have
obtained the written consent of the insurance carriers with which LIAS has
placed property or liability insurance with respect to any Portfolio Property to
the partial assignment of the property insurance policy and the liability
insurance policy to CPLC, taken all actions necessary or desirable to permit the
naming of CPLC as the beneficiary under each such policy with respect to the
Portfolio Property insured under such policies and, in each case, the Seller
shall have provided the Buyer with evidence thereof reasonably satisfactory to
the Buyer and the aggregate fees or other amounts required to be paid to such
carriers in connection with the matters set forth in this subsection (m), if
any, shall not exceed $250,000.
3.3 Conditions for the Benefit of PBCC and the Seller. Neither
PBCC nor the Seller is obligated to consummate the transactions herein provided
for unless each of the following conditions precedent has been satisfied, it
being understood that these conditions are included for the exclusive benefit of
PBCC and the Seller and may be waived in writing in whole or in part by PBCC and
the Seller at any time, and the Buyer shall use commercially reasonable efforts
to ensure that such conditions are fulfilled on or before the Closing Date:
(a) Representations; Covenants; Certificate. The
representations and warranties of the Buyer contained herein shall be true and
correct in all material respects at the Closing, in each case with the same
effect as though made at and as of such time; the Buyer shall have performed in
all material respects all obligations and complied in all material respects with
all covenants required by this Agreement to be performed or complied with by it
at or prior to the Closing (except to the extent waived hereunder in writing);
and the Buyer shall have delivered to the Seller and PBCC a certificate of the
Buyer in form and substance reasonably satisfactory to the Seller and PBCC,
dated the Closing Date, and signed on the Buyer's behalf by its authorized
representative, in his or her representative capacity (and not individually), to
all such effects and certifying the satisfaction of the conditions set forth in
this Section 3.3.
(b) No Action or Proceeding. No action or proceeding shall
have been instituted and, at what would otherwise have been the Closing Date,
remain pending before any Governmental Authority to restrain, prohibit or
otherwise challenge the consummation of the transactions contemplated hereby or
the performance of the material obligations of the parties hereto, nor shall any
Governmental Authority have notified any party to this Agreement that the
consummation of the transactions contemplated hereby would constitute a
violation of Law and that it intends to commence proceedings to restrain the
consummation of such transactions, to force divestiture if the same are
consummated or to materially modify the terms or results of such transactions
unless such Governmental Authority shall have withdrawn such notice, or has
otherwise indicated in writing that it will not take any action, prior to what
would otherwise have been the Closing Date.
(c) Notices, Reports, Filings, Consents. All notices, reports,
filings and Consents set forth on Schedule 3.3(c) attached hereto shall have
been delivered or obtained, as applicable.
(d) Taxes. The Buyer shall have paid any Taxes that are due
and owing and that it is required to pay under Section 2.5 hereof and provided
PBCC and the Seller with evidence thereof reasonably satisfactory to them.
(e) Servicing Agreement. The Servicing Agreement shall have
been duly executed and delivered to the Seller and PBCC by the Buyer and CPLC.
(f) Legal Opinion. The Seller shall have received a favorable
legal opinion in form and scope reasonably satisfactory to the Seller from each
of (i) Monica M. Gaudiosi, Esq., Business General Counsel, counsel to the Buyer
and (ii) the Buyer's Special Counsel.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer, upon each of which representations and
warranties the Buyer specifically relies, as follows:
(a) Corporate Power and Qualification. The Seller (i) is duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts; (ii) has full corporate power to own, operate,
lease and dispose of all or any portion of the Transferred Assets and to conduct
the Business, as presently conducted by it; and (iii) is duly licensed,
registered or qualified and authorized to conduct business in each jurisdiction
in which it owns or leases Property or conducts the Business, to the extent
required to enable the Business to be conducted as now conducted, and all such
licenses, registrations, qualifications and Authorizations are valid and
subsisting and in good standing. Schedule 4.1(a) attached hereto contains true
and correct copies of the certificate of incorporation (including all amendments
thereto through the date hereof) and the bylaws, each as in effect on the date
hereof, of the Seller.
(b) Corporate Authority. The Seller has the full power, legal
right, corporate power and authority to execute, deliver and perform this
Agreement and all of the other documents required to be delivered by it in
connection herewith and to do all acts and things as are expressly required or
contemplated hereunder or thereunder to be done, observed or performed by it
(including consummation of the Contribution Transaction).
(c) Valid Authorization. The execution, delivery and
performance by the Seller of this Agreement and all of the other documents
required to be delivered by it in connection herewith and the taking of all acts
and things as are required or contemplated hereunder or thereunder to be done,
observed or performed by it (including consummation of the Contribution
Transaction) have been duly authorized by all necessary corporate and
stockholder action.
(d) Violation of Other Instruments and No Defaults. Except as
set forth on Schedule 4.1(d), none of the execution and delivery of this
Agreement or any other document required to be delivered by the Seller in
connection herewith, the fulfillment or compliance with any of the terms hereof
or thereof or the consummation of the transactions contemplated hereby or
thereby does or will, with or without the giving of notice and/or the passage of
time, violate, conflict with or constitute a breach of or a default under (i)
any Contract (whether or not in writing) to which the Seller or any of its
Subsidiaries is a party or any of its or their respective Properties are
subject, (ii) the certificate of incorporation or bylaws of the Seller or any of
its Subsidiaries or (iii) any Law to which the Seller or any of its Subsidiaries
is subject; nor will such execution, delivery, fulfillment, compliance or
consummation result either in acceleration in the time for performance of any
obligation of the Seller relating to or affecting any of the Transferred Assets
or the Assumed Liabilities or in the creation of any Lien upon any of the
Transferred Assets other than Liens in favor of the Buyer; provided, however,
that the representation made in clause (i) above shall be conditioned on the
delivery of the notices, reports or filings and the receipt of the Consents, in
each case, that are set forth on Schedule 4.1(e), it being understood that those
Consents set forth on Schedule 3.2(c) shall be obtained prior to the Closing
Date unless waived by the Buyer.
(e) Notices, Reports, Filings and Consents. Except as set
forth on Schedule 4.1(e) attached hereto and other than the HSR Filing, no
notices, reports or other filings are required to be made by the Seller, nor are
any Consents required to be obtained by the Seller, in connection with the
execution and delivery of this Agreement, any document required to be delivered
by the Seller in connection herewith or the consummation of the transactions
contemplated hereby or thereby.
(f) Enforceable Agreements. This Agreement and all of the
other documents to be executed by the Seller in connection herewith or in
connection with the Contribution Transaction have been, or will have been at the
Closing, as applicable, duly executed and delivered by the Seller and are or
will be at the Closing, as applicable, valid and binding obligations of the
Seller enforceable in accordance with their terms, except as such enforceability
may be limited by the Bankruptcy Exception.
(g) Shares. When issued by CPLC to the Seller as part of the
Contribution Transaction, the CPLC Shares will constitute all of the issued and
outstanding shares of capital stock of CPLC and, as of the Closing, will have
been duly authorized and validly issued and will be fully paid, nonassessable
and free of preemptive rights and, as of the Closing, be held of record and
owned beneficially by the Seller, free and clear of any Liens. Except as
contemplated by the Contribution Transaction or this Agreement, there are no
outstanding or authorized options, convertible or exchangeable securities or
instruments, warrants, rights, calls, puts, rights to subscribe, conversion
rights or other Contracts (whether or not in writing) to which the Seller, PBCC
or CPLC is a party or which are binding on any of them providing for the
issuance, disposition or acquisition of any capital stock of CPLC. There are no
outstanding stock appreciation, phantom stock or similar rights with respect to
CPLC. There are no voting trusts, proxies or other Contracts (whether or not in
writing) with respect to the voting of any capital stock of CPLC.
(h) Litigation. Except as set forth on Schedule 4.1(h)
attached hereto, there is no civil, criminal or administrative action, suit,
proceeding, claim, inquiry, hearing, investigation or proceeding (including, but
not limited to, any counter-claim) before any arbitrator or before or by any
Governmental Authority pending or, to the Seller's Knowledge, threatened, by or
against the Seller or CPLC (i) relating to or affecting the Transferred Assets,
the Assumed Liabilities or the CPLC Shares, (ii) relating to or affecting the
Business, except for routine collection actions that have been commenced and are
being prosecuted by the Seller in the ordinary course of its business and
consistent with its past practices or (iii) for the purpose of restraining,
enjoining, preventing or invalidating this Agreement or the consummation of the
transactions contemplated hereby or otherwise claiming that any of the foregoing
are improper. Except as set forth on Schedule 4.1(h) or on Schedule 4.1(n), the
Seller has not been the subject of any proceeding, nor to the Seller's Knowledge
has there been any investigation, by or before any Governmental Authority, in
either case, relating to the business practices of the Seller from January 1,
1993 through the Closing Date.
(i) No Brokers. The Seller has not entered into any agreement
that would entitle any Person to any valid claim against CPLC or the Buyer for a
broker's commission, finder's fee or any like payment in respect of the purchase
and sale of the CPLC Shares or any other transactions contemplated by this
Agreement, except for Wasserstein Perella & Co., Inc. ("WPC"), all of the fees
and expenses of which are for the Seller's and PBCC's account.
(j) Employee Benefit Plans, etc.
(i) Schedule 4.1(j)(i) attached hereto sets forth all
"employee benefit plans" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all
other employee benefit arrangements or payroll practices, including,
without limitation, bonus plans, consulting or other compensation
agreements, incentives, equity or equity-based compensation, or
deferred compensation arrangements, stock purchases, severance pay,
sick leave, vacation pay, salary continuation for disability,
hospitalization, medical insurance, life insurance and scholarship
programs (collectively, "Benefit Plans"), in any case, maintained by
the Seller, or to which the Seller contributed or is obligated to
contribute thereunder for current or former employees of the Seller
(the "Plans"). Except as set forth on Schedule 4(j)(i), none of the
current or former employees of the Seller participate in any Benefit
Plan sponsored or maintained by an ERISA Affiliate. Schedule 4.1(j)(i)
separately sets forth those Plans that are maintained or sponsored by
the Seller.
(ii) Schedule 4.1(j)(ii) attached hereto separately sets
forth all "employee pension plans", as defined in Section 3(2) of
ERISA, subject to Title IV of ERISA or Section 412 of the Code, to
which the Seller or any trades or businesses (whether or not
incorporated) which are or have ever been under common control, or
which are or have ever been treated as a single employer, with the
Seller under Section 414(b), (c), (m) or (o) of the Code (an "ERISA
Affiliate") contributed or has ever been obligated to contribute
thereunder at any time during the six (6) years ending on October 31,
1998 (the "Title IV Plans") and, as of the most recent plan valuation
date, the "accumulated benefit obligations", and the "projected benefit
obligations" of each Title IV Plan that is currently sponsored by the
Seller or any ERISA Affiliate using the actuarial assumptions used by
each such plan's actuary for FAS 87 purposes, together with the fair
market value of the assets of each such Plan. None of the Title IV
Plans is a multiemployer plan, as defined in Section 3(37) of ERISA, or
is or has been subject to Sections 4063 or 4064 of ERISA.
(iii) The Seller has made available or delivered to the
Buyer true, correct and complete copies of the following documents with
respect to each of the Plans, to the extent applicable: (A) summary
plan descriptions, (B) written summaries of any Plans for which summary
plan descriptions are not required and (C) material written
communications to employees relating to the Plans which change the
terms set forth in clauses (A) or (B) above.
\ (iv) To the Seller's Knowledge, the Plans have been
maintained, in all material respects, in accordance with their terms
and with all provisions of ERISA, the Code (including rules and
regulations thereunder) and other applicable Laws.
(v) To the Seller's Knowledge, the Plans that are
intended to be qualified under Section 401 of the Code are so qualified
and the trusts maintained pursuant thereto are exempt from federal
income taxation under Section 501 of the Code, and, to the Seller's
Knowledge, nothing has occurred with respect to the operation of such
Plans which is reasonably likely to cause the loss of such
qualification or exemption or the imposition of any liability, penalty
or tax under ERISA or the Code.
(vi) All contributions (including all employer
contributions and employee salary reduction contributions) required to
have been made under any of the Plans by the Seller or by Law (without
regard to any waivers granted under Section 412 of the Code), to any
funds or trusts established thereunder or in connection therewith have
been made by the due date thereof (including any valid extension), and
all contributions for any period ending on or before the Closing Date
which are not yet due will have been paid on or prior to the Closing
Date.
(vii) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will
result in any compensation payment in excess of $10,000 becoming due to
any employee (current, former or retired) of the Seller as a result of
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby other than benefit payments under the
Plans made in the ordinary course.
(k) Employees and Labor. Schedule 4.1(k) attached hereto sets
forth all of the employees of the Seller as of September 30, 1998. None of the
Employees is represented in his or her capacity as an employee of the Seller by
any labor organization, nor has the Seller recognized any labor organization nor
has any labor organization been elected as the collective bargaining agent of
any Employees, nor has the Seller entered into any collective bargaining
agreement or union contract recognizing any labor organization as the bargaining
agent of any Employees. There is no union organization activity involving any of
the Employees, pending or threatened, nor has there ever been union
representation involving any of the Employees. There is no picketing, strikes,
slowdowns, work stoppages, other job actions, lockouts, arbitrations, grievances
or other labor disputes involving any of the Employees, pending or, to the
Knowledge of the Seller, threatened. There are no complaints, charges or claims
against the Seller pending or, to the Seller's Knowledge, threatened, which
could be brought or filed with any Governmental Authority or arbitrator
resulting from, arising out of, based on or relating to, the employment or
termination of employment or failure to employ by the Seller, of any individual.
The Seller is in compliance in all material respects with all Laws relating to
the employment of labor, including all such Laws relating to wages, hours, WARN
and any similar state or local "mass layoff" or "plant closing" Law, collective
bargaining, discrimination, civil rights, safety and health, workers'
compensation and the collection and payment of withholding and/or social
security taxes and any similar tax. There has been no "mass layoff" or "plant
closing" as defined by WARN with respect to the Seller within the prior six
months.
(l) Compliance with Applicable Laws. The Seller is, and at all
times has been, conducting the Business in compliance with all Laws (including,
but not limited to, Laws pertaining to usury, truth in lending, credit
reporting, equal credit opportunity, installment or conditional sales and sales
financing) of each jurisdiction in which the Business is being conducted.
Neither the billing and collection nor the enforcement of any Transferred
Financing Contract or any Credit Enhancement related thereto in accordance with
the written terms of any contract, agreement or commitment applicable thereto
will result in the violation of any Laws enacted, promulgated or issued by any
Governmental Authority. The Seller has, and at all times in the past had, all
Authorizations and has conducted the Business and has owned and operated each of
the Transferred Assets at all times in compliance with all Laws and all such
Authorizations. Neither the Seller nor CPLC has received any written notice of
violation of any Law from any Governmental Authority. The Seller is not subject
to any judgment, writ, decree, injunction or order of any Governmental Authority
relating to the acquisition, collection or administration of any Financing
Contracts or the disposition of any Portfolio Property or, in either case, any
transactions or activities incidental thereto. The Seller is not required to
comply with any applicable "bulk sales" Law relating to transfers governed by
Article 6 of the Uniform Commercial Code or any other applicable Laws relating
to bulk transfers (other than Tax Laws) in connection with the Contribution
Transaction.
(m) Transferred Financing Contracts.
(i) Validity of Transferred Financing Contracts. Each
Transferred Financing Contract and each Credit Enhancement related
thereto constitutes and arose out of a bona fide business transaction
entered into in the ordinary course of business of the Seller,
consistent with its past practices, and is valid, binding and
enforceable by the Seller against the lessee, obligor or borrower
thereunder in accordance with its written terms, except as may be
limited by the Bankruptcy Exception. Each Transferred Financing
Contract and each Credit Enhancement related thereto is unamended from
its terms (as in effect at the origination of such Financing Contract)
except as has occurred in the ordinary course of business, and each of
such amendments has been accurately and adequately recorded in the
Books and Records of the Seller relating thereto. Except as set forth
on Schedule 4.1(m)(i) attached hereto, each Transferred Financing
Contract and each Credit Enhancement related thereto is without any
default thereunder by the Seller or CPLC. No Obligor under any
Transferred Financing Contract has acquired any Portfolio Property, any
interest in any Portfolio Property or the use of any Portfolio Property
pursuant to any such Transferred Financing Contract for personal,
family or household use. No Obligor under any Transferred Financing
Contract is required under any applicable Law to withhold from payments
on any such Transferred Financing Contract any amounts, whether for the
payment of Taxes to any Governmental Authority or otherwise. The Seller
has in its possession, has made available to the Buyer, and in
connection with the Contribution Transaction, will transfer possession
to CPLC of a fully executed original of any lease or note (and an
executed original or a true and correct copy of all other material
supporting certificates and related Documents) comprising each
Transferred Financing Contract and each related Credit Enhancement and
all other Documents required by the credit or investment approval
relating thereto. The Seller has in its possession Documents sufficient
to establish the original cost or value (as used by the Seller) of all
Portfolio Property for purposes of determining personal property Tax
liability. All payments pursuant to each Transferred Financing Contract
are made directly to the Seller and, after the Closing, will be made
directly to CPLC. The Seller is not, nor has it been, nor is it
committed to become, a party to any Contract with respect to the
Residual of any Portfolio Property except for certain Contracts,
entered into in the ordinary course of the Seller's business and
consistent with its past practices, pursuant to which the Seller has
the right, but not any duty or obligation, to require a broker or
vendor to repurchase the residual interest in certain Portfolio
Property that is specifically identified in such Contract. The Books
and Records of the Seller in respect of each Transferred Financing
Contract accurately and adequately reflect the status of all payments
due thereunder and any written notices received from any Obligor
thereunder or any insurer of Portfolio Property that is subject thereto
or governed thereby.
(ii) Location and Use of Portfolio Property. The Portfolio
Property subject to or governed by any Transferred Financing Contract
(A) has been delivered to and accepted by the Obligor under such
Transferred Financing Contract in accordance with the terms thereof,
(B) is required under such Transferred Financing Contract to be in good
operating condition and to be properly maintained by the Obligor
thereunder and (C) is required under such Transferred Financing
Contract to be situated at the premises referred to in such Transferred
Financing Contract or if such Portfolio Property may be relocated,
requires the Obligor thereunder to provide notice of such relocation to
the Seller.
(iii) Ownership of/Liens on Portfolio Property. Each item
of Portfolio Property is accurately described in the Transferred
Financing Contract related to such Portfolio Property. Except as
disclosed on Schedule 4.1(m)(iii) attached hereto: (A) the Seller has
and, after giving effect to the Contribution Transaction, CPLC will
have, with respect to each item of Portfolio Property, either (1) good
and valid title to such Portfolio Property, free and clear of all Liens
other than (I) Permitted Liens and (II) options to acquire Portfolio
Property that were granted by the Seller to an Obligor or a broker, to
the extent that such options are properly reflected on the Final
Schedule of Assets and Liabilities or (2) a valid first priority
security interest, governed by or subject to a Transferred Financing
Contract, which has been duly perfected (including, but not limited
pursuant to, all appropriate Uniform Commercial Code filings), when and
as required by the Seller's written operating procedures pertaining to
such matters, a copy of which is set forth on Schedule 4.1(m)(iii); (B)
none of the Portfolio Property is a vessel or an aircraft; (C) no
Person has an option to purchase any item of Portfolio Property for a
fixed amount less than the Residual thereof; (D) each item of Portfolio
Property complies in all respects with all Laws applicable to such
Portfolio Property, except that the Seller makes no representation as
to whether the use of Portfolio Property by the Obligor complies with
all applicable Laws; and (E) each Transferred Financing Contract that
relates to any item of Portfolio Property requires the Obligor
thereunder (and not the Seller or any other Person) to obtain and
maintain insurance against loss or damage with respect to such item of
Portfolio Property.
(iv) Defenses, etc. Except as set forth on Schedule
4.1(m)(iv) attached hereto, each Transferred Financing Contract and
each Credit Enhancement related thereto is, or as of the Closing Date
will be, in full force and effect, free and clear of any Liens (whether
or not perfected) except for Permitted Liens, and not subject to any
defense, offset, claim, right of rescission or counterclaim by the
Obligor, in the case of a Transferred Financing Contract, or by the
obligor thereunder in the case of any Credit Enhancement related
thereto, or, in either case, any Person claiming under any such right.
The Seller has not taken any action or failed to take any action, in
respect of any Portfolio Property, which would materially jeopardize or
prejudice the good standing, binding effect or enforceability of any
manufacturer's warranty relating to such Portfolio Property, and the
Seller has not amended, cancelled, extended, modified, assigned or
encumbered any of such warranties, other than to the extent of the
rights of the Obligor provided for in the related Transferred Financing
Contract.
(v) No Warranties by the Seller. The Seller has not made
any representation or warranty, express or implied, to any Person as to
the condition, design, operation, fitness for use, maintenance, value
or marketability of any Portfolio Property.
(vi) Default Provisions. Each Transferred Financing
Contract contains commercially reasonable default provisions, and
remedial provisions in respect thereof, which can reasonably be
expected to enable CPLC, after the Closing, to obtain the practical
realization of the benefits accorded to it, as the owner of the
Transferred Financing Contracts.
(n) Taxes. Except as set forth on Schedule 4.1(n) attached
hereto:
(i) The Seller has timely filed or has had filed on its
behalf, after giving effect to any applicable extensions, all Tax
Returns required to be filed under applicable Law with respect to the
Transferred Assets or the income or operations of the Business, and all
such Tax Returns were true, correct and complete in all material
respects. The Seller has timely paid or has had paid on its behalf,
after giving effect to any applicable extensions, all Taxes shown as
due on such Tax Returns. All Taxes, other than income Taxes, imposed on
the Seller in respect of rents under any Financing Contract comprising
part of the Transferred Assets are the obligation of the Obligor under
such Financing Contract.
(ii) The Seller has delivered or made available to the
Buyer copies of those portions of (A) all domestic or foreign federal,
state and local Tax Returns of the Seller relating to the Transferred
Assets for taxable periods after December 31, 1994, (B) any written
audit report from a taxing authority issued after December 31, 1994
relating to Taxes due from or with respect to the Seller relating to
the Transferred Assets and (C) any extensions of the statute of
limitations with respect to any Taxes due from or with respect to the
Seller relating to the Transferred Assets.
(iii) Except in connection with any consolidated,
affiliated, or combined United States federal, state, or local income
Tax Return, the Seller has not requested any extension of time within
which to file any Tax Return with respect to the Transferred Assets or
the income or operation of the Business, which Tax Return has not since
been filed and for which Buyer or CPLC would have an obligation to file
such Tax Return.
(iv) Except in connection with any consolidated,
affiliated, or combined United States federal, state, or local income
Tax Return, the Seller has not executed any outstanding waivers or
comparable consents regarding the application of the statute of
limitations with respect to any Taxes or Tax Returns with respect to
the Transferred Assets or the income or operation of the Business.
(v) No taxing authority has asserted any material Tax
deficiency that has not been paid or reserved for in accordance with
generally accepted accounting principles as in effect in the United
States on the date of this Agreement with respect to the Transferred
Assets, or the income or operations of the Business. No audits or other
administrative proceedings or court proceedings are presently pending
with regard to any Taxes or Tax Returns of the Seller (with respect to
the Transferred Assets or the income or operation of the Business). No
claim has been made by a taxing authority of a jurisdiction in which
the Seller (with respect to the Transferred Assets or the income or
operation of the Business) has not filed Tax Returns that the Seller is
or may have been subject to taxation by that jurisdiction.
(vi) No power of attorney (with respect to Taxes)
currently in force has been granted by the Seller or CPLC (with respect
to the Transferred Assets or the income or operation of the Business)
that would be binding on the Buyer or CPLC with respect to taxable
periods including, or commencing on or after, the Closing Date.
(vii) The Seller (with respect to the Transferred Assets or
the income and operation of the Business) and CPLC have complied in all
material respects with the provisions of the Code relating to the
payment and withholding of Taxes, including, without limitation, the
withholding and reporting requirements under Code Sections 1441 through
1464, 3401 through 3606, 6041 and 6049, as well as similar provisions
under any other Laws, and within the time and in the manner prescribed
by Law, has withheld and paid over to the proper Governmental
Authorities all material amounts required in connection with amounts
paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(viii) No power of attorney with respect to any Tax matter
relating to CPLC is currently in force.
(ix) No Person (including, but not limited to, PBCC, the
Seller, CPLC or any of their respective Affiliates) on behalf of CPLC
has: (A) filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any disposition
of any Transferred Asset that is a subsection (f) asset (as such term
is defined in Section 341(f)(4) of the Code); (B) executed or entered
into a closing agreement pursuant to Section 7121 of the Code or any
predecessor provision thereof or any similar provision of domestic or
foreign state or local law; or (C) agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar
provision of domestic or foreign state or local law by reason of a
change in accounting method initiated by CPLC or has any knowledge that
the Internal Revenue Service or any other taxing authority has proposed
any such adjustment or change in accounting method, or has any
application pending with any taxing authority requesting permission for
any changes in accounting methods that relate to the business or
operations of CPLC.
(x) Neither the Seller nor CPLC is a foreign person
within the meaning of Section 1445 of the Code as in effect on the
Closing Date.
(xi) No claim has been made by a taxing authority in a
jurisdiction where CPLC does not file Tax Returns that CPLC is or may
be subject to taxation by that jurisdiction.
(xii) (A) the classification set forth on the Final
Schedule of Assets and Liabilities is, with respect to each of the
Transferred Financing Contracts, consistent with the manner in which
such Transferred Financing Contract has been classified on the Seller's
federal income tax returns (as a loan or as a lease for federal income
tax purposes), (B) such classification (as a loan or as a lease for
federal income tax purposes) has not been challenged by the IRS or any
domestic or foreign state or local taxing authority in a notice of
proposed adjustments or notice of deficiency and (C) the Seller has
reported its status under each Transferred Financing Contract as that
of an owner of equipment or a lender and not as an owner of an equity
interest in a partnership, corporation or other association for federal
income tax purposes.
(xiii) None of the Transferred Assets are (A) property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954,
as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986, (B) subject to Section 168(g)(1)(A) of the Code,
(C) tax-exempt use property within the meaning of Section 168(h)(1) of
the Code, (D) limited use property (as that term is used in Rev. Proc.
76-30) or (E) tax-exempt bond financed property within the meaning of
Section 168(g) of the Code.
(xiv) Except for Transfer Taxes that are referred to in
Section 2.5 hereof, the Seller has paid, or caused to be paid, any and
all license fees, stamp taxes, excise, sales, use, transfer or property
taxes or similar fees or taxes due and owing with respect to all
Transferred Financing Contracts and property relating thereto to the
state or other jurisdiction (or any political subdivision thereof)
where the Transferred Financing Contracts originated or where the
Obligors with respect thereto are located, resulting from, arising out
of, based on or relating to, the Transferred Financing Contracts.
(xv) CPLC has not filed, and as of the Closing Date is not
obligated to file any Tax Returns relating to the taxable periods since
its formation as no such tax returns are due.
(xvi) Except for the tax sharing agreement dated April 1,
1977 between PBI and PBCC as amended on January 17, 1990, CPLC is not a
party to any Tax sharing, Tax indemnification or similar agreement or
arrangement (whether or not written) (a "Tax Sharing Agreement").
(xvii) There is no Contract, plan or arrangement covering
any Person or pertaining to the Transferred Assets, the Business or
CPLC, that, individually or collectively (either alone or upon the
occurrence of any additional or subsequent event), could give rise to
the payment of any amount that would not be deductible by the Buyer,
any of the Buyer's Affiliates or CPLC by reason of Section 280G of the
Code.
(xviii) There are no written private letter rulings from the
IRS or comparable written rulings from other taxing authorities and no
written closing agreements with the IRS or other taxing authorities
relating to CPLC or any of the Transferred Assets that would have a
continued adverse effect upon CPLC, the Transferred Assets or the
Business.
(xix) There are no Liens as a result of any unpaid Taxes upon any of
the Property of CPLC.
(xx) There are no written elections in effect for federal
income tax purposes under Sections 108, 168, 338, 441, 463, 472, 1017,
1033 or 4977 of the Code or under any similar provisions of any
domestic or foreign state or local law relating to CPLC or the
Transferred Assets.
(xxi) CPLC has not been a member of any consolidated,
combined or affiliated group of corporations for any Tax purposes,
other than a group for which PBCC or a Subsidiary or Parent of PBCC is
the common parent or the common filer.
(xxii) Except for assets which in the aggregate will have a
Net Finance Receivables Balance on the Closing Date of not more than
$1,000,000, no assets of CPLC are debt instruments, the interest on
which is, or purports to be, excludable, in whole or in part, from
gross income for federal income tax purposes.
(xxiii) PBCC, the Seller and CPLC are members of a "selling
consolidated group" as such term is defined in Treasury Regulation
Section 1.338(h)(10)-1(c).
(xxiv) As of the Closing Date, none of the assets of CPLC
are either stock of a corporation or an equity interest in a
partnership for federal income tax purposes
(o) Chief Executive Office. The chief executive office of the
Seller is located at 13010 Southwest 68th Parkway, Portland, Oregon 97223.
(p) Undisclosed Liabilities. As of the Closing, there shall
exist no obligations of CPLC, either accrued, absolute, contingent or otherwise
except for the Assumed Liabilities and for Taxes for which Seller and PBCC are
liable under Section 5.15 hereof and current Taxes, if any, shown as a reserve
on the Audited Closing Date Balance Sheet.
(q) Personal and Real Properties.
(i) Except as set forth on Schedule 4.1(q)(i) attached
hereto, the Seller has, free and clear of all Liens other than
Permitted Liens, good and valid title to, or a valid leasehold interest
in, all tangible and intangible personal Property required to conduct
the Business and, upon consummation of the transactions contemplated by
this Agreement, CPLC will have, free and clear of all Liens other than
Permitted Liens, good and valid title to, or have a valid leasehold
interest in, and will be entitled to continue to use, all such personal
Property. All such personal Property is in sufficient operating
condition to continue the operations of the Business in the ordinary
and usual course, consistent with the Seller's past practices. All
leases of tangible personal Property of which the Seller, and after the
consummation of the Contribution Transaction, CPLC, is the lessee or
obligor are in full force and effect according to their terms and there
are no outstanding defaults by the Seller or CPLC thereunder (nor, to
the Knowledge of the Seller, are any of the other parties thereto in
default).
(ii) Except as set forth on Schedule 4.1(q)(ii) attached
hereto: (A) the Seller owns no fee interest in any real estate and has
no leasehold interests in real estate, (B) as of the Closing Date, CPLC
will have no fee or leasehold interests in real estate and (C) the
Seller does not occupy or use any other space or facility. All leases
of real Property of which the Seller and, after the consummation of the
transactions contemplated by this Agreement, CPLC, are the lessee are
in full force and effect according to their terms and there are no
outstanding defaults by the Seller or CPLC thereunder, nor to the
Knowledge of the Seller are any of the other parties thereto in
default.
(r) Intellectual Property. Schedule 4.1(r) attached hereto
lists all (A) patents, patent licenses and patent applications (including those
granted to or applied for or owned by the Seller); (B) software or know-how
licenses, trademark licenses, software, computer programs (other than secrecy or
confidentiality agreements) used in the Business; and (C) trademark and trade
name registrations and applications, registered copyrights and applications
therefor, registered servicemarks and applications therefor and trade names
and/or service or trademarks, used in or necessary to conduct the Business
(collectively, the "Intellectual Property"). The Seller owns or is entitled to
use, and CPLC will own or be entitled to continue to use after giving effect to
the transactions contemplated by this Agreement, all of the Intellectual
Property without the payment of any additional license fees or other payments.
There are no existing claims of, and the Seller has not received written notice
alleging, any current infringement of any Intellectual Property relating to the
Business, the Transferred Assets or the Assumed Liabilities.
(s) Material Contracts.
(i) Except as set forth on Schedule 4.1(s)(i) attached
hereto, the Seller is not, nor to the Seller's Knowledge is any other
party, in breach of or in default under any Material Contract or
Assumed Liability and no event has occurred which, with notice and/or
lapse of time, would constitute a default by the Seller or any other
party under any such Material Contract. The Seller has not received any
notice from or given any notice to any other party indicating that the
Seller or, to the Knowledge of Seller such other party, as the case may
be, is presently in default under or in breach or violation of any such
Material Contract in any material respect.
(ii) Except as set forth on Schedule 4.1(s)(ii) attached
hereto, neither CPLC (after the consummation of the Contribution
Transaction) nor the Seller is a party to, bound by or subject to any
Material Contract, or any other Contract (whether or not in writing) of
the following kinds that will constitute a Transferred Asset or an
Assumed Liability: (A) any employment contract, agreement or
commitment; (B) any indebtedness, contract, agreement or commitment to
incur indebtedness for borrowed money; (C) any contract, agreement or
commitment to which the Seller is a party relating to the disposition
or acquisition of the stock or assets of, or any interest in, any
business enterprise; (D) any contract, agreement or commitment relating
to capital expenditures and involving future payments which, together
with future payments under all other contracts, agreements or
commitments relating to the same capital project, exceed $50,000; (E)
any guarantee or indemnification running to any Person which involves,
individually or in the aggregate, a contingent liability of $50,000 or
more; (F) any contract, agreement or commitment providing for the
collection, servicing or administration of leases, loans, conditional
sales agreements or financial instruments of a similar type, by the
Seller or CPLC on behalf of any other Person; (G) other than the
Servicing Agreement, any contract, agreement or commitment providing
for the collection, servicing or administration by any Person of any
part of the leases, loans, conditional sales agreements or financial
instruments of a similar type of the Seller or CPLC on behalf of the
Seller or CPLC; (H) any contract, agreement or commitment in favor of
any Person to purchase Financing Contracts, or any interests or
participation therein, or any contract, agreement or commitment by the
Seller to sell Financing Contracts, or any interests or participation
therein; (I) other than this Agreement, any contract, agreement or
commitment containing any covenant or provision limiting the freedom of
the Seller or CPLC to engage in any line of business or compete with
any Person in any geographic area; (J) any contract, agreement or
commitment that would, if performed in accordance with its terms, have
a Material Adverse Effect; (K) any contract, agreement or commitment
limiting the right of CPLC to pay dividends or distributions to its
shareholders; (L) any hedging, cap, swap or other derivative contract
or agreement; (M) any contract, agreement or commitment in which the
Seller or CPLC participates as a general partner or joint venturer; or
(N) any lease of tangible personal Property (where the Seller or CPLC
is the lessee) involving aggregate payments in excess of $50,000 other
than those which may be canceled without penalty in 30 days. Each
contract, agreement or commitment required to be set forth on Schedule
4.1(s)(ii) or Schedule 4.1(s)(iii) attached hereto is valid, binding
and enforceable against the parties thereto in accordance with its
terms, except to the extent the foregoing may be limited by the
Bankruptcy Exception and, except as otherwise noted on Schedule
4.1(s)(ii) or Schedule 4.1(s)(iii), is in full force and effect without
any default thereunder by the Seller or CPLC or, to the Knowledge of
the Seller, by any other party thereto.
(iii) Schedule 4.1(s)(iii) attached hereto sets forth (A) a
list (including the names of the parties thereto and dates thereof) of
all existing Program Agreements of the Seller, identifying those which
are not terminable without penalty upon 90 days' or less notice by the
Seller, (B) a description of all negotiations concerning the creation
of any new Program Agreement of the Seller and (C) a list of all Active
Brokers.
(iv) Upon the consummation of the transactions
contemplated hereby and subject to the terms and conditions hereof,
CPLC will be entitled to all of the benefits under the contracts,
agreements and commitments required to be set forth on Schedule
4.1(s)(ii) or Schedule 4.1(s)(iii).
(t) Year 2000 Compliance. The Seller has heretofore provided
to the Buyer the Seller's written plan entitled "Colonial Pacific Leasing - Year
2000 Remediation Plan" and dated September 2, 1998 (the "Year 2000 Plan") that
describes all actions that the Seller reasonably believes are necessary or
desirable to cause all of its Date-Sensitive Systems and all of its data, in
each case, that relate to or are used in connection with any of the Transferred
Assets, the Assumed Liabilities or the Business to be Year 2000 Compliant. To
the Knowledge of Seller, the Seller has taken all actions described in the Year
2000 Plan required to be taken by the terms of the Year 2000 Plan through the
date of this Agreement, except that the Seller has not yet undertaken any tests
of such Date-Sensitive Systems for the purpose of verifying that they are Year
2000 Compliant and except for those matters set forth on Schedule 4.1(t) hereto.
To the Seller's Knowledge there are no actions that are necessary or desirable
to cause all of its Date-Sensitive Systems and all of its data, in each case,
that relate or are used in connection with any of the Transferred Assets, the
Assumed Liabilities or the Business to be Year 2000 Compliant that are not set
forth in the Year 2000 Plan.
(u) Insurance. Schedule 4.1(u) attached hereto is a list of
all liability, Property, workers' compensation, directors' and officers'
liability and other policies of insurance that insure the assets, Business,
Properties or operations of the Seller or affect or relate to the ownership, use
or operations of any of the Transferred Assets as of the date hereof, all of
which are in full force and effect.
(v) Absence of Certain Changes; Conduct of Business.
(i) Except as set forth on Schedule 4.1(v)(i) attached
hereto, since May 31, 1998, there has not been any Material Adverse
Effect or any development or combination of developments of which the
Seller has Knowledge that is reasonably likely to result in any
Material Adverse Effect.
(ii) Except as set forth on Schedule 4.1(v)(ii) attached
hereto, since May 31, 1998, the Seller has not (A) made or committed to
make any capital expenditures (excluding the purchase of Portfolio
Property) except for those not in excess of $50,000 per capital
project, (B) waived or committed to waive any rights which could have a
Material Adverse Effect, (C) suffered any extraordinary loss or
extraordinary losses (as defined in Opinion No. 30 of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and any amendments or interpretations thereof), or (D)
suffered any damage, destruction or casualty loss, whether or not
covered by insurance, in excess of $5,000 in the case of any individual
loss, or $50,000 with respect to the aggregate of all such losses.
(iii) Except as set forth on Schedule 4.1(v)(iii) attached
hereto, since May 31, 1998, the Seller has not (A) made or agreed to
make any increase in the compensation payable or to become payable to
any Employee, except for regularly scheduled increases in compensation
payable or increases otherwise occurring in the ordinary and usual
course of business consistent with past practices, (B) made or agreed
to make any increase in any Benefit Plan, (C) failed promptly to pay
and discharge current liabilities, except in the case of such
liabilities disputed in good faith for which adequate reserves are
maintained in accordance with generally accepted accounting principles
as in effect in the United States on the date of this Agreement, or (D)
permitted any Lien on any of the Transferred Assets other than
Permitted Liens.
(iv) Since May 31, 1998, the Seller has used all
reasonable efforts to preserve the Business substantially intact and to
preserve its present relationships with (A) each Employee and (B) each
Person (including any broker) having any business relationship which is
advantageous to it, the Business or the Transferred Assets, the
discontinuance of which relationship, in either case, could have a
Material Adverse Effect. Since May 31, 1998, PBCC and its Affiliates
have conducted their respective business relationships with the Seller
only in the ordinary and usual course, consistent with their past
practices.
(v) Except as set forth on Schedule 4.1(v)(v) attached
hereto, since May 31, 1998, (A) the Seller has conducted the Business
only in the ordinary course, consistent with its past practices and has
not deviated from or changed in any respect any of its credit policies
or collateral eligibility standards that were in effect as of May 31,
1998; (B) to the extent that the Seller has approved credit
applications with respect to (1) financing or lease transactions
constituting Backlog or Program Agreements, which, as of the Closing,
have not become Financing Contracts (in the case of the Backlog) or
binding, valid and enforceable Program Agreements (in the case of
credit applications pertaining to Program Agreements) or (2) Financing
Contracts or Program Agreements entered into after May 31, 1998, but
prior to the Closing, the Seller has complied with standards of
evaluating, originating, underwriting and funding new business which
are in all respects consistent with the Operating Bulletins relating to
evaluating, originating, underwriting and funding new business and (C)
the Seller has not, directly or indirectly, in any way extended or
otherwise restructured the payment schedule, payment terms or any other
term or condition of any Financing Contract or Program Agreement, or
made any advance, extension, restructuring, novation, modification or
other accommodation to any lessee, borrower or obligor thereunder,
except for advances, extensions, restructurings, novations,
modifications or other accommodations made or entered into in the
ordinary course of business and consistent with the Seller's past
practices.
(w) Tax-Exempt Public Sector Financing Contracts. None of the
Transferred Financing Contracts are or, in the case of Backlog, will be
Tax-Exempt Public Sector Financing Contracts, [except for Transferred Financing
Contracts which in the aggregate will have a Net Finance Receivables Balance on
the Closing Date of not more than $1,000,000.]
(x) Environmental Matters. Except as disclosed on Schedule
4.1(x) attached hereto, (i) the operations of the Business have been and are in
material compliance with all Environmental Laws; (ii) no judicial or
administrative proceedings are pending or (to the Knowledge of the Seller)
threatened against the Seller, relating to the Business or the Transferred
Assets, that allege the violation of or seek to impose liability pursuant to any
Environmental Law, and there are no investigations pending or (to the Knowledge
of the Seller) threatened against the Transferred Assets or the Seller with
respect to the Business, which in any case could give rise to Environmental
Costs and Liabilities; and (iii) there are no facts, circumstances or conditions
resulting from, arising out of, based on or relating to, the Business or the
Transferred Assets that are reasonably likely to give rise to any Environmental
Costs and Liabilities. The Seller has provided the Buyer with copies of all
environmentally related audits, assessments, studies, reports, analyses and
results of investigations relating to the Transferred Assets that are in the
possession, custody or control of the Seller or PBCC.
(y) Financial Reports.
(i) The May 31 Balance Sheet, attached hereto as Annex E,
was prepared on the basis of the statements and assumptions set forth
in the respective notes thereto and, based on those assumptions, fairly
presents, on a pro forma basis, the financial position of CPLC as if
the Contribution Transaction had been consummated on such date, in
accordance with the Accounting Principles set forth on Schedule 5.5(a)
except for the matters set forth on Schedule 4.1(y)(i) attached hereto.
(ii) The Adjusted Net Write-off Experience report,
attached hereto as Schedule 4.1(y)(ii), was prepared from the Books and
Records of the Seller as of such date, is true, correct and complete in
all material respects as to the matters set forth therein based on the
assumptions set forth therein as of such date and accurately presents,
on a pro forma basis for the periods covered by such report, the credit
losses that would have been incurred by the Seller during such periods,
assuming that any Financing Contract had been written off by the Seller
when such Financing Contract became 180 Days Delinquent.
(iii) The Other Income Analysis reports for the periods
ended December 31, 1996, December 31, 1997 and April 30, 1998,
respectively, all of which are attached hereto as Schedule 4.1(y)(iii),
were prepared from the Books and Records of the Seller as of the
respective dates of such reports, are true, correct and complete in all
material respects as to the matters set forth therein and accurately
present on a basis consistent with the Accounting Principles, for the
respective periods covered by the applicable report, the sundry income
recognized by the Seller during such periods and each such report was
prepared from the Books and Records of the Seller as of the date of
such report.
(iv) The Schedule of Assets and Liabilities dated as of
September 30, 1998 and attached hereto as Schedule 4.1(y)(iv) was
prepared from the Books and Records of the Seller as of such date, is
true, correct and complete in all material respects as to all matters
set forth therein as of September 30, 1998 and accurately reflects all
assets, liabilities and obligations of the Seller that existed as of
September 30, 1998.
(v) During the period beginning on January 1, 1998 and
ending on September 30, 1998, the Seller has advanced funds, on an
aggregate basis, in an amount not less than $343,000,000 to or on
behalf of the Obligors under the Financing Contracts.
(vi) The Backlog Schedule dated as of October 5, 1998
attached hereto as Schedule 4.1(y)(vi) is true, correct and complete in
all material respects as to all matters set forth therein, as of
September 30, 1998, was prepared from the Books and Records of the
Seller as of such date and the terms contained therein relating to each
item of Backlog set forth thereon have been communicated completely and
consistently with the terms set forth therein to the broker that
originated or referred such Backlog to the Seller.
(vii) After the Contribution Transaction, CPLC shall have
all capabilities (including, without limitation, computer hardware and
software) necessary to provide, and be capable of providing, the
Quarterly Credit Loss Reports within the periods set forth in Section
5.7.
(viii) Since May 31, 1998, the Seller has not (A) made any
change in the accounting principles (including accounting methods,
practices or procedures) used in the preparation of the May 31 Balance
Sheet except as set forth on Schedule 4.1(y)(i), (B) made any upward
adjustments to, written-up or otherwise increased the book value of any
of its Properties, (C) reduced, written-off or otherwise decreased the
amount of any of its obligations or liabilities other than in
accordance with generally accepted accounting principles as in effect
in the United States on May 31, 1998 or (D) made any change in the
manner or method used by the Seller in determining the delinquency
status of any Financing Contract.
4.2 Representations and Warranties of CPLC. CPLC represents
and warrants to the Buyer, upon each of which representations and warranties the
Buyer specifically relies, as follows:
(a) Corporate Power and Qualification. CPLC: (i) is duly
incorporated, validly existing and in good standing under the laws of the state
of Delaware and (ii) as of the Closing, will have the full corporate power to
own, operate, lease and dispose of the Transferred Assets and to carry on the
Business. As of the Closing, CPLC will be duly licensed, registered or qualified
and authorized to conduct the Business in each jurisdiction in which it will own
or lease Property or carry on the Business, in each case, as of the Closing to
the extent required for CPLC to own any of the Transferred Assets or to enable
CPLC to operate and conduct the Business as now operated and conducted by the
Seller; and all such licenses, registrations, qualifications and Authorizations
will be valid and subsisting and in good standing. Schedule 4.2(a) attached
hereto contains true and correct copies of the certificate of incorporation
(including all amendments thereto through the date hereof) and the bylaws, each
as in effect on the date hereof, of CPLC.
(b) Corporate Authority. CPLC has the full power, legal right,
corporate power and authority to execute, deliver and perform this Agreement and
all of the other documents required to be delivered by it in connection herewith
and to do all acts and things as are expressly required or contemplated
hereunder or thereunder to be done, observed or performed by it (including
consummation of the Contribution Transaction).
(c) Valid Authorization. The execution, delivery and
performance by CPLC of this Agreement and all of the other documents required to
be delivered by it in connection herewith and the taking of all acts and things
as are required or contemplated hereunder or thereunder to be done, observed or
performed by it (including consummation of the Contribution Transaction) have
been duly authorized by all necessary corporate and stockholder action.
(d) Violation of Other Instruments and No Defaults. None of
the execution and delivery of this Agreement or any document required to be
delivered by CPLC in connection herewith, the fulfillment or compliance with any
of the terms hereof or thereof or the consummation of the transactions
contemplated hereby or thereby does or will, with or without the giving of
notice and/or the passage of time, violate, conflict with or constitute a breach
of or a default under (i) any Contract (whether or not in writing) to which CPLC
is a party or any of its Properties is subject, (ii) CPLC's certificate of
incorporation or bylaws, or (iii) any Law to which CPLC is subject; nor will
such execution, delivery, fulfillment, compliance or consummation result either
in acceleration in the time for performance of any obligation of CPLC or in the
creation of any Lien upon any of the Transferred Assets other than Liens in
favor of the Buyer; provided, however, that the representation made in clause
(i) above shall be conditioned on the delivery of the notices, reports and
filings and the receipt of the Consents, in each case, that are set forth on
Schedule 4.2(e), it being understood that those Consents set forth on Schedule
3.2(c) shall be obtained prior to the Closing Date unless waived by the Buyer.
(e) Notices, Reports, Filings, Consents. Except as set forth
on Schedule 4.2(e) attached hereto and other than the HSR Filing, no notices,
reports or other filings are required to be made by CPLC, nor are any Consents
required to be obtained by CPLC, in connection with the execution and delivery
of this Agreement or any documents required to be delivered by CPLC in
connection herewith or the consummation of the transactions contemplated hereby
or thereby.
(f) Enforceable Agreements. This Agreement and all of the
other documents to be executed by CPLC in connection herewith or in connection
with the Contribution Transaction have been, or will have been at Closing, as
applicable, duly executed by CPLC and delivered to the Buyer and are, or will be
at Closing, as applicable, valid and binding obligations of CPLC, enforceable in
accordance with their terms, except as such enforceability may be limited by the
Bankruptcy Exception.
(g) Title to Transferred Assets; Sufficiency. As of the
Closing Date, CPLC shall own and have good title to each of the Transferred
Assets, free and clear of all Liens other than Permitted Liens. The Transferred
Assets constitute all of the Properties used in or necessary for CPLC to conduct
the Business from and after the Closing Date without interruption and in the
ordinary course as it has been conducted by the Seller prior to the Contribution
Transaction and consistent with the Seller's past practices.
(h) No Brokers. CPLC has not entered into any agreement that
would entitle any Person to any valid claim against the Buyer for a broker's
commission, finder's fee or any like payment in respect of the purchase and sale
of the CPLC Shares or any other transactions contemplated by this Agreement.
(i) Employee Benefit Plans. CPLC does not sponsor or maintain
any "employee benefit plan" as defined in Section 3(3) of ERISA or any other
Benefit Plan other than due to being treated as a single employer or a member of
a control group of corporations with the Seller, CPLC does not have any
liability with respect to any "employee benefit plan" or any Benefit Plan.
(j) Employees and Labor. None of the CPLC Employees is
represented in his or her capacity as an employee of CPLC by any labor
organization, nor has the Seller recognized any labor organization nor has any
labor organization been elected as the collective bargaining agent of any CPLC
Employees, nor has the Seller entered into any collective bargaining agreement
or union contract recognizing any labor organization as the bargaining agent of
any CPLC Employees. There is no union organization activity involving any of the
CPLC Employees pending or, to the Knowledge of CPLC, threatened, nor has there
ever been union representation involving any of the CPLC Employees. There are no
picketing, strikes, slowdowns, work stoppages, other job actions, lockouts,
arbitrations, grievances or other labor disputes involving any of the Employees
pending or, to the Knowledge of CPLC, threatened. There are no complaints,
charges or claims against CPLC pending or, to the Knowledge of CPLC, threatened
which could be brought or filed with any public or Governmental Authority,
arbitrator or court resulting from, arising out of, based on or relating to, the
employment or termination of employment or failure to employ by CPLC of any
individual. CPLC is in compliance with all Laws, regulations and orders relating
to the employment of labor, including all such Laws, regulations and orders
relating to wages, hours, WARN, collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and payment
of withholding and/or social security taxes and any similar tax. There has been
no "mass layoff" or "plant closing" as defined by WARN with respect to CPLC
within the prior six months.
(k) Authorizations. At the Closing, CPLC will have all
Authorizations.
(l) Chief Executive Office. The chief executive office of CPLC
is located at 13010 Southwest 68th Parkway, Portland, Oregon 97223.
(m) Has Not Conducted Business. CPLC has not conducted any
operations or business with any Person including, without limitation, any of its
Affiliates, other than (i) actions undertaken in connection with obtaining the
Authorizations, (ii) the execution and delivery of this Agreement and (iii)
participating, immediately prior to the Closing, in the Contribution
Transaction. CPLC does not, and after giving effect to the Contribution
Transaction will not, control, directly or indirectly, or have any direct equity
ownership or participation in, any Person.
4.3 Representations and Warranties of PBCC. PBCC represents
and warrants to the Buyer, upon each of which representations and warranties the
Buyer specifically relies, as follows:
(a) Corporate Power; Corporate Authority. PBCC is duly
incorporated, validly existing and in good standing under the laws of Delaware
and has full corporate power, legal right and corporate authority to execute,
deliver and perform this Agreement and all of the other documents expressly
required to be delivered by it in connection herewith or therewith and to do all
acts and things as are required or contemplated hereunder or thereunder to be
done or performed by it.
(b) Valid Authorization; Notices, Reports, Filings, Consents.
The execution, delivery and performance by PBCC of this Agreement and all of the
other documents expressly required to be delivered by PBCC in connection
herewith, and the taking of all acts and things as are expressly required or
contemplated hereunder or thereunder to be done, observed or performed by it
have been duly authorized by all necessary corporate and stockholder action.
Other than the HSR Filing, no notices, reports or other filings are required to
be made by PBCC, nor are any Consents required to be obtained by PBCC in
connection with the execution and delivery of this Agreement, any documents
expressly required to be delivered by PBCC in connection herewith or the
consummation of the transactions contemplated hereby or thereby.
(c) Violation of Other Instruments and No Defaults. None of
the execution and delivery of this Agreement or any of the other documents
expressly required to be delivered by PBCC in connection herewith, the
fulfillment or compliance with any of the terms hereof or thereof, or the
consummation of the transactions contemplated hereby or thereby does or will,
with or without the giving of notice and/or the passage of time, violate,
conflict with or constitute a breach of or a default under (i) any Contract to
which PBCC is a party or any of its Property is subject, (ii) PBCC's certificate
of incorporation or bylaws, or (iii) any Law to which PBCC is subject; nor will
such execution, delivery, fulfillment, compliance or consummation result either
in the acceleration of the time for performance of any obligation of PBCC or in
the creation of any Lien upon the assets of PBCC.
(d) Enforceable Agreements. This Agreement and all of the
other documents expressly required to be delivered by PBCC in connection with
this Agreement have been, or will have been at Closing, as applicable, duly
executed and delivered by PBCC and are, or will be, at Closing, as applicable,
valid and binding obligations of PBCC enforceable in accordance with their
terms, except as such enforceability may be limited by the Bankruptcy Exception.
(e) Litigation. There is no action, suit, proceeding, claim,
inquiry or investigation in any court or before any arbitrator or before or by
any Governmental Authority pending or, to PBCC's Knowledge, threatened by or
against PBCC for the purpose of restraining, enjoining, preventing or
invalidating this Agreement or the consummation of the transactions contemplated
hereby or otherwise claiming that any of the foregoing is improper.
(f) No Brokers. PBCC has not entered into any agreement that
would entitle any Person to any valid claim against PBCC for a broker's
commission, finder's fee or any like payment in respect of the purchase and sale
of the CPLC Shares or any other transactions contemplated by this Agreement,
except for WPC, all of the fees and expenses of which are for the Seller's and
PBCC's account.
4.4 Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Seller, PBCC and CPLC, upon each of which
representations and warranties the Seller, PBCC and CPLC specifically rely, as
follows:
(a) Corporate Power; Corporate Authority. The Buyer is duly
incorporated, validly existing and in good standing under the laws of New York
and has full corporate power, legal right and corporate authority to execute,
deliver and perform this Agreement and all of the other documents expressly
required to be delivered by it in connection herewith and to do all acts and
things as are required or contemplated hereunder or thereunder to be done or
performed, by it.
(b) Valid Authorization; Notices, Reports, Filings, Consents.
The execution, delivery and performance by the Buyer of this Agreement and all
of the documents expressly required to be delivered by the Buyer in connection
herewith and the taking of all acts and things as are expressly required or
contemplated hereunder or thereunder to be done, observed or performed by it
have been duly authorized by all necessary corporate and stockholder action.
Other than the HSR Filing, no notices, reports or other filings are required to
be made by the Buyer, nor are any Consents required to be obtained by the Buyer,
in connection with the execution and delivery of this Agreement, any documents
expressly required to be delivered by the Buyer in connection herewith or the
consummation of the transactions contemplated hereby or thereby.
(c) Violation of Other Instruments and No Defaults. None of
the execution and delivery of this Agreement or any of the other documents
expressly required to be delivered by the Buyer in connection herewith, the
fulfillment or compliance with any of the terms hereof or thereof or the
consummation of the transactions contemplated hereby or thereby does or will,
with or without the giving of notice and/or the passage of time, violate,
conflict with or constitute a breach of or a default under (i) any Contract to
which the Buyer is a party or any of its Property is subject, (ii) the Buyer's
certificate of incorporation or bylaws or (iii) any Law to which the Buyer is
subject; nor will such execution, delivery, fulfillment, compliance or
consummation result either in the acceleration of the time for performance of
any obligation of the Buyer or in the creation of any Lien upon the assets of
the Buyer.
(d) Enforceable Agreements. This Agreement and all of the
other documents expressly required to be delivered by the Buyer in connection
with this Agreement have been, or will have been at Closing, as applicable, duly
executed and delivered by the Buyer and are, or will be, at Closing, as
applicable, valid and binding obligations of the Buyer enforceable in accordance
with their terms, except as such enforceability may be limited by the Bankruptcy
Exception.
(e) Litigation. There is no action, suit, proceeding, claim,
inquiry or investigation in any court or before any arbitrator or before or by
any Governmental Authority pending or, to the Buyer's Knowledge, threatened by
or against the Buyer for the purpose of restraining, enjoining, preventing or
invalidating this Agreement or the consummation of the transactions contemplated
hereby or otherwise claiming that any of the foregoing is improper.
(f) No Brokers. The Buyer has not entered into any agreement
that would entitle any Person to any valid claim against the Buyer for a
broker's commission, finder's fee or any like payment in respect of the purchase
and sale of the CPLC Shares or any other transactions contemplated by this
Agreement.
(g) Acquisition of CPLC Shares for Investment. The Buyer has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its purchase of the CPLC Shares.
The Buyer confirms that PBCC and the Seller have made available to the Buyer the
opportunity to ask such questions of the officers and management Employees of
the Seller and CPLC to acquire such additional information about the Business
and the financial condition of CPLC, the Transferred Assets and the Assumed
Liabilities as is adequate for the purpose of enabling the Buyer to evaluate the
merits and risks of its purchase of the CPLC Shares. The Buyer is acquiring the
CPLC Shares for its own account, for investment and not with a view to, or for
resale in connection with, any distribution thereof.
ARTICLE 5
COVENANTS
5.1 Noncompete; Nonsolicitation.
(a) Noncompete. Each of PBCC and the Seller agrees that it
shall not, and shall not permit any of its Subsidiaries to, without the prior
written consent of the Buyer, at any time during the period of three years
immediately following the Closing Date, directly or indirectly, either alone or
in partnership, through any Person controlled by any of them, or in conjunction
with any Person, as principal, agent, partner, member or shareholder, within the
United States, directly or indirectly, engage in broker-sourced equipment
financing business (which business includes the seller, supplier, manufacturer
or vendor equipment financing transactions generated or referred by, or acquired
from brokers) of the type engaged in by the Seller immediately prior to the
effectiveness of the Contribution Transaction; provided, however, that each of
PBCC and the Seller may engage in the following activities: (i) the business of
financing the purchase or use of (A) equipment manufactured or distributed by
PBI or any of its Subsidiaries together with equipment incidentally provided
along therewith or (B) equipment manufactured or distributed by a Person other
than PBI or any of its Subsidiaries that, at the time of such transaction, is in
service with an end user, if such financing is entered into for the purpose of
facilitating or permitting the user of such equipment to replace it with
equipment manufactured or distributed by PBI or any of its Subsidiaries, (ii)
the administration and ownership of the Excluded Assets solely for the purpose
of realizing the value of such Excluded Assets and not for the purpose of
originating or funding new business or transactions, (iii) the acquisition from
brokers or other intermediaries, or other indirect origination of financing
transactions involving providing financing to end users (and their Affiliates
and sublessees) from time to time for the leasing, financing and acquisition of
equipment, real Property and other assets as long as the amount of financing
provided by PBCC, the Seller or any of their Affiliates pursuant to any such
transaction equals or exceeds $500,000, (iv) the business of providing financing
to end users (and their Affiliates and sublessees) in vendor equipment financing
transactions for the leasing, financing or acquisition of equipment manufactured
or distributed by such vendor, unless such vendor equipment financing
transactions were originated, sourced or otherwise referred to PBCC or the
Seller by a broker, (v) the business of providing financing to end users for the
purchase or use of equipment pursuant to a lease or lending transaction to which
PBCC is a party as of the Closing including, without limitation, any additions
to such equipment as permitted by the terms of such lease or lending
transaction, (vi) the acquisition by PBCC, the Seller or any of their
Subsidiaries in a syndication, or other acquisition of undivided interests (in
an amount of 50% or less) in, financing transactions if PBCC's, the Seller's or
their Subsidiary's investment in such financing transaction equals or exceeds
$500,000; provided, that there shall be no minimum limit on the amount of any
sales or other dispositions by PBCC, the Seller or their Subsidiaries of
undivided interests in financing transactions, (vii) the business of providing
financing for the leasing or acquisition of Property pursuant to any lease or
lending transaction to which a Governmental Authority is the lessee or obligor
if the amount of financing provided by PBCC or any of its Affiliates (other than
the Seller) pursuant to any such lease or lending transaction equals or exceeds
$500,000; provided that there shall not be any minimum amount of investment
required in connection with any additional investments by PBCC or any of its
Affiliates in equipment to be subject to or governed by the terms of such lease
or lending transaction and (viii) any other activity that does not constitute a
broker-sourced equipment financing business (which business includes seller,
supplier, manufacturer or vendor equipment financing transactions generated,
referred by or acquired from brokers) of the type engaged in by the Seller
immediately prior to the effectiveness of the Contribution Transaction.
(b) Nonsolicitation. Each of PBCC and the Seller agrees that
it shall not, and shall not permit any of its Subsidiaries to, without the prior
written consent of the Buyer, at any time during the period of three years
immediately following the Closing Date, entice, seek to hire or solicit for
employment by itself or any other Person, or entice or induce, any CPLC Employee
to leave the employment of CPLC or the Buyer or hire any CPLC Employees;
provided, however, that PBCC, the Seller and any of their respective
Subsidiaries may seek to hire or solicit for employment or hire any CPLC
Employee following the termination by CPLC or the Buyer, for whatever reason, of
such CPLC Employee's employment with CPLC or the Buyer.
(c) Confidentiality. Each of PBCC and the Seller agrees that
it shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, disclose (except as required by Law) or use any confidential
information or trade secrets of the Business (including, but not limited to, the
identity of any Active Brokers or the identity and particular needs of any
customer of the Business and the methods, techniques, marketing plans and
objectives of the Business) unless (i) such information is readily available in
the public domain other than as a result of the breach of this Agreement, (ii)
with respect to any customer of the Seller, such customer is also a customer of
an Affiliate of the Seller as of the Closing and then only to the extent such
Affiliate has obtained such confidential information independently of the Seller
or (iii) with respect to an Active Broker, an Affiliate of the Seller conducts
business with such Active Broker as of the Closing.
(d) Breach of Covenants. The parties hereto recognize that a
breach by the Seller or PBCC of any of the covenants contained in this Section
5.1 would result in Damages to the Buyer and that the Buyer could not adequately
be compensated for such Damages by monetary award alone. Accordingly, the
parties agree that in the event of any such breach, in addition to any other
remedies available to the Buyer at Law or otherwise, the Buyer shall be entitled
to: (i) apply to a court of competent jurisdiction for relief by way of
preliminary and permanent injunction, restraining order, decree or otherwise as
may be appropriate to ensure compliance by the other party; and (ii) if the
Buyer obtains a final judgement which is no longer subject to appeal, recover
from PBCC or the Seller an amount at least equal to all reasonable costs and
expenses (including legal fees) incurred by the Buyer to enforce any provision
of this Section 5.1.
5.2 Investigations; Operation of the Business. Between the
date of this Agreement and the earlier of the Closing or the termination of this
Agreement pursuant to the terms of Article 6 of this Agreement:
(a) The Seller shall give or cause to be given to the Buyer
and its representatives and agents reasonable access to all the premises,
employees and Books and Records (wherever located) of the Seller and CPLC,
including, but not limited to, all accounting Books and Records, all financial
records and statements, all Tax Returns and Tax records, in each case,
pertaining to any Transferred Asset or any Assumed Liability, the management or
operation of any Transferred Asset or any Assumed Liability or any related
personnel and employment related matters; provided, however, that such
investigation shall be conducted during normal business hours and in such a
manner as not to interfere unreasonably with the Seller's business. The Seller
and PBCC shall permit and use their respective commercially reasonable efforts
to facilitate the Buyer in contacting and communicating with any Active Brokers.
The Seller and PBCC shall promptly notify the Buyer in the event that any Person
eligible to participate in the Seller's Tier 1 Retention Incentive program for
"Management and Critical Position Employees" ceases to be employed by the Seller
for any reason.
(b) Neither the Buyer nor any of its Affiliates (including,
after the Closing, CPLC), on the one hand, nor PBCC or any of its Affiliates, on
the other hand, shall have any obligation to dispose of, hold separate or
otherwise restrict, their respective enjoyment of any of their respective assets
or Properties.
(c) Except as otherwise contemplated by this Agreement, the
Seller shall use all efforts reasonable under the circumstances to preserve the
Business substantially intact and shall use all efforts reasonable under the
circumstances to preserve its present business relationships, including, but not
limited to, those with the Obligors under Financing Contracts and with brokers,
where the discontinuance of such relationships would have an adverse effect on
the Business or the billing, collection, administration or servicing of any of
the Transferred Assets.
(d) The Seller shall conduct its businesses in the ordinary
and usual course of business consistent with past practices, maintain its Books
and Records in the usual, regular and ordinary manner and cause such Books and
Records to be true, complete and correct in all material respects, and comply
with the provisions set forth in the remainder of this Section 5.2. In no event
shall PBCC or any of its Affiliates deal with, or enter into any Contracts
(whether or not in writing) with, the Seller or CPLC other than on terms and
provisions which could be obtained by the Seller or CPLC from third parties in
connection with similar dealings or Contracts (whether or not in writing).
Without the prior written consent of the Buyer, the Seller shall not, and shall
not permit CPLC to: (i) issue or commit to issue any shares of its capital
stock; or (ii) grant or commit to grant any options, warrants or rights to
subscribe for or purchase or otherwise acquire any shares of its capital stock
or issue or commit to issue any securities convertible into or exchangeable for
shares of its capital stock; or (iii) directly or indirectly redeem, purchase or
otherwise acquire or commit to acquire any shares of its capital stock; or (iv)
effect a split, modification or reclassification of its capital stock or a
recapitalization; or (v) change its certificate of incorporation or bylaws; or
(vi) borrow or agree to borrow any funds from any Person, other than (in the
case of the Seller) from PBCC in the ordinary and usual course of its business
consistent with its past practices; or (vii) make or commit to make any capital
expenditures; or (viii) waive or commit to waive any rights which could have a
Material Adverse Effect; or (ix) directly or indirectly in any way extend or
otherwise restructure the payment schedule, payment terms or any other term or
condition of any Transferred Financing Contract or Program Agreement, or make
any advance, extension, restructuring, novation, modification or other
accommodation to any Obligor, except for advances, extensions, restructurings,
novations, modifications or other accommodations made or entered into in the
ordinary course of business and consistent with the Seller's past practices; or
(x) enter into or materially modify any Contract (whether or not in writing)
which, if entered into, created or established prior to the date of this
Agreement, would be required to be listed (or, in the case of such modifications
and amendments, pertains to a Contract (whether or not in writing), program,
plan or arrangement presently listed) on Schedule 4.1(s)(ii) or Schedule
4.1(s)(iii); or (xi) establish, create or participate in any Plan or any Title
IV Plan (or amend or modify any existing Plan or Title IV Plan, except for
immaterial amendments or modifications to any Plan or Title IV Plan which covers
all of the Employees) which, if entered into, created or established prior to
the date of this Agreement, would be required to be listed (or, in the case of
modifications and amendments, pertains to a Plan or Title IV Plan which is
presently listed) on a Schedule attached hereto; or (xii) make any change to, or
amend in any way, the salaries, wages or other compensation of any Employee or
officer, director, agent or other similar representative who performs services
related to the Transferred Assets or the Business, other than changes or
amendments that (A) are made in the ordinary course of business and are
consistent with past practice or (B) are required pursuant to the terms of any
pre-existing Plan or written agreement to which such Person is a party; or
(xiii) other than the Contribution Transaction, assume, guarantee, endorse or
otherwise become responsible for the obligations of, or make any advances to,
any other Person, except, solely in the case of the Seller, for such obligations
incurred in the ordinary and usual course of business and consistent with the
Seller's past practices; or (xiv) mortgage, pledge or otherwise encumber any of
its Properties; or (xv) other than the Contribution Transaction, sell, lease
(other than leases or conditional sales of Portfolio Property pursuant to
Financing Contracts entered into in the ordinary and usual course of the
Seller's business consistent with the Seller's past practice), transfer or
otherwise dispose of any of its Properties other than transfers or other
dispositions of Property that was, prior to such transfer or disposition,
subject to or governed by a leasing or lending transaction, in each case,
entered into by the Seller in the ordinary course of business and consistent
with the Seller's past practices; or (xvi) take any action that would breach in
a material respect any of the Seller's or CPLC's representations, warranties or
covenants contained in this Agreement if such representation, warranty or
covenant were made at the time of the action; or (xvii) enter into any Contract
whether or not in writing (other than this Agreement) to do any of the things
prohibited by the foregoing clauses (i) through (xvi).
(e) The Seller will not approve credit applications or
otherwise enter into any commitments that will either give rise to any Financing
Contracts or constitute Backlog unless (i) such commitment giving rise to a
Financing Contract or constituting Backlog constitutes and arises out of a bona
fide business transaction entered into in the ordinary and usual course of
business of the Seller, consistent with the Seller's past practices; and (ii) in
connection therewith, the Seller has complied with the Operating Bulletins
relating to evaluating, originating, underwriting and funding new business.
(f) Pending or Threatened Litigation; Liability for Scheduled
Claims. The Seller and the Buyer shall inform each other, promptly upon
obtaining Knowledge thereof, of any pending or threatened litigation which
reasonably could be anticipated to (i) render inaccurate in any material respect
any representation or warranty made by the Seller, CPLC, PBCC or the Buyer or
(ii) prohibit or restrain or materially and adversely affect the consummation of
the transactions contemplated hereby or the performance by the Seller, CPLC,
PBCC or the Buyer of their respective obligations hereunder.
5.3 338(h)(10) Election.
(a) The Seller and the Buyer shall make a joint election for
CPLC under Section 338(h)(10) of the Code and as required or permitted under any
comparable provisions of domestic or foreign state or local income or franchise
tax law (an "Election") with respect to the purchase of the CPLC Shares. On the
Closing Date, the Seller shall deliver to the Buyer five copies of the Internal
Revenue Service Form 8023 as prepared by the Buyer and as reasonably agreed upon
by the parties and duly executed by the Seller, in form and substance reasonably
acceptable to both parties. If any changes are required in these forms as a
result of information that is first available after such forms are prepared, the
parties will promptly agree on such changes.
(b) Within 60 days following the completion of the Audited
Closing Date Balance Sheet, the Buyer shall draft a schedule (the "Allocation
Schedule") allocating the Modified Adjusted Deemed Sales Price (as defined in
Treasury Regulation Section 1.338(h)(10)-1(f)) among the assets of CPLC. The
Allocation Schedule shall be drafted such that an amount of the Modified
Adjusted Deemed Sales Price equal to the aggregate net book value of the assets
of CPLC as reflected on the Audited Closing Date Balance Sheet shall be
allocated among the assets of CPLC, other than goodwill, on a pro rata basis
based on the net book value of each asset as reflected on the Audited Closing
Date Balance Sheet and any excess Modified Adjusted Deemed Sales Price over such
aggregate net book value shall be allocated to goodwill. No amount shall be
allocated to the Noncompetition/Nonsolicitation Agreement. The Allocation
Schedule shall be prepared in accordance with Section 338(h)(10) of the Code and
the regulations thereunder. Upon receipt of the Allocation Schedule, each of the
Buyer and the Seller shall execute a copy thereof and return such copy to the
other party. The parties shall take no action inconsistent with, or fail to take
any action necessary for, the validity of the Election, and shall adopt and
utilize the asset values as determined on the Allocation Schedule for the
purpose of all Tax Returns filed by them, and shall not voluntarily take any
action inconsistent therewith upon examination of any Tax Return, in any refund
claim, in any litigation or otherwise with respect to such Tax Returns except to
the extent otherwise required by Law.
(c) Any Tax Sharing Agreement in effect at the Closing Date
shall be terminated as of the Closing Date as to CPLC and no amounts shall be
due from or due to CPLC after the Closing Date pursuant to any Tax Sharing
Agreement.
5.4 Indemnification; Assumptions of Liability and Related Matters.
(a) Indemnification by the Seller and PBCC for Breach. PBCC
and the Seller, jointly and severally, shall indemnify and hold harmless the
Buyer and its Affiliates (including, after the Closing, CPLC) and in each such
case their respective directors, officers, employees and agents (collectively,
the "Buyer Indemnified Parties"), from and against any and all Damages suffered
or incurred by any Buyer Indemnified Party resulting from, arising out of, based
on or relating to (i) subject to subsection 5.4(c), any breach of any
representation or warranty made by PBCC, the Seller or CPLC in this Agreement;
or (ii) any failure to perform duly and punctually any covenant, agreement or
undertaking on the part of PBCC, the Seller or CPLC contained in this Agreement;
or (iii) subject to subsection 5.4(c), any breach of a representation or
warranty in, or omission of information required to be included in, any annex,
certificate, schedule, exhibit or other agreement, instrument or Document, in
each case delivered or to be delivered by PBI, PBCC, the Seller or CPLC to the
Buyer or another party hereto pursuant to the terms of this Agreement
(collectively, the "Seller Related Documents"). For purposes of this subsection
5.4(a), a breach of a representation or warranty contained in this Agreement or
a Seller Related Document shall be deemed to exist either if such representation
or warranty is actually inaccurate or breached or would have been inaccurate or
been breached if such representation or warranty had not contained any
limitation or qualification as to materiality, Material Adverse Effect or
Knowledge, it being the intention of the parties hereto that the Buyer
Indemnified Parties shall be indemnified and held harmless from and against any
and all Damages suffered or incurred by any of them resulting from, arising out
of, based on or relating to, the failure of any such representation, warranty,
annex, certificate, schedule, exhibit or other agreement, instrument or Document
to be true, correct and complete in any respect, determined in each case without
regard to any qualification as to materiality, Material Adverse Effect or
Knowledge set forth with respect thereto.
(b) Limitation on Liability.
(i) Each Person entitled to indemnification under
subsection 5.4(a) for any Damages suffered or incurred by such Person
relating to any breach of any representation or warranty in subsection
4.1(g), (i), (j), (k), (l), (m) (n), (q), (r), (x) or (y) or subsection
4.2(g), (h), (i), (j), (k) or (m) (individually, a "Special
Representation" and collectively, the "Special Representations"), or
relating to a failure to perform, duly and punctually, any covenant,
agreement or undertaking of PBCC, the Seller or CPLC, shall be entitled
to such indemnification for the full amount of such Damages regardless
of the amount of the Damages.
(ii) Each Person entitled to indemnification under
subsection 5.4(a) for any Damages suffered or incurred by such Person
relating to (A) any breach of any representation or warranty made by
PBCC, the Seller or CPLC in this Agreement that is not a Special
Representation or (B) any breach of any representation or warranty in
any Seller Related Document shall be entitled to indemnification,
jointly and severally, from PBCC and the Seller to the extent that the
aggregate Damages suffered or incurred by the Buyer Indemnified Parties
resulting from, arising out of, based on or relating to all such
breaches have exceeded $1,000,000.
(c) Survival of Representations and Warranties of PBCC, the
Seller and CPLC.
(i) Except as provided in paragraph (iii) below, the
Special Representations and the indemnifications with respect to their
breach shall survive until it is no longer possible in law or in fact
for an indemnified party to suffer Damages as a result of such breach
and for so long thereafter as such indemnified party may assert a claim
with respect thereto.
(ii) The representations and warranties of the Seller,
CPLC or PBCC in this Agreement (that are not Special Representations)
or in the Seller Related Documents shall survive the Closing until the
expiration of 24 months after the Closing.
(iii) The Limited Survival Tax Representations shall
survive the Closing until the expiration of 12 months after the
Closing.
(d) ERISA and Employment Indemnification. PBCC and the Seller
shall, jointly and severally, covenant and agree to indemnify and hold harmless
the Buyer Indemnified Parties from and against any and all Damages suffered or
incurred by any of the Buyer Indemnified Parties resulting from, arising out of,
based on or relating to:
(i) any Plan, any Title IV Plan and any other "employee
benefit plan", including any Multiemployer Plan, maintained,
contributed to, or obligated to be contributed to, at any time, by the
Seller and any ERISA Affiliate and, prior to the Closing, by CPLC,
including any liability (A) to PBGC under Title IV of ERISA, (B)
relating to a Multiemployer Plan, (C) with respect to non-compliance
with the notice and benefit continuation requirements of COBRA, (D)
with respect to any non-compliance with ERISA, the Code or any other
applicable Laws, or (E) with respect to any suit, proceeding or claim
brought against the Buyer, CPLC, any Plan, any Title IV Plan, or any
fiduciary or former fiduciary of any such plan;
(ii) the employment, failure to employ or termination of
employment, including a constructive termination, by the Seller or CPLC
of any individual (including, but not limited to, any employee of the
Seller or CPLC) attributable to any actions or inactions on or prior to
the Closing Date;
(iii) WARN or any other statutory or common Law or civil
Law notice, severance pay, termination pay in lieu thereof or damages
arising as a result of the termination or dismissal (including
constructive termination or dismissal), by the Seller, CPLC or any of
their Affiliates of any or all current or former employees of the
Seller or CPLC (whether or not constituting CPLC Employees) on or prior
to the Closing Date; and
(iv) any claims by any current or former employee of the
Seller or CPLC for workers' compensation and/or medical benefits
incurred after the Closing which relate to an injury or illness
originating prior to the Closing.
(e) Additional Indemnification by PBCC and the Seller. PBCC
and the Seller shall, jointly and severally, indemnify and hold harmless the
Buyer Indemnified Parties from and against any and all Damages suffered or
incurred by any Buyer Indemnified Party resulting from, arising out of, based on
or relating to:
(i) the Excluded Assets or the ownership, operation,
servicing, lease or use thereof, or any action taken with respect
thereto, by the Seller or any other Person;
(ii) the Excluded Liabilities;
(iii) any Environmental Costs and Liabilities, whether or
not constituting an Assumed Liability; provided, however, that (solely
for the purposes of this clause (iii) and not for purposes of clauses
(iv), (vi), (vii) or (viii) of this subsection 5.4(e)) to the extent
that CPLC suffers or incurs any Environmental Costs and Liabilities
resulting from, arising out of, based on or relating to, an act
actually taken by CPLC that constitutes a continuation of a series or
pattern of actions taken by the Seller on or prior to the Closing Date
(which act gives rise to an independent cause of action against CPLC
and is not merely a natural consequence, or result, of such series or
pattern of actions), then the aggregate Environmental Costs and
Liabilities suffered or incurred by CPLC resulting from, arising out
of, based on or relating to, any such series or pattern of actions that
occurred on or prior to and after the Closing Date shall be allocated
and apportioned between CPLC, on the one hand, and PBCC and the Seller,
on the other hand, so that PBCC and the Seller are allocated with
responsibility and liability only for the portion of the Damages
resulting from, arising out of, based on or relating to, the actions
that were taken on or prior to the Closing Date;
(iv) any civil, criminal or administrative action, suit,
claim, hearing, investigation or proceeding (including, but not limited
to, any counterclaims or crossclaims), resulting from, arising out of,
based on or relating to, any condition existing or action, event or
transaction occurring prior to the Closing Date, whether or not pending
or threatened on the date hereof or at the Closing, whether brought,
made or instigated by any Governmental Authority or any private Person
and whether or not constituting an Assumed Liability; provided,
however, that (solely for the purposes of this clause (iv) and not for
purposes of clauses (iii), (vi), (vii) or (viii) of this subsection
5.4(e)) to the extent that CPLC suffers or incurs any Damages resulting
from, arising out of, based on or relating to, any act by CPLC that
constitutes a continuation of any series or pattern of actions taken by
the Seller on or prior to the Closing Date (which act actually taken by
CPLC gives rise to an independent cause of action against CPLC and is
not merely a natural consequence or result of such series or pattern of
actions), then the aggregate Damages suffered or incurred by CPLC
resulting from, arising out of, based on or relating to, any such
series or pattern of actions that occurred on or prior to and after the
Closing Date shall be allocated and apportioned between CPLC, on the
one hand, and PBCC and the Seller, on the other hand, so that PBCC and
the Seller are allocated with responsibility and liability only for the
portion of the Damages resulting from, arising out of, based on or
relating to, the actions that were taken on or prior to the Closing
Date;
(v) any failure of the Final Schedule of Assets and
Liabilities or the Closing Backlog Schedule to be true, complete,
correct and accurate in any respect;
(vi) any act, practice or conduct undertaken by the Seller
or CPLC prior to the Closing that resulted in, gave rise to or
otherwise constituted a violation or breach of any Law applicable to
the Seller, the Business, any of the Transferred Assets or CPLC,
whether or not constituting an Assumed Liability;
(vii) any violation of any Law after the Closing resulting
from, based on, arising out of or relating to, (A) the administration,
billing, collection or enforcement of any Transferred Financing
Contract in accordance with the written terms thereof or (B) the
documentation, administration, billing, collection or enforcement of
any Funded Backlog that is documented and originated in accordance with
the material terms of (I) the written credit approval relating to such
Funded Backlog and (II) the Seller's Operating Bulletin Number 01.027
attached hereto as Schedule 5.4(e)(vii); provided, however, that in no
event shall the Seller or PBCC be liable for any Damages resulting
from, based on, arising out of or relating to, any changes or
modifications to the terms of any Transferred Financing Contract or
Funded Backlog to the extent that such Damages solely and exclusively
result from, arise out of, relate to or are based on any such changes
or modifications.
(viii) any claim or charge resulting from, arising out of,
based on or relating to, the continued use by CPLC or the Buyer for up
to 45 days after the Closing of any forms of leases, conditional sales
contracts, notes, security agreements, guarantees, financing statements
and other Documents or instruments prepared and used by the Seller
prior to the Closing Date (excluding any information that was included
therein for the first time by the Buyer or CPLC after the Closing).
(f) Indemnification by the Buyer for Breach. The Buyer shall
indemnify and hold harmless the Seller and its Affiliates (other than, after the
Closing, CPLC) and, in each such case, their respective directors, officers,
employees and agents (collectively, the "Seller Indemnified Parties"), from and
against any and all Damages suffered or incurred by any Seller Indemnified Party
resulting from, arising out of, based on or relating to (i) any breach of any
representation or warranty made by the Buyer in this Agreement; or (ii) any
failure to perform duly and punctually any covenant, agreement or undertaking on
the part of the Buyer contained in this Agreement; or (iii) any breach of a
representation or warranty in, or omission of information required to be
included in, any annex, certificate, schedule, exhibit or other agreement,
instrument or Document, in each case delivered or to be delivered by the Buyer
to the Seller or another party hereto pursuant to the terms of this Agreement
(collectively, the "Buyer Related Documents"); or (iv) the Assumed Liabilities;
or (v) any action, suit, claim, hearing, investigation or proceeding resulting
from, arising out of, based on or relating to, the operation or conduct by CPLC
of the Business after the Closing Date; provided, however, that the
indemnification obligations of the Buyer in clause (v) of subsection 5.4(f)
shall be limited to (A) out-of-pocket costs and expenses incurred by any Seller
Indemnified Party (including without limitation amounts payable under subsection
5.4(h)(v)) and (B) any Damages suffered or incurred by any Seller Indemnified
Party if the Buyer has not assumed the defense or settlement of the action,
suit, claim, hearing, investigation or proceeding in question in accordance with
subsection 5.4(h)(ii) or, if it does assume such defense or settlement,
satisfied its obligations under this Agreement with respect thereto. For
purposes of this subsection 5.4(f), a breach of a representation or warranty
contained in this Agreement or a Buyer Related Document shall be deemed to exist
either if such representation or warranty is actually inaccurate or breached or
would have been inaccurate or been breached if such representation or warranty
had not contained any limitation or qualification as to materiality, Material
Adverse Effect or Knowledge, it being the intention of the parties hereto that
the Seller Indemnified Parties shall be indemnified and held harmless from and
against any and all Damages suffered or incurred by any of them resulting from,
arising out of, based on or relating to, the failure of any such representation,
warranty, annex, certificate, schedule, exhibit or other agreement, instrument
or Document to be true, correct and complete in any respect, determined in each
case without regard to any qualification as to materiality, Material Adverse
Effect or Knowledge set forth with respect thereto.
(g) Survival of Representations and Warranties of the Buyer.
The representations and warranties of the Buyer in this Agreement or in the
Buyer Related Documents shall survive the Closing until the expiration of 24
months after the Closing.
(h) Indemnification Procedure. Except as otherwise provided in
Section 5.7 hereof with respect to Credit Loss Events, for the purposes of
administering the indemnification provisions of this Section 5.4, the following
procedures shall apply from and after the Closing Date:
(i) An indemnified party shall notify the Indemnitor of
any Indemnification Event in writing promptly, and in any event within
30 days following the receipt of notice of the commencement of any
action or proceeding or within 30 days of (A) the assertion of any
claim against such indemnified party or (B) the discovery by such
indemnified party of any loss giving rise to indemnity pursuant to this
Section 5.4 (any 30-day notification requirement shall begin to run, in
the case of a claim which is amended so as to give rise to an amended
Indemnification Event, from the first day such claim is amended to
include any claim which is an Indemnification Event hereunder), such
notice to describe in reasonable detail the basis of such
Indemnification Event. The failure to give notice as required by this
subsection 5.4(h)(i) in a timely fashion shall not result in a waiver
of any right to indemnification hereunder except to the extent that the
Indemnitor's ability to defend against the event with respect to which
indemnification is sought is adversely affected by the failure of the
indemnified party to give notice in a timely fashion as required by
this subsection 5.4(h)(i).
(ii) The Indemnitor shall be entitled (but not obligated)
to assume the defense or settlement of any such action or proceeding,
or to participate in any negotiations or proceedings to settle or
otherwise eliminate any claim, if it shall provide the indemnified
parties with a written acknowledgement of its liability for the
indemnity against Damages relating to such claim; provided, however,
that the Buyer or CPLC shall have the sole right, with counsel of its
choice, to defend, settle or otherwise dispose of, in its sole
discretion, any action, claim or proceeding that constitutes a
Non-Assumable Claim, and the Seller shall not be entitled to assume the
defense thereof. If the Indemnitor assumes any such defense or
settlement or any such negotiations, it shall pursue such defense,
settlement or negotiations in good faith. If the Indemnitor fails to
elect in writing, within 15 business days of the notification referred
to above, to assume the defense, the indemnified party may engage
counsel to defend, settle or otherwise dispose of such action or
proceeding, which counsel shall be reasonably satisfactory to the
Indemnitor; provided, further, that the indemnified party shall not
settle or compromise any such action, proceeding or claim without the
consent or agreement of the Indemnitor (which consent will not be
unreasonably withheld or delayed).
(iii) In cases where the Indemnitor has assumed the defense
or settlement with respect to an Indemnification Event, the Indemnitor
shall be entitled to assume the defense or settlement thereof with
counsel of its own choosing; provided, however, that: (A) the
indemnified party (and its counsel) shall be entitled to continue to
participate at its own cost (except as provided below) in any such
action or proceeding or in any negotiations or proceedings to settle or
otherwise eliminate any claim for which indemnification is being
sought; (B) the Indemnitor shall not be entitled to settle or
compromise any such action, proceeding or claim without the consent or
agreement of the indemnified party (which consent will not be
unreasonably withheld or delayed); notwithstanding the foregoing, if
(and only if) an offer of settlement or compromise is received by the
Indemnitor with respect to any Indemnification Event and such offer to
settle or compromise (1) includes an unconditional release of each
applicable indemnified party and (2) does not involve or impose any
obligations or restrictions on any applicable indemnified party (other
than the payment of money (which the Indemnitor has unconditionally
agreed with each applicable indemnified party, in writing, to pay))
without any admission or acceptance of liability or responsibility from
any indemnified party (a "Qualified Settlement Offer"), such Indemnitor
may notify each applicable indemnified party in writing of the
Indemnitor's willingness to compromise or settle such claim on the
basis set forth in such Qualified Settlement Offer, and if (but only
if) such indemnified party fails to consent to such Qualified
Settlement Offer within 30 days after its receipt of such notice from
the Indemnitor, the Indemnitor's liability shall be limited to the sum
of the settlement amount set forth in such Qualified Settlement Offer
and the Indemnitor's costs and attorneys' fees to the end of such
30-day period; and (C) after written notice by the Indemnitor to an
indemnified party of its election to assume control of the defense of
any claim, the Indemnitor shall not be liable to such indemnified party
hereunder for any attorneys' fees and disbursements subsequently
incurred by such indemnified party in connection therewith (except as
provided below).
(iv) In the event indemnification is requested, the
relevant Indemnitor, its representatives and agents shall have access
to the premises, Books and Records of the indemnified party or parties
and their Affiliates seeking such indemnification to the extent
reasonably necessary to assist it in defending or settling any action,
proceeding or claim; provided, however, that such access shall be
conducted in such a manner as not to interfere unreasonably with the
operation of the business of the indemnified party or parties. Except
as reasonably necessary to assist it in defending or settling such
action, proceeding or claim, the indemnified party shall not be
required to disclose any information with respect to itself or any of
its Affiliates (or former Affiliates), and the indemnified party shall
not be required to participate in the defense of any claim to be
indemnified hereunder (except as otherwise expressly set forth herein),
unless otherwise required or reasonably necessary in the defense of any
claim to be indemnified hereunder.
(v) Notwithstanding anything to the contrary in this
Section 5.4, the Indemnitor shall continue to pay the attorneys' fees
and disbursements and other costs each indemnified party may incur (A)
relating to such indemnified party's participation in any
Indemnification Event (whether or not the Indemnitor shall have assumed
the defense of such Indemnification Event) to the extent such
participation relates to a claim or defense that the indemnified party
has that the Indemnitor does not have, or relates to a claim or defense
as to which the Indemnitor may have a conflict of interest, or (B)
relating to discovery against or testimony of such indemnified party
and for participation of such indemnified party's own counsel in such
discovery and testimony.
(i) Tax Effect of Payments. Any indemnity payments otherwise
due and payable under this Section 5.4 shall be (i) decreased to the extent of
any net actual reduction of Tax liability that is actually realized by the
indemnified party by reason of an indemnifiable loss and (ii) increased to the
extent of any net actual increase in Tax liability that is actually imposed on
the indemnified party by reason of an indemnity payment pursuant to this Section
5.4 (including any increase thereof pursuant to this subsection 5.4(i)).
(j) Purchase Price Adjustment. Any payment under Section 5.4,
5.7 or 5.15 hereof shall be treated by the parties hereto for domestic or
foreign federal, state and local income tax purposes as a non-taxable
reimbursement or purchase price adjustment, except to the extent that a contrary
treatment is required by Law.
(k) Document Retention. From the date hereof, each party to
this Agreement shall retain, in accordance with its normal document retention
policy, all documents including, without limitation, Tax Returns and other tax
data and information with respect to all matters as to which indemnity may be
sought under this Agreement (except to the extent that such documents in the
possession of the Seller at the Closing may be transferred to the possession of
CPLC or the Buyer). Before disposing of or otherwise destroying any such
documents, the possessor thereof shall give reasonable notice to such effect and
deliver to any Indemnitor, at such Indemnitor's expense and upon its request, a
copy of any such documents.
(l) Election of Remedies. Anything in this Agreement to the
contrary notwithstanding, in the event that a claim or demand for
indemnification may be made under more than one provision of this Agreement
including, without limitation, Section 5.4, 5.7 or 5.15, the Person making such
claim or demand shall have the option to elect the provision of this Agreement
under which it chooses to make such claim or demand for indemnification;
provided, however, that no indemnified party shall be entitled to recover more
than the aggregate amount of any Damages suffered or incurred by such
indemnified party.
(m) Waiver of Defense. The Seller and PBCC hereby acknowledge
and agree that they shall not raise as a defense or bar, and that they hereby
waive, as to any claim made by any Buyer Indemnified Party under this Agreement,
that on or prior to the Closing, the Buyer or CPLC had or should have had
knowledge of any fact, condition, event or circumstance that (i) caused any
representation or warranty made by any of the Seller, PBCC, PBI or CPLC to be
inaccurate or untrue or (ii) that could form the basis of any claim by any Buyer
Indemnified Party against the Seller or PBCC pursuant to this Agreement.
5.5 Preparation of Closing Date Balance Sheet.
(a) Preparation of Draft Closing Date Balance Sheet, Audited Closing
Date Balance Sheet and Calculations.
(i) As soon as practicable following the Closing, the
Buyer shall cause CPLC, with the assistance of the Buyer and the Seller
and after consultation with the Buyer and the Seller, to prepare the
Draft Closing Date Balance Sheet and a draft calculation of the Gross
Receivables Amount and the amount of the Receivable Deductions, the
Other Assets, the Other Liabilities and the Loss Reserve. The Draft
Closing Date Balance Sheet and the draft calculation of the Gross
Receivables Amount and the amount of the Receivable Deductions, the
Other Assets, the Other Liabilities and the Loss Reserve shall be
prepared in accordance with the Accounting Principles. The Buyer and
the Seller shall use their respective reasonable efforts to cause the
Draft Closing Date Balance Sheet and the draft calculation of the Gross
Receivables Amount and the amount of the Receivable Deductions, the
Other Assets, the Other Liabilities and the Loss Reserve to be
completed within 30 days following the Closing Date and, upon
completion, such Draft Closing Date Balance Sheet and draft
calculations shall promptly be provided to the Buyer, the Buyer's
Accountants, the Seller and the Seller's Accountants.
(ii) Immediately following the preparation and
distribution of the Draft Closing Date Balance Sheet and draft
calculations, the Buyer shall cause the Buyer's Accountants to audit
the Draft Closing Date Balance Sheet and the draft calculation of the
Gross Receivables Amount and the amount of the Receivable Deductions,
the Other Assets, the Other Liabilities and the Loss Reserve, and such
audit shall be conducted in accordance with generally accepted auditing
standards and shall be sufficient to permit the Buyer's Accountants to
render their opinion to the effect that the Draft Closing Date Balance
Sheet fairly presents the financial position of CPLC as at the Closing
Date (after giving effect to the Contribution Transaction) in
accordance with the Accounting Principles and to render a special
report certifying as to the completeness and accuracy of the
calculation of the Gross Receivables Amount and the amount of the
Receivable Deductions, the Other Assets, the Other Liabilities and the
Loss Reserve.
(iii) Following the distribution of the Draft Closing Date
Balance Sheet and draft calculations, the Seller's Accountants shall be
entitled to perform all procedures and take any other steps that they,
in the exercise of their professional judgment, deem appropriate to
confirm that the Draft Closing Date Balance Sheet and the calculation
of the Gross Receivables Amount and the amount of the Receivable
Deductions, the Other Assets, the Other Liabilities and the Loss
Reserve, have each been prepared in conformity with the standard set
forth in subsection 5.5(a)(i) above.
(iv) The Buyer shall use reasonable efforts to cause the
Buyer's Accountants to deliver the audited Draft Closing Date Balance
Sheet, the draft of the Buyer's Accountants' opinion on the Closing
Date Balance Sheet and the draft of the Buyer's Accountants' special
report on the calculation of the Gross Receivables Amount and the
amount of the Receivable Deductions, the Other Assets, the Other
Liabilities and the Loss Reserve to each of the Buyer, the Seller and
the Seller's Accountants within 90 days following the date of the
Buyer's Accountants' receipt of the Draft Closing Date Balance Sheet.
(v) During the 30 days following their receipt of the
audited Draft Closing Date Balance Sheet and audited draft
calculations, both the Buyer and the Seller (in consultation with the
Seller's Accountants) shall have the opportunity to review the audited
Draft Closing Date Balance Sheet and the audited draft calculation of
the Gross Receivables Amount and the amount of the Receivable
Deductions, the Other Assets, the Other Liabilities and the Loss
Reserve (together with the Buyer's Accountants' working papers,
including any portion thereof pertaining to any proposed adjustment)
and, during such 30-day period, the Seller, the Seller's Accountants
and the Buyer shall have the right to propose to the Buyer's
Accountants those changes to the audited Draft Closing Date Balance
Sheet and the audited draft calculation of the Gross Receivables Amount
and the amount of the Receivable Deductions, the Other Assets, the
Other Liabilities and the Loss Reserve that the Seller, the Seller's
Accountants or the Buyer determine to be appropriate in order to (A)
cause the audited Draft Closing Date Balance Sheet and the audited
draft calculation of the Gross Receivable Amount and the amount of the
Receivable Deductions, the Other Assets, the Other Liabilities and the
Loss Reserve to conform, in all respects, to the standard set forth in
subsection 5.5(a)(i) above and (B) if applicable, reflect the Seller's
exercise of its option under subsection 5.5(e) hereof.
(vi) In the event of any dispute between the Seller and
the Seller's Accountants (on the one hand) and the Buyer and the
Buyer's Accountants (on the other hand) regarding any of the
adjustments proposed by the Seller or the Seller's Accountants (on the
one hand) or the Buyer or the Buyer's Accountants (on the other hand)
with respect to the Draft Closing Date Balance Sheet or the audited
draft calculation of the Gross Receivables Amount and the amount of the
Receivable Deductions, the Other Assets, the Other Liabilities or the
Loss Reserve, which the Seller and the Seller's Accountants (on the one
hand) and the Buyer and the Buyer's Accountants (on the other hand)
cannot resolve within 45 days after the receipt by Buyer's Accountants
thereof, as the case may be, either the Seller or the Buyer shall have
the right, upon delivery of written notice to the other party, to
require that such dispute be resolved in accordance with the provisions
set forth in subsection 5.5(b) hereof. Promptly following the final
resolution of any disputes with respect to any proposed adjustments to
the audited Draft Closing Date Balance Sheet or the audited draft
calculation of the Gross Receivables Amount or the amount of the
Receivable Deductions, the Other Assets, the Other Liabilities and the
Loss Reserve, the Buyer shall cause the Buyer's Accountants to prepare
and deliver to the Buyer and the Seller the Audited Closing Date
Balance Sheet, the audited final calculation of the Gross Receivables
Amount and the amount of the Receivable Deductions, the Other Assets,
the Other Liabilities and the Loss Reserve, the Buyer's Accountants'
opinion on the Audited Closing Date Balance Sheet and the Buyer's
Accountants' special report on the audited final calculation of the
Gross Receivables Amount and the amount of the Receivable Deductions,
the Other Assets, the Other Liabilities and the Loss Reserve. The
Audited Closing Date Balance Sheet and the audited final calculation of
the Gross Receivables Amount and the amount of the Receivable
Deductions, the Other Assets, the Other Liabilities and the Loss
Reserve shall reflect all adjustments thereto agreed upon by the Seller
and the Seller's Accountants (on the one hand) and the Buyer and the
Buyer's Accountants (on the other hand) or which have been resolved
pursuant to subsection 5.5(b) hereof.
(vii) Each of the Buyer, the Seller, the Buyer's
Accountants and the Seller's Accountants shall have full access to all
relevant accounting, financial and other records reasonably requested
by it in connection with the preparation, confirmation or review of the
Draft Closing Date Balance Sheet and the calculation of the Gross
Receivables Amount, the amount of the Receivable Deductions, the Other
Assets, the Other Liabilities and the Loss Reserve, as well as the
Buyer's Accountants' working papers and draft opinion and draft special
report thereon. Without limiting the foregoing, each party shall make
available to the other party and its accountants such personnel as they
may reasonably request in connection with the preparation or
confirmation of the Draft Closing Date Balance Sheet and the
calculation of the Gross Receivables Amount, the amount of the
Receivable Deductions, the Other Assets, the Other Liabilities and the
Loss Reserve or the review of the Buyer's Accountants' draft opinion or
draft special report.
(b) Conflict Resolution Mechanism. Any dispute involving the
draft opinion or draft special report of the Buyer's Accountants or any of the
adjustments proposed by the Seller, Seller's Accountants, the Buyer or the
Buyer's Accountants including, without limitation, any interpretation or
application of any provision of this Agreement affecting the preparation of the
draft opinion, draft special report, the Draft Closing Date Balance Sheet, the
calculation of the Gross Receivables Amount or the amount of the Receivable
Deductions, the Other Assets, the Other Liabilities and the Loss Reserve, not
resolved by the Seller's Accountants and the Buyer's Accountants within 45 days
of the relevant date of receipt thereof, at the election of the Seller or the
Buyer by written notice to the other, shall be resolved by the Selected
Accounting Firm. The Selected Accounting Firm shall resolve only issues upon
which the Buyer and the Seller have been unable to agree. The decision of such
Selected Accounting Firm shall be rendered within 20 business days after its
appointment and shall be final and binding upon the parties.
(c) Payment of Fees. The Buyer shall pay all of the fees of
the Buyer's Accountants and all expenses incurred by such firm in connection
with the tasks outlined in this Section 5.5, and the Seller shall pay all fees
of the Seller's Accountants and all expenses incurred by such firm in connection
with the tasks outlined in this Section 5.5. All fees and expenses relating to
the work performed by the Selected Accounting Firm pursuant to subsection 5.5(b)
shall be borne pro rata by the Seller and the Buyer in proportion to the
allocation of the dollar amount of the disputed amount between the Seller and
the Buyer by the Selected Accounting Firm, such that the prevailing party pays a
lesser portion of such fees and expenses.
(d) Accountant Cooperation. The Seller and the Buyer shall use
their best efforts to cause the Buyer's Accountants and the Seller's Accountants
to cooperate with each other in connection with all of their activities
undertaken in connection with this Agreement. Prior to the commencement of the
audit of the Draft Closing Date Balance Sheet, the Seller shall instruct the
Seller's Accountants to make available to the Buyer's Accountants their work
papers from the audit of PBCC's prior audited financial statements, to the
extent they relate to the Seller or its Business, operations or financial
condition.
(e) Option to Assume Certain Liabilities. During the 30 days
following the Seller's receipt of the audited Draft Closing Balance Sheet and
audited draft calculations pursuant to Section 5.5(a)(v) hereof, the Seller, in
its sole discretion, may assume any liability that is reflected on the Draft
Closing Date Balance Sheet that is of a class of liabilities for which there is
no methodology of calculation set forth on Schedule 5.5(a) hereto by delivering
to the Buyer an unconditional assumption of such liability and unconditionally
indemnifying the Buyer with respect thereto pursuant to documentation reasonably
satisfactory to the Buyer within such thirty (30) day period. If the Seller
assumes any liability pursuant to the foregoing sentence, such liability shall
be removed from and shall not be reflected on the Audited Closing Date Balance
Sheet.
5.6 Employees.
(a) Transfer of CPLC Employees. Concurrently with the
consummation of the Contribution Transaction, the Seller shall transfer the CPLC
Employees to CPLC in substantially the same position of employment, at the same
location and on substantially the same terms and conditions as exist for such
individuals as of the date hereof (without regard to any retention agreements
now or hereafter in effect between the Seller or PBCC and such individuals, or
any payments to be made thereunder by the Seller or PBCC at the Closing in
connection with the consummation of the transactions contemplated by this
Agreement).
(b) Inactive Employees. The Seller shall retain liability and
responsibility for any inactive employee of the Seller (each, an "Inactive
Employee") following the Closing until such employee becomes an employee of CPLC
following the Closing or unless such employee is otherwise terminated by the
Seller. After the Closing, CPLC shall offer employment to any Inactive Employee
in accordance with CPLC's standard hiring procedure, subject to the following
conditions: (i) if on medical leave, such Inactive Employee is released by his
or her physician to return to active employment and (ii) such Inactive Employee
actually reports for active employment with CPLC promptly upon receiving such
medical release or the expiration of the approved leave; provided, however, that
CPLC shall not be required to offer employment to any Inactive Employee under
this provision for more than six months from the Closing Date or after the
expiration of any applicable period required by Law, if later.
(c) Post-Closing Benefits. From and after 12:01 a.m. on the
day following the Closing Date, the Buyer shall cause CPLC to provide all of the
CPLC Employees and Later Hires with the employee benefits programs generally
available to employees of the Buyer's Vendor Financial Services division. All
CPLC Employees and Later Hires shall be given full credit by CPLC and the Buyer
for their years of service rendered to the Seller, PBCC, CPLC or an ERISA
Affiliate (i) for purposes of eligibility and vesting in all employee benefit
programs of CPLC and the Buyer and (ii) for purposes of calculating the benefits
to which they are entitled under severance and vacation policies of CPLC and the
Buyer. The Buyer, after the Closing, shall cause CPLC not to (x) relocate any
CPLC Employee or Later Hire or (y) terminate or demote any CPLC Employee or
Later Hire without cause, in each case, during the 90-day period commencing on
the Closing Date.
(d) Retirement/COBRA Benefits. Nothing herein shall require
CPLC or the Buyer to assume any retirement obligations to CPLC Employees or any
other current or former employee of the Seller or CPLC under plans or programs
applicable to such employees or any other employees of PBCC and its
Subsidiaries, and the Buyer and, after the Closing, CPLC shall have no
obligation, liability or responsibility with respect to any such plans or
programs. As of 12:00 midnight on the Closing Date, the CPLC Employees and CPLC
shall cease active participation in the Plans and the Title IV Plans and the
Seller shall be responsible for providing to CPLC Employees any notification
concerning the cessation of their accruals under the Plans, including the notice
required to be provided under Section 204(h) of ERISA. No assets or liabilities
of the Plans shall be transferred to CPLC or the Buyer by reason of the
transactions contemplated herein. After the Closing Date, the Seller shall
administer benefits provided to CPLC Employees under the Plans in accordance
with the terms of the Plans and applicable Law, including provisions relating to
the distribution of benefits in connection with the transactions contemplated
hereby. The Seller shall assume full responsibility under its Plans for
providing continuation of health coverage pursuant to an election made under
Section 4980B of the Code or Sections 601-608 of ERISA (a "COBRA Election") by
any current or former employee (or dependent thereof) of the Seller or CPLC
relating to a "qualifying event" (as defined in Section 4980B(f)(3) of the Code
and Section 603 of ERISA) that occurs on or prior to the Closing to any
"qualifying beneficiaries" (as defined in Section 4980B(g)(1) of the Code and
Section 607(3) of ERISA).
(e) Employment. PBCC and the Seller agree that they shall not,
and shall not permit any of their Subsidiaries to, during the period from the
date of this Agreement through the Closing, encourage any CPLC Employee to
refrain from continuing his or her employment with CPLC after the Closing.
(f) Vacation. At or immediately following the Closing, the
Seller shall pay to each CPLC Employee the cash equivalent of all accrued
vacation for vacation earned on or prior to December 31, 1997. From the Closing
Date until December 31, 1998, the Buyer shall continue in effect for calendar
year 1998 a vacation policy substantially similar to the vacation policy set
forth on Schedule 5.6(f) covering each CPLC Employee immediately prior to the
Closing (the "Seller Vacation Policy"); provided, however, the Buyer shall pay
to each CPLC Employee as soon as practicable in 1999 the cash equivalent of all
accrued but unpaid vacation for vacation earned in 1998. Effective January 1,
1999, each CPLC Employee and Later Hire shall be eligible for vacation in
accordance with the Buyer's vacation policy then in effect ("Buyer Vacation
Policy"); provided, however, that a CPLC Employee's or Later Hire's annual
vacation entitlement immediately prior to the Closing shall be grandfathered
under the Seller Vacation Policy until such CPLC Employee's or Later Hire's
vacation entitlement under the Buyer Vacation Policy would increase such CPLC
Employee's or Later Hire's vacation entitlement.
(g) Flex Plans. The Seller shall cause the sponsor of the Code
Section 125 flexible benefits program ("Seller FSA") to allow the CPLC Employees
who participate in such program prior to the Closing to continue to submit
claims under the Seller FSA for expenses incurred through December 31, 1998 in
an amount not to exceed the funded positive balance in such CPLC Employees'
accounts in the Seller FSA as of the Closing Date.
(h) Retention and Stay Bonuses. The Seller or one of its
Affiliates shall pay, and PBCC and the Seller hereby agree that they are jointly
and severally responsible for, any retention or stay bonus arrangements
(including any 1998 bonus and special bonus opportunity multipliers) in effect
prior to the Closing with respect to any of the Employees.
5.7 Credit Loss Reimbursement.
(a) PBCC and the Seller, jointly and severally, covenant and
agree to indemnify and hold the Buyer harmless from any Credit Loss Amounts, to
the extent the aggregate Credit Loss Amounts for all Transferred Financing
Contracts and Funded Backlog exceed the Reimbursement Threshold; provided,
however, that the amount of any Credit Loss Amount for any Transferred Financing
Contract or Funded Backlog shall be determined without deducting any amounts
that represent or constitute a writeoff or writedown with respect to such
Transferred Financing Contract or Funded Backlog by CPLC. For purposes of
determining if a Credit Loss Event has occurred with respect to any Transferred
Financing Contract or any Funded Backlog, the term or maturity date of any such
Transferred Financing Contract or Funded Backlog shall be deemed to be the
contractual term or maturity (including any extension periods that may be
exercised at the sole discretion of the Obligor under such Transferred Financing
Contract or Funded Backlog) of such Transferred Financing Contract or Funded
Backlog, as it is in effect on the Closing Date.
(b) No later than 10 days after the end of each calendar
quarter ending after the Closing Date, commencing with the calendar quarter
ending December 31, 1998 and continuing thereafter until and including the
calendar quarter during which the last Transferred Financing Contract or Funded
Backlog shall have expired or its maturity date shall have occurred (the
"Cut-Off Date"), the Buyer shall deliver to the Seller a written report
certified by an officer of CPLC, and in a form reasonably satisfactory to the
Seller, setting forth with respect to all of the Transferred Financing Contracts
and Funded Backlog, the details of any Credit Loss Events that occurred during
the immediately preceding calendar quarter, the aggregate Credit Loss Amounts
incurred from the Closing Date through the end of the immediately preceding
calendar quarter and indicating the amount, if any, for which the Buyer is
seeking reimbursement pursuant to this Section 5.7 (the "Quarterly Credit Loss
Report"). No later than the 10th day after the end of each month after the
Closing Date, until the Cut-Off Date, the Buyer shall deliver to the Seller an
aging of accounts report for all of the Transferred Financing Contracts and
Funded Backlog, in a form reasonably satisfactory to the Seller.
(c) The Seller shall have 10 days after receipt of a Quarterly
Credit Loss Report to review such Quarterly Credit Loss Report (together with
copies of the workpapers and other analyses used in the preparation thereof).
During such 10 day period, CPLC shall provide the Seller and its representatives
with access to its Books and Records to the extent that they relate to such
Quarterly Credit Loss Report for the purposes of analyzing and verifying the
information set forth in such Quarterly Credit Loss Report; provided, however,
that such access shall be exercised during normal business hours and in such a
manner so as not to interfere unreasonably with CPLC's business. Unless the
Seller delivers written notice to the Buyer on or prior to the 10th day after
its receipt of such Quarterly Credit Loss Report, specifying in reasonable
detail the amount, nature and basis of all disputed matters (a "Credit Loss
Objection Notice"), the Seller and PBCC shall be deemed to have accepted and
agreed to such Quarterly Credit Loss Report and the information set forth
therein.
(d) If the Seller delivers a Credit Loss Objection Notice in a
timely manner, the Seller and the Buyer shall, within 10 days following the
delivery of such Credit Loss Objection Notice (the "Credit Loss Resolution
Period"), acting reasonably and in good faith, attempt to resolve their
differences, and any resolution by them as to any disputed matter shall be
final, binding and conclusive. If, at the end of the Credit Loss Resolution
Period, the Buyer and the Seller are unable to reach agreement on whether any
Credit Loss Amount claimed by the Buyer was calculated correctly shall be
submitted to an independent third party mutually agreeable to the Seller and the
Buyer (or, if they cannot agree, to the Selected Accounting Firm) (the
"Arbitrator") within three days after the expiration of the Credit Loss
Resolution Period. As to any other matter contained in a Credit Loss Objection
Notice on which the Buyer and the Seller are unable to reach agreement within
the Credit Loss Resolution Period, the Buyer and the Seller shall be free to
pursue any rights they may have with respect to such matter. The Seller and the
Buyer agree to execute, if requested by the Arbitrator, a reasonable engagement
letter for the services to be provided by the Arbitrator. All fees and expenses
relating to the work performed by the Arbitrator shall be borne pro rata by the
Seller and the Buyer in proportion to the allocation of the dollar amount of the
disputed amount between the Seller and the Buyer by the Arbitrator, such that
the prevailing party pays a lesser portion of the fees and expenses. The
Arbitrator shall take such action and perform such tasks as are necessary to
resolve whether any Credit Loss Amount claimed by the Buyer was calculated
correctly. The Arbitrator's determination with respect to all such disputed
matters shall be made within 10 days of submission of the dispute to the
Arbitrator and shall be set forth in a written statement delivered to the Seller
and the Buyer and shall be final, binding and conclusive in respect of such
dispute and all subsequent disputes based on similar facts or circumstances upon
delivery of such written statement to the Buyer and the Seller.
(e) Any payments of any Credit Loss Amounts payable pursuant
to this Section 5.7 shall be made within five business days after the final
determination of the amount of such Credit Loss Amounts and shall be made by
wire transfer, in immediately available funds, to such account at such bank in
the United States as the Buyer or CPLC, as applicable, shall have designated in
writing.
(f) For purposes of calculating the aggregate Credit Loss
Amount incurred during any quarterly period, any amounts received by the Buyer
or CPLC with respect to any Transferred Financing Contract or Funded Backlog
after the date a Credit Loss Event occurred with respect to such Transferred
Financing Contract or Funded Backlog, including, without limitation, past due
lease payments, settlement payments, late fees, out of pocket expenses,
unidentified amounts received by CPLC prior to the date a Credit Loss Event
occurred with respect to such Transferred Financing Contract or Funded Backlog
that are determined by CPLC after such date to be related to such Transferred
Financing Contract or Funded Backlog or equipment remarketing proceeds (whether
in the form of sale proceeds or re-lease payments) (collectively, "Recoveries")
shall be credited to the aggregate Credit Loss Amounts for the quarterly period
during which any such Recoveries are received and, to the extent necessary to
offset the aggregate amount of such Recoveries, to any subsequent quarterly
periods. To the extent the Seller has made payments of Credit Loss Amounts to
the Buyer under this Section 5.7 and the aggregate amount of all Credit Loss
Amounts incurred by CPLC is thereafter reduced to an amount less than the
Reimbursement Threshold, the Buyer shall return to the Seller any Credit Loss
Amounts previously paid by the Seller under this Section 5.7.
(g) In the event the Seller or PBCC is required to indemnify
the Buyer against any Credit Loss Amount under this Section 5.7 with respect to
a Transferred Financing Contract or Funded Backlog, the Seller shall have the
option to purchase, and CPLC shall, upon exercise by the Seller of such option,
be required to sell to the Seller, all of CPLC's right, title and interest in
and to such Transferred Financing Contract or Funded Backlog at a purchase price
equal to the Net Finance Receivables Balance of such Transferred Financing
Contract or Funded Backlog, determined as of the date that the Seller gives CPLC
notice of the exercise of its option with respect to such Transferred Financing
Contract or Funded Backlog, but determined without deducting any amounts that
represent or constitute a writeoff or writedown with respect to such Transferred
Financing Contract or Funded Backlog by CPLC. Any payments of the Net Finance
Receivables Balance pursuant to this subsection 5.7(g) shall be made within five
days after notice by the Seller that it is exercising its option under this
subsection 5.7(g) and shall be made by wire transfer, in immediately available
funds, to such account at such bank in the United States as the Buyer or CPLC,
as applicable, shall have designated in writing. CPLC shall, upon receipt of
such funds, assign and turn over to the Seller all of CPLC's right, title and
interest to such Transferred Financing Contract or Funded Backlog and any
Property (including any Credit Enhancements and any unapplied amounts held by
CPLC and subsequently determined by CPLC to relate to such Transferred Financing
Contract or Funded Backlog after the date the Seller has exercised its option
under this subsection 5.7(g) with respect to such Transferred Financing Contract
or Funded Backlog) related thereto by quit-claim and on an "AS-IS, WHERE-IS"
basis, without any representations or warranties from CPLC (except that CPLC
shall represent to the Seller that CPLC owns such Transferred Financing Contract
or Funded Backlog and Property, free and clear of any Liens created after the
Closing Date by, through or under CPLC) and without any recourse to CPLC (except
for breach of its sole representation) and the Seller shall assume all of CPLC's
rights, duties and obligations thereunder.
5.8 Closing Backlog Schedule; Closing Date Schedule of Assets and
Liabilities.
(a) The Seller shall, within 10 business days following the
Closing, deliver to the Buyer the Closing Backlog Schedule, which shall reflect
all of the Transferred Backlog and all the information required to be set forth
thereon with respect to each item of Transferred Backlog. In the event the
Seller fails to deliver the Closing Backlog Schedule to the Buyer prior to the
end of such 10-business-day period, CPLC is hereby authorized and directed by
the Seller and PBCC to prepare the Closing Backlog Schedule as of the Closing
Date and deliver the final form of such schedule to the Seller and PBCC.
(b) The Seller shall, within 10 business days following the
Closing, deliver to the Buyer a draft Schedule of Assets and Liabilities, which
shall be dated as of the Closing Date and shall reflect all of the assets and
liabilities of the Seller immediately prior to the Contribution Transaction.
Within 10 business days following the delivery of the Audited Closing Date
Balance Sheet to the Seller, the Seller shall deliver to the Buyer the Final
Schedule of Assets and Liabilities, which shall be dated as of the Closing Date
and shall reflect all of the Transferred Assets and Assumed Liabilities. In the
event the Seller fails to deliver the Final Schedule of Assets and Liabilities
to the Buyer prior to the end of such 10-business-day period, CPLC is hereby
authorized and directed by the Seller and PBCC to prepare such Final Schedule of
Assets and Liabilities as of the Closing Date and deliver the final form of such
schedule to the Seller and PBCC.
(c) The Buyer shall cause CPLC to provide the Seller and its
agents and representatives with access to the premises and applicable Books and
Records of CPLC, prior to the expiration of any applicable time period, for the
purpose of preparing the Closing Backlog Schedule, the draft Schedule of Assets
and Liabilities and the Final Schedule of Assets and Liabilities; provided,
however, that such access shall be provided during normal business hours and in
such a manner as not to interfere unreasonably with the operation of CPLC's
business.
5.9 Books and Records; Resignations. At the Closing, the
Seller shall cause to be delivered to the Buyer (i) the Books and Records of
CPLC (including CPLC's organizational documents, minute books and stock ledger
and the Books and Records of the Seller related to any of the Transferred Assets
or Assumed Liabilities) and (ii) the resignations of all of the directors and
officers of CPLC who are not CPLC Employees.
5.10 Further Assurances.
(a) All amounts included in the Transferred Assets or Assumed
Liabilities that are received by the Seller following the Closing shall be
received by the Seller as agent, in trust for and on behalf of CPLC, and the
Seller shall pay promptly all of such amounts over to CPLC and shall provide to
CPLC information as to the nature, source and classification of such payments,
including any invoice relating thereto. All amounts included in the Excluded
Assets or Excluded Liabilities received by CPLC following the Closing shall be
received by CPLC as the Seller's agent, in trust for and on behalf of the
Seller, and the Buyer shall cause CPLC promptly to pay all of such amounts over
to the Seller and shall provide to the Seller information as to the nature,
source and classification of such payments, including any invoice relating
thereto.
(b) In addition to the foregoing, the Seller will, whenever
and as often as reasonably requested to do so by the Buyer or CPLC, do, execute,
acknowledge and deliver any and all such other and further acts, assignments,
transfers and any instruments of further assurance, approvals and Consents as
are necessary or proper in order to complete, ensure and perfect (i) the
Contribution Transaction, (ii) the sale, transfer and conveyance to the Buyer of
the CPLC Shares and (iii) the consummation of the other transactions
contemplated hereby.
5.11 Contribution Transaction.
(a) Immediately prior to the Closing, the Seller and CPLC
shall consummate the Contribution Transaction. In connection with the
Contribution Transaction, the Seller shall subscribe for the CPLC Shares and in
exchange therefor the Seller shall contribute to CPLC all of its right, title
and interest in and to each of the Transferred Assets free and clear of all
Liens other than Permitted Liens and CPLC shall assume and agree to perform all
of the Assumed Liabilities. Each Transferred Asset and Assumed Liability shall
be transferred to, and CPLC's Books and Records shall reflect, the book value of
each Transferred Asset and Assumed Liability as it is reflected on the Seller's
Books and Records immediately prior to the Contribution Transaction.
(b) If, after the Closing Date, the Seller, the Buyer or CPLC
discovers that any Property reflected on the Books and Records of CPLC
constitutes an Excluded Asset or any liability, obligation or contra account
constitutes an Excluded Liability and (i) the Audited Closing Date Balance Sheet
shall not yet have been delivered pursuant to subsection 5.5(a)(vi), the parties
agree that they shall cause any such Property, liability, obligation or contra
account not to be reflected on the Audited Closing Date Balance Sheet and CPLC
shall remit to the Seller all monies, rights and other consideration received by
it in respect of such Property and the Seller shall remit to CPLC any amounts
expended by CPLC in connection with any such liability or obligation or contra
account, in each case during the period after the Closing and prior to the date
any such payments are made or (ii) the Audited Closing Date Balance Sheet shall
have been delivered pursuant to subsection 5.5(a)(vi), and such Property,
liability, obligation or contra account was reflected thereon, the parties agree
that, within five business days of written notice from the applicable party, (A)
the Seller shall remit to CPLC, by wire transfer of immediately available funds,
any amounts expended by CPLC in connection with any such liability or obligation
or contra account and the Seller shall, in writing, reaffirm its liability and
responsibility for any such liability or obligation or contra account and (B)
CPLC shall remit to the Seller, by wire transfer of immediately available funds
(1) the book value of such Property as reflected on the Audited Closing Date
Balance Sheet plus (2) all monies, rights and other consideration received by
CPLC in respect of such Property during the period after the Closing and prior
to the date any such payments are made and CPLC shall deliver possession of such
Property to the Seller, to the extent CPLC has possession thereof.
(c) If, after the Closing Date, the Seller, the Buyer or CPLC
discovers that any Property reflected on the Books and Records of the Seller
constitutes a Transferred Asset or any liability, obligation or contra account
constitutes an Assumed Liability and (i) the Audited Closing Date Balance Sheet
shall not yet have been delivered pursuant to subsection 5.5(a)(vi), the parties
agree that they shall cause any such Property, liability, obligation or contra
account to be reflected on the Audited Closing Date Balance Sheet and the Seller
shall remit to CPLC all monies, rights and other consideration received by it in
respect of such Property and CPLC shall remit to the Seller any amounts expended
by the Seller in connection with any such liability or obligation or contra
account, in each case during the period after the Closing and prior to the date
any such payments are made or (ii) the Audited Closing Date Balance Sheet shall
have been delivered pursuant to subsection 5.5(a)(vi), and such Property,
liability, obligation or contra account was reflected thereon, the parties agree
that, within five business days of written notice from the applicable party, (A)
CPLC shall remit to the Seller, by wire transfer of immediately available funds,
any amounts expended by the Seller in connection with any such liability or
obligation or contra account and CPLC shall, in writing, reaffirm its liability
and responsibility for any such liability or obligation or contra account and
(B) the Seller shall remit to CPLC, by wire transfer of immediately available
funds (1) the book value of such Property as reflected on the Audited Closing
Date Balance Sheet plus (2) all monies, rights and other consideration received
by the Seller in respect of such Property during the period after the Closing
and prior to the date any such payments are made and the Seller shall deliver
possession of such Property to CPLC, to the extent the Seller has possession
thereof.
(d) Promptly after the Closing, the Seller and the Buyer shall
engage a mutually agreeable third party service provider to take any actions
necessary in order to cause the Transferred Assets (title to which must be
registered or recorded under applicable Law) to be registered in the name of the
Seller or otherwise cause record and legal title to such Transferred Assets to
be registered in the name of CPLC as soon as practicable after the Closing Date
(including under any law or regulation regarding the registration of motor
vehicles) and to the extent the Seller is not the registered owner and title
holder of any such Transferred Asset, such third party service provider shall
first cause such Transferred Asset to be registered in the name of the Seller or
otherwise cause record and legal title to such Transferred Asset to be
transferred to the Seller prior to registering and transferring title to such
Transferred Asset to CPLC. Any costs or expenses (including the fees paid to the
third party service provider) incurred in connection with the registration or
titling of such Transferred Assets (i) in the name of CPLC shall be borne 50% by
the Seller and 50% by CPLC or (ii) if applicable, in the name of the Seller
shall be borne by the Seller. The Seller and PBCC shall jointly and severally
indemnify each Buyer Indemnified Party from and against any Damages resulting
from, arising out of, based on or relating to the failure of the Seller to
timely and properly cause such Transferred Assets to be registered in the name
of CPLC or otherwise cause record and legal title to such Transferred Assets to
be transferred to CPLC as of the Closing.
(e) The Buyer and CPLC acknowledge that the Seller has not
taken, and does not intend to take, any action required to comply with any
applicable bulk sale or bulk transfer or similar Laws. The Seller and PBCC
agree, jointly and severally, to indemnify and hold the Buyer and CPLC and their
Affiliates and in each such case any of their respective directors, officers,
employees and agents harmless from and against any Damages resulting from,
arising out of, based on or relating to non-compliance with such Laws.
5.12 Payment of Brokers' or Finders' Fees. The Seller shall
pay any and all brokers' or finders' fees, or any other commissions or similar
fees, payable to any Person acting on behalf of the Seller or any of its
Affiliates or under the authority of any of them, in connection with any of the
transactions contemplated herein, and the Buyer shall pay any and all brokers'
or finders' fees, or any other commissions or similar fees, payable to any
Person acting on behalf of the Buyer or any of its Affiliates or under the
authority of any of them, in connection with any of the transactions
contemplated herein, in each case regardless of whether any claim for payment is
asserted before or after the Closing, or before or after any termination of this
Agreement.
5.13 Conduct of Business. CPLC shall not conduct any business
or engage in any operations until after the earlier of the Closing or the
termination of this Agreement pursuant to Article 6 hereof; provided, however,
that CPLC may take such actions as are necessary to (i) execute and deliver this
Agreement, (ii) procure any and all Authorizations and (iii) immediately prior
to the Closing, take all actions that are necessary to consummate the
Contribution Transaction and the other transactions that are contemplated by
this Agreement.
5.14 No Successor Liability. Each of the Seller, PBCC, CPLC
and the Buyer acknowledge and agree that CPLC is not a successor or successor in
interest to the Seller and that CPLC shall not have, and shall not be deemed to
have, any liabilities or obligations as a successor or successor in interest to
the Seller.
5.15 Tax Indemnification.
(a) PBCC and the Seller shall, jointly and severally, be
liable for, shall promptly defend and shall indemnify and hold each of the Buyer
Indemnified Parties harmless from and against, any and all Damages suffered or
incurred by any Buyer Indemnified Party resulting from, arising out of, based on
or relating to, the following:
(i) any and all Taxes imposed on any member of a
consolidated, combined or unitary group of which CPLC (or any
predecessor) is or was a member on or prior to the Closing Date, by
reason of the liability of CPLC pursuant to Treasury Regulations
Section 1.1502-6(a) or any similar domestic or foreign state or local
law or regulation;
(ii) any breach or inaccuracy of any of the
representations and warranties contained in subsection 4.1(n) (provided
that for purposes of the representations and warranties contained in
either of subsections 4.1(n)(xii) or (xiii), the breach or inaccuracy
of such representations and warranties shall not be indemnifiable in
respect of those of the Transferred Assets that the Buyer treats for
federal income tax purposes in a manner that is inconsistent with the
treatment described in either of such subsections 4.1(n)(xii) or
(xiii), unless a treatment contrary to the treatment described in
either of such subsections 4.1(n)(xii) or (xiii) is required by Law);
(iii) any and all Taxes (other than state or local income
or franchise taxes in respect of income of CPLC that results solely
from the Election described in Section 5.3 hereof) imposed on CPLC (or
any predecessor), or for which CPLC (or any predecessor) may otherwise
be liable (by reason of transferee liability or otherwise), for any
taxable year or period that ends on or before the Closing Date and,
with respect to any Straddle Period, the portion of such Straddle
Period deemed to end on and including the Closing Date, in excess of
current Taxes, if any, shown as a liability on the Audited Closing Date
Balance Sheet;
(iv) any failure by the Seller to timely pay any and all
Taxes required to be borne by the Seller pursuant to Section 2.5
hereof;
(v) any and all Taxes (other than Transfer Taxes) imposed
by any taxing authority on CPLC or the Seller resulting from, arising
out of, based on or relating to, the Contribution Transaction as and
when payable pursuant to applicable Law.
(b) The Buyer shall be liable for, shall promptly defend and
shall indemnify and hold the Seller harmless from and against any and all
Damages suffered or incurred by any of them that result from, arise out of, are
based on or relate to, any of the following:
(i) any and all Taxes imposed on CPLC, the Transferred
Assets or the Business for any taxable year or period that begins after
the Closing Date and, with respect to any Straddle Period, the portion
of such Straddle Period beginning after the Closing Date; and
(ii) any failure by the Buyer to timely pay any and all
Taxes required to be borne by Buyer pursuant to Section 2.5 hereof.
(c) To the extent permitted by law or administrative practice
(i) the taxable year of CPLC that includes the Closing Date shall be treated as
closing on (and including) the Closing Date and (ii) all transactions not in the
ordinary course of business occurring on the Closing Date but after the Closing
shall be reported on the Buyer's consolidated United States federal income Tax
Return to the extent permitted by Treasury Regulation Section
1.1502-76(b)(1)(ii)(B) and shall be similarly reported on other Tax Returns of
the Buyer or its Affiliates to the extent permitted by law. For purposes of
subsections 5.15(a) and (b) above, where it is necessary to apportion between
the Seller and the Buyer the Tax liability of CPLC for a Straddle Period (which
is not treated under the immediately preceding sentence as closing on the
Closing Date), such liability shall be apportioned between the period deemed to
end at the close of the Closing Date and the period deemed to begin at the
beginning of the day following the Closing Date on the basis of an interim
closing of the books, except that (A) exemptions, allowances or deductions
calculated on a time basis (such as the deduction for depreciation) shall be
apportioned on a time basis and (B) personal property taxes whose assessment
date is on or before the Closing Date shall be treated as pre-Closing Date Taxes
borne by the Seller and personal property taxes whose assessment date is after
the Closing Date shall be treated as post-Closing Date Taxes borne by the Buyer.
(d) Assistance and Cooperation. The parties hereto agree to
furnish or cause to be furnished to each other, at their own expense, such
information, access to Books and Records, including without limitation Tax
Returns and other tax data, and assistance, including making employees available
during regular business hours on a mutually convenient basis, as may be
reasonably necessary for the preparation of Tax Returns or any tax contests or
proceedings (including refunds) relating to Taxes of CPLC, Seller or any of its
affiliates, its income, operations or assets.
(e) Refunds. In the event that CPLC's consent is necessary to
enable the Seller to pursue a refund of property or sales taxes attributable to
the Transferred Assets or Business for which the Seller is liable hereunder,
upon the Seller's written request and at the Seller's sole expense, the Buyer
shall, within 20 business days after receipt from the Seller of all completed
necessary forms and filings (prepared at Seller's expense), execute such forms
and filings and return the same to the Seller; provided, however, that neither
CPLC nor Buyer shall be required to take any action described in this sentence
if the Buyer reasonably determines that pursuing such a refund could have an
adverse effect on the Buyer, CPLC or any of their respective Affiliates, unless
the Seller agrees, in a form reasonably satisfactory to the Buyer, to indemnify
the Buyer for any Damages that may result from, arise out of, relate to or are
based upon such action. Upon receipt by CPLC or the Buyer of any refund
described in the preceding sentence the Buyer shall promptly forward the same to
the Seller, decreased to the extent of any net actual Tax liability imposed on
the Buyer, CPLC or any of their respective Affiliates by reason of such refund
and increased to the extent of any net actual reduction of Tax liability of the
Buyer, CPLC or their respective Affiliates by reason of such payment.
(f) Dispute Procedures. If the parties disagree as to the
amount of any payment or allocation to be made under, or any other matter
arising out of, Section 5.3 or 5.15 hereof, the parties shall attempt in good
faith to resolve such dispute. If such dispute is not resolved within 15 days,
the parties shall submit such dispute for resolution by the Selected Accounting
Firm. The report of the Selected Accounting Firm shall be final, binding and
conclusive on the Seller and the Buyer. The fees and expenses of the Selected
Accounting Firm shall be borne pro rata by the Seller and the Buyer in
proportion to the allocation of the dollar amount of the disputed amount between
the Seller and the Buyer by the Selected Accounting Firm, such that the
prevailing party pays a lesser proportion of such fees and expenses.
(g) Limitation on Liability. The Damages for which the Buyer
shall be entitled to indemnification under subsection 5.15(a)(ii) relating to
any breach or inaccuracy of a Limited Survival Tax Representation shall not
exceed the aggregate amount of penalties (and similar amounts, but not any tax
deficiency itself) and interest payable to any taxing authority in respect of
taxable periods or portions thereof of CPLC that end on or prior to the first
anniversary of the Closing Date that results from, arises out of, relates to or
is based upon the breach or inaccuracy of such Limited Survival Tax
Representation.
(h) No Double Counting. No indemnified party shall be entitled
to indemnification under Section 5.15 in an amount greater than the aggregate
amount of Damages suffered or incurred by such indemnified party described in
this Section 5.15.
(i) For all income tax purposes, the Buyer and the Seller
agree to treat the transactions contemplated herein consistent with the manner
described in Revenue Ruling 70-140.
5.16 Supplements to Schedules; Post-Signing Information.
(a) Not more than five nor less than three business days prior
to the Closing, the Seller and the Buyer will supplement or amend the Schedules
relating to their respective representations and warranties in this Agreement
with respect to any matter, condition or occurrence hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such Schedules or would otherwise have been
inconsistent with their representations herein. No supplement or amendment by
either party shall (i) relieve any party of any liability in respect of any
matter set forth on such supplement or amendment that would have constituted a
breach of any representation or warranty made in this Agreement had such matter
not been disclosed, (ii) have any effect for the purpose of determining
satisfaction of the conditions set forth in Sections 3.2 and 3.3 hereof or (iii)
otherwise affect the rights of any party to this Agreement.
(b) Not later than three business days prior to the Closing,
the Seller will supplement or amend Annex A to (i) include all Financing
Contracts that, as of the date such supplement or amendment is delivered to the
Buyer, constitute Excluded Assets pursuant to clause (A) or (B) of clause (i) of
the definition of Excluded Assets and (ii) delete all Financing Contracts
included on the version of Annex A that was attached to this Agreement that, as
of the date such supplement or amendment is delivered to the Buyer, no longer
constitute Excluded Assets.
(c) Not later than three business prior to the Closing, the
Buyer will deliver to the Seller a notice containing the amount of the doubtful
account reserve to be included on the general ledger of CPLC at the Closing,
which shall be the Buyer's good faith estimate of the Reimbursement Threshold.
5.17 Name Change; Use of Trademarks.
(a) Promptly following the Closing, PBCC shall cause the
Seller and each of its Affiliates to take any and all action necessary to
effectuate a change of the name of the Seller and each of its Affiliates to
eliminate any reference to any Transferred Names and Marks.
(b) Following the Closing, PBCC shall cause the Seller and
each of its Affiliates not to use any Transferred Names and Marks in any manner,
including in connection with any signage, letterhead, logos, advertising,
marketing or solicitation efforts; provided, however, that (i) for a reasonable
period of time following the Closing, not to exceed 60 days, the Seller shall be
entitled to use any Transferred Names and Marks in correspondence with customers
and the public regarding the consummation of the transactions contemplated
hereby, (ii) the Seller may continue to use the Transferred Names and Marks in
connection with any Financing Contract that is an Excluded Asset for so long as
such Financing Contract is serviced by CPLC under the Servicing Agreement and
(iii) from and after the Closing, the Seller shall be entitled to use the
Transferred Names and Marks to inform any Obligor that it has changed its name.
PBCC shall cause the Seller and its Affiliates to, as soon as commercially
practicable and in any event within 30 days following the Closing Date, remove
or obliterate all the Transferred Names and Marks from any Property of the
Seller or any of its Affiliates, including its signs, purchase orders, invoices,
brochures, labels, letterhead, shipping documents and all other materials;
provided, however, that the Seller and its Affiliates shall not be obligated to
remove or obliterate any of the Transferred Names and Marks from any printed
materials such as annual reports or comparable internal corporate documents.
(c) Each of PBCC and the Seller, on its own behalf and on the
behalf of its Affiliates, acknowledges and agrees that, except as set forth in
subsection (b) above, from and after the Closing, none of them or any of their
respective successors shall have any interest in or right to use any of the
Transferred Names and Marks and that they shall not adopt or attempt to register
any marks that are confusingly similar to, or contain any element of, any of the
Transferred Names and Marks.
(d) CPLC shall have the right to use, on a non-exclusive
basis, for a period of 90 days after the Closing Date, such Retained Names and
Marks as may be reasonably necessary or appropriate for the purpose of
conducting the Business including, without limitation, issuing billings and the
collection of payments due under the Transferred Financing Contracts, any other
communications relating to the Transferred Financing Contracts with existing
parties to or Obligors under the Transferred Financing Contracts (and any
assignees, services or agents of such parties) and the use or acceptance by CPLC
after the Closing of printed forms or other Documents for the purpose of
entering into leases and loan transactions. The Seller and PBCC, on their behalf
and on behalf of their Affiliates, acknowledge and agree that CPLC shall not be
obligated to remove or obliterate any of the Retained Names and Marks from any
Documents that constitute all or any part of the Transferred Assets.
5.18 Insurance; Risk of Loss. Effective as of the Closing,
PBCC will cause all coverage relating to CPLC and the Transferred Assets under
the general corporate policies of insurance and cancelable surety bonds and hold
harmless agreements of PBI or any of its Affiliates (whether or not held for
itself or for the benefit of its Subsidiaries) to be terminated.
5.19 No Liquidation or Dissolution. The Buyer shall not, and
shall not permit CPLC to, for a period of 18 months after the Closing Date,
liquidate or dissolve CPLC.
5.20 LIAS Receivables.
(a) PBCC and the Seller agree that the LIAS Receivables
constitute unsecured claims and that neither CPLC nor the Buyer holds any Lien
for or on behalf of the Seller or PBCC and the Seller and PBCC have no claim on
or interest in (i) any Lien held by CPLC or the Buyer in respect of any
Transferred Financing Contract, (ii) any Portfolio Property that is subject to
or governed by any Transferred Financing Contract or (iii) any Credit
Enhancement related to any Transferred Financing Contract. PBCC and the Seller
further acknowledge and agree that nothing contained herein shall be deemed to
create a joint venture, partnership or any other relationship between PBCC and
the Seller, on the one hand, and CPLC and the Buyer, on the other hand.
(b) Except as expressly provided in the Servicing Agreement,
CPLC and the Buyer shall have no duty or obligation to pursue the collection or
enforcement of any LIAS Receivable. PBCC and the Seller further agree that they
shall not, directly or indirectly, take any action (or cause any other Person to
direct CPLC to take any action under the Servicing Agreement) with respect to
the exercise of remedies or other acts of collection or enforcement with respect
to any LIAS Receivable, whether at law, in equity or otherwise, including,
without limitation, acceleration or filing suit or instituting litigation or
other collection activities.
(c) Upon receipt by CPLC of any payment made by an Obligor
under any Transferred Financing Contract for which there is a related LIAS
Receivable, such payment shall be applied as the Obligor shall expressly direct.
Each of the Seller, PBCC, CPLC and the Buyer agree that the manner in which the
Seller's cash application program (as in effect on the Closing Date) applies
Obligor payments shall, in the absence of express direction from the Obligor, be
the manner in which payments made by an Obligor under a Transferred Financing
Contract for which there is a related LIAS Receivable are applied to the amounts
due under such Transferred Financing Contract and the related LIAS Receivable.
ARTICLE 6
TERMINATION
6.1 Termination of Agreement. This Agreement may be terminated prior
to Closing as provided below:
(a) The Buyer, the Seller, PBCC and CPLC may terminate this
Agreement by unanimous written consent at any time prior to Closing;
(b) The Buyer may terminate this Agreement by giving written
notice to the Seller, PBCC and CPLC at any time prior to Closing (i) if a case
or proceeding under the bankruptcy laws of the United States of America now or
hereafter in effect or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in equity) is filed
by or against the Seller, or all or any part of the Seller's Properties or if
the Seller shall become insolvent or make an assignment for the benefit of its
creditors, or (ii) if the Closing shall not have occurred on or before December
31, 1998, by reason of the failure of any condition precedent under Section 3.2
hereof (unless the failure results primarily from the Buyer breaching any of its
representations, warranties or covenants contained in this Agreement); and
(c) The Seller, PBCC and CPLC may collectively terminate this
Agreement by giving written notice to the Buyer at any time prior to Closing (i)
if a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed by or against the Buyer or all or any part of the Buyer's Properties or if
the Buyer shall become insolvent or make an assignment for the benefit of its
creditors, or (ii) if the Closing shall not have occurred on or before December
31, 1998, by reason of the failure of any condition precedent under Section 3.3
hereof (unless the failure results primarily from the Seller, PBCC or CPLC
breaching any of their representations, warranties or covenants contained in
this Agreement).
6.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 6.1 hereof, all rights and obligations of the parties
hereunder shall terminate without any liability of any party to any other party
(except for any obligation of any party then in breach); provided, however, that
the provisions of Sections 7.3 and 7.4 hereof shall survive the termination
hereof in accordance with their terms and conditions.
ARTICLE 7
GENERAL
7.1 Interpretation.
(a) Consummation of Transactions. As used herein,
"consummation of the transactions contemplated by this Agreement", "consummation
of the transactions contemplated hereby" and words of similar import shall be
deemed to also refer to the consummation of the Contribution Transaction, and
the transactions contemplated by this Agreement shall be deemed to include the
Contribution Transaction.
(b) Sections and Headings. The division of this Agreement into
Articles, Sections, subsections, paragraphs and subparagraphs and the insertion
of headings and any index are for convenience of reference only and shall not
affect the construction or interpretation hereof.
(c) Extended. Words importing gender include all genders.
(d) Funds. All dollar amounts referred to in this Agreement
are in lawful money of the United States of America.
7.2 Public Announcements. None of the parties to this
Agreement shall issue any press release or make any public statement regarding
transactions contemplated by this Agreement without the prior approval of the
other parties hereto, which approval shall not be unreasonably withheld, except
that no such approval shall be necessary to the extent that, in the opinion of
counsel to the party proposing to make such disclosure, disclosure is required
by any Law or stock exchange regulations applicable to any party hereto. Such
opinion of counsel shall be confirmed in writing and promptly delivered to such
party.
7.3 Confidentiality. If the Closing does not take place
hereunder, the Buyer shall keep confidential, and shall cause any of its
officers, employees, attorneys, accountants, representatives and agents to keep
confidential, any information obtained from the Seller, PBCC and CPLC concerning
the operation of the Business, the Transferred Assets and the Assumed
Liabilities in accordance with the terms of the Confidentiality Agreement, dated
May 18, 1998, between the Seller and the Buyer, which shall terminate upon the
Closing.
7.4 Expenses. Subject to Section 2.5 hereof, each party is
responsible for its own legal and audit fees and other expenses incurred in
connection with the preparation of this Agreement, all negotiations between the
parties, due diligence, any finders' or brokers' fees payable in connection
herewith and the consummation of the transactions contemplated hereby; provided,
however, that the Seller shall be responsible for all such fees and expenses
incurred by CPLC in connection with, as a part of, or prior to, the sale of the
CPLC shares to the Buyer (other than (i) any fees and expenses related to the
procurement of Authorizations and (ii) any amounts required to be paid in
connection with the matters set forth in subsection 3.2(n) (which shall not
exceed $250,000), in each case, which shall be borne fifty percent (50%) by the
Seller and fifty percent (50%) by the Buyer).
7.5 Entire Agreement; Amendment; Waiver. This Agreement, the
Seller Related Documents, the Buyer Related Documents and the Confidentiality
Agreement constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof. This Agreement supersedes any prior or
contemporaneous agreements, negotiations and discussions of the parties in
respect of the subject matter hereof. No amendment, waiver or termination of
this Agreement shall be binding unless executed in writing by the parties and no
such amendment or waiver shall extend to anything other than the specific
subject matter thereof. The failure at any time of any party to insist on strict
performance of any provision of this Agreement shall not limit the ability of
that party to insist at any future time whatsoever on the performance of the
same or any other provision (except insofar as that party may have given a valid
and effective written waiver or release). Each of PBCC and the Seller hereby
waive and relinquish any and all rights which either of them may acquire against
CPLC by way of subrogation, contribution or reimbursement by reason of this
Agreement or by any payment made hereunder.
7.6 Invalidity of Provisions. The invalidity or
unenforceability of any provision of this Agreement, any of the Seller Related
Documents or any of the Buyer Related Documents shall not affect the validity or
enforceability of any other provision hereof or thereof and any such invalid or
unenforceable provisions shall be deemed to be severable.
7.7 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO CONFLICTS OF LAWS RULES OR PRINCIPLES.
7.8 Notices. Any notice required or permitted to be given
hereunder shall be in writing and shall be effectively given if (i) delivered
personally or by nationally recognized overnight courier, or (ii) sent by
facsimile, addressed, in the case of notice to PBCC, the Seller or CPLC as
follows:
c/o Pitney Bowes Credit Corporation
27 Waterview Drive
Shelton, CT 06484-4361
Attention: Christian Hughes, Esq.,
General Counsel
Telephone No.: (203) 922-4023
Facsimile No.: (203) 922-4034
and
c/o Pitney Bowes Credit Corporation
27 Waterview Drive
Shelton, CT 06484-4361
Attention: David Kleinman, Vice President
and Chief Credit Officer
Telephone No.: (203) 922-4330
Facsimile No.: (203) 922-4770
with a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: Merrill B. Stone, Esq.
Telephone No.: (212) 808-7543
Facsimile No.: (212) 808-7897
and in the case of notice to the Buyer, if addressed as follows:
General Electric Capital Corporation
55 Federal Road
Danbury, CT 06830
Attention: Finance Manager
& General Counsel
Telephone No.: (800) 876-2033
Facsimile No.: (203) 731-6275
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Jane McDonald, Esq.
Telephone No.: (212) 310-8000
Facsimile No.: (212) 310-8007
Any notice so given is deemed conclusively to have been given and received (i)
on the day of delivery when so personally delivered, (ii) on the day following
the sending hereof by nationally recognized overnight courier and (iii) on the
same day when sent by facsimile and upon confirmation of receipt, unless the
notice is sent to the other party after 4:00 p.m. (Connecticut time) in which
case it will be deemed to have been given and received on the day after
transmission and upon confirmation of receipt. Any party hereto or other party
mentioned above may change any particulars of its address for notice by
providing notice to the other parties hereto in the manner aforesaid.
7.9 No Assignment. This Agreement inures to the benefit of and
is binding upon the parties hereto and their respective successors and assigns;
provided, however, that no party hereto may assign or transfer this Agreement
without the prior written consent of each other party, except that the Buyer may
assign its rights and obligations hereunder or under any Buyer Related Documents
to one or more of its Affiliates without such written consent; provided,
further, that any such assignment shall not relieve the Buyer of its obligations
hereunder or under any Buyer Related Documents.
7.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be original and which, taken
together, shall be deemed to constitute one and the same instrument, and it
shall not be necessary in making proof of this Agreement to produce more than
one counterpart.
7.11 Waiver of Jury Trial. EACH OF THE PARTIES HERETO
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION RESULTING FROM, ARISING OUT OF, BASED
ON OR RELATING TO, THIS AGREEMENT OR ANY ANNEX, SCHEDULE OR EXHIBIT HERETO, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER VERBAL OR
WRITTEN) RELATING TO THE FOREGOING. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT.
7.12 No Third Party Beneficiary. This Agreement is not
intended and shall not be construed to confer upon any Person other than the
parties hereto any rights or remedies hereunder except that the parties hereto
agree and acknowledge that the agreements and covenants contained in Section 5.4
or Section 5.15 hereof are, subject to Articles VI and VII hereof, intended for
the benefit of the indemnified parties referred to therein (each such Person, a
"Third Party Beneficiary"), and that, subject to Articles VI and VII hereof,
each such indemnified party, although not a party to this Agreement, shall be
and is hereby constituted a direct and irrevocable third-party beneficiary of
the agreements and covenants contained in Section 5.4 or Section 5.15 hereof and
shall have the right to enforce such agreements and covenants against the
applicable party thereto in all respects fully and to the same extent as if such
Third Party Beneficiary were a party hereto. Notwithstanding the foregoing, this
Agreement (including, without limitation, Section 5.4 or Section 5.15 hereof)
may be amended by the parties hereto at any time and from time to time in
accordance with Section 7.5 hereof and any such amendment shall be fully
effective with respect to the rights of the Third Party Beneficiaries under
Section 5.4 or Section 5.15 hereof. Except as provided therein, Section 5.6
hereof shall not create any obligation on the part of the Buyer or any of its
Affiliates to continue the employment of any CPLC Employee nor create any right
for the benefit of any CPLC Employee or his or her beneficiaries following the
Closing.
7.13 Conveyancing Documents. No provision contained in any
conveyancing Document delivered pursuant to this Agreement (including the
conveyancing Documents delivered in connection with the Contribution
Transaction) shall affect in any manner whatsoever any of the indemnification
provisions contained herein.
(this space intentionally left blank)
(signatures appear on the following page)
<PAGE>
IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto as of the date first written above.
COLONIAL PACIFIC LEASING CORPORATION
By:
------------------------------------
Name:
Title:
PITNEY BOWES CREDIT CORPORATION
By:
------------------------------------
Name:
Title:
CPLC II INC.
By:
------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
------------------------------------
Name:
Title:
<PAGE>
ANNEXES, SCHEDULES AND EXHIBITS
Annex A - Excluded Financing Contracts
Annex B - Other Excluded Transactions
Annex C - Broker Notes
Annex D - Shared Software and Computer Systems
Annex E - May 31 Pro Forma Balance Sheet
Annex F - Retained Names and Marks
Annex G - Securitization Transfer Agreements
Annex H - Transferred Names and Marks
Annex I - Additional Excluded Assets
Annex J - Operating Bulletins
Schedule 3.2(c) - Buyer Required Consents
Schedule 3.2(l) - Required Authorizations
Schedule 3.3(c) - Seller Required Consents
Schedule 4.1(a) - Certificate of Incorporation and Bylaws of the Seller
Schedule 4.1(e) - Notices, Reports, Filings and Consents of the Seller
Schedule 4.1(h) - Litigation
Schedule 4.1(j)(i) - Employee Benefit Plans of the Seller
Schedule 4.1(j)(ii) - Employee Pension Plans of the Seller
Schedule 4.1(k) - Seller Employees as of September 30, 1998
Schedule 4.1(m)(i) - Defaults of the Seller or CPLC under Transferred Financing
Contracts
Schedule 4.1(m)(iii) - Liens on Portfolio Property
Schedule 4.1(m)(iv) - Defenses to Transferred Financing Contracts
Schedule 4.1(n) - Tax Matters
Schedule 4.1(n)(xvi) - Federal Income Tax Classifications of Financing Contracts
Schedule 4.1(q)(i) - Liens on the Seller's Personal Property
Schedule 4.1(q)(ii) - Liens on the Seller's Real Property
Schedule 4.1(r) - Intellectual Property Schedule 4.1(s)(i) - Defaults
Under Material Contracts
Schedule 4.1(s)(ii) - Material Contracts
Schedule 4.1(s)(iii) - Program Agreements and Active Brokers
Schedule 4.1(t) - Pending Year 2000 Compliance Actions
Schedule 4.1(u) - Insurance
Schedule 4.1(v)(i) - Material Adverse Effect Since May 31, 1998
Schedule 4.1(v)(ii) - Capital Expenditures; Waivers; Losses
Schedule 4.1(v)(iii) - Material Changes Since May 31, 1998
Schedule 4.1(v)(v) - Deviations from Ordinary Course Operations
Schedule 4.1(x) - Environmental Matters
Schedule 4.1(y)(i) - May 31 Balance Sheet
Schedule 4.1(y)(ii) - Adjusted Net Write-off Experience Report
Schedule 4.1(y)(iii) - Other Income Analysis Reports
Schedule 4.1(y)(iv) - Schedule of Assets and Liabilities dated September 30,1998
Schedule 4.1(y)(vi) - Backlog Schedule dated as of October 5, 1998
Schedule 4.2(a) - Certificate of Incorporation and Bylaws of CPLC
Schedule 4.2(e) - Notices, Reports, Filings and
Consents of CPLC Schedule 5.5(a) - Accounting Principles
Schedule 5.6(f) - Seller's Vacation Policy
Exhibit A - Form of PBI Guaranty
Exhibit B - Form of the Schedule of Assets and Liabilities
Exhibit C - Form of Servicing Agreement
Exhibit (2.2)
AMENDMENT TO
STOCK PURCHASE AGREEMENT
AMENDMENT TO STOCK PURCHASE AGREEMENT dated as of October 12,
1998 (the "Purchase Agreement") (this "Amendment"), among PITNEY BOWES CREDIT
CORPORATION, a Delaware corporation ("PBCC"), WATERVIEW RESOLUTION CORP., a
Massachusetts corporation formerly known as Colonial Pacific Leasing Corporation
(the "Seller"), CPLC II INC., a Delaware corporation ("CPLC"), and GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("Buyer").
RECITALS
WHEREAS, PBCC, the Seller, CPLC and Buyer have agreed, upon
the terms and conditions specified herein, to amend certain provisions of the
Purchase Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereto agree as follows:
SECTION 1. Defined Terms and Interpretation. (a) The
capitalized terms used herein which are defined in the Purchase Agreement, shall
have the respective meanings assigned to them in the Purchase Agreement except
as otherwise provided herein or unless the context otherwise requires.
(b) Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
(c) No provision in this Amendment shall be interpreted or
construed against any Person because that Person or its legal representative
drafted such provision.
SECTION 2. Amendments to the Purchase Agreement. The Purchase
Agreement is, effective as of October 30, 1998, amended as follows:
(a) Section 1.8 of the Purchase Agreement is amended (i) to insert a
new clause (vi) which shall read as follows:
"and (vi) all liabilities and obligations arising out of,
based on or relating to any actions taken by CPLC after the
Closing in connection with any reorganization by CPLC after
the Closing of the vendor services unit of CPLC and the
reassignment, termination or discharge of CPLC Employees who,
prior to the Closing, performed services in connection with
that unit."
and (ii) by replacing the word "and" that precedes clause (v) with a comma.
(b) Section 1.35 of the Purchase Agreement is amended to
replace the final phrase in the definition of "Credit Enhancement", "with
respect to any Transferred Financing Contract, Program Agreement or Funded
Backlog" with the phrase "with respect to any Financing Contract, Program
Agreement or Backlog";
(c) Subsection 1.51(x) of the Purchase Agreement is amended by
replacing the period at the end of such subsection with a semicolon;
(d) Subsection 4.1(j)(ii) of the Purchase Agreement is amended
and restated in its entirety to read as follows:
"(ii) Schedule 4.1(j)(ii) attached hereto separately
sets forth all "employee pension plans", as defined in Section
3(2) of ERISA, subject to Title IV of ERISA or Section 412 of
the Code, to which the Seller, CPLC or any trades or
businesses (whether or not incorporated) which are or have
ever been under common control, or which are or have ever been
treated as a single employer, with the Seller or CPLC under
Section 414(b), (c), (m) or (o) of the Code (an "ERISA
Affiliate") contributed or has ever been obligated to
contribute thereunder at any time during the six (6) years
ending on the Closing Date, except that with respect to
Seller, during the period beginning with the acquisition of
Seller by PBCC or its affiliates and ending on the Closing
Date (the "Title IV Plans") and, as of the most recent plan
valuation date, the "accumulated benefit obligations", and the
"projected benefit obligations" of each Title IV Plan that is
currently sponsored by the Seller or any ERISA Affiliate using
the actuarial assumptions used by each such plan's actuary for
FAS 87 purposes, together with the fair market value of the
assets of each such Plan. None of the Title IV Plans is a
multiemployer plan, as defined in Section 3(37) of ERISA, or
is or has been subject to Sections 4063 or 4064 of ERISA.";
(e) Subsection 4.1(j)(vii) of the Purchase Agreement is
amended and restated in its entirety to read as follows:
"(vii) Except for payments to J. Byrum, T. Lewison,
T. Mahaffey, J. Manthe, I. Dixon, J. Adler, P. Pazourek and T.
Mulvaney under retention agreements which are the sole
responsibility of PBCC, neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated hereby will result in any compensation payment in
excess of $10,000 becoming due to any employee (current,
former or retired) of the Seller as a result of the execution
and delivery of this Agreement or the consummation of the
transactions contemplated hereby other than benefit payments
under the Plans made in the ordinary course."
(f) Subsection 4.1(w) of the Purchase Agreement is amended and
restated in its entirety to read as follows:
"(w) Intentionally Omitted";
(g) Subsection 4.2(i) of the Purchase Agreement is amended by
adding a comma followed by the word "and" after the words "Benefit Plan" in the
second line thereof.
(h) Subsection 5.6(c) is hereby amended to insert the phrase
"; provided, however, that for purposes of clause (y) of this
sentence, CPLC may, after the Closing, reorganize the vendor
services unit of CPLC and reassign, terminate or discharge not
more than three CPLC Employees who, prior to the Closing,
performed services in connection with that unit"
at the end of the last sentence of subsection 5.6(c).
(i) Subsection 5.15(i) of the Purchase Agreement is amended and
restated in its entirety to read as follows:
"For all income tax purposes, the Buyer and the
Seller agree to treat the transactions contemplated herein
consistent with the treatment described in Revenue Ruling
70-140 and to allocate the Purchase Price (and assumed
liabilities) in accordance with Section 5.3(b) hereof.";
(j) Annex A to the Purchase Agreement is hereby supplemented to
reflect the matters set forth on Exhibit A hereto;
(k) Schedule 3.2(c) of the Purchase Agreement is hereby
deleted and replaced in its entirety by Exhibit B hereto;
(l) Schedule 4.1(e) of the Purchase Agreement is hereby
deleted and replaced in its entirety by Exhibit C hereto;
(m) Schedule 4.1(j)(ii) of the Purchase Agreement is hereby
deleted and replaced in its entirety by Exhibit D hereto; and
(n) Schedule 4.2(e) of the Purchase Agreement is hereby
deleted and replaced in its entirety by Exhibit E hereto.
SECTION 3. Representations and Warranties True. Each party
hereto represents and warrants to the other parties hereto that the
representations and warranties set forth in the Purchase Agreement are true and
correct in all material respects on the date hereof as though made on and as of
such date (unless any such representation or warranty expressly relates to an
earlier date).
SECTION 4. Reference to this Amendment and Effect on Purchase
Agreement and any Seller Related Documents. From and after the date hereof, (a)
each reference in the Purchase Agreement to "this Agreement," "hereunder,"
"herein" or words of like import shall mean and be a reference to the Purchase
Agreement, as affected and amended hereby and (b) each reference in any Seller
Related Documents or any Buyer Related Documents to the "Stock Purchase
Agreement," the "Purchase Agreement," "thereunder," "therein" or words of like
import shall mean and be a reference to the Purchase Agreement, as amended and
affected hereby.
(b) The Purchase Agreement, as affected and amended hereby,
shall remain in full force and effect and the Purchase Agreement is hereby
ratified and confirmed in all respects.
SECTION 5. Governing Law; Binding Effect. In all respects,
including all matters of construction, validity and performance, this Amendment
shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of New York (without regard to conflict of law
provisions) and any applicable laws of the United States of America, and shall
be binding upon the parties hereto and their respective successors and permitted
assigns.
SECTION 6. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
[remainder of this page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the date first written above.
WATERVIEW RESOLUTION CORP.
(f.k.a. Colonial Pacific Leasing Corporation)
By:
------------------------
Name:
Title:
PITNEY BOWES CREDIT CORPORATION
By:
------------------------
Name:
Title:
CPLC II INC.
By:
------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
------------------------
Name:
Title:
<PAGE>
Exhibit A
<PAGE>
Exhibit B
See Schedule 3.2(c) of the Purchase Agreement.
<PAGE>
Exhibit C
See Schedule 4.1(e) of the Purchase Agreement.
<PAGE>
Exhibit D
See Schedule 4.1(j)(ii) of the Purchase Agreement.
<PAGE>
Exhibit E
See Schedule 4.2(e) of the Purchase Agreement.
