EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
by and between
CERIDIAN CORPORATION
and
GENERAL DYNAMICS CORPORATION
dated as of
November 3, 1997
TABLE OF CONTENTS
PAGE
ARTICLE 1. PURCHASE AND SALE; CLOSING. ........................1
1.1. Assets to be Purchased ...................................1
1.2. Liabilities Assumed ......................................6
1.3. Consideration for the Assets .............................7
1.4. Adjustment of Purchase Price. ............................8
1.5. Closing .................................................10
1.6. Deliveries by Seller ....................................11
1.7. Deliveries by Buyer .....................................12
1.8. Assignment of Contracts and Rights ......................12
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER .........14
2.1. Disclosure Schedule .....................................14
2.2. Incorporation: Good Standing ............................14
2.3. Authority ...............................................15
2.4. Consents and Approvals: No Violation ....................15
2.5. Financial Statements ....................................16
2.6. Owned Real Property and Leased Real Property. ...........17
2.7. Absence of Certain Changes ..............................19
2.8. Litigation; Orders ......................................20
2.9. Intellectual Property Matters ...........................20
2.10. Labor Matters ..........................................21
2.11. Benefit Plans. .........................................22
2.12. Tax Matters ............................................25
2.13. Compliance with Law ....................................28
2.14. Sufficiency of and Title to the Assets .................29
2.15. Contracts and Government Bids. .........................29
2.16. Environmental Matters. .................................33
2.17. Permits ................................................35
2.18. Brokers, Finders, etc ..................................35
2.19. No Implied Representation ..............................35
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER ...........35
3.1. Organization; Authorization; etc ........................35
3.2. Consents and Approvals; No Violations ...................36
3.3. Brokers, Finders, etc ...................................36
3.4. Financial Capability ....................................37
3.5. Foreign Ownership; Procurement Integrity ................37
3.6. Inspections: Limitation of Seller's Warranties ..........37
ARTICLE 4. COVENANTS OF SELLER AND BUYER .....................38
4.1. Investigation of Business: Access to Properties and
Records. .....................................................38
4.2. Reasonable Efforts; Obtaining Consents ..................41
4.3. Antitrust and Foreign Investment Compliance .............41
4.4. Further Assurances; Novation; Contract Audits ...........42
4.5. Conduct of Business .....................................43
4.6. Public Announcements ....................................44
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4.7. Guaranties. .............................................45
4.8. Privilege and Litigation Matters. .......................46
4.9. Competitive Activities. .................................47
4.10. Supplements and Updates to Disclosure Schedule. ........49
4.11. Tax Matters. ...........................................50
4.12. Other Covenants. .......................................54
4.13. Transfer of Excluded Assets ............................54
4.14. Insurance Coverage .....................................54
4.15. Exclusivity ............................................55
4.16. Resolution of Claims ...................................55
4.17. Shared Intellectual Property Rights ....................55
ARTICLE 5. CONDITIONS TO BUYER'S OBLIGATIONS TO CLOSE ........56
5.1. Representations, Warranties and Covenants of Seller .....56
5.2. Filings; Consents; Waiting Periods ......................56
5.3. No Injunction ...........................................56
5.4. Opinion of Counsel ......................................57
ARTICLE 6. CONDITIONS TO SELLER'S OBLIGATIONS TO CLOSE .......57
6.1. Representations, Warranties and Covenants of Buyer ......57
6.2. Filings; Consents; Waiting Periods ......................57
6.3. No Injunction ...........................................57
6.4. Opinion of Counsel ......................................57
6.5. Receipt of Canadian Tax Certificate .....................57
ARTICLE 7. TERMINATION ........................................58
7.1. Termination .............................................58
7.2. Effect of Termination ...................................58
ARTICLE 8. SURVIVAL: INDEMNIFICATION .........................59
8.1. Survival of Representations, Warranties, Covenants and
Agreements. ..................................................59
8.2. Seller's Indemnification Obligations. ...................60
8.3. Buyer's Indemnification Obligations .....................61
8.4. Procedures for Indemnification Claims ...................61
8.5. No Consequential Damages for Seller Indemnified Parties or
Buyer Indemnified Parties; Indemnification Limits; Exclusive
Remedy. ......................................................63
ARTICLE 9. MISCELLANEOUS .....................................64
9.1. Corporate Name ..........................................64
9.2. Counterparts ............................................65
9.3. Governing Law ...........................................65
9.4. Entire Agreement ........................................65
9.5. Expenses ................................................66
9.6. Notices .................................................66
9.7. Successors and Assigns ..................................67
9.8. Headings: Definitions ...................................67
9.9. Amendments and Waivers ..................................67
9.10. Interpretation .........................................68
9.11. Severability ...........................................68
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LIST OF DEFINED TERMS
PAGE
338 Allocation Arbiter.........................................39
Action.........................................................15
Affiliate......................................................10
Aggrieved Party................................................45
Allocation Arbiter.............................................37
Anti-Assignment Laws...........................................11
Asset Acquisition Statement....................................37
Assets..........................................................3
Assumed Liabilities.............................................6
Audited Closing Statement of Net Assets.........................6
Auditor.........................................................7
Xxxxxxx.........................................................4
Basket Amount..................................................47
Buyer...........................................................1
Buyer Indemnified Parties......................................44
Buyer Proprietary Information..................................30
Canadian Tax Certificate.......................................38
Cash Portion of the Purchase Price..............................6
CD Canada.......................................................1
CD Eastbourne...................................................1
CD Entities.....................................................1
CD H Limited....................................................1
XX Xxxxxxxx.....................................................1
CD Int Books and Records........................................3
CD Int Business.................................................1
CD Int Employees...............................................16
CD Int Leases...................................................3
CD Int Subsidiaries.............................................1
CD Int Subsidiary Leases.......................................14
CD Plus.........................................................1
CD U.K. Subsidiaries............................................1
CD U.S. Subsidiaries............................................1
CDIE............................................................1
Ceridian........................................................1
Ceridian Contracts..............................................2
Ceridian Government Bid.........................................2
Ceridian Government Contracts...................................2
Classified Contract............................................23
Closing.........................................................8
Closing Date....................................................8
Closing Date Net Assets.........................................6
Code...........................................................14
CONFIDENTIAL OFFERING MEMORANDUM...............................26
Confidentiality Agreement......................................29
Contract.......................................................22
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Damages........................................................44
Disclosure Schedule............................................10
dollars........................................................50
Environmental Claim............................................25
Environmental Laws.............................................25
ERISA..........................................................17
Excluded Assets.................................................3
Final Audited Closing Statement of Net Assets...................8
foreign government.............................................50
Form T2062.....................................................38
Form T2062 Estimated Value.....................................38
GAAP............................................................6
Government Bid.................................................22
Government Contract............................................22
Guaranties.....................................................33
Hazardous Substances...........................................25
H-S-R Act......................................................11
Income Taxes...................................................19
Indemnifying Party.............................................45
Intellectual Property Rights....................................2
Joint Venture Interests.........................................3
Lien...........................................................13
Litigation Matters.............................................34
Names..........................................................47
Neutral Auditor.................................................7
Owned Real Property............................................13
Paragon.........................................................1
Permitted Exceptions...........................................13
person.........................................................50
Personnel Agreement............................................40
Plans..........................................................17
Prime Rate......................................................6
Privileged Information.........................................34
Purchase Price..................................................6
RCRA...........................................................25
Release........................................................25
Required Consents..............................................22
Resolution Period...............................................7
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Seller..........................................................1
Seller's expense...............................................40
Seller Indemnified Parties.....................................45
Seller Proprietary Information.................................29
September 30, 1997 Statement of Net Assets......................1
Subsidiary Stock................................................3
Supplement.....................................................36
Surviving Covenants............................................44
Surviving Representations......................................44
Target Net Assets...............................................6
Tax Matters Agreement..........................................40
Tax Return.....................................................18
Taxes..........................................................18
Terminating Party..............................................43
to Seller's knowledge..........................................50
Transition Services Agreement..................................40
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
1.1(a)(i) September 30, 1997 Statement
of Net Assets
1.1(a)(iv) Registered Intellectual
Property
1.1(a)(vi) CD Int Leases
1.1(b)(v) Canadian Payroll Business
2 Disclosure Schedule
4.7 List of Guaranties
4.12(a) Transition Services Agreement
4.12(b) Personnel Agreement
4.12(c) Tax Matters Agreement
5.2 Consents and Approvals as a
Condition to Buyer's
Obligation to Close
5.4 Opinion of General Counsel to
Seller
6.2 Consents and Approvals as a
Condition to Seller's
Obligation to Close
6.4 Opinion of General Counsel to
Buyer
9.10 List of Persons who have
"Knowledge"
vii
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of November 3, 1997
is by and between Ceridian Corporation, a Delaware corporation
("Seller" or "Ceridian"), and General Dynamics Corporation, a
Delaware corporation ("Buyer").
WHEREAS, Ceridian's Computing Device International division
is engaged in the defense electronics business which provides
mission-critical electronics, software, systems integration and
information management for defense and other government agencies
and commercial customers; provided, however, it is understood
that such business does not include any business specifically
referred to as Excluded Assets (as hereinafter defined) (the "CD
Int Business"); and
WHEREAS, the CD Int Business is conducted: in the United
States through an unincorporated division of Ceridian, Computing
Devices International Employment, Inc., a Delaware corporation
("CDIE"), and Paragon Imaging, Inc., a Florida corporation
("Paragon"), (CDIE and Paragon are referred to herein
collectively as the "CD U.S. Subsidiaries"); in Canada through
Computing Devices Canada Ltd., a corporation organized under the
laws of Canada ("CD Canada"); in the United Kingdom through
Computing Devices Company Limited, a corporation organized under
the laws of England ("XX Xxxxxxxx"), Computing Devices Hastings
Limited, a corporation organized under the laws of England ("CD H
Limited"), and Computing Devices Eastbourne Limited, a
corporation organized under the laws of England ("CD Eastbourne")
(XX Xxxxxxxx, CD H Limited and CD Eastbourne are collectively
referred to as the "CD U.K. Subsidiaries"); and in France through
CD Plus S.A.R.L., a corporation organized under the laws of
France ("CD Plus") (the CD U.S. Subsidiaries, CD Canada, the CD
U.K. Subsidiaries, and CD Plus are collectively referred to as
the "CD Int Subsidiaries" and Ceridian and the CD Int
Subsidiaries are collectively referred to as the "CD Entities").
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE
1.
Purchase and Sale; Closing
1.1. Assets to be Purchased.
(a) Upon satisfaction of all conditions contained herein
(other than those conditions which are waived in
accordance with the terms hereof), Ceridian will sell,
transfer, convey, assign and deliver to Buyer and Buyer
will purchase from Ceridian at the Closing (as
hereinafter defined) all of the following assets of
Ceridian related to the CD Int Business (other than the
Excluded Assets):
(i) all of the property and assets of the types
reflected in the unaudited Statement of Net Assets
for the CD Int Business as of September 30, 1997,
a copy of which is attached hereto as Exhibit
1.1(a)(i) (the "September 30, 1997 Statement of
Net Assets"), including, without limitation, all
inventories, plants, machinery, equipment, tools,
supplies, spare parts, furniture, fixtures,
leasehold improvements, accounts and unbilled
1
receivables and prepaid expenses (and including
all items which would be included on the September
30, 1997 Statement of Net Assets except for the
fact that such items are fully depreciated or
expensed), plus all items of a nature used
primarily in the CD Int Business which are
acquired in the ordinary course of business by the
CD Int Business between September 30, 1997 and the
Closing Date (as hereinafter defined), less any
items which are disposed of, consumed by or
otherwise reduced or eliminated in the ordinary
course of the CD Int Business between September
30, 1997 and the Closing Date;
(ii) (A) all existing contracts, licenses, agreements
and commitments of Ceridian relating (as to
Ceridian) primarily to the CD Int Business,
including, without limitation, those contracts,
licenses, agreements and commitments of Ceridian
listed on the Disclosure Schedule (as hereinafter
defined), (B) all contracts, licenses, agreements
and commitments of Seller relating primarily to
the CD Int Business which are entered into between
the date of this Agreement and the Closing Date,
and (C) any prime contract, subcontract, basic
ordering agreement, letter contract, purchase
order or delivery order, including all amendments,
modifications and options thereunder, relating
primarily to the CD Int Business between Ceridian
and (1) the U.S. Government or any state, local or
foreign government, or (2) any prime contractor or
higher-tier subcontractor, under any contract
described in clause (1) above (all of the
foregoing contracts or other documents referred to
in this clause (C) are referred to herein as
"Ceridian Government Contracts") (all of the
foregoing contracts, licenses, agreements,
commitments, work orders or other documents,
instruments or arrangements referred to in clauses
(A) through (C) are referred to herein as the
"Ceridian Contracts");
(iii)
any written quotation, bid or proposal (A)
relating primarily to the CD Int Business made by
Seller that if accepted or awarded would lead to a
contract with (1) the U.S. Government or any
state, local or foreign government, or (2) any
prime contractor or higher-tier subcontractor
under any contract described in clause (1) above
(such written quotation, bid or proposal are
referred to herein as a "Ceridian Government
Bid");
(iv) all rights (subject to rights held by the U.S.
government, other state, local or foreign
governments and any third parties that may have
been licensed by Seller prior to the date of this
Agreement) to any of the following in any
jurisdiction and all of the goodwill associated
with any of the following (collectively referred
to herein as "Intellectual Property Rights"):
(A) all patents, registered trademarks,
registered trade names, registered copyrights
and registered service marks owned by Seller
which are used or held for use primarily in
connection with the CD Int Business,
including, without limitation, those listed
on Exhibit 1.1(a)(iv)(A), and any patent
applications or applications for registration
of the foregoing;
(B) all unregistered trademarks, unregistered
trade names, unregistered service marks,
unregistered works of authorship, inventions,
2
know-how, trade secrets, technology and
proprietary processes owned by Seller which
are used or held for use primarily in
connection with the CD Int Business; and
(C) all computer software and related
documentation (including, without limitation,
all source and object code) owned by Seller
and used or held for use primarily in
connection with the CD Int Business.
(v) originals or copies of all books and records of
Seller relating exclusively to the operations of
the CD Int Business, including, without
limitation, books and records relating to
employees of the CD Int Business, the purchase of
materials, supplies and services, research and
development, manufacture and sale of products and
services and dealings with customers of the CD Int
Business, Owned Real Property (as hereinafter
defined) and leased real property; provided,
however, that such books and records shall not
include any information that does not relate to
the CD Int Business and Seller shall be entitled
to remove or redact any such information (the "CD
Int Books and Records");
(vi) those leases, subleases and occupancy agreements
of real properties by Seller relating to the CD
Int Business (whether entered into as lessor,
lessee, sublessor or sublessee) together with any
modifications, amendments, extensions and renewals
of the same, all as identified on
Exhibit 1.1(a)(vi) (the "CD Int Leases");
(vii)
all of the outstanding capital stock of each of
the CD Int Subsidiaries, including any such
capital stock held by nominees (collectively, the
"Subsidiary Stock");
(viii)
all of Ceridian's right, title and interest in
and to equity or debt interests in Jaguh Angkasa
Teknologi, Inc. SDN BHD, Via, Inc. and
Microelectronics and Computer Technology
Corporation (collectively, the "Joint Venture
Interests"); and
(ix) all claims, deposits, prepayments, prepaid assets,
refunds (excluding tax refunds to the extent
provided in the Tax Matters Agreement [as
hereinafter defined]), causes of action, rights of
recovery, rights of set off and rights of
recoupment of Seller in connection with the CD Int
Business, except to the extent the foregoing items
listed in this Section 1.1(a)(ix) relate to
Excluded Assets.
(the foregoing assets, other than the Excluded Assets, are
collectively referred to herein as the "Assets").
(b) Notwithstanding the foregoing, Seller will not sell,
transfer, convey, assign or deliver to Buyer, and Buyer
will not purchase from the Seller, the following assets
of Ceridian related to the CD Int Business (the
"Excluded Assets"):
(i) the consideration delivered to Seller pursuant to
this Agreement for the Assets;
(ii) the minute books, corporate seal and stock records
of Ceridian;
3
(iii)
all right, title and interest in and to the name
"Ceridian" and all derivative names thereof;
(iv) cash, money and deposits with financial
institutions and others, certificates of deposit,
commercial paper, notes, evidences of
indebtedness, stocks, bonds and other investments
of the CD Int Business, other than the Subsidiary
Stock and the Joint Venture Interests and other
than any cash or such other instruments held by
any of the CD Int Subsidiaries;
(v) the assets, properties and rights relating to the
payroll business operated by CD Canada listed on
Exhibit 1.1(b) (v) (which will be transferred out
of CD Canada prior to Closing in accordance with
the provisions of Section 4.13);
(vi) Ceridian Corporation Benefit Protection Trust or
any other trust relating to any Seller Pension
Plan (as hereinafter defined), Seller Welfare Plan
(as hereinafter defined) or Seller Benefit
Arrangement (as hereinafter defined);
(vii)
all of the CD Entities' right, title and interest
in and to equity or debt interests in Digital
Xpress, L.L.C. and Xxxxxxx Technology, Inc.
("Xxxxxxx") and the note receivable from Xxxxxxx
and all business related thereto (which will be
transferred out of the CD Int Subsidiaries to the
extent applicable prior to Closing in accordance
with the provisions of Section 4.13);
(viii)
Ceridian's and its Affiliates' (as hereinafter
defined) business of providing payroll, data
processing and human resource related services to
customers of the CD Int Business;
(ix) to the extent not reflected on the Final Audited
Closing Statement of Net Assets (as hereinafter
defined), insurance proceeds related to CAMU claim
dated June 17, 1996;
(x) the right to pursue, assert and defend all rights
of recovery, claims, causes of action,
counterclaims or defenses asserted or assertable
against or by CACI or any other person or entity
in the CACI lawsuit which relate to facts,
transactions or events occurring with respect to
CACI regardless of whether the rights to assert
such recovery, claims, causes of action,
counterclaims or defenses are accrued, liquidated,
contingent, matured, unmatured, known or unknown
to Seller at or prior to Closing and whether or
not filed as an additional count in or
consolidated with the CACI lawsuit or in another
judicial or adversarial proceeding, litigation or
arbitration (public or private) (which will be
transferred out of the CD Int Subsidiaries to the
extent applicable prior to Closing in accordance
with the provisions of Section 4.13);
(xi) Agreement dated April 1, 1970 between Ceridian
Corporation (formerly Control Data Corporation)
and The National Cash Register Company;
(xii)
Agreement dated June 5, 1967 between Ceridian
Corporation (formerly Control Data Corporation)
and Honeywell, Inc.;
4
(xiii)
Agreement dated January 1, 1989 between Ceridian
Corporation (formerly Control Data Corporation)
and International Business Machines Corporation;
and
(xiv)
Intellectual Property Agreement dated July 31,
1992 between Ceridian Corporation and Control Data
Systems, Inc.
1.2. Liabilities Assumed. Upon satisfaction of all conditions
to the obligations of the parties contained herein (other
than such conditions as may have been waived in accordance
with the terms hereof) and subject to the provisions of
Article 8, at the Closing, Buyer will assume:
(a) all liabilities set forth on the September 30, 1997
Statement of Net Assets which have not been satisfied
on or prior to the Closing Date;
(b) all of the obligations and liabilities of Seller
relating to the CD Int Business of the type customarily
accrued, reserved against or reflected in the accounts
of the CD Int Business, arising between September 30,
1997 and the Closing Date which are not satisfied or
discharged at or prior to the Closing Date, including,
without limitation, liabilities for checks issued but
not presented for payment;
(c) all obligations assumed by Buyer in connection with the
Personnel Agreement (as hereinafter defined) or the Tax
Matters Agreement;
(d) every other liability of Seller, absolute or
contingent, whether or not reflected on the September
30, 1997 Statement of Net Assets, arising out of or
relating to the CD Int Business or the Assets,
operations or activities of the CD Int Business or
relating thereto, as heretofore currently or hereafter
conducted (including as conducted by any predecessor of
the CD Entities), regardless of by whom such liability
is asserted, whether arising prior to, at or after the
Closing Date and whether or not known, suspected,
asserted or claimed at the Closing Date or at any time
theretofore or thereafter including, without
limitation, any liability based on negligence, gross
negligence, strict liability or any other theory of
civil, criminal or other liability, whether in law
(common or statutory) or equity, and any other activity
undertaken by the CD Int Business or relating thereto;
(e) any indemnification obligations of Seller in favor of
present or former employees or officers of Seller
arising out of the operations of the CD Int Business
prior to the Closing Date; provided, however, that
Buyer shall not assume and the Assumed Liabilities
shall not include any indemnification obligation of
Seller which arises out of the transactions
contemplated by this Agreement;
(f) the Ceridian Contracts;
(g) the CD Int Leases;
(h) all of the liabilities and obligations set forth on the
Final Audited Closing Statement of Net Assets; and
(i) liabilities comprising Permitted Exceptions (as
hereinafter defined).
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In addition, subject to the provisions of Article 8, the CD
Int Subsidiaries will remain subject to all liabilities
(whether known or unknown, fixed or contingent, accrued or
unaccrued) and obligations they may have on the Closing Date
after the Closing. All of the items described in this
Section 1.2 are referred to herein as the "Assumed
Liabilities." The parties acknowledge that the foregoing
assumption of Assumed Liabilities shall not be construed so
as to obligate Buyer as a primary obligor to satisfy the
liabilities and obligations of the CD Int Subsidiaries with
respect to third parties; provided however, it is further
understood that in no event shall this sentence be construed
to limit Buyer's obligations with respect to Seller
Indemnified Parties under Article 8 hereof.
1.3. Consideration for the Assets. Subject to any purchase
price adjustment pursuant to Section 1.4, the aggregate
consideration shall consist of (a) cash in an amount equal
to Six Hundred Million Dollars ($600,000,000) (such cash
consideration after giving effect to any adjustment pursuant
to Section 1.4 is referred to herein as the "Cash Portion of
the Purchase Price") and (b) the assumption by Buyer of, and
indemnification of Seller by Buyer in accordance with the
provisions of Article 8 with respect to, the Assumed
Liabilities (the Cash Portion of the Purchase Price and
Buyer's obligations under the immediately preceding clause
(b) are collectively referred to as the "Purchase Price").
1.4. Adjustment of Purchase Price.
(a) Calculation of Adjustment. The Cash Portion of the
Purchase Price shall be (i) increased by the amount
that the Closing Date Net Assets (as hereinafter
defined), is greater than the book value of the net
assets as shown on the September 30, 1997 Statement of
Net Assets (the "Target Net Assets"); or (ii) decreased
by the amount that the Closing Date Net Assets is less
than the Target Net Assets. The term "Closing Date Net
Assets" as used herein shall mean the book value of the
Assets of the CD Int Business set forth on the Final
Audited Closing Statement of Net Assets in excess of
the amount of the Assumed Liabilities of the CD Int
Business set forth on the Final Audited Closing
Statement of Net Assets, determined in accordance with
the procedures set forth below. The amount of any
decrease or increase to the Purchase Price pursuant to
this Section 1.4(a) plus interest from the Closing Date
at the Prime Rate (as hereinafter defined) shall be
paid by Seller or Buyer, as the case may be, by wire
transfer in immediately available funds within five (5)
business days after the Final Audited Closing Statement
of Net Assets is agreed to by Seller and Buyer or is
determined by the Neutral Auditor (as hereinafter
defined). For purposes of this Agreement, "Prime Rate"
means the prime rate of interest in effect on the
Closing Date as stated in the "Money Rates" section of
the Wall Street Journal.
(b) Preparation of Audited Closing Statement of Net Assets.
As soon as practicable, and in any event within forty-
five (45) days after the Closing Date, Seller shall
cause a statement of net assets for the CD Int Business
consisting of the Assets and the Assumed Liabilities,
as of the close of business on the Closing Date
determined on a pro forma basis as if the parties
hereto had not consummated the transactions
contemplated by this Agreement (the "Audited Closing
Statement of Net Assets"), to be prepared in accordance
with United States generally accepted accounting
principles ("GAAP") applied on a basis consistent with
the September 30, 1997 Statement of Net Assets through
full and consistent application of the policies and
procedures used in preparing the September 30, 1997
Statement of Net Assets, and to be audited by KPMG Peat
6
Marwick LLP, independent public accountants
("Auditor"). Notwithstanding the foregoing or anything
else in this Agreement to the contrary, the Final
Audited Statement of Net Assets shall be prepared: (i)
using the same exchange rates (0.61 British Pound to
One U.S. Dollar and 1.36 Canadian Dollar to One U.S.
Dollar) used in the preparation of the September 30,
1997 Statement of Net Assets; (ii) using the same
contract estimates at completion and contract estimates
to complete used for the preparation of the September
30, 1997 Statement of Net Assets; and (iii) making
changes to the amount of liability reserves set forth
on the September 30, 1997 Statement of Net Assets only
as a result of facts or circumstances arising after
September 30, 1997. The Audited Closing Statement of
Net Assets shall be accompanied by an Auditor's report
(without qualification as to audit scope except for
such qualifications as may result from a Closing on a
date other than December 31) based upon the audit of
the Audited Closing Statement of Net Assets stating
that such statement presents fairly, in all material
respects, the Assets and Assumed Liabilities presented
on such statement as provided for in this Agreement at
the Closing Date in conformity with GAAP consistently
applied with the September 30, 1997 Statement of Net
Assets. Buyer shall provide Seller and Auditor access
to the CD Int Books and Records and the books and
records of the CD Int Subsidiaries as may reasonably be
required for the preparation of the Audited Closing
Statement of Net Assets. All costs and expenses of the
Auditor in preparing the Audited Closing Statement of
Net Assets shall be shared equally by Seller and Buyer.
(c) Review of Audited Closing Statement of Net Assets.
After receipt of the Audited Closing Statement of Net
Assets, Buyer shall have thirty (30) days to review it.
Buyer and its authorized representatives shall have
full access to all relevant books and records and
employees of the Seller and Auditor to the extent
required to complete their review of the Audited
Closing Statement of Net Assets including Auditor's
work papers used in preparation thereof. Unless Buyer
delivers written notice to Seller on or prior to the
30th day after receipt of the Audited Closing Statement
of Net Assets specifying in reasonable detail all
disputed items and the basis therefore, the parties
shall be deemed to have accepted and agreed to the
Audited Closing Statement of Net Assets. If Buyer so
notifies Seller of an objection to the Audited Closing
Statement of Net Assets, the parties shall, within
thirty (30) days following the date of such notice (the
"Resolution Period") attempt to resolve their
differences and any resolution by them as to any
disputed amount shall be final, binding, conclusive and
nonappealable for all purposes under this Agreement
(including without limitation any claims relating to a
breach by Seller of its representations and warranties
in Article 2 hereof with respect to facts giving rise
to such disputed amount).
(d) Resolution. If at the conclusion of the Resolution
Period the parties have not reached an agreement on the
objections, then all amounts remaining in dispute may,
at the election of either party, be submitted to
Deloitte & Touche LLP or another large national
accounting firm not otherwise engaged by either party
with the engagement being led by an office in a city
other than Minneapolis or Washington, D.C. (the
"Neutral Auditor"). Each party agrees to execute, if
requested by the Neutral Auditor, a reasonable
engagement letter. All fees and expenses relating to
the work, if any, to be performed by the Neutral
Auditor shall be borne equally by Seller and Buyer,
unless the Neutral Auditor finds one party acted in bad
faith in which case that party pays all. Except as
provided in the preceding sentence, all other costs and
expenses incurred by the parties in connection with
resolving any dispute hereunder before the Neutral
Auditor shall be borne by the party incurring such cost
and expense. The Neutral Auditor shall act as an
7
arbitrator to determine, based solely on the
presentations by Seller and Buyer, and not by
independent review, only those issues still in dispute.
The Neutral Auditor's determination shall be made
within thirty (30) days of its engagement (which
engagement shall be made no later than five (5)
business days after an election by either party to
submit the objections to the Neutral Auditor) or as
soon thereafter as possible, shall be set forth in a
written statement delivered to Seller and Buyer and
shall be final, binding, conclusive and nonappealable
for all purposes hereunder (including without
limitation any claims relating to a breach by Seller of
its representations and warranties in Article 2 hereof
with respect to facts giving rise to such disputed
amount). The term "Final Audited Closing Statement of
Net Assets," as used herein, shall mean the definitive
Audited Closing Statement of Net Assets agreed to by
Seller and Buyer in accordance with Section 1.4(c) or
the definitive Audited Closing Statement of Net Assets
resulting from the determination made by the Neutral
Auditor in accordance with this Section 1.4(d) (in
addition to those items theretofore agreed to by Seller
and Buyer).
1.5. Closing. Unless this Agreement has been terminated and
the transactions contemplated hereby abandoned pursuant to
Article 7 hereof, a closing (the "Closing") shall be held on
the third business day after the date on which the
conditions set forth in Articles 5 and 6 hereof shall be
satisfied or duly waived, or if Seller and Buyer mutually
agree on a different date, the date upon which they have
mutually agreed (the "Closing Date"). The Closing shall
take place on the Closing Date at 8:00 a.m., Minneapolis,
Minnesota time, at the Minneapolis office of Xxxxxxxxxxx
Xxxxx & Xxxxxxxx or at such other time and place as the
parties may mutually agree.
1.6. Deliveries by Seller. At the Closing, Seller shall
deliver the following to Buyer, each in form and substance
reasonably satisfactory to Buyer:
(a) a duly executed xxxx of sale in a form reasonably
satisfactory to Buyer transferring to Buyer all of the
personal property owned or held by Seller as of the
Closing Date which is included in the Assets and not
covered by the other provisions of this Section 1.6;
(b) duly executed instruments of assignment of the CD Int
Leases to which Seller is a party, in recordable form,
together with the consent of the lessor or sublessor
thereto, if obtained;
(c) duly executed instruments of assignment by Seller of
the Ceridian Contracts to which Seller is a party
(other than Ceridian Government Contracts for which
novation agreements are required), subject to Section
1.8;
(d) duly executed instruments of assignment or transfer of
Intellectual Property Rights;
(e) a certificate dated the Closing Date and validly
executed on behalf of Seller to the effect that the
condition set forth in Section 5.1 has been satisfied;
(f) evidence or copies of any consents, approvals, orders,
qualifications or waivers required pursuant to Section
5.2;
8
(g) a copy of the resolutions of the board of directors of
Seller authorizing the execution, delivery and
performance of this Agreement by Seller, and
certificates of the Secretary or Assistant Secretary of
Seller, dated as of the Closing Date, that such
resolutions were duly adopted and are in full force and
effect;
(h) stock certificates representing all of the Subsidiary
Stock (other than stock certificates representing
shares of the CD U.K. Subsidiaries, title to which will
pass indirectly to Buyer via the conveyance of shares
of CD Canada) and stock certificates, notes and other
instruments evidencing the Joint Venture Interests, in
each case together with required consents to transfer
and duly endorsed in blank for transfer or accompanied
by appropriate stock powers duly executed in blank;
(i) resignations, to become effective as of the Closing
Date, executed by each of the directors and corporate
officers of the CD Int Subsidiaries who will remain
officers or employees of Ceridian after the Closing
Date; and
(j) the opinion of counsel referred to in Section 5.4.
1.7. Deliveries by Buyer. At the Closing, Buyer shall deliver
the following to Seller, each in form and substance
reasonably satisfactory to Seller:
(a) cash in immediately available funds in the amount equal
to Six Hundred Million Dollars ($600,000,000) by wire
transfer of immediately available funds to a bank
account designated by Seller (or by such means as are
otherwise agreed upon by Buyer and Seller);
(b) a duly executed assignment and assumption agreement
with respect to the Ceridian Contracts and Assumed
Liabilities in a form reasonably satisfactory to
Seller;
(c) a certificate dated the Closing Date and validly
executed on behalf of Buyer to the effect that the
condition set forth in Section 6.1 has been satisfied;
(d) evidence or copies of any consents, approvals, orders,
qualifications or waivers required pursuant to Section
6.2;
(e) a copy of the resolutions of the board of directors of
Buyer authorizing the execution, delivery and
performance of this Agreement by Buyer, and a
certificate of its Secretary or Assistant Secretary,
dated as of the Closing Date, that such resolutions
were duly adopted and are in full force and effect; and
(f) the opinion of counsel referred to in Section 6.4.
1.8. Assignment of Contracts and Rights. Anything in this
Agreement to the contrary notwithstanding, this Agreement
shall not constitute an agreement (a) to assign any Asset or
any claim or right or any benefit arising under such Asset
or resulting from such Asset, or (b) to enter into and/or
consummate any sublease or other arrangement pursuant to the
Transition Services Agreement (as hereinafter defined) if,
without the consent of a third party, such assignment or
other transaction would constitute a breach or other
contravention under any agreement to which Seller or its
Affiliates (as hereinafter defined) are a party or in any
9
way adversely affect the rights of Buyer or its Affiliates
or Seller or its Affiliates under any Asset. For purposes
of this Agreement, "Affiliate" means any natural person, and
any corporation, partnership or other entity, that directly,
or indirectly through one or more intermediaries, controls
or is controlled by or under common control with the party
specified. Seller and its Affiliates will use their
commercially reasonable efforts to obtain any required
consents to the assignment thereof to Buyer (or such other
transaction pursuant to the Transition Services Agreement)
and Buyer and its Affiliates will use their commercially
reasonable efforts to cooperate with Seller and its
Affiliates in obtaining any required consents to the
assignment thereof or such other transaction; provided that
neither Buyer nor Seller nor their respective Affiliates
shall be required to make any material payment or agree to
any material undertaking in connection therewith. Any
payment or undertaking that Seller determines to make in
connection with any such consent to assignment, sublease or
other arrangement pursuant to this Agreement shall be the
sole responsibility of Seller, and no Contract (as
hereinafter defined) shall, without Buyer's written consent,
be amended or modified in any manner so as to obtain any
such consent to assignment, sublease or other arrangement.
Seller shall not be responsible for any such payment made or
undertaking entered into by Buyer without Seller's prior
written consent. If any such consent is not obtained and as
a result thereof Buyer shall be prevented by such third
party from receiving the rights and benefits with respect to
such Asset (or such other transaction) intended to be
transferred hereunder, or if an attempted assignment thereof
(or such transaction) would be ineffective or would
adversely affect the rights of Seller thereunder so that
Buyer would not in fact receive all such rights or Seller
and its Affiliates would forfeit or otherwise substantially
lose the benefit of rights which Seller and its Affiliates
are entitled to retain, Seller and Buyer will cooperate in a
mutually agreeable arrangement, as Buyer and Seller shall
agree, under which Buyer would obtain the benefits and
assume the obligations thereunder in accordance with this
Agreement, including subcontracting, sublicensing, or
subleasing to Buyer. Seller will promptly pay to Buyer when
received all monies received by Seller under any such Asset
or any claim or right or any benefit arising thereunder.
Except with respect to Government Contracts (as hereinafter
defined), Buyer shall use its commercially reasonable
efforts to obtain the unconditional release of Seller and
its Affiliates from any obligation or liability under or
with respect to any Contract or Government Bid (as
hereinafter defined) being assigned hereunder; provided,
however, that neither Buyer nor Seller shall be required to
make payment or agree to any material undertaking in
connection therewith.
ARTICLE
2.
Representations and Warranties of Seller
Seller hereby represents and warrants to Buyer as follows:
2.1. Disclosure Schedule. The disclosure schedule attached as
Exhibit 2 is divided into sections which correspond to the
sections of this Article 2 (the "Disclosure Schedule").
Disclosures in any section thereof will constitute
disclosure for purposes of any other section; provided,
however, that the listing of a contract, license, agreement
or commitment on the Disclosure Schedule shall not in itself
be sufficient to disclose any breach, termination, dispute,
investigation or similar matter relating thereto. Certain
matters disclosed in the Disclosure Schedule may not be
material and have been disclosed for informational purposes
only.
2.2. Incorporation: Good Standing. The Disclosure Schedule
lists for each of the CD Int Subsidiaries the jurisdiction
in which it is incorporated, the number of authorized shares
of its capital stock, the par value of its capital stock,
and the holder of its outstanding capital stock. Each of the
10
CD Int Subsidiaries is duly incorporated and presently
subsisting under the laws of the jurisdiction in which it is
incorporated, has all requisite corporate power and
authority to own its properties and assets and to carry on
its business as it is now being conducted and is in good
standing and duly qualified to transact business in each
jurisdiction in which the nature of the property owned or
leased by it or the conduct of its business requires it to
be in good standing or so qualified, except where the
failure to be in good standing or so qualified would not,
individually or in the aggregate, have a material adverse
effect on the CD Int Business. All of the outstanding
shares of capital stock of each of the CD Int Subsidiaries
have been duly authorized and validly issued. Except as set
forth on the Disclosure Schedule, Seller or one of the CD
Int Subsidiaries holds of record and owns beneficially all
of the outstanding capital stock of each of the CD Int
Subsidiaries, free and clear of any restrictions on transfer
(other than restrictions arising under federal, state or
foreign securities laws), taxes, liens, encumbrances,
pledges, security interest or other adverse claims. There
are not as of the date hereof and there will not be at the
Closing Date any outstanding or authorized options,
warrants, calls, rights, commitments or any other agreements
of any character (other than this Agreement) to which any of
the CD Entities is a party, or by which any of them is
bound, requiring it to issue, transfer, sell, purchase,
redeem or acquire any shares of capital stock or any
securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of capital
stock of any of the CD Int Subsidiaries. The Disclosure
Schedule describes in reasonable detail each of the Joint
Venture Interests and identifies any material capital
commitment, guaranty or similar obligation of Seller
existing as of Closing relating to the Joint Venture
Interests for which Buyer will become responsible as of the
Closing Date. Except for its ownership of the Subsidiary
Stock and the Joint Venture Interests, the CD Entities in
connection with the CD Int Business do not hold any equity
or debt investment in any other person.
2.3. Authority. Seller has full corporate power to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
the board of directors of Seller and no other corporate
proceedings on the part of Seller are necessary therefor.
This Agreement has been duly executed and delivered by
Seller, and, assuming the due execution hereof by Buyer,
this Agreement constitutes a valid and binding obligation of
Seller, enforceable against Seller in accordance with its
terms, subject to applicable bankruptcy, moratorium,
reorganization, insolvency and similar laws of general
application relating to or affecting the rights and remedies
of creditors generally and to general equitable principles
(regardless of whether in equity or at law).
2.4. Consents and Approvals: No Violation. Except as set forth
on the Disclosure Schedule and for applicable requirements
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), the Competition Act (Canada),
the Investment Canada Act and any similar laws of the United
Kingdom and France, 41 U.S.C. S 15, 31 U.S.C. S 3727 and FAR
Subpart 42.12 and any similar statutes, laws, rules and
regulations including similar statutes, laws, rules and
regulations of Canada and the United Kingdom and any other
applicable jurisdiction (the "Anti-Assignment Laws"), there
is no requirement applicable to Seller to make any material
filing with, or to obtain any material permit,
authorization, consent or approval of, any public body as a
condition to the lawful consummation by Seller of the
transactions contemplated by this Agreement. Except as set
forth in the Disclosure Schedule, neither the execution and
delivery of this Agreement by Seller nor the consummation by
Seller of the transactions contemplated by this Agreement
will (a) violate any provision of any of the CD Entities'
certificate of incorporation, charter or By-Laws, (b)
assuming compliance with the Anti-Assignment Laws, result in
11
a material default or breach (or give rise to any right of
termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any material Contract or
(c) assuming compliance with the HSR Act, the Competition
Act, the Investment Canada Act, any similar laws of the
United Kingdom and any other applicable jurisdiction and the
Anti-Assignment Laws, violate any material order, writ,
injunction, decree, statute, rule or regulation applicable
to Seller, the CD Int Subsidiaries or any of the Assets.
2.5. Financial Statements. Seller has previously delivered to
Buyer the following financial statements, all of which have
been prepared in accordance with GAAP consistently applied
(subject, in the case of the financial statements referenced
in paragraphs (a) through (e), to the elimination of
corporate office expenses of Ceridian, assets and related
income or expense of commercial ventures not included in the
Assets, accrued U.S. federal income taxes, other expense
(income), including interest, and provision for income
taxes; in paragraphs (a) through (c), to the addition of a
prepaid pension asset related to a U.S. pension plan; and in
paragraphs (d) and (e), to the absence of footnotes and to
normal year-end adjustments, including liabilities for
postemployment costs under FAS 112 of $200,000 and health
care costs incurred but not reported of $682,000), and
present fairly in all material respects the financial
position of the CD Int Business at the dates stated in such
financial statements and the results of their operations for
the periods stated therein:
(a) the unaudited Statements of Net Assets for the CD Int
Business as of December 31, 1994, 1995 and 1996;
(b) the unaudited Statements of Operations for the CD Int
Business for the years ended December 31, 1994, 1995
and 1996;
(c) the unaudited Statements of Cash Flows for the CD Int
Business for the years ended December 31, 1994, 1995
and 1996;
(d) the unaudited Statement of Net Assets for the CD Int
Business as of September 30, 1997; and
(e) the unaudited Statement of Operations and unaudited
Statement of Cash Flows for the CD Int Business for the
nine-month period ended September 30, 1997.
To Seller's knowledge, except as set forth in the
Disclosure Schedule the CD Int Business has no material
liabilities or obligations (whether absolute or contingent,
liquidated or unliquidated, or due or to become due) except
for (a) liabilities and obligations reflected or reserved
for on the foregoing financial statements delivered to
Buyer, (b) liabilities and obligations that have arisen
since September 30, 1997 in the ordinary course of the
operation of the CD Int Business or (c) post-Closing
performance obligations under the Contracts, CD Int Leases
or CD Int Subsidiary Leases. Included as part of the
Disclosure Schedule is a correct and complete list of
program cost reserves (including reserves provided for in
Seller's contract estimates at completion), reserves for
product warranties reserves for defective pricing and
reserves for cost impact studies maintained with respect to
certain Contracts as of September 30, 1997.
12
2.6. Owned Real Property and Leased Real Property.
(a) The Disclosure Schedule lists all of the real estate in
which any of the CD Int Subsidiaries holds a fee simple
interest (or an equivalent interest under the laws of
Canada or the United Kingdom) (all of such real estate
described in the Disclosure Schedule is referred to
herein as the "Owned Real Property"). Ceridian does
not have any fee simple interest in (or equivalent
thereof under the laws of Canada or the United Kingdom)
any real estate used in the CD Int Business. Except as
set forth on the Disclosure Schedule, each of the CD
Int Subsidiaries, as the case may be, has good and
valid fee simple title (or an equivalent interest under
the laws of Canada or the United Kingdom) to the Owned
Real Property and owns all of the improvements located
thereon, subject only to the Permitted Exceptions. For
purposes of this Agreement, "Permitted Exceptions"
means: (i) Liens (as hereinafter defined) for taxes or
governmental assessments, charges or claims the payment
of which is not yet due, or for taxes the validity of
which is being contested in good faith; (ii) statutory
Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar persons and
other Liens imposed by applicable law incurred in the
ordinary course of business for sums not yet delinquent
or being contested in good faith; (iii) Liens
encumbering the Owned Real Property or leased real
property which are disclosed in any preliminary title
report or title opinion (or in any update of the same
as of the Closing Date) or which a current accurate
survey of the Owned Real Property or leased real
property would reveal; provided that such Liens do not
materially interfere with or materially impair the
current use of the Owned Real Property or leased real
property; (iv) all CD Int Leases, Contracts and CD Int
Subsidiary Leases (as hereinafter defined); (v) with
respect to any asset which consists of a leasehold
estate or possessory interest in real property, all
Liens and other title matters to which the underlying
fee estate in such real property is subject; provided
that to Seller's knowledge such Liens do not materially
interfere with or materially impair the current use of
such leased real property; (vi) Liens on any Assets in
favor of U.S., Canadian or United Kingdom Governments,
but only to the extent such Liens secure liabilities
arising out of or directly relating to Government
Contracts (as hereinafter defined); (vii) Liens
securing the executory obligations of Seller or the CD
Int Subsidiaries under any lease that constitutes a
"capital lease" under GAAP; (viii) security interests
granted in the ordinary course of business to the
lessors of leased equipment in respect of such leased
equipment; (ix) liens on advances or progress payments
to secure performance of Contracts; (x) statutory or
common law lien rights of setoff ordinarily available
to financial institutions; (xi) the rights and
interests of Buyer or any Affiliate of Buyer as
provided in this Agreement or any agreement entered
into pursuant to this Agreement; and (xii) the
reservations, limitations, exceptions, provisos and
conditions, if any, expressed in any original grants
from the Crown. "Lien" shall mean, with respect to any
asset, any mortgage, charge, statutory trust, deed of
trust, lien, pledge, encumbrance, lease, sublease,
license, occupancy agreement, easement, right-of-way,
adverse claim or interest covenant, encroachment,
burden, title defect, option, restriction or limitation
of any nature whatsoever, and any change or security
interest in or on such asset, or the interest of a
vendor or lessor under any conditional sale agreement,
capital lease or title retention agreement relating to
such asset. The Owned Real Property constitutes all of
the real property owned by the CD Entities and
exclusively used in the CD Int Business. Except as set
forth in the Disclosure Schedule, none of the Owned
Real Property is subject to any right or option of any
13
other person to purchase or lease or otherwise obtain
title to or an interest in such Owned Real Property.
(b) There is no outstanding material violation by any of
the CD Entities of a condition or agreement contained
in any material easement, restrictive covenant or any
similar instrument or agreement affecting the use of
any Owned Real Property or, to Seller's knowledge, any
leased real property. All material permits necessary
for the operation of the Owned Real Property have been
issued and are in full force and effect. Since January
1, 1997 Seller has not received notice of any pending
or threatened change in the zoning classification of
the Owned Real Property. There are no pending or, to
Seller's knowledge, threatened condemnation proceedings
relating to any of the Owned Real Property.
(c) The Disclosure Schedule lists all of the CD Int Leases
and those leases, subleases and occupancy agreements of
real properties by any of the CD Int Subsidiaries
relating to the CD Int Business (whether entered into
as lessor, lessee, sublessor or sublessee) together
with any modification, amendments, extensions and
renewals of the same (the "CD Int Subsidiary Leases").
True and complete copies of the CD Int Leases and CD
Int Subsidiary Leases have been made available by
Seller to Buyer. Each of the CD Entities, as the case
may be, has a valid leasehold interest in the material
CD Int Leases and material CD Int Subsidiary Leases and
each of the CD Int Leases and CD Int Subsidiary Leases
is valid and binding and in full force and effect and
has not been modified or amended except as indicated in
the lease documents made available to Buyer.
(d) Except as disclosed on the Disclosure Schedule hereto,
the leasehold interests relating to the material CD Int
Leases and material CD Int Subsidiary Leases are free
and clear of all Liens, other than Permitted
Exceptions. Except as set forth on the Disclosure
Schedule, neither Seller nor the CD Int Subsidiaries as
the case may be, and to Seller's knowledge, no other
party, is in material default under any of the material
CD Int Leases or material CD Int Subsidiary Leases and
no event exists which, with the giving of notice or
lapse of time or both, would become a default on the
part of any party under any material CD Int Lease or
material CD Int Subsidiary Lease. There is no action,
suit, complaint or other proceeding pending or, to
Seller's knowledge, threatened against a CD Entity that
would materially interfere with the quiet enjoyment of
any of the material leased real properties.
(e) Seller is neither a "foreign person" within the meaning
of Section 1445(f) of the Internal Revenue Code of
1986, as amended (the "Code") nor a "foreign partner"
within the meaning of Section 1446 of the Code.
2.7. Absence of Certain Changes. Except as permitted or
contemplated by this Agreement or as listed in the
Disclosure Schedule hereto, since September 30, 1997: (a)
the CD Int Business has been operated in the ordinary course
in all material respects, (b) there has been no material
adverse change in the business or financial condition of the
CD Int Business taken as a whole, excluding any such change
resulting from (i) any change or any development in
worldwide, national or local market, financial or economic
conditions, (ii) war, insurrection or other political change
or instability, or (iii) any regulatory, legislative or
economic development or other conditions or circumstances
that generally affect the business in which the CD Int
14
Business operates, (c) there has been no physical damage,
destruction or loss of any of the Assets or any of the
assets of the CD Int Subsidiaries which, individually or in
the aggregate, are material to the CD Int Business and (d)
none of the CD Entities has taken or agreed to take any
action that, if taken after the date hereof, would
constitute a breach of Section 4.5.
19
2.8. Litigation; Orders. The Disclosure Schedule sets forth
(a) each Action (as hereinafter defined) relating to the CD
Int Business that, to Seller's knowledge, is pending on the
date hereof before any court, arbitrator, governmental or
other regulatory agency or commission in which the amount in
controversy or of damages being claimed exceeds One Million
Dollars ($1,000,000), (b) each civil fraud and criminal
Action relating to the CD Int Business that, to Seller's
knowledge, is pending on the date hereof before any court,
arbitrator, governmental or other regulatory agency or
commission, (c) a summary of charges of discrimination
against Seller or the CD Int Subsidiaries and relating to
the CD Int Business that, to Seller's knowledge, are pending
on the date hereof in any federal, state or foreign equal
employment opportunity agency, and (d) a summary of suits
that, to Seller's knowledge, are pending against Seller or
the CD Int Subsidiaries on the date hereof before any
federal, state or foreign court involving employment or
employee benefit claims relating to the CD Int Business in
which the amount in controversy or of damages being claimed
exceeds One Million Dollars ($1,000,000). Except as set
forth in the Disclosure Schedule hereto, as of the date
hereof, to Seller's knowledge, there are no Actions relating
to the CD Int Business pending against Seller or the CD Int
Subsidiaries that would reasonably be expected to have a
material adverse effect on the CD Int Business. For
purposes of this Agreement, "Action" means any pending,
threatened or future action, suit, arbitration, inquiry,
proceeding or investigation by or before any court
arbitrator, governmental or other regulatory or
administrative agency or commission, whether civil, criminal
or other, and whether known or unknown, fixed or contingent,
or matured or unmatured at the Closing Date or at any time
theretofore or thereafter. Except as set forth in the
Disclosure Schedule hereto, as of the date hereof, there are
no material judgments or material outstanding orders,
injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency, or by
arbitration) relating to the CD Int Business against any of
the CD Entities.
2.9. Intellectual Property Matters. Except as set forth in the
Disclosure Schedule, (a) there is to Seller's knowledge no
Action to which any of the CD Entities is a party as a
result of any action or conduct of any of the CD Entities in
the conduct of the CD Int Business prior to the date of the
Agreement, as to which a determination adverse to any of the
CD Entities would have a material adverse effect on the CD
Int Business, that involves a claim by any person of
infringement of any Intellectual Property Right in the
conduct of the CD Int Business, (b) no Intellectual Property
Right is subject to any outstanding order, judgment, decree
or stipulation restricting the use thereof by any of the CD
Entities or the licensing thereof by any of the CD Entities
to any person, and (c) none of the CD Entities has during
the two years preceding the date of this Agreement received
any notice to the effect that the use of the Intellectual
Property Rights in the conduct of the CD Int Business
infringes upon any patent or copyright, violates a patent
license, copyright registration or any pending application
relating thereto or conflicts with or violates any
trademark, service xxxx, trade name or trade secret right of
any person, including any patent, registered or unregistered
trademark, registered or unregistered trade name, registered
or unregistered copyright or work of authorship, registered
or unregistered service xxxx, patent application or
application for registration of any of the foregoing, know-
how, trade secret, rights in invention, rights in
technology, proprietary information or process or computer
software and related documentation and other programming
code. As of the Closing Date and immediately thereafter,
Buyer and the CD Int Subsidiaries shall own upon
15
substantially the same terms and conditions as presently in
effect all of the material Intellectual Property Rights held
primarily in connection with the CD Int Business as of the
date of this Agreement. Except for the effect of the
assignment restrictions identified on the Disclosure
Schedule relating to certain licenses to which the CD
Entities are party, with respect to the intellectual
property rights owned by third parties that are licensed by
the CB Entities for use primarily in connection with the CD
Int Business as of the date of this Agreement, none of the
CD Entities has received any notice that such intellectual
property rights cannot be used by Buyer and the CD Int
Subsidiaries after the Closing Date to the same extent that
the CD Entities are using such intellectual property rights
as of the date of this Agreement. The CD Entities do not
require any material license to intellectual property rights
of any third party, other than intellectual property rights
that are licensed to the CD Entities pursuant to the license
agreements identified on the Disclosure Schedule and that
are included in the Assets or the assets of the CD Int
Subsidiaries, to conduct the CD Int Business as of the
Closing Date and, subject to the receipt of requisite
consents, immediately thereafter in substantially the same
manner as the CD Int Business is conducted as of the date of
this Agreement.
2.10. Labor Matters. The Disclosure Schedule sets forth a list
of all collective bargaining agreements in effect on the
date hereof with labor unions or associations representing
employees working in the CD Int Business as of the date
hereof ("CD Int Employees"). Except as set forth on the
Disclosure Schedule, in connection with the CD Int Business:
(a) no labor organization or group of CD Int Employees has
made a pending demand for recognition or certification,
and there are no representation or certification
proceedings presently pending or, to Seller's
knowledge, threatened to be brought or filed with the
National Labor Relations Board or any other labor
relations tribunal or authority;
(b) to Seller's knowledge, there are no organizing
activities involving the CD Int Employees pending with
any labor organization or group of CD Int Employees;
(c) there are no material strikes, material work stoppages,
material slowdowns, lockouts, material arbitrations or
material grievances or other material labor disputes
pending or, to Seller's knowledge, threatened against
or involving the CD Int Employees;
(d) since January 1, 1995, there have been no material
strikes, work stoppages, slowdowns or lockouts
involving the CD Int Employees;
(e) there are no material unfair labor practice charges,
grievances or complaints pending or, to Seller's
knowledge, threatened by or on behalf of any CD Int
Employee;
(f) there are no material complaints, charges or claims
against any of the CD Entities pending or, to Seller's
knowledge, threatened to be brought or filed with any
public or governmental authority, arbitrator or court
based on, arising out of, in connection with, or
otherwise relating to the employment or termination of
employment of any CD Int Employee; and
(g) Seller and the CD Int Subsidiaries have complied in all
material respects and are in material compliance with
all laws, regulations and orders relating to the
employment of labor, including the National Labor
Relations Act and the Fair Labor Standards Act, and all
such other laws, regulations and orders relating to
16
wages, hours, collective bargaining, discrimination,
civil rights, safety and health and comparable
legislation in the United States, Canada and the U.K.,
in each case where applicable.
2.11. Benefit Plans.
(a) The Disclosure Schedule lists all "Seller Pension
Plans," "Seller Welfare Plans," "Seller Benefit
Arrangements," and material incentive, bonus,
supplementary benefit, club membership, retention and
similar "Current Compensation" plans and "Transferred
Plans," as such terms are defined in the Personnel
Agreement (collectively, "Plans"). Seller has made
available to Buyer true and complete copies of (i) the
Plans and related trust agreements, funding agreements
or other agreements or contracts evidencing any funding
vehicle with respect thereto; (ii) the three most
recent annual reports on Treasury Form 5500, including
all schedules and attachments thereto, or any other
annual return required to be filed in a jurisdiction
outside the U.S. with respect to any Plan for which
such a report is required; (iii) the three most recent
actuarial reports with respect to any Plan that is
subject to Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any
other Plan in respect of which such actuarial reports
have been prepared; (iv) the form of summary plan
description, including any summary of material
modifications thereto or other modifications
communicated to participants, currently in effect with
respect to each Plan; and (v) the most recent
determination letter with respect to each Plan intended
to qualify under Section 401(a) of the Code.
(b) Except as set forth in the Disclosure Schedule:
(i) Except as provided for in Section 4.1(d) of the
Personnel Agreement, each Transferred Plan has
been administered in all material respects
consistently with its written terms and Seller and
each of the CD Int Subsidiaries has complied in
connection with each Transferred Plan in all
material respects with applicable provisions of
ERISA, the Code and any other applicable law of
the United States or of any other applicable
jurisdiction, including, without limitation, the
qualification provisions of Code Section 401(a)
for each Plan intended to qualify thereunder.
(ii) There is no pending or, to the knowledge of
Seller, threatened legal action or proceeding or
investigation against any Transferred Plan, the
assets or any of the trusts under such plans or
the plan sponsor or the plan administrator or
against any fiduciary of the Transferred Plans
that would reasonably be expected to have a
material adverse effect on the CD Int Business and
there is no basis for any such claim or lawsuit.
(iii)
No CD Int Entity has made any plan or commitment,
whether or not legally binding, to create any
additional plan or modify or change any existing
plan that would, individually or in the aggregate,
reasonably be expected to, directly or indirectly,
have a material adverse effect on the CD Int
Business.
(iv) No CD Int Entity has incurred any outstanding
liability under Section 4062 of ERISA or to the
PBGC, to a trust established under Section 4041 or
4042 of ERISA or to a trustee appointed under
ERISA Section 4042.
17
(v) None of the Transferred Plans contains any
provisions which would prohibit the transactions
contemplated by this Agreement and none of the
Transferred Plans, other than any Retention
Agreement listed on Schedule 2.3 to the Personnel
Agreement or employment agreement with Xxxx Xxxxx,
would give rise to any material severance,
termination or other payments as a result of the
transactions contemplated by this Agreement.
(vi) With respect to each Pension Plan (as defined in
the Personnel Agreement) that the Seller
(including any member of the controlled group of
corporations, within the meaning of Code Section
1563, which includes the Seller) maintains or ever
has maintained, or to which any of them
contributes, ever has contributed or ever been
required to contribute, neither Seller nor any
member of its controlled group of corporations (as
referenced above) has incurred or has any reason
to expect that it will incur any liability to the
PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any
withdrawal liability).
(vii)
None of the CD Int Entities or other members of
their controlled group of corporations (as
referenced above) contributes to, ever has
contributed to, or ever has been required to
contribute to any Multiemployer Plan (as defined
in Section 3(37) of ERISA) or has any liability
(including withdrawal liability) under any
Multiemployer Plan.
(viii)
None of the Transferred Plans that are Welfare
Benefit Plans (including any Seller maintained
retiree medical or life benefit plans) contain
vested benefits that may not be changed. Each
such plan may be amended or terminated at any time
by the Seller (or the appropriate CD Int
Subsidiary) and no such plan contains any
provision that would prevent Buyer from amending
or terminating any plan maintained by it on or
after the Closing Date. Buyer acknowledges that
such rights to amend or terminate such plans are
subject to applicable collective bargaining
agreements and other applicable law.
(ix) No CD Int Entity is obligated to make any payment
or is a party to any agreement that under any
circumstances could obligate Buyer or any CD Int
Entity to make any payment that will not be
deductible in whole or in part by reason of
Section 280G of the Code.
(x) Seller has delivered or otherwise made available
to Buyer the most recent listing of open workers'
compensation claims for the CD Int Business.
2.12. Tax Matters. Except as set forth in the Disclosure
Schedule:
(a) Each of the CD Entities has filed all Tax Returns (as
hereinafter defined) that it was required to file, all
such Tax Returns were correct and complete in all
material respects, and all Taxes (as hereinafter
defined) shown thereon have been paid. For purposes of
this Agreement: (i) "Tax Return" means any return,
declaration, report, claim for refund, or information
return or statement relating to Taxes, including any
schedule or attachment thereto; (ii) "Tax" or "Taxes"
means any federal, state, local, or foreign income,
sales or use, goods and services, corporation, capital
18
stock, capital duty, franchise, withholding,
alternative minimum, estimated, property, employment,
ad valorem, gross receipts, transfer, stock, stamp,
capital or other similar tax or levy, including any
interest, penalty, or addition thereto, whether
disputed or not, and including any transferee or
secondary liability (whether imposed by law,
contractual agreement or otherwise) and any liability
in respect of any tax as a result of being a member of
any affiliated, consolidated, combined, unitary or
similar group; and (iii) "Income Taxes" means any and
all liability for any taxes imposed on the income of a
corporation, including without limitation, any
liability under the Code and all federal, state, local,
and foreign income, profits, gross receipts and unitary
taxes or similar taxes or other assessments imposed
with respect thereto and any interest, penalties or
additions in respect of such tax, and including any
transferee or secondary liability (whether imposed by
law, contractual agreement or otherwise) and any
liability in respect of any tax as a result of being a
member of any affiliated, consolidated, combined,
unitary or similar group.
(b) All Taxes with respect to the CD Int Subsidiaries
arising in, or attributable to, any and all periods (or
the portion thereof) through the Closing Date have been
(or will be) paid or fully accrued on the books,
records and financial statements of the CD Int
Subsidiaries (whether or not such Taxes are due and
payable). The Final Audited Closing Statement of Net
Assets will contain accruals for all liabilities for
current Taxes with respect to the CD Int Subsidiaries
and deferred Taxes with respect to CD Canada as of the
Closing Date; the aggregate amount so accrued on such
statement will be sufficient for the payment of any and
all such Taxes.
(c) There is no pending, nor to the knowledge of Seller
threatened, audit, examination or investigation with
respect to any Tax Returns for the CD Int Subsidiaries.
(d) The CD Int Subsidiaries have not waived any statute of
limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or
deficiency.
(e) Neither Seller (with respect to the Assets) or any of
the CD Int Subsidiaries has since January 1, 1994 been
a member of an affiliated group filing a consolidated
federal income Tax Return.
(f) There are no Liens affecting any of the Assets or any
of the assets of the CD Int Subsidiaries arising out
of, connected with, or related to Taxes (other than for
Taxes that are not delinquent and Permitted
Exceptions).
(g) None of the Assets and none of the assets of the CD
U.S. Subsidiaries is "tax-exempt use property" within
the meaning of Section 168(h) of the Code nor property
that after the Closing will be treated as being owned
by a person other than Buyer or one of the CD U.S.
Subsidiaries pursuant to 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.
(h) No change in Tax accounting method which would affect
CD Int Subsidiaries after the Closing has been made,
agreed to, requested or required with respect to CD
Int Subsidiaries, their respective assets or
operations.
19
(i) Except for the Tax allocation agreement pursuant to
Regulation Section 1.1502 promulgated under the Code,
none of the CD U.S. Subsidiaries is a party to, is
bound by, or has any obligation (or potential
obligation) under any tax agreement.
(j) None of the CD U.S. Subsidiaries is a party to any
agreement relating to a foreign sales corporation
within the meaning of Section 922 of the Code; or a
domestic international sales corporation within the
meaning of Section 991 of the Code.
(k) The CD Entities have withheld and paid all Taxes with
respect to the CD Int Business required to have been
withheld and paid in connection with amounts paid or
owing to any employee, creditor, independent
contractor, shareholder or other party.
(l) There are no pending claims for refund of any Tax of
any of the CD Int Subsidiaries (including refunds of
Taxes allocable to the CD Int Subsidiaries with respect
to any consolidated, combined, unitary, fiscal unity or
similar Tax Returns.)
(m) Each asset with respect to which any CD Int Subsidiary
claims depreciation, amortization or similar expense
for Tax purposes is owned for Tax purposes by such CD
Int Subsidiary under applicable Tax law. Each CD Int
Subsidiary has always been properly classified as a
corporation for United States federal Income Tax
purposes. No CD Int Subsidiary owns, directly or
indirectly, any interest in any entity which is
classified as a partnership for United States federal
Income Tax purposes. None of the Assets is an interest
in an entity which is classified as a partnership for
United States federal Income Tax purposes.
(n) There are no outstanding rulings of, or requests for
rulings with, any Tax authority expressly addressed to
any of the CD Int Subsidiaries (or to an Affiliate of
any CD Int Subsidiary) that are, or if issued would be,
binding upon any of the CD Int Subsidiaries for any
Post-Closing Period (as defined in the Tax Matters
Agreement).
(o) None of the CD Int Subsidiaries (of Seller or Seller's
Affiliates with respect to any of the CD Int
Subsidiaries) has, in a manner that would be binding on
any of the CD Int Subsidiaries for any Post-Closing
Period, executed, become subject to or entered into any
closing agreement pursuant to Section 7121 of the Code
or any similar or predecessor provision thereof under
the Code or other applicable Tax Law.
(p) No CD Int Subsidiary will have any taxable income or
gain as a result of prior intercompany transactions
that have been deferred and that will be taxed as a
result of the changes in ownership contemplated by this
Agreement.
(q) None of the CD Int Subsidiaries (or Seller or Seller's
Affiliates on behalf of such CD Int Subsidiaries) has
made or is subject to any election under Section 341(f)
of the Code or has executed or caused any CD Int
Subsidiary to become subject to such election.
(r) No "industrial development bonds" within the meaning of
Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal Revenue Code
of 1954, as amended and in effect prior to the
enactment of the United States Tax Reform Act of 1986,
"private activity bonds" within the meaning of Section
141 of the Code or other tax exempt financing have been
20
used to finance any of the Assets or any of the assets
of the CD Int Subsidiaries, whether leased or owned.
(s) With respect to the CD Int Business, none of the CD
Entities has made any payments, is obligated to make
any payments or is party to any agreement that could
obligate it to make any payments, that will not be
fully deductible under Sections 162(m) or 280G of the
Code (or any similar provision of foreign, state or
local law).
(t) No CD Int Subsidiary has made or is bound by any
election under Section 197 of the Code.
(u) Seller has filed for the taxable year immediately
preceding the current taxable year and will file for
the year in which the Closing occurs a consolidated
federal income tax return with the CD U.S.
Subsidiaries.
(v) All material elections with respect to Taxes affecting
the CD Int Subsidiaries as of the date hereof are set
forth in the Disclosure Schedule.
(w) No amount with respect to any outlay or expense that is
deductible for the purpose of computing income under
the Canadian Income Tax Act has been owing by CD Canada
(i) for longer than two years to any person with whom
CD Canada was not dealing at arms' length at the time
of the outlay or expense was incurred or (ii) for more
than 180 days after the end of the taxation year in
which the outlay or expense was incurred in the case of
a superannuation or pension benefit, a retiring
allowance, salary, wages or other remuneration with
respect to any office or employment. There are no
circumstances which exist and would result, or which
have existed and have resulted, in Section 80 of the
Canadian Income tax Act applying to CD Canada.
2.13. Compliance with Law. Except as set forth in the
Disclosure Schedule, to Seller's knowledge the operations of
the CD Int Business have been and are being conducted in all
material respects in accordance with all applicable laws,
regulations, orders and other requirements of all courts and
other governmental or regulatory authorities having
jurisdiction over the CD Entities and their respective
assets, properties and operations, including, without
limitation, all such laws, regulations, orders and
requirements promulgated by or relating to consumer
protection, currency exchange, equal opportunity, export
controls, government contracts, health, environmental
protection, conservation, wetlands, architectural barriers
to the handicapped, fire, zoning and building, occupation
safety, pension, and securities matters. Except as set
forth in the Disclosure Schedule, since January 1, 1995,
none of the CD Entities has since received notice of any
material violation of any such law, regulation, order or
other legal requirement, and is not in default with respect
to any material order, writ, judgment, award, injunction or
decree of any federal, provincial, state or local court or
governmental or regulatory authority or arbitrator, domestic
or foreign, applicable to the CD Int Business. None of the
CD Int Subsidiaries has or as of the Closing will have any
criminal liability arising under any criminal statute with
respect to any criminal activity occurring prior to the
Closing.
2.14. Sufficiency of and Title to the Assets. Upon
consummation of the transactions contemplated by this
Agreement and Buyer obtaining all Required Consents (as
hereinafter defined), Seller will have assigned, transferred
and conveyed to Buyer, directly or indirectly, all of the
Assets and all of the assets, rights and properties of each
of the CD Int Subsidiaries (other than the Excluded Assets),
in each case free and clear of all Liens (other than
21
Permitted Exceptions). For purposes of this Agreement,
"Required Consents" means, collectively, (a) each consent or
novation with respect to any Contract required to be
obtained from the other party or parties thereto by virtue
of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby in
order to avoid the invalidity of the transfer of such
Contract, the termination thereof, a breach or default
thereunder or any change or modification to the terms
thereof and (b) each registration, filing, application,
notice, transfer, consent, approval, order, qualification
and waiver required under applicable law to be obtained by
virtue of the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
Apart from the Excluded Assets, the Assets constitute, and
on the Closing Date will constitute, all of the assets that
are primarily used or held for use in connection with the
operation of the CD Int Business or are otherwise necessary
to permit the operation of the CD Int Business in
substantially the same manner as such operations have
heretofore been conducted (assuming no change in the
material circumstances external to the CD Entities relating
to the CD Int Business). None of the Excluded Assets have
been included in the September 30, 1997 Statement of Net
Assets.
2.15. Contracts and Government Bids.
(a) For purposes of this Agreement: a "Contract" means
Ceridian Contracts and all existing contracts,
agreements and commitments of each of the CD Int
Subsidiaries; a "Government Contract" means a Ceridian
Government Contract and any prime contract,
subcontract, basic ordering agreement, letter contract,
purchase order or delivery order, including all
amendments, modifications and options thereunder
between (i) any of the CD Int Subsidiaries and (ii) the
U.S. Government or any state, local or foreign
government, or any prime contractor or higher-tier
subcontractor under any contract described in the
immediately preceding clause (i); and a "Government
Bid" means a Ceridian Government Bid and any written
quotation, bid or proposal made by any of the CD Int
Subsidiaries that if accepted or awarded would lead to
a contract with (A) the U.S. Government or any state,
local or foreign government, or (B) any prime
contractor or higher-tier contractor under any contract
described in the immediately preceding clause (A). For
purposes of this Section 2.15, all Contracts stated in
terms of currency other than United States dollars
shall be deemed converted into United States dollars at
the following exchange rates: 0.61 British Pound to One
U.S. Dollar; and 1.36 Canadian Dollar to One U.S.
Dollar.
(b) Except for any Government Contract or Government Bid
containing classified information or requiring special
security clearances for access, the list of Contracts
and Government Bids in the Disclosure Schedule includes
each (i) active Contract, Government Bid and bid
primarily related to the CD Int Business that would be
a Government Bid except that a nongovernmental entity
is the ultimate customer having a stated value,
including options, greater than Five Million Dollars
($5,000,000) under which the CD Int Business is the
seller, (ii) active Contract which has a stated value
greater than Five Million Dollars ($5,000,000) and
where CD Int Business is the purchaser, (iii) material
joint venture agreement or material teaming agreement
not covered by subcontract which relates to the CD Int
Business, (iv) material agreement by which Seller or
the CD Int Subsidiaries is the licensee or licensor of
Intellectual Property Rights or other material patent
cross license (provided, however, it is understood that
shrink-wrap licenses shall not constitute a material
license and any licenses granted or received under
22
Government Contracts are not separately identified on
the Disclosure Schedule), (v) employment or consulting
agreement having a remaining term of at least one year
and providing annual payments in excess of $200,000 or
aggregate payments in excess of $200,000, (vi)
equipment or other personal property leases providing
for total payments in excess of $5,000,000, (vii) with
respect to the CD Int Business, each mortgage,
indenture, note, installment obligation or other
instrument relating to the borrowing of money in excess
of $50,000, (viii) currency or interest rate swap,
collar or hedge agreement, (ix) with respect to the CD
Int Business, offset or countertrade agreements, (x)
distributor, representative or broker contract, or (xi)
agreement imposing material non-competition or material
exclusive dealing obligations on any CD Entity
(excluding teaming agreements, prohibiting or limiting
participation on other teams).
(c) Except as set forth in the Disclosure Schedule, each of
such agreements listed in the Disclosure Schedule and
each Contract which involves government classified
programs subject to special national security
restrictions (a "Classified Contract") is a valid and
binding obligation of Seller or the CD Int
Subsidiaries, as the case may be, and, to Seller's
knowledge, the other party thereto and is in full force
and effect in all material respects.
(d) With respect to all Government Contracts and Government
Bids, including Classified Contracts, to Seller's
knowledge, except as set forth in the Disclosure
Schedule, there are no (i) civil fraud or criminal
investigations by any government investigative agency,
(ii) suspension or debarment proceedings (or equivalent
proceedings) against any of the CD Entities, as the
case may be, (iii) claims of defective pricing in
excess of One Million Dollars ($1,000,000), and (iv)
disputes between any of the CD Entities, as the case
may be, and any government which have resulted in a
government contracting officer's final decision where
the amount in controversy exceeds or is expected to
exceed One Million Dollars ($1,000,000). With respect
to each and every Government Contract or Government
Bid, including Classified Contracts, except as set
forth in the Disclosure Schedule, (i) each of the CD
Entities, as the case may be, has complied in all
material respects with all material terms and
conditions of such Government Contract or Government
Bid, including all clauses, provisions and requirements
incorporated, expressly, by reference or by operation
of law therein, (ii) each of the CD Entities, as the
case may be, has complied in all material respects with
all requirements of all applicable laws or agreements
pertaining to such Government Contract or Government
Bid, (iii) all representations and certifications
executed, acknowledged or set forth in or pertaining to
such Government Contract or Government Bid were
complete and correct in all material respects as of
their effective date, and each of the CD Entities, as
the case may be, has complied in all material respects
with all such representations and certifications, (iv)
since January 1, 1992, neither the U.S. Government nor
any prime contractor, subcontractor or other person has
notified any of the CD Entities, as the case may be, in
writing, that any of the CD Entities, as the case may
be, has breached or violated any applicable law,
certification, representation or requirement pertaining
to such Government Contract or Government Bid, (v)
Seller's established or disclosed cost accounting
practices are in compliance in all material respects
with all applicable law and regulations, (vi) Seller
maintains an accounting system and controls adequate in
all material respects for the proper administration of
progress payments by the U.S. Government, (vii) no
termination for convenience, termination for default,
cure notice or show cause notice is currently in effect
pertaining to any Government Contract, (viii) since
23
January 1, 1995 the CD Int Entities have not received
any audit report or otherwise been advised that any
cost exceeding $500,000 incurred by any CD Entity
pertaining to any Government Contract has been
questioned, challenged or disallowed by any
governmental entity or, to Seller's knowledge, is the
subject of any audit (other than routine audits in the
ordinary course of business) or investigation by any
governmental entity and (ix) no money due any CD Entity
in excess of $50,000 pursuant to any Government
Contract has been withheld or set off nor has any claim
been made to withhold or set off money and the CD
Entities are entitled to all progress payments received
with respect to the Government Contracts through the
date of this Agreement.
(e) Since January 1, 1994, none of the CD Entities has
conducted or initiated any internal investigation
through Ceridian's General Counsel's office or made a
voluntary disclosure pursuant to the Department of
Defense Voluntary Disclosure Program or equivalent
foreign counterpart to any governmental entity with
respect to any alleged improper or illegal act or
omission arising under or relating to any Government
Contract in any case requiring credits or payments
under such Government Contract in excess of $250,000.
(f) The Disclosure Schedule lists each draft and final
audit report received with a finding by any CD Entity
since January 1, 1995 with respect to the audit by any
governmental entity of any Government Contract or of
any overhead cost, other costs or cost accounting
practices of any CD Entity. Seller has delivered or
otherwise made available to Buyer correct and complete
copies of each such report in the form received by the
applicable CD Entity.
(g) To Seller's knowledge, there are no facts or conditions
that would warrant a suspension or debarment
proceedings or the finding of nonresponsibility or
ineligibility on the part of any CD Entity or any
director, officer or employee of any CD Entity. No
payment has been made by any CD Entity or, to Seller's
knowledge, any other person on behalf of any CD Entity
in violation of applicable procurement laws or in
violation of, or requiring disclosure pursuant to, the
Foreign Corrupt Practices Act, as amended.
(h) All test and inspection results provided by any CD
Entity to any governmental entity or higher tier
contractor pursuant to any Government Contract were
complete and correct in all material respects as of the
date so provided. Each CD Entity has performed in all
material respects all material tests and inspections
and provided all material results thereof required
pursuant to law or the terms of the Government
Contracts.
2.16. Environmental Matters.
(a) Except as set forth in the Disclosure Schedule:
(i) the operations of the CD Entities comply in all
material respects with all applicable
Environmental Laws (as hereinafter defined) and
none of the CD Entities has any material liability
or obligation arising under any Environmental Law
in connection with any event, transaction,
condition, practice, Release or occurrence prior
to the Closing Date;
24
(ii) none of the CD Entities has received any written
notice within the past three years from a
governmental authority that alleges that the CD
Int Business is not in compliance with any
applicable Environmental Law;
(iii)
to Seller's knowledge, all of the CD Entities have
all material permits as required by any applicable
Environmental Law, all such permits are in good
standing and the operations of the CD Entities
comply in all material respects with the
conditions of such permits;
(iv) there is no Environmental Claim (as hereinafter
defined) with respect to the CD Int Business
pending or, to Seller's knowledge, threatened
against any of the CD Entities or against any
person whose liability for any Environmental Claim
with respect to the CD Int Business any of the CD
Entities has expressly assumed;
(v) each of the CD Entities has treated, stored and
disposed of any hazardous waste (as such term is
defined in the Resource Conservation and Recovery
Act, 42 U.S.C. S 6901 et seq., as amended (the
"RCRA")) at any of the real properties owned or
leased by the CD Entities in connection with the
CD Int Business in compliance with the RCRA (or
equivalent thereof under foreign law) in all
material respects;
(vi) the CD Entities have no material liability in
connection with the Release (as hereinafter
defined) of any Hazardous Substance (as
hereinafter defined) into the environment; and
(vii)
there are no underground storage tanks located on
any facilities operated by the CD Entities.
(b) "Environmental Claim" means any written notice by any
person or entity alleging potential liability
(including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property
damages, personal injuries or penalties) arising out
of, or resulting from the presence, or release into the
environment, of any Hazardous Substances.
(c) "Environmental Laws" means all applicable federal,
state, local, and foreign laws and regulations relating
to pollution or the environment (including, without
limitation, ambient air, surface water, ground water,
land surface or subsurface strata), including, without
limitation, laws and regulations relating to emissions,
discharges, Releases or threatened Releases of
Hazardous Substances, or otherwise relating to the use,
treatment, storage, disposal, transport or handling of
Hazardous Substances.
(d) "Hazardous Substances" shall have the meaning set forth
in the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. S 9601(14)
or equivalent thereof under foreign law, but shall
include petroleum products.
(e) "Release" shall have the meaning set forth in the
Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. S 9601(22) or equivalent
thereof under foreign law.
25
(f) Seller has provided Buyer with a copy of certain
environmental assessments and environmental baseline
reports for the manufacturing and engineering
facilities of the CD Int Business, as listed in the
Disclosure Schedule. To Seller's knowledge, such
environmental assessments and reports are accurate and
complete in all material respects.
2.17. Permits. To Seller's knowledge, each of the CD Entities
holds all material governmental permits and licenses that
are required by such CD Entity to permit it to conduct its
business as presently conducted. Each such material permit
and license is listed in the Disclosure Schedule. No
suspension, cancellation or termination of any of such
permit or license is pending or, to Seller's knowledge,
threatened.
2.18. Brokers, Finders, etc. Except for Bear, Xxxxxxx & Co.
Inc., Seller has not employed any broker, finder, consultant
or other intermediary in connection with the transactions
contemplated by this Agreement who would have a valid claim
for a fee or commission from Buyer in connection with such
transactions. Seller is solely responsible for any payment,
fee or commission that may be due to Bear, Xxxxxxx & Co.
Inc. in connection with the transactions contemplated
hereby.
2.19. No Implied Representation. NOTWITHSTANDING ANYTHING
CONTAINED IN THIS ARTICLE 2 OR ANY OTHER PROVISION OF THIS
AGREEMENT, (A) BUYER AND SELLER ACKNOWLEDGE AND AGREE THAT
NEITHER SELLER NOR ANY OF ITS AFFILIATES, AGENTS, EMPLOYEES
OR REPRESENTATIVES IS MAKING, WHETHER CONTAINED IN OR
REFERRED TO IN THE EVALUATION MATERIALS THAT HAVE BEEN OR
SHALL HEREAFTER BE PROVIDED TO BUYER OR ANY OF ITS
AFFILIATES, AGENTS OR REPRESENTATIVES (INCLUDING WITHOUT
LIMITATION THE CONFIDENTIAL OFFERING MEMORANDUM RELATING TO
THE CD INT BUSINESS (THE "CONFIDENTIAL OFFERING
MEMORANDUM"), ANY REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN BY SELLER
IN THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTY OR REPRESENTATION AS TO THE VALUE, CONDITION,
MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE PROPERTIES
OR ASSETS OF THE CD INT BUSINESS OPERATED BY SELLER, AND (B)
IT IS UNDERSTOOD THAT EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED HEREIN BUYER TAKES SUCH CD INT
BUSINESS AND ASSETS AS IS AND WHERE IS WITH ALL FAULTS AND
WITHOUT ANY IMPLIED WARRANTY OR REPRESENTATION AS TO THE CD
INT BUSINESS' LIABILITIES OR ANY ACTION.
ARTICLE
3.
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
3.1. Organization; Authorization; etc. Buyer is a corporation
duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now
being conducted. Buyer has full corporate power to execute
and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and
26
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by the board of directors of Buyer and no other
corporate proceedings on the part of Buyer or any of its
Affiliates are necessary therefor. This Agreement has been
duly executed and delivered by Buyer, and, assuming the due
execution hereof by Seller, this Agreement constitutes the
legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, subject to
applicable bankruptcy, moratorium, reorganization,
insolvency and similar laws of general application relating
to or affecting the rights and remedies of creditors
generally and to general equitable principles (regardless of
whether in equity or at law).
3.2. Consents and Approvals; No Violations. Except for
applicable requirements of the HSR Act, the Competition Act,
any similar laws of the United Kingdom, the Anti-Assignment
Laws and except for Investment Canada Approval, there is no
requirement applicable to Buyer to make any material filing
with, or to obtain any material permit, authorization,
consent or approval of, any public body as a condition to
the lawful consummation by Buyer of the transactions
contemplated by this Agreement. Neither the execution nor
delivery of this Agreement by Buyer nor the consummation by
Buyer of the transactions contemplated by this Agreement
will (a) violate any provision of the charter or By-Laws or
similar organizational instrument of Buyer or any of its
Affiliates, (b) assuming compliance with the Anti-Assignment
Laws, result in a material default or breach (or give rise
to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any
material note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which
Buyer or any of its Affiliates is a party or by which they
or any of their properties or assets may be bound, or (c)
compliance with the Investment Canada Act, compliance with
the HSR Act, the Competition Act, any similar laws of the
United Kingdom and any other applicable jurisdiction and the
Anti-Assignment Laws, violate any material order, writ,
injunction, decree, statute, rule or regulation applicable
to Buyer, any of its subsidiaries or any of their properties
or assets.
3.3. Brokers, Finders, etc. Buyer has not employed any broker,
finder, consultant or other intermediary in connection with
the transactions contemplated by this Agreement who would
have a valid claim for a fee or commission from Seller in
connection with such transactions.
3.4. Financial Capability. Buyer will have available as of the
Closing Date (either from its immediately available cash or
from external financing sources, or a combination thereof)
funds sufficient to pay the cash consideration and
consummate the transactions contemplated by this Agreement.
On the Closing Date, after giving effect to the transactions
contemplated by this Agreement and to all indebtedness being
incurred on such date in connection therewith, Buyer will
not (a) be insolvent (either because its financial condition
is such that the sum of its debts is greater than the fair
value of its assets or because the present fair salable
value of its assets will be less than the amount required to
pay its probable liability on its debts as they become
absolute and matured), (b) have unreasonably small capital
with which to engage in its business or (c) have incurred or
plan to incur debts beyond its ability to pay as they become
absolute and matured.
3.5. Foreign Ownership; Procurement Integrity. Buyer is not
under "foreign ownership, control or influence," as such
term is defined in the U.S. Department of Defense Industrial
Security Manual for Safeguarding Classified Information and
in the Industrial Security Regulation or similar statutes,
laws, rules and regulations of Canada or the United Kingdom.
27
3.6. Inspections: Limitation of Seller's Warranties. Buyer is
an informed and sophisticated participant in the
transactions contemplated by this Agreement and has
undertaken such investigation, and has been provided with
and has evaluated certain documents and information in
connection with the execution, delivery and performance of
this Agreement. With respect to any financial projection or
forecast delivered on behalf of Seller to Buyer, Buyer
acknowledges that there are uncertainties inherent in
attempting to make such projections and forecasts and that
it is familiar with such uncertainties. Buyer further
acknowledges that it is acquiring the CD Int Business
without any representation or warranty, express or implied,
by Seller or any of its Affiliates except as expressly set
forth in this Agreement. In furtherance of the foregoing,
and not in limitation thereof, Buyer acknowledges that,
except as expressly set forth herein, no representation or
warranty, express or implied, of Seller or any of its
advisors, including, without limitation, Bear, Xxxxxxx & Co.
Inc., or any of their respective Affiliates or
representatives, with respect to the CD Int Business
(including, without limitation, the Confidential Offering
Memorandum, any other information provided to Buyer pursuant
to the Confidentiality Agreement and any financial
projection or forecast delivered to Buyer with respect to
the revenues or profitability which may arise from the CD
Int Business either before or after the Closing Date) shall
form the basis of any claim against Seller or any of its
advisors, or any of their respective Affiliates or
representatives.
ARTICLE
4.
Covenants of Seller and Buyer
4.1. Investigation of Business: Access to Properties and
Records.
(a) After the date hereof and prior to the Closing, Seller
shall afford to Buyer and its authorized
representatives reasonable access to all offices,
plants and properties of the CD Int Business and to the
CD Int Books and Records and the books and records of
the CD Int Subsidiaries during normal business hours,
in order that Buyer may have full opportunity to make
such investigations as it desires of the affairs of the
CD Int Business subject to compliance with applicable
laws and regulations, and contractual obligations of
Seller or the CD Int Subsidiaries or any of its
Affiliates, regarding classified information, security
clearances, proprietary information of third parties,
source selection information, and other procurement-
sensitive information; provided, however, that such
investigation shall be conducted in such a manner as to
minimize interference with the operation of the CD Int
Business or any other business of Seller or any of its
Affiliates, it being understood and agreed that all
requests for access to the CD Int Business, the CD Int
Books and Records and the books and records of the CD
Int Subsidiaries shall be made to such representatives
of Seller as Seller shall designate in writing, who
shall be solely responsible for coordinating all such
requests and all access permitted hereunder. It is
further understood and agreed that neither Buyer nor
its representatives shall contact any of the employees,
customers, suppliers, joint venture partners, team
members or other associates or Affiliates of Seller or
the CD Int Subsidiaries, in connection with the
transactions contemplated by this Agreement, whether in
person or by telephone, mail or other means of
communication, without the specific prior authorization
of such representatives of Seller as Seller may
designate in writing, which authorization shall not be
unreasonably withheld or delayed. In addition, all
notices and applications to, filings with, and other
contacts with the United States, the United Kingdom,
28
Canada or any state, local or other foreign
governmental authorities relating to the transactions
contemplated by this Agreement shall be made by Buyer
only after prior consultation with Seller.
(b) Any information provided to Buyer or its
representatives pursuant to this Agreement shall be
held by Buyer and its representatives in accordance
with, and shall be subject to the terms of, the letter
agreement between Buyer and Bear, Xxxxxxx & Co. Inc. on
behalf of Seller (the "Confidentiality Agreement"),
which is hereby incorporated in this Agreement as
though fully set forth herein and in accordance with
such other terms and conditions as may otherwise be
agreed by the parties; provided, that the provisions of
this Section 4.1(b) shall expire following the Closing.
(c) Except to the extent prohibited by law or regulation,
Buyer agrees to (i) hold the CD Int Books and Records
and the books and records of the CD Int Subsidiaries
transferred to Buyer on the Closing Date and not to
destroy or dispose of any thereof for a period of six
(6) years from the Closing Date or such longer time as
may be required by law, regulation or Government
Contract, and thereafter, if it proposes to destroy or
dispose of such CD Int Books and Records, to offer
first in writing at least 60 days prior to such
proposed destruction or disposition to surrender them
to Seller and (ii) at any time and from time to time
following the Closing Date to afford Seller, its
accountants and counsel, during normal business hours,
upon at least 48 hours' notice, full access to such CD
Int Books and Records and the books and records of the
CD Int Subsidiaries (including the right to copy such
materials at Seller's expense) and to the CD Int
Employees to the extent that such access may be
requested (without unreasonably disrupting the
personnel and operations of the CD Int Business) for
any legitimate purpose at no cost to Seller; provided,
however, that nothing herein shall limit any of
Seller's rights of discovery. Seller hereby agrees to
provide Buyer with reasonable access to its books and
records relating to indirect corporate general and
administrative expenses invoiced or allocated to the CD
Int Business prior to the Closing Date. Access to the
foregoing books and records will be provided only to
the extent reasonably necessary to permit Buyer to
contest or defend governmental audits or
investigations, to complete required government reports
or contract closures relating to periods prior to the
Closing Date or as required by law or legal process.
(d) All information obtained by Buyer concerning the
businesses of Seller other than the CD Int Business
(the "Seller Proprietary Information") shall be used by
Buyer solely as required to perform its obligations
under this Agreement or the Transition Services
Agreement and for no other purpose. Buyer shall not
disclose, or permit the disclosure of, any of the
Seller Proprietary Information to any person except
those persons to whom such disclosure is necessary to
permit Buyer's performance of such obligations. Buyer
shall treat, and will cause its Affiliates and the
directors, officers, employees, agents, representatives
and advisors of Buyer or any of its Affiliates to
treat, the Seller Proprietary Information as
confidential, using the same degree of care as Buyer
normally employs to safeguard its own highly
confidential information from unauthorized use or
disclosure. Notwithstanding the foregoing, the term
Seller Proprietary Information shall not include
information which: (i) at the time of disclosure to
Buyer by or on behalf of Seller is already known to
Buyer; (ii) is or becomes known or available to the
public other than as a result of an unauthorized
disclosure by Buyer or any of its Affiliates, or any of
their respective directors, officers, employees,
agents, representatives or advisors; (iii) becomes
known or available to Buyer without restrictions of
29
confidentiality from a source other than Seller,
provided that such source is not bound by an agreement
prohibiting such disclosure to Buyer; or (iv) is
required to be disclosed by Buyer by law, regulation,
court order or other legal process, provided that Buyer
shall provide Seller with prompt notice of such
requirement so that Seller may seek an appropriate
protective order.
(e) From and after the Closing Date, all information
concerning the CD Int Business (the "Buyer Proprietary
Information") shall be used by Seller and its
Affiliates solely as required to perform its
obligations under this Agreement or the Transition
Services Agreement and for no other purpose. Seller
shall not disclose, or permit the disclosure of, any of
the Buyer Proprietary Information to any person except
those persons to whom such disclosure is necessary to
permit Seller's performance of such obligations.
Seller shall treat, and will cause its Affiliates and
the directors, officers, employees, agents,
representatives and advisors of Seller or any of its
Affiliates to treat, the Buyer Proprietary Information
as confidential, using the same degree of care as
Seller normally employs to safeguard its own highly
confidential information from unauthorized use or
disclosure. Notwithstanding the foregoing, the term
Buyer Proprietary Information shall not include
information which: (i) is or becomes known or
available to the public other than as a result of an
unauthorized disclosure by Seller or any of its
Affiliates, or any of their respective directors,
officers, employees, agents, representatives or
advisors; (ii) becomes known or available to Seller
without restrictions of confidentiality from a source
other than Buyer, provided that such source is not
bound by an agreement prohibiting such disclosure to
Seller; or (iii) is required to be disclosed by Seller
by law, regulation, court order or other legal process,
provided that Seller shall provide Buyer with prompt
notice of such requirement so that Buyer may seek an
appropriate protective order.
4.2. Reasonable Efforts; Obtaining Consents. Subject to the
terms and conditions herein provided, Seller and Buyer agree
to use all reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions
contemplated by this Agreement and to cooperate with the
other in connection with the foregoing. Subject to Section
1.8 and Section 4.3, Seller and Buyer shall use all
reasonable efforts (a) to obtain Required Consents, and (b)
to obtain all consents, approvals and authorizations that
are required to be obtained under any federal, state, local
or foreign law or regulation. Seller and Buyer shall use
all reasonable efforts (a) to lift or rescind any injunction
or restraining order or other order adversely affecting
their respective ability to consummate the transactions
contemplated hereby, (b) to effect all necessary
registrations and filings including, but not limited to,
their respective filings under the HSR Act, the Competition
Act and the Investment Canada Act and any similar laws of
the United Kingdom and submissions of information requested
by governmental authorities, and (c) to fulfill all their
respective conditions to this Agreement. Seller and Buyer
further covenant and agree, with respect to a threatened or
pending preliminary or permanent injunction or other order,
decree or ruling or statute, rule, regulation or executive
order that would adversely affect the ability of the parties
hereto to consummate the transactions contemplated hereby,
to use all of their respective reasonable efforts to prevent
the entry, enactment or promulgation thereof, as the case
may be.
4.3. Antitrust and Foreign Investment Compliance. Seller and
Buyer will promptly file or cause to be filed with the
30
Antitrust Division of the United States Department of
Justice and the Federal Trade Commission pursuant to the HSR
Act and with the Competition Bureau pursuant to the
Competition Act and the Minister under the Investment Canada
Act (if applicable) and any other antitrust authorities
required under applicable law, all requisite documents and
notifications in connection with the transactions
contemplated by this Agreement. Seller, on the one hand,
and Buyer, on the other hand, shall promptly inform the
other of any material communication from the United States
Federal Trade Commission, the Department of Justice, the
Bureau of Competition Policy or any other domestic or
foreign government or governmental or multinational
authority regarding any of the transactions contemplated
hereby. If either Seller or Buyer or any Affiliate of
Seller or Buyer receives a request for additional
information or documentary material from any such government
or authority with respect to the transactions contemplated
hereby, then such party will endeavor in good faith to make,
or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate
response in compliance with such request. Buyer shall give
status reports as reasonably requested by Seller with
respect to any understandings, undertakings or agreements
(oral or written) which Buyer proposes to make or enter into
with the United States Federal Trade Commission, the
Department of Justice or any other domestic or foreign
government or governmental or multinational authority in
connection with the transactions contemplated hereby.
Seller shall keep any information so received confidential.
4.4. Further Assurances; Novation; Contract Audits. Seller and
Buyer agree that, from time to time, whether before, at or
after the Closing Date, each of them will execute and
deliver such further instruments of conveyance and transfer
and take such other action as may be necessary or desirable
to carry out the purposes and intents of this Agreement
including by Seller's delivering to Buyer to the extent
practicable the items listed below:
(i) duly executed and acknowledged transfer tax and
other required tax forms reasonably required by
Buyer to transfer to Buyer the Owned Real Property
and the CD Int Leases, all in the form required by
applicable law;
(ii) a Non-Foreign Affidavit duly executed and
acknowledged stating that Seller is neither a
"foreign person" within the meaning of Section
1445(f) of the Code nor a "foreign partner" within
the meaning of Section 1446 of the Code in a form
that is reasonably satisfactory to Buyer;
(iii)
duly executed 1099-S forms;
(iv) duly executed and acknowledged title affidavits
and/or certificates and satisfaction of other
requirements as a title company shall reasonably
deem necessary or desirable in form and substance
satisfactory to the title company (in the exercise
of its reasonable discretion) in connection with
the issuance by the title company of title
insurance policies in favor of Buyer on any of the
Owned Real Property and CD Int Leases;
(v) duly recorded UCC-3 or other appropriate
termination statements evidencing the termination
of all Liens on the Assets other than Permitted
Exceptions; and
(vi) certificates or other filings required by state
environmental statutes and regulations governing
transfers of real property.
31
The parties shall cooperate to preserve the Government Bids
and facilitate the award of the Contracts pursuant thereto
consistent with applicable laws and regulations. The
parties shall use their reasonable efforts to obtain any
necessary novation agreements of all Government Contracts
and Government Bids requiring novation and the parties shall
cooperate reasonably with each other in connection with any
litigation brought by a third party, audit, inquiry,
investigation or similar proceeding with respect to the CD
Int Business. Upon a party's reasonable request, at such
party's expense and subject to confidentiality agreements
reasonably acceptable to the other party, the other party
shall make available appropriate personnel and provide
pertinent records to assist in any such litigation, audit,
inquiry, investigation or proceeding.
4.5. Conduct of Business. From the date hereof until the
Closing, except as set forth in the Disclosure Schedule or
as permitted by this Agreement, or as otherwise consented to
by Buyer in writing, such consent not to be unreasonably
withheld or delayed, Seller shall cause the CD Int Business
and the CD Int Subsidiaries to:
(a) be carried out in the ordinary course of business in
substantially the same manner in which it has been
conducted since January 1, 1997, and to use
commercially reasonable efforts to preserve intact its
present business organization and to preserve its
relationships with customers, suppliers, employees and
others having business dealings with it;
(b) not amend the charter documents or By-Laws of the CD
Int Subsidiaries;
(c) maintain books of account and records in their usual,
regular and ordinary manner, consistent with past
practice;
(d) not dispose of any assets other than in the ordinary
course of business or other than assets which in the
aggregate are not material to the CD Int Business;
(e) not issue any additional shares of capital stock of the
CD Int Subsidiaries or enter into any commitments for
the issuance of such shares or purchase, redeem or
otherwise acquire for value any shares of such capital
stock;
(f) except as required under any employment agreements, any
applicable collective bargaining agreement or in the
ordinary course of business, consistent with past
practice or custom, not grant any material general or
uniform increase in the rates of pay of employees of
the CD Int Business, nor grant any material general or
uniform increase in the benefits under any bonus or
pension plan to, for or with any such employees, nor
materially increase the compensation payable or to
become payable to officers, key salaried employees or
agents, or materially increase any bonus, insurance,
pension or other benefit plan, payment or arrangement
made to, for, or with any such offices, key salaried
employees or agents;
(g) not make or enter into any agreement to make capital
expenditures in excess of One Million Dollars
($1,000,000) in any one case;
(h) repay in full prior to the Closing Date, together with
all accrued and unpaid interest thereon, the
outstanding note payable due from Seller to CD Canada;
32
(i) not, in connection with the settlement of the matter
captioned Xxxxxxx Xxxxxx et al. v. Ceridian Corporation
et al., permit the CD Int Retirement Plan to pay any
consideration in excess of $3,000,000;
(j) not declare or pay and divided or make any distribution
of cash or other property; or
(k) not enter into or commit to enter into any material
transaction with any other division, subsidiary or
business unit of Seller or any of its Affiliates not in
the ordinary and usual course of business consistent
with past practice and custom.
Notwithstanding the provisions of this Section 4.5, nothing
in this Agreement shall be construed or interpreted to prevent
Seller as part of its normal cash management procedures
consistent with past practice, from (i) making, accepting or
settling intercompany or intracompany advances, transfers or
loans to, from or with one another or with Seller or any
Affiliate; or (ii) engaging in any other transaction including,
without limitation, short-term investments in bank deposits,
money market instruments, time deposits, certificates of deposit
and bankers' acceptances.
4.6. Public Announcements. From the date hereof until the
Closing Date, neither Seller nor Buyer will issue, or permit
any agent or Affiliate to issue, any press releases or
otherwise make or permit any agent or Affiliate to make, any
public statements with respect to this Agreement and the
transactions contemplated hereby without the prior written
consent of the non-disclosing party, which consent shall not
be unreasonably withheld or delayed; provided, however, that
Seller or Buyer may at any time make any announcements which
are required by applicable law or the rules of any national
securities exchange so long as the party so required to make
an announcement promptly upon learning of such requirement
notifies the other party of such requirement and discusses
with the other party in good faith the exact proposed
wording of any such announcement.
4.7. Guaranties.
(a) Buyer shall be substituted in all respects for Seller
or any of its Affiliates (including without limitation
the CD Int Subsidiaries), effective as of the Closing,
in respect of the following obligations of Seller and
any such Affiliate (collectively, the "Guaranties") (i)
all obligations under each of the guaranties, letters
of credit, letters of comfort, bid bonds and
performance bonds obtained by Seller or any of such
Affiliates solely for the benefit of the CD Int
Business, which guaranties, letters of credit, letters
of comfort, bid bonds and performance bonds are set
forth in Exhibit 4.7 and (ii) the portion that is
solely for the benefit of the CD Int Business of each
of the obligations of Seller and any such Affiliate
under each of the guaranties, letters of credit,
letters of comfort, bid bonds and performance bonds
obtained by Seller or any of such Affiliates for the
joint benefit of the CD Int Business and any other
business units of Seller, provided that Seller will
duly and punctually perform the portion of such
obligations which are solely for the benefit of
Seller's divisions other than the CD Int Business. If
Buyer is unable to effect such a substitution with
respect to any of the Guaranties after using its best
efforts to do so, Buyer shall indemnify, defend and
holder Seller harmless from and against any Damages (as
hereafter defined) suffered or incurred by Seller with
respect to the obligations covered by each of the
Guaranties for which Buyer does not effect such
substitution. As a result of the substitution
contemplated by the first sentence of this Section 4.7
33
and/or the indemnification contemplated by the second
sentence hereof, Seller and its Affiliates shall, from
and after the Closing, cease to have any obligation
whatsoever arising from or in connection with the
Guaranties.
(b) On and after the Closing Date, Buyer will use its
reasonable efforts to obtain the release of and return
to Seller as soon as practicable any and all collateral
(other than collateral included in the Assets) pledged
pursuant to any Guaranties. To the extent not
reflected on the Final Audited Closing Statement of Net
Assets, any amounts refunded under any Guarantees
relating to periods prior to the Closing Date and any
cash collateral deposited prior to the Closing Date
that is released shall be refunded to Seller.
4.8. Privilege and Litigation Matters.
(a) Buyer and Seller each acknowledge that: (i) Seller
(including its Affiliates) has or may obtain
information (whether in documents or stored in any
other form or known to employees or agents) that is or
may be protected from disclosure pursuant to the
attorney-client privilege, the work product doctrine or
other applicable privileges that Buyer may come into
possession of or obtain access to in anticipation of or
as a result of the transfer of the CD Int Business
pursuant to this Agreement ("Privileged Information");
(ii) there are a number of actual, threatened or future
litigations, investigations, claims or other legal
matters that have been or may be asserted against, or
otherwise adversely affect, Seller and/or Buyer
("Litigation Matters"), including matters that may be
asserted against Seller arising out of its ownership of
the CD Int Business prior to Closing and against Buyer
arising out of its acquisition of the CD Int Business
pursuant to this Agreement; (iii) both Buyer and Seller
have a common legal interest in Litigation Matters
relating to the CD Int Business, in the Privileged
Information, and in the preservation of the
confidential status of the Privileged Information; and
(iv) both Buyer and Seller intend that the Closing
pursuant to this Agreement and any transfer of
Privileged Information in anticipation of or as a
result of transfer of the CD Int Business shall not
operate as a waiver of any potentially applicable
privilege.
(b) Buyer and Seller (and their Affiliates) agree not to
disclose any Privileged Information, and otherwise not
to waive any privilege that may cause disclosure of
Privileged Information, without providing prompt
written notice to and obtaining the prior written
consent of the other, which consent shall not be
unreasonably withheld and will not be withheld if the
other party certifies that such disclosure is to be
made in response to a likely threat of suspension or
debarment. In the event of a disagreement between
Buyer and Seller concerning the reasonableness of
withholding such consent, no disclosure shall be made
prior to a resolution of such disagreement by
arbitration (to which the parties hereby consent)
pursuant to the rules of the American Arbitration
Association by a three-person panel with respect to
which the Buyer and Seller shall each appoint one
arbitrator and the third arbitrator, unless mutually
agreed upon, shall be appointed by the American
Arbitration Association (the panel shall have no
authority to make any monetary award in favor of or
against any party).
(c) Upon Buyer or Seller (or their Affiliates) receiving
any subpoena or other compulsory disclosure notice from
a court, other governmental agency or otherwise which
requests disclosure of Privileged Information, the
recipient of the notice shall promptly provide to the
other a copy of such notice, the intended response, and
all materials or information that might be disclosed.
34
In the event of a disagreement as to the intended
response or disclosure, unless and until the
disagreement is resolved pursuant to arbitration as
provided in subparagraph (b), Buyer and Seller shall
cooperate to assert all defenses to disclosure claimed
by either party, and shall not disclose any disputed
documents or information until all legal defenses and
claims of privilege have been finally determined.
(d) With respect to Litigation Matters in which Seller (or
its Affiliates) is or may be named as a defendant or is
otherwise interested, Buyer (and its Affiliates) agrees
to provide Seller access to all documents and witnesses
that are transferred to its possession, custody or
control pursuant to this Agreement, to respond to
Seller's requests for information to the same extent as
if Seller continued to own the CD Int Business and
otherwise to cooperate fully with Seller.
(e) The provisions of this Section 4.8 shall not be deemed
to restrict any disclosure of information by either
party reasonably related to the enforcement of such
party's rights and remedies under this Agreement.
4.9. Competitive Activities.
(a) Seller agrees that for a period of five (5) years after
the Closing Date it and its Affiliates will not,
directly or indirectly, engage in any activity that is
competitive with the CD Int Business as conducted as of
the Closing Date nor will Seller or any of its
Affiliates participate in the management or operation
of, or become an investor in (other than with respect
to ownership of less than five (5) percent of any
entity required to file reports pursuant to the
Securities Exchange Act of 1934, as amended), any
venture or enterprise of whatever kind, the business of
which is competitive with the CD Int Business as
conducted as of the Closing Date.
(b) Notwithstanding the foregoing, Seller or any of its
Affiliates may acquire (and thereafter own) a company
or business that engages in activities that would
otherwise be prohibited by Section 4.9(a) if (i) at the
time of such acquisition the aggregate sales
attributable to such activities as reflected in the
most recently completed fiscal year of the business to
be acquired for which financial statements are then
available are less than the greater of $20,000,000 or
25% of the total sales of such company or business for
such fiscal year, or (ii) if such sales were in excess
of both of such thresholds, Seller shall dispose of
some or all of the portion of such acquired business
that engages in such prohibited activities, thereby
causing the sales of the acquired business attributable
to such activities, on an annualized basis, to fall
below the larger of such thresholds within eighteen
months after the date of such acquisition.
(c) For a period of two (2) years after the Closing Date,
without the express written consent of Buyer, Seller
shall not solicit, directly or indirectly (other than
through a general solicitation of employment not
specifically directed to employees of the CD Int
Business), the employment of or hire any senior
management level employees or technical or engineering
employees of the CD Int Business.
(d) If any provision contained in this Section 4.9 shall
for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity,
35
illegality or unenforceability shall not affect any
other provisions of this Section, but this Section
shall be construed as if such invalid, illegal or
unenforceable provision had never been contained
herein. It is the intention of the parties that if any
of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length
of time which is not permitted by applicable law, or in
any way construed to be too broad or to any extent
invalid, such provision shall not be construed to be
null, void and of no effect, but to the extent such
provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall
construe and interpret or reform this Section to
provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not
greater than those contained herein) as shall be valid
and enforceable under such applicable law.
4.10. Supplements and Updates to Disclosure Schedule.
(a) Not later than November 12, 1997, Seller shall deliver
to Buyer a supplement to the Disclosure Schedule
attached to this Agreement (the "Supplement") setting
forth any disclosures required to be made in order to
make the representations and warranties of Seller set
forth in Sections 2.2 (regarding Joint Venture
Interests), 2.4 (regarding the CD U.K. Subsidiaries and
CD Plus), 2.5(e), 2.6(b), 2.6(d), 2.11(b)(x),
2.15(b)(iii), (viii) and (x), 2.15(d)(vii) through (ix)
and (f) through (h), 2.16 and 2.17 true and correct as
of the date of this Agreement. If Buyer fails to
deliver written notice to Seller of its objection to
the disclosures contained in the Supplement on or prior
to the fifth business day after the date of Seller's
delivery thereof to Buyer, Buyer shall be deemed to
have accepted the Supplement and the disclosures
contained in the Supplement shall be deemed for all
purposes to have been included in the Disclosure
Schedule attached to this Agreement. If Buyer delivers
written notice of its objection to Seller prior to the
expiration of the foregoing period, the parties will
negotiate in good faith for a period of ten business
days to resolve Buyer's objection. If the parties are
unable to resolve Buyer's objections prior to the
expiration of the foregoing negotiation period, then,
for purposes of determining the accuracy as of the
Closing Date of the representations and warranties of
the Seller contained in Article 2 hereof in order to
determine the fulfillment of the conditions set forth
in Section 5.1 and to determine whether a material
breach has occurred pursuant to Section 7.1(b) or (c),
the Disclosure Schedule will be deemed to exclude any
material information contained in the Supplement as to
which there remains an unresolved objection by Buyer,
provided that if the Closing takes place, the
Disclosure Schedule, including any material information
as to which there remains an unresolved objection by
Buyer, will be deemed the Disclosure Schedule for all
purposes, including with respect to Section 8.2 hereof.
In addition, if such unresolved objection would permit
Buyer to terminate this Agreement pursuant to Sections
7.1(b) or (c), and if Buyer does not so terminate this
Agreement by delivery of written notice to Seller
within two (2) business days after the expiration of
the foregoing negotiation period, Buyer shall be deemed
to have waived its right to terminate this Agreement on
account of such unresolved objection (including any
claim that the closing condition set forth in Section
5.1 has not been satisfied).
(b) Not later than three business days prior to Closing,
Seller may update the Disclosure Schedule with respect
to any event or development occurring after the date of
this Agreement which, if existing or occurring at or
prior to the date of this Agreement, would have been
required to be set forth or described in the Disclosure
Schedule or which is necessary to correct any
information in the Disclosure Schedule or in any
36
representation and warranty of Seller which has been
rendered inaccurate by reason of such event or
development. For purposes of determining the accuracy
as of the Closing Date of the representations and
warranties of the Seller contained in Article 2 hereof
in order to determine the fulfillment of the conditions
set forth in Section 5.1 and to determine whether a
material breach has occurred pursuant to Section
7.1(c), the Disclosure Schedule will be deemed to
exclude any material information contained in any
updates to the Disclosure Schedule hereto delivered
after the date of this Agreement, provided that if the
Closing takes place, the Disclosure Schedule, as so
updated, will be deemed the Disclosure Schedule for all
purposes, including with respect to Section 8.2 hereof.
In addition, if such material information contained in
any such update would permit Buyer to terminate this
Agreement pursuant to Sections 7.1(b) or (c), and if
Buyer does not so terminate this Agreement by delivery
written notice to Seller within ten (10) days after its
receipt of such information, Buyer shall be deemed to
have waived its right to terminate this Agreement on
account of the matter or matters therein contained
(including any claim that the closing condition set
forth in Section 5.1 has not been satisfied).
4.11. Tax Matters.
(a)
(i) Within 60 days after the Closing Date, Buyer shall
provide to Seller copies of IRS Form 8594 and any
required exhibits thereto (the "Asset Acquisition
Statement") with Buyer's proposed allocation of
the Purchase Price. Within 30 days after the
receipt of such Asset Acquisition Statement,
Seller shall propose to Buyer any changes to such
Asset Acquisition Statement (and in the event no
such changes are proposed in writing to Buyer
within such time period, the Seller shall be
deemed to have agreed to, and accepted, the Asset
Acquisition Statement). Buyer and Seller shall
endeavor in good faith to resolve any differences
with respect to the Asset Acquisition Statement
within 15 days after Buyer's receipt of written
notice of objection from Seller.
(ii) Subject to the provision of the following sentence
of this Section 4.11(a)(ii), the Purchase Price
shall be allocated in accordance with the Asset
Acquisition Statement provided by Buyer to Seller
pursuant to Section 4.11(a)(i), and subject to the
requirements of applicable Tax law or election,
all Tax Returns and reports filed by Buyer and
Seller shall be prepared consistently with such
allocation. If Seller withholds its consent to
the allocation reflected in the Asset Acquisition
Statement, and Buyer and Seller have acted in good
faith to resolve any differences with respect to
items on the Asset Acquisition Statement and
thereafter are unable to resolve any differences
that, in the aggregate, are material in relation
to the Purchase Price, then any remaining disputed
matters shall be finally and conclusively
determined by an independent accounting firm of
recognized national standing (the "Allocation
Arbiter") selected by Buyer and Seller, which firm
shall not be the regular accounting firm of Buyer
or Seller. Promptly, but not later than 15 days
after its acceptance of appointment hereunder, the
Allocation Arbiter shall determine (based solely
on presentations by Seller and Buyer and not by
independent review) only those matters in dispute
and shall render a written report as to the
disputed matters and the resulting allocation of
37
Purchase Price which report shall be conclusive
and binding upon the parties. Buyer and Seller
shall, subject to the requirements of any
applicable Tax law or election, file all Tax
Returns and reports consistent with the allocation
provided in the Asset Acquisition Statement or, if
applicable, the determination of the Allocation
Arbiter.
(b) Seller and Buyer agree that Buyer has purchased
substantially all of the property used in CD Int
Business, and in connection therewith, Buyer shall, in
accordance with the terms of the Personnel Agreement,
employ individuals who immediately before the Closing
Date were employed by CD Entities. Accordingly,
pursuant to Rev. Proc. 96-60, 1996-2 C.B. 399, provided
that Seller provides Buyer with all the necessary
payroll records for the calendar year which includes
the Closing Date, Buyer shall furnish a Form W-2 to
each employee employed by Buyer who had been employed
by Seller immediately prior to the Closing, disclosing
all wages and other compensation paid for such calendar
year, and Taxes withheld therefrom, and Seller shall be
relieved of the responsibility to do so.
(c) Seller and Buyer agree that, with respect to the sale
of the stock of CD Canada, Notice by a Non-Resident of
Canada Concerning the Disposition or Proposed
Disposition of Taxable Canadian Property (Form T2062)
(the "Form T2062") will be filed by Seller, as required
by Section 116 of the Canadian Income Tax Act, within
ten (10) days after the date of this Agreement. For
purposes of filing the Form T2062, the estimated amount
of the Purchase Price allocable to the sale of the
outstanding shares of capital stock of CD Canada (the
"Form T2062 Estimated Value") shall be U.S.
$388,650,000. In the event that Revenue Canada refuses
or otherwise fails to issue a certificate of compliance
to the effect that the transactions contemplated by
this Agreement are not subject to withholding by
Revenue Canada (the "Canadian Tax Certificate") with a
certificate limit equal to the Form T2062 Estimated
Value, Buyer and Seller shall use commercially
reasonable efforts, including any necessary adjustments
to the Form T2062 Estimated Value, to obtain a Canadian
Tax Certificate as soon as practicable. Seller and
Buyer agree that the Form T2062 Estimated Value is a
good faith estimate and subject to post-Closing
adjustment as agreed by Buyer and Seller in accordance
with Section 4.11(a) of this Agreement.
(d) Between the date hereof and the Closing Date, to the
extent Seller has knowledge of the commencement or
scheduling of any Tax audit, the assessment of any Tax,
the issuance of any notice of Tax due or any xxxx for
collection of any Tax due, or the commencement or
scheduling of any other administrative or judicial
proceeding with respect to the determination,
assessment or collection of any Tax of a CD Entity with
respect to the CD Int Business, Seller shall provide
reasonably prompt notice to Buyer of such matter,
setting forth information (to the extent known)
describing any asserted Tax liability in reasonable
detail and including copies of any notice or other
documentation received from the applicable Tax
authority with respect to such matter.
(e) Seller shall not and shall cause the CD Int
Subsidiaries not to (i) make, revoke or amend any Tax
election, (ii) execute any waiver of restrictions on
assessment or collection of any Tax or (iii) enter into
or amend any agreement or settlement with any Tax
authority, in each case (i) through (iii) without the
consent of Buyer which consent shall not be
unreasonably withheld.
38
(f) All Tax-sharing agreements or similar arrangements with
respect to or involving the CD Int Subsidiaries shall
be terminated with respect to the CD Int Subsidiaries
prior to the Closing Date, and, after the Closing Date,
neither the Seller and its Affiliates, on the one hand,
nor the CD Int Subsidiaries, on the other, shall be
bound thereby or have any liability thereunder to the
other party for amounts due in respect of periods prior
to the Closing Date.
(g) On or prior to the Closing Date, Seller shall provide
Buyer with any clearance certificates or similar
documents which may be required by any state taxing (or
similar) authority in order to relieve Buyer of any
obligation to withhold any portion of the Purchase
Price.
(h) Seller and Buyer shall share equally in any sales, use,
transfer and documentary Taxes and recording and filing
fees applicable to the transfer of the Assets to Buyer
at Closing.
(i) Buyer and Seller shall make an election under Section
338(h)(10) of the Code (and any comparable election
under state tax law) with respect to the acquisition of
the CD U.S. Subsidiaries by Buyer. Buyer and Seller
shall cooperate fully with each other in the making of
such election. In particular, and not by way of
limitation, in order to effect such election, on or
prior to the Closing Date, Buyer and Seller shall
jointly execute necessary copies of Internal Revenue
Service Form 8023-A and all attachments required to be
filed therewith pursuant to applicable Treasury
regulations. Buyer and Seller shall allocate the
Purchase Price in the manner required by Section 338 of
the Code and the Treasury Regulations promulgated
thereunder. Such allocation shall be used for purposes
of determining the modified aggregate deemed sales
price under the applicable Treasury Regulations and in
reporting the deemed sale of assets of the CD U.S.
Subsidiaries in connection with the 338(h)(10)
Elections.
(j) Buyer shall initially prepare a completed set of IRS
Forms 8023-A (and any comparable forms required to be
filed under state Tax law) and any additional data or
materials required to be attached to Form 8023-A
pursuant to the Treasury Regulations promulgated under
Section 338 of the Code. Buyer shall deliver such
forms to Seller for review no later than 45 days prior
to the date the Section 338 Forms are required to be
filed. In the event Seller objects to the manner in
which such forms have been prepared, Seller shall
notify Buyer within 30 days of receipt of such forms of
such objection, and the parties shall endeavor within
the next 15 days in good faith to resolve such dispute.
If the parties are unable to resolve such dispute
within said 15 day period, Buyer and Seller shall
submit such dispute to an independent accounting firm
of recognized national standing (the "338 Allocation
Arbiter") selected by Buyer and Seller, which firm
shall not be the regular accounting firm of Buyer or
Seller. Promptly, but not later than 15 days after its
acceptance of appointment hereunder, the 338 Allocation
Arbiter will determine (based solely on presentations
of Buyer and Seller and not by independent review) only
those matters in dispute and will render a written
report as to the disputed matters and the resulting
preparation of the Section 338 forms shall be
conclusive and binding upon the parties.
39
4.12. Other Covenants.
(a) At the Closing, Buyer and Seller shall enter into the
Transition Services Agreement substantially in the form
of Exhibit 4.12(a) hereto (the "Transition Services
Agreement").
(b) At the Closing, Buyer and Seller shall enter into the
Personnel Agreement in the form of Exhibit 4.12(b)
hereto (the "Personnel Agreement").
(c) At the Closing, Buyer and Seller shall enter into the
Tax Matters Agreement in the form of Exhibit 4.12(c)
hereto (the "Tax Matters Agreement").
4.13. Transfer of Excluded Assets. On or prior to the Closing
Date, Seller shall cause to be transferred from the
applicable CD Int Subsidiaries all of the assets described
in Sections 1.1(b)(v), 1.1(b)(vii) and 1.1(b)(x) and shall
assume and shall pay, perform and discharge when due all
liabilities and obligations (whether known or unknown,
absolute or contingent, liquidated or unliquidated, or due
or to become due) arising out of the businesses conducted by
Seller or any of its Affiliates relating to such transferred
assets. Seller shall cause such asset transfer and
liability assumption to be documented and carried out in a
manner reasonably acceptable to Buyer and shall indemnify,
defend and hold Buyer harmless from and against any Damages
(including, without limitation, any Tax liability or
obligation) suffered or incurred by any Buyer Indemnified
Party (as hereinafter defined) arising out of such asset
transfer or liability assumption or arising prior to, on or
after the Closing Date in connection with the businesses to
which such transferred assets relate.
4.14. Insurance Coverage. To the extent any Assumed Liability
or any casualty affecting any of the Assets is subject to
coverage under any policy of insurance maintained by Seller
or any of its Affiliates with respect to periods on or prior
to the Closing Date, then Seller shall cooperate with Buyer
and shall take such actions as may reasonably be requested
by Buyer in order to provide Buyer with the benefits of such
insurance coverage. Seller shall not terminate, renounce or
intentionally prejudice any of its rights under any such
policy of insurance in response to a notice of claim that
would be covered by the provisions of this Section; nothing,
however, contained in this Section shall prevent Seller from
otherwise conducting its insurance program in the manner it
deems appropriate, including the termination of individual
policies or coverages. Seller's obligations under this
Section 4.14 shall be undertaken at Buyer's expense except
to the extent, if any, Buyer is entitled to indemnification
pursuant to Article 8 with respect to the matter as to which
such insurance coverage is sought. For purposes of this
Section, "Seller's expense" shall be deemed to include all
economic costs to Seller, including but not limited to
deductible payments, self-insured retentions, premium
increases, adverse experience ratings, and the reasonable
cost of administrative effort included in supporting Buyer's
requested submission of a claim.
4.15. Exclusivity. With respect to the CD Int Business, Seller
shall not solicit, initiate or encourage the submission of
any proposal or offer from any person, or negotiate any
unsolicited offer or proposal, relating to any (a)
liquidation, dissolution or recapitalization, (b) merger or
consolidation, (c) acquisition or purchase of securities or
assets or (d) similar transaction or business combination
involving the CD Int Business. Seller shall notify Buyer
promptly if any person makes any proposal, offer, inquiry or
contact with respect to any of the foregoing.
40
4.16. Resolution of Claims. Prior to the Closing Date, Seller
shall resolve all claims arising in connection with the
pending Department of Justice investigation described in the
Disclosure Schedule. Seller shall be responsible for any
fine, payment or other consideration required to be paid or
made to effect the resolution of such investigation and such
resolution shall include an appropriate release covering
Buyer and each of the CD Int Subsidiaries from all
liabilities and obligations relating to the subject matter
of such investigation.
4.17. Shared Intellectual Property Rights. In the event the CD
Int Business is using any material intellectual property
rights of third parties, as of the Closing Date, pursuant to
licenses or similar agreements not included in the Contracts
because they do not relate primarily to the CD Int Business,
then Seller, upon Buyer's request, shall use its reasonable
effects to obtain the consent of the owner of such
intellectual property rights to the continued use of such
rights by Buyer and the CD Int Business after the Closing
Date. The rights and obligations of the parties with
respect to consents of the type described herein shall be
determined in accordance with the provisions of Section 1.8.
ARTICLE
5.
Conditions to Buyer's Obligation to Close
Buyer's obligation to consummate the transactions
contemplated hereby shall be subject to the satisfaction on
or prior to the Closing Date, or waiver by Buyer, of all of
the following conditions:
5.1. Representations, Warranties and Covenants of Seller. The
representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as
of such date except for representations and warranties that
speak as of a specific date or time other than the Closing
Date (which need only be true and correct in all material
respects as of such date or time) (provided that no breaches
of representations and warranties shall be deemed to excuse
Buyer's obligation to consummate the transactions
contemplated hereby unless, individually or in the
aggregate, such breaches would have a material adverse
effect on the CD Int Business taken as whole), and the
covenants and agreements of Seller to be performed on or
before the Closing Date in accordance with this Agreement
shall have been duly performed in all material respects.
5.2. Filings; Consents; Waiting Periods. All registrations,
filings, applications, notices, consents, approvals, orders,
qualifications and waivers identified in Exhibit 5.2 hereto
as being a condition to the Closing for Buyer shall have
been filed, made or obtained, and all waiting periods
applicable under the HSR Act, the Competition Act and the
Investment Canada Act and any similar applicable laws of
other jurisdictions shall have expired or been terminated;
provided, however, that Buyer shall not be entitled to claim
the benefit of any such condition if the failure of such
condition to be satisfied is a result of a breach by Buyer
of any provision of this Agreement.
5.3. No Injunction. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any
court or governmental agency or body of competent
jurisdiction that is in effect that restrains or prohibits
the consummation of the transactions contemplated by this
41
Agreement or which would materially restrict or impair the
ability of Buyer to own and operate the CD Int Business
substantially in the manner currently owned and operated by
Seller.
5.4. Opinion of Counsel. Buyer shall have received a favorable
opinion, dated as of the Closing Date, from the General
Counsel to Seller, in the form attached hereto as Exhibit
5.4.
ARTICLE
6.
Conditions to Seller's Obligation to Close
Seller's obligation to consummate the transactions
contemplated by this Agreement is subject to the
satisfaction on or prior to the Closing Date, or waiver by
Seller, of all of the following conditions:
6.1. Representations, Warranties and Covenants of Buyer. The
representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as
of such date except for representations and warranties that
speak as of a specific date or time other than the Closing
Date (which need only be true and correct in all material
respects as of such date or time) and the covenants and
agreements of Buyer to be performed on or before the Closing
Date in accordance with this Agreement shall have been duly
performed in all material respects.
6.2. Filings; Consents; Waiting Periods. All registrations,
filings, applications, notices, consents, approvals, orders,
qualifications and waivers identified in Exhibit 6.2 hereto
as being a condition to the Closing for Seller shall have
been filed, made or obtained, and all applicable waiting
periods under the HSR Act, the Competition Act and the
Investment Canada Act and any similar applicable laws of
other jurisdictions shall have expired or been terminated;
provided, however, that Seller shall not be entitled to
claim the benefit of any such condition if the failure of
such condition to be satisfied is a result of a breach by
Seller of any provision of this Agreement.
6.3. No Injunction. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any
court or governmental agency or body of competent
jurisdiction that is in effect that restrains or prohibits
the consummation of the transactions contemplated by this
Agreement.
6.4. Opinion of Counsel. Seller shall have received a
favorable opinion, dated as of the Closing Date, from the
General Counsel to Buyer, in the form of Exhibit 6.4 hereto:
6.5. Receipt of Canadian Tax Certificate. Seller shall have
received the Canadian Tax Certificate on or before the
Closing Date.
ARTICLE
7.
Termination
7.1. Termination. Subject to the terms of Section 7.2 this
Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing by:
42
(a) the mutual written consent of Seller and Buyer;
(b) by either Buyer, on the one hand, or Seller, on the
other hand, if the Closing shall not have taken place
on or before December 31, 1997, provided that such
nonoccurrence of the Closing is not attributable to a
breach of the terms hereof by the party seeking
termination; or
(c) by either Buyer, on the one hand, or Seller, on the
other hand, if there has been a material default,
misrepresentation or breach on the part of the other
party in its representations and warranties set forth
in Article 2 or Article 3, as the case may be (the
effect of which breaches would individually or in the
aggregate have a material adverse effect on the CD Int
Business taken as a whole in the case of a breach by
Seller or a material adverse effect on the Buyer in the
case of a breach by Buyer), or the due and timely
performance of any of its respective covenants and
agreements in Article 4 and such material default,
misrepresentation or breach cannot be cured by the
Closing Date and has not been waived.
7.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 7.1, the obligations of the parties
hereunder shall terminate and the parties hereto shall have
no obligation or liability to each other, except that the
obligations set forth in Section 2.17 (Brokers), 4.1
(Confidentiality), 7.2 (Effect of Termination) and 9.5
(Expenses) shall survive, provided that, if this Agreement
is terminated by Buyer or Seller (in either case, the
"Terminating Party"), due to the nonsatisfaction of one or
more conditions to the Terminating Party's obligations
hereunder as a result of the other party's breach of or
failure to comply with any provision of this Agreement, the
Terminating Party's right to pursue all legal remedies for
breach of contract and damages shall also survive such
termination unimpaired.
ARTICLE
8.
Survival: Indemnification
8.1. Survival of Representations, Warranties, Covenants and
Agreements.
(a) Except as otherwise provided in Section 8.1(b), the
representations and warranties and the covenants and
agreements contained in this Agreement, or in any
certificate or other instrument delivered by or on
behalf of Buyer or Seller at the Closing, shall survive
the Closing until March 31, 1999, and there shall be no
liability or obligation whatsoever in respect thereof
on the part of Seller, Buyer or any of their Affiliates
unless written notice of a claim or of facts that would
constitute a claim in respect thereof shall have been
delivered to the other party prior to such date whether
such liability has accrued prior to or will accrue
after the Closing Date.
(b) Notwithstanding the provisions of Section 8.1(a), the
representations and warranties (i) of Seller set forth
in Sections 2.10, 2.13, 2.15(c), (d), (e), (f), (g) and
(h) and 2.16 (or in any certificate delivered by Seller
with respect thereto) shall survive the Closing and
shall continue in effect until the third anniversary of
the Closing Date, (ii) of Seller set forth in Sections
2.11 and 2.12 (or in any certificate delivered by
Seller with respect thereto) shall survive the Closing
and shall continue in effect until the expiration of
all applicable statutes of limitation, (iii) of Seller
43
set forth in Sections 2.2, 2.3, 2.6(a) (solely as to
the ownership of the Owned Real Property), 2.14 (solely
as to the ownership of the Assets and the assets of the
CD Int Subsidiaries) and 2.18 (or in any certificate
delivered by Seller with respect thereto) shall survive
the Closing and shall continue in effect indefinitely,
and (iv) of Buyer set forth in Sections 3.1, 3.3, and
3.6, shall survive the Closing and shall continue in
effect indefinitely. The covenants and agreements of
the parties made pursuant to this Agreement which are
by their terms intended or permitted to be performed or
satisfied after the Closing Date shall survive until
all obligations set forth therein shall have been
performed and satisfied.
(c) The representations and warranties referred to in this
Section 8.1 are, to the extent and so long as they
survive the Closing as provided in this Section 8.1,
referred to as the "Surviving Representations." The
covenants and agreements referred to in this Section
8.1 are, to the extent and so long as they survive the
Closing as provided in this Section 8.1, referred to as
the "Surviving Covenants."
8.2. Seller's Indemnification Obligations.
(a) Subject to the provisions of this Article 8, if the
Closing is consummated, Seller shall indemnify, defend
and hold harmless to the fullest extent permitted by
law Buyer and Buyer's Affiliates (including the CD Int
Subsidiaries), and their respective directors,
officers, employees and agents (collectively, the
"Buyer Indemnified Parties"), from and against any and
all Damages incurred by the Buyer Indemnified Parties
as a result of (i) any breach by Seller of any of the
Surviving Representations made by Seller, (ii) any
breach of Seller of any of the Surviving Covenants made
by Seller; (iii) any breach by Seller of its
obligations under the Transition Services Agreement,
Personnel Agreement or Tax Matters Agreement, or (iv)
any liability or obligation relating to any of the
Excluded Assets, and any Damages arising out of or
related to any Excluded Asset or any Action that may
relate to or arise from an Excluded Asset. In
determining whether Seller is deemed to have breached
any of the Surviving Representations for purposes of
this Section 8.2, the parties agree that the Surviving
Representations shall not be deemed to be qualified or
modified by any disclosure set forth in (i) the
Disclosure Schedule which relates to any Employment-
Related Claim (as defined in the Personnel Agreement)
by or on behalf of any Former Business Employee (as
defined in the Personnel Agreement) or (ii) Section
2.16 of the Disclosure Schedule. The obligations of
Seller under this Article 8 shall accordingly be
determined without reference to any such disclosure.
(b) For purposes of this Agreement, "Damages" means any and
all debts, losses, claims, damages, costs, demands,
fines, judgments, penalties, obligations, Taxes,
payments, environmental remedial and investigatory
costs and liabilities of every type and nature
(including, without limitation, those arising out of
any Action) including any reasonable costs and expenses
(including, without limitation, reasonable attorneys',
accountants' and experts' fees and out-of-pocket
expenses) incurred in connection with any of the
foregoing, net of any Tax benefits or insurance
proceeds actually realized or received with respect
thereto by the party entitled to indemnification or the
actual recovery of such amounts (or portions thereof)
as reimburseable costs under any cost-type, flexible-
priced or incentive-priced Contract.
44
8.3. Buyer's Indemnification Obligations. Subject to the
provisions of this Article 8, if the Closing is consummated,
Buyer shall indemnify, defend and hold harmless to the
fullest extent permitted by law Seller and Seller's
Affiliates, and each of their respective directors,
officers, employees and agents (collectively, the "Seller
Indemnified Parties"), from and against any and all Damages
incurred by the Seller Indemnified Parties as a result of:
(a) any breach by Buyer of any of the Surviving
Representations or Surviving Covenants made by Buyer, (b)
any breach by Buyer of its obligations under the Transition
Services Agreement, Personnel Agreement or Tax Matters
Agreement, (c) the Assumed Liabilities and any Damages
arising out of or related to any of the Assumed Liabilities
or in connection with any Action that may relate to or arise
from the Assumed Liabilities, or (d) the operation of the CD
Int Business after the Closing Date. Notwithstanding the
foregoing, it is understood that Buyer shall not be
obligated to indemnify Seller Indemnified Parties pursuant
to Section 8.3(d) to the extent that Seller is obligated to
indemnify the Buyer Indemnified Parties pursuant to Section
8.2(a)
8.4. Procedures for Indemnification Claims. Except as otherwise
provided in the Tax Matters Agreement, the respective
indemnification obligations of Seller and Buyer pursuant to
Sections 8.2 and 8.3 shall be conditioned upon compliance by
the Buyer Indemnified Parties (in respect of the obligations
of Seller) or the Seller Indemnified Parties (in respect of
the obligations of Buyer) with the following procedures for
indemnification claims arising out of this Agreement:
(a) If at any time a claim shall be made or threatened, or
an action or proceeding shall be commenced or
threatened, against a person (the "Aggrieved Party")
which could result in liability of Buyer or Seller
pursuant to its indemnification obligations hereunder
(as such, the "Indemnifying Party"), the Aggrieved
Party shall give to the Indemnifying Party prompt
notice of such claim, action or proceeding; provided,
however, that a failure to provide prompt notice by the
Aggrieved Party shall not be deemed a failure to comply
with these procedures unless the Indemnifying Party is
damaged thereby and provided, further, that the
Indemnifying Party shall have no obligation in respect
of any claim unless such notice shall have been
delivered to the Indemnifying Party prior to the
expiration of the Surviving Representations and
Surviving Covenants upon which such claim is based.
Such notice shall state the basis for the claim, action
or proceeding and the amount thereof (to the extent
such amount is determinable at the time when such
notice is given) and shall permit the Indemnifying
Party to assume the defense of such claim, action or
proceeding (including any action or proceeding
resulting from any such claim). Failure by the
Indemnifying Party to notify the Aggrieved Party of its
election to defend any such claim, action or proceeding
within a reasonable time, but in no event more than 30
days after notice thereof shall have been given to the
Indemnifying Party, shall be deemed a waiver by the
Indemnifying Party of its right to defend such claim,
action or proceeding; provided, however, that the
Indemnifying Party shall not be deemed to have waived
its right to contest and defend against any claim of
the Aggrieved Party for indemnification hereunder based
upon or arising out of such claim, action or
proceeding.
(b) If the Indemnifying Party assumes the defense of any
such claim, action or proceeding, the obligation of the
Indemnifying Party as to such claim, action or
proceeding shall be limited to taking all steps
necessary in the defense or settlement thereof and,
provided the Indemnifying Party is held to be liable
for indemnification hereunder, to holding the Aggrieved
Party harmless from and against any and all Damages
caused by or arising out of any settlement approved by
the Indemnifying Party or any judgment or award
45
rendered in connection with such claim, action or
proceeding. The Aggrieved Party may participate, at
its expense, in the defense of such claim, action or
proceeding, provided that the Indemnifying Party shall
direct and control the defense of such claim, action or
proceeding. Without limiting any other obligation
under this Agreement, the Aggrieved Party agrees to
cooperate and make available to the Indemnifying Party
all books and records and such officers, employees and
agents as are reasonably necessary and useful in
connection with the defense. The Indemnifying Party
shall not, in the defense of such claim, action or
proceeding, consent to the entry of any judgment or
award, or enter into any settlement, except in either
event with the prior consent of the Aggrieved Party
(such consent not to be unreasonably withheld) , unless
such judgment, award or settlement includes as an
unconditional term thereof the giving by the claimant
or the plaintiff to the Aggrieved Party of a release
from all liability in respect of such claim, action or
proceeding and such settlement entails no material
adverse effects upon the Aggrieved Party, either
directly or indirectly.
(c) If the Indemnifying Party does not assume the defense
of any such claim, action or proceeding, the Aggrieved
Party may defend against, or settle, such claim, action
or proceeding in such manner as it may deem
appropriate. Without limiting any other obligation
under this Agreement, the Indemnifying Party agrees to
cooperate and make available to the Aggrieved Party all
books and records and such officers, employees and
agents as are reasonably necessary and useful in
connection with the defense or settlement of such
claim, action or proceeding.
(d) If an Aggrieved Party shall cooperate in the defense or
make available books, records, officers, employees or
agents, as required by the terms of Section 8.4(b) or
(c), the Indemnifying Party shall pay the out-of-pocket
costs and expenses (including legal fees and
disbursements) of the Aggrieved Party and of its
officers, employees and agents reasonably incurred in
connection with providing such cooperation, but shall
not be responsible to reimburse the Aggrieved Party for
such party's time or the salaries or costs of fringe
benefits or other similar expenses paid by the
Aggrieved Party to its officers and employees in
connection therewith.
(e) Notwithstanding the foregoing provisions of this
Section 8.4, Buyer shall be entitled to control all
investigatory and remedial actions relating to any
environmental contamination or condition (including,
without limitation, underground and above ground
storage tank removal and closure, PCB removal, asbestos
removal and similar matters) affecting the Owned Real
Property or any real property leased in connection with
the CD Int Business. Buyer agrees that all such
investigatory and remedial actions shall be conducted
in a cost-effective and commercially reasonable manner
consistent with reasonable environmental standards or
as otherwise required by applicable law or order of an
environmental agency (after reasonable attempts to
appeal or limit such order). Buyer shall consult with
and advise Seller in advance of all material
environmental investigatory and remedial actions
proposed to be taken by Buyer for which Seller may be
obligated to indemnify Buyer pursuant to this Agreement
and shall permit Seller to review in advance all
material filings made by Buyer with government
environmental agencies.
46
8.5. No Consequential Damages for Seller Indemnified Parties or
Buyer Indemnified Parties; Indemnification Limits; Exclusive
Remedy.
(a) None of the Seller Indemnified Parties or Buyer
Indemnified Parties shall be entitled to any recovery
under this Agreement for its own special or
consequential damages. Nothing in this Section 8.5(a)
shall prevent any of the Seller Indemnified Parties or
Buyer Indemnified Parties from being indemnified for
all components of awards against them in Actions by
unrelated third parties, including, without limitation,
special and consequential damage components.
(b) Notwithstanding any provision to the contrary contained
in this Agreement, Seller shall not be liable to any of
the Buyer Indemnified Parties pursuant to Section
8.2(a)(i) in respect of any claim for indemnification
for breach of representation or warranty until the
aggregate Damages for which the Buyer Indemnified
Parties otherwise would be entitled to indemnification
under Section 8.2(a)(i) exceeds Twenty Million Dollars
($20,000,000) (the "Basket Amount") and, if such amount
is exceeded, Seller shall be obligated to pay only the
amount by which such aggregate Damages exceed the
Basket Amount; provided that in no event shall Seller
be obligated to pay under this Article 8, or otherwise
in connection with this Agreement or the transactions
contemplated hereby, in the aggregate, an amount
greater than ten percent (10%) of the Cash Portion of
the Purchase Price.
(c) Buyer and Seller acknowledge and agree that, after the
Closing Date, the sole and exclusive legal remedy of
each party with respect to any and all claims relating
to or arising out of misrepresentation or breach of any
representation, warranty, covenant or agreement made by
the other party in this Agreement shall be pursuant to
the indemnification provisions set forth in this
Article 8. Nothing set forth in this Article 8 shall
be deemed to prohibit or limit either party's right at
any time to seek injunctive or equitable relief for the
failure of the other party to perform any covenant or
agreement contained herein.
ARTICLE
9.
Miscellaneous
9.1. Corporate Name. Buyer acknowledges that, from and after
the Closing Date, Seller and their Affiliates have the
absolute and exclusive proprietary right to all names,
marks, trade names and trademarks (collectively "Names")
incorporating "Ceridian" by itself or in combination with
any other Name, and that none of the rights thereto or
goodwill represented thereby or pertaining thereto are being
transferred hereby or in connection herewith. Buyer agrees
that from and after the Closing Date it will not, nor will
47
it permit any of its Affiliates to, use any name, phrase or
logo incorporating "Ceridian" in or on any of its
literature, sales materials or products or otherwise in
connection with the sale of any products or services;
provided, however, that Buyer will not be obligated to
remove any such name, phrase or logo from any tools, dies or
other machinery included in the Assets and may continue to
use any printed literature, sales materials, purchase orders
and sales, maintenance or license agreements, and sell any
products, that are included in the inventories of the CD Int
Business on the Closing Date and that bear a name, phrase or
logo incorporating "Ceridian" until the supplies thereof
existing on the Closing Date have been exhausted, but in any
event for not longer than ninety (90) days from the Closing
Date. With respect to the printed purchase orders and
sales, maintenance or license agreements referred to in the
preceding sentence, from and after the Closing Date Buyer
shall sticker or otherwise xxxx such documents as necessary
in order to indicate clearly that neither Seller nor any of
its Affiliates is a party to such documents. From and after
the expiration of such ninety (90) day period, Buyer shall
cease to use any such literature and sales materials; delete
or cover (as by stickering) any such name, phrase or logo
from any item included in the inventories of the CD Int
Business that bears such name, phrase or logo; and take such
other actions as may be necessary or advisable to clearly
and prominently indicate that neither Buyer nor any of its
Affiliates is affiliated with Seller or any of its
Affiliates. Within 30 days after the Closing Date, Buyer
shall delete all references to the Names with respect to the
CD Int Business on signs on or near buildings or offices in
which the CD Int Business is conducted.
9.2. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and
the same agreement, and shall become effective when one or
more counterparts have been signed by each of the parties
and delivered to the other parties. Copies of executed
counterparts transmitted by telecopy or other electronic
transmission service shall be considered original executed
counterparts for purposes of this Section 9.2, provided
receipt of copies of such counterparts is confirmed.
9.3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware without reference to the choice of law principles
thereof.
9.4. Entire Agreement. This Agreement (including agreements
incorporated herein) and the Exhibits and Disclosure
Schedule hereto contain the entire agreement between the
parties with respect to the subject matter hereof and there
are no agreements, understandings, representations or
warranties between the parties other than those set forth or
referred to herein. Except for Sections 8.2 and 8.3, this
Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns permitted by
Section 9.7) any rights or remedies hereunder.
9.5. Expenses. Except as set forth in this Agreement, whether
or not the transactions contemplated by this Agreement are
consummated, all legal and other costs and expenses incurred
in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring
such costs and expenses.
9.6. Notices. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in
writing and delivered personally, sent by documented
overnight delivery service or, to the extent receipt is
confirmed, facsimile or other electronic transmission
service to the appropriate address or number as set forth
below:
(a) if to Seller, to
Ceridian Corporation
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Fax No: (000) 000-0000
48
with a copy to:
Ceridian Corporation
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx
00000
Attention: General
Counsel
Fax No: (000) 000-0000
(b) if to Buyer, to
General Dynamics
Corporation
0000 Xxxxxxxx Xxxx
Xxxxx
Xxxxx Xxxxxx, Xxxxxxxx
00000-0000
Attention: Chief
Executive Officer
Fax No: (000) 000-0000
with a copy (which shall not constitute notice) to:
Jenner & Block
Xxx XXX Xxxxx
Xxxxxxx, Xxxxxxxx
00000
Attention: Xxxxx X.
Xxxxxx, Esq.
Fax No: (000) 000-0000
or at such other address and to the attention of such
other person as a party may designate by written notice
to the other party; provided, however, that any such
notice shall be deemed given only upon receipt thereof.
9.7. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however,
that except as provided in this Section 9.7 no party hereto
will assign its rights or delegate its obligations under
this Agreement without the express prior written consent of
the other party hereto. After the Closing Date, Seller
shall be entitled to assign all of its rights and
obligations hereunder to any successor entity that may
acquire all or substantially all of its assets or business,
by merger or otherwise. On or prior to the Closing Date,
Buyer shall be entitled to assign all of its rights and
obligations hereunder to any one or more wholly-owned
subsidiaries. Buyer's assignment of its rights and
obligations pursuant to the preceding sentence shall not
terminate, limit or reduce in any manner Buyer's obligations
to Seller pursuant to this Agreement and Buyer shall
continue to be primarily liable to Seller with respect
thereto.
9.8. Headings: Definitions. The section and article headings
contained in this Agreement are inserted for convenience of
reference only and will not affect the meaning or
interpretation of this Agreement. All references to
Sections or Articles contained herein mean Sections or
Articles of this Agreement unless otherwise stated. All
capitalized terms defined herein are equally applicable to
both the singular and plural forms of such terms.
9.9. Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments
in writing signed by the party against whom enforcement of
any such modification or amendment is sought. Any party
hereto may, only by an instrument in writing, waive
49
compliance by the other parties hereto with any term or
provision of this Agreement on the part of such other party
hereto to be performed or complied with. The waiver by any
party hereto of a breach of any term or provision of this
Agreement shall not be construed as a waiver of any
subsequent breach.
9.10. Interpretation. For the purposes of this Agreement,
(a) unless otherwise specified, "dollars" shall mean United
States dollars,
(b) "to Seller's knowledge" or words to similar effect
shall mean the actual knowledge of the persons listed
on Exhibit 9.10,
(c) a "person" shall mean an individual, a partnership, a
joint venture, a corporation, a trust, an
unincorporated organization and a government or any
department or agency thereof, and
(d) "foreign government" shall mean any government other
than: (i) the U.S. government; (ii) any government of
any states of the United States; or (iii) a local
government within any states of the United States. It
is further understood and agreed that neither the
specification of any dollar amount in the
representations and warranties contained in this
Agreement nor the inclusion of any specific item in the
Schedules or Exhibits is intended to imply that such
amounts or higher or lower amounts, or the items so
included or other items, are or are not material, and
neither party shall use the fact of the setting of such
amounts or the fact of the inclusion of any such item
in the Schedules or Exhibits in any dispute or
controversy between the parties as to whether any
obligation, item or matter is or is not material for
purposes of this Agreement.
9.11. Severability. Any provision of this Agreement which is
invalid or unenforceable shall be ineffective to the extent
of such invalidity or unenforceability, without affecting in
any way the remaining provisions hereof.
ACCORDINGLY, this Agreement has been signed by or on behalf
of each of the parties as of the day first above written.
CERIDIAN CORPORATION
By:
Name:
Title:
GENERAL DYNAMICS CORPORATION
By:
Name:
Title:
50
