EXCHANGE AGREEMENT
Dated as of January 17, 1998
Among
FIRST DATA CORPORATION,
INTEGRATED PAYMENT SYSTEMS INC.,
NTS, INC.,
FIRST DATA FINANCIAL SERVICES, L.L.C.,
CERIDIAN CORPORATION,
COMDATA NETWORK, INC.
and
PERMICOM PERMITS SERVICES, INC.
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . 1
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
EXCHANGE . . . . . . . . . . . . . . . . . . 15
2.1. Exchange of Gaming Business for the NTS Business and Cash. . . . . . . . . . 15
2.2. Purchased Gaming Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3. Excluded Gaming Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.4. Assumed Gaming Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.5. Excluded Gaming Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 19
2.6. Purchased NTS Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.7. Excluded NTS Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.8. Assumed NTS Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.9. Excluded NTS Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE III
CASH ADJUSTMENT. . . . . . . . . . . . . . . . 24
3.1. Determination of Transferred Cash. . . . . . . . . . . . . . . . . . . . . . 24
3.2. Transferred Cash Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . 25
3.3. Determination of Gaming Receivables Adjustment . . . . . . . . . . . . . . . 25
3.4. Determination of NTS Receivables Adjustment. . . . . . . . . . . . . . . . . 27
3.5. Net Receivables Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IV
CLOSING . . . . . . . . . . . . . . . . . . 30
4.1. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.2. Delivery of Promissory Notes . . . . . . . . . . . . . . . . . . . . . . . . 30
4.3. FDC's, IPS', NTS' and FDFS' Additional Deliveries. . . . . . . . . . . . . . 30
4.4. Ceridian's, Comdata's and Permicom's Additional Deliveries . . . . . . . . . 33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CERIDIAN AND COMDATA. . . . . . . 35
5.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.2. Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . . . 36
5.3. Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.5. Operations Since the Gaming Balance Sheet Date . . . . . . . . . . . . . . . 38
5.6. No Finder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.7. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.8. Availability of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.9. Governmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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5.10. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.11. Real Property Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.12. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.13. Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.14. Personal Property Leases. . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.15. Intellectual Property; Software . . . . . . . . . . . . . . . . . . . . . . 44
5.16. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.17. Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.18. Employees and Related Agreements; ERISA . . . . . . . . . . . . . . . . . . 47
5.19. Employee Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.20. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.21. Status of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.22. No Violation, Litigation or Regulatory Action . . . . . . . . . . . . . . . 50
5.23. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.24. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.25. Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.26. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.27. Estimated Closing Date Gaming Special Report. . . . . . . . . . . . . . . . 51
5.28. Estimated Amount of Transferred Cash. . . . . . . . . . . . . . . . . . . . 51
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF FDC, IPS AND NTS. . . . . . . . 52
6.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.2. Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . . . 53
6.3. Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.5. Operations Since the NTS Balance Sheet Date. . . . . . . . . . . . . . . . . 55
6.6. No Finder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.7. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.8. Availability of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.9. Governmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.10. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.11. Real Property Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.12. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.13. Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.14. Personal Property Leases. . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.15. Intellectual Property; Software . . . . . . . . . . . . . . . . . . . . . . 60
6.16. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.17. Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.18. Employees and Related Agreements; ERISA . . . . . . . . . . . . . . . . . . 63
6.19. Employee Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.20. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
6.21. Status of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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6.22. No Violation, Litigation or Regulatory Action . . . . . . . . . . . . . . . 66
6.23. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.24. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.25. Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.26. Bank Accounts; Powers of Attorney . . . . . . . . . . . . . . . . . . . . . 67
6.27. Estimated Closing Date NTS Special Report . . . . . . . . . . . . . . . . . 67
ARTICLE VII
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . 67
7.1. Covenant Not to Compete or Solicit Business by FDC, IPS, NTS and FDFS. . . . 67
7.2. Solicitation of Employees. . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.3. Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.4. Employees and Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . 74
7.5. Collection of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.6. Release of NonCompetition Provisions . . . . . . . . . . . . . . . . . . . . 81
7.7. Waiver of Exclusivity Obligations of Western Union Agents. . . . . . . . . . 81
7.8. NTS Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.9. Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.10. Proration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.11. Certain Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.12. Termination of FlashCash License. . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE VIII
INDEMNIFICATION. . . . . . . . . . . . . . . . 84
8.1. Indemnification by Ceridian. . . . . . . . . . . . . . . . . . . . . . . . . 84
8.2. Indemnification by FDC . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.3. Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.4. Third-Person Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.5. Indemnification Payments Net of Insurance Recovery . . . . . . . . . . . . . 90
ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . . . . 90
9.1. Survival of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . 90
9.2. Confidential Nature of Information . . . . . . . . . . . . . . . . . . . . . 90
9.3. No Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
9.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
9.5. Successors and Assigns; Third Party Beneficiaries. . . . . . . . . . . . . . 92
9.6. Access to Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.7. Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . . . 94
9.8. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.9. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.10. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.11. Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
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9.12. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.13. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.14. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.15. Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
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Schedules Description
--------- -----------
1.1 Gaming Agreed Accounting Principles
1.2 Gaming Armored Cars
1.3 Gaming ATM Machines
1.4 Gaming Booths
1.5 Gaming Vaults
1.6 IPS Agreed Accounting Principles
1.7 Gaming Bank Accounts
2.3 Comdata Excluded Assets
2.6 NTS Transferred Bank Accounts
2.7 IPS Excluded Assets
4.2(A) Comdata Bank Account Information
4.2(B) NTS Bank Account Information
5.2(A) Subsidiaries of Comdata
5.2(B) Capital Structure of the Gaming Subsidiary
5.3 Comdata Exceptions to Execution and Delivery
5.4 Gaming Business Financial Statements
5.5(A) Changes since Gaming Balance Sheet Date
5.5(B) Exceptions to Ordinary Course Since Gaming Balance Sheet Date
5.7 Gaming Business Taxes
5.8(A) Availability of Gaming Business Assets
5.8(B) Material Services Provided by Comdata
5.9 Gaming Business Governmental Permits
5.11(A) Gaming Business Leased Real Property
5.11(B) Exceptions to Title of Gaming Business Leased Real Property
5.11(C) Encumbrances on Gaming Business Leased Real Property
5.13(A) Gaming Business Personal Property
5.13(B) Gaming Business Personal Property Title Exceptions
5.14 Gaming Business Personal Property Lease
5.15(A) Gaming Intellectual Property
5.15(B) Gaming Software
5.15(C) Agreements Relating to Gaming Intellectual Property
5.15(D) Ownership of Gaming Intellectual Property
5.15(E) Validity and Enforceability of Gaming Business Intellectual
Property
5.15(F) Limitations on Gaming Business Intellectual Property
5.15(G) Limitations on Gaming Business Owned Software
5.15(H) Intellectual Property Agents, Consultants and Contractors
5.17 Gaming Business Exceptions to Title
5.18(A) Gaming Business Employee Agreements
5.18(C) Gaming Business Severance Plans
5.19(A) Gaming Business Compliance with Labor Laws
5.19(B) Gaming Business Conflicts of Interest
5.20 Gaming Business Contracts
5.21 Status of Gaming Agreements
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5.22 Gaming Business Litigation
5.23 Gaming Business Environmental Matters
5.24 Gaming Business Insurance
5.25 Gaming Business Customers
5.26 Gaming Bank Accounts
5.27 Estimated Closing Date Gaming Special Report
5.28 Estimated Amount of Transferred Cash
6.2(A) Subsidiaries of NTS; Organization
6.2(B) Capital Structure of the NTS Subsidiary
6.3 FDC Exceptions to Execution and Delivery
6.4 NTS Financial Statements
6.5(A) Changes since NTS Balance Sheet Date
6.5(B) Exceptions to Ordinary Course since NTS Balance Sheet Date
6.7 NTS Taxes
6.8(A) Availability of NTS Assets
6.8(B) Material Services Provided by IPS
6.9 NTS Governmental Permits
6.11(A) NTS Leased Real Property
6.11(B) Exceptions to Title of NTS Leased Real Property
6.11(C) Encumbrances on NTS Leased Real Property
6.13(A) NTS Personal Property
6.13(B) NTS Personal Property Title Exceptions
6.14 NTS Personal Property Lease
6.15(A) NTS Intellectual Property
6.15(B) NTS Software
6.15(C) Agreements Relating to NTS Intellectual Property
6.15(D) Ownership of NTS Intellectual Property
6.15(E) Validity and Enforceability of NTS Intellectual Property
6.15(F) Limitations on NTS Intellectual Property
6.15(G) Limitations on NTS Business Owned Software
6.15(H) Intellectual Property Agents, Consultants and Contractors
6.16 NTS Intellectual Property
6.17 NTS Exceptions to Title
6.18(A) NTS Business Employee Agreements
6.18(C) NTS Business Severance Plans
6.19(A) NTS Compliance with Labor Laws
6.19(B) NTS Conflicts of Interest
6.20 NTS Contracts
6.21 Status of NTS Agreements
6.22 NTS Litigation
6.23 NTS Environmental Matters
6.24 NTS Insurance
6.25 NTS Customers
6.26 NTS Bank Accounts
6.27 Estimated Closing Date NTS Special Report
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7.4(A) NTS Employees
7.4(B) Comdata Employees
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Exhibits Description
-------- -----------
Exhibit A Comdata Instrument of Assignment
Exhibit B Comdata Instrument of Assumption
Exhibit C NTS Instrument of Assignment
Exhibit D FDFS Instrument of Assumption
Exhibit E Services and Processing Agreement
Exhibit F Gaming Business Transition Services Agreement
Exhibit G NTS Business Transition Services Agreement
Exhibit H NTS State of Maryland Articles of Transfer
Exhibit I Intentionally Omitted
Exhibit J NTS Canadian Instrument of Assignment
Exhibit K NTS Canadian Instrument of Assumption
Exhibit L Comdata Canadian Instrument of Assignment
Exhibit M Comdata Canadian Instrument of Assumption
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EXCHANGE AGREEMENT
EXCHANGE AGREEMENT, dated as of January 17, 1998 (this "AGREEMENT"),
among First Data Corporation, a Delaware corporation ("FDC"), Integrated Payment
Systems Inc., a Delaware corporation and a wholly owned subsidiary of FDC
("IPS"), NTS, Inc., a Maryland corporation and wholly owned subsidiary of IPS
("NTS"), First Data Financial Services, L.L.C., a Delaware limited liability
company and wholly-owned subsidiary of IPS ("FDFS"), Ceridian Corporation, a
Delaware corporation ("CERIDIAN"), Comdata Network, Inc., a Maryland corporation
and an indirect, wholly owned subsidiary of Ceridian ("COMDATA"), and Permicom
Permits Services, Inc., an Ontario corporation and wholly owned subsidiary of
Comdata ("PERMICOM").
W I T N E S S E T H:
WHEREAS, Comdata, through its Gaming Services Division, is engaged in
the Gaming Business, as hereinafter defined;
WHEREAS, NTS is engaged in the NTS Business, as hereinafter defined;
WHEREAS, pursuant to this Agreement, NTS is conveying the NTS Business
(except the NT Canada Shares which NTS is conveying to Permicom) and a specified
amount of cash to Comdata in exchange for the Gaming Business; and
WHEREAS, NTS' rights to receive the Gaming Business pursuant to this
Agreement have been transferred to FDFS (by a distribution from NTS to IPS and
IPS' subsequent contribution of such rights to FDFS).
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed among FDC, IPS, NTS, FDFS,
Ceridian, Comdata and Permicom as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. In this Agreement, the following terms have the
meanings specified or referred to in this SECTION 1.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and by this
Agreement.
"ACTIVELY EMPLOYED" shall mean any employee who (i) is actually
performing services on the Closing Date; (ii) is on company-approved vacation or
other company-approved absence of less than 14 day duration; or (ii) is on
Statutorily Protected Leave.
"AFFILIATE" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"AGREED ADJUSTMENTS" has the meaning specified in SECTION 3.1(c).
"AGREED GAMING ADJUSTMENTS" has the meaning specified in
SECTION 3.3(c).
"AGREED NTS ADJUSTMENTS" has the meaning specified in SECTION 3.4(c).
"AGREED RATE" means the fluctuating prime or corporate base rate of
interest published by, and as in effect from time to time of, Citibank, N.A., or
if that rate is no longer published, the interest rate designated as the prime
rate as published from time to time in the "Money Rates" section of THE WALL
STREET JOURNAL.
"ALLOCATION SCHEDULE" has the meaning set forth in SECTION 7.3(f).
"ARMORED CAR CASH" means the cash in the Gaming Armored Cars.
"ASSOCIATE" means, with respect to any Person (i) a corporation or
organization of which such Person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of equity
securities, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity and (iii) any relative or spouse of such Person,
or any relative of such spouse, who has the same home as such Person or who is a
director or officer of the person or any of its parents or subsidiaries.
"ASSUMED GAMING LIABILITIES" shall mean the liabilities described in
SECTION 2.4, but excluding the liabilities described in SECTION 2.5.
"ASSUMED NTS LIABILITIES" has the meaning specified in SECTION 2.8,
but excluding the liabilities described in SECTION 2.9.
"ATM CASH" means the cash in the Gaming ATM Machines.
"BANK ACCOUNT CASH" means the cash in the Gaming Bank Accounts.
"BOOTH CASH" means the cash in the Gaming Booths designated on
SCHEDULE 1.4 as "Booths Funded by Comdata" and as "Comdata Cash Provided for
Float".
"CASHCALL INC. SHARES" means all of the issued and outstanding shares
of capital stock of the Gaming Subsidiary.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Sections 9601 ET SEQ., any amendments thereto, any
successor statutes, and any regulations promulgated thereunder.
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"CERIDIAN GROUP MEMBER" means Ceridian, Comdata and their respective
Affiliates and their respective successors and assigns.
"CLAIM NOTICE" has the meaning specified in SECTION 8.3(a).
"CLOSING" means the following actions effected pursuant to the terms
of this Agreement: of (i) the transfer of the NT Canada Shares from NTS to
Permicom; (ii) the delivery by Permicom to NTS of the Permicom Note; (iii) the
transfer of the Purchased Gaming Assets from Comdata to FDFS; (iv) the transfer
of the Purchased NTS Assets (except the NT Canada shares) from NTS to Comdata;
and (v) the delivery by NTS of the NTS Note to Comdata. The actions referred to
in clauses (i) and (ii) shall be effected simultaneously, following which the
actions referred to in clauses (iii), (iv) and (v) shall be effected
simultaneously.
"CLOSING DATE" means the date hereof.
"CLOSING DATE GAMING SPECIAL REPORT" has the meaning specified in
SECTION 3.3(e).
"CLOSING DATE NTS SPECIAL REPORT" has the meaning specified in
SECTION 3.4(e).
"COBRA" means Sections 601 through 609 of ERISA.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMDATA ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Ceridian, Comdata or any of
their respective Affiliates under this Agreement or in connection herewith.
"COMDATA COLLECTION REPORT" has the meaning specified in SECTION 7.5.
"COMDATA EFFECTIVE DATE" has the meaning specified in SECTION
7.4(a)(iii).
"COMDATA EMPLOYEES" has the meaning specified in SECTION 7.4(a)(ii).
"COMDATA INSTRUMENT OF ASSIGNMENT" means the Instrument of Assignment
in the form of EXHIBIT A.
"COMDATA INSTRUMENT OF ASSUMPTION" means the Instrument of Assumption
in the form of EXHIBIT B.
"COMDATA PAYMENT INSTRUMENT" means a check or draft (such as a
Comchek-Registered Trademark- draft), which is (i) issued by Comdata or an
Affiliate thereof; (ii) drawn on a bank account of Comdata or an Affiliate
thereof; and (iii) used to effect a Gaming Business transaction at a Gaming
Establishment.
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"COMDATA PENSION PLANS" has the meaning specified in SECTION
7.4(c)(i).
"COMDATA WELFARE PLANS" has the meaning specified in SECTION
7.4(b)(ii).
"CONTAMINANT" means any waste, pollutant, hazardous or toxic substance
or waste, petroleum, petroleum-based substance or waste, special waste, or any
constituent of any such substance or waste.
"COPYRIGHTS" means United States and foreign copyrights, copyrightable
works, and maskworks, whether registered or unregistered, and pending
applications to register the same.
"COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"E&Y" means Ernst & Young, LLP, independent public accountants.
"ENCUMBRANCE" means any lien (statutory or other), claim, charge,
security interest, mortgage, deed of trust, pledge, hypothecation, assignment,
easement, conditional sale or other title retention agreement, defect in title,
covenant, preference, priority or security agreement or preferential arrangement
of any kind or nature, and any easement, encroachment, covenant, restriction,
right of way or other restrictions of any kind.
"ENVIRONMENTAL ENCUMBRANCE" means an Encumbrance in favor of any
Governmental Body for (i) any liability under any Environmental Law, or (ii)
damages arising from, or costs incurred by such Governmental Body in response
to, a Release or threatened Release of a Contaminant into the environment.
"ENVIRONMENTAL LAW" means all Requirements of Laws derived from or
relating to all federal, state and local laws or regulations relating to or
addressing the environment, health or safety, including but not limited to
CERCLA, OSHA and RCRA and any state equivalent thereof.
"ENVIRONMENTAL PROPERTY TRANSFER ACTS" means any applicable
Requirements of Laws that for environmental reasons conditions, restricts,
prohibits or requires any notification or disclosure with respect to the direct
or indirect transfer, sale, lease or closure of any property, including any so-
called "Environmental Cleanup Responsibility Acts" or "Responsible Property
Transfer Acts."
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCHEAT LAWS" means all applicable Requirements of Law relating to
unclaimed property, escheat and similar federal and state statutes.
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"ESTIMATED AMOUNT OF TRANSFERRED CASH" has the meaning specified in
SECTION 5.28.
"ESTIMATED CLOSING DATE GAMING SPECIAL REPORT" has the meaning
specified in SECTION 5.27.
"ESTIMATED CLOSING DATE NTS SPECIAL REPORT" has the meaning specified
in SECTION 6.27.
"EXCLUDED COMDATA SUBSIDIARIES" means Comdata Network, Inc. of
California, Comdata Telecommunications Services, Inc. and Permicom.
"EXCLUDED GAMING ASSETS" has the meaning specified in SECTION 2.3.
"EXCLUDED GAMING LIABILITIES" has the meaning specified in SECTION
2.5.
"EXCLUDED NTS ASSETS" has the meaning specified in SECTION 2.7.
"EXCLUDED NTS LIABILITIES" has the meaning specified in SECTION 2.9.
"FDC" has the meaning specified in the first paragraph of this
Agreement.
"FDC GROUP" means any "affiliated group" (as defined in SECTION
1504(a) of the Code without regard to the limitations contained in SECTION
1504(b) of the Code) that includes FDC.
"FDC GROUP MEMBER" means FDC, NTS, IPS and FDFS and their respective
Affiliates and their respective successors and assigns.
"FDFS" has the meaning specified in the first paragraph of this
Agreement.
"FDFS EFFECTIVE DATE" has the meaning specified in SECTION 7.4(a)(iv).
"FDFS INSTRUMENT OF ASSUMPTION" means the Instrument of Assumption in
the form of EXHIBIT D.
"FDT" means First Data Technologies, Inc. a Delaware corporation and
wholly owned subsidiary of FDC.
"GAMING ACCOUNTING REPORT" has the meaning specified in
SECTION 3.3(e).
"GAMING AGREED ACCOUNTING PRINCIPLES" means generally accepted
accounting principles consistently applied; PROVIDED, HOWEVER, that, with
respect to any matter as to which there is more than one generally accepted
accounting principle, Gaming Agreed Accounting Principles means the generally
accepted accounting principles applied in the preparation of the
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Gaming Balance Sheet included in SCHEDULE 5.4; PROVIDED FURTHER that,
notwithstanding the foregoing, Gaming Agreed Accounting Principles shall include
the accounting policies and be subject to the exceptions described in
SCHEDULE 1.1; and PROVIDED FURTHER that, for purposes of the Gaming Agreed
Accounting Principles, no known adjustments for items or matters, regardless of
the amount thereof, shall be deemed to be immaterial.
"GAMING AGREEMENTS" has the meaning specified in SECTION 5.21.
"GAMING AMOUNTS" means the Gaming Receivables and the Gaming
Liabilities.
"GAMING ARMORED CARS" means the armored cars holding cash pertaining
to the Gaming Business listed on SCHEDULE 1.2.
"GAMING ATM MACHINES" means the ATM machines listed on SCHEDULE 1.3.
"GAMING BALANCE SHEET" means the unaudited balance sheet of the Gaming
Business as of September 30, 1997 included in SCHEDULE 5.4.
"GAMING BANK ACCOUNTS" means the Bank Accounts listed on SCHEDULE 1.7.
"GAMING BALANCE SHEET DATE" means September 30, 1997.
"GAMING BOOTHS" means the on-floor Xxxxxxx xxxxx operations listed on
SCHEDULE 1.4.
"GAMING BUSINESS" means the business of Comdata's Gaming Services
Division on the date hereof in providing the following financial and certain
information services related thereto to Gaming Establishments: (a) credit card
cash advance services, (b) debit services providing for withdrawals, balance
inquiries and similar transactions effected through an automated teller machine
or point-of-sale device and tied to an account, (c) operations of financial
services booths located on the premises of Gaming Establishments, (d) certain
development and marketing activities related to a cashless gaming system for use
in slot machines and similar gaming devices by gaming patrons at a Gaming
Establishment, (e) marketing services to Gaming Establishments for products and
services offered by Persons other than Comdata, such as certain services offered
by Western Union Financial Services, Inc., (f) a single system financial
services authorization platform to be utilized by Gaming Establishments known as
C.O.I.N.S.-TM- ("Casino Operations Information System") and (g) certain
marketing and information services related to the foregoing, including, without
limitation, the Financial Marketing System database and related systems. In
addition, the Gaming Business shall include any of the services provided
pursuant to the Master Agreement dated as of April 14, 1997 by and between
Comdata and ITT Sheraton Corporation.
"GAMING BUSINESS GOVERNMENTAL PERMITS" has the meaning specified in
SECTION 5.9.
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"GAMING BUSINESS LEASED REAL PROPERTY" has the meaning specified in
SECTION 5.11.
"GAMING BUSINESS OWNED SOFTWARE" has the meaning specified in
SECTION 5.15.
"GAMING BUSINESS PROPERTY" means any real or personal property, plant,
building, facility, structure, underground storage tank, equipment or unit, or
other asset owned, leased or operated by Comdata and used in the Gaming
Business.
"GAMING BUSINESS TRANSITION SERVICES AGREEMENT" means the Transition
Services Agreement in the form of Exhibit F.
"GAMING EQUALIZATION CASH AMOUNT" means the amount of cash, if any,
designated as "Gaming Equalization Cash" on SCHEDULE 5.27
"GAMING ESTABLISHMENT" means any locations at which wagering or gaming
activities are the primary business conducted. Notwithstanding any other
provision in this Agreement to the contrary, the parties acknowledge and agree
that a truck stop facility or a gasoline station shall not, under any
circumstance, be construed or interpreted to be a Gaming Establishment.
"GAMING LIABILITIES" means the liabilities listed on the Closing Date
Gaming Special Report.
"GAMING RECEIVABLES" means the receivables listed on the Closing Date
Gaming Special Report.
"GAMING RECEIVABLES ADJUSTMENT" shall equal:
(i) if the sum of the Gaming Receivables and the Gaming Equalization
Cash Amount is equal to the Gaming Liabilities, zero;
(ii) if the sum of the Gaming Receivables and the Gaming Equalization
Cash Amount is greater than the Gaming Liabilities, the amount of such
excess; and
(iii) if the sum of the Gaming Receivables and the Gaming
Equalization Cash Amount is less than the Gaming Liabilities, the amount of
such shortfall (represented as a negative number).
"GAMING SUBSIDIARY" means Cashcall Systems Inc., a Canadian
corporation.
"Gaming Subsidiary Excluded Assets" has the meaning specified in
SECTION 2.3.
"GAMING SUBSIDIARY EXCLUDED LIABILITIES" has the meaning specified in
SECTION 2.5.
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"GAMING VAULTS" means the bank vaults holding cash pertaining to the
Gaming Business listed on SCHEDULE 1.5.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or other
governmental authority or regulatory body.
"INDEMNIFICATION EXPENSES" means any and all expenses incurred in
connection with investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against hereunder (including,
without limitation, court filing fees, court costs, arbitration fees or costs,
witness fees, and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, consultants, accountants and other
professionals).
"INITIAL AMOUNT" means (a) the sum of (i) $65,400,000.00, (ii) the
Estimated Amount of Transferred Cash and (iii) the NTS Equalization Cash Amount
(which is a negative amount), less (b) the Gaming Equalization Cash Amount
(which is a positive amount).
"INTELLECTUAL PROPERTY" means Copyrights, Patent Rights, Trademarks
and Trade Secrets and all agreements, contracts, licenses, sublicenses,
assignments and indemnities which relate or pertain to any of the foregoing.
"IPS" has the meaning specified in the first paragraph of this
Agreement.
"IPS ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by FDC, IPS, NTS or FDFS or
their respective Affiliates under this Agreement or in connection herewith.
"IPS PENSION PLANS" has the meaning specified in SECTION 7.4(c)(i).
"IPS WELFARE PLANS" has the meaning specified in SECTION 7.4(b)(ii).
"IRS" means the Internal Revenue Service.
"LOSSES" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"MATERIAL ADVERSE EFFECT" means any condition, circumstance, change or
effect (or any development that, insofar as can be reasonably foreseen, would
result in any condition, circumstance, change or effect) that is materially
adverse to the assets, business, financial condition, results of operations or
prospects of the Gaming Business or NTS Business, as the case may be.
"NET AMOUNT OF GAMING RECEIVABLES" has the meaning specified in
SECTION 7.5.
"NET AMOUNT OF NTS RECEIVABLES" has the meaning specified in SECTION
7.5.
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"NET RECEIVABLES ADJUSTMENT" shall mean the amount, if any, paid by
any party pursuant to SECTION 3.5.
"NOTICE TO DEFEND" has the meaning specified in SECTION 8.4(b)(i).
"NT CANADA SHARES" means all the issued and outstanding shares of
capital stock of the NTS Subsidiary.
"NTS" has the meaning specified in the first paragraph of this
Agreement.
"NTS ACCOUNTING REPORT" has the meaning specified in SECTION 3.4(d).
"NTS AGREED ACCOUNTING PRINCIPLES" means generally accepted accounting
principles consistently applied, PROVIDED that, with respect to any matter as to
which there is more than one generally accepted accounting principle, NTS Agreed
Accounting Principles means the generally accepted accounting principles applied
in the preparation of the NTS Balance Sheet included in SCHEDULE 6.4; PROVIDED
FURTHER that, notwithstanding the foregoing, NTS Agreed Accounting Principles
shall include the accounting policies and be subject to the exceptions described
in SCHEDULE 1.6; and PROVIDED FURTHER that, for purposes of the NTS Agreed
Accounting Principles, no known adjustments for items or matters, regardless of
the amount thereof, shall be deemed to be immaterial.
"NTS AGREEMENTS" has the meaning specified in SECTION 6.21.
"NTS AMOUNTS" means the NTS Receivables and the NTS Liabilities.
"NTS BALANCE SHEET" means the unaudited balance sheet of NTS as of
September 30, 1997 included in SCHEDULE 6.4.
"NTS BALANCE SHEET DATE" means September 30, 1997.
"NTS BUSINESS" means the business of NTS on the date hereof in
providing the following products and services to trucking companies, truck
stops, vehicle fleets, service stations and others engaged in the transportation
industry wherever located: (i) credit, debit and funds transfer services for
the purchase of fuel, equipment and repairs and other services and products
generally necessary or appropriate in connection with the operation of a
trucking company, truck stop, fleet or service station, (ii) cash advance,
driver settlement and payroll services for those engaged in the transportation
industry, (iii) load identification and matching services, (iv) long distance
telecommunications and telephone card services, (v) factoring and financing
services, (vi) legalization services for the transportation industry, including,
permits, motor vehicle licensing and renewals, fuel tax reporting and
assistance, driver log auditing and driver safety programs, (vii) pilot car
services, (viii) in-route communications and (ix) information and data capture
services related to the foregoing. Notwithstanding the foregoing, or any other
provision in this Agreement to the contrary, the parties acknowledge and agree
that the NTS Business shall
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not include the products and services currently contemplated to be marketed
under the name "Transpay."
"NTS BUSINESS TRANSITION SERVICES AGREEMENT" means the Transition
Services Agreement in the form of EXHIBIT G.
"NTS COLLECTION REPORT" has the meaning specified in SECTION 7.5.
"NTS COMPUTER FACILITY" means the office space, raised floor area,
embossing facility, mailroom and other facilities which accommodate the computer
and telecommunications operations and equipment and are located principally on
the 1st floor and (G)arden level of the West Tower of the facility at 6000 and
0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxx 00000.
"NTS EMPLOYEES" has the meaning specified in SECTION 7.4(a)(i).
"NTS EQUALIZATION CASH AMOUNT" means the amount of cash, if any,
designated as "NTS Equalization Cash" on SCHEDULE 6.27.
"NTS GOVERNMENTAL PERMITS" has the meaning specified in SECTION 6.9.
"NTS INSTRUMENT OF ASSIGNMENT" means the Instrument of Assignment in
the form of Exhibit C.
"NTS LEASED REAL PROPERTY" has the meaning specified in SECTION 6.11.
"NTS LIABILITIES" means the liabilities listed on the Closing Date NTS
Special Report.
"NTS NOTE" has the meaning specified in SECTION 2.1.
"NTS OWNED SOFTWARE" has the meaning specified in SECTION 6.15.
"NTS PAYMENT INSTRUMENT" means any check or draft (such as an NTS
draft, and EDS draft or an ULTRANS draft) which is (i) issued by NTS or an
Affiliate thereof; (ii) drawn on a bank account of NTS or an Affiliate thereof;
and (iii) used to transfer funds for the payment of a purchase, cash advance or
settlement transaction with a vendor/merchant, client or client employee.
"NTS PROPERTY" means any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or other asset
owned, leased or operated by NTS or the NTS Subsidiary.
"NTS RECEIVABLES" means the receivables listed on the Closing Date NTS
Special Report.
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"NTS RECEIVABLES ADJUSTMENT" shall equal:
(i) if the sum of the NTS Receivables and the NTS Equalization Cash
Amount is equal to the NTS Liabilities, zero;
(ii) if the sum of the NTS Receivables and the NTS Equalization Cash
Amount is greater than the NTS Liabilities, the amount of such excess; and
(iii) if the sum of the NTS Receivables and the NTS Equalization Cash
Amount is less than the NTS Liabilities, the amount of such shortfall
(represented as a negative number).
"NTS SUBSIDIARIES" means any corporation, partnership, limited
liability company, joint venture or other entity in which NTS (a) owns, or at
any relevant time owned, directly or indirectly, 50% or more of the outstanding
voting or equity interests or (b) is a general partner.
"NTS SUBSIDIARY" means National Truckers Service Canada, Inc., a
Canadian corporation.
"NTS SUBSIDIARY EXCLUDED ASSETS" has the meaning specified in
SECTION 2.7.
"NTS SUBSIDIARY EXCLUDED LIABILITIES" has the meaning specified in
SECTION 2.9.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
SECTIONS 651 ET SEQ., any amendment thereto, any successor statute, and any
regulations promulgated thereunder as well as any similar state or local laws.
"PATENT RIGHTS" means United States and foreign patents, patent
applications, continuations, continuations-in-part, divisions, reissues, patent
disclosures, inventions (whether or not patentable) or improvements thereto.
"PENSION PLAN" means any employee pension benefit plan, as such term
is defined in SECTION 3(2) of ERISA.
"PERMICOM NOTE" has the meaning specified in SECTION 2.1.
"PERMITTED ENCUMBRANCES" means (a) liens for taxes and other
governmental charges and assessments arising in the ordinary course of business
which are not yet due and payable, (b) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens arising in the
ordinary course of business for sums not yet due and payable and (c) other liens
or imperfections on property which are not material in amount, do not interfere
with and are not violated by, the consummation of the transactions contemplated
by this
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Agreement and do not impair the marketability of, or materially detract from the
value of or materially impair the existing use of, the property affected by such
lien or imperfection.
"PERSON" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"PRELIMINARY CLOSING DATE GAMING SPECIAL REPORT" has the meaning
specified in SECTION 3.3(a)(i).
"PRELIMINARY CLOSING DATE NTS SPECIAL REPORT" has the meaning
specified in SECTION 3.4(a)(i).
"PRELIMINARY GAMING ACCOUNTING REPORT" has the meaning specified in
SECTION 3.3(a)(iii).
"PRELIMINARY GAMING AMOUNTS" has the meaning specified in
SECTION 3.3(a)(i).
"PRELIMINARY GAMING LIABILITIES" has the meaning specified in
SECTION 3.3(a)(i).
"PRELIMINARY GAMING RECEIVABLES" has the meaning specified in
SECTION 3.3(a)(i).
"PRELIMINARY GAMING RECEIVABLES ADJUSTMENT" has the meaning specified
in SECTION 3.3(a)(ii).
"PRELIMINARY NTS ACCOUNTING REPORT" has the meaning specified in
SECTION 3.4(a)(iii).
"PRELIMINARY NTS AMOUNTS" has the meaning specified in
SECTION 3.4(a)(i).
"PRELIMINARY NTS LIABILITIES" has the meaning specified in
SECTION 3.4(a)(i).
"PRELIMINARY NTS RECEIVABLES" has the meaning specified in
SECTION 3.4(a)(i).
"PRELIMINARY NTS RECEIVABLES ADJUSTMENT" has the meaning specified in
SECTION 3.4(a)(ii).
"PRELIMINARY TRANSFERRED CASH STATEMENT" has the meaning specified in
SECTION 3.1(a).
"PURCHASED GAMING ASSETS" shall mean the assets and properties
described in SECTION 2.2, but excluding the assets and properties described in
SECTION 2.3.
"PURCHASED NTS ASSETS" has the meaning specified in SECTION 2.6.
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"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
SECTIONS 6901 ET SEQ., and any successor statute, and any regulations
promulgated thereunder.
"REMEDIAL ACTION" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threatened Release or minimize the
further Release of Contaminants or (iii) investigate and determine if a remedial
response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.
"REQUIREMENTS OF LAWS" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued
or promulgated by any Governmental Body (including, without limitation, those
pertaining to employment, wage and hour, electrical, building, zoning,
environmental and occupational safety and health requirements, the Bank Secrecy
Act and Money Laundering and Control Act and the rules and regulations
promulgated thereunder, and all laws governing or regulating gambling or gaming)
or common law.
"RESTRICTED COMDATA PARTIES" has the meaning specified in SECTION
7.2(a).
"RESTRICTED FDC PARTIES" has the meaning specified in SECTION 7.2(b).
"RESTRICTED TRUCKING ACTIVITIES" means (i) cash advance, factoring,
financing or in-cab communication services or products that are marketed
exclusively to the trucking industry or the usefulness of which is limited to
the trucking industry, (ii) legalization services for the trucking industry,
including permitting and licensing (and renewal thereof), fuel tax reporting and
assistance, driver log auditing and driver safety programs, (iii) pilot car
services for the trucking industry, and (iv) load matching services for the
trucking industry.
"SELECTED ACCOUNTING FIRM" means a major independent public accounting
firm (other than E&Y or KPMG Peat Marwick) which shall have been selected by the
joint decision of FDC and Ceridian.
"SERVICES AND PROCESSING AGREEMENT" means the Services and Processing
Agreement in the form of EXHIBIT E.
"SOFTWARE" means computer software programs and software systems,
including, without limitation, all databases, compilations, tool sets,
compilers, higher level or "proprietary" languages, related documentation and
materials, whether in source code, object code or human readable form.
"STATUTORILY PROTECTED LEAVE" shall mean any leave (i) pursuant to the
Family and Medical Leave Act; (ii) pursuant to a military leave of absence under
circumstances entitling the employee to return to his or her position or (iii)
pursuant to taking sick days or in the case of Transferring Comdata Employees,
those on short term disability leave.
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"STRADDLE PERIOD" means any taxable year or period beginning before
and ending after the Closing.
"TAX" (and, with correlative meaning, "TAXES") means any federal,
state, local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorem, value added, transfer or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, imposed by any governmental
authority.
"TAX RETURN" means any return, report or similar statement required to
be filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
"THIRD-PERSON CLAIM" has the meaning specified in SECTION 8.4.
"TRADEMARKS" means United States, state and foreign trademarks,
service marks, logos, trade dress and trade names (including all assumed or
fictitious names under which the party is conducting business or has within the
past five years conducted business), whether registered or unregistered, and
pending applications to register the foregoing.
"TRADE SECRETS" means confidential ideas, trade secrets, know-how,
concepts, methods, processes, formulae, reports, data, customer lists, mailing
lists, business plans, or other proprietary information.
"TRANSFERRED CASH" means the sum of the ATM Cash, the Armored Car
Cash, the Booth Cash, the Bank Account Cash and the Vault Cash.
"TRANSFERRED CASH STATEMENT" has the meaning specified in
SECTION 3.1(b).
"TRANSFERRING COMDATA EMPLOYEES" has the meaning specified in SECTION
7.4(a)(iv).
"TRANSFERRING NTS EMPLOYEES" has the meaning specified in SECTION
7.4(a)(iii).
"UNRESOLVED GAMING OBJECTIONS" has the meaning specified in
SECTION 3.3(d).
"UNRESOLVED NTS OBJECTIONS" has the meaning specified in
SECTION 3.4(d).
"VAULT CASH" means the cash in the Gaming Vaults.
"WARN" means the Workers Adjustment and Retraining Notification Act.
"WELFARE PLAN" means any employee welfare benefit plan, as such term
is defined in SECTION 3(1) of ERISA.
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ARTICLE II
EXCHANGE
2.1. EXCHANGE OF GAMING BUSINESS FOR THE NTS BUSINESS AND CASH. As
more specifically provided herein, on the date hereof (immediately following the
acquisition provided for in the last sentence of this SECTION 2.1) Comdata is
(a) conveying and transferring to FDFS, free and clear of all Encumbrances
(except Permitted Encumbrances), the Purchased Gaming Assets and (b) assuming
the NTS Liabilities in exchange for (i) the simultaneous conveyance and transfer
by NTS to Comdata of the Purchased NTS Assets (excluding the NT Canada Shares
which are being conveyed and transferred to, and purchased by, Permicom), free
and clear of all Encumbrances (other than Permitted Encumbrances), (ii) the
simultaneous assumption by FDFS of the Gaming Liabilities and (iii) NTS'
delivery to Comdata of a promissory note of NTS in the principal amount and in a
form mutually acceptable to Comdata and NTS (the "NTS NOTE") equal to the
Initial Amount. The parties hereto agree to use their respective best efforts
to determine the fair market value of the NTS Business within twelve months of
Closing, which value shall in no event be less than $55 million or greater than
$65 million. The Initial Amount shall be subject to adjustment as provided in
Article III hereof. Simultaneously with the execution of this Agreement,
Permicom shall acquire the NT Canada Shares from NTS in exchange for Permicom's
delivery to NTS of a promissory note of Permicom in the principal amount of
$400,000 (US) and in a form mutually acceptable to Permicom and NTS (the
"PERMICOM NOTE").
2.2. PURCHASED GAMING ASSETS. The Purchased Gaming Assets shall
consist of all assets and properties of Ceridian or Comdata of every kind and
description, wherever located, real, personal or mixed, tangible or intangible,
heretofore used in connection with the Gaming Business, including, without
limitation, all right, title and interest of Ceridian or Comdata in, to and
under:
(a) all of the assets reflected on the Gaming Balance Sheet, except
those disposed of or converted into cash after the Gaming Balance Sheet
Date in the ordinary course of business;
(b) all notes and accounts receivable generated by the Gaming
Business;
(c) all inventory used in the Gaming Business (other than any blank,
unissued Comdata Payment Instruments);
(d) to the extent assignable, the Gaming Business Governmental
Permits listed in SCHEDULE 5.9;
(e) the Gaming Business Leased Real Property and leasehold
improvements listed or described in SCHEDULE 5.11(A) except to the extent
such Gaming Business Leased Real Property is (i) provided to FDFS pursuant
to the Gaming Business Transition Services Agreement or (ii) listed on
SCHEDULE 2.3;
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(f) the machinery, equipment, vehicles, furniture and other personal
property listed or referred to in SCHEDULES 1.2, 1.3, 1.4, 1.5, 1.7 or
SCHEDULE 5.13(A) except to the extent the use of such machinery, equipment,
vehicles, furniture and other property is (i) provided to NTS pursuant to
the Gaming Business Transition Services Agreement or (ii) listed on
SCHEDULE 2.3;
(g) the personal property leases listed in SCHEDULE 5.14, except to
the extent the use of such personal property leases are (i) provided to
FDFS pursuant to the Gaming Business Transition Services Agreement or (ii)
listed on SCHEDULE 2.3;
(h) the Copyrights, Patent Rights and Trademarks (and all goodwill
associated therewith), and the agreements, contracts, licenses,
sublicenses, assignments and indemnities, listed in SCHEDULE 5.15(A),
together with the licenses and other agreements with third parties related
thereto;
(i) the Gaming Business Owned Software listed in SCHEDULE 5.15 (B),
together with the licenses and other agreements with third parties related
thereto;
(j) all Trade Secrets and other proprietary or confidential
information used in or relating to the Gaming Business except those Trade
Secrets or other proprietary or confidential information which are used in
or relates to any other business of Ceridian or its Affiliates;
(k) the agreements listed in SCHEDULE 5.18(A);
(l) the contracts, agreements or understandings listed or described
in SCHEDULE 5.20 and all other contracts related to the Gaming Business to
which Ceridian, Comdata or the Gaming Subsidiary is a party that are
customary for companies engaged in the same line of business as the Gaming
Business;
(m) all books and records (including all data and other information
stored on discs, tapes or other media) of Comdata relating exclusively to
the assets, properties, business and operations of the Gaming Business and,
if requested, copies of all books and records (including all data and other
information stored on discs, tapes or other media) which are used in
connection with, (but not exclusively related to) the assets, properties,
business and operations of the Gaming Business, PROVIDED, HOWEVER, that
only such portions of such books and records relating to the Gaming
Business will be provided;
(n) Ceridian's and Comdata's interest in and to all telephone, telex
and telephone facsimile numbers and other directory listings utilized
primarily in connection with the Gaming Business;
(o) all of the Cashcall Inc. Shares;
(p) the Transferred Cash;
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(q) all personal property, Intellectual Property and agreements
relating to the "COINS" product;
(r) all personal property, Intellectual Property and agreements
relating to the "QuickPlay" product;
(s) all personal property, Intellectual Property and agreements
relating to the Financial Marketing System product; and
(t) all the Gaming Bank Accounts.
2.3. EXCLUDED GAMING ASSETS. Notwithstanding the provisions of
SECTION 2.2, the Purchased Gaming Assets shall not include the following (herein
referred to as the "EXCLUDED GAMING ASSETS"):
(a) all cash, bank deposits and cash equivalents except the
Transferred Cash (it being understood that the Gaming Equalization
Cash is reflected in the Initial Amount);
(b) the name "Comdata" and "Comchek" or any related or similar trade
names, trademarks, service marks or logos to the extent the same
incorporate the name "Comdata" and "Comchek" or any variation thereof;
(c) Ceridian's and Comdata's rights, claims or causes of action
against third parties relating to the assets, properties, business or
operations of the Gaming Business which may arise in connection with the
discharge by Ceridian or Comdata of the Excluded Gaming Liabilities;
(d) all contracts of insurance;
(e) all corporate minute books and stock transfer books and the
corporate seal of Comdata;
(f) Comdata's rights under the lease agreements referred to in point
7 on SCHEDULE 5.11(A);
(g) except to the extent provided in SECTION 7.4, Comdata's employee
benefit agreements, plans or arrangements listed in SCHEDULE 5.18(A) or
otherwise maintained by Comdata or the Gaming Subsidiary on behalf of
persons employed by Comdata or the Gaming Subsidiary;
(h) all shares of capital stock of each of the Excluded Comdata
Subsidiaries;
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(i) all refunds of any Tax to which Ceridian or Comdata is entitled
pursuant to SECTION 7.3; and
(j) the assets listed on SCHEDULE 2.3;
(k) that certain agreement among Comdata Network, Inc., Service Data
Corporation and SDC Enterprises, Inc. dated as of May 15, 1997;
(l) that certain agreement among Comdata, Concord Computing
Corporation and EFS National Bank dated as of April 30, 1996, as amended
and the Marketing Rights Agreement executed in connection therewith; and
(m) that certain Acquisition Agreement between Comdata and Western
Union Financial Services dated March 23, 1994.
With respect to any assets that were owned on the date preceding the date hereof
by the Gaming Subsidiary and that would have constituted Excluded Gaming Assets
if owned by Comdata (the "GAMING SUBSIDIARY EXCLUDED ASSETS"), Comdata shall,
immediately prior to the Closing, cause the Gaming Subsidiary to convey,
transfer and deliver, without any representation or warranty (express or
implied), to Comdata such assets and the Gaming Subsidiary Excluded Assets shall
be deemed to be Excluded Gaming Assets for purposes of this Agreement.
2.4. ASSUMED GAMING LIABILITIES. The Assumed Gaming Liabilities
shall consist of:
(a) all liabilities of the Gaming Business reflected in the Closing
Date Gaming Special Report as a dollar amount;
(b) all liabilities and obligations of Ceridian and Comdata to be
paid or performed after the date hereof under (i) the Gaming Agreements and
(ii) any contracts related to the Gaming Business to which Ceridian,
Comdata or the Gaming Subsidiary is a party that are customary for
companies engaged in the same line of business as the Gaming Business,
except in each case, to the extent such liabilities and obligations, (A)
but for a breach or default by Ceridian, Comdata or the Gaming Subsidiary,
would have been paid, performed or otherwise discharged on or prior to the
date hereof or to the extent the same arise out of any such breach or
default and (B) are not reflected on the Closing Date Gaming Special Report
and are not taken into account as a deduction in connection with the
determination of the Gaming Receivables Adjustment pursuant to SECTION 3.3;
and
(c) all liabilities in respect of Taxes for which FDC, IPS, NTS or
FDFS is liable pursuant to SECTION 7.3.
2.5. EXCLUDED GAMING LIABILITIES. Notwithstanding the provisions of
SECTION 2.4, the Assumed Gaming Liabilities shall not include the following
(herein referred to as the "EXCLUDED GAMING LIABILITIES"):
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(a) any liabilities in respect of Taxes for which Comdata or Ceridian
is liable pursuant to SECTION 7.3;
(b) any intercompany payables and other liabilities or
obligations of the Gaming Business to Comdata, Ceridian or any of
their respective Affiliates;
(c) any costs and expenses incurred by Comdata, Ceridian or the
Gaming Subsidiary incident to the negotiation and preparation of this
Agreement and their respective performance and compliance with the
agreements and conditions contained herein;
(d) any liabilities or obligations in respect of any Excluded Gaming
Assets;
(e) any liabilities in respect of the claims or proceedings
described in SCHEDULE 5.22;
(f) accrued liabilities of any kind required to be reflected on the
Closing Date Gaming Special Report prepared in accordance with the Gaming
Agreed Accounting Principles which were not reflected thereon as a dollar
amount;
(g) any liabilities and obligations related to, associated with or
arising out of (i) the occupancy, operation, use or control of any of the
Gaming Business Property on or prior to the date hereof or (ii) the
operation of the Gaming Business on or prior to the date hereof, in each
case incurred or imposed by any Environmental Law (including, without
limitation, any Release of any Contaminant on, at or from (1) the Gaming
Business Property, including, without limitation, all facilities,
improvements, structures and equipment thereon, surface water thereon or
adjacent thereto and soil or groundwater thereunder, or any conditions
whatsoever on, under or in the vicinity of such real property or (2) any
real property or facility owned by a third Person to which Contaminants
generated by the Gaming Business were sent prior to the date hereof);
(h) any product liability or claims for injury to person or property,
regardless of when made or asserted, relating to products manufactured,
distributed or sold by the Gaming Business or services performed by the
Gaming Business on or prior to the date hereof;
(i) any liabilities relating to Escheat Laws or the failure to file
reports, or to pay or turn over amounts due, thereunder which pertain to
(A) any Gaming Business transaction initiated prior to the Closing Date or
(B) any Gaming Business transactions for which a Comdata Payment Instrument
is issued during the twelve month period following Closing; and
(j) any liabilities arising under that certain Processing and Related
Services Agreement among Comdata, Concord Computing Corporation and EFS
National Bank
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dated as of April 30, 1996, as amended and the Marketing Rights Agreement
executed in connection therewith.
In order that the Gaming Subsidiary shall not be responsible in any respect for
any liabilities or obligations that would constitute Excluded Gaming Liabilities
in the case of Comdata, Comdata shall assume and agree to pay, perform and
discharge such liabilities and obligations of the Gaming Subsidiary (the "GAMING
SUBSIDIARY EXCLUDED LIABILITIES") and all Gaming Subsidiary Excluded Liabilities
shall be deemed to constitute Excluded Gaming Liabilities for purposes of this
Agreement.
2.6. PURCHASED NTS ASSETS. The Purchased NTS Assets shall consist of
all assets and properties of NTS of every kind and description, wherever
located, real, personal or mixed, tangible or intangible, heretofore used in
connection with the NTS Business, including, without limitation, all right,
title and interest of NTS in, to and under:
(a) all of the assets reflected on the NTS Balance Sheet, except
those disposed of or converted into cash after the NTS Balance Sheet Date
in the ordinary course of business;
(b) all notes and accounts receivable generated by the NTS Business;
(c) all inventory used in the NTS Business;
(d) to the extent assignable, the NTS Business Governmental Permits
listed in SCHEDULE 6.9;
(e) the NTS Business Leased Real Property and leasehold improvements
listed or described in SCHEDULE 6.11(A) except to the extent such NTS
Leased Real Property is (i) provided to Comdata pursuant to the NTS
Business Transition Services Agreement or (ii) is listed on SCHEDULE 2.7;
(f) the machinery, equipment, vehicles, furniture and other personal
property listed or referred to in SCHEDULE 6.13(A) except to the extent the
use of such machinery, equipment, vehicles, furniture and other property is
(i) provided to Comdata pursuant to the NTS Business Transition Services
Agreement or (ii) is listed on SCHEDULE 2.7;
(g) the personal property leases listed in SCHEDULE 6.14 except to
the extent the use of such personal property leases are (i) provided to
Comdata pursuant to the NTS Business Transition Services Agreement or (ii)
is listed on SCHEDULE 2.7;
(h) the Copyrights, Patent Rights and Trademarks (and all goodwill
associated therewith), the name "NTS," and the agreements, contracts,
licenses, sublicenses, assignments and indemnities, listed in SCHEDULE
6.15(A) except to the extent such Copyrights, Patent Rights and Trademarks
are (i) licensed or sublicensed to Comdata
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pursuant to the NTS Business Transition Services Agreement or (ii) is
listed on SCHEDULE 2.7;
(i) the NTS Business Owned Software listed in SCHEDULE 6.15(B) except
to the extent such NTS Business Owned Software is (i) licensed or
sublicensed to Comdata pursuant to the NTS Business Transition Services
Agreement or (ii) is listed on SCHEDULE 2.7;
(j) all Trade Secrets and other proprietary or confidential
information used in or relating to the NTS Business except those Trade
Secrets or other proprietary or confidential information which is used in
or relates to any other business of FDC or its Affiliates;
(k) the agreements listed in SCHEDULE 6.18(A);
(l) the contracts, agreements or understandings listed or described
in SCHEDULE 6.20 and all other contracts related to the NTS Business to
which FDC, IPS or NTS or the NTS Subsidiary is a party that are customary
for companies engaged in the same line of business as the NTS Business;
(m) all books and records (including all data and other information
stored on discs, tapes or other media) of FDC, IPS or NTS relating
exclusively to the assets, properties, business and operations of the NTS
Business and, if requested, copies of all books and records (including all
data and other information stored on discs, tapes or other media) which are
used in connection with, (but not exclusively related to) the assets,
properties, business and operations of the NTS Business, PROVIDED, HOWEVER,
that only the portions of such books and records relating to the NTS
Business will be provided;
(n) FDC's, IPS' and NTS' interest in and to all telephone, telex and
telephone facsimile numbers and other directory listings utilized primarily
in connection with the NTS Business;
(o) all of the NT Canada Shares;
(p) all of the bank accounts listed on SCHEDULE 2.6; and
(q) all of the blank, unissued NTS Payment Instruments.
2.7. EXCLUDED NTS ASSETS. Notwithstanding the provisions of
SECTION 2.6, the Purchased NTS Assets shall not include the following (herein
referred to as the "EXCLUDED NTS ASSETS"):
(a) all cash, bank deposits and cash equivalents (except for
that cash listed as a receivable on the Estimated NTS Special Report)
(it being understood that the NTS Equalization Cash is reflected in
the Initial Amount);
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(b) the names "IPS," "Western Union," "Greenback," "Transpay" or any
related or similar trade names, trademarks, service marks or logos to the
extent the same incorporate the name "IPS," "Western Union", "Greenback,"
"Transpay" or any variation thereof;
(c) FDC's and IPS' rights, claims or causes of action against third
parties relating to the assets, properties, business or operations of the
NTS Business which may arise in connection with the discharge by FDC or IPS
of the Excluded NTS Liabilities;
(d) all contracts of insurance;
(e) all corporate minute books and stock transfer books and the
corporate seal of IPS and NTS;
(f) FDC's and IPS' rights under the lease agreement described in
SCHEDULE 6.11(A);
(g) except to the extent provided in SECTION 7.4, NTS' employee
benefit agreements, plans or arrangements listed in SCHEDULE 6.18(A) or
otherwise maintained by IPS, NTS or the NTS Subsidiary on behalf of persons
employed by IPS, NTS or the NTS Subsidiary;
(h) all refunds of any Tax to which FDC or IPS is entitled pursuant
to SECTION 7.3;
(i) the assets listed on SCHEDULE 2.7;
(j) that certain agreement between PHH Corporation and IPS dated as
of February 12, 1996;
(k) that certain agreement between Electronic Data Systems
Corporation and IPS dated as of August 13, 1996; and
(l) all assets and agreements relating to the NTS Computer Facility.
With respect to any assets that were owned on the date preceding the date hereof
by the NTS Subsidiary and that would have constituted Excluded NTS Assets if
owned by NTS (the "NTS SUBSIDIARY EXCLUDED ASSETS"), NTS shall, immediately
prior to the Closing, cause the NTS Subsidiary to convey, transfer and deliver,
without any representation or warranty (express or implied), to NTS such assets
and the NTS Subsidiary Excluded Assets shall be deemed to be Excluded NTS Assets
for purposes of this Agreement.
2.8. ASSUMED NTS LIABILITIES. The Assumed NTS Liabilities shall
consist of:
(a) all liabilities of the NTS Business reflected in the Closing Date
NTS Special Report as a dollar amount;
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(b) all liabilities and obligations of NTS to be paid or performed
after the date hereof under (i) the NTS Agreements and (ii) all other
contracts related to the NTS Business to which FDC, IPS, NTS or the NTS
Subsidiary is a party that are customary for companies engaged in the same
line of business as the NTS Business, except in each case, to the extent
such liabilities and obligations, (A) but for a breach or default by FDC,
IPS, NTS or the NTS Subsidiary, would have been paid, performed or
otherwise discharged on or prior to the date hereof or to the extent the
same arise out of any such breach or default and (B) are not reflected on
the Closing Date NTS Special Report and are not taken into account as a
deduction in connection with the determination of the NTS Receivables
Adjustment pursuant to SECTION 3.4;
(c) all liabilities in respect of Taxes for which Comdata is liable
pursuant to SECTION 7.3.
(d) all liabilities pursuant to any NTS Payment Instrument issued on
or after the Closing Date.
2.9. EXCLUDED NTS LIABILITIES. Notwithstanding the provisions of
SECTION 2.8, the Assumed NTS Liabilities shall not include the following (herein
referred to as the "EXCLUDED NTS LIABILITIES"):
(a) any liabilities in respect of Taxes for which FDC, IPS, NTS, FDFS
or is liable pursuant to SECTION 7.3;
(b) any intercompany payables and other liabilities or
obligations of the NTS Business to IPS, FDC, FDFS or any of their
respective Affiliates;
(c) any costs and expenses incurred by IPS, FDC, NTS, the NTS
Subsidiary or FDFS incident to the negotiation and preparation of this
Agreement and their respective performance and compliance with the
agreements and conditions contained herein;
(d) any liabilities or obligations in respect of any Excluded NTS
Assets;
(e) any liabilities in respect of the claims or proceedings
described in SCHEDULE 6.22;
(f) accrued liabilities of any kind required to be reflected on the
Closing Date NTS Special Report prepared in accordance with the NTS Agreed
Accounting Principles which were not reflected thereon as a dollar amount;
(g) any liabilities and obligations related to, associated with or
arising out of (i) the occupancy, operation, use or control of any of the
NTS Property on or prior to the date hereof or (ii) the operation of the
NTS Business on or prior to the date hereof, in each case incurred or
imposed by any Environmental Law (including, without limitation, any
Release of any Contaminant on, at or from (1) the NTS Property, including,
without
-23-
limitation, all facilities, improvements, structures and equipment thereon,
surface water thereon or adjacent thereto and soil or groundwater
thereunder, or any conditions whatsoever on, under or in the vicinity of
such real property or (2) any real property or facility owned by a third
Person to which Contaminants generated by the NTS Business were sent prior
to the date hereof);
(h) any product liability or claims for injury to person or property,
regardless of when made or asserted, relating to products manufactured,
distributed or sold by the NTS Business or services performed by the NTS
Business on or prior to the date hereof; and
(i) any liabilities relating to Escheat Laws or the failure to file
reports, or to pay or turn over amounts due, thereunder which pertain to
any NTS Business transaction initiated prior to the Closing Date.
In order that the NTS Subsidiary shall not be responsible in any respect for any
liabilities or obligations that would constitute Excluded NTS Liabilities in the
case of NTS, NTS shall assume and agree to pay, perform and discharge such
liabilities and obligations of the NTS Subsidiary (the "NTS SUBSIDIARY EXCLUDED
LIABILITIES") and all NTS Subsidiary Excluded Liabilities shall be deemed to
constitute Excluded NTS Liabilities for purposes of this Agreement.
ARTICLE III
CASH ADJUSTMENT
3.1. DETERMINATION OF TRANSFERRED CASH. (a) As promptly as
practicable (but not later than 60 business days) after the date hereof, IPS
shall prepare and deliver to Comdata a detailed statement (with appropriate work
papers attached) setting forth the amount of Transferred Cash as of 11:59 p.m.
central time on the date hereof (the "PRELIMINARY TRANSFERRED CASH STATEMENT").
(b) Promptly following receipt of the Preliminary Transferred Cash
Statement, Comdata may review the same and, within 60 days after the date of
such receipt, may deliver to IPS a certificate (signed by its chief financial
officer or its chief accounting officer) setting forth its objections, if any,
to the Preliminary Transferred Cash Statement, together with a summary of the
reasons therefor and calculations which, in its view, are necessary to eliminate
any such objections. In the event Comdata does not so object within such 60-day
period, the Preliminary Transferred Cash Statement shall be final and binding as
the "TRANSFERRED CASH STATEMENT" for purposes of this Agreement, but shall not
limit the representations, warranties, covenants and agreements of the parties
set forth elsewhere in this Agreement.
(c) In the event Comdata so objects within such 60-day period, IPS
and Comdata shall use their reasonable efforts to resolve by written agreement
(the "AGREED ADJUSTMENTS") any differences as to the Preliminary Transferred
Cash Statement and, in the event Comdata and IPS
-24-
so resolve any such differences, the Preliminary Transferred Cash Statement as
adjusted by the Agreed Adjustments shall be final and binding as the Transferred
Cash Statement for purposes of this Agreement, but shall not limit the
representations, warranties, covenants and agreements of the parties set forth
elsewhere in this Agreement.
(d) In the event any objections raised by Comdata are not resolved by
Agreed Adjustments within the 60-day period next following such 60-day period,
then IPS and Comdata shall submit the objections that are then unresolved to the
Selected Accounting Firm and the Selected Accounting Firm shall be directed by
Comdata and IPS to resolve the unresolved objections as promptly as reasonably
practicable and to deliver written notice to each of Comdata and IPS setting
forth its resolution of the disputed matters. The Preliminary Transferred Cash
Statement, after giving effect to any Agreed Adjustments and to the resolution
of disputed matters by the Selected Accounting Firm, shall be final and binding
as the Transferred Cash Statement, for purposes of this Agreement but shall not
limit the representations, warranties, covenants and agreements of the parties
set forth elsewhere in this Agreement.
(e) The parties hereto shall make available to Comdata, IPS and, if
applicable, the Selected Accounting Firm, such books, records and other
information (including work papers) as any of the foregoing may reasonably
request to prepare or review the Preliminary Transferred Cash Statement or any
matters submitted to the Selected Accounting Firm. The fees and expenses of the
Selected Accounting Firm hereunder shall be paid 50% by Comdata and 50% by IPS.
3.2. TRANSFERRED CASH ADJUSTMENT. As promptly as practicable (but
not later than five business days) after the determination of the Transferred
Cash Statement pursuant to SECTION 3.1 that is final and binding as set forth
therein:
(i) if the aggregate amount of cash set forth in the Transferred
Cash Statement exceeds the Estimated Amount of Transferred Cash, NTS
shall pay to Comdata, by wire transfer of immediately available funds
to such bank account of Comdata as Comdata shall designate in writing
to NTS, an amount equal to such excess, plus interest on such excess
from the date hereof to the date of payment thereof at the Agreed
Rate; or
(ii) if the Estimated Amount of Transferred Cash exceeds the
aggregate amount of cash set forth in the Transferred Cash Statement,
Comdata shall pay to NTS, by wire transfer of immediately available
funds to such bank account of NTS as NTS shall designate in writing to
Comdata, an amount equal to such excess, plus interest on such excess
from the date hereof to the date of payment thereof at the Agreed
Rate.
3.3. DETERMINATION OF GAMING RECEIVABLES ADJUSTMENT. (a) As promptly
as practicable (but not later than sixty days) after the date hereof, IPS shall:
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(i) prepare, in accordance with the Gaming Agreed Accounting
Principles, a written report (the "Preliminary Closing Date Gaming Special
Report") which shall fairly present the amounts of the gaming receivables
and gaming liabilities, in each case, as of 11:59 p.m. central time on the
date hereof and of the type reflected as such in the Preliminary Closing
Date Gaming Special Report (the amounts of the gaming receivables and the
gaming liabilities as so reflected being referred to respectively herein as
the "PRELIMINARY GAMING RECEIVABLES" and the "PRELIMINARY GAMING
LIABILITIES" and collectively as the "PRELIMINARY GAMING AMOUNTS".)
(ii) calculate the Gaming Receivables Adjustment in accordance with
the provisions of this Agreement, based on the Preliminary Closing Date
Gaming Special Report and assuming for such purposes that the Preliminary
Gaming Amounts constitute the Gaming Amounts (the "PRELIMINARY GAMING
RECEIVABLES ADJUSTMENT"); and
(iii) deliver to Comdata the Preliminary Closing Date Gaming Special
Report and a certificate setting forth the Preliminary Gaming Receivables,
the Preliminary Gaming Liabilities and the Preliminary Gaming Receivables
Adjustment, together with the supporting calculations in reasonable detail
(collectively, the "PRELIMINARY GAMING ACCOUNTING REPORT").
(b) Promptly following such delivery of the Preliminary Gaming
Accounting Report, Comdata shall have the opportunity to review the Preliminary
Closing Date Gaming Special Report and the Preliminary Gaming Receivables
Adjustment. Not later than 60 days after the date of such receipt, Comdata may
deliver to IPS a certificate (signed by an officer of Comdata) setting forth its
objections to the Preliminary Closing Date Gaming Special Report, the
Preliminary Gaming Receivables, the Preliminary Gaming Liabilities or the
Preliminary Gaming Receivables Adjustment as set forth in the Preliminary Gaming
Accounting Report, together with a summary of the reasons therefor and
calculations which, in its view, are necessary to eliminate such objections. If
Comdata does not so object within such 60-day period, the Preliminary Closing
Date Gaming Special Report, the Preliminary Gaming Receivables, the Preliminary
Gaming Liabilities and the Preliminary Gaming Receivables Adjustment set forth
in the Preliminary Gaming Accounting Report shall be final and binding as the
Closing Date Gaming Special Report, the Gaming Receivables, the Gaming
Liabilities and the Gaming Receivables Adjustment, respectively, for purposes of
this Agreement but shall not limit the representations, warranties, covenants
and agreements of the parties set forth elsewhere in this Agreement.
(c) If Comdata so objects within such 60-day period, IPS and Comdata
shall use their reasonable efforts to resolve by written agreement (the "AGREED
GAMING ADJUSTMENTS") any differences as to the Preliminary Closing Date Gaming
Special Report, the Preliminary Gaming Receivables, the Preliminary Gaming
Liabilities and the Preliminary Gaming Receivables Adjustment and, if IPS and
Comdata so resolve any such differences, the Preliminary Closing Date Gaming
Special Report, the Preliminary Gaming Receivables, the Preliminary Gaming
Liabilities and the Preliminary Gaming Receivables Adjustment set forth in the
Preliminary Gaming Accounting Report as adjusted by the Agreed Gaming
Adjustments shall be final and binding as the Closing Date Gaming Special
Report, the Gaming Receivables, the Gaming
-26-
Liabilities, and the Gaming Receivables Adjustment, respectively, for purposes
of this Agreement but shall not limit the representations, warranties, covenants
and agreements of the parties set forth elsewhere in this Agreement.
(d) If any objections raised by Comdata are not resolved by Agreed
Gaming Adjustments within the 60-day period next following such 60-day period,
then IPS and Comdata shall submit the objections that are then unresolved (the
"UNRESOLVED GAMING OBJECTIONS") to the Selected Accounting Firm and such
Selected Accounting Firm shall be directed by IPS and Comdata to resolve the
Unresolved Gaming Objections (based solely on the presentations by IPS and
Comdata as to whether any disputed matter had been determined in a manner
consistent with the Agreed Gaming Accounting Principles) as promptly as
reasonably practicable and to deliver written notice to each of IPS and Comdata
setting forth its resolution of the disputed matters. The Preliminary Closing
Date Gaming Special Report, the Preliminary Gaming Receivables, the Preliminary
Gaming Liabilities and the Preliminary Gaming Receivables Adjustment, after
giving effect to any Agreed Gaming Adjustments and to the resolution of disputed
matters by the Selected Accounting Firm, shall be final and binding as the
Closing Date Gaming Special Report, the Gaming Receivables, the Gaming
Liabilities, and the Gaming Receivables Adjustment, respectively, for purposes
of this Agreement but shall not limit the representations, warranties, covenants
and agreements of the parties set forth elsewhere in this Agreement. Any
determinations by the Selected Accounting Firm shall be final and binding on the
parties hereto. Comdata and IPS shall each be responsible for all fees of their
respective accountants and all expenses incurred by such respective firms in
connection with any settlement proceeding. The fees and expenses of the
Selected Accounting Firm incurred in connection with such settlement proceeding
shall be paid fifty (50%) percent by IPS and fifty (50%) percent by Comdata.
(e) Upon final determination pursuant to this SECTION 3.3 of the
Closing Date Gaming Special Report, the Gaming Amounts and the Gaming
Receivables Adjustment, IPS shall deliver to Comdata a report setting forth the
Closing Date Gaming Special Report, the Gaming Amounts, and the Gaming
Receivables Adjustment (the "GAMING ACCOUNTING REPORT").
(f) IPS and Comdata shall make available to one another and the
Selected Accounting Firm, as the case may be, such books, records and other
information (including work papers) as such Person may reasonably request during
the review of the Preliminary Gaming Accounting Report or the preparation of the
Gaming Accounting Report.
3.4. DETERMINATION OF NTS RECEIVABLES ADJUSTMENT. (a) As promptly as
practicable (but not later than sixty days) after the date hereof, Comdata
shall:
(i) prepare, in accordance with the NTS Agreed Accounting Principles,
a written report (the "Preliminary Closing Date NTS Special Report") which
shall fairly present the amounts of the NTS receivables and NTS
liabilities, in each case, as of 11:59 p.m. central time on the date hereof
and of the type reflected as such in the Preliminary Closing Date NTS
Special Report (the amounts of the NTS receivables, and the NTS liabilities
so reflected being referred to respectively herein as the "PRELIMINARY NTS
RECEIVABLES" and the "PRELIMINARY NTS LIABILITIES" and collectively as the
"PRELIMINARY NTS AMOUNTS".)
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(ii) calculate the NTS Receivables Adjustment in accordance with the
provisions of this Agreement, based on the Preliminary Closing Date NTS
Special Report and assuming for such purposes that the Preliminary NTS
Amounts constitute the NTS Amounts (the "PRELIMINARY NTS RECEIVABLES
ADJUSTMENT"); and
(iii) deliver to IPS the Preliminary Closing Date NTS Special Report
and a certificate setting forth the Preliminary NTS Receivables, the
Preliminary NTS Liabilities and the Preliminary NTS Receivables Adjustment,
together with the supporting calculations in reasonable detail
(collectively, the "PRELIMINARY NTS ACCOUNTING REPORT").
(b) Promptly following such delivery of the Preliminary NTS
Accounting Report, IPS shall have the opportunity to review the Preliminary
Closing Date NTS Special Report and the Preliminary NTS Receivables Adjustment.
Not later than 60 days after the date of such receipt, IPS may deliver to
Comdata a certificate (signed by an officer of IPS) setting forth its objections
to the Preliminary Closing Date NTS Special Report, the Preliminary NTS
Receivables, the Preliminary NTS Liabilities or the Preliminary NTS Receivables
Adjustment as set forth in the Preliminary NTS Accounting Report, together with
a summary of the reasons therefor and calculations which, in its view, are
necessary to eliminate such objections. If IPS does not so object within such
60-day period, the Preliminary Closing Date NTS Special Report, the Preliminary
NTS Receivables, the Preliminary NTS Liabilities and the Preliminary NTS
Receivables Adjustment set forth in the Preliminary NTS Accounting Report shall
be final and binding as the Closing Date NTS Special Report, the NTS
Receivables, the NTS Liabilities and the NTS Receivables Adjustment,
respectively, for purposes of this Agreement but shall not limit the
representations, warranties, covenants and agreements of the parties set forth
elsewhere in this Agreement.
(c) If IPS so objects within such 60-day period, Comdata and IPS
shall use their reasonable efforts to resolve by written agreement (the "AGREED
NTS ADJUSTMENTS") any differences as to the Preliminary Closing Date NTS Special
Report, the Preliminary NTS Receivables, the Preliminary NTS Liabilities and the
Preliminary NTS Receivables Adjustment and, if Comdata and IPS so resolve any
such differences, the Preliminary Closing Date NTS Special Report, the
Preliminary NTS Receivables, the Preliminary NTS Liabilities and the Preliminary
NTS Receivables Adjustment set forth in the Preliminary NTS Accounting Report as
adjusted by the Agreed NTS Adjustments shall be final and binding as the Closing
Date NTS Special Report, the NTS Receivables, the NTS Liabilities, and the NTS
Receivables Adjustment, respectively, for purposes of this Agreement but shall
not limit the representations, warranties, covenants and agreements of the
parties set forth elsewhere in this Agreement.
(d) If any objections raised by IPS are not resolved by Agreed NTS
Adjustments within the 60-day period next following such 60-day period, then
Comdata and IPS shall submit the objections that are then unresolved (the
"UNRESOLVED NTS OBJECTIONS") to the Selected Accounting Firm and such Selected
Accounting Firm shall be directed by Comdata and IPS to resolve the Unresolved
NTS Objections (based solely on the presentations by Comdata and IPS as to
whether any disputed matter had been determined in a manner consistent with the
Agreed NTS Accounting Principles) as promptly as reasonably practicable and to
deliver written notice to each
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of Comdata and IPS setting forth its resolution of the disputed matters. The
Preliminary Closing Date NTS Special Report, the Preliminary NTS Receivables,
the Preliminary NTS Liabilities and the Preliminary NTS Receivables Adjustment,
after giving effect to any Agreed NTS Adjustments and to the resolution of
disputed matters by the Selected Accounting Firm, shall be final and binding as
the Closing Date NTS Special Report, the NTS Receivables, the NTS Liabilities,
and the NTS Receivables Adjustment, respectively, for purposes of this Agreement
but shall not limit the representations, warranties, covenants and agreements of
the parties set forth elsewhere in this Agreement. Any determinations by the
Selected Accounting Firm shall be final and binding on the parties hereto. IPS
and Comdata shall each be responsible for all fees of their respective
accountants and all expenses incurred by such respective firms in connection
with any settlement proceeding. The fees and expenses of the Selected
Accounting Firm incurred in connection with such settlement proceeding shall be
paid fifty (50%) percent by IPS and fifty (50%) percent by Comdata.
(e) Upon final determination pursuant to this SECTION 4.4 of the
Closing Date NTS Special Report, the NTS Amounts and the NTS Receivables
Adjustment, Comdata shall deliver to IPS a report setting forth the Closing Date
NTS Special Report, the NTS Amounts and the NTS Receivables Adjustment (the "NTS
ACCOUNTING REPORT").
(f) IPS and Comdata shall make available to one another and the
Selected Accounting Firm, as the case may be, such books, records and other
information (including work papers) as such Person may reasonably request during
the review of the Preliminary NTS Accounting Report or the preparation of the
NTS Accounting Report.
3.5. NET RECEIVABLES ADJUSTMENT. Promptly (but not later than five
business days) after the later of (i) the determination of the Gaming
Receivables Adjustment pursuant to SECTION 3.3 that is final and binding as set
forth therein or (ii) the determination of the NTS Receivables Adjustment
pursuant to SECTION 3.4 that is final and binding as set forth therein:
(a) if the Gaming Receivables Adjustment exceeds the NTS Receivables
Adjustment, NTS shall pay to Comdata, by wire transfer of immediately available
funds to such bank account of Comdata as Comdata shall designate in writing to
NTS, an amount equal to such excess, plus interest on such excess from the date
hereof to the date of payment thereof at the Agreed Rate; or
(b) if the NTS Receivables Adjustment exceeds the Gaming Receivables
Adjustment, Comdata shall pay to NTS, by wire transfer of immediately available
funds to such bank account of NTS as NTS shall designate in writing to Comdata
an amount equal to such excess, plus interest on such excess from the date
hereof to the date or payment thereof at the Agreed Rate.
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ARTICLE IV
CLOSING
4.1. CLOSING. The Closing shall be consummated on January 16, 1998
at the offices of Sidley & Austin, One First National Plaza, Chicago, Illinois.
At the Closing, the parties shall effect the deliveries contemplated by SECTIONS
4.3 and 4.4. As soon as practicable thereafter, NTS and Comdata shall file with
the Department of Assessments and Taxation of the State of Maryland Articles of
Transfer in the form of EXHIBIT H. For all purposes of this Agreement, the
Closing shall be deemed effective as of 11:59 p.m. central time on the date
hereof (it being understood that the transfer of the NT Canada Shares from NTS
to Permicom shall be deemed to have occurred immediately prior to the transfer
of the Purchased NTS Assets to Comdata).
4.2. DELIVERY OF PROMISSORY NOTES. Simultaneously with the execution
hereof, Permicom shall deliver to NTS the Permicom Note, following which NTS
shall deliver to Comdata the NTS Note.
4.3. FDC's, IPS', NTS' AND FDFS' ADDITIONAL DELIVERIES.
Simultaneously with the execution hereof, FDC, IPS, NTS and FDFS shall deliver
to Comdata, Ceridian and Permicom all the following:
(a) A copy of the Certificate of Incorporation of FDC certified as of
a recent date by the Secretary of State of the State of Delaware;
(b) Certificate of Good Standing of FDC issued as of a recent date by
the Secretary of State of the State of Delaware;
(c) Certificate of the secretary or an assistant secretary of FDC,
dated the date hereof, in form and substance reasonably satisfactory to
Comdata, as to (i) no amendments to the Certificate of Incorporation of FDC
since a specified date; (ii) the by-laws of FDC; (iii) the resolutions of
the Board of Directors of FDC authorizing the execution and performance of
this Agreement and the transactions contemplated hereby; and (iv)
incumbency and signatures of the officers of FDC executing this Agreement
and any IPS Ancillary Agreement;
(d) A copy of the Certificate of Incorporation of IPS certified as of
a recent date by the Secretary of State of the State of Delaware;
(e) Certificate of Good Standing of IPS issued as of a recent date by
the Secretary of State of the State of Delaware;
(f) Certificate of the secretary or an assistant secretary of IPS,
dated the date hereof, in form and substance reasonably satisfactory to
Comdata, as to (i) no amendments to the Certificate of Incorporation of IPS
since a specified date; (ii) the by-laws of IPS; (iii) the resolutions of
the Board of Directors of IPS authorizing the execution and
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performance of this Agreement and the transactions contemplated hereby; and
(iv) incumbency and signatures of the officers of IPS executing this
Agreement and any IPS Ancillary Agreement;
(g) A copy of the Certificate of Incorporation of NTS certified as of
a recent date by the Secretary of State of the State of Maryland;
(h) Certificate of good standing of NTS issued as of a recent date by
the Secretary of State of the State of Maryland;
(i) Certificate of the secretary or an assistant secretary of NTS,
dated the date hereof, in form and substance reasonably satisfactory to
Comdata, as to (i) no amendments to the Certificate of Incorporation of NTS
since a specified date; (ii) the by-laws of NTS; (iii) the resolutions of
the Board of Directors of NTS and sole stockholder authorizing the
execution and performance of this Agreement and the transactions
contemplated hereby; and (iv) incumbency and signatures of the officers of
NTS executing this Agreement and any IPS Ancillary Agreement;
(j) Certificate of Good Standing of NTS Subsidiary issued as of a
recent date by Ministry of Consumer and Commercial Relations;
(k) Certificate of the secretary or an assistant secretary of NTS
Subsidiary dated the date hereof, in form and substance reasonably
satisfactory to Comdata, as to (i) no amendments to the Charter of NTS
Subsidiary since a specified date and (ii) the by-laws of the NTS
Subsidiary;
(l) Certificate of the secretary or assistant secretary of FDFS dated
the date hereof, in form and substance reasonably satisfactory to Comdata
as to (i) no amendments to the certificate of formation of FDFS since a
specified date;
(m) The FDFS Instrument of Assumption pursuant to which FDFS shall
assume and agree to discharge the Assumed Gaming Liabilities in accordance
with their respective terms and subject to the respective conditions
thereof duly executed by FDFS;
(n) The NTS Instrument of Assignment pursuant to which NTS shall
transfer and assign (i) the Purchased NTS Assets (except the NT Canada
Shares) to Comdata and (ii) the NT Canada Shares to Permicom, duly executed
by NTS;
(o) a stock certificate representing the NT Canada Shares,
accompanied by a duly executed and witnessed stock power, transferring the
NT Canada Shares to Permicom;
(p) Certificates of title or origin (or like documents) with respect
to any vehicles or other equipment included in the Purchased NTS Assets for
which a certificate of title or origin is required in order to transfer
title;
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(q) All consents, waivers or approvals obtained by FDC, IPS, FDFS,
NTS or the NTS Subsidiary with respect to the Purchased NTS Assets or the
consummation of the transactions contemplated by this Agreement;
(r) The Gaming Business Transition Services Agreement duly executed
by IPS, FDT and FDFS;
(s) The NTS Business Transition Services Agreement duly executed by
NTS, IPS and FDT;
(t) The Services and Processing Agreement duly executed by IPS and
FDT;
(u) All consents, waivers or approvals obtained by FDC, IPS, NTS,
FDFS or the NTS Subsidiary with respect to the consummation of the
transactions contemplated by this Agreement;
(v) A signed resignation by each of the directors and officers of the
NTS Subsidiary;
(w) All minute books and stock ledgers of the NTS Subsidiary;
(x) An assignment, in recordable form, with respect to each of the
leases of real estate described in SCHEDULE 6.11, duly executed by NTS and
in form and substance reasonably satisfactory to Comdata;
(y) Such other bills of sale, assignments and other instruments of
transfer or conveyance as Comdata may reasonably request or as may be
otherwise necessary to evidence and effect the sale, transfer, conveyance
and delivery of the Purchased NTS Assets (except the NT Canada Shares) to
Comdata and the NT Canada Shares to Permicom.
(z) A receipt evidencing receipt of the Cashcall Inc. Shares duly
executed by FDFS;
(aa) The NTS Canadian Instrument of Assignment pursuant to which the
NTS Subsidiary shall transfer and assign the NTS Subsidiary Excluded Assets
to NTS duly executed by NTS; and
(ab) The NTS Canadian Instrument of Assumption pursuant to which NTS
shall assume and agree to discharge the NTS Subsidiary Excluded Liabilities
of the NTS Subsidiary duly executed by NTS.
In addition to the above deliveries, FDC, IPS, NTS and the NTS Subsidiary shall
take all steps and actions including the delivery of such other bills of sale,
deeds, endorsements, assignments and other good and sufficient instruments of
conveyance and transfer, as Ceridian, Comdata or
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Permicom may reasonably request or as may otherwise be necessary to put Comdata
in control and possession of the Purchased NTS Assets (except the NT Canada
Shares) and Permicom in control and possession of the NT Canada Shares.
4.4. CERIDIAN'S, COMDATA'S AND PERMICOM'S ADDITIONAL DELIVERIES.
Simultaneously with the execution hereof, Ceridian, Comdata or Permicom shall
deliver to FDC, IPS, NTS and FDFS all the following:
(a) A copy of Ceridian's Certificate of Incorporation certified as of
a recent date by the Secretary of State of the State of Delaware;
(b) Certificate of Good Standing of Ceridian issued as of a recent
date by the Secretary of State of the State of Delaware;
(c) Certificate of the secretary or an assistant secretary of
Ceridian, dated the date hereof, in form and substance reasonably
satisfactory to FDC, as to (i) no amendments to the Certificate of
Incorporation of Ceridian since a specified date; (ii) the by-laws of
Ceridian; (iii) the resolutions of the Board of Directors of Ceridian
authorizing the execution and performance of this Agreement and the
transactions contemplated hereby; and (iv) incumbency and signatures of the
officers of Ceridian executing this Agreement and any Comdata Ancillary
Agreement;
(d) A copy of the Certificate of Incorporation of Comdata certified
as of a recent date by the Secretary of State of the State of Maryland;
(e) Certificate of good standing of Comdata issued as of a recent
date by the Secretary of State of the State of Maryland;
(f) Certificate of the secretary or an assistant secretary of
Comdata, dated the date hereof, in form and substance reasonably
satisfactory to FDC, as to (i) no amendments to the Certificate of
Incorporation of Comdata since a specified date; (ii) the by-laws of
Comdata; (iii) the resolutions of the Board of Directors of Comdata
authorizing the execution and performance of this Agreement and the
transactions contemplated hereby; and (iv) incumbency and signatures of the
officers of Comdata executing this Agreement and any Comdata Ancillary
Agreement;
(g) Certificate of Good Standing of Gaming Subsidiary issued as of a
recent date by the Ministry of Consumer and Commercial Relations.
(h) Certificate of the secretary or an assistant secretary of Gaming
Subsidiary dated the date hereof, in form and substance reasonably
satisfactory to FDC, as to (i) no amendments to the Charter of Gaming
Subsidiary since a specified date and (ii) the by-laws of Gaming
Subsidiary;
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(i) Certificate of the secretary or an assistant secretary of
Permicom dated the date hereof, in form and substance reasonably
satisfactory to FDC, as to (i) no amendments to the Charter of Permicom
since a specified date and (ii) the by-laws of Permicom;
(j) The Comdata Instrument of Assumption pursuant to which Comdata
shall assume and agree to discharge the Assumed NTS Liabilities in
accordance with their respective terms and subject to the respective
conditions thereof duly executed by Comdata;
(k) The Comdata Instrument of Assignment pursuant to which Comdata
shall transfer and assign the Purchased Gaming Assets to FDFS duly executed
by Comdata;
(l) Certificates of title or origin (or like documents) with respect
to any vehicles or other equipment included in the Purchased Gaming Assets
for which a certificate of title or origin is required in order to transfer
title;
(m) All consents, waivers or approvals obtained by Ceridian, Comdata
or the Gaming Subsidiary with respect to the Purchased Gaming Assets or the
consummation of the transactions contemplated by this Agreement;
(n) A stock certificate representing the Cashcall Inc. Shares,
accompanied by a duly executed and witnessed stock power transferring the
Cashcall Inc. Shares to FDFS;
(o) The Gaming Business Transition Services Agreement duly executed
by Comdata;
(p) The NTS Business Transition Services Agreement, duly executed by
Comdata;
(q) The Services and Processing Agreement duly executed by Comdata;
(r) All consents, waivers or approvals obtained by Comdata or the
Gaming Subsidiary with respect to the consummation of the transactions
contemplated by this Agreement;
(s) A signed resignation by each of the directors and officers of the
Gaming Subsidiary;
(t) All minute books and stock ledgers of the Gaming Subsidiary;
(u) An assignment, in recordable form, with respect to each of the
leases of real estate described in SCHEDULE 6.11, duly executed by Ceridian
or Comdata and in form and substance reasonably satisfactory to FDFS;
(v) Such other bills of sale, assignments and other instruments of
transfer or conveyance as FDFS may reasonably request or as may be
otherwise necessary to
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evidence and effect the sale, assignment, transfer, conveyance and delivery
of the Purchased Gaming Assets to FDFS;
(w) A receipt evidencing receipt of the NT Canada Shares, duly
executed by Permicom;
(x) A receipt evidencing receipt of the Initial Amount duly executed
by Comdata.
(y) The Comdata Canadian Instrument of Assignment pursuant to which
the Gaming Subsidiary shall transfer and assign the Gaming Subsidiary
Excluded Assets to Comdata; and
(z) The Comdata Canadian Instrument of Assumption pursuant to which
Comdata shall assume and agree to discharge the Gaming Subsidiary Excluded
Liabilities of the Gaming Subsidiary.
In addition to the above deliveries, Ceridian, Comdata and the Gaming Subsidiary
shall take all steps and actions, including the delivery of such other bills of
sale, deeds, endorsements, assignments, and other good and sufficient
instruments of conveyance and transfer, as IPS, FDC, NTS or FDFS may reasonably
request or as may otherwise be necessary to put FDFS in actual possession or
control of the Purchased Gaming Assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CERIDIAN AND COMDATA
As an inducement to FDC, IPS, NTS and FDFS to enter into this
Agreement and to consummate the transactions contemplated hereby, Ceridian,
Comdata and Permicom represent and warrant to FDC, IPS, NTS and FDFS and agree
as follows:
5.1. ORGANIZATION. (a) Ceridian is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Ceridian is duly qualified to transact business as a foreign corporation and is
in good standing in all jurisdictions except where the absence of such
qualification would not have a Material Adverse Effect. No other jurisdiction
has demanded, requested or otherwise indicated that Ceridian is required so to
qualify on account of the ownership or leasing of the Purchased Gaming Assets or
the conduct of the Gaming Business. Ceridian has full power and authority to
own or lease and to operate and use the Purchased Gaming Assets and to carry on
the Gaming Business as now conducted.
True and complete copies of the certificate of incorporation and all
amendments thereto and of the By-laws, as amended to date, of Ceridian have been
delivered to IPS.
(b) Comdata is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland. Comdata is duly
qualified to transact business as a
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foreign corporation and is in good standing in all jurisdictions except where
the absence of such qualification would not have a Material Adverse Effect. No
other jurisdiction has demanded, requested or otherwise indicated that Comdata
is required so to qualify on account of the ownership or leasing of the
Purchased Gaming Assets or the conduct of the Gaming Business. Except as set
forth on SCHEDULE 5.22, Comdata has full power and authority to own or lease and
to operate and use the Purchased Gaming Assets and to carry on the Gaming
Business as now conducted.
True and complete copies of the certificate of incorporation and all
amendments thereto and of the By-laws, as amended to date, of Comdata have been
delivered to IPS.
(c) The Gaming Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to transact business as a foreign
corporation and is in good standing in all jurisdictions except where the
absence of such qualification would not have a Material Adverse Effect and no
other jurisdiction has demanded, requested or otherwise indicated that the
Gaming Subsidiary is required so to qualify. The Gaming Subsidiary has full
power and authority to own or lease and to operate and use its properties and
assets and to carry on its business as now conducted.
True and complete copies of the certificate or articles of
incorporation and all amendments thereto, the By-laws, as amended to date, and
the stock ledger of the Gaming Subsidiary have been delivered to IPS.
(d) Permicom is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction.
5.2. SUBSIDIARIES AND INVESTMENTS. (a) Except for the Gaming
Subsidiary and as set forth in SCHEDULE 5.2(A), neither Ceridian or Comdata
directly or indirectly, (i) owns, of record or beneficially, any outstanding
voting securities or other equity interests in any corporation, partnership,
joint venture or other entity which is involved in or relates to the Gaming
Business or (ii) controls any corporation, partnership, limited liability
company, joint venture or other entity which is involved in or relates to the
Gaming Business.
(b) SCHEDULE 5.2(B) sets forth with respect to the Gaming Subsidiary
on the date hereof the number of authorized, issued and outstanding shares of
capital stock of each class, the number of issued shares of capital stock held
as treasury shares and the number of shares of capital stock unissued and
reserved for any purpose. Except as set forth in SCHEDULE 5.2(B) and except for
this Agreement, there are no agreements, arrangements, options, warrants, calls,
rights or commitments of any character relating to the issuance, sale, purchase
or redemption of any shares of capital stock of the Gaming Subsidiary. All of
the outstanding shares of capital stock of the Gaming Subsidiary are validly
issued, fully paid and nonassessable and, except as set forth in
SCHEDULE 5.2(B), are owned by Comdata of record and beneficially free from all
Encumbrances of any kind.
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5.3. AUTHORITY. (a) Ceridian has full power and authority to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement by Ceridian has been duly authorized and approved
by Ceridian's board of directors and does not require any further authorization
or consent of Ceridian or its stockholders. This Agreement has been duly
authorized, executed and delivered by Ceridian and is the legal, valid and
binding obligation of Ceridian enforceable in accordance with its terms, and
upon execution and delivery by Ceridian will be a legal, valid and binding
obligation of Ceridian enforceable in accordance with its terms,
and each of the Comdata Ancillary Agreements has been duly authorized by
Ceridian and upon execution and delivery by Ceridian will be a legal, valid and
binding obligation of Ceridian enforceable in accordance with its terms.
(b) Comdata has full power and authority to execute, deliver and
perform this Agreement and all of the Comdata Ancillary Agreements. The
execution, delivery and performance of this Agreement and the Comdata Ancillary
Agreements by Comdata have been duly authorized and approved by Comdata's board
of directors and sole stockholder and do not require any further authorization
or consent. This Agreement has been duly authorized, executed and delivered by
Comdata and is the legal, valid and binding obligation of Comdata enforceable in
accordance with its terms, and each of the Comdata Ancillary Agreements has been
duly authorized by Comdata and upon execution and delivery by Comdata will be a
legal, valid and binding obligation of Comdata enforceable in accordance with
its terms.
(c) Permicom has full power and authority to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement by Permicom have been duly authorized and approved by Permicom's board
of directors and sole stockholder and do not require any further authorization
or consent of Permicom or its stockholder. This Agreement has been duly
authorized, executed and delivered by Permicom and is the legal, valid and
binding obligation of Permicom enforceable in accordance with its terms.
(d) Except as set forth in SCHEDULE 5.3, neither the execution and
delivery of this Agreement or any of the Comdata Ancillary Agreements or the
consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under, (1) the charter or By-laws of Ceridian, Comdata, the Gaming
Subsidiary or Permicom; (2) any Gaming Agreement, (3) any other material
note, instrument, agreement, mortgage, lease, license, franchise, permit or
other authorization, right, restriction or obligation to which Ceridian,
Comdata, the Gaming Subsidiary or Permicom is a party or any of the
Purchased Gaming Assets is subject or by which Ceridian, Comdata, the
Gaming Subsidiary or Permicom is bound, (4) any Court Order to which
Ceridian, Comdata, the Gaming Subsidiary or Permicom is a party or any of
the Purchased Gaming Assets is subject or by which Ceridian, Comdata, the
Gaming Subsidiary or Permicom is bound, or (5) any Requirements of Laws
affecting
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Xxxxxxxx, Xxxxxxx, the Gaming Subsidiary, Permicom or the Purchased Gaming
Assets; or
(ii) require the approval, consent, authorization or act of, or the
making by Ceridian, Comdata, the Gaming Subsidiary, Permicom or the Gaming
Business of any declaration, filing or registration with, any Person.
(e) With respect to the transactions contemplated by this Agreement,
Comdata is not required, pursuant to the Maryland General Corporation Law, to
file Articles of Transfer with the Department of Assessments and Taxation of the
State of Maryland or otherwise take any action pursuant to Sections 3-105, 3-107
or 3-110 of the Maryland General Corporation Law.
5.4. FINANCIAL STATEMENTS. SCHEDULE 5.4 contains (i) the unaudited
balance sheet of the Gaming Business as of December 31, 1996 and the related
statements of income and cash flows for the year then ended and (ii) the
unaudited balance sheet of the Gaming Business as of September 30, 1997 and the
related statements of income and cash flows for the nine months then ended.
Except as set forth therein, such balance sheets and statements of income and
cash flow have been prepared in conformity with generally accepted accounting
principles consistently applied, and such balance sheets and related statements
of income and cash flow present fairly the financial position and results of
operations and cash flow of the Gaming Business as of their respective dates and
for the respective periods covered thereby.
5.5. OPERATIONS SINCE THE GAMING BALANCE SHEET DATE. (a) Except as
set forth in SCHEDULE 5.5(A) or SCHEDULE 5.22, and except as due to changes in
the general economic environment, since the Gaming Balance Sheet Date, there has
been:
(i) no material adverse change in the Purchased Gaming Assets, the
Gaming Business or the operations, liabilities, profits, or condition
(financial or otherwise) of the Gaming Business, and no fact or condition
exists or is contemplated or, to the knowledge of Comdata or the Gaming
Subsidiary, threatened which might reasonably be expected to cause such a
change in the future; and
(ii) no damage, destruction, loss or claim, whether or not covered by
insurance, or condemnation or other taking adversely affecting any of the
Purchased Gaming Assets or the Gaming Business.
(b) Except as set forth in SCHEDULE 5.5(B), since the Gaming Balance
Sheet Date, Comdata and the Gaming Subsidiary conducted the Gaming Business only
in the ordinary course and in conformity with past practice. Without limiting
the generality of the foregoing, since the Gaming Balance Sheet Date, except as
set forth in such Schedule, Comdata has not, in respect of the Gaming Business,
and the Gaming Subsidiary has not:
(i) sold, leased (as lessor), transferred or otherwise disposed of
(including any transfers from the Gaming Business to Ceridian, Comdata or
any of their respective Affiliates), or mortgaged or pledged, or imposed or
suffered to be imposed any
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Encumbrance (other than a Permitted Encumbrance) on, any of the assets
reflected on the Gaming Balance Sheet or any assets acquired by the Gaming
Business after the Gaming Balance Sheet Date, except for inventory and
minor amounts of personal property sold or otherwise disposed of for fair
value in the ordinary course of the Gaming Business;
(ii) canceled any debts owed to or claims held by the Gaming Business
(including the settlement of any claims or litigation) or waived any other
rights held by the Gaming Business other than in the ordinary course of the
Gaming Business consistent with past practice;
(iii) paid any claims against the Gaming Business (including the
settlement of any claims and litigation against the Gaming Business or the
payment or settlement of any obligations or liabilities of the Gaming
Business) other than in the ordinary course of business consistent with
past practice;
(iv) created, incurred or assumed, or agreed to create, incur or
assume, any indebtedness for borrowed money in respect of the Gaming
Business (other than money borrowed or advances from Ceridian, Comdata or
any of their respective Affiliates in the ordinary course of the Gaming
Business consistent with past practice) or entered into, as lessee, any
capitalized lease obligations (as defined in Statement of Financial
Accounting Standards No. 13);
(v) accelerated or delayed collection of notes or accounts receivable
generated by the Gaming Business in advance of or beyond their regular due
dates or the dates when the same would have been collected in the ordinary
course of the Gaming Business consistent with past practice;
(vi) delayed or accelerated payment of any account payable or other
liability of the Gaming Business beyond or in advance of its due date or
the date when such liability would have been paid in the ordinary course of
the Gaming Business consistent with past practice;
(vii) acquired any real property or undertaken or committed to
undertake capital expenditures exceeding $10,000 in the aggregate;
(viii) made, or agreed to make, any payment of cash or distribution
of assets to Ceridian, Comdata or any of their respective Affiliates (other
than cash realized upon collection of receivables generated in the ordinary
course of the Gaming Business);
(ix) instituted any increase in any compensation payable to any
officer or employee of Comdata or the Gaming Subsidiary with respect to the
Gaming Business (other than changes made in accordance with normal
compensation practices and consistent with past compensation practices) or
in any profit-sharing, bonus, incentive, deferred compensation, insurance,
pension, retirement, medical, hospital, disability,
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welfare or other benefits made available to officers or employees of
Comdata or the Gaming Subsidiary with respect to the Gaming Business;
(x) made any change in (A) the accounting principles and practices
used by Comdata or the Gaming Subsidiary from those applied in the
preparation of the Gaming Balance Sheet and the related statements of
income and cash flow for the period then ended or (B) the charge-off
policies applicable to accounts receivable;
(xi) entered into or become committed to enter into any other material
transaction except in the ordinary course of business;
(xii) amended the Gaming Subsidiary's certificate of incorporation or
by-laws;
(xiii) issued, granted, sold or encumbered any shares of the Gaming
Subsidiary's capital stock or other securities; issued, granted, sold or
encumbered any security, option, warrant, put, call, subscription or other
right of any kind, fixed or contingent, that directly or indirectly calls
for the acquisition, issuance, sale, pledge or other disposition of any
shares of its capital stock or other securities or make any other changes
in the equity capital structure of the Gaming Subsidiary;
(xiv) made any material change in the operations of the Gaming
Business or any expenditure in respect of the Gaming Business which
shall exceed $50,000 in the aggregate;
(xv) made any capital expenditure with respect to the Gaming
Business or entered into any contract or commitment therefor which
shall exceed $50,000 in the aggregate;
(xvi) entered into any contract, agreement, undertaking or
commitment which would have been required to be set forth in
SCHEDULE 5.20 if in effect on the date hereof or entered into any
contract which requires the consent or approval of any third party to
consummate the transactions contemplated by this Agreement; or made
any material modification to any existing, material Gaming Agreement
or to any Gaming Business Governmental Permits, other than changes
made in good faith to cure document deficiencies; or
(xvii) entered into any contract for the purchase, lease (as
lessee) or other occupancy of real property to be used by the Gaming
Business or any option to extend a lease listed in SCHEDULE 5.11(A).
5.6. NO FINDER. Neither Comdata, any Affiliate thereof nor any
Person acting on behalf of the foregoing has paid or become obligated to pay any
fee or commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement.
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5.7. TAXES. Except as set forth in SCHEDULE 5.7, (i) Ceridian and
Comdata have, in respect of the Gaming Business and the Purchased Gaming Assets,
and the Gaming Subsidiary has filed all Tax Returns which are required to be
filed and Ceridian, Comdata and the Gaming Subsidiary have paid all Taxes which
have become due pursuant to such Tax Returns or pursuant to any assessment which
has become payable; (ii) all such Tax Returns are complete and accurate and
disclose all Taxes required to be paid in respect of the Gaming Business, the
Purchased Gaming Assets and the Gaming Subsidiary; (iii) all such Tax Returns
relating to United States federal income Taxes have been examined by the
relevant taxing authority or the period for assessment of the Taxes in respect
of which such Tax Returns were required to be filed has expired; (iv) there is
no action, suit, investigation, audit, claim or assessment pending or proposed
or threatened with respect to Taxes of the Gaming Business, the Purchased Gaming
Assets or the Gaming Subsidiary; (v) none of Ceridian, Comdata or the Gaming
Subsidiary has waived or been requested to waive any statute of limitations in
respect of Taxes associated with the Gaming Business, the Purchased Gaming
Assets or the Gaming Subsidiary which waiver is currently in effect; (vi) all
monies required to be withheld by Comdata or the Gaming Subsidiary (including
from employees of the Gaming Business for income Taxes and social security and
other payroll Taxes) have been collected or withheld, and either paid to the
respective taxing authorities, set aside in accounts for such purpose, or
accrued, reserved against and entered upon the books of the Gaming Business;
(vii) Comdata is properly treated as the owner, for all federal, state, local
and other income Tax purposes, of all property of which it is the lessor; (viii)
no change in Tax accounting method which would affect the Gaming Subsidiary
after the Closing has been made, agreed to, requested or required with respect
to its assets or operations; (ix) all tax sharing arrangements and tax
indemnity arrangements relating to the Gaming Subsidiary (other than this
Agreement) will terminate prior to the Closing and the Gaming Subsidiary will
have no liability thereunder on or after the Closing; (x) the Gaming Subsidiary
is not a party to any agreement relating to a foreign sales corporation within
the meaning of Section 922 of the Code; (xi) there are no pending claims for
refund of any Tax attributable to the Gaming Subsidiary (including refunds of
Taxes allocable to the Gaming Subsidiary with respect to any consolidated,
combined, unitary, fiscal unity or similar Tax Returns; (xii) each asset with
respect to which the Gaming Subsidiary claims depreciation, amortization or
similar expense for Tax purposes is owned for Tax purposes by the Gaming
Subsidiary under applicable Tax law; (xiii) the Gaming Subsidiary has always
been properly classified as a corporation for United States federal income Tax
purposes;(xiv) there are no outstanding rulings of, or requests for rulings
with, any Tax authority expressly addressed to the Gaming Subsidiary (or to an
Affiliate of any Gaming Subsidiary) that are, or if issued would be, binding
upon the Gaming Subsidiary for any taxable year or period beginning after the
Closing; (xv) the Gaming Subsidiary (or any Affiliates of the Gaming Subsidiary
with respect to the Gaming Subsidiary) has not, in a manner that would be
binding on the Gaming Subsidiary for a taxable year or period beginning after
the Closing 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; (xvi) the Gaming Subsidiary
has not made and is not subject to any election under Section 341(f) of the
Code; (xvii) 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 used to finance any of the assets of the
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Gaming Subsidiary, whether leased or owned; (xviii) the Gaming Subsidiary has
not made or is not bound by any election under Section 197 of the Code; (xix)
Ceridian has not and will not file for the year in which the Closing occurs a
consolidated federal income tax return with the Gaming Subsidiary; (xx) all
material elections with respect to Taxes affecting the Gaming Subsidiary as of
the date hereof are set forth in SCHEDULE 5.7; (xxi) 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 the Gaming Subsidiary for
longer than two years to any person with whom the Gaming Subsidiary was not
dealing at arms' length at the time of the outlay or expense was incurred or 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; and (xxii) 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 the Gaming Subsidiary.
5.8. AVAILABILITY OF ASSETS. (a) Except as set forth in SCHEDULE
5.8(A) and except for the Excluded Gaming Assets, the Purchased Gaming Assets
constitute all the assets, services and properties used in or necessary for the
Gaming Business as currently configured (including, but not limited to, all
books, records, computers and computer programs and data processing systems) and
are in good condition (subject to normal wear and tear) and serviceable
condition and are suitable for the uses for which intended.
(b) SCHEDULE 5.8(B) sets forth a description of all material services
provided by Comdata or any Affiliate of Comdata, other than those services to be
provided pursuant to the Gaming Business Transition Services Agreement, to the
Gaming Business utilizing either (i) assets not included in the Purchased Gaming
Assets or (ii) employees not listed in SCHEDULE 7.4(B) and the manner in which
the costs of providing such services have been allocated to the Gaming Business.
5.9. GOVERNMENTAL PERMITS. Except as set forth in SCHEDULE 5.9,
Comdata or the Gaming Subsidiary owns, holds or possesses all licenses,
franchises, permits, privileges, immunities, approvals and other authorizations
from a Governmental Body which are necessary to entitle it to own or lease,
operate and use the Purchased Gaming Assets and to carry on and conduct the
Gaming Business substantially as currently conducted (herein collectively called
"GAMING BUSINESS GOVERNMENTAL PERMITS"), except for such Governmental Permits as
to which the failure to so own, hold or possess would not have a material
adverse effect on the Purchased Gaming Assets, the Gaming Business or the
operations, liabilities, profits, prospects or condition (financial or
otherwise) of the Gaming Business. SCHEDULE 5.9 sets forth a list and brief
description of each Gaming Business Governmental Permit. Complete and correct
copies of all of the Gaming Business Governmental Permits have heretofore been
delivered by Comdata to IPS.
Except as set forth in SCHEDULE 5.9, (i) Comdata or the Gaming
Subsidiary has fulfilled and performed its obligations under each of the Gaming
Business Governmental Permits, and, to the knowledge of Comdata or the Gaming
Subsidiary, no event has occurred or condition or state of facts exists which
constitutes or, after notice or lapse of time or both, would constitute a breach
or default under any such Gaming Business Governmental Permit or which permits
or,
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after notice or lapse of time or both, would permit revocation or termination of
any such Gaming Business Governmental Permit, or which might adversely affect
the rights of Comdata or the Gaming Subsidiary under any such Gaming Business
Governmental Permit; (ii) no notice of cancellation, of default or of any
dispute concerning any Gaming Business Governmental Permit, or of any event,
condition or state of facts described in the preceding clause, has been received
by, or is known to, Comdata or the Gaming Subsidiary; and (iii) each of the
Gaming Business Governmental Permits is valid, subsisting and in full force and
effect.
5.10. REAL PROPERTY. Neither Comdata (in respect of the Gaming
Business) or the Gaming Subsidiary (a) owns any real property or (b) holds any
options to acquire real property.
5.11. REAL PROPERTY LEASES. SCHEDULE 5.11(A) sets forth a list and
brief description of each lease or similar agreement (showing the parties
thereto, annual rental, and the location of the real property covered by and the
space occupied under, such lease or other agreement) under which (i) Comdata (in
respect of the Gaming Business) or the Gaming Subsidiary is lessee of, or holds,
uses or operates, any real property owned by any third Person (the "GAMING
BUSINESS LEASED REAL PROPERTY") or (ii) Comdata (in respect of the Gaming
Business) or the Gaming Subsidiary is lessor of any of the Gaming Business
Leased Real Property. Except as set forth in SCHEDULE 5.11(B), Comdata or the
Gaming Subsidiary has the right to quiet enjoyment of all the Gaming Business
Leased Real Property described in SCHEDULE 5.11(A) for the full term of each
such lease or similar agreement (and any renewal option) relating thereto, and
the leasehold or other interest of Comdata or the Gaming Subsidiary in such
Gaming Business Leased Real Property is not subject or subordinate to any
Encumbrance except for Permitted Encumbrances. Except as set forth on
SCHEDULE 5.11(C), and except for Permitted Encumbrances, there are no agreements
or other documents governing or affecting the occupancy or tenancy of any of the
Gaming Business Leased Real Property by Comdata or the Gaming Subsidiary or by
any Person other than Comdata or the Gaming Subsidiary. Complete and correct
copies of any instruments evidencing Encumbrances, commitments for the issuance
of title insurance, title opinions, surveys and appraisals in Comdata's or the
Gaming Subsidiary's possession and any policies of title insurance currently in
force and in the possession of Comdata or the Gaming Subsidiary with respect to
each such parcel of Gaming Business Leased Real Property have heretofore been
delivered by Comdata to IPS.
5.12. CONDEMNATION. To the knowledge of Comdata or the Gaming
Subsidiary neither the whole nor any part of any real property leased, used or
occupied by Comdata or the Gaming Subsidiary in connection with the Gaming
Business is subject to any pending suit for condemnation or other taking by any
public authority and no such condemnation or other taking is threatened or
contemplated.
5.13. Personal Property. SCHEDULE 5.13(A) contains a detailed list
of all machinery, equipment, vehicles, furniture and other personal property
owned by Comdata having an original cost of $10,000 or more and used in or
relating to the Gaming Business. Except as set forth in SCHEDULE 5.13(B),
Comdata or the Gaming Subsidiary has good and marketable title to all of the
Purchased Gaming Assets free and clear of all Encumbrances, except for Permitted
Encumbrances.
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5.14. PERSONAL PROPERTY LEASES. SCHEDULE 5.14 contains a brief
description of each lease or other agreement or right, whether written or oral
(including in each case the annual rental, the expiration date thereof and a
brief description of the property covered), under which Comdata or the Gaming
Subsidiary is lessee of, or holds or operates, any machinery, equipment, vehicle
or other tangible personal property owned by a third Person and used in or
relating to the Gaming Business, except for any such lease, agreement or right
that is terminable by Comdata or the Gaming Subsidiary without penalty or
payment on notice of 30 days or less, or which involves the payment by Comdata
or the Gaming Subsidiary of rentals of less than $5,000 per year.
5.15. INTELLECTUAL PROPERTY; SOFTWARE. (a) SCHEDULE 5.15(A)
contains a list and description (showing in each case any product, device,
process, service, business or publication covered thereby, the registered or
other owner, expiration date and number, if any) of all Copyrights, Patent
Rights and Trademarks owned by, licensed to or used by Comdata or the Gaming
Subsidiary in connection with the conduct of the Gaming Business.
(b) SCHEDULE 5.15(B) contains a list and description (showing in each
case any owner, licensor or licensee) of all Software owned by, licensed to or
used by Comdata or the Gaming Subsidiary in the conduct of the Gaming Business,
provided that SCHEDULE 5.15(B) does not list Software licensed to Comdata or the
Gaming Subsidiary that is commercially available and subject to "shrink-wrap" or
"click on" license agreements.
(c) SCHEDULE 5.15(C) contains a list and description (showing in each
case the parties thereto) of all agreements, contracts, licenses, sublicenses,
assignments and indemnities which relate to (i) any Copyrights, Patent Rights or
Trademarks listed in SCHEDULE 5.15(A), (ii) any Trade Secrets owned by, licensed
to or used by Comdata or the Gaming Subsidiary in connection with the conduct of
the Gaming Business or (iii) any Software listed in SCHEDULE 5.15(B).
(d) Except as disclosed in SCHEDULE 5.15(D), Comdata or the Gaming
Subsidiary either: (i) owns the entire right, title and interest in and to the
Intellectual Property and Software included in the Purchased Gaming Assets, free
and clear of any Encumbrance; (ii) has the perpetual, royalty-free right to use
the same or (iii) in the case of third party vendor Software, has the ability to
transfer such Software without the necessity of obtaining consents or the
payment of fees.
(e) Except as disclosed in SCHEDULE 5.15(E): (i) all Copyrights,
Patent Rights and Trademarks, including registrations therefor, identified in
SCHEDULE 5.15(A) as being owned by Comdata or the Gaming Subsidiary are valid
and in force, and all patent applications with respect to Patent Rights and all
applications to register any unregistered Copyrights and Trademarks so
identified are pending and in good standing, all without challenge of any kind;
(ii) the Intellectual Property owned by Comdata or the Gaming Subsidiary and
included in the Purchased Gaming Assets is valid and enforceable; (iii) Comdata
or the Gaming Subsidiary has the sole and exclusive right to bring actions for
infringement or unauthorized use of the Intellectual Property and Software owned
by Comdata or the Gaming Subsidiary and included in the Purchased Gaming Assets,
and to the knowledge of Comdata or the Gaming Subsidiary, there is no basis for
any such
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action; (iv) Comdata or the Gaming Subsidiary has taken all actions reasonably
necessary to protect the Copyrights, Trademarks, Software, Patent Rights or
Trade Secrets included in the Purchased Gaming Assets, including by pursuing
registration where necessary; and (v) neither Comdata or the Gaming Subsidiary
is in breach of any agreement affecting any of the Intellectual Property and
Software included in the Purchased Gaming Assets, and has not taken any action
which would impair or otherwise adversely affect its rights in the Intellectual
Property and Software included in the Purchased Gaming Assets. Correct and
complete copies of: (x) registrations for all registered Copyrights, Patent
Rights and Trademarks identified in SCHEDULE 5.15(A) as being owned by Comdata
or the Gaming Subsidiary; and (y) all pending applications to register
unregistered Copyrights, Patent Rights and Trademarks identified in
SCHEDULE 5.15(A) as being owned by Comdata or the Gaming Subsidiary (together
with any subsequent correspondence or filings relating to the foregoing) have
heretofore been delivered by Comdata to IPS.
(f) Except as set forth in SCHEDULE 5.15(F), (i) to the knowledge of
Comdata or the Gaming Subsidiary, no infringement of any Intellectual Property
Right of any other Person has occurred or results in any way from the operations
of the Gaming Business as previously or currently conducted; (ii) no claim of
any infringement of any Intellectual Property Right of any other Person has been
made or asserted in respect of the operations of the Gaming Business; (iii)
neither Comdata or the Gaming Subsidiary has received notice that any claim of
invalidity of any Copyright, Trademark or Patent Right, Software or Trade Secret
has been made; (iv) no proceedings are pending or, to the knowledge of Comdata
or the Gaming Subsidiary, threatened which challenge the validity, ownership or
use of any of the Gaming Business Intellectual Property; and (v) neither Comdata
or the Gaming Subsidiary has had notice of, or knowledge of any basis for, a
claim against Comdata or the Gaming Subsidiary that the operations, activities,
products, software, equipment, machinery or processes of the Gaming Business
infringe any Intellectual Property Right of any other Person.
(g) Except as disclosed in SCHEDULE 5.15(G): (i) the Software used
in the Gaming Business (the "GAMING BUSINESS OWNED SOFTWARE") is not subject to
any transfer, assignment, source code escrow agreement, reversion, site,
equipment, or other operational limitations; (ii) Comdata or the Gaming
Subsidiary has maintained and protected the Gaming Business Owned Software
(including, without limitation, all source code and system specifications) with
appropriate proprietary notices (including, without limitation, the notice of
copyright in accordance with the requirements of 17 U.S.C. Section 401),
confidentiality and non-disclosure agreements and such other measures as are
reasonably necessary to protect the proprietary, trade secret or confidential
information contained therein; (iii) the Gaming Business Owned Software is
protectable under applicable copyright law and has not been forfeited to the
public domain and has been registered with the U.S. Copyright Office or is
eligible for registration; (iv) Comdata or the Gaming Subsidiary has copies of
all releases or separate versions of the Gaming Business Owned Software so that
the same may be subject to registration in the United States Copyright Office;
(v) Comdata or the Gaming Subsidiary has complete and exclusive right, title and
interest in and to the Gaming Business Owned Software; (vi) Comdata or the
Gaming Subsidiary has developed the Gaming Business Owned Software through its
own efforts and for its own account without the aid or use of any consultants,
agents, independent contractors or Persons (other than
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Persons that are employees of Comdata or the Gaming Subsidiary); (vii) to the
knowledge of Comdata or the Gaming Subsidiary, the Gaming Business Owned
Software does not infringe any Intellectual Property Right of any other Person;
(viii) any Gaming Business Owned Software includes the source code, system
documentation, statements of principles of operation and schematics, as well as
any pertinent commentary and explanation used for the development, maintenance,
implementation and use thereof, so that a trained computer programmer could
develop, maintain, enhance, modify, support, compile and use all releases or
separate versions of the same that are currently subject to maintenance
obligations by Comdata or the Gaming Subsidiary; and (ix) there are no
agreements or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the Gaming Business Owned Software by
any other Person.
(h) Except as disclosed in SCHEDULE 5.15(H), all agents, consultants
or contractors who have contributed to or participated in the creation or
development of any Intellectual Property or Software on behalf of Comdata or the
Gaming Subsidiary or any predecessor in interest thereto either: (i) is a party
to a "work-for-hire" agreement under which Comdata or the Gaming Subsidiary is
deemed to be the original owner/author of all property rights therein; or (ii)
has executed an assignment or an agreement to assign in favor of Comdata or the
Gaming Subsidiary (or such predecessor in interest, as applicable) of all right,
title and interest in such material.
(i) Except as expressly provided herein, FDFS acknowledges and agrees
that the conveyance of the Purchased Gaming Assets from Comdata to FDFS does not
result in any express or implied license or other rights to FDFS or any third
person under any patent rights of Comdata or its Affiliates or under any patent
rights of any third parties licensed to Comdata or its Affiliates whether by
implication, estoppel or otherwise. All such express or implied licenses or
other rights are hereby expressly excluded and disclaimed.
5.16. ACCOUNTS RECEIVABLE. All accounts receivable of the Gaming
Business have arisen from bona fide transactions by Comdata or the Gaming
Subsidiary in the ordinary course of the Gaming Business. All accounts
receivable are good and collectible in the ordinary course of business at the
aggregate recorded amounts thereof, net of any allowance for doubtful accounts;
and all accounts receivable to be reflected in the Closing Date Gaming Special
Report will be good and collectible in the ordinary course of business at the
aggregate recorded amounts thereof, net of any allowance for doubtful accounts,
which allowance will be determined on a basis consistent with the basis used in
determining the allowance for doubtful accounts reflected in the Gaming Balance
Sheet.
5.17. TITLE TO PROPERTY. Comdata or the Gaming Subsidiary has good
and marketable title to all of the Purchased Gaming Assets, free and clear of
all Encumbrances, except for Permitted Encumbrances and except as set forth in
SCHEDULE 5.17. Upon delivery to FDFS on the date hereof of the instruments of
transfer contemplated by Section 4.4, Comdata will thereby transfer to FDFS good
and marketable title to the Purchased Gaming Assets, subject to no Encumbrances,
except for Permitted Encumbrances.
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5.18. EMPLOYEES AND RELATED AGREEMENTS; ERISA. (a) Except as
described in SCHEDULE 5.18(A), neither Comdata or the Gaming Subsidiary is, with
respect to the Gaming Business, a party to or bound by any oral or written:
stock option, stock purchase, bonus or other incentive plan or agreement.
(b) Except as described in SCHEDULE 5.18(B), Comdata does not
maintain, and is not required to contribute to, any "employee pension benefit
plan" (as such term is defined in Section 3(2) of ERISA) or "Welfare Benefit
Plan" (as such term is defined in Section 3(1) of ERISA), on behalf of any
employees or former employees of the Gaming Business. None of Comdata's ERISA
Benefit Plans is a "multiemployer plan" as defined in Section 3(37) of ERISA, or
is or has been subject to Sections 4063 or 4064 of ERISA. Comdata has complied
with the healthcare continuation requirements of Section 601, ET. SEQ., of ERISA
with respect to employees of the Gaming Business and their spouses, former
spouses and dependents.
(c) SCHEDULE 5.18(C) hereto sets forth a true, correct and complete
copy of each severance plan, policy or practice in effect immediately prior to
Closing Date with respect to Transferring Comdata Employees.
5.19. EMPLOYEE RELATIONS. (a) Except as set forth in
SCHEDULE 5.19(A), Comdata and the Gaming Subsidiary have complied in respect of
the Gaming Business with all applicable laws, rules and regulations which relate
to prices, wages, hours, discrimination in employment, occupational safety and
health, and collective bargaining and are not liable for any arrears of wages or
any taxes, penalties or damages for failure to comply with any of the foregoing.
Comdata (in respect of the Gaming Business) and the Gaming Subsidiary are in
compliance with the requirements of WARN and all similar state and local
statutes, laws and regulations and have no liabilities pursuant to any of them.
Comdata believes that its relations with the employees of the Gaming Business
are satisfactory and are not likely to lead to collective bargaining efforts.
Neither Comdata nor the Gaming Subsidiary is a party to, and the Gaming Business
is not affected by or, to the knowledge of Comdata or the Gaming Subsidiary,
threatened with, any dispute or controversy with a union or with respect to
unionization or collective bargaining involving the employees of the Gaming
Business. Neither Comdata, the Gaming Subsidiary nor the Gaming Business is
materially affected by any dispute or controversy with a union or with respect
to unionization or collective bargaining involving any supplier or customer of
the Gaming Business. SCHEDULE 5.19(A) sets forth a description of any union
organizing or election activities involving any non-union employees of the
Gaming Business which have occurred since January 1, 1996 or, to the knowledge
of Comdata or the Gaming Subsidiary, are threatened as of the date hereof.
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(b) Except as set forth in SCHEDULE 5.19(B), since January 1, 1996,
the Gaming Business has not, directly or indirectly, purchased, leased from
others or otherwise acquired any material property or obtained any material
services from, or sold, leased to others or otherwise disposed of any material
property or furnished any material services to (except with respect to
remuneration for services rendered as a director, officer or employee of the
Gaming Business), in the ordinary course of business or otherwise, (i) any
Person who is an officer or director of Comdata or the Gaming Subsidiary or
(ii) any Associate of any person referred to in clause (i) above. Except as set
forth in SCHEDULE 5.19(B), the Gaming Business does not owe any amount in excess
of $10,000 to, or have any contract with or commitment to, Comdata or any
director, officer or employee of Comdata or the Gaming Subsidiary (other than
for compensation for current services not yet due and payable and reimbursement
of expenses arising in the ordinary course of business) and none of such Persons
owes any amount in excess of $10,000 to the Gaming Business.
(c) Neither the Gaming Business nor any officer, employee or agent or
other person acting on its behalf has, directly or indirectly, since January 1,
1993, given or agreed to give any gift or similar benefit (other than with
respect to bona fide payments for which adequate consideration has been given)
to any customer, supplier, governmental employee or other person who is or may
be in a position to help or hinder the business of the Gaming Business (or
assist the Gaming Business in connection with any actual or proposed
transaction) (i) which might subject the Gaming Business to any damage or
penalty in any civil, criminal or governmental litigation or proceeding,
(ii) which, if not continued in the future, would have an adverse effect on the
assets, business, operations or prospects of the Gaming Business or which would
subject the Gaming Business to suit or penalty in any private or governmental
litigation or proceeding, (iii) for any of the purposes described in Section
162(c) of the Code, or (iv) for establishment or maintenance of any concealed
fund or concealed bank account.
5.20. CONTRACTS. Except as set forth in SCHEDULE 5.20 or any other
SCHEDULE hereto, Comdata is not, with respect to the Gaming Business, and the
Gaming Subsidiary is not a party to or bound by:
(i) any contract for the purchase, sale or lease of real property;
(ii) any contract for the purchase of goods or services by Comdata or
the Gaming Subsidiary which involved the payment of more than $50,000 in
1997;
(iii) any contract for the purchase, licensing or development of
software to be used by the Gaming Business except for Software that is
available in consumer retail stores and subject to "shrink-wrap" license
agreements;
(iv) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or advertising or
public relations contract except to the extent such contract is cancelable
without penalty within 30 days;
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(v) any guarantee of the obligations of customers, suppliers,
officers, directors, employees, Affiliates or others except to the extent
such contract is cancelable without penalty within 30 days;
(vi) any agreement which provides for, or relates to, the incurrence
by the Gaming Business of debt for borrowed money (including, without
limitation, any interest rate or foreign currency swap, cap, collar, hedge
or insurance agreements, or options or forwards on such agreements, or
other similar agreements for the purpose of managing the interest rate
and/or foreign exchange risk associated with its financing);
(vii) any contract not made in the ordinary course except to the
extent such contract is cancelable without penalty within 30 days; or
(viii) any other contract, agreement, commitment, understanding or
instrument which is material to the Gaming Business and which involves the
payment of more than $50,000.
5.21. STATUS OF CONTRACTS. Except as set forth in SCHEDULE 5.21 or
in any other Schedule hereto, each of the leases, contracts and other agreements
listed in SCHEDULES 5.11(A), 5.14, 5.15(A), 5.18(C) and 5.20 (collectively, the
"GAMING AGREEMENTS") constitutes a valid and binding obligation of the parties
thereto and is in full force and effect and (except as set forth in SCHEDULE 5.3
and except for those Gaming Agreements which by their terms will expire prior to
the date hereof or are otherwise terminated prior to the date hereof in
accordance with the provisions hereof) to the knowledge of Comdata or the Gaming
Subsidiary, may be transferred to FDFS pursuant to this Agreement and will
continue in full force and effect thereafter, in each case without breaching the
terms thereof or resulting in the forfeiture or impairment of any rights
thereunder and without the consent, approval or act of, the payment of any
transfer or similar fee, or the making of any filing with, any other party.
Comdata and the Gaming Subsidiary have fulfilled and performed their obligations
under each of the Gaming Agreements, and neither Comdata or the Gaming
Subsidiary is in, or alleged to be in, breach or material default under, nor is
there or is there alleged to be any basis for termination of, any of the Gaming
Agreements and to the knowledge of Comdata or the Gaming Subsidiary, no other
party to any of the Gaming Agreements has breached or committed a material
default thereunder, and to the knowledge of Comdata or the Gaming Subsidiary, no
event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach by Comdata, the Gaming Subsidiary or by any such other party. Comdata
is not currently renegotiating any of the Gaming Agreements or paying liquidated
damages in lieu of performance thereunder.
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5.22. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as set
forth in SCHEDULE 5.22:
(i) the Purchased Gaming Assets and the operation of the Gaming
Business complies with all applicable Requirements of Laws and Court
Orders;
(ii) Comdata and the Gaming Subsidiary have complied with all
Requirements of Laws and Court Orders which are applicable to the Purchased
Gaming Assets or the Gaming Business;
(iii) there are no lawsuits, claims, suits, proceedings or
investigations pending or, to the knowledge of Comdata or the Gaming
Subsidiary, threatened against or affecting Comdata or the Gaming
Subsidiary in respect of the Purchased Gaming Assets or the Gaming Business
nor, to the knowledge of Comdata or the Gaming Subsidiary, is there any
basis for any of the same, and there are no lawsuits, suits or proceedings
pending in which Comdata is the plaintiff or claimant and which relate to
the Purchased Gaming Assets or the Gaming Business;
(iv) there is no action, suit or proceeding pending or, to the
knowledge of Comdata or the Gaming Subsidiary, threatened which questions
the legality or propriety of the transactions contemplated by this
Agreement; and
(v) to the knowledge of Comdata or the Gaming Subsidiary, no
legislative or regulatory proposal or other proposal for the change in any
Requirements of Law or the interpretation thereof has been adopted or is
pending which could adversely affect the Gaming Business.
5.23. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 5.23:
(a) the operations of the Gaming Business are, and have been, in
compliance with, and the Gaming Business is not the subject of any judicial or
administrative proceedings or settlements involving alleged violations of or
liability under, Environmental Laws.
(b) no property now or previously owned or operated by the Gaming
Business is under investigation by any Governmental Body or requires remedial
action under any applicable Environmental Laws to address any Contaminant.
5.24. INSURANCE. SCHEDULE 5.24 sets forth a list and brief
description (including nature of coverage, limits, deductibles, premiums and the
loss experience for the most recent five years with respect to each type of
coverage) of all policies of insurance maintained, owned or held by Comdata or
the Gaming Subsidiary on the date hereof with respect to the Purchased Gaming
Assets or the Gaming Business. Comdata and the Gaming Subsidiary have complied
with each such insurance policies and have not failed to give any notice or
present any claim thereunder in a due and timely manner. Comdata or the Gaming
Subsidiary has delivered to FDFS correct and
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complete copies of the most recent inspection reports, if any, received from
insurance underwriters as to the condition of the Purchased Gaming Assets.
5.25. CUSTOMERS AND SUPPLIERS. Set forth in SCHEDULE 5.25 hereto is
a list of names and addresses of the fifteen largest customers for (i) the year
ended December 31, 1996 and (ii) the period from January 1, 1997 through
November 30, 1997 (measured by dollar volume of net revenue in each case) of
Comdata or the Gaming Subsidiary in respect of the Gaming Business and the
percentage of the Gaming Business which each such customer represents or
represented. Except as set forth in SCHEDULE 5.25, there exists no actual or to
the knowledge of Comdata or the Gaming Subsidiary, threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship of Comdata or the Gaming Subsidiary with any customer or group of
customers listed in SCHEDULE 5.25, or whose purchases individually or in the
aggregate are material to the operations of the Gaming Business, and to the
knowledge of Comdata or the Gaming Subsidiary, there exists no present or future
condition or state of facts or circumstances involving customers, suppliers or
sales representatives which Comdata or the Gaming Subsidiary can now reasonably
foresee would materially adversely affect the Gaming Business or prevent the
conduct of the Gaming Business after the consummation of the transactions
contemplated by this Agreement in essentially the same manner in which such
business has heretofore been conducted.
5.26. BANK ACCOUNTS. SCHEDULE 5.26 sets forth a complete and correct
list of all bank accounts and safe deposit boxes related to the Gaming Business
and the individuals authorized to sign or otherwise act with respect thereto as
of the date hereof and a complete and correct list of all Persons holding a
general or special power of attorney related to the Gaming Business granted by
Comdata and a complete and correct copy thereof.
5.27. ESTIMATED CLOSING DATE GAMING SPECIAL REPORT. SCHEDULE 5.27
contains Comdata's bona fide, good faith estimate of the Closing Date Gaming
Special Report (the "ESTIMATED CLOSING DATE GAMING SPECIAL REPORT").
5.28. ESTIMATED AMOUNT OF TRANSFERRED CASH. SCHEDULE 5.28 contains
Comdata's bona fide, good faith estimate of the amount of cash in each of the
Gaming ATM Machines, the Gaming Vaults, Gaming Armored Cars, the Gaming Bank
Accounts and Gaming Booths (identified by geographical location) as of 11:59
p.m. central time on the date hereof and the aggregate amount of such cash in
each case, together with supporting calculations in reasonable detail (the
"ESTIMATED AMOUNT OF TRANSFERRED CASH").
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF FDC, IPS AND NTS
As an inducement to Ceridian, Comdata and Permicom to enter into this
Agreement and to consummate the transactions contemplated hereby, FDC, IPS, NTS
and FDFS hereby represent and warrant to Ceridian, Comdata and Permicom and
agree as follows:
6.1. ORGANIZATION. (a) FDC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. FDC is
duly qualified to transact business as a foreign corporation and is in good
standing in all jurisdictions except where the absence of such qualification
would not have a Material Adverse Effect. No other jurisdiction has demanded,
requested or otherwise indicated that FDC is required so to qualify on account
of the ownership or leasing of the Purchased NTS Assets or the conduct of the
NTS Business. Except as set forth on SCHEDULE 6.22, FDC has full power and
authority to own or lease and to operate and use the Purchased NTS Assets and to
carry on the NTS Business as now conducted.
True and complete copies of the certificate of incorporation and all
amendments thereto and of the By-laws, as amended to date, of FDC have been
delivered to Comdata.
(b) IPS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. IPS is duly qualified to
transact business as a foreign corporation and is in good standing in all
jurisdictions except where the absence of such qualification would not have a
Material Adverse Effect. No other jurisdiction has demanded, requested or
otherwise indicated that IPS is required so to qualify on account of the
ownership or leasing of the Purchased NTS Assets or the conduct of the NTS
Business. IPS has full power and authority to own or lease and to operate and
use the Purchased NTS Assets and to carry on the NTS Business as now conducted.
True and complete copies of the certificate of incorporation and all
amendments thereto and of the By-laws, as amended to date, of IPS have been
delivered to Comdata.
(c) NTS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland. NTS is duly qualified to
transact business as a foreign corporation and is in good standing in all
jurisdictions except where the absence of such qualification would not have a
Material Adverse Effect. No other jurisdiction has demanded, requested or
otherwise indicated that NTS is required so to qualify. NTS has full power and
authority to own or lease and to operate and use its properties and assets and
to carry on its business as now conducted.
True and complete copies of the certificate or articles of
incorporation and all amendments thereto, of the By-laws, as amended to date,
and of the stock ledger of NTS have been delivered to Comdata.
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(d) The NTS Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to transact business as a foreign
corporation and is in good standing in all jurisdictions except where the
absence of such qualification would not have a Material Adverse Effect. No
other jurisdiction has demanded, requested or otherwise indicated that the NTS
Subsidiary is required so to qualify. The NTS Subsidiary has full power and
authority to own or lease and to operate and use its properties and assets and
to carry on its business as now conducted.
True and complete copies of the certificate or articles of
incorporation and all amendments thereto, the By-laws, as amended to date, and
the stock ledger of the NTS Subsidiary have been delivered to Comdata.
(e) FDFS is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of Delaware.
6.2. SUBSIDIARIES AND INVESTMENTS. (a) Except for the NTS Subsidiary
and as set forth in SCHEDULE 6.2(A), neither FDC, IPS, NTS or the NTS Subsidiary
directly or indirectly, (i) owns, of record or beneficially, any outstanding
voting securities or other equity interests in any corporation, partnership,
joint venture or other entity which is involved in or relates to the NTS
Business or (ii) controls any corporation, partnership, limited liability
company, joint venture or other entity which is involved in or relates to the
NTS Business.
(b) SCHEDULE 6.2(B) sets forth with respect to the NTS Subsidiary on
the date hereof the number of authorized, issued and outstanding shares of
capital stock of each class, the number of issued shares of capital stock held
as treasury shares and the number of shares of capital stock unissued and
reserved for any purpose. Except as set forth in SCHEDULE 6.2(B) and except for
this Agreement, there are no agreements, arrangements, options, warrants, calls,
rights or commitments of any character relating to the issuance, sale, purchase
or redemption of any shares of capital stock of the NTS Subsidiary. All of the
outstanding shares of capital stock of the NTS Subsidiary are validly issued,
fully paid and nonassessable and, except as set forth in SCHEDULE 6.2(B), are
owned by NTS of record and beneficially free from all Encumbrances of any kind.
6.3. AUTHORITY. (a) FDC has full power and authority to execute,
deliver and perform this Agreement. The execution, delivery and performance of
this Agreement by FDC has been duly authorized and approved by FDC's board of
directors and does not require any further authorization or consent of FDC or
its stockholders. This Agreement has been duly authorized, executed and
delivered by FDC and is the legal, valid and binding obligation of FDC
enforceable in accordance with its terms, and upon execution and delivery by FDC
will be a legal, valid and binding obligation of FDC enforceable in accordance
with its terms, and each of the IPS Ancillary Agreements has been duly
authorized by FDC and upon execution and delivery by FDC will be a legal, valid
and binding obligation of FDC enforceable in accordance with its terms.
(b) IPS has full power and authority to execute, deliver and perform
this Agreement and all of the IPS Ancillary Agreements. The execution, delivery
and performance of
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this Agreement and the IPS Ancillary Agreements by IPS have been duly authorized
and approved by IPS' board of directors and do not require any further
authorization or consent of IPS or its stockholders. This Agreement has been
duly authorized, executed and delivered by IPS and is the legal, valid and
binding obligation of IPS enforceable in accordance with its terms, and each of
the IPS Ancillary Agreements has been duly authorized by IPS and upon execution
and delivery by IPS will be a legal, valid and binding obligation of IPS
enforceable in accordance with its terms.
(c) NTS has full power and authority to execute, deliver and perform
this Agreement and all of the IPS Ancillary Agreements. The execution, delivery
and performance of this Agreement and the IPS Ancillary Agreements by NTS have
been duly authorized and approved by NTS' board of directors and sole
stockholder and, except for filing the NTS State of Maryland Articles of
Transfer, do not require any further authorization or consent. This Agreement
has been duly authorized, executed and delivered by NTS and is the legal, valid
and binding obligation of NTS enforceable in accordance with its terms, and each
of the IPS Ancillary Agreements has been duly authorized by NTS and upon
execution and delivery by NTS will be a legal, valid and binding obligation of
NTS enforceable in accordance with its terms.
(d) FDFS has full power and authority to execute, deliver and perform
this Agreement. The execution, delivery and performance of this Agreement by
FDFS have been duly authorized and approved by FDFS' board of directors and sole
stockholder and do not require any further authorization or consent. This
Agreement has been authorized, executed and delivered by FDFS and is the legal,
valid and binding obligation of FDFS enforceable in accordance with its terms.
(e) Except as set forth in SCHEDULE 6.3, neither the execution and
delivery of this Agreement or any of the IPS Ancillary Agreements or the
consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under, (1) the charter or By-laws of FDC, IPS, NTS, the NTS
Subsidiary or FDFS; (2) any NTS Agreement, (3) any other material note,
instrument, agreement, mortgage, lease, license, franchise, permit or other
authorization, right, restriction or obligation to which FDC, IPS, NTS, the
NTS Subsidiary or FDFS is a party or any of the Purchased NTS Assets is
subject or by which FDC, IPS, NTS, the NTS Subsidiary or FDFS is bound, (4)
any Court Order to which FDC, IPS, NTS, the NTS Subsidiary or FDFS is a
party or any of the Purchased NTS Assets is subject or by which FDC, IPS,
NTS, the NTS Subsidiary or FDFS is bound, or (5) any Requirements of Laws
affecting FDC, IPS, NTS, the NTS Subsidiary or FDFS or the Purchased NTS
Assets; or
(ii) require the approval, consent, authorization or act of, or the
making by FDC, IPS, NTS, the NTS Subsidiary, FDFS or the NTS Business of
any declaration, filing or registration with, any Person.
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6.4. FINANCIAL STATEMENTS. SCHEDULE 6.4 contains (i) the unaudited
balance sheet of NTS as of December 31, 1996 and the related statements of
income for the year then ended and (ii) the unaudited balance sheet of NTS as of
September 30, 1997 and the related statements of income for the nine months then
ended. Except as set forth therein, such balance sheets and statements of
income have been prepared in conformity with generally accepted accounting
principles consistently applied, and such balance sheets and related statements
of income and cash flow present fairly the financial position and results of
operations of NTS as of their respective dates and for the respective periods
covered thereby.
6.5. OPERATIONS SINCE THE NTS BALANCE SHEET DATE. (a) Except as set
forth in SCHEDULE 6.5(A) or SCHEDULE 6.22, and except as due to changes in the
general economic environment, since the NTS Balance Sheet Date, there has been:
(i) no material adverse change in the Purchased NTS Assets, the NTS
Business or the operations, liabilities, profits or condition (financial or
otherwise) of the NTS Business, and no fact or condition exists or is
contemplated or to the knowledge of IPS, NTS or the NTS Subsidiary
threatened which might reasonably be expected to cause such a change in the
future; and
(ii) no damage, destruction, loss or claim, whether or not covered by
insurance, or condemnation or other taking adversely affecting any of the
Purchased NTS Assets or the NTS Business.
(b) Except as set forth in SCHEDULE 6.5(B), since the NTS Balance
Sheet Date, NTS and the NTS Subsidiary have conducted the NTS Business only in
the ordinary course and in conformity with past practice. Without limiting the
generality of the foregoing, since the NTS Balance Sheet Date, except as set
forth in such Schedule, neither NTS or the NTS Subsidiary has:
(i) sold, leased (as lessor), transferred or otherwise disposed of
(including any transfers from NTS or the NTS Subsidiary to IPS, FDC or any
of their respective Affiliates), or mortgaged or pledged, or imposed or
suffered to be imposed any Encumbrance (other than a Permitted Encumbrance)
on, any of the assets reflected on the NTS Balance Sheet or any assets
acquired by NTS or the NTS Subsidiary after the NTS Balance Sheet Date,
except for inventory and minor amounts of personal property sold or
otherwise disposed of for fair value in the ordinary course of business
consistent with past practice;
(ii) canceled any debts owed to or claims held by NTS or the NTS
Subsidiary (including the settlement of any claims or litigation) or waived
any other rights held by NTS or the NTS Subsidiary other than in the
ordinary course of business consistent with past practice;
(iii) paid any claims against NTS or the NTS Subsidiary (including
the settlement of any claims and litigation against NTS or the NTS
Subsidiary or the payment or
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settlement of any obligations or liabilities of NTS or the NTS Subsidiary)
other than in the ordinary course of business consistent with past
practice;
(iv) created, incurred or assumed, or agreed to create, incur or
assume, any indebtedness for borrowed money (other than money borrowed or
advances from IPS, FDC or any of their respective Affiliates in the
ordinary course of business consistent with past practice) or entered into,
as lessee, any capitalized lease obligations (as defined in Statement of
Financial Accounting Standards No. 13);
(v) accelerated or delayed collection of notes or accounts receivable
in advance of or beyond their regular due dates or the dates when the same
would have been collected in the ordinary course of the NTS Business
consistent with past practice;
(vi) delayed or accelerated payment of any account payable or other
liability of NTS or the NTS Subsidiary beyond or in advance of its due date
or the date when such liability would have been paid in the ordinary course
of the NTS Business consistent with past practice;
(vii) acquired any real property or undertaken or committed to
undertake capital expenditures exceeding $10,000 in the aggregate;
(viii) made, or agreed to make, any payment of cash or distribution
of assets to FDC, IPS or any of their respective Affiliates (other than
cash realized upon collection of receivables generated in the ordinary
course of the NTS Business);
(ix) instituted any increase in any compensation payable to any
officer or employee of NTS or the NTS Subsidiary with respect to the NTS
Business (other than changes made in accordance with normal compensation
practices and consistent with past compensation practices) or in any
profit-sharing, bonus, incentive, deferred compensation, insurance,
pension, retirement, medical, hospital, disability, welfare or other
benefits made available to officers or employees of NTS or the NTS
Subsidiary with respect to the NTS Business;
(x) made any change in (A) the accounting principles and practices
used by NTS or the NTS Subsidiary from those applied in the preparation of
the NTS Balance Sheet and the related statements of income and cash flow
for the period then ended or (B) the charge-off policies applicable to
accounts receivable;
(xi) entered into or become committed to enter into any other
material transaction except in the ordinary course of business; or
(xii) amended its certificate of incorporation or by-laws;
(xiii) issued, granted, sold or encumbered any shares of its capital
stock or other securities; issued, granted, sold or encumbered any
security, option, warrant, put, call,
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subscription or other right of any kind, fixed or contingent, that directly
or indirectly calls for the acquisition, issuance, sale, pledge or other
disposition of any shares of its capital stock or other securities or make
any other changes in the equity capital structure of NTS or the NTS
Subsidiary;
(xiv) made any material change in the NTS Business or the operations
of NTS or the NTS Subsidiary or make any expenditure which shall exceed
$50,000 in the aggregate;
(xv) made any capital expenditure or entered into any contract
or commitment therefor which shall exceed $50,000 in the aggregate;
(xvi) entered into any contract, agreement, undertaking or
commitment which would have been required to be set forth in
SCHEDULE 6.20 if in effect on the date hereof or entered into any
contract which requires the consent or approval of any third party to
consummate the transactions contemplated by this Agreement; or made
any material modification to any existing material NTS Agreement or to
any NTS Governmental Permits, other than changes made in good faith to
cure document deficiencies; or
(xvii) entered into any contract for the purchase, lease (as
lessee) or other occupancy of real property to be used by the NTS
Business or any option to extend a lease listed in SCHEDULE 6.11(A).
6.6. NO FINDER. Neither NTS, any Affiliate thereof nor any Person
acting on behalf of the foregoing has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement.
6.7. TAXES. Except as set forth in SCHEDULE 6.7, (i) FDC, IPS and NTS
have, in respect of the NTS Business and the Purchased NTS Assets, and the NTS
Subsidiary has filed all Tax Returns which are required to be filed and FDC,
IPS, NTS and the NTS Subsidiary have paid all Taxes which have become due
pursuant to such Tax Returns or pursuant to any assessment which has become
payable; (ii) all such Tax Returns are complete and accurate and disclose all
Taxes required to be paid in respect of the NTS Business, the Purchased NTS
Assets and the NTS Subsidiary; (iii) all such Tax Returns relating to United
States federal income Taxes have been examined by the relevant taxing authority
or the period for assessment of the Taxes in respect of which such Tax Returns
were required to be filed has expired; (iv) there is no action, suit,
investigation, audit, claim or assessment pending or proposed or threatened with
respect to Taxes of the NTS Business, the Purchased NTS Assets or the NTS
Subsidiary; (v) none of FDC, IPS, NTS or the NTS Subsidiary has waived or been
requested to waive any statute of limitations in respect of Taxes associated
with the NTS Business, the Purchased NTS Assets or the NTS Subsidiary which
waiver is currently in effect; (vi) all monies required to be withheld by NTS or
the NTS Subsidiary (including from employees of the NTS Business for income
Taxes and social security and other payroll Taxes) have been collected or
withheld, and either paid to the respective taxing authorities, set aside in
accounts for such purpose, or accrued, reserved against and entered upon the
books of the NTS Business; (vii) NTS is properly treated as the owner, for
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all federal, state, local and other income Tax purposes, of all property of
which it is the lessor; (viii) no change in Tax accounting method which would
affect the NTS Subsidiary after the Closing has been made, agreed to, requested
or required with respect to its assets or operations; (ix) all tax sharing
arrangements and tax indemnity arrangements relating to the NTS Subsidiary
(other than this Agreement) will terminate prior to the Closing and the NTS
Subsidiary will have no liability thereunder on or after the Closing; (x) the
NTS Subsidiary is not a party to any agreement relating to a foreign sales
corporation within the meaning of Section 922 of the Code; (xi) there are no
pending claims for refund of any Tax attributable to the NTS Subsidiary
(including refunds of Taxes allocable to the NTS Subsidiary with respect to any
consolidated, combined, unitary, fiscal unity or similar Tax Returns; (xii) each
asset with respect to which the NTS Subsidiary claims depreciation, amortization
or similar expense for Tax purposes is owned for Tax purposes by the NTS
Subsidiary under applicable Tax law; (xiii) the NTS Subsidiary has always been
properly classified as a corporation for United States federal income Tax
purposes; (xiv) there are no outstanding rulings of, or requests for rulings
with, any Tax authority expressly addressed to the NTS Subsidiary (or to an
Affiliate of any NTS Subsidiary) that are, or if issued would be, binding upon
the NTS Subsidiary for any taxable year or period beginning after the Closing;
(xv) the NTS Subsidiary (or any Affiliates of the NTS Subsidiary with respect to
the NTS Subsidiary) has not, in a manner that would be binding on the NTS
Subsidiary for a taxable year or period beginning after the Closing 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; (xvi) the NTS Subsidiary has not made and is not
subject to any election under Section 341(f) of the Code; (xvii) 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 used
to finance any of the assets of the NTS Subsidiary, whether leased or owned;
(xviii) the NTS Subsidiary has not made or is not bound by any election under
Section 197 of the Code; (xix) FDC 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 NTS Subsidiary;
(xx) all material elections with respect to Taxes affecting the NTS Subsidiary
as of the date hereof are set forth in SCHEDULE 6.7; (xxi) 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 the NTS Subsidiary
for longer than two years to any person with whom the NTS Subsidiary was not
dealing at arms' length at the time of the outlay or expense was incurred or for
more than 180 days after the end of the taxation year 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; and (xxii) 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 the NTS Subsidiary.
6.8. AVAILABILITY OF ASSETS. (a) Except as set forth in
SCHEDULE 6.8(A) and except for the Excluded NTS Assets, the Purchased NTS Assets
constitute all of the assets, services and properties used in, or necessary for,
the NTS Business as currently configured (including, but not limited to, all
books, records, computers and computer programs and data processing systems)
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and are in good condition (subject to normal wear and tear) and serviceable
condition and are suitable for the uses for which intended.
(b) SCHEDULE 6.8(B) sets forth a description of all material services
provided by FDC or IPS or any Affiliate of FDC or IPS, other than those services
to be provided pursuant to the NTS Business Transition Services Agreement, to
NTS or the NTS Subsidiary utilizing either (i) assets not included in the
Purchased NTS Assets or (ii) employees not listed in SCHEDULE 7.4(B) and the
manner in which the costs of providing such services have been allocated to NTS
or the NTS Subsidiary.
6.9. GOVERNMENTAL PERMITS. Except as set forth in SCHEDULE 6.9, NTS
or the NTS Subsidiary owns, holds or possesses all licenses, franchises,
permits, privileges, immunities, approvals and other authorizations from a
Governmental Body which are necessary to entitle it to own or lease, operate and
use the Purchased NTS Assets and to carry on and conduct the NTS Business
substantially as currently conducted (herein collectively called "NTS
GOVERNMENTAL PERMITS"), except for such Governmental Permits as to which the
failure to so own, hold or possess would not have a material adverse effect on
the Purchased NTS Assets, the NTS Business or the operations, liabilities,
profits, prospects or condition (financial or otherwise) of NTS or the NTS
Subsidiary. SCHEDULE 6.9 sets forth a list and brief description of each
Governmental Permit. Complete and correct copies of all of the NTS Governmental
Permits have heretofore been delivered by IPS to Comdata.
Except as set forth in SCHEDULE 6.9, (i) NTS or the NTS Subsidiary has
fulfilled and performed its obligations under each of the NTS Governmental
Permits and to the knowledge of IPS, NTS or the NTS Subsidiary, no event has
occurred or condition or state of facts exists which constitutes or, after
notice or lapse of time or both, would constitute a breach or default under any
such NTS Governmental Permit or which permits or, after notice or lapse of time
or both, would permit revocation or termination of any such NTS Governmental
Permit, or which might adversely affect the rights of NTS or the NTS Subsidiary
under any such NTS Governmental Permit; (ii) no notice of cancellation, of
default or of any dispute concerning any NTS Governmental Permit, or of any
event, condition or state of facts described in the preceding clause, has been
received by, or is known to, IPS, NTS or the NTS Subsidiary; and (iii) each of
the NTS Governmental Permits is valid, subsisting and in full force and effect.
6.10. REAL PROPERTY. Neither NTS nor the NTS Subsidiary (a) owns any
real property or (b) holds any options to acquire real property.
6.11. REAL PROPERTY LEASES. SCHEDULE 6.11(A) sets forth a list and
brief description of each lease or similar agreement (showing the parties
thereto, annual rental and the location of the real property covered by and the
space occupied under such lease or other agreement) under which NTS or the NTS
Subsidiary is lessee of, or holds, uses or operates, any real property owned by
any third Person (the "NTS LEASED REAL PROPERTY") or (ii) NTS or the NTS
Subsidiary is lessor of any of the NTS Leased Real Property. Except as set
forth in SCHEDULE 6.11(B), NTS or the NTS Subsidiary has the right to quiet
enjoyment of all the NTS Leased Real Property described in SCHEDULE 6.11(A) for
the full term of each such lease or similar
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agreement (and any renewal option) relating thereto, and the leasehold or other
interest of NTS or the NTS Subsidiary in such NTS Leased Real Property is not
subject or subordinate to any Encumbrance except for Permitted Encumbrances.
Except as set forth on SCHEDULE 6.11(C), and except for Permitted Encumbrances,
there are no agreements or other documents governing or affecting the occupancy
or tenancy of any of the NTS Leased Real Property by NTS or the NTS Subsidiary
by any Person other than NTS or the NTS Subsidiary. Complete and correct copies
of any instruments evidencing Encumbrances, commitments for the issuance of
title insurance, title opinions, surveys and appraisals in IPS's, NTS's or the
NTS Subsidiary's possession and any policies of title insurance currently in
force and in the possession of IPS, NTS or the NTS Subsidiary with respect to
each such parcel of NTS Leased Real Property have heretofore been delivered by
IPS to Comdata.
6.12. CONDEMNATION. To the knowledge of IPS, NTS or the NTS
Subsidiary neither the whole nor any part of any real property leased, used or
occupied by NTS or the NTS Subsidiary is subject to any pending suit for
condemnation or other taking by any public authority and no such condemnation or
other taking is threatened or contemplated.
6.13. PERSONAL PROPERTY. SCHEDULE 6.13(A) contains a detailed list
of all machinery, equipment, vehicles, furniture and other personal property
owned by NTS or the NTS Subsidiary having an original cost of $10,000 or more.
Except as set forth in SCHEDULE 6.13(B), NTS or the NTS Subsidiary has good and
marketable title to all the Purchased NTS Assets free and clear of all
Encumbrances, except for Permitted Encumbrances.
6.14. PERSONAL PROPERTY LEASES. SCHEDULE 6.14 contains a brief
description of each lease or other agreement or right, whether written or oral
(including in each case the annual rental, the expiration date thereof and a
brief description of the property covered), under which NTS or the NTS
Subsidiary is lessee of, or holds or operates, any machinery, equipment, vehicle
or other tangible personal property owned by a third Person, except for any such
lease, agreement or right that is terminable by NTS or the NTS Subsidiary
without penalty or payment on notice of 30 days or less, or which involves the
payment by NTS or the NTS Subsidiary of rentals of less than $5,000 per year.
6.15. INTELLECTUAL PROPERTY; SOFTWARE. (a) SCHEDULE 6.15(A)
contains a list and description (showing in each case any product, device,
process, service, business or publication covered thereby, the registered or
other owner, expiration date and number, if any) of all Copyrights, Patent
Rights and Trademarks owned by, licensed to or used by NTS or the NTS
Subsidiary.
(b) SCHEDULE 6.15(B) contains a list and description (showing in each
case any owner, licensor or licensee) of all Software owned by, licensed to or
used by NTS or the NTS Subsidiary, PROVIDED that SCHEDULE 6.15(B) does not list
Software licensed to NTS or the NTS Subsidiary that is commercially available
and subject to "shrink-wrap" or "click on" license agreements.
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(c) SCHEDULE 6.15(C) contains a list and description (showing in each
case the parties thereto) of all agreements, contracts, licenses, sublicenses,
assignments and indemnities which relate to (i) any Copyrights, Patent Rights or
Trademarks listed in SCHEDULE 6.15(A), (ii) any Trade Secrets owned by, licensed
to or used by NTS or the NTS Subsidiary or (iii) any Software listed in SCHEDULE
6.15(B).
(d) Except as disclosed in SCHEDULE 6.15(D), NTS or the NTS
Subsidiary either: (i) owns the entire right, title and interest in and to the
Intellectual Property and Software included in the Purchased NTS Assets, free
and clear of any Encumbrance; or (ii) has the perpetual, royalty-free right to
use the same or (iii) in the case of third party vendor Software, has the
ability to transfer such Software without the necessity of obtaining consents or
the payment of fees.
(e) Except as disclosed in SCHEDULE 6.15(E): (i) all Copyrights,
Patent Rights and Trademarks, including registration therefor, identified in
SCHEDULE 6.15(A) as being owned by NTS or the NTS Subsidiary are valid and in
force, and all patent applications with respect to Patent Rights and all
applications to register any unregistered Copyrights and Trademarks so
identified are pending and in good standing, all without challenge of any kind;
(ii) the Intellectual Property owned by NTS or the NTS Subsidiary is valid and
enforceable; (iii) NTS or the NTS Subsidiary has the sole and exclusive right to
bring actions for infringement or unauthorized use of the Intellectual Property
and Software owned by NTS or the NTS Subsidiary, and to the knowledge of IPS,
NTS or the NTS Subsidiary, there is no basis for any such action; (iv) NTS or
the NTS Subsidiary has taken all actions reasonably necessary to protect the
Copyrights, Trademarks, Software, Patent Rights or Trade Secrets included in the
Purchased NTS Assets, including by pursuing registration where necessary; and
(v) neither NTS or the NTS Subsidiary is in breach of any agreement affecting
any of the Intellectual Property and Software included in the Purchased NTS
Assets, and has not taken any action which would impair or otherwise adversely
affect its rights in the Intellectual Property and Software included in the
Purchased NTS Assets. Correct and complete copies of: (x) registrations for all
registered Copyrights, Patent Rights and Trademarks identified in
SCHEDULE 6.15(A) as being owned by NTS or the NTS Subsidiary; and (y) all
pending applications to register unregistered Copyrights, Patent Rights and
Trademarks identified in SCHEDULE 6.15(A) as being owned by NTS or the NTS
Subsidiary (together with any subsequent correspondence or filings relating to
the foregoing) have heretofore been delivered by IPS to Comdata.
(f) Except as set forth in SCHEDULE 6.15(F), (i) to the knowledge of
IPS, NTS or the NTS Subsidiary, no infringement of any Intellectual Property
Right of any other Person has occurred or results in any way from the operations
of NTS or the NTS Subsidiary as previously or currently conducted; (ii) no
claim of any infringement of any Intellectual Property Right of any other Person
has been made or asserted in respect of the operations of the NTS Business;
(iii) neither IPS, NTS or the NTS Subsidiary has received notice that any claim
of invalidity of any Copyright, Trademark or Patent Right, Software or Trade
Secret has been made; (iv) no proceedings are pending or, to the knowledge of
IPS, NTS or the NTS Subsidiary, threatened which challenge the validity,
ownership or use of any of the NTS Business Intellectual Property; and (v)
neither IPS, NTS or the NTS Subsidiary has had notice of, or knowledge of any
basis for,
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a claim against NTS or the NTS Subsidiary that the operations, activities,
products, software, equipment, machinery or processes of NTS or the NTS
Subsidiary infringe any Intellectual Property Right of any other Person.
(g) Except as disclosed in SCHEDULE 6.15(G): (i) the Software used
in the NTS Business (the "NTS OWNED SOFTWARE") is not subject to any transfer,
assignment, source code escrow agreement, reversion, site, equipment, or other
operational limitations; (ii) NTS or the NTS Subsidiary has maintained and
protected the NTS Owned Software (including, without limitation, all source code
and system specifications) with appropriate proprietary notices (including,
without limitation, the notice of copyright in accordance with the requirements
of 17 U.S.C. SECTION 401), confidentiality and non-disclosure agreements and
such other measures as are reasonably necessary to protect the proprietary,
trade secret or confidential information contained therein; (iii) the NTS Owned
Software is protectable under applicable copyright law and has not been
forfeited to the public domain and has been registered with the U.S. Copyright
office or is eligible for registration; (iv) NTS or the NTS Subsidiary has
copies of all releases or separate versions of the NTS Owned Software so that
the same may be subject to registration in the United States Copyright Office;
(v) NTS or the NTS Subsidiary has complete and exclusive right, title and
interest in and to the NTS Owned Software; (vi) NTS or the NTS Subsidiary has
developed the NTS Owned Software through its own efforts and for its own account
without the aid or use of any consultants, agents, independent contractors or
Persons (other than Persons that are employees of NTS or the NTS Subsidiary);
(vii) to the knowledge of IPS, NTS or the NTS Subsidiary, the NTS Owned Software
does not infringe any Intellectual Property Right of any other Person; (viii)
any NTS Owned Software includes the source code, system documentation,
statements of principles of operation and schematics, as well as any pertinent
commentary and explanation language used for the development, maintenance,
implementation and use thereof, so that a trained computer programmer could
develop, maintain, enhance, modify, support, compile and use all releases or
separate versions of the same that are currently subject to maintenance
obligations by NTS or the NTS Subsidiary; and (ix) there are no agreements or
arrangements in effect with respect to the marketing, distribution, licensing or
promotion of the NTS Owned Software by any other Person.
(h) Except as disclosed in SCHEDULE 6.15(H), all agents, consultants
or contractors who have contributed to or participated in the creation or
development of any Intellectual Property or Software on behalf of NTS or the NTS
Subsidiary or any predecessor in interest thereto either: (i) is a party to a
"work-for-hire" agreement under which NTS or the NTS Subsidiary is deemed to be
the original owner/author of all property rights therein; or (ii) has executed
an assignment or an agreement to assign in favor of NTS or the NTS Subsidiary
(or such predecessor in interest, as applicable) of all right, title and
interest in such material.
(i) Except as expressly provided herein, Comdata acknowledges and
agrees that the conveyance of the Purchased NTS Assets from NTS to Comdata does
not result in any express or implied license or other rights to Comdata or any
third person under any patent rights of NTS or its Affiliates or under any
patent rights of any third parties licensed to NTS or its Affiliates (including,
without limitation, any patent rights licensed to NTS or its Affiliates by
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Xxxxxx X. Xxxx Technology Licensing, L.P.) whether by implication, estoppel or
otherwise. All such express or implied licenses or other rights are hereby
expressly excluded and disclaimed.
6.16. ACCOUNTS RECEIVABLE. All accounts receivable of NTS or the NTS
Subsidiary have arisen from bona fide transactions by NTS or the NTS Subsidiary
in the ordinary course of the NTS Business. All accounts receivable are good
and collectible in the ordinary course of business at the aggregate recorded
amounts thereof, net of any allowance for doubtful accounts; and all accounts
receivable to be reflected in the Closing Date NTS Special Report will be good
and collectible in the ordinary course of business at the aggregate recorded
amounts thereof, net of any allowance for doubtful accounts, which allowance
will be determined on a basis consistent with the basis used in determining the
allowance for doubtful accounts reflected in the NTS Balance Sheet.
6.17. TITLE TO PROPERTY. NTS or the NTS Subsidiary has good and
marketable title to all of the Purchased NTS Assets, free and clear of all
Encumbrances, except for Permitted Encumbrances and except as set forth in
SCHEDULE 6.17. Upon delivery to Comdata on the date hereof of the instruments
of transfer contemplated by SECTION 4.3, NTS will thereby transfer to Comdata
good and marketable title to the Purchased NTS Assets, subject to no
Encumbrances, except for Permitted Encumbrances.
6.18. EMPLOYEES AND RELATED AGREEMENTS; ERISA. (a) Except as
described in SCHEDULE 6.18(A), neither NTS or the NTS Subsidiary is, with
respect to the NTS Business, a party to or bound by any oral or written stock
option, stock purchase, bonus or other incentive plan or agreement;
(b) Except as described in SCHEDULE 5.19B), NTS does not maintain,
and is not required to contribute to, any "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA) or "Welfare Benefit Plan" (as
such term is defined in Section 3(1) of ERISA), on behalf of any employees or
former employees of the NTS Business. None of NTS' ERISA Benefit Plans is a
"multiemployer plan" as defined in Section 3(37) of ERISA, or is or has been
subject to Sections 4063 or 4064 of ERISA. NTS has complied with the healthcare
continuation requirements of Section 601, ET. SEQ., of ERISA with respect to
employees of the NTS Business and their spouses, former spouses and dependents.
(c) SCHEDULE 6.18(C) hereto set forth a true, correct and complete
copy of each NTS severance plan, policy or practice in effect immediately prior
to the Closing Date with respect to Transferring NTS Employees.
6.19. EMPLOYEE RELATIONS. (a) Except as set forth in
SCHEDULE 6.19(A), NTS and the NTS Subsidiary have complied with all applicable
laws, rules and regulations which relate to prices, wages, hours, discrimination
in employment, occupational safety and health, and collective bargaining and are
not liable for any arrears of wages or any taxes, penalties or damages for
failure to comply with any of the foregoing. NTS and the NTS Subsidiary are in
compliance with the requirements of WARN and all similar state and local
statutes, laws and regulations and have no liabilities pursuant to any of them.
NTS believes that its relations with the employees of the
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NTS Business are satisfactory and are not likely to lead to collective
bargaining efforts. Neither NTS or the NTS Subsidiary is a party to or affected
by or, to the knowledge of IPS, NTS or the NTS Subsidiary, threatened with, any
dispute or controversy with a union or with respect to unionization or
collective bargaining involving the employees of NTS or the NTS Subsidiary.
Neither NTS nor the NTS Subsidiary is materially affected by any dispute or
controversy with a union or with respect to unionization or collective
bargaining involving any supplier or customer of NTS or the NTS Subsidiary.
SCHEDULE 6.19(A) sets forth a description of any union organizing or election
activities involving any non-union employees of NTS or the NTS Subsidiary which
have occurred since January 1, 1996 or, to the knowledge of IPS, NTS or the NTS
Subsidiary, are threatened as of the date hereof.
(b) Except as set forth in SCHEDULE 6.19(B), since January 1, 1996,
neither NTS or the NTS Subsidiary has directly or indirectly, purchased, leased
from others or otherwise acquired any material property or obtained any material
services from, or sold, leased to others or otherwise disposed of any material
property or furnished any material services to (except with respect to
remuneration for services rendered as a director, officer or employee of NTS or
the NTS Subsidiary), in the ordinary course of business or otherwise, (i) any
Person who is an officer or director of NTS or the NTS Subsidiary or (ii) any
Associate of any person referred to in clause (i) above. Except as set forth in
SCHEDULE 6.19(B), neither NTS or the NTS Subsidiary owes any amount in excess of
$10,000 to, or has any contract with or commitment to, IPS or any director,
officer or employee of NTS or the NTS Subsidiary (other than for compensation
for current services not yet due and payable and reimbursement of expenses
arising in the ordinary course of business) and none of such Persons owes any
amount in excess of $10,000 to NTS or the NTS Subsidiary.
(c) Neither NTS, the NTS Subsidiary or any officer, employee or agent
or other person acting on either of their behalf has, directly or indirectly,
since January 1, 1993, given or agreed to give any gift or similar benefit
(other than with respect to bona fide payments for which adequate consideration
has been given) to any customer, supplier, governmental employee or other person
who is or may be in a position to help or hinder the business of NTS or the NTS
Subsidiary (or assist NTS or the NTS Subsidiary in connection with any actual or
proposed transaction) (i) which might subject NTS or the NTS Subsidiary to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) which, if not continued in the future, would have an adverse
effect on the assets, business, operations or prospects of NTS or the NTS
Subsidiary or which would subject NTS or the NTS Subsidiary to suit or penalty
in any private or governmental litigation or proceeding, (iii) for any of the
purposes described in SECTION 162(c) of the Code, or (iv) for establishment or
maintenance of any concealed fund or concealed bank account.
6.20. CONTRACTS. Except as set forth in SCHEDULE 6.20 or any other
SCHEDULE hereto, neither NTS or the NTS Subsidiary is a party to or bound by:
(i) any contract for the purchase, sale or lease of real property;
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(ii) any contract for the purchase of goods or services by NTS or the
NTS Subsidiary which involved the payment of more than $50,000 in 1997;
(iii) any contract for the purchase, licensing or development of
software to be used by NTS or the NTS Subsidiary except for Software that
is available in consumer retail stores and subject to "shrink-wrap" license
agreements;
(iv) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or advertising or
public relations contract except to the extent such contract is cancelable
without penalty within 30 days;
(v) any guarantee of the obligations of customers, suppliers,
officers, directors, employees, Affiliates or others except to the extent
such contract is cancelable without penalty within 30 days;
(vi) any agreement which provides for, or relates to, the incurrence
by NTS or the NTS Subsidiary of debt for borrowed money (including, without
limitation, any interest rate or foreign currency swap, cap, collar, hedge
or insurance agreements, or options or forwards on such agreements, or
other similar agreements for the purpose of managing the interest rate
and/or foreign exchange risk associated with its financing);
(vii) any contract not made in the ordinary course except to the
extent such contract is cancelable without penalty within 30 days; or
(viii) any other contract, agreement, commitment, understanding or
instrument which is material to NTS or the NTS Subsidiary and which
involves the payment of more than $50,000.
6.21. STATUS OF CONTRACTS. Except as set forth in SCHEDULE 6.21 or
in any other Schedule hereto, each of the leases, contracts and other agreements
listed in SCHEDULES 6.11(A), 6.14, 6.15(C), 6.18(A) and 6.20 (collectively, the
"NTS AGREEMENTS") constitutes a valid and binding obligation of the parties
thereto and is in full force and effect and (except as set forth in SCHEDULE 6.3
and except for those NTS Agreements which by their terms will expire prior to
the date hereof or are otherwise terminated prior to the date hereof in
accordance with the provisions hereof) to the knowledge of IPS, NTS or the NTS
Subsidiary, may be transferred to Comdata pursuant to this Agreement and will
continue in full force and effect thereafter, in each case without breaching the
terms thereof or resulting in the forfeiture or impairment of any rights
thereunder and without the consent, approval or act of, the payment of any
transfer or similar fee, or the making of any filing with, any other party. NTS
and the NTS Subsidiary have fulfilled and performed their obligations under each
of the NTS Agreements, and neither NTS or the NTS Subsidiary is in, or alleged
to be in, breach or material default under, nor is there or is there alleged to
be any basis for termination of, any of the NTS Agreements and to the knowledge
of IPS, NTS or the NTS Subsidiary, no other party to any of the NTS Agreements
has breached or committed a material default thereunder, and to the knowledge of
IPS, NTS or the NTS Subsidiary, no event has occurred and no condition or state
of facts exists which, with the passage
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of time or the giving of notice or both, would constitute such a default or
breach by NTS, the NTS Subsidiary or by any such other party. Neither NTS or
the NTS Subsidiary is currently renegotiating any of the NTS Agreements or
paying liquidated damages in lieu of performance thereunder.
6.22. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as set
forth in SCHEDULE 6.22:
(i) the Purchased NTS Assets and the operation of the NTS Business
complies with all applicable Requirements of Laws and Court Orders;
(ii) NTS and the NTS Subsidiary have complied with all Requirements
of Laws and Court Orders which are applicable to the Purchased NTS Assets
or the NTS Business;
(iii) there are no lawsuits, claims, suits, proceedings or
investigations pending or, to the knowledge of IPS, NTS or the NTS
Subsidiary, threatened against or affecting NTS or the NTS Subsidiary nor,
to the knowledge of IPS, NTS or the NTS Subsidiary, is there any basis for
any of the same, and there are no lawsuits, suits or proceedings pending in
which NTS or the NTS Subsidiary is the plaintiff or claimant;
(iv) there is no action, suit or proceeding pending or, to the
knowledge of IPS, NTS or the NTS Subsidiary, threatened which questions the
legality or propriety of the transactions contemplated by this Agreement;
and
(v) to the knowledge of IPS, NTS or the NTS Subsidiary, no
legislative or regulatory proposal or other proposal for the change in any
Requirements of Law or the interpretation thereof has been adopted or is
pending which could adversely affect NTS or the NTS Subsidiary.
6.23. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 6.23:
(a) the operations of NTS and the NTS Subsidiary are, and have been,
in compliance with, and neither NTS or the NTS Subsidiary is the subject of any
judicial or administrative proceedings or settlements involving alleged
violations of or liability under, Environmental Laws.
(b) no property now or previously owned or operated by NTS or the NTS
Subsidiary is under investigation by any Governmental Body or requires remedial
action under any applicable Environmental Laws to address any Contaminant.
6.24. INSURANCE. SCHEDULE 6.24 sets forth a list and brief
description (including nature of coverage, limits, deductibles, premiums and the
loss experience for the most recent five years with respect to each type of
coverage) of all policies of insurance maintained, owned or held by NTS or the
NTS Subsidiary on the date hereof. NTS and the NTS Subsidiary have complied
with each such insurance policy and have not failed to give any notice or
present any claim
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thereunder in a due and timely manner. NTS or the NTS Subsidiary has delivered
to Comdata correct and complete copies of the most recent inspection reports, if
any, received from insurance underwriters as to the condition of the Purchased
NTS Assets.
6.25. CUSTOMERS. Set forth in SCHEDULE 6.25 hereto is (i) a list of
names and addresses of the five largest truck stop customers of the NTS Business
as measured by the total transaction volume of the NTS Business which each such
truck stop represents the period January 1, 1997 through November 30, 1997 and
(ii) a list of names and addresses of the 25 largest trucking customers
(measured by dollar volume of net revenues in each case) of the NTS Business and
the percentage of the NTS Business which each such customer represents. Except
as set forth in SCHEDULE 6.25, there exists no actual or to the knowledge of
IPS, NTS or the NTS Subsidiary, threatened termination, cancellation or
limitation of, or any modification or change in, the business relationship of
NTS and the NTS Subsidiary with any customer or group of customers listed in
SCHEDULE 6.25, or whose purchases individually or in the aggregate are material
to the operation of the NTS Business, and to the knowledge of IPS, NTS or the
NTS Subsidiary, there exists no present or future condition or state of facts or
circumstances involving customers, suppliers or sales representatives which IPS
or NTS can now reasonably foresee would materially adversely affect NTS or the
NTS Subsidiary (taken as a whole) or prevent the conduct of the NTS Business
after the consummation of the transactions contemplated by this Agreement in
essentially the same manner in which such business has heretofore been
conducted.
6.26. BANK ACCOUNTS; POWERS OF ATTORNEY. SCHEDULE 6.26 sets forth a
complete and correct list of all bank accounts and safe deposit boxes of NTS and
the NTS Subsidiary and the individuals authorized to sign or otherwise act with
respect thereto as of the date hereof and a complete and correct list of all
Persons holding a general or special power of attorney granted by NTS or the NTS
Subsidiary and a complete and correct copy thereof.
6.27. ESTIMATED CLOSING DATE NTS SPECIAL REPORT. SCHEDULE 6.27
contains IPS's bona fide, good faith estimate of the Closing Date NTS Special
Report (the "ESTIMATED CLOSING DATE NTS SPECIAL REPORT").
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. COVENANT NOT TO COMPETE OR SOLICIT BUSINESS BY FDC, IPS, NTS AND
FDFS. (a) In furtherance of the exchange of the Purchased Gaming Assets for the
Purchased NTS Assets and the Initial Amount hereunder, by virtue of the
transactions contemplated hereby and more effectively to protect the value and
goodwill of the Purchased Gaming Assets and the Purchased NTS Assets so
exchanged, FDC, IPS, NTS and FDFS, covenant and agree that, for a period ending
on the third anniversary of the date hereof, neither FDC, IPS, NTS, FDFS nor any
of their respective controlled Affiliates will:
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(i) directly or indirectly (whether as principal, agent,
independent contractor, partner or otherwise) own, manage, operate,
control, participate in, or otherwise carry on, a business engaged in
Restricted Trucking Activities anywhere in the U.S. and Canada (it
being understood by the parties hereto that the NTS Business is not
limited to any particular region and that such business may be engaged
in effectively from any location); or
(ii) induce or attempt to persuade any customer of NTS or the
NTS Subsidiary to terminate such business relationship in order to
enter into any such relationship on behalf of any other business
organization in competition with the NTS Business;
PROVIDED, HOWEVER, that nothing set forth in this SECTION 7.1(a) shall prohibit
FDC, IPS, NTS, FDFS or their respective Affiliates from (v) owning not in excess
of 5% in the aggregate of any class of capital stock of any corporation if such
stock is publicly traded and listed on any national or regional stock exchange
or on the NASDAQ national market system (w) purchasing, and following such
purchase, actively engaging in, any business that has a subsidiary, division,
group, franchise or segment that is engaged in any Restricted Trucking Activity,
so long as: (A) on the date of such purchase, not more than 20% of the
consolidated revenues of such business are derived from such Restricted Trucking
Activity and (B) such business divests itself of such subsidiary, division,
group, franchise or segment as soon as practicable after the date of such
purchase, PROVIDED, that with respect to any purchase intended to be accounted
for as a pooling of interests under GAAP or treated for federal income tax
purposes as a tax-free reorganization, no such divestiture shall be required
until, in the reasonable opinion of FDC, such divestiture would no longer
endanger the accounting of such purchase as a pooling of interests under GAAP or
the treatment for federal income tax purposes of such purchase as a tax-free
reorganization; (x) performing any services pursuant to the NTS Business
Transition Services Agreement; (y) the provision of payroll delivery services
or products (whether or not under the name "Transpay") or any products currently
contemplated by NTS to be offered under the name "Transpay" unrelated to the
Restricted Trucking Activities; and (z) except for the Restricted Trucking
Activities (to the extent not otherwise permitted by reason of the foregoing),
engaging in any other activity which may now or hereafter be provided by such
party.
(b) In addition, FDC, IPS, NTS and FDFS covenant and agree that
neither they nor any of their respective Affiliates will divulge or make use of
any Trade Secrets or other confidential information of the NTS Business in each
case relating exclusively to the Purchased NTS Assets other than to disclose
such secrets and information to Ceridian, Comdata or their respective
Affiliates.
(c) Nothing in this Agreement, including without limitation, SECTION
7.1(a), shall prevent any Affiliate of FDC from engaging in Restricted Trucking
Activities after such Affiliate ceases to be an Affiliate of FDC.
(d) In the event FDC, IPS, NTS, FDFS or any of their respective
Affiliates violates any of their respective obligations under this SECTION 7.1,
Ceridian or Comdata may
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proceed against it in law or in equity for such damages or other relief as a
court may deem appropriate. FDC, IPS, NTS and FDFS acknowledge that a violation
of this SECTION 7.1 may cause Ceridian or Comdata irreparable harm which may not
be adequately compensated for by money damages. FDC, IPS, NTS and FDFS
therefore agree that in the event of any actual or threatened violation of this
SECTION 7.1, Ceridian or Comdata shall be entitled, in addition to other
remedies that they may have, to a temporary restraining order and to preliminary
and final injunctive relief against FDC, IPS, NTS, FDFS or such Affiliate of
FDC, IPS, NTS or FDFS to prevent any violations of this SECTION 7.1, without the
necessity of posting a bond. The prevailing party in any action commenced under
this SECTION 7.1 shall also be entitled to receive reasonable attorneys' fees
and court costs.
(e) It is the intent and understanding of each party hereto that if,
in any action before any court or agency legally empowered to enforce this
SECTION 7.1, any term, restriction, covenant or promise in this SECTION 7.1 is
found to be unreasonable and for that reason unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency.
7.2. SOLICITATION OF EMPLOYEES. (a) Prior to the first anniversary
of the date hereof, without the consent of FDC, none of Comdata, Ceridian or any
of their controlled Affiliates (the "RESTRICTED COMDATA PARTIES") shall solicit
or seek to hire any Transferred Comdata Employee; PROVIDED, HOWEVER, that the
foregoing shall not prevent any Restricted Comdata Party from hiring any such
person (i) who contacts such Restricted Comdata Party on his or her own
initiative without solicitation from any of the Restricted Comdata Parties, (ii)
in connection with general employment advertisements published in magazines,
journals, newspapers and other publications that are not targeted at the
Transferred Comdata Employees or (iii) who has been discharged by the Gaming
Business prior to any such solicitation.
(b) Prior to the first anniversary of the date hereof, without the
consent of Ceridian, none of FDC, IPS, NTS, FDFS or any of their controlled
Affiliates (the "RESTRICTED FDC PARTIES") shall solicit or seek to hire any
Transferred NTS Employee; PROVIDED, HOWEVER, that the foregoing shall not
prevent any Restricted FDC Party from hiring any such person (i) who contacts
such Restricted FDC Party on his or her own initiative without solicitation from
any of the Restricted FDC Parties, (ii) in connection with general employment
advertisements published in magazines, journals, newspapers and other
publications that are not targeted at the Transferred NTS Employees or (iii) who
has been discharged by the NTS Business prior to any such solicitation.
7.3. TAX MATTERS.
(a) Liability for Taxes.
(i) FDC TAXES. FDC shall be liable for and pay, and pursuant to
ARTICLE VIII (and subject to the limitations thereof) shall indemnify each
Ceridian Group Member against, all Taxes (A) applicable to the NTS Business, the
Purchased NTS Assets and the Assumed NTS Liabilities, in each case attributable
to taxable years or periods ending at the time
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of or prior to the Closing and, with respect to any Straddle Period, the portion
of such Straddle Period ending on and including the Closing, (B) imposed on the
NTS Subsidiary or for which the NTS Subsidiary may otherwise be liable for any
taxable year or period that ends on or before the Closing and, with respect to
any Straddle Period, the portion of such Straddle Period ending on and including
the Closing (including, without limitation, any Taxes imposed on the NTS
Subsidiary pursuant to Treas. Reg. SECTION 1.1502-6 or similar provision of
state, local, or foreign law or any Taxes imposed on the NTS Subsidiary as a
result of the termination of its election under Section 1504(d) of the Code),
(C) applicable to the Gaming Business, the Purchased Gaming Assets and the
Assumed Gaming Liabilities, in each case attributable to taxable years or
periods beginning after the Closing and, with respect to any Straddle Period,
the portion of such Straddle Period beginning after the Closing, and (D) imposed
on the Gaming Subsidiary or for which the Gaming Subsidiary may otherwise be
liable for any taxable year or period that begins after the Closing and, with
respect to any Straddle Period, the portion of such Straddle Period beginning
after the Closing. FDC shall be entitled to any refund of (or credit for)
Taxes for which FDC would be liable pursuant to this SECTION 7.3(a)(i).
(ii) CERIDIAN TAXES. Ceridian shall be liable for and pay, and
pursuant to ARTICLE VIII (and subject to the limitations thereof) shall
indemnify each FDC Group Member against, all Taxes (A) applicable to the Gaming
Business, the Purchased Gaming Assets and the Assumed Gaming Liabilities, in
each case attributable to taxable years or periods ending at the time of or
prior to the Closing and, with respect to any Straddle Period, the portion of
such Straddle Period ending on and including the Closing, (B) imposed on the
Gaming Subsidiary or for which the Gaming Subsidiary may otherwise be liable for
any taxable year or period that ends on or before the Closing and, with respect
to any Straddle Period, the portion of such Straddle Period ending on and
including the Closing (including, without limitation, any Taxes imposed on the
Gaming Subsidiary pursuant to Treas. Reg. SECTION 1.1502-6 or similar provision
of state, local or foreign law or any Taxes imposed on the Gaming Subsidiary as
a result of a termination of an election under Section 1504(d) of the Code), (C)
applicable to the NTS Business, the Purchased NTS Assets and the Assumed NTS
Liabilities, in each case attributable to taxable years or periods beginning
after the Closing and, with respect to any Straddle Period, the portion of such
Straddle Period beginning after the Closing, and (D) imposed on the NTS
Subsidiary or for which the NTS Subsidiary may otherwise be liable for any
taxable year or period that begins after the Closing and, with respect to any
Straddle Period, the portion of such Straddle Period beginning after the
Closing. Ceridian shall be entitled to any refund of (or credit for) Taxes for
which Ceridian would be liable pursuant to this SECTION 7.3(a)(ii).
(iii) STRADDLE PERIODS. For purposes of paragraphs (a)(i) and
(a)(ii), whenever it is necessary to determine the liability for Taxes for a
Straddle Period, the determination of the Taxes for the portion of the Straddle
Period ending on and including, and the portion of the Straddle Period beginning
after, the Closing shall be determined by assuming that the Straddle Period
consisted of two taxable years or periods, one which ended at the Closing and
the other which began immediately after the Closing, and items of income, gain,
deduction, loss or credit for the Straddle Period shall be allocated between
such two taxable years or periods on a "closing of the books basis" by assuming
that the books of the NTS Business or the Gaming Business, as the case may be,
were closed at the time of the Closing, PROVIDED, HOWEVER, that
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exemptions, allowances or deductions that are calculated on an annual basis,
such as the deduction for depreciation, shall be apportioned between such two
taxable years or periods on a daily basis.
(iv) OFFSET TO LIABILITY. If, as a result of any action, suit,
investigation, audit, claim, assessment or amended Tax Return, there is any
change after the date hereof in an item of income, gain, loss, deduction, credit
or amount of Tax that results in an increase in a Tax liability for which FDC
would otherwise be liable pursuant to paragraph (a)(i) of this SECTION 7.3, and
such change results in a decrease in the Tax liability of the NTS Subsidiary,
Ceridian or any Affiliate or successor of any thereof for any taxable year or
period beginning after the Closing or for the portion of any Straddle Period
beginning after the Closing, FDC shall not be liable pursuant to such paragraph
(a)(i) with respect to such increase to the extent of such decrease (and, to the
extent such increase in Tax liability is paid to a taxing authority by FDC or
any Affiliate thereof, Ceridian shall pay FDC an amount equal to such decrease).
If, as a result of any action, suit, investigation, audit, claim, assessment or
amended Tax Return, there is any change after the date hereof in an item of
income, gain, loss, deduction, credit or amount of Tax that results in an
increase in a Tax liability for which Ceridian would otherwise be liable
pursuant to paragraph (a)(ii) of this SECTION 7.3, and such change results in a
decrease in the Tax liability of the Gaming Subsidiary, FDC or any Affiliate or
successor thereof for any taxable year or period beginning after the Closing or
for the portion of any Straddle Period beginning after the Closing, Ceridian
shall not be liable pursuant to such paragraph (a)(ii) with respect to such
increase to the extent of such decrease (and, to the extent such increase in Tax
liability is paid to a taxing authority by Ceridian or any Affiliate thereof,
FDC shall pay Ceridian an amount equal to such decrease).
(v) TRANSFER TAXES. Notwithstanding anything herein to the
contrary, (A) Ceridian shall pay, and shall indemnify each FDC Group Member
against one-half of any real property transfer or gains Tax, sales Tax, use
Tax, stamp Tax, stock transfer Tax, or other similar Tax imposed on the
transactions contemplated by this Agreement and (B) FDC shall pay, and shall
indemnify each Ceridian Group Member against, one-half of any real property
transfer or gains Tax, sales Tax, use Tax, stamp Tax, stock Transfer Tax, or
other similar Tax imposed on the transactions contemplated by this Agreement.
(b) TAX RETURNS.
(i) FDC TAX RETURNS. FDC shall timely file or cause to be
timely filed when due (taking into account all extensions properly obtained) all
Tax Returns (A) attributable to the NTS Business, the Purchased NTS Assets or
the NTS Subsidiary for taxable years or periods ending on or before the Closing
and (B) attributable to the Gaming Business, the Purchased Gaming Assets or the
Gaming Subsidiary for taxable years or periods beginning after the Closing or
Straddle Periods. In each case FDC shall remit or cause to be remitted any
Taxes due in respect of such Tax Returns.
(ii) CERIDIAN TAX RETURNS. Ceridian shall timely file or cause
to be timely filed when due (taking into account all extensions properly
obtained) all Tax Returns (A)
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attributable to the Gaming Business, the Purchased Gaming Assets or the Gaming
Subsidiary for taxable years or periods ending on or before the Closing and (B)
attributable to the NTS Business, the Purchased NTS Assets or the NTS Subsidiary
for taxable years or periods beginning after the Closing or Straddle Periods.
In each case, Ceridian shall remit or cause to be remitted any Taxes due in
respect of such Tax Returns.
(iii) REMITTANCE. FDC or Ceridian shall pay the other party for
the Taxes for which FDC or Ceridian, respectively, is liable pursuant to
paragraph (a) of this SECTION 7.3 but which are payable with any Tax Return to
be filed by the other party pursuant to this paragraph (b) upon the written
request of the party entitled to payment, setting forth in detail the
computation of the amount owed by FDC or Ceridian, as the case may be, but in no
event earlier than 10 days prior to the due date for paying such Taxes.
(iv) AMENDED RETURNS. None of Ceridian or any Affiliate of
Ceridian shall (or shall cause or permit the NTS Subsidiary to) amend, refile or
otherwise modify (or grant an extension of any statute of limitation with
respect to) any Tax Return relating in whole or in part to the NTS Business, the
Purchased NTS Assets or the NTS Subsidiary with respect to any taxable year or
period ending on or before the Closing (or with respect to any Straddle Period)
without the prior written consent of FDC, which consent may not be unreasonably
withheld. None of FDC or any Affiliate of FDC shall (or shall cause the Gaming
Subsidiary to) amend, refile or otherwise modify (or grant an extension of any
statute of limitation with respect to) any Tax Return relating in whole or in
part to the Gaming Business, the Purchased Gaming Assets or the Gaming
Subsidiary with respect to any taxable year or period ending on or before the
Closing (or with respect to any Straddle Period) without the prior written
consent of Ceridian, which consent may not be unreasonably withheld.
(c) CONTEST PROVISIONS.
(i) CONTESTS INVOLVING PRE-CLOSING TAXES OF THE NTS BUSINESS,
THE PURCHASED NTS ASSETS OR THE NTS SUBSIDIARY. Ceridian shall promptly notify
FDC, in writing upon receipt by Ceridian, Comdata, any of their Affiliates, or
the NTS Subsidiary of written notice of any pending or threatened federal,
state, local or foreign Tax audits, examinations or assessments which might
affect the Tax liabilities for which FDC may be liable pursuant to paragraph
(a)(i) of this SECTION 7.3. FDC shall have the sole right to control any Tax
audit or administrative or court proceeding relating to the NTS Business, the
Purchased NTS Assets or the NTS Subsidiary for taxable periods ending on or
before the Closing, and to employ counsel of its choice at its expense. None
of Ceridian, any of its Affiliates, or the NTS Subsidiary may settle any Tax
claim for any Taxes for which FDC may be liable pursuant to paragraph (a)(i) of
this SECTION 7.3, without the prior written consent of FDC, which consent may
not be unreasonably withheld.
(ii) CONTESTS INVOLVING PRE-CLOSING TAXES OF THE GAMING BUSINESS
OR THE PURCHASED GAMING ASSETS. FDC shall promptly notify Ceridian in writing
upon receipt by FDC, FDFS, NTS, any of their Affiliates or the Gaming Subsidiary
of written notice of any pending or threatened federal, state, local or foreign
Tax audits, examinations or assessments which might
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affect the Tax liabilities for which Ceridian may be liable pursuant to
paragraph (a)(ii) of this SECTION 7.3. Ceridian shall have the sole right to
control any Tax audit or administrative or court proceeding relating to the
Gaming Business, the Purchased Gaming Assets or the Gaming Subsidiary for
taxable periods ending on or before the Closing, and to employ counsel of its
choice at its expense. None of FDC or any of its Affiliates may settle any Tax
claim for any Taxes for which Ceridian may be liable pursuant to paragraph
(a)(ii) of this SECTION 7.3, without the prior written consent of Ceridian,
which consent may not be unreasonably withheld.
(iii) STRADDLE PERIODS. In the case of a Straddle Period, the
party (the "Filing Party" responsible for filing (or causing to be filed) the
Tax Returns related to such Straddle Period pursuant to SECTION 7.3(b) shall
control any Tax audit or administrative or court proceeding relating to such
Straddle Period; PROVIDED, HOWEVER, that the other party (the "Non-Filing
Party") shall be entitled to participate at its expense in such proceeding to
the extent the Non-Filing Party is liable for Taxes relating to such Straddle
Period pursuant to SECTION 7.3(a) and, with the written consent of the Filing
Party, and at the Non-Filing Party's sole expense, may assume the entire control
of such audit or proceeding.
(d) ASSISTANCE AND COOPERATION. After the date hereof, each of FDC
and Ceridian shall (and cause their respective Affiliates to):
(i) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing in accordance with
paragraph (b) of this SECTION 7.3;
(ii) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns relating to the NTS Business,
the Purchased NTS Assets, the NTS Subsidiary, the Gaming Business, the Purchased
Gaming Assets or the Gaming Subsidiary;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to Taxes
of the NTS Business, the Purchased NTS Assets, the NTS Subsidiary, the NTS
Business, the Purchased NTS Assets, the Gaming Business, the Purchased Gaming
Assets or the Gaming Subsidiary;
(iv) timely sign and deliver such certificates or forms as may
be necessary or appropriate to establish an exemption from (or otherwise
reduce), or file Tax Returns or other reports with respect to, Taxes described
in paragraph (a)(v) of this SECTION 7.3 (relating to sales, transfer and similar
Taxes); and
(v) timely provide to the other powers of attorney or similar
authorizations necessary to carry out the purposes of this SECTION 7.3;
(e) The parties hereto agree to file all federal, state, local and
foreign Tax Returns in a manner consistent with the fair market values
identified in SECTION 2.1. Within 60 days following the date hereof or as soon
as is reasonably practicable, FDC and Ceridian shall negotiate
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and draft a schedule (the "ALLOCATION SCHEDULE") allocating such amounts among
the Purchased NTS Assets and the Purchased Gaming Assets. The Allocation
Schedule shall be consistent with the values set forth above and shall be
prepared in accordance with Section 1060 of the Code and the regulations
thereunder. FDC and Comdata each agrees that promptly upon receiving said
Allocation Schedule it shall return an executed copy thereof to the other party.
FDC and Comdata each agrees to file all federal, state, local and foreign Tax
Returns in accordance with the Allocation Schedule.
(f) REVENUE CANADA APPROVALS. FDC has filed, with respect to the
sale of the stock of the NTS Subsidiary by FDC, and Ceridian has filed, with
respect to the sale of the stock of the Gaming Subsidiary by Ceridian, a Notice
by a Non-Resident of Canada Concerning the Disposition or Proposed Disposition
of Taxable Canadian Property (the "FORM T2062") as required by Section 116 of
the Canadian INCOME TAX ACT and, in the case of Ceridian, Notice by a Non-
Resident of Quebec concerning the Disposition or Proposed Disposition of Taxable
Quebec Property (The "Form TP 1097") as required by Section 1097 of The Quebec
Taxation Act. The parties hereby agree that the good faith estimated value of
the purchase price allocable to the outstanding shares of capital stock of the
NTS Subsidiary is $571,000 (Canadian dollars) and the good faith estimated value
of the purchase price allocable to the outstanding shares of capital stock of
the Gaming Subsidiary, is $2,857,000 (Canadian dollars), subject to any post-
closing adjustments which are agreed to by the parties. Each of Ceridian and
FDC shall use commercially reasonable efforts to obtain from Revenue Canada a
certificate under Section 116 of the INCOME TAX ACT (Canada) and, in the case of
Ceridian, the equivalent certificate under the TAXATION ACT (Quebec) with a
"certificate limit" greater than or equal to the purchase price allocable to the
shares sold by it (the "Canadian Tax Certificate") within 30 days after the end
of the month during which the Closing occurs (the "Certificate Date"), and to
provide the purchaser of the shares with its copy of the Canadian Tax
Certificate forthwith. If the Canadian Tax Certificate is not obtained by the
seller and delivered to the purchaser by the Certificate Date, then the seller
will indemnify the purchaser and hold the purchaser harmless with respect to any
tax, penalties and interest which may be assessed against the purchaser under
the INCOME TAX ACT (Canada) or the TAXATION ACT (Quebec) by virtue of the
purchaser's failure to withhold and remit or pay any tax required to be remitted
or paid by the purchaser under subsection 116(5) of the INCOME TAX ACT (Canada)
or the equivalent provision of the TAXATION ACT (Quebec).
7.4. EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) TRANSFERRING EMPLOYEES.
(i) NTS has listed on SCHEDULE 7.4(A) those employees of either NTS
or the NTS Subsidiary who NTS or the NTS Subsidiary intends to transfer to
Comdata and who are Actively Employed on the date hereof and whose duties
primarily relate to the NTS Business (collectively, the "NTS EMPLOYEES"). On
SCHEDULE 7.4(A), NTS shall designate separately those NTS Employees on a
Statutorily Protected Leave.
(ii) Comdata has listed on SCHEDULE 7.4(B) those employees of either
Comdata or the Gaming Subsidiary who Comdata intends to transfer to FDFS and who
are Actively Employed
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on the date hereof and whose duties primarily relate to the Gaming Business
(collectively, the "COMDATA EMPLOYEES"). On SCHEDULE 7.4(B), Comdata shall
designate separately those Comdata Employees on a Statutorily Protected Leave.
(iii) On the Closing Date, Comdata shall offer employment to each of
the NTS Employees. All such employees who do not decline Comdata's offer of
employment and actually perform services for Comdata on the Closing Date or who,
on the Closing Date, are on NTS approved absences or Statutorily Protected
Leaves and do not later decline Comdata's offer of employment and actually
perform services for Comdata on the next business day following the expiration
of such approved absence or Statutorily Protected Leave, are hereinafter
referred to as "TRANSFERRING NTS EMPLOYEES." The employment of the NTS
Employees with Comdata shall be considered effective and their employment by NTS
shall transfer to Comdata on the Closing Date, or in the case of employees on
NTS approved absences or Statutorily Protected Leaves, as of the date they first
perform services for Comdata (the "COMDATA EFFECTIVE DATE").
(iv) On the Closing Date, FDFS shall offer employment to each of the
Comdata Employees. All such employees who do not decline FDFS' offer of
employment and actually perform services for FDFS on the Closing Date or who, on
the Closing Date, are on Comdata approved absence or Statutorily Protected
Leaves and do not later decline FDFS' offer of employment and actually perform
services for FDFS on the next business day following the expiration of such
approved absence or Statutorily Protected Leave are hereinafter referred to as
"TRANSFERRING COMDATA EMPLOYEES." The employment of the Comdata Employees with
FDFS shall be considered effective and their employment by Comdata shall
transfer to FDFS on the Closing Date, or, in the case of employees on Comdata
approved absences or Statutorily Protected Leaves, as of the date they first
perform services for FDFS (the "FDFS EFFECTIVE DATE").
(v) NTS shall be responsible for paying out any earned, unused
vacation days of Transferring NTS Employees upon their termination of employment
with NTS and in accordance with NTS' vacation policy. In no event will Ceridian
or Comdata have any responsibility or liability for payment of any vacation or
sick days earned by a Transferring NTS Employee during his employment with NTS.
(vi) Comdata shall be responsible for paying out any earned, unused
vacation and sick days of Transferring Comdata Employees upon their termination
of employment with Comdata and in accordance with Comdata's vacation and sick
pay policy. In no event will FDC, IPS or FDFS have any responsibility or
liability for payment of any vacation or sick days earned by a Transferring
Comdata Employee during his employment with Comdata.
(vii) FDC, IPS and FDFS shall be solely liable for, and indemnify and
hold Ceridian and Comdata harmless from all claims, demands, costs or other
liabilities, including reasonable attorneys' fees, related to the employees
listed on SCHEDULE 7.4(A): (A) who do not become Transferring NTS Employees; (B)
to the extent such liability arises from any action, event or course of conduct
except for any action, event or course of conduct of Ceridian or Comdata
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that occurs prior to the Comdata Effective Date; or (C) to the extent such
liability arises under or relates to any employee benefit plan of FDC or IPS
except for any liability related to such plans with respect to any Transferred
NTS Employee arising during the transition period described in SECTION 7.4(a)(x)
below, which shall be the responsibility of Comdata.
(viii) Ceridian and Comdata shall be solely liable for, and indemnify
and hold FDC, IPS and FDFS harmless from all claims, demands, costs or other
liabilities, including reasonable attorneys' fees, related to the employees
listed on SCHEDULE 7.4(B): (A) who do not become Transferring Comdata Employees;
(B) to the extent such liability arises from any action, event or course of
conduct except for any action, event or course of conduct of FDC, IPS or FDFS
that occurs prior to the FDFS Effective Date; or (C) to the extent such
liability arises under or relates to any employee benefit plan of Ceridian or
Comdata except for any liability related to such plans with respect to any
Transferred Comdata Employee arising during the transition period described in
SECTION 7.4(b)(ix) below, which shall be the responsibility of FDC.
(ix) Comdata will, for administrative convenience only, allow the
Transferring Comdata Employees to remain on its payroll and welfare benefit
plans for a transition period of up to 30 days following the Closing Date. FDC,
IPS and FDFS shall reimburse Comdata for all direct costs associated with the
Transferring Comdata Employees remaining on its payroll and welfare benefit
plans during this transition period.
(x) FDC will, for administrative convenience only, allow the
Transferring NTS Employees to remain on its payroll and welfare benefit plans
for a transition period of up to 30 days following the Closing Date. Ceridian
and Comdata shall reimburse NTS for all direct costs associated with the
Transferring NTS Employees remaining on its payroll and welfare benefit plans
during this transition period.
(b) WELFARE PLANS.
(i) Except as otherwise required by the terms of any such plan, all
Transferring NTS Employees shall cease participation in any Welfare Plan
sponsored or maintained by FDC, IPS or NTS except for any transition period
provided for in SUBSECTION 7.4(a)(x) above. Except as otherwise required by the
terms of any such plan, all Transferring Comdata Employees shall cease
participation in any Welfare Plan sponsored or maintained by Ceridian or Comdata
except for any transition period provided for in SUBSECTION 7.4(a)(ix) above.
(ii) Commencing on the Comdata Effective Date, Transferring NTS
Employees shall be eligible for those Welfare Plans of Ceridian and Comdata in
effect for similarly situated existing employees of Comdata (collectively, the
"COMDATA WELFARE PLANS"). Transferring NTS Employees shall be credited for
their length of service with NTS and its Affiliates for all purposes under the
Comdata Welfare Plans, including eligibility. Any pre-existing condition
limitation under a Comdata Welfare Plan shall be waived for Transferring NTS
Employees and their eligible dependents. Commencing on the FDFS Effective Date,
Transferring Comdata Employees shall be eligible for those Welfare Plans of FDC
or IPS in effect for similarly situated existing employees of IPS (collectively,
the "IPS WELFARE PLANS"). Transferring Comdata Employees shall be credited
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for their length of service with Comdata and its Affiliates for all purposes
under the IPS Welfare Plans, including eligibility. Any pre-existing condition
limitation under an IPS Welfare Plan shall be waived for Transferring Comdata
Employees and their eligible dependents.
(iii) IPS shall be responsible for providing continuation coverage
to NTS Employees who do not become Transferred NTS Employees (and their covered
dependents) and Transferring NTS Employees (and their covered dependents) under
each of its applicable health plans with respect to all qualifying events under
COBRA and comparable state law which occur before the Comdata Effective Date.
Comdata shall be responsible for providing continuation coverage to Transferring
NTS Employees (and their covered dependents) under each of its applicable group
health plans with respect to all qualifying events under COBRA and comparable
state law which occur on or after the Comdata Effective Date. Comdata shall be
responsible for providing continuation coverage to Comdata Employees who do not
become Transferring Comdata Employees (and their covered dependents) and
Transferring Comdata Employees (and their covered dependents) under each of its
applicable group health plans with respect to all qualifying events under COBRA
and comparable state law which occur before the IPS Effective Date. IPS shall
be responsible for providing continuation coverage to Transferring Comdata
Employees (and their covered dependents) under each of its applicable group
health plans with respect to all qualifying events under COBRA and comparable
state law which occur on or after the IPS Effective Date.
(iv) Except as otherwise expressly provided in this SECTION 7.4(b),
IPS shall be liable for, and shall indemnify and hold each Ceridian Group Member
harmless from, all claims incurred by Transferring NTS Employees and other
current or former employees of IPS (and their covered dependents) under the IPS
Welfare Plans. Except as otherwise expressly provided in this SECTION 7.4(b),
Comdata shall be liable for, and shall indemnify and hold each FDC Group Member
harmless from, all claims incurred by Transferring Comdata Employees which occur
before the IPS Effective Date and other current or former employees of Comdata
(and their covered dependents) under the Comdata Welfare Plans.
(c) PENSION PLANS.
(i) As of the Comdata Effective Date, all Transferring NTS Employees
shall cease accruing benefits under any Pension Plan sponsored or maintained by
FDC, IPS or NTS (collectively, the "IPS PENSION PLANS"). As of the FDFS
Effective Date, all Transferring Comdata Employees shall cease accruing benefits
under any Pension Plan sponsored or maintained by Ceridian or Comdata
(collectively, the "COMDATA PENSION PLANS").
(ii) Commencing on the Comdata Effective Date, Transferring NTS
Employees shall be eligible for those Comdata Pension Plans in effect for
similarly situated existing employees of Comdata PROVIDED, HOWEVER, that
Transferring NTS Employees shall not be considered eligible for the Ceridian
Corporation Retirement Plan which is closed to new entrants. Transferring NTS
Employees shall be credited for their length of service with NTS and its
Affiliates for purposes of eligibility and vesting under the Comdata Pension
Plans. Commencing on the FDFS Effective Date, Transferring Comdata Employees
shall be eligible for those IPS Pension Plans in effect for
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similarly situated existing employees of IPS; provided, however, that
Transferring Comdata Employees shall not be considered eligible for the FDC
Retirement Plan, which is frozen. Transferring Comdata Employees shall be
credited for their length of service with Comdata and its Affiliates for
purposes of eligibility and vesting under the IPS Pension Plans.
(iii) Subject to the approval of the FDC Employee Benefits
Administration and Investment Committee, IPS shall cause the accounts of the
Transferring NTS Employees under IPS's 401(k) plan or plans to be fully vested
as of the Closing Date. Subject to the approval of the plan administrator,
Comdata shall cause the accounts of the Transferring Comdata Employees under
Ceridian's and Comdata's 401(k) plan or plans to be fully vested as of the
Closing Date. If IPS determines that it is unable to make distribution from its
401(k) plan or plans in connection with the transactions contemplated by this
Agreement pursuant to SECTION 401(k)(10) of the Code, it will provide notices of
such determination to Comdata. Thereafter, Comdata will promptly notify IPS
whenever a Transferring NTS Employee ceases to be employed with Comdata and its
Affiliates, including any such cessation that occurred before Comdata received
the notice. If Comdata determines that it is unable to make distributions from
its 401(k) plan or plans in connection with the transactions contemplated by
this Agreement pursuant to SECTION 401(k)(10) of the Code, it will provide
written notice of such determination to IPS. Thereafter, IPS will promptly
notify Comdata whenever a Transferring Comdata Employee ceases to be employed
with IPS and its Affiliates, including any such cessation that occurred before
IPS received the notice.
(d) OTHER BENEFITS.
(i) As of the Comdata Effective Date, the Transferring NTS Employees
shall be eligible for vacation, sick leave and all other compensation and
benefit programs not specifically addressed in SECTION 7.4(b) or (c) in effect
for similarly situated existing employees of Comdata and shall be credited for
their length of service with NTS and its Affiliates for all purposes under such
programs.
(ii) As of the FDFS Effective Date, the Transferring Comdata
Employees shall be eligible for vacation, sick leave and all other compensation
and benefit programs not specifically addressed in SECTION 7.4(b) or (c) in
effect for similarly situated existing employees of IPS and shall be credited
for their length of service with Comdata and its Affiliates for all purposes
under such programs.
(e) MISCELLANEOUS.
(i) During the 12-month period beginning at Closing, Comdata shall
follow the terms of a severance plan which covers each Transferring NTS Employee
and which is at least as favorable to each such Transferring NTS Employee as the
applicable NTS severance plan, policy or practice, to the extent it is described
on SCHEDULE 6.18(d) in effect immediately prior to Closing with respect to such
Transferring NTS Employee. During the 12-month period beginning at Closing,
FDFS shall follow the terms of a severance plan which covers each Transferring
Comdata Employee as the applicable Xxxxxxx xxxxxxxxx plan, policy or practice,
to the extent it
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is described on SCHEDULE 5.18(d) in effect immediately prior to Closing with
respect to such transferring Comdata Employee.
(ii) IPS shall be responsible for compliance with the federal Worker
Adjustment and Retraining Notification Act ("WARN") and any similar applicable
state or local laws and assumes any liability for non-compliance with such laws
with respect to IPS' termination of any Transferring Comdata Employee. Comdata
shall be responsible for compliance with WARN and any similar applicable state
or local laws and assume any liability for non-compliance with such laws with
respect to Comdata's termination of any Transferring NTS Employee.
(f) IPS shall be liable for any workers' compensation or similar
workers' protection claims by Transferring NTS Employees originating prior to
the Comdata Effective Date and by Transferring Comdata Employees for occurrences
originating on or after the FDFS Effective Date. Comdata shall be liable for
any workers' compensation or similar workers' protection claims by Transferring
Comdata Employees originating prior to the FDFS Effective Date and by
Transferring NTS Employees for occurrences originating on or after the Comdata
Effective Date.
(g) No Transferring NTS Employee, Transferring Comdata Employee or
other current or former employee of NTS or Comdata (including any beneficiary or
dependent thereof), or any other person not a party to this Agreement, shall be
entitled to assert any claim hereunder.
7.5. COLLECTION OF RECEIVABLES. (a) From and after the Closing
Date, Comdata shall use reasonable efforts to collect the NTS Receivables
reflected in the Closing Date NTS Special Report generally in accordance with
the billing and collection practices presently applied by Comdata in the
collection of its accounts and notes receivable, except that with respect to any
particular NTS Receivable, Comdata shall be under no obligation to commence
litigation to effect collection and may make any concession or settlement which
in the good faith judgment of Comdata is commercially reasonable. In connection
with the collections by Comdata, if a payment is received from an account debtor
who has not designated the invoice being paid thereby, such payment shall be
applied to the earliest invoice outstanding with respect to indebtedness of such
account debtor reflected on the Closing Date NTS Special Report, except for
those invoices which are subject to a dispute to the extent of such dispute.
(b) Comdata shall, on or before the tenth business day of each
calendar month commencing with the second complete calendar month following the
Closing Date, deliver to NTS a written report ("NTS COLLECTION REPORT") of the
following information with respect to the NTS Receivables:
(i) The aggregate amount of the NTS Receivables (and the number of
accounts comprising such NTS Receivables); and
(ii) The aggregate amount of cash collections of the NTS Receivables
during the period from the Closing Date through the date of the NTS
Collection Report.
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(c) If Comdata has not collected, within 180 days after the Closing
Date, an amount equal to the excess of the NTS Receivables over the allowance
for doubtful accounts shown on the Closing Date NTS Special Report (such excess
being referred to herein as the "NET AMOUNT OF NTS RECEIVABLES"), then Comdata
shall have the right to require NTS to pay Comdata an amount, if positive, equal
to (i) the sum of (A) Net Amount of NTS Receivables and (B) all collection fees
incurred by Comdata (in accordance with SECTION 7.5(a)), MINUS (ii) the amount
collected in cash by Comdata during such 180 days period in respect of the NTS
Receivables; PROVIDED, HOWEVER, that concurrently with the payment by NTS of
such amount, Comdata shall reassign to NTS all such NTS Receivables together
with all security interests or other rights securing payment thereof; PROVIDED,
FURTHER, that, with respect to each NTS Receivable required to be so reassigned,
during the two-year period commencing on the 180th day after the date hereof
neither Comdata nor any of its Affiliates shall provide to the account debtor
relating to such NTS Receivable any services, goods or products relating to the
NTS Business. Notwithstanding the foregoing, Comdata will not be entitled to
require NTS to make any such payment with respect to the NTS Receivable referred
to in item 3 of SCHEDULE 1.6 until after (i) the third anniversary of the
Closing Date or (ii) if there is a payment default after the date hereof and
prior to such third anniversary, in respect of such NTS Receivable, in which
case the date of such default. If Comdata then elects to require such payment
with respect to such NTS Receivable, Comdata shall concurrently therewith
reassign to NTS such NTS Receivable together with all security interests or
other rights securing payment thereof; PROVIDED, HOWEVER, that prior to any such
payment and reassignment, Comdata shall have terminated the marketing services
agreement entered into with the account debtor relating to such NTS Receivable.
In addition, if Comdata so elects to require such payment, during the two-year
period commencing on such third anniversary, neither Comdata nor any of its
Affiliates shall provide to such account debtor any services, goods or products
relating to the NTS Business.
(d) If, after the Closing Date, NTS shall receive any remittance from
any account debtors with respect to the NTS Receivables (excluding any NTS
Receivable reassigned to NTS), NTS shall endorse such remittance to the order of
Comdata and forward it to Comdata immediately upon receipt thereof, and any such
amounts shall be deemed to have been collected by Comdata for purposes of this
SECTION 7.5.
(e) In the event Comdata shall receive any remittance from or on
behalf of any account debtor with respect to any Receivable after such NTS
Receivable has been reassigned to NTS, Comdata shall endorse such remittance to
the order of NTS and forward it to NTS immediately upon receipt thereof.
(f) From and after the Closing Date, FDFS shall use reasonable
efforts to collect the Gaming Receivables reflected in the Closing Date Gaming
Special Report generally in accordance with the billing and collection practices
presently applied by FDFS in the collection of its accounts and notes
receivable, except that with respect to any particular Gaming Receivable, FDFS
shall be under no obligation to commence litigation to effect collection and may
make any concession or settlement which in the good faith judgment of FDFS is
commercially reasonable. In connection with the collections by FDFS, if a
payment is received from an account debtor who has not designated the invoice
being paid thereby, such payment shall be applied to the earliest
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invoice outstanding with respect to indebtedness of such account debtor
reflected on the Closing Date Gaming Special Report, except for those invoices
which are subject to a dispute to the extent of such dispute.
(g) FDFS shall, on or before the tenth business day of each calendar
month commencing with the second complete calendar month following the Closing
Date, deliver to Comdata a written report ("COMDATA COLLECTION REPORT") of the
following information with respect to the Gaming Receivables:
(i) The aggregate amount of the Gaming Receivables (and the number of
accounts comprising such Gaming Receivables); and
(ii) The aggregate amount of cash collections of the Gaming
Receivables during the period from the Closing Date through the date of the
Comdata Collection Report.
(h) If FDFS has not collected, within 180 days after the Closing
Date, an amount equal to the excess of the Gaming Receivables over the allowance
for doubtful accounts shown on the Closing Date Gaming Special Report (such
excess being referred to herein as the "NET AMOUNT OF GAMING RECEIVABLES"), then
FDFS shall have the right to require Comdata to pay FDFS an amount, if positive,
equal to (i) the sum of (A) Net Amount of Gaming Receivables and (B) all
collection fees incurred by FDFS (in accordance with SECTION 7.5(f)), MINUS
(ii) the amount collected in cash by FDFS during such 180 day period in respect
of the Comdata Receivables; PROVIDED, HOWEVER, that concurrently with the
payment by Comdata of such amount, FDFS shall reassign to Comdata all such
uncollected Gaming Receivables.
(i) If, after the Closing Date, Comdata shall receive any remittance
from any account debtors with respect to the Gaming Receivables (excluding any
Gaming Receivable reassigned to Comdata), Comdata shall endorse such remittance
to the order of FDFS and forward it to FDFS immediately upon receipt thereof,
and any such amounts shall be deemed to have been collected by FDFS for purposes
of this SECTION 7.5.
(j) In the event FDFS shall receive any remittance from or on behalf
of any account debtor with respect to any Gaming Receivable after such Gaming
Receivable has been reassigned to Comdata, FDFS shall endorse such remittance to
the order of Comdata and forward it to Comdata immediately upon receipt thereof.
7.6. RELEASE OF NONCOMPETITION PROVISIONS. The parties agree that
the non-competition provisions included in this Article VII shall supersede,
replace, and be the sole source of any non-competition provisions between them
and their respective Affiliates as of the Closing Date to the extent relating to
the Gaming Business or the NTS Business.
7.7. WAIVER OF EXCLUSIVITY OBLIGATIONS OF WESTERN UNION AGENTS.
Ceridian and Comdata, on behalf of themselves and their Affiliates, hereby waive
any currently existing obligations of Western Union agents to utilize
exclusively the services of Comdata or any of its Affiliates with respect to the
receipt of wire money transfers.
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7.8. NTS NAME. On the Closing Date, NTS shall change its name to a
name not including "NTS."
7.9. SUBLEASE. With respect to NTS' current lease with respect to
the office buildings located at 6000 and 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxx 00000, Comdata hereby subleases from NTS, and NTS hereby subleases to
Comdata, those certain portions of the 8th floor in the East Tower and the 2nd
floor in the West Tower which are currently leased to NTS and the entire 9th
floor in the East Tower (the "SUBLEASED FLOORS") of the office buildings located
at 6000 and 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxx 00000 for the period
commencing on the date hereof and ending on March 31, 2002 on the same terms and
conditions applicable to NTS with respect to the Subleased Floors. Comdata
shall be subject to all of the restrictions contained in such lease relating to
the Subleased Floors and any tenant thereof. Comdata shall pay to NTS (or such
other third party as may be consented to by NTS) all rents and other amounts
required to be paid by NTS or any of its Affiliates to any third party and all
other costs, charges or expenses incurred by NTS or any of its Affiliates, in
each case, in respect of the Subleased Floors. NTS shall provide Comdata with
periodic statements of any such amounts required to be paid. Any such payments
to NTS shall be made not later than the first business day of each calendar
month or, in the case of any other incurred costs, charges or expenses, not
later than 15 business days after notice is provided to Comdata of the amount
owing. Any such payments made by Comdata to any third party (with the consent
of NTS as aforesaid) shall be made not later than the date on which the payment
is due to such third party.
7.10. PRORATION. With respect to all third party charges (including,
without limitation, telephone and utility charges) other than Taxes incurred in
the ordinary course of business by the Gaming Business, the NTS Business or in
respect of the Purchased Gaming Assets or the Purchased NTS Assets that are
payable after the date hereof and that relate to a period that commenced prior
to the date hereof, it is the intent of the parties hereto that the pro-rated
portion thereof applicable to the period ending on or prior to the date hereof
shall be the responsibility of Comdata or NTS, respectively, except to the
extent such amount is recorded as a liability on the Closing Date Gaming Special
Report or the Closing Date NTS Special Report. Comdata or FDFS, as the case may
be, shall reimburse NTS or Comdata, respectively, for any portion of such
charges that is paid by one party that is the responsibility of the other party
in accordance with the term of this SECTION 7.10. Any receivables which are
incurred in the ordinary course of business by the Gaming Business, the NTS
Business or in respect of the Purchased Gaming Assets or the Purchased NTS
Assets that are collected after the date hereof and that relate to a period that
commenced prior to the date hereof, except to the extent that such amounts are
recorded as receivables on the Closing Date Gaming Special Report or the Closing
Date NTS Special Report, shall be treated in a similar manner.
7.11. CERTAIN CONSENTS. (a) Following the Closing, at the request
of FDFS, Comdata shall use commercially reasonable efforts (but which shall not
include the payment of fees by Comdata to any third party) to assist FDFS in
obtaining any consent of any third party which may be required in order to
assign any rights or other assets constituting Purchased Gaming Assets. If FDFS
is unable to obtain any such consent, or believes that an attempt to assign such
Purchased Gaming Asset would be ineffective or would adversely affect the
ability of FDFS to
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receive the asset in question, at the request of FDFS Comdata will cooperate
with FDFS in any commercially reasonable alternative arrangement designed to
provide FDFS the benefits that, with respect to such Purchased Gaming Assets,
were contemplated to be conferred on FDFS by this Agreement. If FDFS is unable
to obtain such consent, such Purchased Gaming Asset shall, at FDFS's election,
be deemed to have been excluded from the Purchased Gaming Assets conveyed to
FDFS hereunder and be deemed to have been an Excluded Gaming Asset for the
purposes of the Agreement, PROVIDED, HOWEVER, that to the extent any such
Purchased Gaming Asset would have been included on the Closing Date Gaming
Special Report if such consent had been obtained, it shall be included on the
Closing Date Gaming Special Report even in the absence of such consent; and
PROVIDED, FURTHER, that, notwithstanding any such election, the liabilities or
obligations of FDFS relating to such Purchased Gaming Asset shall, except to the
extent provided in SECTION 2.5 (other than SECTION 2.5(d)), be deemed to have
been an Assumed Gaming Liability for purposes of this Agreement. Notwithstanding
the foregoing, nothing in this Agreement shall be construed as an attempt to
assign any Purchased Gaming Asset in respect of which FDFS has made the an
election contemplated by the third sentence of this SECTION 7.11(a) without the
consent of the other party thereto.
(b) Following the Closing, at the request of Comdata, NTS shall use
commercially reasonable efforts (but which shall not include the payment of fees
by NTS to any third party) to assist Comdata in obtaining any consent of any
third party which may be required in order to assign any rights or other assets
constituting Purchased NTS Assets. If Comdata is unable to obtain any such
consent, or believes that an attempt to assign such Purchased NTS Asset would be
ineffective or would adversely affect the ability of Comdata to receive the
asset in question, at the request of Comdata NTS will cooperate with Comdata in
any commercially reasonable alternative arrangement designed to provide Comdata
the benefits that, with respect to such Purchased NTS Assets, were contemplated
to be conferred on Comdata by this Agreement. If Comdata is unable to obtain
such consent, such Purchased NTS Asset shall, at Comdata's election, be deemed
to have been excluded from the Purchased NTS Assets conveyed to Comdata
hereunder and be deemed to have been an Excluded NTS Asset for the purposes of
the Agreement, PROVIDED, HOWEVER, that to the extent any such Purchased NTS
Asset would have been included on the Closing Date NTS Special Report if such
consent had been obtained, it shall be included on the Closing Date NTS Special
Report even in the absence of such consent; and PROVIDED, FURTHER, that,
notwithstanding any such election, the liabilities or obligations of Comdata
relating to such Purchased NTS Asset shall, except to the extent provided in
SECTION 2.9 (other than SECTION 2.9(d)), be deemed to have been an Assumed NTS
Liability for purposes of this Agreement. Notwithstanding the foregoing, nothing
in this Agreement shall be construed as an attempt to assign any Purchased NTS
Asset in respect of which Comdata has made the an election contemplated by the
third sentence of this SECTION 7.11(b) without the consent of the other party
thereto.
7.12. TERMINATION OF FLASHCASH LICENSE. Comdata hereby relinquishes
and terminates any rights it may have under that certain License Agreement by
and between Western Union Financial Services, Inc. and Comdata dated as of
April 6, 1994.
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ARTICLE VIII
INDEMNIFICATION
8.1. INDEMNIFICATION BY CERIDIAN. (a) Ceridian agrees to indemnify
and hold harmless each FDC Group Member from and against any and all Losses and
Indemnification Expenses incurred by such FDC Group Member in connection with or
arising from:
(i) any breach by Ceridian or any of its Affiliates of any of their
respective covenants or agreements in this Agreement;
(ii) any failure of Ceridian or any of its Affiliates to perform any
of their respective obligations in this Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of Ceridian or any of its Affiliates contained or referred
to in this Agreement or any certificate delivered by or on behalf of
Ceridian or any of its Affiliates pursuant hereto;
(iv) the failure of Comdata to comply with any applicable bulk sales
law, except that this clause shall not affect the obligation of FDFS to pay
and discharge the Assumed Gaming Liabilities;
(v) any Excluded Gaming Liability;
(vi) any recalls on or after the date hereof mandated by any
Governmental Body of the products manufactured, distributed or sold by the
Gaming Business on or prior to the date hereof; or
(vii) any obligations to provide parts and service on, or to repair
or replace, any products manufactured, distributed or sold by the Gaming
Business on or prior to the date hereof.
(b) Notwithstanding the foregoing SECTION 8.1(a), Ceridian shall be
required to indemnify and hold harmless under clauses (i), (ii) and (iii) of
SECTION 8.1(a) with respect to Losses and Indemnification Expenses incurred by
FDC Group Members only:
(i) to the extent that the aggregate amount of any and all
Losses and Indemnification Expenses exceeds $1,950,000; and
(ii) to the extent that the aggregate amount required to be paid by
Ceridian pursuant to SECTION 8.1(a)(i)-(iii) shall not exceed $22,550,000.
(c) Notwithstanding the limitations in SECTION 8.1(b);
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(i) the limitations in SECTION 8.1(b)(i)-(ii) shall not apply to
(A) any Losses or Indemnification Expenses incurred as result of
a failure to pay or discharge an Excluded Gaming Liability or any
obligation set forth in ARTICLE III, (B) any Losses or
Indemnification Expenses incurred as a result of inaccuracies of
the representations and warranties contained in SECTIONS 5.1,
5.2, 5.3(a)-(c), 5.6 and 5.7 and (C) any Losses and
Indemnification Expenses incurred as a result of a breach by
Comdata or Ceridian of their respective covenants and obligations
set forth in SECTIONS 7.3, 7.4, 7.5, 7.9, 7.10, 9.2 and 9.10; and
(ii) none of (A) any Losses or Indemnification Expenses incurred
as a result of a failure to pay or discharge an Excluded Gaming
Liability or any obligation set forth in ARTICLE III,
(B) any Losses or Indemnification Expenses incurred as a result
of inaccuracies of the representations and warranties contained
in SECTIONS 5.1, 5.2, 5.3(a)-(c), 5.6 and 5.7, and (C) any Losses
and Indemnification Expenses incurred as a result of a breach by
Comdata or Ceridian of their respective covenants and obligations
set forth in SECTIONS 7.3, 7.4, 7.5, 7.9, 7.10, 9.2 and 9.10,
shall be applied toward the amounts specified in SECTION
8.1(b)(i)-(ii).
(d) The indemnification provided for in this SECTION 8.1 shall
terminate 3 years after the date hereof (and no claims shall be made by any FDC
Group Member under this SECTION 8.1 thereafter), except that the indemnification
by Ceridian and its Affiliates shall continue as to:
(i) the obligations of Comdata under the Comdata Instrument of
Assignment, the Comdata Instrument of Assumption, the Comdata Canadian
Instrument of Assignment and the Comdata Canadian Instrument of Assumption,
as to which no time limitation shall apply;
(ii) the obligations of Comdata or Ceridian set forth in ARTICLE III,
the representations and warranties set forth in SECTIONS 5.1, 5.2,
5.3(a)-(c), 5.6, 5.7 and the covenants of Ceridian and its Affiliates set
forth in SECTIONS 7.3, 7.4, 7.5, 7.10, 9.2, 9.6, 9.10 and 9.13, as to all
of which no time limitation shall apply;
(iii) the covenants set forth in SECTION 7.2(a) as to which the
indemnification provided for in this SECTION 8.1 shall terminate one year
after the expiration of the period provided for therein; and
(iv) any Losses or Indemnification Expenses of which any FDC Group
Member has notified Ceridian or Comdata in accordance with the requirements
of SECTION 8.3 on or prior to the date such indemnification would otherwise
terminate in accordance with this SECTION 8.1, as to which the obligation
of Ceridian shall continue until the liability of Ceridian shall have been
determined pursuant to this ARTICLE VIII, and Ceridian shall have
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reimbursed all FDC Group Members for the full amount of such Losses and
Indemnification Expenses in accordance with this ARTICLE VIII.
(e) Notwithstanding anything in this SECTION 8.1 to the contrary, Ceridian
shall not indemnify or hold any FDC Group Member harmless from or against any
Losses or Indemnification Expenses incurred by such FDC Group Member in
connection with or arising from any matter on SCHEDULE 8.1; it being understood
and agreed that any such Losses or Indemnification Expenses shall constitute
Excluded NTS Liabilities nothwithstanding anything to the contrary set forth in
SECTION 2.4 of this Agreement.
8.2. INDEMNIFICATION BY FDC. (a) FDC agrees to indemnify and hold
harmless each Ceridian Group Member from and against any and all Losses and
Indemnification Expenses incurred by such Ceridian Group Member in connection
with or arising from:
(i) any breach by FDC or any of its Affiliates of any of its
covenants or agreements in this Agreement;
(ii) any failure by FDC or any of its Affiliates to perform any of
their obligations in this Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of FDC or any of its Affiliates contained or referred to in
this Agreement or in any certificate delivered by or on behalf of FDC;
(iv) the failure of NTS to comply with any applicable bulk sales law,
except that this clause shall not effect the obligation of Comdata to pay,
perform or discharge the Assumed NTS Liabilities; or
(v) any Excluded NTS Liabilities;
(vi) any recalls on or after the date hereof mandated by any
Governmental Body of the products manufactured, distributed or sold by the
NTS Business on or prior to the date hereof; or
(vii) any obligations to provide parts and service on, or to repair
or replace, any products manufactured, distributed or sold by the NTS
Business on or prior to the date hereof.
(b) Notwithstanding the foregoing SECTION 8.2(a), FDC shall be
required to indemnify and hold harmless under clauses (i), (ii) and (iii) of
SECTION 8.2(a) with respect to Losses and Indemnification Expenses incurred by
Ceridian Group Members only:
(i) to the extent that the aggregate amount of any and all
Losses and Indemnification Expenses exceeds $975,000; and
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(ii) to the extent that the aggregate amount required to be paid by
FDC pursuant to SECTION 8.2(a)(i)-(iii) shall not exceed $11,375,000.
(c) Notwithstanding the limitations in SECTION 8.2(b);
(i) the limitations in SECTION 8.2(b)(i)-(ii) shall not apply to
(A) any Losses or Indemnification Expenses incurred as result of
a failure to pay or discharge an Excluded NTS Liability or any
obligation set forth in ARTICLE III, (B) any Losses or
Indemnification Expenses incurred as a result of inaccuracies of
the representations and warranties contained in SECTIONS 6.1,
6.2, 6.3(a)-(c), 6.6, 6.7 and (C) any Losses and Indemnification
Expenses incurred as a result of a breach by FDC, IPS, NTS or
FDFS of their respective covenants and obligations set forth in
SECTIONS 7.3, 7.4, 7.5, 7.9, 7.10, 9.2 and 9.10;
(ii) the limitations SECTION 8.2(b)(i) shall not apply to Losses
and Indemnification Expenses incurred as a result of a breach by
FDC, IPS, NTS or FDFS of their respective covenants and
obligations set forth in SECTION 7.1;
(iii) none of (A) any Losses or Indemnification Expenses
incurred as a result of a failure to pay or discharge an Excluded
NTS Liability or any obligation set forth in ARTICLE III, (B) any
Losses or Indemnification Expenses incurred as a result of
inaccuracies of the representations and warranties contained in
SECTIONS 6.1, 6.2, 6.3(a)-(c), 6.6, 6.7, and (C) any Losses and
Indemnification Expenses incurred as a result of a breach by FDC,
IPS, NTS or FDFS of their respective covenants and obligations
set forth in SECTION 7.3, 7.4, 7.5, 7.9, 7.10, 9.2 and 9.10;
shall be applied toward the amounts specified in SECTION
8.2(b)(i)-(ii); and
(iv) the Losses and Indemnification Expenses incurred as a
result of a breach by FDC, IPS or NTS of their respective
covenants and obligations set forth in SECTION 7.1 shall not be
applied toward the amount specified in SECTION 8.2(b)(i).
(d) The indemnification provided for in this SECTION 8.2 shall
terminate 3 years after the date hereof (and no claims shall be made by any
Ceridian Group Member under this SECTION 8.2 thereafter), except that the
indemnification by FDC and its Affiliates shall continue as to:
(i) the obligations of NTS and FDFS under the NTS Instrument of
Assignment, the FDFS Instrument of Assumption, the NTS Canadian Instrument of
Assignment or the NTS Canadian Instrument of Assumption, as to which no time
limitation shall apply;
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(ii) the obligations of FDC or IPS set forth in ARTICLE III, the
representations and warranties set forth in SECTIONS 6.1, 6.2, 6.3(a)-(c),
6.6, 6.7 and the covenants of FDC and its Affiliates set forth in SECTIONS
7.3, 7.4, 7.5, 7.10, 9.2, 9.6, 9.10 and 9.13, as to all of which no time
limitation shall apply;
(iii) the covenants set forth in SECTIONS 7.1 and 7.2(b) as to which
the indemnification provided for in this SECTION 8.2 shall terminate one
year after the expiration of the respective periods provided for therein;
and
(iv) any Losses or Indemnification Expenses of which any Ceridian
Group Member has notified FDC or IPS in accordance with the requirements of
SECTION 8.3 on or prior to the date such indemnification would otherwise
terminate in accordance with this SECTION 8.2, as to which the obligation
of FDC shall continue until the liability of FDC shall have been determined
pursuant to this ARTICLE VIII, and FDC shall have reimbursed all Ceridian
Group Members for the full amount of such Losses and Indemnification
Expenses in accordance with this ARTICLE VIII.
(e) Notwithstanding anything in this SECTION 8.2 to the contrary, FDC
shall not indemnify or hold any Ceridian Group Member harmless from or against
any Losses or Indemnification Expenses incurred by such Ceridian Group Member in
connection with or arising from any matter on SCHEDULE 8.2, it being understood
and agreed that any such Losses or Indemnification Expenses shall constitute
Assumed NTS Liabilities notwithstanding anything to the contrary set forth in
SCHEDULE 2.4 of this Agreement.
8.3. NOTICE OF CLAIMS. Any FDC Group Member or Ceridian Group Member
(the "INDEMNIFIED PARTY") seeking indemnification hereunder shall give to the
party obligated to provide indemnification to such Indemnified Party (the
"INDEMNITOR") a notice (a "CLAIM NOTICE") describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder and shall include
in such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based; PROVIDED, HOWEVER, that a Claim Notice
in respect of any action at law or suit in equity by or against a third Person
as to which indemnification will be sought shall be given promptly after the
action or suit is commenced; and PROVIDED FURTHER that failure to give such
notice shall not relieve the Indemnitor of its obligations hereunder except to
the extent it shall have been prejudiced by such failure.
(b) After the giving of any Claim Notice pursuant hereto, the amount
of indemnification to which an Indemnified Party shall be entitled under this
ARTICLE VIII shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The Indemnified Party
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shall have the burden of proof in establishing the amount of Loss and
Indemnification Expense suffered by it.
8.4. THIRD-PERSON CLAIMS. (a) In order for an Indemnified Party to
be entitled to any indemnification provided for under this Agreement in respect
of, arising out of or involving a claim or demand made by any third Person
against the Indemnified Party (a "THIRD-PERSON CLAIM"), such Indemnified Party
shall give to an Indemnitor a Claim Notice relating to the Third-Person Claim
within 15 days after receipt by such Indemnified Party of written notice of the
Third-Person Claim; PROVIDED, HOWEVER, that failure to give such notice shall
not relieve an Indemnitor of its obligations hereunder except to the extent the
Indemnitor shall have been prejudiced by such failure (except that the
Indemnitor shall not be liable for any Indemnification Expenses incurred during
the period in excess of the initial 15 days in which the Indemnified Party
failed to give such notice) (it being understood that the Indemnified Party
shall use good faith efforts to notify the Indemnitor promptly upon receipt of
any oral or written notice of a Third-Person Claim). Thereafter, the
Indemnified Party shall deliver to the Indemnitor, within five business days
after the Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Party relating to
the Third-Person Claim. Notwithstanding the foregoing, should an Indemnified
Party be physically served with a complaint with regard to a Third-Person Claim,
the Indemnified Party must notify an Indemnitor with a copy of the complaint
within five business days after receipt thereof and shall deliver to the
Indemnitor within seven business days after the receipt of such complaint copies
of notices and documents (including court papers) received by the Indemnified
Party relating to the Third-Person Claim; PROVIDED, HOWEVER, that failure to
give such notice shall not relieve the Indemnitor of its obligations hereunder
except to the extent the Indemnitor shall have been prejudiced by such failure.
(b) (i) In the event of a Third-Person Claim an Indemnitor shall have
the absolute right after the receipt of notice, at its option and at its own
expense, to be represented by counsel of its choice (which shall be satisfactory
to the Indemnified Party) and to defend any proceeding, claim, or demand which
relates to any Loss or Indemnification Expense indemnified against hereunder if
the Indemnitor gives written notice to the Indemnified Party of its intention to
defend a ("NOTICE TO DEFEND") within seven business days following receipt of
the Claim Notice. The Notice to Defend must also state that the Indemnitor
agrees to fully indemnify the Indemnified Party for the Third-Person Claim to
the extent provided for in this ARTICLE VIII; PROVIDED, HOWEVER, that the
Indemnified Party may participate in any such proceeding with counsel of its
choice and at its expense. The parties hereto agree to cooperate fully with
each other in connection with the defense, negotiation or settlement of any such
legal proceeding, claim or demand. To the extent an Indemnitor elects not to
defend such proceeding, claim or demand or fails to give a Notice to Defend
within such seven business-day period, and the Indemnified Party defends against
or otherwise deals with any such proceeding, claim or demand, the Indemnified
Party may retain counsel, at the expense of the Indemnitor to the extent
provided for in this ARTICLE VIII, and control the defense of such proceeding.
Neither the Indemnitor nor the Indemnified Party may settle any such proceeding
which settlement obligates the other party, pursuant to such settlement or this
ARTICLE VIII, to pay money, to perform obligations, to refrain
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from performing acts or to admit liability without the consent of the other
party which shall not be unreasonably withheld.
(ii) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction and
the time in which to appeal therefrom has expired, or a settlement shall have
been consummated, or the Indemnified Party and the Indemnitor shall arrive at a
mutually binding agreement with respect to each separate matter alleged to be
indemnified by an Indemnitor hereunder, the Indemnified Party shall forward to
the Indemnitor notice of any sums due and owing by it with respect to such
matter and the Indemnitor shall pay all of the sums so owing to the Indemnified
Party by wire transfer, certified or bank cashier's check within 30 days after
the date of such notice.
(iii) The Indemnified Party shall neither be required to refrain from
paying or satisfying any claim which the Indemnitor has not acknowledged in
writing its obligations to indemnify the Indemnified Party, provided that the
Indemnified Party shall have given notice of such claim to the Indemnitor in
accordance with SECTION 8.3 and 8.4, or which has matured by court judgment or
decree, unless appeal is taken thereafter and proper appeal bond posted by the
Indemnitor, nor shall the Indemnified Party be required to refrain from paying
or satisfying any Third-Person Claim after and to the extent that such
Third-Person Claim has resulted in an unstayed permanent injunction or other
similar equitable relief against the Indemnified Party (unless such claim shall
have been discharged or enforcement thereof stayed by the filing of a legally
permitted bond by the Indemnitor or otherwise, at its sole expense).
(c) If there shall be any conflicts between the provisions of this
SECTION 8.4 and SECTION 7.3(c) (relating to Tax Contests), the provisions of
SECTION 7.3(c) shall control with respect to Tax Contests.
8.5. INDEMNIFICATION PAYMENTS NET OF INSURANCE RECOVERY. In
calculating any Loss or Indemnification Expense there shall be deducted any
insurance recovery in respect thereof (and no right of subrogation shall accrue
hereunder to any insurer.) FDC and Ceridian agree to report each payment made
in respect of a Loss or Indemnification Expense as an adjustment to the Initial
Amount for income tax purposes.
ARTICLE IX
GENERAL PROVISIONS
9.1. SURVIVAL OF OBLIGATIONS. All representations, warranties,
covenants, agreements and obligations contained in this Agreement shall survive
the consummation of the transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that, except as otherwise provided in ARTICLE VIII, the representations
and warranties contained in ARTICLES V and VI shall terminate on the third
anniversary of the date hereof (other than the representations and warranties
contained in SECTIONS 5.1, 5.2, 5.3, 5.6, 5.7, 6.1, 6.2, 6.3, 6.6 and 6.7, each
of which shall survive indefinitely). Except as otherwise provided herein, no
claim shall be made for the
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breach of any representation or warranty contained in ARTICLE V or VI or under
any certificate delivered with respect thereto under this Agreement after the
date on which such representations and warranties terminate as set forth in this
SECTION 9.1.
9.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees that it
will treat in confidence all documents, materials and other information which it
shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated
hereby, the investigation provided for herein and the preparation of this
Agreement and other related documents. Such documents, materials and
information shall not be communicated to any third Person (other than, in the
case of FDC or IPS, to its counsel, accountants, financial advisors or lenders,
and in the case of Ceridian or Comdata, to its counsel, accountants or financial
advisors or lenders). No other party shall use any confidential information in
any manner whatsoever except solely for the purpose of evaluating the
transactions contemplated herein; PROVIDED, HOWEVER, that (i) IPS, FDFS, and the
Gaming Subsidiary may use or disclose any confidential information included in
the Purchased Gaming Assets or otherwise reasonably related to the Gaming
Business or the Purchased Gaming Assets, and (ii) Comdata, the NTS Subsidiary
and Permicom may use or disclose any confidential information included in the
Purchased NTS Assets related or otherwise reasonably related to the NTS Business
or the Purchased NTS Assets. The obligation of each party to treat such
documents, materials and other information in confidence shall not apply to any
information which (a) is or becomes available to such party from a source other
than such party, (b) is or becomes available to the public other than as a
result of disclosure by such party or its agents, (c) is required to be
disclosed under applicable law or judicial process, but only to the extent it
must be disclosed, or (d) such party reasonably deems necessary to disclose to
obtain any of the consents or approvals contemplated hereby.
9.3. NO PUBLIC ANNOUNCEMENT. FDC and IPS and their Affiliates shall
not, without the approval of Ceridian, and Ceridian and Comdata and their
Affiliates shall not, without the approval of FDC, make any press release or
other public announcement concerning the transactions contemplated by this
Agreement; PROVIDED, HOWEVER, that any party may make a press release or other
public announcement; to the extent such party shall be so obligated by law or by
the rules of any stock exchange (in which case the other party shall be advised
and the parties shall use their reasonable best efforts to cause a mutually
agreeably release or announcement to be issued).
9.4. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
(i) when delivered personally, (ii) if transmitted by facsimile when
confirmation of transmission is received, or (iii) if sent by registered or
certified mail return receipt requested or by private courier when received and
shall be addressed as follows:
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If to FDC, IPS, NTS or FDFS:
First Data Corporation
0000 X. Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel - Integrated Services Division
Facsimile: (000) 000-0000
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to Ceridian or Comdata, to:
Ceridian Corporation
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Executive Vice President, Operations
Facsimile: (000) 000-0000
with copies to:
Ceridian Corporation
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000
Comdata Network, Inc.
0000 Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
Comdata Network, Inc.
0000 Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Chief Counsel
Facsimile: (000) 000-0000
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Xxxxxx X. Xxxx, Esq.
Xxxxxx & Xxxxxxxxxxx, P.A.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
9.5. SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. (a) The
rights of any party under this Agreement shall not be assignable by such party
hereto without the prior written consent of the other except that (i) any party
may assign its rights hereunder to any Affiliate; (ii) FDC may assign its rights
hereunder to a subsequent purchaser of substantially all of the assets of FDC,
IPS, NTS or FDFS; and (iii) Ceridian may assign its rights hereunder to a
subsequent purchaser of substantially all of the assets of Ceridian or Comdata.
Notwithstanding anything in this SECTION 9.5, FDFS may assign all of its rights
and obligations hereunder to any Affiliate of FDC, IPS, NTS or FDFS without the
prior written consent of Ceridian or Comdata, PROVIDED, HOWEVER, that
notification of such assignment is provided to Ceridian and Comdata and,
PROVIDED, FURTHER, that upon such assignment FDC shall remain liable to Ceridian
and Comdata for all its obligations under this Agreement. Notwithstanding
anything in this SECTION 9.5, Comdata may assign all of its rights and
obligations hereunder to any Affiliate of Comdata without the prior written
consent of FDC or its Affiliates, PROVIDED, HOWEVER, that notification of such
assignment is provided to FDC, IPS, NTS and FDFS and, PROVIDED, FURTHER, that
upon such assignment Ceridian shall remain liable to FDC, IPS, NTS and FDFS for
all of its obligations under this Agreement.
(b) Nothing contained in this Agreement or in any instrument or
document executed by any party in connection with the transactions contemplated
hereby shall create any rights in, or be deemed to have been executed for the
benefit of, any person or entity that is not a party hereto or a successor or
permitted assign of such a party.
9.6. ACCESS TO RECORDS. (a) For a period of six years after the date
hereof, Comdata and its representatives shall have reasonable access to all of
the books and records of the Gaming Business transferred to FDFS hereunder to
the extent that such access may reasonably be required by Comdata in connection
with matters relating to or affected by the operations of the Gaming Business
prior to the date hereof. Such access shall be afforded by FDFS upon receipt of
reasonable advance notice and during normal business hours. Comdata shall be
solely responsible for any costs or expenses incurred by it pursuant to this
SECTION 9.6(a). If FDFS shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, FDFS shall, prior to
such disposition, give Comdata a reasonable opportunity, at Comdata's expense,
to segregate and remove such books and records as Comdata may select.
(b) For a period of six years after the date hereof, FDFS and its
representatives shall have reasonable access to all of the books and records
relating to the Gaming Business which Comdata or any of its Affiliates may
retain after the date hereof. Such access shall be afforded by Comdata and its
Affiliates upon receipt of reasonable advance notice and during
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normal business hours. FDFS shall be solely responsible for any costs and
expenses incurred by it pursuant to this SECTION 9.6(b). If Comdata or any of
its Affiliates shall desire to dispose of any of such books and records prior to
the expiration of such six-year period, Comdata shall, prior to such
disposition, give FDFS a reasonable opportunity, at FDFS' expense, to segregate
and remove such books and records as FDFS may select.
(c) For a period of six years after the date hereof, NTS and its
representatives shall have reasonable access to all of the books and records of
the NTS Business to the extent that such access may reasonably be required by
IPS in connection with matters relating to or affected by the operations of the
NTS Business prior to the date hereof. Such access shall be afforded by Comdata
upon receipt of reasonable advance notice and during normal business hours. NTS
shall be solely responsible for any costs or expenses incurred by it pursuant to
this SECTION 9.6(c). If Comdata shall desire to dispose of any of such books
and records prior to the expiration of such six-year period, Comdata shall,
prior to such disposition, give NTS a reasonable opportunity, at IPS' expense,
to segregate and remove such books and records as NTS may select.
(d) For a period of six years after the date hereof, Comdata and its
representatives shall have reasonable access to all of the books and records
relating to the NTS Business which NTS or any of its Affiliates may retain after
the date hereof. Such access shall be afforded by NTS and its Affiliates upon
receipt of reasonable advance notice and during normal business hours. Comdata
shall be solely responsible for any costs and expenses incurred by it pursuant
to this SECTION 9.6(d). If NTS or any of its Affiliates shall desire to dispose
of any of such books and records prior to the expiration of such six-year
period, NTS shall, prior to such disposition, give Comdata a reasonable
opportunity, at Comdata's expense, to segregate and remove such books and
records as Comdata may select.
9.7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Exhibits
and Schedules referred to herein and the documents delivered pursuant hereto
contain the entire understanding of the parties hereto with regard to the
subject matter contained herein or therein, and supersede all prior agreements,
understandings or letters of intent between or among any of the parties hereto.
This Agreement shall not be amended, modified or supplemented except by a
written instrument signed by an authorized representative of each of the parties
hereto.
9.8. INTERPRETATION. Article titles and headings to sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement. The Schedules
and Exhibits referred to herein shall be construed with and as an integral part
of this Agreement to the same extent as if they were set forth verbatim herein.
9.9. WAIVERS. Any term or provision of this Agreement may be waived,
or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement
-94-
or any part hereof or the right of any party thereafter to enforce each and
every such provision. No waiver of any breach of this Agreement shall be held
to constitute a waiver of any other or subsequent breach.
9.10. EXPENSES. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with, including the fees, expenses and
disbursements of its counsel and accountants.
9.11. PARTIAL INVALIDITY. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
9.12. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties hereto and delivered to each of FDC and Ceridian.
9.13. FURTHER ASSURANCES. (a) From time to time following the date
hereof, Comdata shall, at FDFS' expense, execute and deliver, or cause to be
executed and delivered, to FDFS, such other instruments of conveyance and
transfer as FDFS may reasonably request or as may be otherwise necessary to more
effectively convey and transfer to, and vest in, FDFS and put FDFS in possession
of, any part of the Purchased Gaming Assets.
(b) From time to time following the date hereof, shall, at Comdata's
(or, in the case of the NT Canada Shares, Permicom) expense, execute and
deliver, or cause to be executed and delivered, to Comdata (or, in the case of
the NT Canada Shares, Permicom) such other instruments of conveyance and
transfer as Comdata (or, in the case of the NT Canada Shares, Permicom) may
reasonably request or as may be otherwise necessary to more effectively convey
and transfer to, and vest in, Comdata (or, in the case of the NT Canada Shares,
Permicom) and put Comdata (or, in the case of the NT Canada Shares, Permicom) in
possession of, the Purchased NTS Assets.
9.14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of Delaware.
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9.15. ATTORNEY'S FEES. In connection with any legal proceeding, suit
or action arising out of a dispute regarding the terms of this Agreement, the
party that is determined by the court or tribunal to have substantially
prevailed in such proceeding, suit or action shall be entitled to recover from
the other party thereto its reasonable costs, fees and expenses incurred in
connection with such legal proceeding, suit or action (including the reasonable
fees and expenses of its legal counsel and other professional advisors).
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ACCORDINGLY, the parties hereto have caused this Agreement to be
executed the day and year first above written.
FIRST DATA CORPORATION
/s/ Xxxxxxx Xxxx
--------------------------------
By Xxxxxxx Xxxx
-----------------------------
Its Executive Vice President
-----------------------------
INTEGRATED PAYMENT SYSTEMS INC.
/s/ Xxxxxxx Xxxx
--------------------------------
By Xxxxxxx Xxxx
-----------------------------
Its Authorized Representative
-----------------------------
NTS, INC.
/s/ Xxxxxxx Xxxx
--------------------------------
By Xxxxxxx Xxxx
-----------------------------
Its Authorized Representative
-----------------------------
FIRST DATA FINANCIAL SERVICES, L.L.C.
/s/ Xxxxxxx Xxxx
--------------------------------
By Xxxxxxx Xxxx
-----------------------------
Its Authorized Representative
-----------------------------
Signature Page 1
to
Exchange Agreement
dated January 17, 1998
CERIDIAN CORPORATION
/s/ Xxxx X. Xxxxxx
--------------------------------
By Xxxx X. Xxxxxx
-----------------------------
Its Vice President
-----------------------------
COMDATA NETWORK, INC.
/s/ Xxxx X. Xxxxxx
--------------------------------
By Xxxx X. Xxxxxx
-----------------------------
Its Vice President
-----------------------------
PERMICOM PERMITS SERVICES, INC.
/s/ Xxxx X. Xxxxxx
--------------------------------
By Xxxx X. Xxxxxx
-----------------------------
Its Vice President
-----------------------------
Signature Page 2
to
Exchange Agreement
dated January 17, 1998
